CONFIDENTIAL Generex Biotechnology Corporation
May 5,
2009
CONFIDENTIAL
Generex
Biotechnology Corporation
00
Xxxxxxx Xxxxxx, Xxxxx 0000
Toronto
ONT M5J 2G2 CANADA
|
Attn:
|
Xxxx
X. Xxxxxxx,
|
President
and Chief Executive Officer
Dear
Sirs:
This
letter (the “Agreement”)
constitutes the agreement between Xxxxxx & Xxxxxxx, LLC (“Xxxxxx” or the “Placement Agent”) and
Generex Biotechnology Corporation (the “Company”), that
Xxxxxx shall serve as the sole placement agent for the Company, on a “reasonable
best efforts” basis, in connection with the proposed placement pursuant to
paragraph 8 of the February 27, 2009 Forbearance and Amendment Agreements
entered into by the Company with the holders (the “Note Holders”) of its
8% senior secured convertible notes (the “Placement”) of up to
$5,000,000 worth of shares (the “Shares”) of the
Company’s registered common stock, par value $0.001 per share (the “Common Stock”) at not
less than $0.25 per Share solely to the prospective purchasers (each, a “Purchaser” and
collectively, the “Purchasers”) approved
by the Company. For greater certainty, the Company will have no
obligation or liability to the Placement Agent in respect of any sale of
securities to purchasers other than the Purchasers and solely in respect of the
Placement. The terms of such Placement shall be mutually agreed upon by the
Company and the Purchasers and nothing herein constitutes that Xxxxxx
would have the power or authority to bind the Company or any Purchaser or an
obligation for the Company to issue any securities or complete the Placement.
This Agreement and the documents executed and delivered by the Company and the
Purchasers in connection with the Placement shall be collectively referred to
herein as the “Transaction Documents.” The
date of the closing of the Placement shall be referred to herein as the “Closing
Date.” The Company expressly acknowledges and agrees that
Xxxxxx’x obligations hereunder are on a reasonable best efforts basis only and
that the execution of this Agreement does not constitute a commitment by Xxxxxx
to purchase securities and does not ensure the successful placement of
securities or any portion thereof or the success of Xxxxxx with respect to
securing any other financing on behalf of the Company.
SECTION
1. COMPENSATION AND OTHER
FEES.
As
compensation for the services provided by Xxxxxx xxxxxxxxx, the Company agrees
to pay to Xxxxxx:
(A) The
fees set forth below with respect to the Placement:
1. Placement
Agent’s Fee. The Company shall pay to
Rodman a cash placement fee equal to (A) 6% of the aggregate purchase price paid
by any Purchaser of Shares in the Placement that (i) is introduced to the
Placement by Xxxxxx, and (ii) has been submitted by Xxxxxx in advance to the
Company and approved by the Company in writing (including via an exchange of
e-mails) from time to time, (B) 3.5% of the aggregate purchase price paid by any
Purchaser of Shares in the Placement that is also a Note Holder, and (C) 2% of
the aggregate purchase price paid by any other Purchaser of Shares in the
Placement.
0000
Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx,
Xxx Xxxx, XX 00000 Tel: 000 000 0000 Fax: 000 000 0000
xxx.xxxx.xxx
Member: FINRA, SIPC
Page 2
2. Expenses. The
Company shall reimburse Xxxxxx for expenses actually directly incurred by Xxxxxx
in connection with its services as placement agent in respect of the Placement
provided that (a) any such expenses have been approved by the Company in writing
in advance, (b) supporting invoices or receipts are provided to the Company in
respect of any such expenses, and (c) the aggregate amount of any such expenses
does not exceed an amount equal to 0.8% of the aggregate gross proceeds raised
in the Placement. Such expenses will be payable upon, and only in the
event of, the closing of the Placement.
SECTION
2. REGISTRATION
STATEMENT.
