SECURITIES PURCHASE AGREEMENT
Between
CEL SCI CORPORATION
and
THE INVESTORS SIGNATORY HERETO
Dated as of March 21, 2000
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of March 15,
2000, among Cel Sci Corporation, a Colorado corporation (the "Company"), and the
investors signatory hereto (each such investor is a "Purchaser" and all such
investors are, collectively, the "Purchasers").
WHEREAS, subject to the terms and conditions set forth in this Agreement,
the Company desires to issue and sell to the Purchasers and the Purchasers,
severally and not jointly, desire to purchase from the Company, shares of the
Company's common stock, $.01 par value per share (the "Common Stock"), and
certain other securities of the Company as more fully described in this
Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy are hereby acknowledged, the Company and the Purchasers agree as
follows:
ARTICLE I
PURCHASE AND SALE
1.1 The Closing.
(a) The Closing. (i) Subject to the terms and conditions set forth
in this Agreement, the Company shall issue and sell to the Purchasers and the
Purchasers shall, severally and not jointly, purchase an aggregate of 933,333
shares of Common Stock (the "Shares") for an aggregate purchase price of
$7,000,000. The closing of the purchase and sale of the Shares (the "Closing")
shall take place at the offices of Robinson Silverman Pearce Aronsohn & Berman
LLP ("Robinson Silverman"), 1290 Avenue of the Americas, New York, New York
10104, on March 21, 2000. The date of the Closing is hereinafter referred to as
the "Closing Date."
(ii) At the Closing, the parties shall deliver or shall cause
to be delivered the following: (A) the Company shall deliver to each Purchaser
(1) a stock certificate representing the number of Shares indicated below such
Purchaser's name on the signature page of this Agreement, registered in the name
of such Purchaser, (2) a Common Stock purchase warrant, in the form of Exhibit
A, registered in the name of such Purchaser, pursuant to which such Purchaser
shall have the right to acquire shares of Common Stock upon the terms and in
such number as set forth therein (each an "Adjustable Warrant"), (3) a Common
Stock purchase warrant, in the form of Exhibit B, registered in the name of such
Purchaser, pursuant to which such Purchaser shall have the right to acquire the
number of shares of Common Stock indicated below such Purchaser's name on the
signature page of this Agreement, upon the terms and at the exercise price set
forth therein (each, a "Closing Warrant" and together with the Adjustable
Warrants, the "Warrants"), (4) the legal opinion of Hart & Trinen, outside
counsel to the Company, substantially in the form of Exhibit C, and (5) all
other documents, instruments and writings required to be delivered at or prior
to the Closing by the Company pursuant to this Agreement, including an executed
Registration Rights Agreement, dated the date hereof, among the Company and the
Purchasers, in the form of Exhibit D (the "Registration Rights Agreement"), and
the Transfer Agent Instructions, in the form of Exhibit E, delivered to and
acknowledged by the Company's transfer agent (the "Transfer Agent
Instructions"); and (B) each Purchaser shall deliver to the Company (1) the
purchase price indicated below such Purchaser's name on the signature page to
this Agreement in United States dollars in immediately available funds by wire
transfer to an account designated for such purpose prior to the Closing Date in
writing by the Company, and (2) all documents, instruments and writings required
to have been delivered at or prior to the Closing Date by such Purchaser
pursuant to this Agreement, including an executed Registration Rights Agreement.
1.2 Certain Defined Terms. For purposes of this Agreement,"Trading
Day" and "Per Share Market Value" shall have the meanings set forth in Exhibit A
and "Business Day" shall mean any day except Saturday, Sunday, the day following
Christmas, the day following Thanksgiving and any day which shall be a federal
legal holiday or a day on which banking institutions in the State of New York or
the Commonwealth of Virginia generally are authorized or required by law or
other governmental action to close. A "Person" means 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.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of the Company. The Company hereby
makes the following representations and warranties to the Purchasers:
(a) Organization and Qualification. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Colorado, with the requisite corporate power and authority to own and
use its properties and assets and to carry on its business as currently
conducted. The Company has no subsidiaries other than as set forth in Schedule
2.1(a) (collectively, the "Subsidiaries"). 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. Each
of the Company and the Subsidiaries is duly qualified to do 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, individually or in the aggregate, (x)
adversely affect the legality, validity or enforceability of the Securities (as
defined below) or any of this Agreement, the Registration Rights Agreement, the
Transfer Agent Instructions or the Warrants (collectively, the "Transaction
Documents"), (y) have or result in a material adverse effect on the results of
operations, assets, prospects, or condition (financial or otherwise) of the
Company and the Subsidiaries, taken as a whole, or (z) adversely impair the
Company's ability to perform fully on a timely basis its obligations under any
of the Transaction Documents (any of (x), (y) or (z), a "Material Adverse
Effect").
(b) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Company and no further action is required by the Company. Each of
the Transaction Documents 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. Neither the Company nor any Subsidiary is in violation of any of
the provisions of its respective certificate of incorporation, by-laws or other
charter or organizational documents.
(c) Capitalization. The number of authorized, issued and outstanding
capital stock of the Company is set forth in Schedule 2.1(c). Except as
disclosed in Schedule 2.1(c), the Company owns all of the capital stock of each
Subsidiary. No securities of the Company or any Subsidiary are entitled to
preemptive or similar rights, nor is any holder of securities of the Company or
any Subsidiary entitled to preemptive or similar rights arising out of any
agreement or understanding with the Company or any Subsidiary by virtue of any
of the Transaction Documents. Except as disclosed in Schedule 2.1(c) and except
as a result of the purchase and sale of the Securities, there are no outstanding
options, warrants, script rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities, or rights or obligations
convertible into or exchangeable for, or giving any Person any right to
subscribe for or acquire, any shares of Common Stock, or contracts, commitments,
understandings, or arrangements by which the Company or any Subsidiary is or may
become bound to issue additional shares of Common Stock, or securities or rights
convertible or exchangeable into shares of Common Stock. To the knowledge of the
Company, except as specifically disclosed in the SEC Reports (as defined below)
or Schedule 2.1(c), no Person or group of related Persons beneficially owns (as
determined pursuant to Rule 13d-3 promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act")), or has the right to acquire by
agreement with or by obligation binding upon the Company, beneficial ownership
of in excess of 5% of the Common Stock.
