EFFECTIVE AUGUST 23RD, 2004
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 12, 2004
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Great Expectations and Associates, Inc. |
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(Exact name of registrant as specified in its charter) |
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Colorado |
0001100397 |
841521955 |
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(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
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212 Carnegie Center, Ste 206, Princeton, NJ |
08540 |
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(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code (609) 844-7755
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501 S. Cherry Street, Ste 610, Denver, CO 80246 |
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(Former name or former address, if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Section 2 - Financial Information
Item 2.01 Completion of Acquisition or Disposition of Assets.
Business
On November 12, 2004, the Company acquired Advaxis, Inc., a Delaware corporation (“Advaxis”), through a share exchange and reorganization (the “Acquisition”), pursuant to which Advaxis became a wholly-owned subsidiary of the Company, and acquired (i) all of the issued and outstanding shares of common stock of Advaxis and Series A Preferred Stock of Advaxis in exchange for an aggregate of 15,597,723 shares of authorized, but theretofore unissued, shares of common stock, no par value, of the Company, (ii) all of the issued and outstanding warrants to purchase Advaxis capital stock, in exchange for warrants to purchase 584,885 shares of the Company, and (iii) all of the issued and outstanding options to purchase Advaxis capital stock in exchange for an aggregate of
2,381,525 options to purchase common stock of the Company, constituting approximately 96% of the capital stock of the Company prior to the issuance of shares of Common Stock of the Company in the private placement described in Section 3.02 of this 8-K report. Prior to the closing of the Acquisition, the existing shareholders of the Company had each surrendered 99.5% of the shares of common stock, thus reducing the issued and outstanding shares of Common Stock of the Company from 150,520,000 shares to 752,600 shares. Additionally, 752,600 shares of Common Stock of the Company was issued to the financial advisor in connection with the Acquisition.
Advaxis is a development stage biotechnology company utilizing multiple mechanisms of immunity to develop cancer vaccines that are more effective and safer than existing vaccines. Advaxis’ technology is embodied in exclusive patent licenses from the University of Pennsylvania.
Item 3.02 Unregistered Sales of Equity Securities.
On November 12, 2004, the Company sold to accredited investors at an initial closing of a private placement offering 117 Units at $25,000 per Unit for an aggregate purchase price of $2,925,000. In making such sale, the Company relied on the exemption from registration provided by Section 506 of Regulation D. Each Unit is comprised of (i) 87,108 shares of Common Stock, no par value, of the Company (“Common Stock”) and (ii) a 5-year Warrant (each a “Warrant” and collectively the “Warrants) to purchase 87,108 shares of Common Stock at an exercise price of $0.40 per share. At the Initial Closing, the accredited investors received an aggregate of 10,191,638 shares of Common Stock and Warrants to purchase 10,191,638 shares of Common Stock. The Company is continuing to
market the Units and presently intends to market up to a maximum aggregate of $7,000,000 of said Units unless the Company, in its sole discretion, increases the offering to a maximum aggregate of $10,000,000. The Company issued to the Placement Agent and/or its designees an aggregate of 2,057,160 shares of Common Stock and warrants to acquire up to an aggregate of 2,038,328 shares of Common Stock. The proceeds of such sales will be used principally to fund further development of cancer vaccines and provide funding to conduct a Phase I trial in currently developed vaccines and to cover the costs of development and testing. In addition, on November 12, 2004, $595,000 aggregate principal amount of convertible promissory notes of Advaxis (“Advaxis Notes”) were converted into Units on the same terms as the Units sold. The holders of the Advaxis Notes received an aggregate of 2,136,441 shares of Common Stock and warrants to purchase 2,136,441 shares of Common Stock upon conversion of the
Advaxis Notes plus accrued interest thereon. Following the Acquisition, the Offering and conversion of the Advaxis Notes there were 31,488,161 shares of Common Stock issued and outstanding.
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Section 4 - Financial Information
Item 4.01 Changes in Registrant’s Certifying Accountant.
On November 12, 2004, our Board of Directors approved to dismiss Tannenbaum & Company P.C. as our independent registered public accounting firm. The audit reports of Tannenbaum & Company P.C. on our financial statement for the fiscal years ended October 31, 2003 and October 31, 2002 did not contain any adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope, or accounting principles. However, the reports
included an explanatory paragraph wherein Tannenbaum & Company P.C. expressed substantial doubt about our ability to continue as a going concern. These reports related to the Company prior to the Acquisition and not with respect to the combined company.
In connection with the audits of the years ended October 31, 2002 and 2003 and during subsequent interim periods through October 31, 2004, we did not have any disagreements with Tannenbaum & Company P.C. on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which if not resolved to the satisfaction of Tannenbaum & Company P.C. would have caused them to make reference to the subject matter of the disagreement in connection with their reports on our financial statements.
We have provided Tannenbaum & Company P.C. with a copy of this report prior to its filing with the Commission.
On November 12, 2004 we engaged Goldstein Golub Kessler LLP, an independent registered accounting firm. During the years ended October 31, 2002 and 2003 and the year ended October 31, 2004, we did not consult with Goldstein Golub Kessler LLP regarding either:
| 1. | the application of accounting principles to any specified transaction, either completed or proposed or the type of audit opinion that might be rendered on our financial statements, and neither a report was provided to us nor oral advice was provided that was an important factor considered by us in reaching a decision as to the accounting, auditing or financial reporting issue; or |
| 2. | any matter that was either the subject of disagreement or event, as defined in Item 304(a)(1)(iv) Regulation S-B and the related instruction to Item 304 of Regulation S-B, or a reportable event that term is explained in Item 304(a)(1)(iv) of Regulation S-B. |
Section 5 - Corporate Governance and Management
Item 5.01 Change in Control of Registrant.
With the issuance of 15,597,723 shares of Common Stock to holders of capital stock of Advaxis upon the Company’s Acquisition, the former holders of capital stock of Advaxis became the holders of approximately 95% of the voting securities of the Company before issuance of Common Stock in the private placement (also on November 12, 2004), which private placement reduced the percentage ownership of such former holders of capital stock of Advaxis to approximately 5% of the issued and outstanding shares. The change of control of the Company was effected solely by the issuance of newly issued shares of the Company to the former shareholders of Advaxis upon the Acquisition without any other consideration.
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Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.
(a) Effective on November 12, 2004, upon the Acquisition, the then officers and directors of the Company resigned and were replaced by persons who have been officers and directors of Advaxis. See 5.02(c) of this report on Form 8-K.
(b) See 5.02(c) of this report on Form 8-K.
(c) The following persons became the executive officers and directors of the Company on November 12, 2004. Prior to the Acquisition, such persons had no relationship with the Company.
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Name |
Age |
Position | ||
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J. Todd Derbin(3) |
52 |
President, Chief Executive Officer and Director | ||
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Dr. James Patton(1) |
47 |
Chairman of the Board of Directors | ||
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Roni A. Appel(3) |
38 |
Chief Financial Officer, Secretary and Director | ||
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Dr. Thomas McKearn(2) |
56 |
Director | ||
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Dr. Steven Roth |
62 |
Director | ||
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Scott Flamm(1) (2) |
50 |
Director |
| (1) | Member of the Audit Committee. |
| (2) | Member of the Compensation Committee. |
| (3) | Member of the Nominating and Corporate Governance Committee. |
J. Todd Derbin. Mr. Derbin has previously served as Advaxis’ President, Chief Executive Officer and a director since November 2002. From 1996 until June, 2001, Mr. Derbin was the founder and Chairman of the Board of Directors, President, and Chief Executive Officer of Micrus Corporation, a market leader in the design and development of highly differentiated and proprietary interventional neuroradiology devices and delivery systems. From 1992 until 1996, he served as Director of Corporate Business Development, Commercial Director - Cardiovascular and Director of Strategic Planning, Mergers & Acquisitions with Biocompatibles International, plc, a UK biotechnology/biomedical company. Prior to this,
Mr. Derbin served as Chief Executive Officer of Syncare Corporation, developers of synthetic wound care products and drug delivery systems. Mr. Derbin is an alumnus of Wilkes College and the Wharton School of the University of Pennsylvania.
Dr. James Patton. Dr. Patton has previously served as Chairman of Advaxis’ Board of Directors since February 2002 and as Advaxis’ Chief Executive Officer from February 2002 to November 2002. Additionally, since February 1999, Dr. Patton has served as the President of Comprehensive Oncology Care, LLC, which owns and operates a cancer treatment facility in Exton, Pennsylvania and as Vice President of Millennium Oncology Management, Inc., which provides technical services for oncology care to four sites. From February 1999 to September 2003, Dr. Patton served as a consultant to LibertyView Equity Partners SBIC, LP, a venture capital fund based in Jersey City, New Jersey (“LibertyView”).
From July 2000 to December 2002, Dr. Patton served as a director of Pinpoint Data Corp. From February 2000 to November 2000, Dr. Patton served as a director of Healthware Solutions. From June 2000 to June 2003, Dr. Patton served as a director of LifeStar Response. He earned his B.S. from the University of Michigan, his Medical Doctorate from Medical College of Pennsylvania, and his M.B.A. from the University of Pennsylvania’s Wharton School.
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Roni A. Appel. Mr. Appel has previously served as Advaxis’ Secretary and Chief Financial Officer since inception. Since January 1999, Mr. Appel has been a partner and managing director in LV Equity Partners (fka LibertyView Equity Partners). From 1998 until 1999, he was a founder and the director of business development at Americana Financial Services, Inc. From 1994 to 1998, he was an attorney in the State of Israel and completed his MBA at Columbia University.
Dr. Thomas McKearn. Dr. McKearn has previously served as an Advaxis director since July 2002. Dr. McKearn is a founder of Cytogen Corporation, then as an Executive Director of Strategic Science and Medicine at Bristol-Myers Squibb and now as the VP. Medical Affairs at GPC-Biotech. Prior to entering the biotechnology industry in 1981, McKearn did his medical, graduate and post-graduate training at the University of Chicago and served on the faculty of the Medical School at the University of Pennsylvania.
Dr. Steven Roth. Dr. Roth has previously served as an Advaxis director since November 2002. He is a co-founder of Neose Technologies, a publicly traded biotechnology company, since 1990, and has served as its chief executive and board chairman since 1994. Between 1980 and 1992 he was a professor of biology at Penn University and was appointed department chairman in 1982, serving in that role until 1987. At Penn, Dr. Roth helped form its Plant Science Institute. Between 1992 and 1994 he was the chief scientific officer and vice president, research and development, of Neose
Technologies. From 1970 through 1980, Dr. Roth was assistant and associate professor of biology at The Johns Hopkins University. Dr. Roth received an A.B. degree from Johns Hopkins in 1964, a Ph.D. from Case Western Reserve University in 1968, and did postdoctoral work in carbohydrate chemistry at Hopkins from 1968-1970.
Scott Flamm. Mr. Flamm has previously served as an Advaxis director since its inception. Since June 1998, Mr. Flamm has been the president and general partner of LV Equity Partners (fka Liberty View Equity Partners). From 1988 until January 1993, he was Executive Vice President, Chief Operating Officer and a Director of Catalyst Energy, a $2 billion independent power producer. He received his masters in public health from Yale University.
Executive Compensation of J. Todd Derbin
The officers of Advaxis became the officers of the Company after the closing of the Acquisition. The following table sets forth the compensation earned during the years ended December 31, 2002 and 2003 by Advaxis’ J. Todd Derbin who, on November 12, 2004,
became the Chief Executive Officer:
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Annual Compensation |
Long Term
Compensation
Awards |
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Name And Principal Position |
Salary($) |
Bonus($) |
Securities Underlying Options |
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J. Todd Derbin
President, Chief Executive Officer, and Director |
2003
2002 |
$
$ |
150,000
25,000 |
$
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60,000
— |
1,172,727
— |
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Related Party Transactions
Advaxis entered into an employment agreement with Mr. Derbin on October 24, 2002, pursuant to which Mr. Derbin is employed as the Chief Executive Officer of Advaxis and became the Chief Executive Officer of the Company upon the closing of the Acquisition. The current term of the agreement expires January 1, 2005 but will be automatically renewed for additional one-year periods until either party gives the other party written notice of its intent not to renew at least 30 days prior to the end of the term. Mr. Derbin has been receiving an annual base salary of $150,000; provided, that on the closing of the offering of Units, if the Company sold 120 Units, Mr. Derbin’s annual base salary would be adjusted to $225,000 and provided, further that if the Company sold more than 120 Units,
Mr. Derbin’s annual base salary would be adjusted to $250,000. Mr. Derbin is entitled to participate in the Company’s bonus program which will be dependent upon the achievement of certain milestones. Additionally, Advaxis granted Mr. Derbin 1,172,767 options to purchase shares of common stock of Advaxis subject to a 4 year vesting period, 25% vest at the first anniversary of the effective date and 75% vest in 36 equal installments at the end of each calendar month. Upon the closing of the Acquisition, such options became options to purchase shares of Common Stock of the Company.
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Carmel Ventures, Inc. (“Carmel”) is owned by Roni Appel and had provided various consulting services to Advaxis and will continue providing services to the Company. Carmel was paid consulting fees by Advaxis of $5,000 per month since November 1, 2002 which fees accrued but were not paid. As of October 31, 2004, such accrued fees amounted to $120,000. Carmel has assigned $35,000 of such fees to Mr. Scott Flamm, who is also a director of the Company. Carmel and Mr. Flamm converted $65,000 and $35,000 respectively into convertible bridge notes and warrants. In addition Carmel has received a $35,000 bonus which has been converted into Units. Furthermore, Advaxis had granted Carmel options to purchase shares of common stock of Advaxis at the rate of 7,044 options per month since November 11, 2002. As of November 12, 2004 the total number of options received by Carmel was 140,873. The exercise price of these options is $0.35 per share. Carmel has assigned 70,436 of these options to Mr. Flamm. Upon the Acquisition, such options became options to purchase shares of Common Stock of the Company. Following the Acquisition, the contract with Carmel will continue until December 31, 2004, and will automatically renew thereafter for successive six month terms, at the same compensation, unless terminated by either party.
Item 5.05 Amendments to the Registrant’s Code of Ethics, or Waiver of a Provision of the Code of Ethics.
Effective on November 12, 2004, the Company adopted a Code of Ethics (filed hereto as Exhibit 14.1). Prior thereto, the Company had no formal, written code of ethics.
Section 8 - Other Events
Item 8.01 Other Events.
A. Certificate of Incorporation and By-laws.
As soon as practicable following the Acquisition, the certificate of incorporation of the Company will be amended and restated to: (i) change the name of the Company to Advaxis, Inc., to change the par value of the common stock of the Company from no par value to par value $.001 per share, and to add 5,000,000 shares of “blank check preferred” to the authorized capital of the Company, the rights, privileges and powers of which may be designated by the Board of Directors of the Company from time to time.
As soon as practicable following the Acquisition, the bylaws of the Company will be amended and restated in their entirety.
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Section 9 - Financial Statements and Exhibits
A. Financial Statements of Business Acquired
Advaxis, Inc. Financial Statements for the years ended December 31, 2002 and December 31, 2001 with independent auditors report (including Balance Sheets, Statement of Operations, Statements of Shareholders’ Equity, Statement of Cash Flows, and Notes to Consolidated Financial Statements). It is impractical to provide the required financial statements at the date of the filing of this Form 8-K. The required financial statements will be provided as soon as practicable, but no later than January 28, 2005.
B. Pro Forma Financial Information
Unaudited Pro Forma Condensed Financial Statements of Great Expectations and Associates, Inc. (including Balance Sheet, Statement of Operations and Notes to Financial Statements) as of and for the year ended October 31, 2004. It is impractical to provide the required financial statements at the date of the filing of this Form 8-K. The required pro forma financial statements will be provided as soon as practicable, but no later than January 28, 2005.
C. Exhibits
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Exhibit 3.1 |
Form of Warrant issued to purchasers | |
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Exhibit 3.2 |
Form of Warrant issued to Placement Agent | |
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Exhibit 10.1 |
Share and Exchange Agreement, dated as of August 25, 2004, by and among the Company, Advaxis and the shareholders of Advaxis. | |
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Exhibit 10.2 |
Form of Securities Purchase Agreement, by and among the Company and the purchasers listed as signatories thereto | |
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Exhibit 10.3 |
Form of Registration Rights Agreement, by and among the Company and the persons listed as signatories thereto | |
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Exhibit 10.4 |
Form of Standstill Agreement, by and among the Company and persons listed on Schedule 1 attached thereto | |
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Exhibit 14.1 |
Code of Ethics | |
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Exhibit 16.1. |
Letter from Tannenbaum & Company P.C., dated November 18, 2004, regarding their dismissal as the Company’s independent registered public accounting firm. | |
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Exhibit 17.1 |
Letter of Resignation of Fred Mahlke | |
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Exhibit 17.2 |
Letter of Resignation of Daniel Unrein, Jr. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| GREAT EXPECTATIONS AND ASSOCIATES, INC. | ||
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| November 18, 2004 | By: | /s/ J. Todd Derbin |
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Name: J. Todd Derbin | ||
| Title: President and Chief Executive Officer | ||
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NEITHER THESE SECURITIES NOR THE SECURITIES FOR 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. NOTWITHSTANDING THE FOREGOING, THESE SECURITIES MAY BE PLEDGED
IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY SUCH SECURITIES.
GREAT EXPECTATIONS AND ASSOCIATES, INC.
WARRANT
Warrant No. ________ Date of Original Issuance: November 12, 2004
Great Expectations and Associations, Inc., a Colorado corporation (the
"COMPANY"), hereby certifies that, for value received,
_____________________________ or his, her, or its registered assigns (the
"HOLDER"), is entitled to purchase from the Company up to a total of
________________ (_________) shares of common stock, par value $0.001 per share
(the "COMMON STOCK"), of the Company (each such share, a "WARRANT SHARE" and all
such shares, the "WARRANT SHARES") at an exercise price equal to $0.40 per share
(as adjusted from time to time as provided in Section 9, the "EXERCISE PRICE"),
at any time and from time to time from and after the date hereof and through and
including November 12, 2009 (the "EXPIRATION DATE"), and subject to the
following terms and conditions:
1. Definitions. This warrant (the "Warrant") is one of a series of similar
warrants issued pursuant to the Securities Purchase Agreement, among Great
Expectations, Inc. (the predecessor in interest to the Company) and the
purchasers named therein, dated September 14, 2004 (the "SECURITIES PURCHASE
AGREEMENT"). All such warrants are collectively referred to herein as the
"WARRANTS". Capitalized terms used and not otherwise defined herein have the
meanings as defined in the Securities Purchase Agreement.
2. Registration of Warrant; Transfers. The Company shall register this
Warrant, upon records to be maintained by the Company for that purpose (the
"WARRANT REGISTER"), in the name of the record Holder hereof from time to time.
The Company may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any distribution
to the Holder, and for all other purposes, absent actual notice to the contrary.
The Holders are entitled to the benefits of the Securities Purchase Agreement,
which provides, among other things, for certain registration rights and certain
restrictions on the transfer of the Warrants and the Warrant Shares, and each
Holder, by acceptance of a Warrant, accepts the restrictions and other
provisions of the Securities Purchase Agreement.