The
Company represents and warrants to, and agrees with, the Placement Agent
that:
(A) The
Company has filed with the Securities and Exchange Commission (the “Commission”)
a registration statement on Form S-3 (Registration File No. 333-139637) under
the Securities Act of 1933, as amended (the “Securities Act”), which became
effective on February 23, 2007, for the registration under the Securities Act of
the Shares (the “Registration Statement”). At the time of such filing, the
Company met the requirements of Form S-3 under the Securities
Act. The Registration Statement meets the requirements set forth in
Rule 415(a)(1)(x) under the Securities Act and complies with said Rule as at the
date hereof. The Company will file with the Commission pursuant to Rule 424(b)
under the Securities Act, and the rules and regulations (the “Rules and
Regulations”) of the Commission promulgated thereunder, a supplement to
the form of prospectus included in the Registration Statement relating to the
placement of the Shares and the plan of distribution thereof. Such prospectus in
the form in which it appears in the Registration Statement is hereinafter called
the “Base Prospectus”; and the supplemented form of prospectus, in the form in
which it will be filed with the Commission pursuant to Rule 424(b) (including
the Base Prospectus as so supplemented) is hereinafter called the “Prospectus
Supplement.” Any reference in this Agreement to the Registration Statement, the
Base Prospectus or the Prospectus Supplement shall be deemed to refer to and
include the documents incorporated by reference therein (the “Incorporated
Documents”) pursuant to Item 12 of Form S-3 which were filed under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), on or before
the date of this Agreement, or the issue date of the Base Prospectus or the
Prospectus Supplement, as the case may be; and any reference in this Agreement
to the terms “amend,” “amendment” or “supplement” with respect to the
Registration Statement, the Base Prospectus or the Prospectus Supplement shall
be deemed to refer to and include the filing of any document under the Exchange
Act after the date of this Agreement, or the issue date of the Base Prospectus
or the Prospectus Supplement, as the case may be, deemed to be incorporated
therein by reference. All references in this Agreement to financial statements
and schedules and other information which is “contained,” “included,”
“described,” “referenced,” “set forth” or “stated” in the Registration
Statement, the Base Prospectus or the Prospectus Supplement (and all other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is or is deemed
to be incorporated by reference in the Registration Statement, the Base
Prospectus or the Prospectus Supplement, as the case may be. No stop
order suspending the effectiveness of the Registration Statement or the use of
the Base Prospectus or the Prospectus Supplement has been issued, and no
proceeding for any such purpose is pending or has been initiated or, to the
Company's knowledge, is threatened by the Commission. For purposes of this
Agreement, “free writing prospectus” has the meaning set forth in Rule 405 under
the Securities Act and the “Time of Sale Prospectus” means the preliminary
prospectus, if any, together with the free writing prospectuses, if any, used in
connection with the Placement, including any documents incorporated by reference
therein.
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3
(B) The
Registration Statement (and any further documents to be filed with the
Commission) contains or will contain all
exhibits and schedules as required by the Securities Act. Each of the
Registration Statement and any post-effective amendment thereto, at the time it
became effective, complied in all material respects with the Securities Act and
the Exchange Act and the applicable Rules and Regulations and did not and, as
amended or supplemented, if applicable, will not, contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. The Base
Prospectus, the Time of Sale Prospectus, if any, and the Prospectus Supplement,
each as of its respective date, will comply
in all material respects with the Securities Act and the Exchange Act and the
applicable Rules and Regulations. Each of the Base Prospectus, the Time of Sale
Prospectus, if any, and the Prospectus Supplement, as amended or supplemented,
will not contain as of the date thereof any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Incorporated Documents, when they are filed with the Commission,
will conform in all material respects to the requirements of the Exchange Act
and the applicable Rules and Regulations, and none of such documents, when they
are filed with the Commission, will contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein
(with respect to Incorporated Documents incorporated by reference in the Base
Prospectus or Prospectus Supplement), in light of the circumstances under which
they are made not misleading; and any further documents so filed and
incorporated by reference in the Base Prospectus, the Time of Sale Prospectus,
if any, or Prospectus Supplement, when such documents are filed with the
Commission, will conform in all material respects to the requirements of the
Exchange Act and the applicable Rules and Regulations, as applicable, and will
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. No post-effective amendment to the
Registration Statement reflecting any facts or events arising after the date
thereof which represent, individually or in the aggregate, a fundamental change
in the information set forth therein is required to be filed with the Commission
as at the date hereof. There are no documents required to be filed
with the Commission in connection with the transaction contemplated hereby that
will not be filed within the requisite time period. There are no contracts or
other documents required to be described in the Base Prospectus, the Time of
Sale Prospectus, if any, or Prospectus Supplement, or to be filed as exhibits or
schedules to the Registration Statement, which
will not be described or filed as required.
(C) The
Company is eligible to use free writing prospectuses in connection with the
Placement pursuant to Rules 164 and 433 under the Securities Act. Any
free writing prospectus that the Company is required to file pursuant to Rule
433(d) under the Securities Act has been, or will be, filed with the Commission
in accordance with the requirements of the Securities Act and the applicable
rules and regulations of the Commission thereunder. Each free writing
prospectus that the Company has filed, or is required to file, pursuant to Rule
433(d) under the Securities Act or that was prepared by or behalf of or used by
the Company complies or will comply in all material respects with the
requirements of the Securities Act and the applicable rules and regulations of
the Commission thereunder. The Company will not, without the prior
consent of the Placement Agent, prepare, use or refer to, any free writing
prospectus.
SECTION
3. REPRESENTATIONS AND
WARRANTIES. The Company hereby makes the representations and warranties
set forth below to the Placement Agent.