(d) Issuance of the Securities. The Securities are duly authorized
and, when issued and paid for in accordance with the terms hereof and the
Warrants, shall have been duly and validly issued, fully paid and
non-assessable, free and clear of all liens, encumbrances and rights of first
refusal of any kind (collectively, "Liens"). The Company has reserved a number
of duly authorized number of shares of Common Stock for issuance hereunder upon
exercise of the Warrants that is not less than the sum of (i) the Shares to be
issued hereunder; (ii) the number of shares of Common Stock issuable upon
exercise of the Adjustable Warrants on the First Vesting Date (as defined in the
Adjustable Warrant), assuming for such purposes that, on the First Vesting Date,
each Purchaser holds the entire number of Shares purchased hereunder and the
Adjustment Price equals 50% of the Per Share Market Value on the Trading Day
immediately preceding the Closing Date, and (iii) the number of shares of Common
Stock as are issuable upon exercise in full of the Closing Warrants (the number
of shares of Common Stock contemplated in (i), (ii) and (iii), the "Initial
Minimum"). The shares of Common Stock issuable upon exercise of the Warrants are
referred to herein as the "Underlying Shares." The Shares, the Warrants and the
Underlying Shares are collectively referred to herein as, the "Securities."
(e) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of the Company's or any Subsidiary's certificate of
incorporation, bylaws or other charter documents (each as amended through the
date hereof), or (ii) subject to obtaining the Required Approvals (as defined
below), conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation (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) 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), as could not, individually or in the aggregate, have or
result in a Material Adverse Effect. The business of the Company is not being
conducted in violation of any law, ordinance or regulation of any governmental
authority, except for violations which, individually or in the aggregate, could
not have or result in a Material Adverse Effect.
(f) Filings, Consents and Approvals. Neither the Company nor any
Subsidiary is 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 in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than (i) the filings required pursuant to Section
3.10, (ii) the filing with the Securities and Exchange Commission (the
"Commission") of a registration statement meeting the requirements set forth in
the Registration Rights Agreement and covering the resale of the Shares and the
Underlying Shares by the Purchasers (the "Underlying Shares Registration
Statement"), (iii) the application(s) to the American Stock Exchange ("AMEX")
for the listing of the Shares and the Underlying Shares with the AMEX (and with
any other national securities exchange of market in which the Common Stock is
then listed) in the time and manner required thereby, (vi) applicable Blue Sky
filings, and (v) in all other cases where the failure to obtain such consent,
waiver, authorization or order, or to give such notice or make such filing or
registration could not have or result in, individually or in the aggregate, a
Material Adverse Effect (the items described in clauses (i)-(vi) are
collectively, the "Required Approvals").
(g) Litigation; Proceedings. Except as specified in the 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 or any of its Subsidiaries 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
Securities or (ii) could, individually or in the aggregate, have or result in a
Material Adverse Effect.
(h) No Default or Violation. Neither the Company nor any Subsidiary
(i) is in default under or in violation of (and no event has occurred which has
not been waived which, 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 in violation of any statute, rule or regulation of any governmental
authority, except as could not individually or in the aggregate, have or result
in a Material Adverse Effect.
(i) Private Offering. Assuming the accuracy of the representations
and warranties of the Purchasers set forth in Sections 2.2(b)-(g), the offer,
issuance and sale of the Securities to the Purchasers as contemplated hereby are
exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"). Neither the Company nor any Person acting on its
behalf has taken or is, to the knowledge of the Company, contemplating taking
any action which could subject the offering, issuance or sale of the Securities
to the registration requirements of the Securities Act including soliciting any
offer to buy or sell the Securities by means of any form of general solicitation
or advertising.
(j) SEC Reports; Financial Statements. The Company has filed all
reports required to be filed by it under the Securities Act, and the Exchange
Act 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
being collectively referred to herein as the "SEC Reports" and, together with
the Schedules to this Agreement the "Disclosure Materials") 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 light of the circumstances under which they were made, not
misleading. All material agreements to which the Company is a party or to which
the property or assets of the Company are subject which were required under the
Securities Act, the Exchange Act or the rules or regulations promulgated
thereunder to have been filed with the Commission have been filed as exhibits to
the SEC Reports. 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 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 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. Since June 30,
1999, except as specifically disclosed in the SEC Reports, (a) there has been no
event, occurrence or development that has or that could result in a Material
Adverse Effect, (b) the Company has not incurred any liabilities (contingent or
otherwise) other than (x) liabilities incurred in the ordinary course of
business consistent with past practice and (y) 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, (c) the Company has not
altered its method of accounting or the identity of its auditors and (d) the
Company has not declared or made any payment or distribution of cash or other
property to its stockholders or officers or directors (other than in compliance
with existing Company stock or stock option plans) with respect to its capital
stock, or purchased, redeemed (or made any agreements to purchase or redeem) any
shares of its capital stock.
(k) Investment Company. The Company is not, and is not an Affiliate
(as defined in Rule 405 under the Securities Act) of, an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
(l) Certain Fees. Except as are payable to Reedland Capital
Partners, no fees or commissions 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 this
Agreement. 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 this Agreement. The Company shall indemnify and
hold harmless the Purchasers, their employees, officers, directors, agents, and
partners, and its respective Affiliates, from and against all claims, losses,
damages, costs (including the costs of preparation and attorney's fees) and
expenses suffered in respect of any such claimed or existing fees, as such fees
and expenses are incurred.
(m) Solicitation Materials. Neither the Company nor any Person
acting on the Company's behalf has solicited any offer to buy or sell the
Securities by means of any form of general solicitation or advertising.
(n) Form S-3 Eligibility. The Company is eligible to register its
Common Stock for resale under Form S-3 promulgated under the Securities Act.
(o) Listing and Maintenance Requirements. The Company has not, in
the two years preceding the date hereof received notice (written or oral) from
the AMEX or any other stock exchange, market or trading facility on which the
Common Stock is or has been listed (or on which it has been quoted) to the
effect that the Company is not in compliance with the listing or maintenance
requirements of such exchange, market or trading facility. The Company is, and
has no reason to believe that it will not in the foreseeable future continue to
be, in compliance with all such listing and maintenance requirements.