3. Registration of Transfers. The Company shall register the transfer of
any portion of this Warrant in the Warrant Register, upon surrender of this
Warrant, with the Form of Assignment attached hereto duly completed and signed,
to the Company at its address specified herein. Upon any such registration or
transfer, a new Warrant to purchase Common Stock, in substantially the form of
this Warrant (any such new Warrant, a "NEW WARRANT"), evidencing the portion of
this Warrant so transferred shall be issued to the transferee and a New Warrant
evidencing the remaining portion of this Warrant not so transferred, if any,
shall be issued to the transferring Holder. The acceptance of the New Warrant by
the transferee thereof shall be deemed the acceptance by such transferee of all
of the rights and obligations of a holder of a Warrant.
4. Exercise and Duration of Warrants. This Warrant shall be exercisable by
the registered Holder at any time and from time to time on or after the date
hereof to and including the Expiration Date; provided, that if (i) the average
of the Closing Prices for any consecutive 30 Trading Days period is at least
$1.00, (ii) the average daily trading volume of the Common Stock during such
30-Trading Day period is at least 100,000 shares, and (iii) a Registration
Statement covering the resale of the Warrant Shares is at such time effective
(the first date upon which the conditions set forth in (i), (ii) and (iii) are
satisfied, being referred to as the "EARLY EXPIRATION TRIGGERING EVENT"), then
the Warrant shall be canceled and shall be of no further force and effect (to
the extent not previously exercised) as of the 45th day following the Early
Expiration Triggering Event; provided, that, and only if, the Company gives
written notice to the Holder of same within five days following the Early
Expiration Triggering Event it being understood that such notice and 45-day
period is intended to give the Holder a reasonable opportunity to exercise this
Warrant prior to such cancellation. As used herein, the term "CLOSING PRICE"
means, for any date, the price determined by the first of the following clauses
that applies: (A) if the Common Stock is then listed or quoted on New York Stock
Exchange, the American Stock Exchange, the Nasdaq National Market, the Nasdaq
Small Cap Market or the OTC Bulletin Board or any successor to any of the
foregoing, the closing price per share of the Common Stock for such date (or the
nearest preceding date) on the primary market or exchange on which the Common
Stock is then listed or quoted; (B) if prices for the Common Stock are then
reported in the "Pink Sheets" published by the National Quotation Bureau
Incorporated (or a similar organization or agency succeeding to its functions of
reporting prices), the most recent closing bid price per share of the Common
Stock so reported; or (C) in all other cases, the fair market value of a share
of Common Stock as determined by an independent appraiser selected in good faith
by the Investors and the Company.
The Company may not call or redeem all or any portion of this Warrant without
the prior written consent of the Holder.
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5. Delivery of Warrant Shares.
(a) Upon delivery to the Company of an exercise notice in the form
attached hereto (the "EXERCISE NOTICE") at the Company's address for notice set
forth herein and upon payment of the Exercise Price multiplied by the number of
Warrant Shares that the Holder intends to purchase hereunder, the Company shall
promptly (but in no event later than three Trading Days after the Date of
Exercise (as defined herein) issue and deliver to the Holder, a certificate for
the Warrant Shares issuable upon such exercise, which, unless otherwise required
by the Securities Purchase Agreement, shall be free of restrictive legends. The
Company shall, upon request of the Holder and subsequent to the date on which a
registration statement covering the resale of the Warrant Shares has been
declared effective by the Securities and Exchange Commission, use its best
efforts to deliver Warrant Shares hereunder electronically through the
Depository Trust Corporation or another established clearing corporation
performing similar functions, if available, provided, that, the Company may, but
will not be required to change its transfer agent if its current transfer agent
cannot deliver Warrant Shares electronically through the Depository Trust
Corporation. A "DATE OF EXERCISE" means the date on which the Holder shall have
delivered to Company: the Exercise Notice, appropriately completed and duly
signed, and payment of the Exercise Price for the number of Warrant Shares so
indicated by the Holder to be purchased.
(b) To effect exercises hereunder, the Holder shall be required to
physically surrender this Warrant. Execution and delivery of the Exercise Notice
shall have the same effect as cancellation of the original Warrant and issuance
of a New Warrant evidencing the right to purchase the remaining number of
Warrant Shares. This Warrant is exercisable, either in its entirety or, from
time to time, for a portion of the number of Warrant Shares. Upon surrender of
this Warrant following one or more partial exercises, the Company shall issue or
cause to be issued, at its expense, a New Warrant evidencing the right to
purchase the remaining number of Warrant Shares.
(c) The Company's obligations to issue and deliver Warrant Shares in
accordance with the terms hereof are absolute and unconditional, irrespective of
any action or inaction by the Holder to enforce the same, any waiver or consent
with respect to any provision hereof, the recovery of any judgment against any
Person or any action to enforce the same, or any setoff, counterclaim,
recoupment, limitation or termination, or any breach or alleged breach by the
Holder or any other Person of any obligation to the Company or any violation or
alleged violation of law by the Holder or any other Person, and irrespective of
any other circumstance which might otherwise limit such obligation of the
Company to the Holder in connection with the issuance of Warrant Shares. Nothing
herein shall limit a Holder's right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief with respect to the Company's
failure to timely deliver certificates representing shares of Common Stock upon
exercise of the Warrant as required pursuant to the terms hereof.
6. Charges, Taxes and Expenses. Issuance and delivery of certificates for
shares of Common Stock upon exercise of this Warrant shall be made without
charge to the Holder for any issue or transfer tax, withholding tax, transfer
agent fee or other incidental tax or expense in respect of the issuance of such
certificates, all of which taxes and expenses shall be paid by the Company;
provided, however, that the Company shall not be required to pay any tax which
may be payable in respect of any transfer involved in the registration of any
certificates for Warrant Shares or Warrants in a name other than that of the
Holder. The Holder shall be responsible for all other tax liability that may
arise as a result of holding or transferring this Warrant or receiving Warrant
Shares upon exercise hereof.
3
7. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary and
reasonable indemnity (which shall not include a surety bond), if requested.
Applicants for a New Warrant under such circumstances shall also comply with
such other reasonable regulations and procedures and pay such other reasonable
third-party costs as the Company may prescribe. If a New Warrant is requested as
a result of a mutilation of this Warrant, then the Holder shall deliver such
mutilated Warrant to the Company as a condition precedent to the Company's
obligation to issue the New Warrant.
8. Reservation of Warrant Shares. The Company covenants that it will at
all times reserve and keep available out of the aggregate of its authorized but
unissued and otherwise unreserved Common Stock, solely for the purpose of
enabling it to issue Warrant Shares upon exercise of this Warrant as herein
provided, the number of Warrant Shares which are then issuable and deliverable
upon the exercise of this entire Warrant, free from preemptive rights or any
other contingent purchase rights of persons other than the Holder (taking into
account the adjustments and restrictions of Section 9). The Company covenants
that all Warrant Shares so issuable and deliverable shall, upon issuance and the
payment of the applicable Exercise Price in accordance with the terms hereof,
shall be duly and validly authorized, issued and fully paid and nonassessable.
9. Certain Adjustments. The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section 9.
(a) Stock Dividends and Splits. If the Company, at any time while
this Warrant is outstanding, (i) pays a stock dividend on its Common Stock or
otherwise makes a distribution on any class of capital stock that is payable in
shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into
a larger number of shares, or (iii) combines outstanding shares of Common Stock
into a smaller number of shares, then in each such case the Exercise Price shall
be multiplied by a fraction of which the numerator shall be the number of shares
of Common Stock outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately after such event. Any adjustment made pursuant to clause (i) of this
paragraph shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution,
and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall
become effective immediately after the effective date of such subdivision or
combination. If any event requiring an adjustment under this Section 9(a) occurs
during the period that an Exercise Price is calculated hereunder, then the
calculation of such Exercise Price shall be adjusted appropriately to reflect
such event.
4
(b) Fundamental Transactions. If, at any time while this Warrant is
outstanding, (1) the Company effects any merger or consolidation of the Company
with or into another Person, (2) the Company effects any sale of all or
substantially all of its assets in one or a series of related transactions, (3)
any tender offer or exchange offer (whether by the Company or another Person) is
completed pursuant to which holders of Common Stock are permitted to tender or
exchange their shares for other securities, cash or property, or (4) the Company
effects any reclassification of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property (in any such case, a
"FUNDAMENTAL TRANSACTION"), then the Holder shall have the right thereafter to
receive, upon exercise of this Warrant, the same amount and kind of securities,
cash or property as it would have been entitled to receive upon the occurrence
of such Fundamental Transaction if it had been, immediately prior to such
Fundamental Transaction, the holder of the number of Warrant Shares then
issuable upon exercise in full of this Warrant (the "ALTERNATE CONSIDERATION").
For purposes of any such exercise, the determination of the Exercise Price shall
be appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it
receives upon any exercise of this Warrant following such Fundamental
Transaction. At the Holder's option and request, any successor to the Company or
surviving entity in such Fundamental Transaction shall issue to the Holder a new
warrant substantially in the form of this Warrant and consistent with the
foregoing provisions and evidencing the Holder's right to purchase the Alternate
Consideration for the aggregate Exercise Price upon exercise thereof. The terms
of any agreement pursuant to which a Fundamental Transaction is effected shall
include terms requiring any such successor or surviving entity to comply with
the provisions of this Section 9(b) and insuring that the Warrant (or any such
replacement security) will be similarly adjusted upon any subsequent transaction
analogous to a Fundamental Transaction.
(c) In case the Company shall issue shares of Common Stock or
rights, options, warrants or other securities to subscribe for or purchase
Common Stock, or securities convertible or exercisable into or exchangeable for
Common Stock ("COMMON STOCK EQUIVALENTS") (excluding shares, rights, options,
warrants, or convertible or exchangeable securities, issued or issuable (i) in
any of the transactions with respect to which an adjustment of the Exercise
Price is provided pursuant to Sections 9(a) or 9(b) above, (ii) upon exercise of
the Warrants, (iii) pursuant to stock option plans, stock bonus plans, stock
incentive plans, programs or agreements providing for the grant of shares,
options for shares or stock appreciation rights to employees (including
officers), directors, consultants, advisors, agents, lessors, lenders,
customers, vendors and suppliers, or (iv) in connection with transactions which
are not for the principal purpose of raising money (ie, strategic alliance,
corporate partnering, licensing of technology, mergers, acquisition of assets)),
at a price per share lower than the the Base Price (as hereinafter defined) per
share of Common Stock in effect immediately prior to such issuance, then the
Exercise Price shall be reduced on the date of such issuance to a price
(calculated to the nearest cent) determined by multiplying the Exercise Price in
effect immediately prior to such issuance by a fraction, (1) the numerator of
which shall be an amount equal to the sum of (A) the number of shares of Common
5
Stock outstanding immediately prior to such issuance plus (B) the quotient
obtained by dividing the consideration received by the Company upon such
issuance by the Base Price, and (2) the denominator of which shall be the total
number of shares of Common Stock outstanding immediately after such issuance.
For the purposes of such adjustments, the maximum number of shares which the
holders of any such Common Stock Equivalents, shall be entitled to subscribe for
or purchase or convert or exchange such securities into shall be deemed to be
issued and outstanding as of the date of such issuance (whether or not such
Common Stock Equivalent is then exercisable, convertible or exchangeable), and
the consideration received by the Company therefor shall be deemed to be the
consideration received by the Company for such Common Stock Equivalents, plus
the minimum aggregate consideration or premiums stated in such Common Stock
Equivalents, to be paid for the shares covered thereby. No further adjustment of
the Exercise Price shall be made as a result of the actual issuance of shares of
Common Stock on exercise of such Common Stock Equivalents. On the expiration or
the termination of such Common Stock Equivalents, or the termination of such
right to convert or exchange, the Exercise Price shall forthwith be readjusted
(but only with respect to that portion of the Warrants which has not yet been
exercised) to such Exercise Price as would have obtained had the adjustments
made upon the issuance of such Common Stock Equivalents, been made upon the
basis of the delivery of only the number of shares of Common Stock actually
delivered upon the exercise of such Common Stock Equivalents; and on any change
of the number of shares of Common Stock deliverable upon the exercise of any
such Common Stock Equivalents, or any change in the consideration to be received
by the Company upon such exercise, conversion, or exchange, including, but not
limited to, a change resulting from the anti-dilution provisions thereof, the
Exercise Price, as then in effect, shall forthwith be readjusted (but only with
respect to that portion of the Warrants which has not yet been exercised or
converted after such change) to such Exercise Price as would have been obtained
had an adjustment been made upon the issuance of such Common Stock Equivalents
not exercised prior to such change, or securities not converted or exchanged
prior to such change, on the basis of such change. In case the Company shall
issue shares of Common Stock or any such Common Stock Equivalents, for a
consideration consisting, in whole or in part, of property other than cash or
its equivalent, then the "price per share" and the "consideration received by
the Company" for purposes of the first sentence of this Section 9(c) shall be as
determined in good faith by the Board of Directors of the Company. Shares of
Common Stock owned by or held for the account of the Company or any
majority-owned subsidiary shall not be deemed outstanding for the purpose of any
such computation. For the purposes of this Agreement "BASE PRICE" shall mean
$0.287 (as adjusted for any stock dividends, combinations, splits,
recapitalizations and the like).
(d) Pro Rata Distributions. If the Company, at any time while this
Warrant is outstanding, distributes to holders of Common Stock (i) evidences of
its indebtedness, (ii) any security (other than a distribution of Common Stock
covered by Section 9(a)), (iii) rights or warrants to subscribe for or purchase
any security (other than Common Stock Equivalents which are covered by Section
9(c)), or (iv) any other asset (in each case, "DISTRIBUTED PROPERTY"), then in
each such case the Exercise Price in effect immediately prior to the record date
fixed for determination of stockholders entitled to receive such distribution
shall be adjusted (effective on such record date) to equal the product of such
Exercise Price times a fraction of which the denominator shall be the average of
the Closing Prices for the five Trading Days immediately prior to (but not
including) such record date and of which the numerator shall be such average
less the then fair market value of the Distributed Property distributed in
6
respect of one outstanding share of Common Stock, as determined by the Company's
independent certified public accountants that regularly examine the financial
statements of the Company (an "APPRAISER"). In such event, the Holder, after
receipt of the determination by the Appraiser, shall have the right to select an
additional appraiser (which shall be a nationally recognized accounting firm),
in which case such fair market value shall be deemed to equal the average of the
values determined by each of the Appraiser and such appraiser. As an alternative
to the foregoing adjustment to the Exercise Price, at the request of the Holder
delivered before the 90th day after such record date, the Company will deliver
to such Holder, within five Trading Days after such request (or, if later, on
the effective date of such distribution), the Distributed Property that such
Holder would have been entitled to receive in respect of the Warrant Shares for
which this Warrant could have been exercised immediately prior to such record
date. If a Holder has elected to receive Distributed Property and such
Distributed Property is not delivered to a Holder pursuant to the preceding
sentence, then upon expiration of or any exercise of the Warrant that occurs
after such record date, such Holder shall remain entitled to receive, in
addition to the Warrant Shares otherwise issuable upon such exercise (if
applicable), such Distributed Property. This Section 9(d) is only applicable if
the Holder exercises the Warrant concurrently with the distribution to the
Holder of the Distributed Property.
(e) Number of Warrant Shares. Simultaneously with any adjustment to
the Exercise Price pursuant to Sections 9(a), 9(c) or 9(d), the number of
Warrant Shares that may be purchased upon exercise of this Warrant shall be
increased or decreased proportionately, so that after such adjustment the
aggregate Exercise Price payable hereunder for the adjusted number of Warrant
Shares shall be the same as the aggregate Exercise Price in effect immediately
prior to such adjustment.
(f) Calculations. All calculations under this Section 9 shall be
made to the nearest cent or the nearest 1/100th of a share, as applicable. The
number of shares of Common Stock outstanding at any given time shall not include
shares owned or held by or for the account of the Company, and the disposition
of any such shares shall be considered an issue or sale of Common Stock.
(g) Notice of Adjustments. Upon the occurrence of each adjustment
pursuant to this Section 9, the Company at its expense will promptly compute
such adjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment, including a statement of the adjusted
Exercise Price and adjusted number or type of Warrant Shares or other securities
issuable upon exercise of this Warrant (as applicable), describing the
transactions giving rise to such adjustments and showing in detail the facts
upon which such adjustment is based. Upon written request, the Company will
promptly deliver a copy of each such certificate to the Holder and to the
Company's Transfer Agent.
(h) Notices of Corporate Events. If the Company (i) declares a
dividend or any other distribution of cash, securities or other property in
respect of its Common Stock, including without limitation any granting of rights
or warrants to subscribe for or purchase any capital stock of the Company or any
Subsidiary, (ii) authorizes or approves, enters into any agreement contemplating
or solicits stockholder approval for any Fundamental Transaction or (iii)
authorizes a repurchase of Common Stock or the voluntary dissolution,
liquidation or winding up of the affairs of the Company, then the Company shall
deliver to the Holder a notice describing the material terms and conditions of
such transaction, at least 10 calendar days prior to the applicable record or
effective date on which a Person would need to hold Common Stock in order to
participate in or vote with respect to such transaction, and the Company will
take all steps reasonably necessary in order to insure that the Holder is given
the practical opportunity to exercise this Warrant prior to such time so as to
participate in or vote with respect to such transaction; provided, however, that
the failure to deliver such notice or any defect therein shall not affect the
validity of the corporate action required to be described in such notice.
7
(i) Successive Adjustments and Changes. The provisions of Section 9
shall similarly apply to successive dividends, subdivisions, combinations, and
distributions, to successive consolidations, mergers, sales, leases, or
conveyances, and to successive reclassifications, changes of shares of Common
Stock and issuances of Common Stock, warrants, options or other rights to
subscribe for or purchase Common Stock, or securities convertible into Common
Stock. If applicable, appropriate adjustment, as determined in good faith by the
Company's Board of Directors, shall be made in the application of the provisions
herein set forth with respect to the rights and interests of the Holder so that
the provisions of Section 9 shall thereafter be applicable, as nearly as
possible, in relation to any shares or other property thereafter deliverable
upon exercise of this Warrant.
10.Payment of Exercise Price. The Holder must pay the Exercise Price by
delivery of immediately available funds.
11. Limitations on Exercise.
(a) Notwithstanding anything to the contrary contained herein, the
number of shares of Common Stock that may be acquired by the Holder upon any
exercise of this Warrant (or otherwise in respect hereof) shall be limited to
the extent necessary to insure that, following such exercise (or other
issuance), the total number of shares of Common Stock then beneficially owned by
such Holder and its Affiliates and any other Persons whose beneficial ownership
of Common Stock would be aggregated with the Holder's for purposes of Section
13(d) of the Exchange Act, does not exceed 4.999% (the "5% MAXIMUM PERCENTAGE")
of the total number of issued and outstanding shares of Common Stock (including
for such purpose the shares of Common Stock issuable upon such exercise). For
such purposes, beneficial ownership shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. The Company shall, instead of issuing shares of Common Stock in
excess of the limitation referred to in this Section 11(a), suspend its
obligation to issue shares in excess of the foregoing limitation until such
time, if any, as such shares of Common Stock may be issued in compliance with
such limitation. Additionally, by written notice to the Company, the Holder may
waive the provisions of this Section 11(a) or increase or decrease the 5%
Maximum Percentage to any other percentage specified in such notice; provided,
that (i) any such waiver or increase or decrease will not be effective until the
61st day after such notice is delivered to the Company, and (ii) any such waiver
or increase or decrease will apply only to the Holder and not to any other
holder of Warrants.