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(A) Organization and
Qualification. All of the direct and indirect subsidiaries
(individually, a “Subsidiary”) of the
Company are set forth on Schedule 3(A). The Company owns, directly or
indirectly, all of the capital stock or other equity interests of each
Subsidiary free and clear of any “Liens” (which for
purposes of this Agreement shall mean a lien, charge, security interest,
encumbrance, right of first refusal, preemptive right or other restriction) not
disclosed in the SEC Reports (for greater certainty, as disclosed in the SEC
Reports, assets of the Company are subject to security interests in favour of
the holders of the Company’s 8% senior secured convertible notes), and all the
issued and outstanding shares of capital stock of each Subsidiary are validly
issued and are fully paid, non-assessable and free of preemptive and similar
rights to subscribe for or purchase securities. The Company and each
of the Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. Neither the Company nor any Subsidiary is in
violation or default of any of the provisions of its respective certificate or
articles of incorporation, bylaws or other organizational or charter
documents. Each of the Company and the Subsidiaries is duly qualified
to conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not
have or reasonably be expected to result in (i) a material adverse effect on the
legality, validity or enforceability of any Transaction Document, (ii) a
material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
Company’s ability to perform in any material respect on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse
Effect”) and no “Proceeding” (which
for purposes of this Agreement shall mean any action, claim, suit, investigation
or proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened) has been
instituted in any such jurisdiction revoking, limiting or curtailing or seeking
to revoke, limit or curtail such power and authority or
qualification.
(B) Authorization;
Enforcement. The Company has the requisite corporate power and
authority to enter into and to consummate this Agreement and otherwise to carry
out its obligations hereunder. The execution and delivery of this
Agreement by the Company has been duly authorized by all necessary action on the
part of the Company and no further action is required by the Company, its board
of directors or its stockholders in connection therewith other than in
connection with the “Required Approvals”
(as defined in subsection 3(D) below). This Agreement has been duly
executed by the Company and, when delivered in accordance with the terms hereof,
will constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors’ rights generally and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies.
(C) No
Conflicts. The execution, delivery and performance of this
Agreement by the Company does not (i) conflict with or violate any provision of
the Company’s or any Subsidiary’s certificate or articles of incorporation,
bylaws or other organizational or charter documents, or (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, result in the creation of any lien upon any of
the properties or assets of the Company or any Subsidiary, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which any
property or asset of the Company or any Subsidiary is bound or affected, or
(iii) subject to the Required Approvals (as hereinafter defined), conflict with
or result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority
to which the Company or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), such as could not have or reasonably be expected to
result in a Material Adverse Effect.
(D) Filings, Consents and
Approvals. The Company is not required to obtain any consent,
waiver, authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other “Person” (defined as
an individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any kind,
including, without limitation, any Trading Market) in connection with the
execution, delivery and performance by the Company of this Agreement, other than
such filings as are required to be made under applicable Federal and state
securities laws (collectively, the “Required
Approvals”).
(E) [intentionally
deleted]
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5
(F) Capitalization. The
capitalization of the Company is as set forth on Schedule 3(F). The
Company has not issued any capital stock since its most recently filed periodic
report under the Exchange Act, other than pursuant to the exercise of employee
stock options under the Company’s stock option plans, the issuance of shares of
Common Stock to employees pursuant to the Company’s employee stock purchase plan
and pursuant to the conversion or exercise of securities exercisable,
exchangeable or convertible into Common Stock (“Common Stock
Equivalents”). All of the outstanding shares of capital
stock of the Company are validly issued, fully paid and nonassessable, have been
issued in compliance with all federal and state securities laws, and none of
such outstanding shares was issued in violation of any preemptive rights or
similar rights to subscribe for or purchase securities. There are no
stockholders agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the Company is a party or, to
the knowledge of the Company, between or among any of the Company’s
stockholders.
(G) SEC Reports; Financial
Statements. The Company has complied in all material respects
with requirements to file all reports, schedules, forms, statements and other
documents required to be filed by it under the Securities Act and the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years
preceding the date hereof (or such shorter period as the Company was required by
law to file such material) (the foregoing materials, including the exhibits
thereto and documents incorporated by reference therein, being collectively
referred to herein as the “SEC Reports”) on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such
extension. As of their respective dates, the SEC Reports complied in
all material respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the
SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods involved
(“GAAP”),
except as may be otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not contain all
footnotes required by GAAP, and fairly present in all material respects the
financial position of the Company and its consolidated subsidiaries as of and
for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.