(p) Patents and Trademarks. The Company and its Subsidiaries have,
or have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and rights which
are necessary or material for use in connection with their respective business
as described in the SEC Reports (collectively, the "Intellectual Property
Rights") and which the failure to so have would have a Material Adverse Effect .
Neither the Company nor any Subsidiary has received a written notice that the
Intellectual Property Rights used by the Company or its Subsidiaries violates or
infringes upon the rights of any Person, to the best 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.
(q) Regulatory Permits. The Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses as described in the SEC Reports, except where the failure to possess
such permits could not, individually or in the aggregate, have or result in a
Material Adverse Effect ("Material Permits"), and neither the Company nor any
such Subsidiary has received any notice of proceedings relating to the
revocation or modification of any Material Permit.
(r) Title. The Company and the Subsidiaries have good and marketable
title in fee simple to all real property and personal property owned by them
which is material to the business of the Company and its Subsidiaries, in each
case free and clear of all Liens, except for Liens as do not affect the value of
such property and do not interfere with the use made and proposed to be made of
such property by the Company and its Subsidiaries. Any real property and
facilities held under lease by the Company and its Subsidiaries are held by them
under valid, subsisting and enforceable leases with such exceptions as are not
material and do not materially interfere with the use made and proposed to be
made of such property and buildings by the Company and its Subsidiaries.
(s) Registration Rights; Rights of Participation. Except as set
forth on Schedule 6(b) to the Registration Rights Agreement, the Company has not
granted or agreed to grant to any Person any rights (including "piggy-back"
registration rights) to have any securities of the Company registered with the
Commission or any other governmental authority which has not been satisfied.
Except as set forth on Schedule 6(b) to the Registration Rights Agreement, no
Person has any right of first refusal, preemptive right, right of participation,
or any similar right to participate in the transactions contemplated by the
Transaction Documents.
(t) Absence of Certain Proceedings. Except as described in the SEC
Reports, (i) there is no Action pending or, to the knowledge of the Company,
threatened against the Company, in any such case wherein an unfavorable
decision, ruling or finding could have or result in a Material Adverse Effect;
(ii) neither the Company nor any Subsidiary, nor any director or officer
thereof, is or has been the subject of any Action involving (A) a claim of
violation of or liability under federal or state securities laws or (B) a claim
of breach of fiduciary duty; (iii) the Company does not have pending before the
Commission any request for confidential treatment of information and the Company
has no knowledge of any expected such request that would be made prior to the
Effectiveness Date (as defined in the Registration Rights Agreement); and (iv)
there has not been, and to the best of the Company's knowledge 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.
(u) Labor Relations. No material labor problem exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company.
(v) Disclosure. The Company confirms that neither it nor any Person
acting on its behalf has provided the Purchasers or their agents or counsel with
any information that constitutes or might constitute material non-public
information. The Company understands and confirms that the Purchasers shall be
relying on the foregoing representations in effecting transactions in securities
of the Company. All disclosure provided to the Purchasers regarding the Company,
its business and the transactions contemplated hereby, including the Schedules
to this Agreement, furnished by or on behalf of the Company are true and correct
and do not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
2.2 Representations and Warranties of the Purchasers. Each Purchaser
hereby for itself and for no other Purchaser, represents and warrants to the
Company as follows:
(a) Organization; Authority. Such Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate or partnership
power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations thereunder. The purchase by such Purchaser of the Securities
hereunder has been duly authorized by all necessary action on the part of such
Purchaser. Each of this Agreement and the Registration Rights Agreement has been
duly executed by such Purchaser, and when delivered by such Purchaser in
accordance with the terms hereof, will constitute the valid and legally binding
obligation of such Purchaser, enforceable against it in accordance with its
terms.
(b) Investment Intent. Such Purchaser is acquiring the Securities as
principal for its own account for investment purposes only and not with a view
to or for distributing or reselling such Securities or any part thereof, without
prejudice, however, to such Purchaser's right, subject to the provisions of this
Agreement and the Registration Rights Agreement, at all times to sell or
otherwise dispose of all or any part of such Securities pursuant to an effective
registration statement under the Securities Act and in compliance with
applicable federal and state securities laws or under an exemption from such
registration. Nothing contained herein shall be deemed a representation or
warranty by such Purchaser to hold Securities for any amount of time.
(c) Purchaser Status. At the time such Purchaser was offered the
Securities, it was, and at the date hereof it is, and at each exercise date
under the Warrants, it will be, an "accredited investor" as defined in Rule
501(a) under the Securities Act.
(d) Experience of such Purchaser. Such Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment.
(e) Ability of Purchaser to Bear Risk of Investment. Such Purchaser
is able to bear the economic risk of an investment in the Securities and, at the
present time, is able to afford a complete loss of such investment.
(f) Access to Information. Such Purchaser acknowledges that it has
reviewed the Disclosure Materials and has been afforded (i) the opportunity to
ask such questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Company's
financial condition, results of operations, business, properties, management and
prospects sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information which the Company possesses or
can acquire without unreasonable effort or expense that is necessary to make an
informed investment decision with respect to the investment. Neither such
inquiries nor any other investigation conducted by or on behalf of such
Purchaser or its representatives or counsel shall modify, amend or affect such
Purchaser's right to rely on the truth, accuracy and completeness of the
Disclosure Materials and the Company's representations and warranties contained
in the Transaction Documents.
(g) General Solicitation. Such Purchaser is not purchasing the
Securities as a result of or subsequent to any advertisement, article, notice or
other communication regarding the Securities published in any newspaper,
magazine or similar media or broadcast over television or radio or presented at
any seminar or any other general solicitation or general advertisement.
(h) Reliance. Such Purchaser understands and acknowledges that (i)
the Securities are being offered and sold to it without registration under the
Securities Act in a private placement that is exempt from the registration
provisions of the Securities Act and (ii) the availability of such exemption,
depends in part on, and the Company will rely upon the accuracy and truthfulness
of, the foregoing representations and such Purchaser hereby consents to such
reliance.
(i) Trading in the Common Stock. During the thirty (30) Trading Days
immediately preceding the Closing Date, such Purchaser has neither established a
position in the Common Stock nor engaged in any trading activity with respect to
the Common Stock.
The Company acknowledges and agrees that no Purchaser makes or has
made representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 2.2.