(b) Notwithstanding anything to the contrary contained herein and
regardless of whether the restrictions contained in Section 11(a) are waived as
provided therein, the number of shares of Common Stock that may be acquired by
the Holder upon any exercise of this Warrant (or otherwise in respect hereof)
shall be limited to the extent necessary to insure that, following such exercise
(or other issuance), the total number of shares of Common Stock then
beneficially owned by such Holder and its Affiliates and any other Persons whose
beneficial ownership of Common Stock would be aggregated with the Holder's for
purposes of Section 13(d) of the Exchange Act, does not exceed 9.999% (the "10%
MAXIMUM PERCENTAGE") of the total number of issued and outstanding shares of
Common Stock (including for such purpose the shares of Common Stock issuable
upon such exercise). For such purposes, beneficial ownership shall be determined
in accordance with Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder. The Company shall, instead of issuing shares
of Common Stock in excess of the limitation referred to in this Section 11(b),
suspend its obligation to issue shares in excess of the foregoing limitation
until such time, if any, as such shares of Common Stock may be issued in
compliance with such limitation. The provisions of this Section 11(b) may not be
waived.
8
(c) This Section 11 shall not restrict the number of shares of
Common Stock which a Holder may receive or beneficially own in order to
determine the amount of securities or other consideration that such Holder may
receive in the event of a Fundamental Transaction as contemplated in Section
9(b) this Warrant or the amount of Distributed Property to which the Holder may
become entitled pursuant to Section 9(d) of this Warrant. In addition, this
provision shall not in any way limit any other adjustment to be made pursuant to
Section 9 hereof.
12. No Fractional Shares. If any fraction of a Warrant Share would, except
for the provisions of this Section, be issuable upon exercise of this Warrant,
the number of Warrant Shares to be issued will be rounded up to the nearest
whole share.
13. Notices. Any and all notices or other communications or deliveries
hereunder (including, without limitation, any Exercise Notice) 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 confirmed
facsimile at the facsimile number specified in this Section prior to 4:00 p.m.
(New York City time) on a Trading Day, (ii) the next Trading Day after the date
of transmission, if such notice or communication is delivered via confirmed
facsimile at the facsimile number specified in this Section on a day that is not
a Trading Day or later than 4:00 p.m. (New York City time) on any Trading Day,
(iii) the Trading Day following the date of mailing, if sent by nationally
recognized overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given. The addresses for such
communications shall be: (i) if to the Company, to Great Expectations and
Associations, Inc., c/o Advaxis, Inc., 212 Carnegie Center, Suite 206,
Princeton, New Jersey 08540, Attention: Chief Executive Officer, or (ii) if to
the Holder, to the address or facsimile number appearing on the Warrant Register
or such other address or facsimile number as the Holder may provide to the
Company in accordance with this Section.
14. Warrant Agent. The Company shall serve as warrant agent under this
Warrant. Upon 10 days' notice to the Holder, the Company may appoint a new
warrant agent. Any corporation into which the Company or any new warrant agent
may be merged or any corporation resulting from any consolidation to which the
Company or any new warrant agent shall be a party or any corporation to which
the Company or any new warrant agent transfers substantially all of its
corporate trust or shareholders services business shall be a successor warrant
agent under this Warrant without any further act. Any such successor warrant
agent shall promptly cause notice of its succession as warrant agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder's last
address as shown on the Warrant Register.
9
15. Miscellaneous.
(a) Subject to the restrictions on transfer set forth on the first
page hereof, this Warrant may be assigned by the Holder upon delivery to the
Company of a properly completed notice of assignment, substantially in the form
attached hereto. This Warrant may not be assigned by the Company except to a
successor in the event of a Fundamental Transaction. This Warrant shall be
binding on and inure to the benefit of the parties hereto and their respective
successors and assigns. Subject to the preceding sentence, nothing in this
Warrant shall be construed to give to any Person other than the Company and the
Holder any legal or equitable right, remedy or cause of action under this
Warrant. This Warrant may be amended only in writing signed by the Company and
the Holder and their successors and assigns.
(b) All questions concerning the construction, validity, enforcement
and interpretation of this Warrant 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. Each party agrees that all
legal proceedings concerning the interpretations, enforcement and defense of
this Warrant and the transactions herein contemplated ("PROCEEDINGS") (whether
brought against a party hereto or its respective Affiliates, employees or
agents) may be commenced non-exclusively in the state and federal courts sitting
in the City of New York, Borough of Manhattan (the "NEW YORK COURTS"). Each
party hereto hereby irrevocably submits to the non-exclusive jurisdiction of the
New York Courts for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any Proceeding, any claim
that it is not personally subject to the jurisdiction of any New York Court, or
that such Proceeding has been commenced in an improper or inconvenient forum.
Each party hereto hereby irrevocably waives personal service of process and
consents to process being served in any such Proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Warrant 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.
Each party hereto hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Warrant or the transactions contemplated
hereby. If either party shall commence a Proceeding to enforce any provisions of
this Warrant, then the prevailing party in such Proceeding shall be reimbursed
by the other party for its attorney's fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such Proceeding.
(c) The headings herein are for convenience only, do not constitute
a part of this Warrant and shall not be deemed to limit or affect any of the
provisions hereof.
10
(d) In case any one or more of the provisions of this Warrant shall
be invalid or unenforceable in any respect, the validity and enforceability of
the remaining terms and provisions of this Warrant shall not in any way be
affected or impaired thereby and the parties will attempt in good faith to agree
upon a valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
(e) The Company will not, by amendment of its governing documents or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the Holder against impairment. Without limiting the
generality of the foregoing, the Company (i) will not increase the par value of
any Warrant Shares above the amount payable therefor on such exercise, (ii) will
take all such action as may be reasonably necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable Warrant
Shares on the exercise of this Warrant, and (iii) will not close its stockholder
books or records in any manner which interferes with the timely exercise of this
Warrant.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE FOLLOWS]
11
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.
GREAT EXPECTATIONS AND ASSOCIATES, INC.
By:
------------------------------------
Name: J. Todd Derbin
Title: Chief Executive Officer
12
GREAT EXPECTATIONS AND ASSOCIATES, INC. -- EXERCISE NOTICE
Exercise Notice for Warrant No: ________
The undersigned hereby irrevocably elects to purchase ________________ shares of
Common Stock of Great Expectations and Associates, Inc. (the "COMPANY"),
pursuant to the above captioned Warrant and in connection therewith shall pay
the sum of $____________ to the Company in accordance with the terms of the
Warrant. Pursuant to this exercise, the Company shall deliver to the holder
_______________ Warrant Shares in accordance with the terms of the Warrant.
The undersigned requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of:
------------------------------------
------------------------------------
-------------------------------------
(Print Name, Address and Social Security
or Tax Identification Number)
and, if such number of Warrant Shares shall not be all the Warrant Shares
covered by the within Warrant, that a new Warrant for the balance of the Warrant
Shares covered by within Warrant be registered in the name of, and delivered to,
the undersigned at the address stated below.
Dated:
-----------------------------------
By:
--------------------------------------
Print Name
-----------------------------------------
Signature
Address:
- ------------------------------------
- ------------------------------------
- ------------------------------------
13
GREAT EXPECTATIONS AND ASSOCIATES, INC.
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
Warrant No: ____________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the
above-captioned Warrant to purchase ____________ shares of Common Stock of Great
Expectations and Associates, Inc. to which such Warrant relates and appoints
________________ attorney to transfer said right on the books of the Company
with full power of substitution in the premises.
Dated:
------------, ----
--------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant)
--------------------------------------------
Address of Transferee
--------------------------------------------
--------------------------------------------
--------------------------------------------
In the presence of:
- ------------------------------------
NEITHER THESE SECURITIES NOR THE SECURITIES FOR 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. NOTWITHSTANDING THE FOREGOING, THESE SECURITIES MAY BE PLEDGED
IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY SUCH SECURITIES.
GREAT EXPECTATIONS AND ASSOCIATES, INC.
WARRANT
Warrant No. ________ Date of Original Issuance: November 12, 2004
Great Expectations and Associates, Inc., a Colorado corporation (the
"COMPANY"), hereby certifies that, for value received,
_____________________________ or his, her, or its registered assigns (the
"HOLDER"), is entitled to purchase from the Company up to a total of
________________ (_________) shares of common stock, par value $0.001 per share
(the "COMMON STOCK"), of the Company (each such share, a "WARRANT SHARE" and all
such shares, the "WARRANT SHARES") at an exercise price equal to $0.287 per
share (as adjusted from time to time as provided in Section 9, the "EXERCISE
PRICE"), at any time and from time to time from and after the date hereof and
through and including November 12, 2009 (the "EXPIRATION DATE"), and subject to
the following terms and conditions:
1. Definitions. This warrant (the "Warrant") is one of a series of similar
warrants issued pursuant to the Securities Purchase Agreement, among Great
Expectations, Inc. (the predecessor in interest to the Company) and the
purchasers named therein, dated as of September 14, 2004 (the "SECURITIES
PURCHASE AGREEMENT"). All such warrants are collectively referred to herein as
the "WARRANTS". Capitalized terms used and not otherwise defined herein have the
meanings as defined in the Securities Purchase Agreement.
2. Registration of Warrant; Transfers. The Company shall register this
Warrant, upon records to be maintained by the Company for that purpose (the
"WARRANT REGISTER"), in the name of the record Holder hereof from time to time.
The Company may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any distribution
to the Holder, and for all other purposes, absent actual notice to the contrary.
The Holders are entitled to the benefits of the Securities Purchase Agreement,
which provides, among other things, for certain registration rights and certain
restrictions on the transfer of the Warrants and the Warrant Shares, and each
Holder, by acceptance of a Warrant, accepts the restrictions and other
provisions of the Securities Purchase Agreement.
3. Registration of Transfers. The Company shall register the transfer of
any portion of this Warrant in the Warrant Register, upon surrender of this
Warrant, with the Form of Assignment attached hereto duly completed and signed,
to the Company at its address specified herein. Upon any such registration or
transfer, a new Warrant to purchase Common Stock, in substantially the form of
this Warrant (any such new Warrant, a "NEW WARRANT"), evidencing the portion of
this Warrant so transferred shall be issued to the transferee and a New Warrant
evidencing the remaining portion of this Warrant not so transferred, if any,
shall be issued to the transferring Holder. The acceptance of the New Warrant by
the transferee thereof shall be deemed the acceptance by such transferee of all
of the rights and obligations of a holder of a Warrant.
4. Exercise and Duration of Warrants.
(a) This Warrant shall be exercisable by the registered Holder at
any time and from time to time on or after the date hereof to and including the
Expiration Date.
(b) A Holder may exercise this Warrant by delivering to the Company
(i) an exercise notice, in the form attached hereto (the "EXERCISE NOTICE"), and
(ii) payment of the Exercise Price for the number of Warrant Shares as to which
this Warrant is being exercised (which may take the form of a "cashless
exercise" if so indicated in the Exercise Notice , and the date such items are
delivered to the Company (as determined in accordance with the notice provisions
hereof) is the "DATE OF EXERCISE."
The Company may not call or redeem all or any portion of this Warrant without
the prior written consent of the Holder.
5. Delivery of Warrant Shares.
(a) Upon exercise of this Warrant, the Company shall promptly (but
in no event later than three Trading Days after the Date of Exercise issue and
deliver to the Holder, a certificate for the Warrant Shares issuable upon such
exercise, which, unless otherwise required by the Securities Purchase Agreement,
shall be free of restrictive legends. The Company shall, upon request of the
Holder and subsequent to the date on which a registration statement covering the
resale of the Warrant Shares has been declared effective by the Securities and
Exchange Commission, use its best efforts to deliver Warrant Shares hereunder
electronically through the Depository Trust Corporation or another established
clearing corporation performing similar functions, if available, provided, that,
the Company may, but will not be required to change its transfer agent if its
current transfer agent cannot deliver Warrant Shares electronically through the
Depository Trust Corporation.
2
(b) To effect exercises hereunder, the Holder shall be required to
physically surrender this Warrant or, if this Warrant has been lost, mutilated
or stolen, an affidavit of loss in respect thereof in form and substance
reasonably satisfactory to the Company. Execution and delivery of the Exercise
Notice shall have the same effect as cancellation of the original Warrant and
issuance of a New Warrant evidencing the right to purchase the remaining number
of Warrant Shares. This Warrant is exercisable, either in its entirety or, from
time to time, for a portion of the number of Warrant Shares. Upon surrender of
this Warrant following one or more partial exercises, the Company shall issue or
cause to be issued, at its expense, a New Warrant evidencing the right to
purchase the remaining number of Warrant Shares.
(c) The Company's obligations to issue and deliver Warrant Shares in
accordance with the terms hereof are absolute and unconditional, irrespective of
any action or inaction by the Holder to enforce the same, any waiver or consent
with respect to any provision hereof, the recovery of any judgment against any
Person or any action to enforce the same, or any setoff, counterclaim,
recoupment, limitation or termination, or any breach or alleged breach by the
Holder or any other Person of any obligation to the Company or any violation or
alleged violation of law by the Holder or any other Person, and irrespective of
any other circumstance which might otherwise limit such obligation of the
Company to the Holder in connection with the issuance of Warrant Shares. Nothing
herein shall limit a Holder's right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief with respect to the Company's
failure to timely deliver certificates representing shares of Common Stock upon
exercise of the Warrant as required pursuant to the terms hereof.
6. Charges, Taxes and Expenses. Issuance and delivery of certificates for
shares of Common Stock upon exercise of this Warrant shall be made without
charge to the Holder for any issue or transfer tax, withholding tax, transfer
agent fee or other incidental tax or expense in respect of the issuance of such
certificates, all of which taxes and expenses shall be paid by the Company;
provided, however, that the Company shall not be required to pay any tax which
may be payable in respect of any transfer involved in the registration of any
certificates for Warrant Shares or Warrants in a name other than that of the
Holder. The Holder shall be responsible for all other tax liability that may
arise as a result of holding or transferring this Warrant or receiving Warrant
Shares upon exercise hereof.
7. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary and
reasonable indemnity (which shall not include a surety bond), if requested.
Applicants for a New Warrant under such circumstances shall also comply with
such other reasonable regulations and procedures and pay such other reasonable
third-party costs as the Company may prescribe. If a New Warrant is requested as
a result of a mutilation of this Warrant, then the Holder shall deliver such
mutilated Warrant to the Company as a condition precedent to the Company's
obligation to issue the New Warrant.
3
8. Reservation of Warrant Shares. The Company covenants that it will at
all times reserve and keep available out of the aggregate of its authorized but
unissued and otherwise unreserved Common Stock, solely for the purpose of
enabling it to issue Warrant Shares upon exercise of this Warrant as herein
provided, the number of Warrant Shares which are then issuable and deliverable
upon the exercise of this entire Warrant, free from preemptive rights or any
other contingent purchase rights of persons other than the Holder (taking into
account the adjustments and restrictions of Section 9). The Company covenants
that all Warrant Shares so issuable and deliverable shall, upon issuance and the
payment of the applicable Exercise Price in accordance with the terms hereof,
shall be duly and validly authorized, issued and fully paid and nonassessable.
9. Certain Adjustments. The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section 9.
(a) Stock Dividends and Splits. If the Company, at any time while
this Warrant is outstanding, (i) pays a stock dividend on its Common Stock or
otherwise makes a distribution on any class of capital stock that is payable in
shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into
a larger number of shares, or (iii) combines outstanding shares of Common Stock
into a smaller number of shares, then in each such case the Exercise Price shall
be multiplied by a fraction of which the numerator shall be the number of shares
of Common Stock outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately after such event. Any adjustment made pursuant to clause (i) of this
paragraph shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution,
and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall
become effective immediately after the effective date of such subdivision or
combination. If any event requiring an adjustment under this Section 9(a) occurs
during the period that an Exercise Price is calculated hereunder, then the
calculation of such Exercise Price shall be adjusted appropriately to reflect
such event.
(b) Fundamental Transactions. If, at any time while this Warrant is
outstanding, (1) the Company effects any merger or consolidation of the Company
with or into another Person, (2) the Company effects any sale of all or
substantially all of its assets in one or a series of related transactions, (3)
any tender offer or exchange offer (whether by the Company or another Person) is
completed pursuant to which holders of Common Stock are permitted to tender or
exchange their shares for other securities, cash or property, or (4) the Company
effects any reclassification of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property (in any such case, a
"FUNDAMENTAL TRANSACTION"), then the Holder shall have the right thereafter to
receive, upon exercise of this Warrant, the same amount and kind of securities,
4
cash or property as it would have been entitled to receive upon the occurrence
of such Fundamental Transaction if it had been, immediately prior to such
Fundamental Transaction, the holder of the number of Warrant Shares then
issuable upon exercise in full of this Warrant (the "ALTERNATE CONSIDERATION").
For purposes of any such exercise, the determination of the Exercise Price shall
be appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it
receives upon any exercise of this Warrant following such Fundamental
Transaction. At the Holder's option and request, any successor to the Company or
surviving entity in such Fundamental Transaction shall issue to the Holder a new
warrant substantially in the form of this Warrant and consistent with the
foregoing provisions and evidencing the Holder's right to purchase the Alternate
Consideration for the aggregate Exercise Price upon exercise thereof. The terms
of any agreement pursuant to which a Fundamental Transaction is effected shall
include terms requiring any such successor or surviving entity to comply with
the provisions of this Section 9(b) and insuring that the Warrant (or any such
replacement security) will be similarly adjusted upon any subsequent transaction
analogous to a Fundamental Transaction.
(c) In case the Company shall issue shares of Common Stock or
rights, options, warrants or other securities to subscribe for or purchase
Common Stock, or securities convertible or exercisable into or exchangeable for
Common Stock ("COMMON STOCK EQUIVALENTS") (excluding shares, rights, options,
warrants, or convertible or exchangeable securities, issued or issuable (i) in
any of the transactions with respect to which an adjustment of the Exercise
Price is provided pursuant to Sections 9(a) or 9(b) above, (ii) upon exercise of
the Warrants, (iii) pursuant to stock option plans, stock bonus plans, stock
incentive plans, programs or agreements providing for the grant of shares,
options for shares or stock appreciation rights to employees (including
officers), directors, consultants, advisors, agents, lessors, lenders,
customers, vendors and suppliers, or (iv) in connection with transactions which
are not for the principal purpose of raising money (ie, strategic alliance,
corporate partnering, licensing of technology, mergers, acquisition of assets)),
at a price per share lower than the the Base Price (as hereinafter defined) per
share of Common Stock in effect immediately prior to such issuance, then the
Exercise Price shall be reduced on the date of such issuance to a price
(calculated to the nearest cent) determined by multiplying the Exercise Price in
effect immediately prior to such issuance by a fraction, (1) the numerator of
which shall be an amount equal to the sum of (A) the number of shares of Common
Stock outstanding immediately prior to such issuance plus (B) the quotient
obtained by dividing the consideration received by the Company upon such
issuance by the Base Price, and (2) the denominator of which shall be the total
number of shares of Common Stock outstanding immediately after such issuance.