(H) Material Changes;
Undisclosed Events, Liabilities or Developments. Since the
date of the latest audited financial statements included within the SEC Reports,
except as specifically disclosed in the SEC Reports, (i) there has been no
event, occurrence or development that has had or that could reasonably be
expected to result in a Material Adverse Effect, (ii) the Company has not
incurred any liabilities (contingent or otherwise) other than (A) trade payables
and accrued expenses incurred in the ordinary course of business consistent with
past practice and (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or required to be disclosed in filings
made with the Commission, (iii) the Company has not altered its method of
accounting, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock and (v) the Company has not issued any equity securities to any officer,
director or “Affiliate” (defined
as any Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person, as such
terms are used in and construed under Rule 144 under the Securities Act), except
pursuant to existing Company stock option plans. The Company does not
have pending before the Commission any request for confidential treatment of
information. Except for the issuance of the Shares contemplated by
this Agreement or as set forth on Schedule 3(H), no event, liability or
development has occurred or exists with respect to the Company or its
Subsidiaries or their respective business, properties, operations or financial
condition, that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made that has not
been publicly disclosed 1 Trading Day prior to the date that this representation
is made.
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(I)
Litigation. Except
as disclosed in SEC Reports, there is no action, suit, inquiry, notice of
violation, Proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company, any Subsidiary or any of
their respective properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an “Action”) which (i)
adversely affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the Shares or (ii) could, if there were an
unfavorable decision, have or reasonably be expected to result in a Material
Adverse Effect. Neither the Company nor any Subsidiary, nor any
director or officer thereof, is or has been the subject of any Action involving
a claim of violation of or liability under federal or state securities laws or a
claim of breach of fiduciary duty. There has not been, and to the
knowledge of the Company, there is not pending or contemplated, any
investigation by the Commission involving the Company or any current or former
director or officer of the Company. The Commission has not issued any
stop order or other order suspending the effectiveness of any registration
statement filed by the Company or any Subsidiary under the Exchange Act or the
Securities Act. None of the Company’s or its Subsidiaries’ employees
is a member of a union that relates to such employee’s relationship with the
Company, and neither the Company or any of its Subsidiaries is a party to a
collective bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good. No executive
officer, to the knowledge of the Company, is, or is now expected to be, in
violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement or non-competition agreement, or
any other contract or agreement or any restrictive covenant, and the continued
employment of each such executive officer does not subject the Company or any of
its Subsidiaries to any liability with respect to any of the foregoing
matters. The Company and its Subsidiaries are in compliance with all
U.S. federal, state, local and foreign laws and regulations relating to
employment and employment practices, terms and conditions of employment and
wages and hours, except where the failure to be in compliance could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(J)
Labor
Relations. No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company which could reasonably be expected to result in a Material Adverse
Effect.
(K)
Compliance. Except
as disclosed in SEC Reports, neither the Company nor any Subsidiary (i) is in
default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company or any Subsidiary under), nor has the Company or any Subsidiary
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any order of any court, arbitrator or governmental body, or (iii)
is or has been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign, federal, state
and local laws applicable to its business and all such laws that affect the
environment, except in each case as could not have a Material Adverse
Effect.
(L) Regulatory
Permits. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits could not have or reasonably be expected to result in a
Material Adverse Effect (“Material Permits”),
and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material
Permit.
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(M) Title to
Assets. The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them that is
material to the business of the Company and the Subsidiaries and good and
marketable title in all personal property owned by them that is material to the
business of the Company and the Subsidiaries. Any real property and
facilities held under lease by the Company and the Subsidiaries are held by them
under valid, subsisting and enforceable leases of which the Company and the
Subsidiaries are in compliance.
(N) Patents and
Trademarks. The Company and the Subsidiaries have, or have
rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights,
licenses and other similar intellectual property rights necessary or material
for use in connection with their respective businesses as described in the SEC
Reports and which the failure to so have could have a Material Adverse Effect
(collectively, the “Intellectual Property
Rights”). Neither the Company nor any Subsidiary has received
a notice (written or otherwise) that the Intellectual Property Rights used by
the Company or any Subsidiary violates or infringes upon the rights of any
Person save and except as disclosed in the SEC Reports. To the
knowledge of the Company, all such Intellectual Property Rights are enforceable
and there is no existing infringement by another Person of any of the
Intellectual Property Rights of others. The Company and its
Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their intellectual properties, except where
failure to do so could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(O) Insurance. The
Company and the Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which the Company and the Subsidiaries are
engaged, including, but not limited to, directors and officers insurance
coverage. To the best knowledge of the Company, such insurance
contracts and policies are accurate and complete. Neither the Company
nor any Subsidiary has any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business without a significant increase in cost.
(P) Transactions With Affiliates
and Employees. Except as set forth in the SEC Reports, none of
the officers or directors of the Company and, to the knowledge of the Company,
none of the employees of the Company is presently a party to any transaction
with the Company or any Subsidiary (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any
entity in which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner, other than (i) for
payment of salary or consulting fees for services rendered, (ii) reimbursement
for expenses incurred on behalf of the Company and (iii) for other employee
benefits, including stock option agreements under any stock option plan of the
Company.