ARTICLE III
OTHER AGREEMENTS OF THE PARTIES
3.1 Transfer Restrictions. (a) Securities may only be disposed of pursuant
to an effective registration statement under the Securities Act, to the Company
or pursuant to an available exemption from or in a transaction not subject to
the registration requirements of the Securities Act, and in compliance with any
applicable federal and state securities laws. In connection with any transfer of
Securities other than pursuant to an effective registration statement or to the
Company, except as otherwise set forth herein, the Company may require the
transferor thereof to provide to the Company an opinion of counsel selected by
the transferor, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration under the Securities Act. Notwithstanding the foregoing, the
Company, without requiring a legal opinion as described in the immediately
preceding sentence, hereby consents to and agrees to register on the books of
the Company and with any transfer agent for the securities of the Company any
transfer of Securities by a Purchaser to an Affiliate of such Purchaser or to
one or more funds or managed accounts under common management with such
Purchaser, and any transfer among any such Affiliates or one or more funds or
managed accounts, provided that: (A) the transferee certifies to the Company
that it is an "accredited investor" within the meaning of Rule 501(a) under the
Securities Act and that it is acquiring the Securities solely for investment
purposes (subject to the qualifications hereof) and (B) any such transfer does
not constitute a public distribution of securities. As a condition of transfer,
any such transferee shall agree in writing to be bound by the terms of this
Agreement and shall have the rights of a Purchaser under this Agreement and the
Registration Rights Agreement.
(b) The Purchasers agree to the imprinting, so long as is required
by this Section 3.1(b), of the following legend on the Securities:
[NEITHER] THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE EXERCISABLE] HAVE BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
Neither Shares nor Underlying Shares shall contain the legend set
forth above nor any other legend at any time while an Underlying Shares
Registration Statement is effective under the Securities Act or, in the event
there is not an effective Underlying Shares Registration Statement at such time
if such legend is not required under applicable requirements of the Securities
Act (including judicial interpretations and pronouncements issued by the staff
of the Commission). The Company shall cause its counsel to issue the legal
opinion included in the Transfer Agent Instructions to the Company's transfer
agent on the day that such Underlying Shares Registration Statement is declared
effective by the Commission (the "Effective Date"). The Company agrees that if
any Shares or Underlying Shares are issued with a legend in accordance with this
Section 3.1(b), it will, within three (3) Trading Days after request therefor by
a Purchaser and the surrender by such Purchaser of the certificate representing
the applicable Shares or Underlying Shares, provide such Purchaser with a
certificate or certificates representing such Shares or Underlying Shares, free
from such legend at such time as such legend would not have been required under
this Section 3.1(b) had such issuance occurred on the date of such request. The
Company may not make any notation on its records or give instructions to any
transfer agent of the Company which enlarge the restrictions of transfer set
forth in this Section.
3.2 Acknowledgment of Dilution. The Company acknowledges that the issuance
of Underlying Shares upon exercise of the Warrants will result in dilution of
the outstanding shares of Common Stock, which dilution may be substantial under
certain market conditions. The Company further acknowledges that its obligation
to issue Underlying Shares upon exercise of the Warrants pursuant to the terms
thereof is unconditional and absolute regardless of the effect of any such
dilution.
3.3 Furnishing of Information. As long as the Purchasers own Securities,
the Company covenants to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed by
the Company after the date hereof pursuant to the Exchange Act. So long as the
Purchasers own Securities, if the Company is not required to file reports
pursuant to such laws, it will prepare and furnish to the Purchasers and make
publicly available in accordance with Rule 144(c) promulgated under the
Securities Act such information as is required for the Purchasers to sell the
Securities under Rule 144 promulgated under the Securities Act. The Company
further covenants that it will take such further action as any holder of
Securities may reasonably request, all to the extent required from time to time
to enable such Person to sell Underlying Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
promulgated under the Securities Act, including the legal opinion referenced
above in this Section. Upon the request of any such Person, the Company shall
deliver to such Person a written certification of a duly authorized officer as
to whether it has complied with such requirements.
3.4 Integration. The Company shall not, and shall use its best efforts to
ensure that, no Affiliate of the Company shall, sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would require the registration under the
Securities Act of the sale of the Securities to the Purchasers or that would be
integrated with the offer or sale of the Securities for purposes of the rules
and regulations of the AMEX.
3.5 Increase in Authorized Shares. If on any date the Company would be, if
a notice of exercise were to be delivered on such date, precluded from issuing
the sum of (i) 200% of the number of Underlying Shares then issuable upon
exercise in full of the Adjustable Warrants and (ii) the number of Underlying
Shares issuable upon exercise in full of the Closing Warrants (the "Current
Required Minimum") due to the unavailability of a sufficient number of
authorized but unissued or reserved shares of Common Stock, then the Board of
Directors of the Company shall promptly (and in any case, within 30 Business
Days from such date) prepare and mail to the stockholders of the Company proxy
materials requesting authorization to amend the Company's articles of
incorporation to increase the number of shares of Common Stock which the Company
is authorized to issue to at least such number of shares as is reasonably
adequate to enable the Company to comply with its issuance, exercise and
reservation of shares obligations as set forth in this Agreement and the
Warrants (the sum of (x) the number of shares of Common Stock then outstanding
plus all shares of Common Stock issuable upon exercise of all outstanding
options, warrants and convertible instruments other than the Warrants, and (y)
the Current Required Minimum, shall be a reasonable number). In connection
therewith, the Board of Directors shall (a) adopt proper resolutions authorizing
such increase, (b) recommend to and otherwise use its best efforts to promptly
and duly obtain stockholder approval to carry out such resolutions (and hold a
special meeting of the stockholders no later than the earlier to occur of the
60th day after delivery of the proxy materials relating to such meeting and the
90th day after request by a holder of Warrants to issue the number of Underlying
Shares in accordance with the terms hereof) and (c) within five (5) Business
Days of obtaining such stockholder authorization, file an appropriate amendment
to the Company's articles of incorporation to evidence such increase.