For the purposes of such adjustments, the maximum number of shares which the
holders of any such Common Stock Equivalents, shall be entitled to subscribe for
or purchase or convert or exchange such securities into shall be deemed to be
issued and outstanding as of the date of such issuance (whether or not such
Common Stock Equivalent is then exercisable, convertible or exchangeable), and
the consideration received by the Company therefor shall be deemed to be the
consideration received by the Company for such Common Stock Equivalents, plus
the minimum aggregate consideration or premiums stated in such Common Stock
5
Equivalents, to be paid for the shares covered thereby. No further adjustment of
the Exercise Price shall be made as a result of the actual issuance of shares of
Common Stock on exercise of such Common Stock Equivalents. On the expiration or
the termination of such Common Stock Equivalents, or the termination of such
right to convert or exchange, the Exercise Price shall forthwith be readjusted
(but only with respect to that portion of the Warrants which has not yet been
exercised) to such Exercise Price as would have obtained had the adjustments
made upon the issuance of such Common Stock Equivalents, been made upon the
basis of the delivery of only the number of shares of Common Stock actually
delivered upon the exercise of such Common Stock Equivalents; and on any change
of the number of shares of Common Stock deliverable upon the exercise of any
such Common Stock Equivalents, or any change in the consideration to be received
by the Company upon such exercise, conversion, or exchange, including, but not
limited to, a change resulting from the anti-dilution provisions thereof, the
Exercise Price, as then in effect, shall forthwith be readjusted (but only with
respect to that portion of the Warrants which has not yet been exercised or
converted after such change) to such Exercise Price as would have been obtained
had an adjustment been made upon the issuance of such Common Stock Equivalents
not exercised prior to such change, or securities not converted or exchanged
prior to such change, on the basis of such change. In case the Company shall
issue shares of Common Stock or any such Common Stock Equivalents, for a
consideration consisting, in whole or in part, of property other than cash or
its equivalent, then the "price per share" and the "consideration received by
the Company" for purposes of the first sentence of this Section 9(c) shall be as
determined in good faith by the Board of Directors of the Company. Shares of
Common Stock owned by or held for the account of the Company or any
majority-owned subsidiary shall not be deemed outstanding for the purpose of any
such computation. For the purposes of this Agreement "BASE PRICE" shall mean
$0.287 (as adjusted for any stock dividends, combinations, splits,
recapitalizations and the like).
(d) Pro Rata Distributions. If the Company, at any time while this
Warrant is outstanding, distributes to holders of Common Stock (i) evidences of
its indebtedness, (ii) any security (other than a distribution of Common Stock
covered by Section 9(a)), (iii) rights or warrants to subscribe for or purchase
any security (other than Common Stock Equivalents which are covered by Section
9(c)), or (iv) any other asset (in each case, "DISTRIBUTED PROPERTY"), then in
each such case the Exercise Price in effect immediately prior to the record date
fixed for determination of stockholders entitled to receive such distribution
shall be adjusted (effective on such record date) to equal the product of such
Exercise Price times a fraction of which the denominator shall be the average of
the Closing Prices (as defined below) for the five Trading Days immediately
prior to (but not including) such record date and of which the numerator shall
be such average less the then fair market value of the Distributed Property
distributed in respect of one outstanding share of Common Stock, as determined
by the Company's independent certified public accountants that regularly examine
the financial statements of the Company (an "APPRAISER"). In such event, the
Holder, after receipt of the determination by the Appraiser, shall have the
right to select an additional appraiser (which shall be a nationally recognized
accounting firm), in which case such fair market value shall be deemed to equal
the average of the values determined by each of the Appraiser and such
appraiser. As an alternative to the foregoing adjustment to the Exercise Price,
at the request of the Holder delivered before the 90th day after such record
date, the Company will deliver to such Holder, within five Trading Days after
such request (or, if later, on the effective date of such distribution), the
Distributed Property that such Holder would have been entitled to receive in
respect of the Warrant Shares for which this Warrant could have been exercised
immediately prior to such record date. If a Holder has elected to receive
Distributed Property and such Distributed Property is not delivered to a Holder
pursuant to the preceding sentence, then upon expiration of or any exercise of
the Warrant that occurs after such record date, such Holder shall remain
entitled to receive, in addition to the Warrant Shares otherwise issuable upon
such exercise (if applicable), such Distributed Property. This Section 9(d) is
only applicable if the Holder exercises the Warrant concurrently with the
distribution to the Holder of the Distributed Property.
6
(e) Number of Warrant Shares. Simultaneously with any adjustment to
the Exercise Price pursuant to Sections 9(a), 9(c) or 9(d), the number of
Warrant Shares that may be purchased upon exercise of this Warrant shall be
increased or decreased proportionately, so that after such adjustment the
aggregate Exercise Price payable hereunder for the adjusted number of Warrant
Shares shall be the same as the aggregate Exercise Price in effect immediately
prior to such adjustment.
(f) Calculations. All calculations under this Section 9 shall be
made to the nearest cent or the nearest 1/100th of a share, as applicable. The
number of shares of Common Stock outstanding at any given time shall not include
shares owned or held by or for the account of the Company, and the disposition
of any such shares shall be considered an issue or sale of Common Stock.
(g) Notice of Adjustments. Upon the occurrence of each adjustment
pursuant to this Section 9, the Company at its expense will promptly compute
such adjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment, including a statement of the adjusted
Exercise Price and adjusted number or type of Warrant Shares or other securities
issuable upon exercise of this Warrant (as applicable), describing the
transactions giving rise to such adjustments and showing in detail the facts
upon which such adjustment is based. Upon written request, the Company will
promptly deliver a copy of each such certificate to the Holder and to the
Company's Transfer Agent.
(h) Notices of Corporate Events. If the Company (i) declares a
dividend or any other distribution of cash, securities or other property in
respect of its Common Stock, including without limitation any granting of rights
or warrants to subscribe for or purchase any capital stock of the Company or any
Subsidiary, (ii) authorizes or approves, enters into any agreement contemplating
or solicits stockholder approval for any Fundamental Transaction or (iii)
authorizes a repurchase of Common Stock or the voluntary dissolution,
liquidation or winding up of the affairs of the Company, then the Company shall
deliver to the Holder a notice describing the material terms and conditions of
such transaction, at least 10 calendar days prior to the applicable record or
effective date on which a Person would need to hold Common Stock in order to
participate in or vote with respect to such transaction, and the Company will
take all steps reasonably necessary in order to insure that the Holder is given
the practical opportunity to exercise this Warrant prior to such time so as to
participate in or vote with respect to such transaction; provided, however, that
the failure to deliver such notice or any defect therein shall not affect the
validity of the corporate action required to be described in such notice.
7
(i) Successive Adjustments and Changes. The provisions of Section 9
shall similarly apply to successive dividends, subdivisions, combinations, and
distributions, to successive consolidations, mergers, sales, leases, or
conveyances, and to successive reclassifications, changes of shares of Common
Stock and issuances of Common Stock, warrants, options or other rights to
subscribe for or purchase Common Stock, or securities convertible into Common
Stock. If applicable, appropriate adjustment, as determined in good faith by the
Company's Board of Directors, shall be made in the application of the provisions
herein set forth with respect to the rights and interests of the Holder so that
the provisions of Section 9 shall thereafter be applicable, as nearly as
possible, in relation to any shares or other property thereafter deliverable
upon exercise of this Warrant.
10. Payment of Exercise Price. The Holder may pay the Exercise Price by
delivery of immediately available funds or, subject to the first sentence of the
immediately following paragraph, if the Holder so elects, the Holder may satisfy
its obligation to pay the Exercise Price through a "cashless exercise," in which
event the Company shall issue to the Holder the number of Warrant Shares
determined as follows:
X = Y*((A-B)/A)
where:
X = the number of Warrant Shares to be issued to the Holder.
Y = the number of Warrant Shares with respect to which this
Warrant is being exercised.
A = the Common Stock Market Price.
B = the Exercise Price.
As used herein, the term "COMMON STOCK MARKET PRICE" means the greater of: (i)
the Closing Price of the Trading Day immediately preceding (but not including)
the Date of Exercise, (ii) the average of the Closing Prices for the 10 Trading
Days immediately preceding (but not including) the Date of Exercise, and (iii)
if applicable, the average of the Closing Prices for the 90 Trading Days
immediately following the date on which a Registration Statement covering the
resale of the Warrant Shares is declared effective (or, if the Date of Exercise
is less than 90 Trading Days following such effective date, then such shorter
period). For purposes of Rule 144 promulgated under the Securities Act, it is
intended, understood and acknowledged that the Warrant Shares issued in a
cashless exercise transaction shall be deemed to have been acquired by the
Holder, and the holding period for the Warrant Shares shall be deemed to have
commenced, on the date this Warrant was originally issued pursuant to the
Securities Purchase Agreement. As used herein, the term "CLOSING PRICE" means,
for any date, the price determined by the first of the following clauses that
applies: (A) if the Common Stock is then listed or quoted on New York Stock
Exchange, the American Stock Exchange, the Nasdaq National Market, the Nasdaq
Small Cap Market or the OTC Bulletin Board or any successor to any of the
foregoing, the closing price per share of the Common Stock for such date (or the
nearest preceding date) on the primary market or exchange on which the Common
Stock is then listed or quoted; (B) if prices for the Common Stock are then
reported in the "Pink Sheets" published by the National Quotation Bureau
Incorporated (or a similar organization or agency succeeding to its functions of
reporting prices), the most recent closing bid price per share of the Common
Stock so reported; or (C) in all other cases, the fair market value of a share
of Common Stock as determined by an independent appraiser selected in good faith
by the Investors and the Company.
8
11. Limitations on Exercise.
(a) Notwithstanding anything to the contrary contained herein, the
number of shares of Common Stock that may be acquired by the Holder upon any
exercise of this Warrant (or otherwise in respect hereof) shall be limited to
the extent necessary to insure that, following such exercise (or other
issuance), the total number of shares of Common Stock then beneficially owned by
such Holder and its Affiliates and any other Persons whose beneficial ownership
of Common Stock would be aggregated with the Holder's for purposes of Section
13(d) of the Exchange Act, does not exceed 4.999% (the "5% MAXIMUM PERCENTAGE")
of the total number of issued and outstanding shares of Common Stock (including
for such purpose the shares of Common Stock issuable upon such exercise). For
such purposes, beneficial ownership shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. The Company shall, instead of issuing shares of Common Stock in
excess of the limitation referred to in this Section 11(a), suspend its
obligation to issue shares in excess of the foregoing limitation until such
time, if any, as such shares of Common Stock may be issued in compliance with
such limitation. Additionally, by written notice to the Company, the Holder may
waive the provisions of this Section 11(a) or increase or decrease the 5%
Maximum Percentage to any other percentage specified in such notice; provided,
that (i) any such waiver or increase or decrease will not be effective until the
61st day after such notice is delivered to the Company, and (ii) any such waiver
or increase or decrease will apply only to the Holder and not to any other
holder of Warrants.
(b) Notwithstanding anything to the contrary contained herein and
regardless of whether the restrictions contained in Section 11(a) are waived as
provided therein, the number of shares of Common Stock that may be acquired by
the Holder upon any exercise of this Warrant (or otherwise in respect hereof)
shall be limited to the extent necessary to insure that, following such exercise
(or other issuance), the total number of shares of Common Stock then
beneficially owned by such Holder and its Affiliates and any other Persons whose
beneficial ownership of Common Stock would be aggregated with the Holder's for
purposes of Section 13(d) of the Exchange Act, does not exceed 9.999% (the "10%
MAXIMUM PERCENTAGE") of the total number of issued and outstanding shares of
Common Stock (including for such purpose the shares of Common Stock issuable
upon such exercise). For such purposes, beneficial ownership shall be determined
in accordance with Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder. The Company shall, instead of issuing shares
of Common Stock in excess of the limitation referred to in this Section 11(b),
suspend its obligation to issue shares in excess of the foregoing limitation
until such time, if any, as such shares of Common Stock may be issued in
compliance with such limitation. The provisions of this Section 11(b) may not be
waived.
9
(c) This Section 11 shall not restrict the number of shares of
Common Stock which a Holder may receive or beneficially own in order to
determine the amount of securities or other consideration that such Holder may
receive in the event of a Fundamental Transaction as contemplated in Section
9(b) this Warrant or the amount of Distributed Property to which the Holder may
become entitled pursuant to Section 9(d) of this Warrant. In addition, this
provision shall not in any way limit any other adjustment to be made pursuant to
Section 9 hereof.
12. No Fractional Shares. If any fraction of a Warrant Share would, except
for the provisions of this Section, be issuable upon exercise of this Warrant,
the number of Warrant Shares to be issued will be rounded up to the nearest
whole share.
13. Notices. Any and all notices or other communications or deliveries
hereunder (including, without limitation, any Exercise Notice) 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 confirmed
facsimile at the facsimile number specified in this Section prior to 4:00 p.m.
(New York City time) on a Trading Day, (ii) the next Trading Day after the date
of transmission, if such notice or communication is delivered via confirmed
facsimile at the facsimile number specified in this Section on a day that is not
a Trading Day or later than 4:00 p.m. (New York City time) on any Trading Day,
(iii) the Trading Day following the date of mailing, if sent by nationally
recognized overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given. The addresses for such
communications shall be: (i) if to the Company, to Great Expectations and
Associates, Inc., 212 Carnegie Center, Suite 206, Princeton, New Jersey 08540,
Attention: Chief Executive Officer, or (ii) if to the Holder, to the address or
facsimile number appearing on the Warrant Register or such other address or
facsimile number as the Holder may provide to the Company in accordance with
this Section.
14. Warrant Agent. The Company shall serve as warrant agent under this
Warrant. Upon 10 days' notice to the Holder, the Company may appoint a new
warrant agent. Any corporation into which the Company or any new warrant agent
may be merged or any corporation resulting from any consolidation to which the
Company or any new warrant agent shall be a party or any corporation to which
the Company or any new warrant agent transfers substantially all of its
corporate trust or shareholders services business shall be a successor warrant
agent under this Warrant without any further act. Any such successor warrant
agent shall promptly cause notice of its succession as warrant agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder's last
address as shown on the Warrant Register.
15. Miscellaneous.
(a) Subject to the restrictions on transfer set forth on the first
page hereof, this Warrant may be assigned by the Holder upon delivery to the
Company of a properly completed notice of assignment, substantially in the form
attached hereto. This Warrant may not be assigned by the Company except to a
successor in the event of a Fundamental Transaction. This Warrant shall be
binding on and inure to the benefit of the parties hereto and their respective
successors and assigns. Subject to the preceding sentence, nothing in this
Warrant shall be construed to give to any Person other than the Company and the
Holder any legal or equitable right, remedy or cause of action under this
Warrant. This Warrant may be amended only in writing signed by the Company and
the Holder and their successors and assigns.
10
(b) All questions concerning the construction, validity, enforcement
and interpretation of this Warrant 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. Each party agrees that all
legal proceedings concerning the interpretations, enforcement and defense of
this Warrant and the transactions herein contemplated ("PROCEEDINGS") (whether
brought against a party hereto or its respective Affiliates, employees or
agents) may be commenced non-exclusively in the state and federal courts sitting
in the City of New York, Borough of Manhattan (the "NEW YORK COURTS"). Each
party hereto hereby irrevocably submits to the non-exclusive jurisdiction of the
New York Courts for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any Proceeding, any claim
that it is not personally subject to the jurisdiction of any New York Court, or
that such Proceeding has been commenced in an improper or inconvenient forum.
Each party hereto hereby irrevocably waives personal service of process and
consents to process being served in any such Proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Warrant 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.
Each party hereto hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Warrant or the transactions contemplated
hereby. If either party shall commence a Proceeding to enforce any provisions of
this Warrant, then the prevailing party in such Proceeding shall be reimbursed
by the other party for its attorney's fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such Proceeding.
(c) The headings herein are for convenience only, do not constitute
a part of this Warrant and shall not be deemed to limit or affect any of the
provisions hereof.
(d) In case any one or more of the provisions of this Warrant shall
be invalid or unenforceable in any respect, the validity and enforceability of
the remaining terms and provisions of this Warrant shall not in any way be
affected or impaired thereby and the parties will attempt in good faith to agree
upon a valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
(e) The Company will not, by amendment of its governing documents or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the Holder against impairment. Without limiting the
generality of the foregoing, the Company (i) will not increase the par value of
any Warrant Shares above the amount payable therefor on such exercise, (ii) will
take all such action as may be reasonably necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable Warrant
Shares on the exercise of this Warrant, and (iii) will not close its stockholder
books or records in any manner which interferes with the timely exercise of this
Warrant.
11
(f) Registration Rights. For the avoidance of doubt, the Warrant
Shares issued or issuable upon exercise of this Warrant are the subject of
registration rights pursuant to the terms of that certain Registration Rights
Agreement, dated as of November 12, 2004, by and among the Company and the other
persons or entities signatory thereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE FOLLOWS]
12
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.
GREAT EXPECTATIONS AND ASSOCIATES, INC.
By:
------------------------------------
Name: J. Todd Derbin
Title: Chief Executive Officer
13
GREAT EXPECTATIONS AND ASSOCIATES, INC. -- EXERCISE NOTICE
Exercise Notice for Warrant No: ________
The undersigned hereby irrevocably elects to purchase ________________
shares of Common Stock of Great Expectations and Associates, Inc. (the
"COMPANY"), pursuant to the above captioned Warrant. Capitalized terms used
herein and not otherwise defined herein shall have the meanings ascribed to such
terms in the above captioned Warrant. The Holder intends that payment of the
Exercise Price shall be made as (check one):
____ "Cash Exercise" with respect to ____________ of shares
____ "Cashless Exercise" with respect to __________ of shares
If the holder has elected a Cash Exercise, the holder shall pay the sum of
$____________ to the Company in accordance with the terms of the Warrant.
Pursuant to this exercise, the Company shall deliver to the holder
_______________ Warrant Shares in accordance with the terms of the Warrant.
Following this exercise, the Warrant will reflect the right to purchase a total
of __________ Warrant Shares.
The undersigned requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of:
------------------------------------
------------------------------------
-------------------------------------
(Print Name, Address and Social Security
or Tax Identification Number)
and, if such number of Warrant Shares shall not be all the Warrant Shares
covered by the within Warrant, that a new Warrant for the balance of the Warrant
Shares covered by within Warrant be registered in the name of, and delivered to,
the undersigned at the address stated below.
Dated: By:
-------------- ---------------------------------
Print Name
---------------------------------
Signature
Address:
- -------------------------------
- -------------------------------
- -------------------------------
14
GREAT EXPECTATIONS AND ASSOCIATES, INC.
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
Warrant No: ____________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the above
captioned Warrant to purchase ____________ shares of Common Stock of Great
Expectations and Associates, Inc. to which such Warrant relates, and appoints
________________ attorney to transfer said right on the books of the Company
with full power of substitution in the premises.
Following the above described transfer and assignment, the undersigned
shall retain pursuant to the above captioned Warrant the right to purchase
____________ shares of Common Stock of Great Expectations and Associates, Inc.
Capitalized terms used herein and not otherwise defined herein shall have
the meanings ascribed to such terms in the above captioned Warrant.