(Q) Xxxxxxxx-Xxxxx. The
Company is in material compliance with all provisions of the Xxxxxxxx-Xxxxx Act
of 2002 which are applicable to it as of the date hereof.
(R) Certain
Fees. Except as otherwise provided in this Agreement, no
brokerage or finder’s fees or commissions are or will be payable by the Company
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by the Transaction Documents. The Purchasers shall have
no obligation with respect to any fees or with respect to any claims made by or
on behalf of other Persons for fees of a type contemplated in this Section that
may be due in connection with the transactions contemplated by the Transaction
Documents.
(S) Trading Market
Rules. The issuance and sale of the Shares hereunder does not
contravene the rules and regulations of the Trading Market.
(T) Investment Company.
The Company is not, and is not an Affiliate of, and immediately after receipt of
payment for the Shares, will not be or be an Affiliate of, an “investment
company” within the meaning of the Investment Company Act of 1940, as
amended. The Company shall conduct its business in a manner so that
it will not become subject to the Investment Company Act.
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(U) Registration
Rights. No Person has any right to cause the Company to effect
the registration under the Securities Act of any securities of the
Company.
(V) Listing and Maintenance
Requirements. The Company’s Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has
taken no action designed to, or which to its knowledge is likely to have the
effect of, terminating the registration of the Common Stock under the Exchange
Act nor has the Company received any notification that the Commission is
contemplating terminating such registration.
(W) The
SEC Reports set forth as of the dates thereof all outstanding secured and
unsecured Indebtedness of the Company or any Subsidiary, or for which the
Company or any Subsidiary has commitments. For the purposes of this
Agreement, “Indebtedness” shall
mean (a) any liabilities for borrowed money or amounts owed in excess of $50,000
(other than trade accounts payable incurred in the ordinary course of business),
(b) all guaranties, endorsements and other contingent obligations in respect of
Indebtedness of others, whether or not the same are or should be reflected in
the Company’s balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (c) the present value of
any lease payments in excess of $50,000 due under leases required to be
capitalized in accordance with GAAP. Neither the Company nor any
Subsidiary is in default with respect to any Indebtedness.
(Y) Tax
Status. Except for matters that would not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company and each Subsidiary has filed all necessary federal, state
and foreign income and franchise tax returns and has paid or accrued all taxes
shown as due thereon, and the Company has no knowledge of a tax deficiency which
has been asserted or threatened against the Company or any
Subsidiary.
(Z) Foreign Corrupt
Practices. Neither the Company, nor to the knowledge of the
Company, any agent or other person acting on behalf of the Company, has (i)
directly or indirectly, used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company (or made by any person acting on its behalf of
which the Company is aware) which is in violation of law, or (iv)
violated in any material respect any provision of the Foreign Corrupt Practices
Act of 1977, as amended.
(AA) Accountants. To
the knowledge of the Company, the Company’s accountants, who the Company expects
will express their opinion with respect to the financial statements to be
included in the Company’s next Annual Report on Form 10-K, are a registered
public accounting firm as required by the Securities Act.
(BB) Regulation
M Compliance. The Company has not, and to its knowledge no one acting
on its behalf has, (i) taken, directly or indirectly, any action designed to
cause or to result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of any of the Shares,
(ii) sold, bid for, purchased, or, paid any compensation for soliciting
purchases of, any of the Shares (other than for the placement agent’s placement
of the Shares), or (iii) paid or agreed to pay to any person any compensation
for soliciting another to purchase any other securities of the
Company.
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(CC) FINRA
Affiliations. There are no affiliations with any FINRA member firm
among the Company’s officers, directors or, to the knowledge of the Company, any
five percent (5%) or greater stockholder of the Company, except as set forth in
the Base Prospectus.
(DD) Incorporation
By Reference. All representations and warranties made by the Company in any
subscription or securities purchase agreement entered into between the Company
and the Purchasers shall be deemed incorporated by reference herein as if made
directly to Xxxxxx.
SECTION
4. INDEMNIFICATION. The
Company agrees to the indemnification and other agreements set forth in the
Indemnification Provisions (the “Indemnification”)
attached hereto as Addendum A, the provisions of which are incorporated herein
by reference and shall survive the termination or expiration of this
Agreement.
SECTION
5. ENGAGEMENT
TERM. Xxxxxx’x engagement hereunder will be for the period
commencing on the date hereof and expiring on July 1, 2009 (the “Termination Date”). Notwithstanding
anything to the contrary contained herein, the provisions concerning
confidentiality, indemnification, contribution and the Company’s obligations to
pay fees actually earned under Section 1 contained herein and the Company’s
obligations contained in the Indemnification Provisions will survive any
expiration or termination of this Agreement. Xxxxxx agrees not to use
any confidential information concerning the Company provided to them by the
Company for any purposes other than those contemplated under this
Agreement.