3.6 Reservation and Listing of Underlying Shares. (a) The Company shall
(i) in the time and manner required by the AMEX and such other national
securities exchange or market or trading or quotation facility on which the
Common Stock is then listed for trading, prepare and file with the AMEX (and
such other national securities exchange or market or trading or quotation
facility on which the Common Stock is then listed for trading) an additional
shares listing application covering a number of shares of Common Stock which is
not less than the Initial Minimum, (ii) take all steps necessary to cause such
shares of Common Stock to be approved for listing in the AMEX (as well as on any
such other national securities exchange or market or trading or quotation
facility on which the Common Stock is then listed) as soon as possible
thereafter, and (iii) provide to the Purchasers evidence of such listing, and
the Company shall maintain the listing of its Common Stock thereon. If the
number of Underlying Shares issuable upon exercise of the then unexercised
portion of the Warrants exceeds 85% of the number of Underlying Shares
previously listed on account thereof with AMEX (and any such other required
exchanges), then the Company shall take the necessary actions to immediately
list a number of Underlying Shares as equals no less than the then Current
Required Minimum with respect thereto.
(b) The Company shall maintain a reserve of shares of Common Stock
for issuance upon exercise in full of the Warrants in accordance with the
Warrants, in such amount as may be required to fulfill its obligations in full
under the Warrants, which reserve shall equal no less than the then Current
Required Minimum.
3.7 Exercise Procedures. The Transfer Agent Instructions and Form of
Election to Purchase under the Warrants set forth the totality of the procedures
with respect to the exercise of the Warrants, including the form of legal
opinion, if necessary, that shall be rendered to the Company's transfer agent
and such other information and instructions as may be reasonably necessary to
enable the Purchasers to exercise the Warrants.
3.8 Notice of Breaches. Each of the Company and the Purchasers shall give
prompt written notice to the other of any breach by it of any representation,
warranty or other agreement contained in any Transaction Document, as well as
any events or occurrences arising after the date hereof which would reasonably
be likely to cause any representation or warranty or other agreement of such
party, as the case may be, contained therein to be incorrect or breached as of
the Closing Date. However, no disclosure by a party pursuant to this Section
shall be deemed to cure any breach of any representation, warranty or other
agreement contained in any Transaction Document.
3.9 Certain Securities Laws Disclosures; Publicity. The Company shall: (i)
on the Closing Date, issue a press release acceptable to the Purchasers
disclosing the transactions contemplated hereby, (ii) file with the Commission a
Report on Form 8-K or Form 10-Q (as applicable) disclosing the transactions
contemplated hereby within ten (10) Business Days after the Closing Date, and
(iii) timely file with the Commission a Form D promulgated under the Securities
Act as required under Regulation D promulgated under the Securities Act and
provide a copy thereof to the Purchasers promptly after the filing thereof. The
Company shall, no less than one (1) Business Days prior to the filing of any
disclosure required by clauses (ii) and (iii) above, provide a copy thereof to
the Purchasers. The Company and the Purchasers shall consult with each other in
issuing any press releases or otherwise making public statements or filings and
other communications with the Commission or any regulatory agency or stock
market or trading facility with respect to the transactions contemplated hereby
and neither party shall issue any such press release or otherwise make any such
public statement, filings or other communications pertaining to the transactions
contemplated hereby without the prior written consent of the other, which
consent shall not be unreasonably withheld or delayed, except that no prior
consent shall be required if such disclosure is required by law and such consent
can not reasonably be expected to be received prior to the time required to
complete such filing or make such statement in accordance with such applicable
law, in which such case the disclosing party shall provide the other party with
prior notice of such public statement, filing or other communication.
Notwithstanding the foregoing, the Company shall not publicly disclose the name
of a Purchaser, or include the name of a Purchaser in any filing with the
Commission, or any regulatory agency, trading facility or stock market without
the prior written consent of such Purchaser, except to the extent such
disclosure (but not any disclosure as to the controlling Persons thereof) is
required by law, in which case the Company shall provide such Purchaser with
prior notice of such disclosure.
3.10 Transfer of Intellectual Property Rights. Except in connection with
the sale of all or substantially all of the assets of the Company, the Company
shall not transfer, sell or otherwise dispose of any Intellectual Property
Rights, or allow any of the Intellectual Property Rights to become subject to
any Liens, or fail to renew such Intellectual Property Rights (if renewable and
it would otherwise lapse if not renewed), without the prior written consent of
the Purchasers. Notwithstanding anything contained in this Agreement or the
other Transaction Documents to the contrary, the Company will not be restricted
from selling, transferring or otherwise disposing of: (i) any interest in its
subsidiaries: Viral Technology, Inc. or MaxPharma, (ii) any interest in its
HGP-30 or AIDS technology, (iii) any interest in its L.E.A.P.S. technology, or
(iv) so long as any sale, transfer or disposition is made to a corporation with
gross annual revenues of at least $100,000,000 or a market capitalization of at
least $500,000,000 any interest in its other Intellectual Property Rights. The
restriction provided by this Section 3.11 will expire on the earlier of three
(3) years from the date of this Agreement or the date the Purchasers no longer
own any Shares.
3.11 Use of Proceeds. The Company shall use the net proceeds from the sale
of the Securities hereunder for working capital purposes and not for the
satisfaction of any portion of the Company's debt (excluding payment of trade
payables in the ordinary course of the Company's business and prior practices),
to redeem any Company equity or equity-equivalent securities or to settle any
outstanding litigation. Pending application of the proceeds of this placement in
the manner permitted hereby, the Company will invest such proceeds in interest
bearing accounts and/or short-term, investment grade interest bearing securities
3.12 Reimbursement. If any Purchaser, other than by reason of its gross
negligence or willful misconduct or other than in connection with an agreement
between such Purchaser and a Person other than the Company or the formation or
governing documents of such Purchaser, becomes involved in any capacity in any
action, proceeding or investigation brought by or against any Person, including
stockholders of the Company, in connection with or as a result of the
consummation of the transactions contemplated by Transaction Documents, the
Company will reimburse such Purchaser for its reasonable legal and other
expenses (including the cost of any investigation and preparation and travel in
connection therewith) incurred in connection therewith, as such expenses are
incurred. In addition, other than with respect to any matter in which any of the
Purchasers is a named party, the Company will pay such Purchaser the charges, as
reasonably determined by such Purchaser, for the time of any officers or
employees of such Purchaser devoted to appearing and preparing to appear as
witnesses, assisting in preparation for hearings, trials or pretrial matters, or
otherwise with respect to inquiries, hearings, trials, and other proceedings
relating to the subject matter of this Agreement. The reimbursement obligations
of the Company under this paragraph shall be in addition to any liability which
the Company may otherwise have, shall extend upon the same terms and conditions
to any Affiliates of the Purchasers who are actually named in such action,
proceeding or investigation, and partners, directors, agents, employees and
controlling persons (if any), as the case may be, of the Purchasers and any such
Affiliate, and shall be binding upon and inure to the benefit of any successors,
assigns, heirs and personal representatives of the Company, the Purchasers and
any such Affiliate and any such Person. The Company also agrees that neither the
Purchasers nor any such Affiliates, partners, directors, agents, employees or
controlling persons shall have any liability to the Company or any Person
asserting claims on behalf of or in right of the Company in connection with or
as a result of the consummation of the Transaction Documents except to the
extent that any losses, claims, damages, liabilities or expenses incurred by the
Company result from the gross negligence or willful misconduct of the applicable
Purchaser or entity in connection with the transactions contemplated by this
Agreement.