Dated:
------------, ----
--------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant)
--------------------------------------------
Address of Transferee
--------------------------------------------
--------------------------------------------
--------------------------------------------
In the presence of:
- ------------------------------------
EXECUTION COPY
SHARE EXCHANGE AND REORGANIZATION AGREEMENT, dated as of August 25, 2004
(the "Agreement"), between GREAT EXPECTATIONS AND ASSOCIATES, INC., a Colorado
corporation ("GXPT"); and ADVAXIS, INC., a Delaware corporation ("Advaxis"), and
the SHAREHOLDERS OF ADVAXIS set forth on Schedule A hereto, which shareholders
constitute all of the holders of capital stock of Advaxis as of the date hereof
and as of the Closing (as defined below) (the "Advaxis Shareholders").
INTRODUCTION
GXPT desires to acquire (i) all of the issued and outstanding shares of
Common Stock of Advaxis (the "Advaxis Common Stock"), and Series A Preferred
Stock of Advaxis (the "Advaxis Series A Preferred Stock;' together with the
Advaxis Common Stock, the "Advaxis Capital Stock") in exchange for an aggregate
of 15,597,723 shares (the "Purchase Shares") of authorized, but theretofore
unissued, shares of common stock, no par value, of GXPT (the "GXPT Common
Stock"), (ii) all of the issued and outstanding warrants to purchase Advaxis
Capital Stock (the "Advaxis Warrants"), in exchange for Warrants to purchase
584,885 shares of GXPT Common Stock (the "GXPT Warrants"), and (iii) all of the
issued and outstanding options to purchase Advaxis Capital Stock (the "Advaxis
Options") in exchange for an aggregate of 2,381,525 options to purchase GXPT
Common Stock (the "GXPT Options"); representing 96.25% of the fully diluted
outstanding GXPT Common Stock after giving effect to such issuances and the
issuance of shares of GXPT Common Stock referred to in Section 3.01(p) below,
all as more fully set forth on Schedule B hereto. The Advaxis Shareholders
desire to exchange their beneficially owned shares of Advaxis Capital Stock
solely for shares of GXPT Common Stock at a ratio of 352.1823361 as more fully
set forth on Schedule B hereto.
Prior to the date hereof, the respective boards of directors of each of
GXPT and Advaxis have, and the Advaxis Shareholders and the shareholders of GXPT
have, approved and adopted this Agreement and it is the intent of the parties
hereto that the transactions contemplated hereby be structured so as to qualify
as a tax-free exchange under Subchapter C of the Internal Revenue Code of 1986,
as amended (the "Code"), and the provisions of this Agreement will be
interpreted in a manner consistent with this intent.
There shall be an offering to sell up to 280 units (the "Units"), each
Unit consisting of 87,108 shares of GXPT Common Stock and Warrants to purchase
87,108 shares of GXPT Common Stock for an aggregate purchase price of up to
$7,000,000 (the "Offering"). In connection with the Offering all of the issued
and outstanding promissory notes of Advaxis which are convertible into shares of
Advaxis capital stock (the "Advaxis Notes") shall be exchanged for Units on the
same terms as in the Offering. As of the date hereof the aggregate principal
amount of the Advaxis Notes is $494,729.
After giving effect to (a) the acquisition of the Advaxis Capital Stock in
exchange for the Purchase Shares, (b) the issuance of shares of GXPT Common
Stock referred to in Section 3.01(p) below, and (c) the exchanges of the Advaxis
Warrants and Advaxis Options for GXPT Warrants and GXPT Options (but not giving
effect to the issuance and/or conversion of the Advaxis Notes, the Units or
shares of GXPT Common Stock or Warrants issuable to placement agents or to
consultants in connection with the Offering) there shall be outstanding
20,069,333 shares of common stock of GXPT, on a fully diluted basis. Such fully
diluted capitalization table is set forth on Schedule B hereto.
Upon the signing of this Agreement by all parties to this Agreement,
Advaxis shall advance to GXPT a nonrefundable payment of $7,500 by wire transfer
or by certified check. The closing of the transaction contemplated by this
Agreement (the "Closing") shall occur when $1,500,000 has been placed in escrow
in connection with the Offering; it being understood however that the date of
the Closing must occur on or prior to forty-five (45) days from the date hereof
(the "Initial Closing Date"). If Advaxis advances to GXPT a nonrefundable
payment of $15,000 on or prior to the Initial Closing Date, then the date of the
Closing shall be extended for an additional forty-five (45) day period. Such
advances shall be offset against the amount Advaxis shall pay to GXPT at Closing
as set forth in Section 1.03(e).
NOW, THEREFORE, in consideration of the premises and mutual
representations, warranties and covenants herein contained, the parties hereby
agree as follows:
ARTICLE I
ACQUISITION AND EXCHANGE OF SHARES
SECTION 1.01 THE AGREEMENT. The parties hereto hereby agree that GXPT
shall acquire all of the issued and outstanding shares of Advaxis Capital Stock,
Advaxis Warrants and Advaxis Options in exchange for the Purchase Shares, GXPT
Warrants and GXPT Options. The parties hereto agree that at the Closing Advaxis
will become a wholly-owned subsidiary of GXPT subject to the conditions and
provisions of Section 1.03 hereof.
SECTION 1.02 EXCHANGE OF SECURITIES.
(a) At the Closing, GXPT will cause to be issued and held for delivery to
the Advaxis Shareholders or their designees, as applicable, stock certificates
representing the Purchase Shares in exchange for all of the issued and
outstanding shares of Advaxis Capital Stock. At the Closing, Advaxis and the
Advaxis Shareholders will cause to be delivered to GXPT, stock certificates or
other evidence, as applicable, representing Advaxis Capital Stock. The shares of
GXPT Common Stock to be issued will be authorized, but theretofore unissued
shares of GXPT Common Stock, and will be issued to the respective Advaxis
Shareholders as set forth in Schedule B hereof.
(b) At the Closing, GXPT will cause to be issued and held for delivery to
the Advaxis Shareholders warrant agreements representing the GXPT Warrants in
exchange for all of the Advaxis Warrants, which will be delivered to GXPT at the
Closing. At the Closing, Advaxis and the Advaxis Shareholders will cause to be
delivered to GXPT, warrant agreements or other evidence, as applicable,
representing the Advaxis Warrants. The GXPT Warrants to be issued will be
authorized, but theretofore unissued GXPT Warrants, and will be issued to the
Advaxis Shareholders, as applicable, as set forth in Schedule B hereof.
2
(c) At the Closing, GXPT will cause to be issued and held for delivery to
the Advaxis Shareholders option agreements representing GXPT Options in exchange
for all of the Advaxis Options, which Advaxis Options will be delivered to GXPT
at the Closing. At the Closing, Advaxis and the Advaxis Shareholders will cause
to be delivered to GXPT the option agreements or other evidence, as applicable,
representing the GXPT Options. The GXPT Options to be issued will be authorized,
but theretofore ungranted, and will be granted to the respective Advaxis
Shareholders as set forth in Schedule B hereof.
(d) All shares of GXPT Common Stock to be issued hereunder shall be deemed
"restricted securities" as defined in paragraph (a) of Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"). All shares of GXPT
Common Stock to be issued under the terms of this Agreement shall be issued
pursuant to an exemption from the registration requirements of the Securities
Act, under Section 4(2) of the Securities Act and the rules and regulations
promulgated thereunder. Certificates representing the shares of GXPT Common
Stock to be issued hereunder shall bear a restrictive legend in substantially
the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED
FOR SALE, SOLD, OR OTHERWISE DISPOSED OF, EXCEPT IN COMPLIANCE WITH
THE REGISTRATION PROVISIONS OF SUCH ACT OR PURSUANT TO AN EXEMPTION
FROM SUCH REGISTRATION PROVISIONS, THE AVAILABILITY OF WHICH IS TO
BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY.
SECTION 1.03 CLOSING. The Closing will take place at the offices of
Reitler Brown & Rosenblatt LLC ("Reitler Brown") on the date that $1,500,000 has
been placed in escrow pursuant to the Offering, or such other date and at such
other time and place to be mutually agreed upon by the parties hereto; provided
that such date will occur by the Initial Closing Date unless extended by Advaxis
in the manner set forth in the Introduction, and will be subject to the
provisions of Article IV of this Agreement. The date the Closing actually occurs
shall be deemed the "Closing Date". At the Closing:
(a) Advaxis will deliver to GXPT stock certificates, warrant certificates,
warrant agreements, option agreements, or other evidences representing the
Advaxis Capital Stock, Advaxis Warrants and Advaxis Options, duly endorsed or
accompanied by a properly executed stock power, so as to make GXPT the holder
thereof, free and clear of all liens, claims and other encumbrances, or an
affidavit of lost certificate or other evidence satisfactory to Advaxis that
such securities and/or agreements were lost or destroyed;
3
(b) GXPT will deliver to the Advaxis Shareholders, in accordance with
Section 1.02 hereof, stock certificates representing the Purchase Shares, option
agreements representing the GXPT Options and warrant certificates representing
the GXPT Warrants;
(c) GXPT will deliver an Officer's Certificate as described in Sections
4.02(a) and 4.02(b) hereof, dated the Closing Date, certifying that all
representations, warranties, covenants, and conditions set forth herein by GXPT
are true and correct as of, or have been fully performed and complied with by,
the Closing Date;
(d) Advaxis will deliver an Officer's Certificate as described in Sections
4.01(a) and 4.01(b) hereof, dated the Closing Date, certifying that all
representations, warranties, covenants and conditions set forth herein by
Advaxis are true and correct as of, or have been fully performed and complied
with by, the Closing Date;
(e) Advaxis shall pay up to an aggregate of $90,000 less the aggregate
amount of payments Advaxis shall have made to GXPT prior to the Closing (as set
forth in the Introduction) (the "Advaxis Payment") to GXPT by wire transfer or
certified check. It being understood among the parties hereto that GXPT shall
pay the aggregate amount of the notes payable to the stockholders of GXPT as
stated in GXPT's most recent Form 10Q filing with the SEC and all reasonable
legal costs and expenses and auditor costs and expenses of GXPT out of such
Advaxis Payment; provided that GXPT shall have provided to Advaxis written
documentation of such costs and expenses prior to Closing; and.
(f) GXPT will prepare and file with the applicable governmental or
regulatory authorities any additional necessary documents that may be required
by applicable law or regulations of the State of Colorado, the Unities States of
America, or otherwise to effect the transactions contemplated hereby.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.01 REPRESENTATIONS AND WARRANTIES OF GXPT. GXPT hereby
represents and warrants to, and agrees with, Advaxis and the Advaxis
Shareholders as follows:
(a) Organization and Qualification. Other than as set forth in Section A
of the disclosure letter, of even date herewith, from GXPT to Advaxis and the
Advaxis Shareholders (the "GXPT Disclosure Letter"), GXPT does not have any
subsidiaries or affiliated corporations and does not own any interest in any
other enterprise (whether or not such enterprise is a corporation). GXPT is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Colorado, with all requisite power and authority, and all
necessary consents, authorizations, approvals, orders, licenses, certificates,
and permits of and from, and declarations and filings with, all federal, state,
local, and other governmental authorities and all courts and other tribunals, to
own, lease, license, and use its properties and assets and to carry on the
businesses in which it is now engaged and the businesses in which it
contemplates engaging. Other than as set forth in Section A of the GXPT
Disclosure Letter, GXPT is duly qualified to transact the businesses in which it
is engaged and is in good standing as a foreign corporation in every
jurisdiction in which its ownership, leasing, licensing, or use of property or
assets or the conduct of its businesses makes such qualification necessary.
4
(b) Capitalization. Immediately prior to the Closing, the authorized
capital stock of GXPT consists of 500,000,000 shares of GXPT Common Stock, of
which 150,520,000 shares are outstanding. Prior to Closing, a majority of the
GXPT shareholders shall approve and caused to become effective the charter
amendments contemplated by Section 3.01 hereof. Each of such outstanding shares
of GXPT Common Stock is validly authorized, validly issued, fully paid, and
nonassessable, has not been issued and is not owned or held in violation of any
preemptive or similar right of stockholders. There is no commitment, plan, or
arrangement to issue, and no outstanding option, warrant, or other right calling
for the issuance of, any share of capital stock of GXPT or any security or other
instrument convertible into, exercisable for, or exchangeable for capital stock
of GXPT other than the Offering. There is outstanding no security or other
instrument convertible into, or exchangeable or exercisable for, capital stock
of GXPT.
(c) Financial Condition. GXPT has filed with the Securities and Exchange
Commission (the "SEC") and has provided to Advaxis true and correct copies of
the following: audited balance sheets of GXPT as of October 31, 2002 and 2003;
unaudited balance sheets of GXPT as of April 30, 2003 and 2004; audited
statements of income, statements of stockholders' equity, and statements of cash
flows of GXPT for the years ended October 31, 2002 and 2003; and the unaudited
statements of income, statements of stockholders' equity, and statements of cash
flows of GXPT for the six months ended April 30, 2003 and 2004. Each such
balance sheet shall present fairly the financial condition, assets, liabilities,
and stockholders' equity of GXPT as of its respective date; each such statement
of income and statement of stockholders' equity shall present fairly the results
of operations of GXPT for the period indicated; and each such statement of cash
flows shall present fairly the information purported to be shown therein. The
financial statements referred to in this Section 2.01(c) will have been prepared
in accordance with generally accepted accounting principles in the United States
("GAAP") consistently applied throughout the periods involved and shall be in
accordance with the books and records of GXPT. The financial statements referred
to in this Section 2.01(c) contain all certifications and statements required by
the SEC's Order, dated June 27, 2002, pursuant to Section 21(a)(1) of the
Exchange Act (File No. 4-460), Rule 13a-14 or 15d-14 under the Exchange Act, or
18 U.S.C. Section 1350 (Sections 302 and 906 of the Sarbanes-Oxley Act of 2002)
with respect to the report relating thereto. The financial statements referred
to in this Section 2.01(c) comply as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with GAAP,
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of unaudited financial
statements, as permitted by the rules and regulations of the SEC) and fairly
present, subject in the case of the unaudited financial statements, to customary
year end audit adjustments, the financial position of GXPT as at the dates
thereof and the results of its operations and cash flows. Since April 30, 2004:
(i) There has at no time been a material adverse change in the
financial condition, results of operations, businesses, properties,
assets, liabilities, or future prospects of GXPT.
5
(ii) GXPT has not authorized, declared, paid, or effected any
dividend or liquidating or other distribution in respect of its
capital stock or any direct or indirect redemption, purchase, or
other acquisition of any stock of GXPT.
(iii) The operations and businesses of GXPT have been
conducted in all respects only in the ordinary course, except as
described in filings made and to be made by GXPT to the SEC..
There is no fact known to GXPT which materially adversely affects or in the
future (as far as GXPT can reasonably foresee) may materially adversely affect
the financial condition, results of operations, businesses, properties, assets,
liabilities, or future prospects of GXPT; provided, however, that GXPT expresses
no opinion as to political or economic matters of general applicability. GXPT
has made known, or caused to be made known, to the accountants or auditors who
have prepared, reviewed, or audited the aforementioned consolidated financial
statements all material facts and circumstances which could affect the
preparation, presentation, accuracy, or completeness thereof.
(d) Tax and Other Liabilities. GXPT does not have any material liability
of any nature, accrued or contingent, including, without limitation, liabilities
for federal, state, local, or foreign taxes and penalties, interest, and
additions to tax ("Taxes"), and liabilities to customers or suppliers, other
than the following:
(i) Liabilities for which full provision has been made on the
balance sheet and the notes thereto (the "Last GXPT Balance Sheet")
as of April 30, 2004, (the "Last GXPT Balance Sheet Date") referred
to in Section 2.01(c); and
(ii) Other liabilities arising since the Last GXPT Balance
Sheet Date and prior to Closing in the ordinary course of business
(which shall not include liabilities to customers on account of
defective products or services) which are not inconsistent with the
representations and warranties of GXPT or any other provision of
this Agreement.
Without limiting the generality of the foregoing, the amounts set up as
provisions for Taxes on the Last GXPT Balance Sheet are sufficient for all
accrued and unpaid Taxes of GXPT, whether or not due and payable and whether or
not disputed, under tax laws, as in effect on the Last GXPT Balance Sheet Date
or now in effect, for the period ended on such date and for all fiscal periods
prior thereto. The execution, delivery, and performance of this Agreement by
GXPT will not cause any Taxes to be payable (other than those that may possibly
be payable by the Advaxis Shareholders as a result of the contribution of their
shares of Advaxis Capital Stock to GXPT) or cause any lien, charge, or
encumbrance to secure any Taxes to be created either immediately or upon the
nonpayment of any Taxes other than on the properties or assets of the Advaxis
Shareholders. GXPT has filed all federal, state, local, and foreign tax returns
required to be filed by it; has delivered to the Advaxis Shareholders a true and
correct copy of each such return which was filed since incorporation; has paid
(or has established on the Last GXPT Balance Sheet a reserve for) all Taxes,
assessments, and other governmental charges payable or remittable by it or
levied upon it or its properties, assets, income, or franchises which are due
and payable; and has delivered to the Advaxis Shareholders a true and correct
copy of any report as to adjustments received by it from any taxing authority
since incorporation and a statement as to any litigation, governmental or other
proceeding (formal or informal), or investigation pending, threatened, or in
prospect with respect to any such report or the subject matter of such report.
6
(e) Litigation and Claims. Except as described in Section E of the GXPT
Disclosure Letter, there is no litigation, arbitration, claim, governmental or
other proceeding (formal or informal), or investigation pending or, to the best
of GXPT's knowledge, threatened, or in prospect (or any basis therefor known to
GXPT) with respect to GXPT or any of its businesses, properties, or assets. GXPT
is not a "union shop" and is not a party to any collective bargaining agreement
or similar labor arrangement. GXPT is not affected by any present or threatened
strike or other labor disturbance nor to the knowledge of GXPT, is any union
attempting to represent any employee of GXPT as collective bargaining agent.
GXPT is not in violation of, or in default with respect to, any law, rule,
regulation, order, judgment, or decree which violation or default would have a
material adverse effect on GXPT; nor is GXPT required to take any action in
order to avoid such violation or default.
(f) Properties.
(i) GXPT owns no real property. GXPT has good title to all personal
properties and assets used in its businesses or owned by it and has valid
leasehold interests and licenses in and with respect to all real and other
properties and assets as are held pursuant to leases or licenses described in
Section B or C of the GXPT Disclosure Letter and used in its business, free and
clear of all liens, mortgages, security interests, pledges, charges, and
encumbrances (except such as are listed in Section F of the GXPT Disclosure
Letter).
(ii) Set forth in Section F of the GXPT Disclosure Letter is a true
and complete list of all tangible properties and assets owned by GXPT or leased
or licensed by GXPT from or to a third party (including inventory but not
including Intangibles (as hereinafter defined)), and with respect to such
properties and assets leased or licensed by GXPT from or to a third party, a
description of such lease or license, including the term interest and amounts
paid GXPT under such lease or license. All such properties and assets (including
Intangibles) owned by GXPT are reflected on the Last GXPT Balance Sheet (except
for acquisitions subsequent to the Last GXPT Balance Sheet Date and prior to the
Closing Date, which are set forth in Section F of the GXPT Disclosure Letter or
are approved in writing by Advaxis). All tangible properties and assets owned by
GXPT or leased or licensed by GXPT from or to a third party are in good and
usable condition (reasonable wear and tear which is not such as to affect
adversely the operation of the businesses of GXPT excepted). All such leases and
licenses to which GXPT is a party are in full force and effect.