SECTION
6. XXXXXX
INFORMATION. The Company agrees that any information or advice
rendered by Xxxxxx in connection with this engagement is for the confidential
use of the Company only in their evaluation of the Placement and, except as
otherwise required by law, the Company will not disclose or otherwise refer to
the advice or information in any manner without Xxxxxx’x prior written
consent.
SECTION
7. NO FIDUCIARY
RELATIONSHIP. This Agreement does not create, and shall not be
construed as creating rights enforceable by any person or entity not a party
hereto, except those entitled hereto by virtue of the Indemnification Provisions
hereof. The Company acknowledges and agrees that Xxxxxx is not and
shall not be construed as a fiduciary of the Company and shall have no duties or
liabilities to the equity holders or the creditors of the Company or any other
person by virtue of this Agreement or the retention of Xxxxxx hereunder, all of
which are hereby expressly waived.
SECTION
8. CLOSING. The
obligations of the Placement Agent and the Purchasers, and the closing of the
sale of the Shares hereunder are subject to the accuracy, when made and on the
Closing Date, of the representations and warranties on the part of the Company
and its Subsidiaries contained herein, to the accuracy of the statements of the
Company and its Subsidiaries made in any certificates pursuant to the provisions
hereof, to the performance by the Company and its Subsidiaries of their
obligations hereunder, and to each of the following additional terms and
conditions:
(A) No
stop order suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been initiated or
threatened by the Commission, and any request for additional information on the
part of the Commission (to be included in the Registration Statement, the Base
Prospectus or the Prospectus Supplement or otherwise) shall have been complied
with to the reasonable satisfaction of the Placement Agent.
(B) The
Placement Agent shall not have discovered and disclosed to the Company on or
prior to the Closing Date that the Registration Statement, the Base Prospectus
or the Prospectus Supplement or any amendment or supplement thereto contains an
untrue statement of a fact which, in the opinion of counsel for the Placement
Agent, is material or omits to state any fact which, in the opinion of such
counsel, is material and is required to be stated therein or is necessary to
make the statements therein not misleading.
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10
(C) All
corporate proceedings and other legal matters incident to the authorization,
form, execution, delivery and validity of each of this Agreement, the Shares,
the Registration Statement, the Base Prospectus and the Prospectus Supplement
and all other legal matters relating to this Agreement and the transactions
contemplated hereby shall be reasonably satisfactory in all material respects to
counsel for the Placement Agent, and the Company shall have furnished to such
counsel all documents and information that they may reasonably request to enable
them to pass upon such matters.
(D) The
Placement Agent shall have received from outside counsel to the Company such
counsel’s written opinion, addressed to the Placement Agent and the Purchasers
dated as of the Closing Date, in form and substance reasonably satisfactory to
the Placement Agent, which opinion shall include a “10b-5” representation from
such counsel.
(E) Neither
the Company nor any of its Subsidiaries shall have sustained since the date of
the latest audited financial statements included or incorporated by reference in
the Base Prospectus, any loss or interference with its business from fire,
explosion, flood, terrorist act or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth in or contemplated by the Base Prospectus
and (ii) since such date there shall not have been any change in the capital
stock or long-term debt of the Company or any of its Subsidiaries or any change,
or any development involving a prospective change, in or affecting the business,
general affairs, management, financial position, stockholders’ equity, results
of operations or prospects of the Company and its Subsidiaries, otherwise than
as set forth in or contemplated by the Base Prospectus, the effect of which, in
any such case described in clause (i) or (ii), is, in the judgment of the
Placement Agent, so material and adverse as to make it impracticable or
inadvisable to proceed with the sale or delivery of the Shares on the terms and
in the manner contemplated by the Base Prospectus, the Time of Sale Prospectus,
if any, and the Prospectus Supplement.
(F) The
Common Stock is registered under the Exchange Act and, as of the Closing Date,
the Shares shall be listed and admitted and authorized for trading on the NASDAQ
Capital Market, and satisfactory evidence of such actions shall have been
provided to the Placement Agent. The Company shall have taken no
action designed to, or likely to have the effect of terminating the registration
of the Common Stock under the Exchange Act or delisting or suspending from
trading the Common Stock from the NASDAQ Capital Market, nor has the Company
received any information suggesting that the Commission is contemplating
terminating such registration.