3.13 Redemption at the Option of the Company.
(a) Subject to the provisions of this Section, commencing on the
Effective Date, the Company shall have the right, upon thirty (30) Trading Days'
notice to the Purchasers which may not be given until after the Effective Date
(an "Optional Redemption Notice" and the date such notice is received by the
Purchasers, the "Notice Date"), to redeem all or a portion of the Shares then
held by the Purchasers at a cash price equal to the Optional Redemption Price
(as defined below). The Company may only deliver an Optional Redemption Notice
to the Purchasers if, on the Notice Date: (i) either there is an effective
Underlying Shares Registration Statement pursuant to which the Purchasers are
permitted to utilize the prospectus thereunder to sell Shares or Shares may be
sold without volume restrictions pursuant to Rule 144 promulgated under the
Securities Act, as determined by counsel to the Company pursuant to a written
opinion letter, addressed and delivered prior to the Notice Date to the
Company's transfer agent in the form and substance acceptable to the Purchasers
and such transfer agent and (ii) the Common Stock is listed for trading on the
AMEX or on a Subsequent Market (as defined in the Adjustable Warrants). If any
of the foregoing conditions shall cease to be in effect during the period
between the Notice Date and the date the Optional Redemption Payment is paid in
full, then the Purchasers subject to such redemption may elect, by written
notice to the Company given at any time after any of the foregoing conditions
shall cease to be in effect, to invalidate ab initio such redemption,
notwithstanding anything herein contained to the contrary. The Purchasers may
sell any portion of the Shares subject to an Optional Redemption Notice prior to
the date that the Optional Redemption Price is due and paid in full.
(b) The Optional Redemption Price is due on the thirtieth (30th)
Trading Day following the Notice Date. If any portion of the Optional Redemption
Price shall not be paid by the Company by expiration of such thirtieth (30th)
Trading Day, interest shall accrue thereon at the rate of 18% per annum (or the
maximum rate permitted by applicable law, whichever is less) until the Optional
Redemption Price plus all such interest is paid in full. In addition, if any
portion of the Optional Redemption Price remains unpaid after such date, the
Purchasers subject to such redemption may elect, by written notice to the
Company given at any time thereafter, to invalidate ab initio such redemption,
notwithstanding anything herein contained to the contrary. If a Purchaser elects
to invalidate such redemption the Company shall promptly, and, in any event, not
later than three (3) Trading Days from receipt of such Purchaser's notice of
such election, return to such Purchaser all of the Shares for which the Optional
Redemption Price shall not have been paid in full.
(c) The "Optional Redemption Price" for each Share to be redeemed
shall equal the sum of (i) 120% multiplied by the greater of (A) the average of
the Per Share Market Values for the five (5) Trading Days immediately preceding
the date the Optional Redemption Price is paid in full, and (B) the most recent
Adjustment Price (as defined in the Adjustable Warrants), or if such optional
redemption occurs prior to the First Vesting Date, the Initial Closing Price (as
defined in the Adjustable Warrants), and (ii) all other amounts, costs, expenses
and liquidated damages due in respect of such Shares.
3.14 Redemption at the Option of the Purchasers.
(a) Upon the occurrence of a Triggering Event (as defined below),
each Purchaser shall have the right, exercisable at the sole option of such
Purchaser, to require the Company to redeem all or a portion of the Shares then
held by such Purchaser for a redemption price, in cash, equal to the Mandatory
Redemption Price (as defined below). The Mandatory Redemption Price shall be due
and payable within five (5) Trading Days of the date on which the notice for the
payment therefor is provided by a Purchaser (the date such notice is delivered,
the "Mandatory Redemption Date"). If the Company fails to pay the Mandatory
Redemption Price hereunder in full pursuant to this Section on the date such
amount is due in accordance with this Section, the Company will pay interest
thereon at a rate of 18% per annum (or the lesser amount permitted by applicable
law), accruing daily from such date until the Mandatory Redemption Price, plus
all such interest thereon, is paid in full.
(b) A "Triggering Event" means any one or more of the following
events (whatever the reason and whether it shall be voluntary or involuntary or
effected by operation of law or pursuant to any judgment, decree or order of any
court, or any order, rule or regulation of any administrative or governmental
body):
(i) after the Effective Date, the effectiveness of the
Underlying Shares Registration Statement lapses for any reason or the Purchasers
shall not be permitted to resell Registrable Securities (as defined in the
Registration Rights Agreement) under the Underlying Shares Registration
Statement, in either case, for more than an aggregate of thirty (30) days (which
need not be consecutive days);
(ii) for an aggregate of five (5) consecutive days, at the
direction of the Company or due to events or circumstances within the control of
the Company, there shall be no closing bid prices for the Company reported by
Bloomberg Information Services, Inc. (or any successor entity thereto to the
function of reporting stock prices);
(iii) the failure of the Common Stock to be listed for trading
on the AMEX or on a Subsequent Market or the suspension of the Common Stock from
trading on the AMEX or on a Subsequent Market, in either case, at the direction
of the Company or due to events or circumstances within the control of the
Company;
(iv) the Company shall either be a party to any Change of
Control Transaction (as defined below) or agree to sell (in one or a series of
related transactions) all or substantially all of its assets (whether or not
such sale would constitute a Change of Control Transaction). "Change of Control
Transaction" means the occurrence of any of (i) an acquisition after the date
hereof by an individual or legal entity or "group" (as described in Rule
13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether
through legal or beneficial ownership of capital stock of the Company, by
contract or otherwise) of in excess of 33% of the voting securities of the
Company, except as a result of a tender offer to the holders of the Common Stock
that is not approved by the Board, (ii) a replacement at one time or over time
of more than one-half of the members of the Company's board of directors which
is not approved by a majority of those individuals who are members of the board
of directors on the date hereof (or by those individuals who are serving as
members of the board of directors on any date whose nomination to the board of
directors was approved by a majority of the members of the board of directors
who are members on the date hereof), (iii) the merger of the Company with or
into another entity which either is not listed for trading on the AMEX or a
Subsequent Market or in which the holders of the Company's securities prior to
the first such transaction do not own a minimum of 51% of the outstanding
capital stock of the surviving entity, or (iv) the execution by the Company of
an agreement to which the Company is a party or by which it is bound, providing
for any of the events set forth above in (i) - (iii);
(v) the Company shall fail to observe or perform any other
covenant, agreement or warranty contained in, or otherwise commit any breach of
the Transaction Documents, and such failure or breach shall not, if subject to
the possibility of a cure by the Company, have been remedied within five (5)
days after the date on which notice of such failure or breach shall have been
given.