(iii) To the best of GXPT's knowledge, no real property leased or
licensed by GXPT from or to a third party lies in an area which is, or will be,
subject to zoning, use, or building code restrictions which would prohibit, and,
to the best of GXPT's knowledge, no state of facts relating to the actions or
inaction of another person or entity or his or its ownership, leasing, or
licensing of any real or personal property exists or will exist which would
prevent, the continued effective ownership, leasing, or licensing of such real
property in the businesses in which GXPT is now engaged or the businesses in
which it contemplates engaging.
7
(iv) The properties and assets (including Intangibles (as
hereinafter defined)) owned by GXPT (other than those leased or licensed by GXPT
to a third party) or leased or licensed by GXPT from a third party constitute
all such properties and assets which are necessary to the businesses of GXPT as
presently conducted.
(v) GXPT has not caused or permitted its businesses properties, or
assets to be used to generate, manufacture, refine, transport, treat, store,
handle, dispose of, transfer, produce, or process any Hazardous Substance (as
such term is defined in this Section 2.01(f)(v)) except in compliance with all
applicable laws, rules, regulations, orders, judgments, and decrees, and has not
caused or permitted the Release (as such term is defined in this Section
2.01(f)(v)) of any Hazardous Substance on or off the site of any property of
GXPT. The term "Hazardous Substance" shall mean any hazardous waste, as defined
by 42 U.S.C. ss.6903(5), any hazardous substance, as defined by 42 U.S.C.
ss.9601(14), any pollutant or contaminant, as defined by 42 U.S.C. ss.9601(33),
and all toxic substances, hazardous materials, or other chemical substances
regulated by any other law, rule, or regulation. The term "Release" shall have
the meaning set forth in 42 U.S.C. ss.9601(22).
(g) Contracts and Other Instruments. Section G of the GXPT Disclosure
Letter contains a true and correct statement of the information required to be
contained therein regarding material contracts, agreements, instruments, leases,
licenses, arrangements, or understandings with respect to GXPT. GXPT has
furnished to the Advaxis Shareholders (i) the certificate of incorporation (or
other charter document) and by-laws of GXPT and all amendments thereto, as
presently in effect, and (ii) the following: (A) true and correct copies of all
material contracts, agreements, and instruments referred to in Section G of the
GXPT Disclosure Letter; (B) true and correct copies of all material leases and
licenses referred to in Section G of the GXPT Disclosure Letter hereto; and (C)
true and correct written descriptions of all material supply, distribution,
agency, financing, or other arrangements or understandings referred to in
Section G of the GXPT Disclosure Letter. To the best of GXPT's knowledge,
neither GXPT nor (to the knowledge of GXPT) any other party to any such material
contract, agreement, instrument, lease, or license is now or expects in the
future to be in violation or breach of, or in default with respect to complying
with, any term thereof, and each such material contract, agreement, instrument,
lease, or license is in full force and is (to the best of GXPT's knowledge in
the case of third parties) the legal, valid, and binding obligation of the
parties thereto and (subject to applicable bankruptcy, insolvency, and other
laws affecting the enforceability of creditors' rights generally) is enforceable
as to them in accordance with its respective terms. Each such material supply,
distribution, agency, financing, or other arrangement or understanding is a
valid and continuing arrangement or understanding; neither GXPT nor any other
party to any such arrangement or understanding has given notice of termination
or taken any action inconsistent with the continuance of such arrangement or
understanding; and the execution, delivery, and performance of this Agreement
will not prejudice any such arrangement or understanding in any way. GXPT enjoys
peaceful and undisturbed possession under all material leases and licenses under
which it is operating. GXPT is not party to, or bound by, any contract,
agreement, instrument, lease, license, arrangement, or understanding, or subject
to any charter or other restriction, which has had or (to the knowledge of GXPT)
8
may in the future have a material adverse effect on the financial condition,
results of operations, businesses, properties, assets, liabilities, or future
prospects of GXPT. GXPT has not engaged within the last five years in, is not
engaging in, and does not intend to engage in any transaction with, and has not
had within the last five years, does not now have, and does not intend to have
any material contract, agreement, instrument, lease, license, arrangement, or
understanding with, any stockholder of GXPT, any director, officer, or employee
of GXPT (except for employment agreements listed in Section G of the GXPT
Disclosure Letter and employment and compensation arrangements described in
Section H of the GXPT Disclosure Letter), any relative or affiliate of any
stockholder of GXPT or of any such director, officer, or employee, or any other
corporation or enterprise in which any stockholder of GXPT, any such director,
officer, or employee, or any such relative or affiliate then had or now has a 5%
or greater equity or voting or other substantial interest, other than those
listed and so specified in Section G of the GXPT Disclosure Letter. The stock
ledgers and stock transfer books relating to all issuances and transfers of
stock by GXPT and the minute book records of GXPT and all proceedings of the
stockholders and the Board of Directors and committees thereof of GXPT since
their respective incorporations made available to counsel to Advaxis and the
Advaxis Shareholders are the original stock ledgers and stock transfer books and
minute book records of GXPT or exact copies thereof. GXPT is not in violation or
breach of, or in default with respect to, any term of its certificate of
incorporation (or other charter document) or by-laws.
(h) Employees.
(i) GXPT does not have, or contribute to, any pension,
profit-sharing, option, other incentive plan, or any other type of Employee
Benefit Plan (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), nor does GXPT have any obligation
to or customary arrangement with employees for bonuses, incentive compensation,
vacations, severance pay, sick pay, sick leave, insurance, service award,
relocation, disability, tuition refund, or other benefits, whether oral or
written, except as set forth in Section H of the GXPT Disclosure Letter. GXPT
has furnished to Advaxis and the Advaxis Shareholders: (A) true and correct
copies of all documents evidencing plans, obligations, or arrangements referred
to in Section H of the GXPT Disclosure Letter (or true and correct written
summaries, so initialed, of such plans, obligations, or arrangements to the
extent not evidenced by documents) and true and correct copies, so initialed, of
all documents evidencing trusts, summary plan descriptions, and any other
summaries or descriptions relating to any such plans; (B) the two most recent
annual reports (Form 5500's), if any, including all schedules thereto and the
most recent annual and periodic accounting of related plan assets with respect
to each Employee Benefit Plan; (C) the two most recent actuarial valuations with
respect to each Pension Plan (as defined in Section 3(2) of ERISA) subject to
Title IV of ERISA; and (D) the most recent determination letter issued by the
Internal Revenue Service with respect to each Pension Plan.
(ii) If any Employee Benefit Plan of GXPT were to be terminated on
the day prior to Closing Date, (A) no liability under Title IV of ERISA would be
incurred by GXPT or Advaxis and (B) all Accrued Benefits (as defined in this
Section 2.01(h)(ii)) to such day prior to the Closing Date (whether or not
vested) would be fully funded in accordance with the assumptions contained in
the regulations of the Pension Benefit Guaranty Corporation governing the
funding of terminated defined benefit plans. For purposes hereof, "Accrued
Benefits" shall include the value of disability, pre-retirement, death benefits,
9
and all supplements, subsidized, ancillary, and optional forms of benefits. All
Accrued Liabilities (for contributions or otherwise) (as defined in this Section
2.01(h)(ii)) of GXPT as of the Closing Date to each Employee Benefit Plan and
with respect to each obligation to, or customary arrangement with, employees for
bonuses, incentive compensation, vacations, severance pay, sick pay, sick leave,
insurance, service award, relocation, disability, tuition refund, or other
benefits, whether oral or written, have been paid or accrued for all periods
ending prior to the Closing Date and no payment to any Employee Benefit Plan or
with respect to any such obligation or arrangement since the Last GXPT Balance
Sheet Date has been disproportionately large compared to prior payments. For
purposes hereof, "Accrued Liabilities" shall include a pro rata contribution to
each Employee Benefit Plan or with respect to each such obligation or
arrangement for that portion of a plan year or other applicable period which
commences prior to, and ends after, the Closing Date, and Accrued Liabilities
for any portion of a plan year or other applicable period shall be determined by
multiplying the liability for the entire such year or period by a fraction, the
numerator of which is the number of days preceding the Closing Date in such year
or period and the denominator of which is the number of days in such year or
period, as the case may be.
(iii) There has been no violation of the reporting and disclosure
requirements imposed either under ERISA or the Code for which a penalty has been
or may be imposed with respect to any Employee Benefit Plan of GXPT. There has
been no breach of fiduciary duty or responsibility with respect to any Employee
Benefit Plan of GXPT. No Employee Benefit Plan of GXPT or related trust has any
liability of any nature, accrued or contingent, including without limitation
liabilities for Taxes, other than for routine payments to be made in due course
to participants and beneficiaries, except as set forth in Section H of the GXPT
Disclosure Letter. GXPT does not have any formal plan or commitment, whether or
not legally binding, to create any additional or modify any existing Employee
Benefit Plan or benefit obligation or arrangement described in Section
2.01(h)(i)). Each Employee Benefit Plan of GXPT which is a group health plan
within the meaning of Section 5000(b)(1) of the Code is and has been maintained
in full compliance with the applicable requirements of Section 4980B of the
Code. Other than the health care continuation requirements of Section 4980B of
the Code, GXPT does not have any obligation to provide post-retirement medical
benefits or life insurance coverage or any deferred compensation benefits to any
present or former employees. There is no litigation, arbitration, claim,
governmental or other proceeding (formal or informal), or investigation pending,
threatened, or (to the best of GXPT's knowledge) in prospect (or any basis
therefor known to GXPT) with respect to any Employee Benefit Plan of GXPT or
related trust or with respect to any fiduciary, administrator, or sponsor (in
its capacity as such) of any Employee Benefit Plan. No Employee Benefit Plan of
GXPT or related trust and no such obligation or arrangement is in violation of,
or in default with respect to, any law, rule, regulation, order, judgment, which
violation or default would have a material adverse effect thereon or decree nor
is GXPT, any Employee Benefit Plan of GXPT, or any related trust required to
take any action in order to avoid any such violation or default. No event has
occurred, or is (to the best of GXPT's knowledge) threatened or about to occur,
which would constitute a prohibited transaction under Section 406 of ERISA.
(iv) Each Pension Plan maintained for the employees of GXPT has been
qualified, from its inception, under Section 401(a) of the Code and any related
trust has been an exempt trust for such period under Section 501 of the Code.
10
Each Pension Plan has been operated in accordance with its terms. No Pension
Plan which is subject to Title IV of ERISA has an accumulated or waived funding
deficiency within the meaning of Section 412 of the Code. No investigation or
review by the Internal Revenue Service is currently pending or (to the knowledge
of GXPT) is contemplated in which the Internal Revenue Service has asserted or
may assert that any Pension Plan is not qualified under Section 401(a) of the
Code or that any related trust is not exempt under Section 501 of the Code.
Neither GXPT, nor any organization to which GXPT is a successor or parent
corporation, within the meaning of Section 4069(b) of ERISA, has divested itself
of any entity maintaining or with an obligation to contribute to any Pension
Plan which had an "amount of unfunded benefit liabilities," as defined in
Section 4001(a)(18) of ERISA, at the time of such divestiture. No assessment of
any federal taxes with respect to any Employee Benefit Plan of GXPT has been
made or (to the knowledge of GXPT) is contemplated against GXPT, or any related
trust of any Pension Plan of GXPT, and nothing has occurred which would result
in the assessment of unrelated business taxable income under the Code with
respect to any Employee Benefit Plan of GXPT. Form 5500's have been timely filed
with respect to all Pension Plans of GXPT. No event has occurred or (to the
knowledge of GXPT) is threatened or about to occur which would constitute a
reportable event within the meaning of Section 4043(b) of ERISA. No notice of
termination has been filed by the plan administrator pursuant to Section 4041 of
ERISA or issued by the Pension Benefit Guaranty Corporation pursuant to Section
4042 of ERISA with respect to any Pension Plan of GXPT.
(v) GXPT does not currently contribute to, and has not effectuated
either a complete or partial withdrawal from, any multiemployer Pension Plan
within the meaning of Section 3(37) of ERISA.
(vi) Section H of the GXPT Disclosure Letter contains a true and
correct statement of the names, relationship with GXPT, present rates of
compensation (whether in the form of salary, bonuses, commissions, or other
supplemental compensation now or hereafter payable), and aggregate compensation
for the fiscal years ended December 31, 2002 and 2003 of (A) each director,
officer, or other employee of GXPT whose aggregate compensation for the fiscal
years ended December 31, 2002 and 2003 exceeded US$25,000 or whose aggregate
compensation presently exceeds the rate of US$25,000 per annum and (B) all sales
agents, dealers, or distributors of GXPT. Since December 31, 2003, GXPT has not
changed the rate of compensation of any of its directors, officers, employees,
agents, dealers, or distributors, nor has any Employee Benefit Plan or program
of GXPT been instituted or amended to increase benefits thereunder. There is no
contract, agreement, plan, arrangement, or understanding covering any person
that, individually or collectively, could give rise to the payment of any amount
that would not be deductible by GXPT by reason of Section 280G of the Code.
(vii) GXPT has not extended or maintained credit, arranged for the
extension of credit, or renewed an extension of credit, in the form of a
personal loan to or for any director or executive officer (or equivalent
thereof) thereof.
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(i) Patents, Trademarks, Et Cetera. GXPT does not own or have pending, and
is not licensed or otherwise permitted to use, any material patent, patent
application, trademark, trademark application, service mark, copyright,
copyright application, franchise, trade secret, computer program (in object or
source code or otherwise), or other intangible property or asset (collectively,
"Intangibles"), other than as described in Section I of the GXPT Disclosure
Letter. Each Intangible set forth in such Section I of the GXPT Disclosure
Letter is validly issued and is currently in force and uncontested in all
jurisdictions in which it is used or in which such use is contemplated by GXPT
and may reasonably be contemplated by GXPT after the effective date of this
Agreement and the closing of the Offering. Section I of the GXPT Disclosure
Letter contains a true and correct listing of: (i) all Intangibles which are
owned (either in whole or in part), used by, or licensed to GXPT or which
otherwise relate to the businesses of GXPT, and a description of each such
Intangible which identifies its owner, registrant, or applicant; (ii) all
contracts, agreements, instruments, leases, and licenses and identification of
all parties thereto under which GXPT owns or uses any Intangible (whether or not
under license from third parties), together with the identification of the
owner, registrant, or applicant of each such Intangible; (iii) all contracts,
agreements, instruments, leases, and licenses and identification of all parties
thereto under which GXPT grants the right to use any Intangible; (iv) all
validity, infringement, right-to-use, or other opinions of counsel (whether
in-house or outside) which concern the validity, infringement, or enforceability
of any Intangible owned or controlled by a party other than GXPT which relates
to the businesses, properties, or assets of GXPT. Except as specified in Section
I of the GXPT Disclosure Letter, to the knowledge of GXPT: (v) GXPT is the sole
and exclusive owner or licensee of, and (other than those exclusively licensed
by GXPT to a third party) has the right to use, all Intangibles; (vi) no
Intangible is subject to any order, judgment, decree, contract, agreement,
instrument, lease, or license restricting the scope of the use thereof; (vii)
during the last five years, GXPT has not been charged with, and has not charged
others with, unfair competition or infringement of any Intangible, or wrongful
use of confidential information, trade secrets, or secret processes; and (viii)
GXPT is not using any patentable invention, confidential information, trade
secret, or secret process of others. There is no right under any Intangible
necessary to the businesses of GXPT as presently conducted or as it contemplates
conducting, except such as are so designated in Section I of the GXPT Disclosure
Letter. Except as described in Section I of the GXPT Disclosure Letter, GXPT has
not infringed, is not infringing, and has not received notice of infringement in
respect of the Intangibles or asserted Intangibles of others, nor has GXPT been
advised by counsel or others that it is infringing or may infringe the
Intangibles or asserted Intangibles of others if any currently contemplated
business activity is effectuated. To the knowledge of GXPT, there is no
infringement by others of Intangibles of GXPT. As far as GXPT can reasonably
foresee, there is no Intangible or asserted Intangible of others that may
materially adversely affect the financial condition, results of operations,
businesses, properties, assets, liabilities, or future prospects of GXPT. All
material contracts, agreements, instruments, leases, and licenses pertaining to
Intangibles to which GXPT is a party, or to which any of its businesses,
properties, or assets are subject, are in compliance in all material respects
with all laws, rules, regulations, orders, judgments, and decrees binding on
GXPT or to which any of its businesses, properties, or assets are subject. GXPT
did not register any trademark, tradename or service mark, design, or name used
by GXPT to identify its products, businesses, or services. Neither any
stockholder of GXPT, any director, officer, or employee of GXPT, any relative or
affiliate of any stockholder of GXPT, any such director, officer, or employee,
nor any other corporation or enterprise in which any stockholder of GXPT, any
such director, officer, or employee, or any such relative or affiliate had or
now has a 5% or greater equity or voting or other substantial interest,
possesses any Intangible which relates to the businesses of GXPT.
12
(j) Questionable Payments. Neither GXPT, nor any director, officer, agent,
employee, or other person associated with, or acting on behalf of, GXPT, nor any
stockholder of GXPT has, directly or indirectly: used any corporate funds for
unlawful contributions, gifts, entertainment, or other unlawful expenses
relating to political activity; made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns from corporate funds; violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended; or made any bribe, rebate, payoff, influence
payment, kickback, or other unlawful payment.
(k) Authority. GXPT has all requisite power and authority to execute,
deliver, and perform this Agreement. All necessary corporate proceedings of GXPT
have been duly taken to authorize the execution, delivery, and performance of
this Agreement thereby. This Agreement has been duly authorized, executed, and
delivered by GXPT, constitutes the legal, valid, and binding obligation of GXPT,
and is enforceable as to GXPT in accordance with its terms. Except as otherwise
set forth in this Agreement, no consent, authorization, approval, order,
license, certificate, or permit of or from, or declaration or filing with, any
federal, state, local, or other governmental authority or any court or other
tribunal is required by GXPT for the execution, delivery, or performance of this
Agreement by GXPT. No consent of any party to any material contract, agreement,
instrument, lease, license, arrangement, or understanding to which GXPT is a
party, or to which it or any of its businesses, properties, or assets are
subject, is required for the execution, delivery, or performance of this
Agreement (except such consents referred to in Section K of the GXPT Disclosure
Letter); and the execution, delivery, and performance of this Agreement will not
(if the consents referred to in Section K of the GXPT Disclosure Letter are
obtained prior to the Closing) violate, result in a breach of, conflict with, or
(with or without the giving of notice or the passage of time or both) entitle
any party to terminate or call a default under, entitle any party to receive
rights or privileges that such party was not entitled to receive before this
Agreement was executed under, or create any obligation on the part of GXPT to
which it was not subject immediately before this Agreement was executed under,
any term of any such material contract, agreement, instrument, lease, license,
arrangement, or understanding, or violate or result in a breach of any term of
the certificate of incorporation (or other charter document) or by-laws of GXPT,
or (if the provisions of this Agreement are satisfied) violate, result in a
breach of, or conflict with any law, rule, regulation, order, judgment, or
decree binding on GXPT or to which any of its businesses, properties, or assets
are subject, which violation or breach would have a material adverse effect on
GXPT. Neither GXPT, nor any of its officers, directors, employees, or agents has
employed any broker or finder or incurred any liability for any fee, commission,
or other compensation payable by any person on account of alleged employment as
a broker or finder, or alleged performance of services as a broker or finder, in
connection with or as a result of this Agreement or the transactions
contemplated hereby and in connection herewith.