(G) Subsequent
to the execution and delivery of this Agreement, there shall not have occurred
any of the following: (i) trading in securities generally on the New York Stock
Exchange, the Nasdaq National Market or the NYSE Alternext US or in the
over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or minimum
or maximum prices or maximum ranges for prices shall have been established on
any such exchange or such market by the Commission, by such exchange or by any
other regulatory body or governmental authority having jurisdiction, (ii) a
banking moratorium shall have been declared by federal or state authorities or a
material disruption has occurred in commercial banking or securities settlement
or clearance services in the United States, (iii) the United States shall have
become engaged in hostilities in which it is not currently engaged, the subject
of an act of terrorism, there shall have been an escalation in hostilities
involving the United States, or there shall have been a declaration of a
national emergency or war by the United States, or (iv) there shall have
occurred any other calamity or crisis or any change in general economic,
political or financial conditions in the United States or elsewhere, if the
effect of any such event in clause (iii) or (iv) makes it, in the sole judgment
of the Placement Agent, impracticable or inadvisable to proceed with the sale or
delivery of the Shares on the terms and in the manner contemplated by the Base
Prospectus and the Prospectus Supplement.
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11
(H) No
action shall have been taken and no statute, rule, regulation or order shall
have been enacted, adopted or issued by any governmental agency or body which
would, as of the Closing Date, prevent the issuance or sale of the Shares or
materially and adversely affect or potentially and adversely affect the business
or operations of the Company; and no injunction, restraining order or order of
any other nature by any federal or state court of competent jurisdiction shall
have been issued as of the Closing Date which would prevent the issuance or sale
of the Shares or materially and adversely affect or potentially and adversely
affect the business or operations of the Company.
(I)
The Company shall have prepared and filed with the Commission a
Current Report on Form 8-K with respect to the Placement, including as an
exhibit thereto this Agreement.
(J)
The Company shall have entered into subscription agreements with each of the
Purchasers and such agreements shall be in full force and effect and shall
contain representations and warranties of the Company as agreed between the
Company and the Purchasers.
(K)
FINRA shall have raised no objection to the fairness and reasonableness of the
terms and arrangements of this Agreement. In addition, the Company
shall, if requested by the Placement Agent, make or authorize Placement Agent’s
counsel to make on the Company’s behalf, an Issuer Filing with FINRA pursuant to
FINRA Rule 5110 with respect to the Registration Statement. Any and
all filing fees required in connection therewith shall be borne solely by the
Placement Agent.
(L) Prior
to the Closing Date, the Company shall have furnished to the Placement Agent
such further information, certificates and documents as the Placement Agent may
reasonably request.
All
opinions, letters, evidence and certificates mentioned above or elsewhere in
this Agreement shall be deemed to be in compliance with the provisions hereof
only if they are in form and substance reasonably satisfactory to counsel for
the Placement Agent.
SECTION
9. GOVERNING
LAW. This Agreement will be governed by, and construed in
accordance with, the laws of the State of New York applicable to agreements made
and to be performed entirely in such State. This Agreement may not be
assigned by either party without the prior written consent of the other
party. This Agreement shall be binding upon and inure to the benefit
of the parties hereto, and their respective successors and permitted assigns.
Any right to trial by jury with respect to any dispute arising under this
Agreement or any transaction or conduct in connection herewith is
waived. Any dispute arising under this Agreement may be brought into
the courts of the State of New York or into the Federal Court located in New
York, New York and, by execution and delivery of this Agreement, the Company
hereby accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of aforesaid courts. Each party
hereto hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by delivering a copy
thereof via overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law. If either party shall
commence an action or proceeding to enforce any provisions of a Transaction
Document, then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its attorneys fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such
action or proceeding.
SECTION
10. ENTIRE
AGREEMENT/MISC. This Agreement (including the attached
Indemnification Provisions) embodies the entire agreement and understanding
between the parties hereto, and supersedes all prior agreements and
understandings, relating 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
or any other provision of this Agreement, which will remain in full force and
effect. This Agreement may not be amended or otherwise modified or
waived except by an instrument in writing signed by both Xxxxxx and the
Company. The representations, warranties, agreements and covenants
contained herein shall survive the closing of the Placement and delivery and/or
exercise of the Shares, as applicable. This Agreement may be executed
in two or more counterparts, all of which when taken together shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party, it
being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by
facsimile transmission or a .pdf format file, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such facsimile or
..pdf signature page were an original thereof.
Page 12
SECTION
11. NOTICES. Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified on
the signature pages attached hereto prior to 6:30 p.m. (New York City time) on a
business day, (b) the next business day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number on
the signature pages attached hereto on a day that is not a business day or later
than 6:30 p.m. (New York City time) on any business day, (c) the business day
following the date of mailing, if sent by U.S. nationally recognized overnight
courier service, or (d) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications
shall be as set forth on the signature pages hereto.
Please
confirm that the foregoing correctly sets forth our agreement by signing and
returning to Xxxxxx the enclosed copy of this Agreement.