(vi) there shall have occurred a "Triggering Event" under the
Company's Securities Purchase Agreement, dated December 8, 1999, except that no
Triggering Event hereunder will be deemed to have occurred if the Company shall
have complied with its obligations under Section 3(c) of the Registration Rights
Agreement, dated as of December 8, 1999, among the Purchasers and the Company,
by timely filing the additional registration statement, if any, required to be
filed under such agreement, unless such additional registration statement is not
declared effective by the Commission by the 70th day following the date that
such registration statement was first required to have been filed.
(c) Notwithstanding anything herein to the contrary, in the event
one or more of the Triggering Events would cause the Company's auditors to
characterize the issuance of the Shares as a debt issuance then the Company and
the Purchasers agree to discuss any changes to the Transaction Documents in
order to avoid the characterization of the issuance of the Shares by the
Company's auditors as a debt issuance. The "Mandatory Redemption Price" for each
Share to be redeemed shall equal the sum of (i) 120% multiplied by the greater
of (A) the average of the Per Share Market Values for the five (5) Trading Days
preceding the Mandatory Redemption Date, (B) the average of the Per Share Market
Values for the five (5) Trading Days preceding the date the {Mandatory}
Redemption Price is paid in full, and (C) the most recent Adjustment Price, or
if such optional redemption occurs prior to the First Vesting Date, the Initial
Closing Price, and (ii) all other amounts, costs, expenses and liquidated
damages due in respect of such Shares.
3.15 Certain Trading Restrictions. Each Purchaser agrees that from
the period commencing on the Closing Date and ending on the Expiration Date (as
defined in the Adjustable Warrants) it will not, during the 35 Trading Days
preceding each Vesting Date (as defined in the Adjustable Warrants), enter into
any Short Sales (as defined herein). For purposes of this Section 3.16, a "Short
Sale" by a Purchaser shall mean a sale of Common Stock by such Purchaser that is
marked as a short sale and that is made at a time when there is no equivalent
offsetting long position in Common Stock held by the Purchaser. For purposes of
determining whether there is an equivalent offsetting long position in Common
Stock held by a Purchaser, Warrant Shares that have not yet been issued on
exercise of the Warrants held by a Purchaser shall be deemed to be held long by
such Purchaser.
ARTICLE IV
MISCELLANEOUS
4.1 Fees and Expenses. At the Closing the Company shall reimburse
the Purchasers for their legal fees and expenses incurred in connection with the
preparation and negotiation of the Transaction Documents by paying to Robinson
Silverman $25,000 for the preparation and negotiation of the Transaction
Documents. Other than the amounts contemplated in the immediately preceding
sentence, and except as otherwise set forth in the Registration Rights
Agreement, each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement. The Company shall pay all stamp and other taxes
and duties levied in connection with the issuance of the Securities.
4.2 Entire Agreement; Amendments. The Transaction Documents,
together with the Exhibits and Schedules thereto, contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such
documents, exhibits and schedules.
4.3 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 (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 5:00 p.m. (New
York City time) on a Business Day, (ii) the Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Agreement later than 5:00 p.m. (New
York City time) on any date and earlier than 11:59 p.m. (New York City time) on
such date, (iii) the Business Day following the date of mailing, if sent by
nationally recognized overnight courier service and marked for next Business Day
delivery, or (iv) 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 follows:
If to the Company: Cel Sci Corporation
8229 Boone Boulevard, Suite 802
Vienna, Virginia 22182
Facsimile No.: (703) 506-9460
Attn: Chief Financial Officer
With copies to: Hart & Trinen
1624 Washington Street
Denver, Colorado
Facsimile No.: (303) 839-5414
Attn: Bill Hart, Esq.
If to a Purchaser: To the address set forth under such
Purchaser's name on the signature
pages hereto.
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
4.4 Amendments; Waivers. No provision of this Agreement may be
waived or amended except in a written instrument signed, in the case of an
amendment, by both the Company and the Purchasers or, in the case of a waiver,
by the party against whom enforcement of any such waiver is sought. No waiver of
any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right accruing to it thereafter.
4.5 Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
4.6 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers. Except as set forth in
Section 3.1(a), the Purchasers may not assign this Agreement or any of the
rights or obligations hereunder without the consent of the Company. This
provision shall not limit any Purchaser's right to transfer securities or
transfer or assign rights under the Registration Rights Agreement.
4.7 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
4.8 Governing Law. The corporate laws of the State of Colorado shall
govern all issues concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof.
4.9 Survival. The representations, warranties, agreements and
covenants contained herein shall survive the Closing and the delivery and
exercise of the Warrants.
4.10 Execution. 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, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
4.11 Severability. In case any one or more of the provisions of this
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affecting or impaired thereby and the parties will attempt to
agree upon a valid and enforceable provision which shall be a reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Agreement.
4.12 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, the Purchasers
will be entitled to specific performance of the obligations of the Company under
the Transaction Documents. Each of the Company and the Purchasers agree that
monetary damages may not be adequate compensation for any loss incurred by
reason of any breach of its obligations described in the foregoing sentence and
hereby agrees to waive in any action for specific performance of any such
obligation the defense that a remedy at law would be adequate.