(l) Status of Shares of GXPT Common Stock To Be Issued. The shares of GXPT
Common Stock to be issued pursuant to Section 1.02(a) hereof, and, in any case,
the shares of GXPT Common Stock issuable pursuant to Section 3.01(p) hereof, are
validly authorized and, when the such shares of GXPT Common Stock have been duly
delivered pursuant to the terms of this Agreement, such shares of GXPT Common
Stock will be validly issued, fully paid, and nonassessable and will not have
been issued, owned or held in violation of any preemptive or similar right of
stockholder.
13
(m) Insurance. All policies of fire and other insurance against casualty
and other losses and public liability insurance carried by GXPT are described in
Section M of the GXPT Disclosure Letter (including the risks covered and limits
of such policies) and are in full force and effect. All premiums in respect of
such policies for which premium notices have been received have been paid in
full as the same become due and payable. GXPT has not failed to give any notice
or present any claim under any insurance policy in due and timely fashion. There
are no actual claims or claims threatened in writing against GXPT which could
come within the scope of such coverage nor are any such policies currently
threatened with cancellation. There are no outstanding requirements or
recommendations by any insurance company that issued a policy with respect to
any of the respective assets, the businesses, or operations of GXPT or by any
Board of Fire Underwriters or other body exercising similar functions or by any
governmental authority requiring or recommending any repairs or other work to be
done on, or with respect to, any of the assets of GXPT or requiring or
recommending any equipment or facilities to be installed on any premises from
which the businesses of GXPT is conducted or in connection with any of the
respective assets thereof. GXPT does not have any knowledge of any material
proposed increase in applicable insurance rates or of any conditions or
circumstances applicable to the businesses thereof that might result in such
increases. No such policy is terminable by virtue of the transactions
contemplated by this Agreement.
(o) Trading Matters. At the date hereof and at the Closing Date:
(i) the GXPT Common Stock is not actively traded and quoted in the
pink sheet market; and
(ii) GXPT has not, and shall not have taken any action that would
preclude, or otherwise jeopardize, the inclusion of the GXPT Common Stock for
quotation on the OTC Bulletin Board.
(p) Reorganization.
(i) GXPT has not taken, has not agreed to take and will not take any
action (other than actions contemplated by this Agreement) that could reasonably
be expected to prevent the transactions contemplated by this Agreement from
constituting a "reorganization" under section 368(b) of the Code or as an
acquisition of in excess of 80% of the stock of a corporation in exchange for
property under Section 351 of the Code. GXPT is not aware of any agreement, plan
or other circumstance that could reasonably be expected to prevent the
transactions contemplated by this Agreement from so qualifying.
(ii) GXPT has no plan or intention to reacquire, and, to GXPT's
knowledge, no person related to GXPT within the meaning of Treasury Regulations
Section 1.368-1 has a plan or intention to acquire, any of the GXPT Common Stock
pursuant to Section 1.02(a) hereof.
(q) Completeness of Disclosure. No representation or warranty by GXPT in
this Agreement, any of the financial statement or other instruments or written
statements provided to the Advaxis Shareholders hereunder or in connection
herewith, the GXPT Disclosure Letter or any Schedules or Exhibits attached
hereto are made a part hereof contains or, and at the Closing Date will contain,
an untrue statement of material fact or omits or, at the Closing Date, will omit
to state a material fact required to be stated therein or necessary to make the
statements made not misleading.
14
(r) Periodic Reporting.
(i) The GXPT Common Stock has been registered under Section 12 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and GXPT is
subject to the periodic reporting requirements of Section 13 of the Exchange
Act. GXPT has heretofore provided or made available to Advaxis and the Advaxis
Shareholders true, complete, and correct copies of all forms, reports,
schedules, statements, and other documents required to be filed by it under the
Exchange Act since at least December 31, 2001 as such documents have been
amended since the time of the filing thereof (the "GXPT SEC Documents"). The
GXPT SEC Documents, including, without limitation, any financial statements and
schedules included therein, at the time filed or, if subsequently amended, as so
amended, (i) did not contain any untrue statement of a material fact required to
be stated therein or necessary in order to make the statements therein not
misleading and (ii) complied in all respects with the applicable requirements of
the Exchange Act and the applicable rules and regulations thereunder. The
financial statements included in the GXPT SEC Documents complied when filed as
to form in all material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with generally accepted accounting principles in the
United States, applied on a consistent basis during the periods involved (except
as may be indicated in the notes thereto or, in the case of unaudited financial
statements, as permitted by the rules and regulations of the Commission) and
fairly present, subject in the case of the unaudited financial statements, to
customary year end audit adjustments, the financial position of GXPT as at the
dates thereof and the results of its operations and cash flows.
(ii) Except as set forth in Section R of the GXPT Disclosure Letter,
the Company maintains disclosure controls and procedures required by Rule 13a-15
or 15d-15 under the Exchange Act; such controls and procedures are effective to
ensure that all material information concerning the Company and its subsidiaries
is made known on a timely basis to the individuals responsible for the
preparation of the Company's filings with the SEC and other public disclosure
documents. To the extent any exist, GXPT has delivered or made available to
Advaxis copies of, all written descriptions of, and all policies, manuals and
other documents promulgating, such disclosure controls and procedures. Except as
set forth in Section R of the GXPT Disclosure Letter, to GXPT's knowledge, each
director and executive officer thereof has filed with the SEC on a timely basis
all statements required by Section 16(a) of the Exchange Act and the rules and
regulations thereunder since January 1, 2002. As used in Section 2.01(r), the
term "file" shall be broadly construed to include any manner in which a document
or information is furnished, supplied or otherwise made available to the SEC.
(iii) Except as set forth in Section R of the GXPT Disclosure
Letter, the Chief Executive Officer and the Chief Financial Officer of GXPT have
signed, and the Company has furnished to the SEC, all certifications required by
Sections 302 and 906 of the Sarbanes-Oxley Act of 2002; such certifications
contain no qualifications or exceptions to the matters certified therein and
have not been modified or withdrawn; and neither GXPT nor any of its officers
has received notice from any governmental entity questioning or challenging the
accuracy, completeness, form or manner of filing or submission of such
certifications.
15
(iv) GXPT has heretofore has provided or made available to Advaxis
complete and correct copies of all certifications filed with the SEC pursuant to
Sections 302 and 906 of Sarbanes-Oxley Act of 2002 and hereby reaffirms,
represents and warrants to Advaxis the matters and statements made in such
certificates.
(s) Compliance with Law and Government Regulations.
(i) GXPT is in compliance with, and is not in violation of,
applicable federal, state, local or foreign statutes, laws and regulations
(including without limitation, any applicable building, zoning or other law,
ordinance or regulation) affecting its properties or the operation of its
business. GXPT is not subject to any order, decree, judgment or other sanction
of any court, administrative agency or other tribunal.
(ii) Each of GXPT, its directors and its senior financial officers
has consulted with GXPT's independent auditors and with GXPT's outside counsel
with respect to, and (to the extent applicable to GXPT) is familiar in all
material respects with all of the requirements of, Sarbanes-Oxley Act of 2002.
GXPT is in compliance with the provisions of such act applicable to it as of the
date hereof and has implemented such programs and has taken reasonable steps,
upon the advice of GXPT's independent auditors and outside counsel,
respectively, to ensure GXPT's future compliance (not later than the relevant
statutory and regulatory deadlines therefore) with all provisions of such act
which shall become applicable thereto after the date hereof.
(t) Legal Proceedings and History. GXPT hereby represents that, unless
otherwise disclosed herein or in Section T of the GXPT Disclosure Letter, no
officer, director or affiliate of GXPT, has been, within the five years ending
on the Closing Date, a party to any bankruptcy petition against such person or
against any business of which such person was affiliated; convicted in a
criminal proceeding or subject to a pending criminal proceeding (excluding
traffic violations and other minor offenses); subject to any order, judgment or
decree, not subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining, barring,
suspending or otherwise limiting their involvement in any type of business,
securities or banking activities; or found by a court of competent jurisdiction
in a civil action, by the SEC or the Commodity Futures Trading Commission to
have violated a federal or state securities or commodities law, and the judgment
has not been reversed, suspended or vacated.
SECTION 2.02 REPRESENTATIONS AND WARRANTIES OF ADVAXIS. Advaxis hereby
represents and warrants to, and agrees with, GXPT:
(a) Organization and Qualification. Other than as set forth in Section A
of the disclosure letter, of even date herewith, from Advaxis to GXPT (the
"Advaxis Disclosure Letter"), Advaxis has no subsidiaries or affiliated
corporation or owns any interest in any other enterprise (whether or not such
enterprise is a corporation). Advaxis is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware with all
requisite power and authority, and all necessary consents, authorizations,
approvals, orders, licenses, certificates, and permits of and from, and
declarations and filings with, all federal, state, local, and other governmental
authorities and all courts and other tribunals, to own, lease, license, and use
its properties and assets and to carry on the businesses in which it is now
engaged and the businesses in which it contemplates. Advaxis is duly qualified
to transact the businesses in which it is engaged and is in good standing as a
foreign corporation in every jurisdiction in which its ownership, leasing,
licensing, or use of property or assets or the conduct of its businesses makes
such qualification necessary.
16
(b) Capitalization. Immediately prior to the Closing, the authorized
capital stock of Advaxis consists of 100,000 shares of Advaxis Common Stock, par
value $0.001 per share, 40,000 of which shares are issued and outstanding and
50,000 shares of preferred stock, par value $0.001 per share, 6,000 shares of
preferred stock have been designated as Series A Preferred Stock, par value
$0.001 per share of which 3650.46 shares are issued and outstanding. Each of the
outstanding shares of Advaxis Capital Stock is validly authorized, validly
issued, fully paid, and nonassessable, has not been issued and is not owned or
held in violation of any preemptive right of stockholders and by the owners set
forth in Section A of the Advaxis Disclosure Letter, in each case free and clear
of all liens, security interests, pledges, charges, encumbrances, stockholders'
agreements, and voting trusts (other than the existing stockholders agreement to
be terminated prior to the Closing). Other than as set forth in Section A of the
Advaxis Disclosure Letter, there is no commitment, plan, or arrangement to
issue, and no outstanding option, warrant, or other right calling for the
issuance of, any share of Advaxis Capital Stock or any security or other
instrument convertible into, exercisable for, or exchangeable for Advaxis
Capital Stock. Other than as set forth in Section A of the Advaxis Disclosure
Letter, there is outstanding no security or other instrument convertible into or
exercisable or exchangeable for Advaxis Capital Stock.
(c) Financial Condition. Advaxis has delivered to GXPT true and correct
copies of the following: audited balance sheets of Advaxis as of December 31,
2002 and December 31, 2003 and unaudited balance sheets of Advaxis as of June
30, 2003 and June 30, 2004; and audited statements of operations, statements of
stockholders' equity, and statements of cash flows of Advaxis for the two years
ended December 31, 2002 and December 31, 2003 and unaudited statements of
operations, statements of stockholders' equity, and statements of cash flows of
Advaxis for the periods ended June 30, 2003 and June 30, 2004. Each such balance
sheet presents fairly the financial condition, assets, liabilities, and
stockholders' equity of Advaxis as of its date; each such statement of income
and consolidated statement of stockholders' equity presents fairly the results
of operations of Advaxis for the period indicated; and each such statement of
cash flows presents fairly the information purported to be shown therein. The
audited financial statements referred to in this Section 2.02(c) have been
prepared in accordance with GAAP in the United States consistently applied
throughout the periods involved and are in accordance with the books and records
of Advaxis. Except as set forth in Section C of the Advaxis Disclosure Letter,
since June 30, 2004:
(i) There has at no time been a material adverse change in the
financial condition, results of operations, business, properties, assets,
liabilities, or future prospects of Advaxis.
(ii) Advaxis has not authorized, declared, paid, or effected any
dividend or liquidating or other distribution in respect of its capital
stock or any direct or indirect redemption, puchase, or other acquisition
of any stock of Advaxis (other than the pay-in-kind dividend to holders of
Series A Preferred Stock as of August 15, 2004).
17
(iii) The operations and businesses of Advaxis have been conducted
in all respects only in the ordinary course, except for the transactions
contemplated hereby and in connection herewith.
(iv) There has been no accepted purchase order or quotation,
arrangement, or understanding for future sale of the products or services
of Advaxis that Advaxis expects will not be profitable.
(v) Advaxis has not suffered an extraordinary loss (whether or not
covered by insurance) or waived any right of substantial value.
There is no fact known to Advaxis which materially adversely affects or in the
future (as far as Advaxis can reasonably foresee) may materially adversely
affect the financial condition, results of operations, business, properties,
assets, liabilities, or future prospects of Advaxis; provided, however, that
Advaxis expresses no opinion as to political or economic matters of general
applicability. Advaxis has made known, or caused to be made known, to the
accountants or auditors who have prepared, reviewed, or audited the
aforementioned consolidated financial statements all material facts and
circumstances which could affect the preparation, presentation, accuracy or
completeness thereof. The statement of operations of Advaxis for the year ended
December 31, 2003 shall be audited in accordance with GAAP in the United States
consistently applied throughout the periods involved.
(d) Tax and Other Liabilities. Advaxis does not have any material
liability of any nature, accrued or contingent, including, without limitation,
liabilities for Taxes, and liabilities to customers or suppliers, other than the
following:
(i) Liabilities for which full provision has been made on the
balance sheet and the notes thereto, if any (the "Last Advaxis Balance
Sheet") as of June 30, 2004 (the "Last Advaxis Balance Sheet Date")
referred to in Section 2.02(c); and
(ii) Other liabilities arising since the Last Advaxis Balance Sheet
Date and prior to the Closing Date in the ordinary course of business
(which shall not include liabilities to customers on account of defective
products or services) or in connection with the transactions contemplated
hereby or in connection herewith which are not inconsistent with the
representations and warranties of Advaxis or any other provision of this
Agreement.
Without limiting the generality of the foregoing, the amounts set up as
provisions for Taxes on the Last Advaxis Balance Sheet are sufficient for all
accrued and unpaid Taxes of Advaxis, whether or not due and payable and whether
or not disputed, under tax laws, as in effect on the Last Advaxis Balance Sheet
Date or now in effect, for the period ended on such date and for all fiscal
periods prior thereto. The execution, delivery, and performance of this
Agreement by Advaxis will not cause any Taxes to be payable other than by the
stockholders of Advaxis or cause any lien, charge, or encumbrance to secure any
Taxes to be created either immediately or upon the nonpayment of any Taxes other
18
than on the properties or assets of the stockholders of Advaxis. Advaxis has
filed all federal, state, local, and foreign tax returns required to be filed by
it; has delivered to the GXPT a true and correct copy of each such return which
was filed since incorporation; has paid (or has established on the Last Advaxis
Balance Sheet a reserve for) all Taxes, assessments, and other governmental
charges payable or remittable by it or levied upon it or its properties, assets,
income, or franchises which are due and payable; and has delivered to the GXPT a
true and correct copy of any report as to adjustments received by it from any
taxing authority since incorporation and a statement as to any litigation,
governmental or other proceeding (formal or informal), or investigation pending,
threatened, or in prospect with respect to any such report or the subject matter
of such report.
(e) Litigation and Claims. There is no litigation, arbitration, claim,
governmental or other proceeding (formal or informal), or investigation pending,
threatened, or, to the best of Advaxis's knowledge, in prospect (or any basis
therefor known to Advaxis), with respect to Advaxis or any of its businesses,
properties, or assets. Advaxis is not affected by any present or threatened
strike or other labor disturbance nor to the knowledge of Advaxis is any union
attempting to represent any employee of Advaxis as collective bargaining agent.
Advaxis is not in violation of, or in default with respect to, any law, rule,
regulation, order, judgment, or decree which violation or default would have a
material adverse effect upon Advaxis; nor is Advaxis required to take any action
in order to avoid such violation or default.
(f) Properties.
(i) Advaxis does not own any legal or equitable interest in any real
property. Advaxis has good title to all other properties and assets
material to Advaxis, used in its business or owned by it (except real and
other properties and assets as are held pursuant to leases or licenses
described in Section F of the Advaxis Disclosure Letter), free and clear
of all liens, mortgages, security interests, pledges, charges, and
encumbrances (except such as are listed in Section F of the Advaxis
Disclosure Letter).
(ii) All accounts and notes receivable reflected on the Last Advaxis
Balance Sheet, or arising since the Last Advaxis Balance Sheet Date, have
been collected, or are and will be good and collectible, in each case at
the aggregate recorded amounts thereof without right of recourse, defense,
deduction, return of goods, counterclaim, offset, or set off on the part
of the obligor, and, if not collected, can reasonably be anticipated to be
paid within 180 days of the date incurred.
(iii) All production in progress of Advaxis is usable, in current
production and marketable, on a normal basis in the existing business of
Advaxis.
(iv) Attached as Section F of the Advaxis Disclosure Letter is a
true and complete list of the classes of all tangible properties and
assets owned by Advaxis or leased or licensed by Advaxis from or to a
third party (including inventory but not including Intangibles, as defined
in Section 2.02(i)), and with respect to such properties and assets leased
or licensed by Advaxis from or to a third party, a description of such
lease or license. All such properties and assets (including Intangibles)
owned by Advaxis are reflected on the Last Advaxis Balance Sheet (except
for acquisitions subsequent to the Last Advaxis Balance Sheet Date and
prior to the Closing Date which are set forth in Section F of the Advaxis
Disclosure Letter or are approved in writing by GXPT). All real and other
tangible properties and assets owned by Advaxis or leased or licensed by
Advaxis from or to a third party are in good and usable condition
(reasonable wear and tear which is not such as to affect adversely the
operation of the business of Advaxis excepted).
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(v) To the best of Advaxis's knowledge, no real property owned by
Advaxis or leased or licensed by Advaxis from or to a third party lies in
an area which is, or will be, subject to zoning, use, or building code
restrictions which would prohibit, and, to the best of Advaxis's
knowledge, no state of facts relating to the actions or inaction of
another person or entity or his or its ownership, leasing, or licensing of
any real or personal property exists or will exist which would prevent,
the continued effective ownership, leasing, or licensing of such real
property in the businesses in which Advaxis is now engaged or the
businesses in which it contemplates engaging.
(vi) The properties and assets (including Intangibles) owned by
Advaxis (other than those leased or licensed by Advaxis to a third party)
or leased or licensed by Advaxis from a third party constitute all such
properties and assets which are necessary to the business of Advaxis as
presently conducted or as it contemplates conducting.
(vii) Advaxis has not caused or permitted its businesses properties,
or assets to be used to generate, manufacture, refine, transport, treat,
store, handle, dispose of, transfer, produce, or process any Hazardous
Substance (as such term is defined in Section 2.01(f)(v)) except in
compliance with all applicable laws, rules, regulations, orders,
judgments, and decrees, and has not caused or permitted the Release (as
such term is defined in Section 2.01(f)(v)) of any Hazardous Substance on
or off the site of any property of Advaxis.