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Very
truly yours,
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XXXXXX
& XXXXXXX, LLC
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By:
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Name:
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Title:
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Address for notice:
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0000
Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
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New
York, NY, 10020
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Fax
(000) 000-0000
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Attention: General
Counsel
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13
Accepted
and Agreed to as of
the date
first written above:
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GENEREX
BIOTECHNOLOGY CORPORATION
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By:
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Name:
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Xxxx
X. Xxxxxxx
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Title:
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President,
Chief Executive Officer
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By:
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Name:
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Xxxx
X. Xxxxx
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Title:
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Chief
Financial Officer
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Address for
notice:
00
Xxxxxxx Xxxxxx
Suite
202
Toronto,
Ontario
Canada
M5J 2G2
Attention: Chief
Executive Officer
[ ]
ADDENDUM
A
INDEMNIFICATION
PROVISIONS
In connection with the engagement of
Xxxxxx & Xxxxxxx, LLC (“Xxxxxx”) by Generex
Biotechnology Corporation (the “Company”) pursuant to
a letter agreement dated March __ 2009, between the Company and Xxxxxx, as it
may be amended from time to time in writing (the “Agreement”), the
Company hereby agrees as follows:
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1.
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To
the extent permitted by law, the Company will indemnify Xxxxxx and its
affiliates, stockholders, directors, officers, employees and controlling
persons (within the meaning of Section 15 of the Securities Act of 1933,
as amended, or Section 20 of the Securities Exchange Act of 1934, as
amended) against all losses, claims, damages, expenses and liabilities, as
the same are incurred (including the reasonable fees and expenses of
counsel), relating to or arising out of its activities hereunder or
pursuant to the Agreement, except to the extent that any losses, claims,
damages, expenses or liabilities (or actions in respect thereof) are found
in a final judgment (not subject to appeal) by a court of law to have
resulted primarily and directly from Xxxxxx’x willful misconduct or gross
negligence in performing the services described
herein.
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2.
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Promptly
after receipt by Xxxxxx of notice of any claim or the commencement of any
action or proceeding with respect to which Xxxxxx is entitled to indemnity
hereunder, Xxxxxx will notify the Company in writing of such claim or of
the commencement of such action or proceeding, and the Company will assume
the defense of such action or proceeding and will employ counsel
reasonably satisfactory to Xxxxxx and will pay the fees and expenses of
such counsel. Notwithstanding the preceding sentence, Xxxxxx
will be entitled to employ counsel separate from counsel for the Company
and from any other party in such action if counsel for
Xxxxxx reasonably determines that it would be inappropriate
under the applicable rules of professional responsibility for the same
counsel to represent both the Company and Xxxxxx. In such
event, the reasonable fees and disbursements of no more than one such
separate counsel will be paid by the Company. The Company will
have the exclusive right to settle the claim or proceeding provided that
the Company will not settle any such claim, action or proceeding without
the prior written consent of Xxxxxx, which will not be unreasonably
withheld.
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3.
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The
Company agrees to notify Xxxxxx promptly of the assertion against it or
any other person of any claim or the commencement of any action or
proceeding relating to a transaction contemplated by the
Agreement.
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4.
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If
for any reason the foregoing indemnity is unavailable to Xxxxxx or
insufficient to hold Xxxxxx harmless, then the Company shall contribute to
the amount paid or payable by Xxxxxx as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to reflect not
only the relative benefits received by the Company on the one hand and
Xxxxxx on the other, but also the relative fault of the Company on the one
hand and Xxxxxx on the other that resulted in such losses, claims, damages
or liabilities, as well as any relevant equitable
considerations. The amounts paid or payable by a party in
respect of losses, claims, damages and liabilities referred to above shall
be deemed to include any legal or other fees and expenses incurred in
defending any litigation, proceeding or other action or
claim. Notwithstanding the provisions hereof, Xxxxxx’x share of
the liability hereunder shall not be in excess of the amount of fees
actually received, or to be received, by Xxxxxx under the Agreement
(excluding any amounts received as reimbursement of expenses incurred by
Xxxxxx).
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0000
Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx,
Xxx Xxxx, XX 00000 Tel: 000 000 0000 Fax: 000 000 0000
xxx.xxxx.xxx
Member: FINRA, SIPC
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5.
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These
Indemnification Provisions shall remain in full force and effect whether
or not the transaction contemplated by the Agreement is completed and
shall survive the termination of the Agreement, and shall be in addition
to any liability that the Company might otherwise have to any indemnified
party under the Agreement or
otherwise.
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XXXXXX
& XXXXXXX, LLC
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By:
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Name:
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Title:
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Accepted
and Agreed to as of
the date
first written above:
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GENEREX
BIOTCHNOLOGY CORPORATION
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By:
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Name:
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Xxxx
X. Xxxxxxx
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Title:
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President,
Chief Executive Officer
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By:
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Name:
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Xxxx
X. Xxxxx
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Title:
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Chief
Financial Officer
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