4.13 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document is several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert with respect to such obligations or
the transactions contemplated by the Transaction Document. Each Purchaser shall
be entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the Transaction
Documents, and it shall not be necessary for any other Purchaser to be joined as
an additional party in any proceeding for such purpose.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
. CEL SCI CORPORATION
By:_____________________________________
Name:
Title:
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR PURCHASERS FOLLOWS]
ADVANTAGE FUND II LTD.
By:_____________________________________
Name:
Title:
Purchase Price for Shares to be
acquired at Closing: $4,000,000
Number of Shares to be acquired at
Closing: 533,333
Warrant Shares subject to Closing
Warrant: 214,724
Address for Notice:
c/o CITCO
Kaya Flamboyan 9
Curacao, Netherlands Antilles
Facsimile: 011-599-9732-2008
Attention: W.R. Weber
With copies to:
Genesee International Inc.
10500 NE 8th Street
Suite 1920
Bellevue, WA 98004
Facsimile: (425) 462-4645
Attention: Christopher Purrier
Robinson Silverman Pearce Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, NY 10104
Facsimile No.: (212) 541-4630 and (212) 541-1432
Attn: Eric L. Cohen, Esq.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
KOCH INVESTMENT GROUP LTD.
By:_____________________________________
Name:
Title:
Purchase Price for Shares to be
acquired at Closing: $3,000,000
Number of Shares to be acquired at
Closing: 400,000
Warrant Shares subject to Closing
Warrant: 161,043
Address for Notice:
4111 East 37th Street North
Wichita, Kansas 67270
Facsimile: (316) 828-7947
Attention: Josh Taylor
CEL-SCI CORPORATION
SCHEDULES
Schedule 2.1 (a) Subsidiaries:
The Company has the following subsidiaries:
Viral Technologies, Inc.
MaxPharma
Schedule 2.1 (c) Capitalization
Number of
Shares
Shares outstanding as of March 14, 2000 20,314,873
Shares issuable upon exercise of Series A and
Series B Warrants 1,100,000
Shares issuable upon exercise of sales agent warrants 75,000
Shares issuable upon exercise of options granted
to financial and investor relations consultants 305,000
Shares issuable upon exercise of warrants issued in
connection with exchange offer 116,405
Shares issuable upon exercise of callable warrants held by
Advantage Fund II, Ltd. and Koch Investment Group, Ltd. 402,007
Advantage Fund II, Ltd. and Koch Investment Group, Ltd. -
shares issuable upon exercise of Adjustable Warrants (1)
Former underwriter. Shares issuable upon exercise of warrants. 10,000
Shares issuable upon exercise of options and warrants
granted to Company's officers, directors, employees,
consultants and third parties. 3,153,448
(1) Number of shares issuable upon exercise of Adjustable Warrants cannot be
determined at this time.
CEL-SCI CORPORATION
SCHEDULE TO EXHIBIT 10 (m)
The form of the Securities Purchase Agreement was filed as Exhibit 10(m) as
part of the Company's original filing.
This schedule provides information regarding those persons who were parties
to the acquired the Company's securities pursuant to the terms of the Securities
Purchase Agreement as well as other information required by Instruction 2 to
Item 601 of Regulation S-K.
The names and addresses of the investors which are parties to the Securities
Purchase Agreement, and the shares and warrants issued to the investors, are:
Name and Address Number of Shares Series C Warrants
Advantage Fund II Ltd. 533,333 214,724
c/o CITCO
Kaya Flamboyan 9
Curacao, Netherlands Antilles
Attention: W.R. Webber
Koch Investment Group, Ltd. 400,000 161,043
4111 East 37th Street North
Wichita, Kansas 67270
Attention: Josh Taylor
Mooring Capital Fund 93,333 37,577
8614 Westwood Center Drive
Suite 650
Vienna, Virginia 22182
The Series C Warrant is sometimes referred to in the Securities Purchase
Agreement as the "Callable Warrant". The exercise price of the Series C Warrant
is $8.50 per share.
The Series D Warrant is sometimes referred to in the Securities Purchase
Agreement as the "Adjustable Warrant". The investors listed above all received
Series D Warrants in the transaction. However, the number of shares issuable
pursuant to the Series D Warrants cannot be determined at this time.
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Series C The Series A Warrants allow the investors the purchase shares
Warrants of the Company's common stock at a price of $8.50 per share
at any time prior to March 21, 2003.
The Series A Warrant are callable by the Company if the
closing price of the Company's common stock is above $25.00 for
20 consecutive trading days.
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Series D The Series D Warrants allow the investors to acquire shares
Warrants of the Company's common stock at a nominal price in
accordance with the following terms:
If subsequent to March 21, 2001 the Company closes any equity
or debt financing at a price below $7.50, then on the closing
date of that financing (the "Anti-Dilution Reset Date")
additional Common Shares shall be issued to the Investor, equal
to the following:
[(C x I) / A] - C
C = Common Shares held by the Investor on the Reset Date
(excluding hedged Common Shares)
I = $7.50
A = "Adjustment Price", equal to the lesser of (x)
$7.50, (y) the average of the closing bid prices of
the Common Stock on the American Stock Exchange for
the 10 trading days immediately preceding the
Anti-Dilution Reset Date, or (z) the price of the
subsequent financing in excess of $1 million (the
lowest determinable conversion price for a
convertible financing; the lowest share price for a
common stock financing, the strike price for
warrants, etc
On March 16, 2001 and each six month anniversary thereafter
through and including the March 16, 2003 (each a "Periodic
Reset Date"), additional Common Shares may be issued to the
Investors to reset the value per share to the lesser of (y)
$7.50, or (z) the Reset Price as of that Periodic Reset Date.
The following formula will be used to determine any additional
Common Shares to be issued:
[(C x PA) / A] - C
C = Common Shares held by the Investor on the Reset Date
(excluding hedged Common Shares)
PA = Adjustment Price from immediately preceding Reset
Date ($7.50 if no previous Reset Dates)
A = Adjustment Price equal to the lesser of (y) $7.50, or
(z) the average of the 10 lowest closing bid prices of
the Common Stock over the 30 trading days immediately
preceding the Periodic Reset Date. The investors agree
not to sell or short any CEL-SCI shares during the 35
trading days prior to the
Reset Date.
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