(g) Contracts and Other Instruments. Section G of the Advaxis Disclosure
Letter contains a true and correct statement of the information required to be
contained therein regarding material contracts, agreements, instruments, leases,
licenses, arrangements, or understandings with respect to Advaxis. Advaxis has
furnished to GXPT: (i) the certificate of incorporation and by-laws of Advaxis
(or, in each case, the comparable charter documents, if any, under applicable
law) and all amendments thereto, as presently in effect, certified by the
Secretary or an authorized signatory of Advaxis and (ii) the following: (A) true
and correct copies of all material contracts, agreements, and instruments
referred to in Section G of the Advaxis Disclosure Letter; (B) true and correct
copies of all material leases and licenses referred to in Section G of the
Advaxis Disclosure Letter; and (C) true and correct written descriptions of all
material supply, distribution, agency, financing, or other arrangements or
understandings referred to in Section G of the Advaxis Disclosure Letter. Except
as set forth in Section G of the Advaxis Disclosure Letter, Advaxis is not party
to any employment agreement with any employee thereof. Except as set forth in
Section G of the Advaxis Disclosure Letter, to the best of Advaxis's knowledge,
none of Advaxis or any other party to any such contract, agreement, instrument,
lease, or license is now or expects in the future to be in violation or breach
of, or in default with respect to complying with, any term thereof, and each
such material contract, agreement, instrument, lease, or license is in full
force and is (to the best of Advaxis's knowledge in the case of third parties)
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the legal, valid, and binding obligation of the parties thereto and (subject to
applicable bankruptcy, insolvency, and other laws affecting the enforceability
of creditors' rights generally) is enforceable as to them in accordance with its
terms. Each such material supply, distribution, agency, financing, or other
arrangement or understanding is a valid and continuing arrangement or
understanding; none of Advaxis or any other party to any such arrangement or
understanding has given notice of termination or taken any action inconsistent
with the continuance of such arrangement or understanding; and the execution,
delivery, and performance of this Agreement will not prejudice any such
arrangement or understanding in any way. Except as set forth in Section G of the
Advaxis Disclosure Letter, Advaxis enjoys peaceful and undisturbed possession
under all leases and licenses under which it is operating. Advaxis is not party
to or bound by any contract, agreement, instrument, lease, license, arrangement,
or understanding, or subject to any charter or other restriction, which has had
or, to the best of Advaxis's knowledge, may in the future have a material
adverse effect on the financial condition, results of operations, businesses,
properties, assets, liabilities, or future prospects of Advaxis and, following
the consummation of the transactions contemplated hereby, GXPT. Advaxis has not
engaged within the last five years in, is engaging in, or intends to engage in
any transaction with, or has had within the last five years, now has, or intends
to have any contract, agreement, instrument, lease, license, arrangement, or
understanding with, any stockholder of Advaxis, any director, officer, or
employee of Advaxis (except for employment agreements listed in Section G of the
Advaxis Disclosure Letter and employment and compensation arrangements described
in Section G of the Advaxis Disclosure Letter), any relative or affiliate of any
stockholder of Advaxis, any such director, officer, or employee, or any other
corporation or enterprise in which any stockholder of Advaxis, any such
director, officer, or employee, or any such relative or affiliate then had or
now has a 5% or greater equity or voting or other substantial interest, other
than those listed and so specified in Section G of the Advaxis Disclosure
Letter. The stock ledgers and stock transfer books and the minute book records
of Advaxis relating to all issuances and transfers of stock by Advaxis and all
proceedings of the stockholders and the Board of Directors and committees
thereof of Advaxis since its incorporation made available to GXPT are the
original stock ledgers and stock transfer books and minute book records of
Advaxis or exact copies thereof. Advaxis is not in violation or breach of, or in
default with respect to, any term of its certificate of incorporation or by-laws
(or the comparable charter document, if any, under applicable law).
(h) Employees.
(i) Advaxis does not have, or contribute to, any pension,
profit-sharing, option, other incentive plan, or any other type of
Employee Benefit Plan or has any obligation to or customary arrangement
with employees for bonuses, incentive compensation, vacations, severance
pay, sick pay, sick leave, insurance, service award, relocation,
disability, tuition refund, or other benefits, whether oral or written,
except as set forth in Section H of the Advaxis Disclosure Letter. Advaxis
has furnished to GXPT true and correct copies, of all documents evidencing
plans, obligations, or arrangements referred to in Section H of the
Advaxis Disclosure Letter (or true and correct written summaries of such
plans, obligations, or arrangements to the extent not evidenced by
documents) and true and correct copies, so initialed, of all documents
evidencing trusts, summary plan descriptions, and any other summaries or
descriptions relating to any such plans.
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(ii) Section H of the Advaxis Disclosure Letter contains a true and
correct statement of the names, relationship with Advaxis, present rates
of compensation (whether in the form of salary, bonuses, commissions, or
other supplemental compensation now or hereafter payable), and aggregate
compensation for the fiscal year ended December 31, 2003 of (A) each
director, officer, or other employee of Advaxis whose aggregate
compensation for the fiscal year ended December 31, 2003 exceeded
US$25,000 or whose aggregate compensation presently exceeds the rate of
US$25,000 per annum and (B) all sales agents, dealers, or distributors of
Advaxis. Since December 31, 2003, Advaxis has not changed the rate of
compensation of any of its directors, officers, employees, agents,
dealers, or distributors, nor has any Employee Benefit Plan or program of
Advaxis been instituted or amended to increase benefits thereunder.
(i) Patents, Trademarks, Et Cetera. Advaxis does not own or have pending,
and is not licensed or otherwise permitted to use, any material Intangible,
other than as described in Section I of the Advaxis Disclosure Letter. Except as
set forth in Section I of the Advaxis Disclosure Letter, each Intangible is
validly issued and is currently in force and uncontested in all jurisdictions in
which it is used or in which such use is contemplated. Section I of the Advaxis
Disclosure Letter contains a true and correct listing of: (i) all Intangibles
which are owned (either in whole or in part), used by, or licensed to Advaxis or
which otherwise relate to the businesses of Advaxis, and a description of each
such Intangible which identifies its owner, registrant, or applicant; (ii) all
contracts, agreements, instruments, leases, and licenses and identification of
all parties thereto under which Advaxis owns or uses any Intangible (whether or
not under license from third parties), together with the identification of the
owner, registrant, or applicant of each such Intangible; (iii) all contracts,
agreements, instruments, leases, and licenses and identification of all parties
thereto under which Advaxis grants the right to use any Intangible; and (iv) all
validity, infringement, right-to-use, or other opinions of counsel (whether
in-house or outside) which concern the validity, infringement, or enforceability
of any Intangible owned or controlled by a party other than Advaxis which
relates to the businesses, properties, or assets of Advaxis. Except as specified
in Section I of the Advaxis Disclosure Letter: (i) Advaxis is the sole and
exclusive owner or licensee of, and (other than those licensed by Advaxis to a
third party) has the right to use, all Intangibles; (ii) no Intangible is
subject to any order, judgment, decree, contract, agreement, instrument, lease,
or license restricting the scope of the use thereof; (iii) during the last five
years, Advaxis has not been charged with, and has not charged others with,
unfair competition, infringement of any Intangible, or wrongful use of
confidential information, trade secrets, or secret processes; and (iv) Advaxis
is not using any patentable invention, confidential information, trade secret,
or secret process of others. There is no right under any Intangible necessary to
the businesses of Advaxis as presently conducted or as it contemplates
conducting, except such as are so designated in Section I of the Advaxis
Disclosure Letter. Except as set forth in Section I of the Advaxis Disclosure
Letter, Advaxis has not infringed, is not infringing, and has not received
notice of infringement in respect of the Intangibles or asserted Intangibles of
others, nor has Advaxis been advised by counsel or others that it is infringing
or may infringe the Intangibles or asserted Intangibles of others if any
currently contemplated business activity is effectuated. To the knowledge of
Advaxis, there is no infringement by others of Intangibles of Advaxis. To the
knowledge of Advaxis, there is no Intangible or asserted Intangible of others
that may materially adversely affect the financial condition, results of
operations, businesses, properties, assets, liabilities, or future prospects of
22
Advaxis. All contracts, agreements, instruments, leases, and licenses pertaining
to Intangibles to which Advaxis is a party, or to which any of its businesses,
properties, or assets are subject, are in compliance with all laws, rules,
regulations, orders, judgments, and decrees binding on Advaxis or to which any
of its businesses, properties, or assets are subject. Except as set forth in
Section I of the Advaxis Disclosure Letter, there is no trademark, tradename or
service mark used by Advaxis to identify, respectively, its products,
businesses, or services. Except as set forth in Section I of the Advaxis
Disclosure Letter, none of the Advaxis Shareholders, any director, officer, or
employee of Advaxis, any relative or affiliate of any Advaxis Shareholder or any
such director, officer, or employee, nor any other corporation or enterprise in
which the Advaxis Shareholder, any such director, officer, or employee, or any
such relative or affiliate had or now has a 5% or greater equity or voting or
other substantial interest, possesses any Intangible which relates to the
businesses of Advaxis.
(j) Questionable Payments. Neither Advaxis, nor any director, officer,
agent, employee, or other person associated with, or acting on behalf of,
Advaxis, nor the Advaxis Shareholder, has, directly or indirectly: used any
corporate funds for unlawful contributions, gifts, entertainment, or other
unlawful expenses relating to political activity; made any unlawful payment to
foreign or domestic government officials or employees or to foreign or domestic
political parties or campaigns from corporate funds; violated any provision of
the Foreign Corrupt Practices Act of 1977, as amended; or made any bribe,
rebate, payoff, influence payment, kickback, or other unlawful payment.
(k) Authority. Advaxis has all requisite power and authority to execute,
deliver, and perform this Agreement. All necessary corporate proceedings of
Advaxis have been duly taken to authorize the execution, delivery, and
performance of this Agreement by Advaxis. This Agreement has been duly
authorized, executed, and delivered by Advaxis, constitutes the legal, valid,
and binding obligation of Advaxis, and is enforceable as to Advaxis in
accordance with its terms. Except as otherwise set forth in this Agreement, no
consent, authorization, approval, order, license, certificate, or permit of or
from, or declaration or filing with, any federal, state, local, or other
governmental authority or any court or other tribunal is required by Advaxis for
the execution, delivery, or performance of this Agreement by Advaxis. No consent
of any party to any material contract, agreement, instrument, lease, license,
arrangement, or understanding to which Advaxis is a party, or to which its or
any of its businesses, properties, or assets are subject, is required for the
execution, delivery, or performance of this Agreement (except such consents
referred to in Section K of the Advaxis Disclosure Letter); and the execution,
delivery, and performance of this Agreement will not (if the consents referred
to in Section K of the Advaxis Disclosure Letter are obtained prior to the
Closing) violate, result in a breach of, conflict with, or (with or without the
giving of notice or the passage of time or both) entitle any party to terminate
or call a default under, entitle any party to receive rights or privileges that
such party was not entitled to receive immediately before this Agreement was
executed under, or create any obligation on the part of Advaxis or GXPT to which
it was not subject immediately before this Agreement was executed under, any
term of any such material contract, agreement, instrument, lease, license,
arrangement, or understanding, or violate or result in a breach of any term of
the certificate of incorporation or by-laws of Advaxis (or the comparable
charter documents, if any, under applicable law), or (if the provisions of this
Agreement are satisfied) violate, result in a breach of, or conflict with any
law, rule, regulation, order, judgment, or decree binding on Advaxis or to which
any of its businesses, properties, or assets are subject. Except as set forth in
Section K of the Advaxis Disclosure Letter, neither Advaxis nor any of its
officers, directors, employees, or agents has employed any broker or finder or
incurred any liability for any fee, commission, or other compensation payable by
any person on account of alleged employment as a broker or finder, or alleged
performance of services as a broker or finder, in connection with or as a result
of this Agreement or the other transactions contemplated hereby and in
connection herewith.
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(l) Insurance. All policies of fire and other insurance against casualty
and other losses and public liability insurance carried by Advaxis are described
in Section L of the Advaxis Disclosure Letter (including the risks covered and
limits of such policies) and are in full force and effect. A full and complete
copy of each such insurance policy has been provided to GXPT, and such policies
are summarized in Section L of the Advaxis Disclosure Letter. All premiums in
respect of such policies for which premium notices have been received have been
paid in full as the same become due and payable. Advaxis have not failed to give
any notice or present any claim under any insurance policy in due and timely
fashion. There are no actual claims or claims threatened in writing against
Advaxis which could come within the scope of such coverage nor are any such
policies currently threatened with cancellation. There are no outstanding
requirements or recommendations by any insurance company that issued a policy
with respect to any of the respective assets, the businesses, or operations of
Advaxis or by any Board of Fire Underwriters or other body exercising similar
functions or by any governmental authority requiring or recommending any repairs
or other work to be done on, or with respect to, any of the respective assets of
Advaxis or requiring or recommending any equipment or facilities to be installed
on any premises from which the respective businesses of Advaxis is conducted or
in connection with any of the respective assets thereof. Advaxis does not have
any knowledge of any material proposed increase in applicable insurance rates or
of any conditions or circumstances applicable to the respective businesses
thereof that might result in such increases. No such policy is terminable by
virtue of the transactions contemplated by this Agreement.
(m) Business Conducted in No Other Name. All business of Advaxis has been
conducted in its and for their benefit and there are no parties related or
affiliated with Advaxis, either directly or indirectly, which are competing for
the business of Advaxis.
(n) Customers and Suppliers. There has been no termination or cancellation
of any relationship between Advaxis and any material supplier, or any customer
or group of customers which, individually or in the aggregate, represented more
than five (5%) percent of the gross revenues of Advaxis taken as a whole during
the year ended December 31, 2003, nor is there any reason to believe that any
such terminations or cancellations of such magnitudes are pending or threatened.
(o) Completeness of Disclosure. No representation or warranty by Advaxis
in this Agreement contains, or at the Closing Date will contain, an untrue
statement of material fact or omits or at the Closing Date will omit to state a
material fact required to be stated therein or necessary to make the statements
made not misleading.
(p) Compliance with Law and Government Regulations. Advaxis is in
compliance in all material respects with, and is not in violation of, applicable
local or foreign statutes, laws and regulations (including without limitation,
any applicable building, zoning or other law, ordinance or regulation) affecting
its properties or the operation of its business. Advaxis is not subject to any
order, decree, judgment or other sanction of any court, administrative agency or
other tribunal.
24
SECTION 2.03 REPRESENTATIONS AND WARRANTIES OF THE ADVAXIS SHAREHOLDERS.
The Advaxis Shareholders, severally and not jointly, hereby represent and
warrant to, and agree with, GXPT as follows:
(a) Representations and Warranties of Advaxis. Those Advaxis Shareholders
who are also employees and members of the management of Advaxis (and no other
Advaxis Shareholder) represent and warrant that the representations and
warranties of Advaxis set forth in Section 2.02 hereof are true and correct in
all material respects. Nothing has come to the attention of such Advaxis
Shareholders that would lead such Advaxis Shareholders to believe that any
representation or warranty of Advaxis set forth on Section 2.02 hereof is untrue
or incorrect in any material respect.
(b) Authority. Each of the Advaxis Shareholders has approved this
Agreement and, if an entity, has duly authorized the execution and delivery
hereof. Each Advaxis Shareholder has full power and authority to execute,
deliver, and perform this Agreement and the transactions contemplated hereby and
in connection herewith. Each Advaxis Shareholder who is an individual has
reached the age of majority under applicable law.
(c) Ownership of Shares. Each of the Advaxis Shareholders owns
beneficially the shares of Advaxis Capital Stock set forth opposite such Advaxis
Shareholder's name on Schedule A. Each Advaxis Shareholder has full power and
authority to transfer his, her or its shares of Advaxis Capital Stock to GXPT
under, pursuant to, and in accordance with, this Agreement, and to the knowledge
of such Advaxis Shareholder, such shares are free and clear of any liens,
charges, mortgages, pledges or encumbrances and such shares are not subject to
any claims as to the ownership thereof, or any rights, powers or interest
therein, by any third party and are not subject to any preemptive or similar
rights of stockholders.
(d) Investment Representations and Covenants.
(i) Each Advaxis Shareholder represents that such Advaxis
Shareholder is acquiring the Purchase Shares to be issued pursuant to Section
1.02(a) hereof for his, her or its own account and for investment only and not
with a view to distribution or resale thereof within the meaning of such phrase
as defined under the Securities Act. The Advaxis Shareholders shall not dispose
of any part or all of such Purchase Shares in violation of the provisions of the
Securities Act and the rules and regulations promulgated under the Securities
Act by the SEC and all applicable provisions of state securities laws and
regulations.
(ii) Each Advaxis Shareholder acknowledges that the certificate or
certificates representing such Advaxis Shareholder's Purchase Shares shall bear
a legend in substantially the form set forth in Section 1.02(c) hereof.
25
(iii) Each Advaxis Shareholder acknowledges being informed that the
Purchase Shares to be issued pursuant to Section 1.02(a) hereof shall be
unregistered, shall be "restricted securities" as defined in paragraph (a) of
Rule 144 under the Securities Act, and must be held indefinitely unless (a) they
are subsequently registered under the Securities Act, or (b) an exemption from
such registration is available.
(iv) Each Advaxis Shareholder acknowledges that such Advaxis
Shareholder has been afforded access to all material information which such
Advaxis Shareholder has requested relevant to such Advaxis Shareholder's
decision to acquire the Purchase Shares and to ask questions of GXPT's
management and that, except as set forth herein, neither GXPT nor anyone acting
on behalf of GXPT has made any representations or warranties to such Advaxis
Shareholder which have induced, persuaded, or stimulated such Advaxis
Shareholder to acquire such Purchase Shares. Each Advaxis Shareholder shall
deliver to GXPT a completed investor representation letter in the form attached
hereto as Exhibit X.
(v) Either alone, or together with his, her or its investment
advisor(s), each Advaxis Shareholder has the knowledge and experience in
financial and business matters to be capable of evaluating the merits and risks
of the prospective investment in the Purchase Shares, and each Advaxis
Shareholder is and will be able to bear the economic risk of the investment in
such Purchase Shares.
ARTICLE III
COVENANTS
SECTION 3.01 COVENANTS OF GXPT. GXPT covenants and agrees that, after the
date hereof and through the earlier of the Closing or the date of the
termination of this Agreement pursuant to Article IV hereof (the earlier of such
times, the "Release Time"), unless Advaxis will otherwise approve in writing,
which approval will not be unreasonably withheld:
(a) (i) Until the Release Time, no dividend or liquidating or other
distribution or stock split shall be authorized, declared, paid, or effected by
GXPT in respect of the outstanding shares of GXPT Common Stock other than the 1
for 200 reverse stock split referenced in 3.01(l) below.
(ii) Until the Release Time, no share of capital stock of GXPT
or warrant for any such share, right to subscribe to or purchase any such share,
or security convertible into, or exchangeable or exercisable for, any such
share, shall be issued or sold by GXPT other than the Offering.
(b) Until the Release Time, GXPT will afford the officers,
directors, employees, counsel, agents, investment bankers, accountants, and
other representatives of Advaxis and the Advaxis Shareholders free and full
access to the plants, properties, books, and records of GXPT. GXPT will permit
them to make extracts from and copies of such books and records, and will from
time to time furnish Advaxis and the Advaxis Shareholders with such additional
financial and operating data and other information as to the financial
condition, results of operations, businesses, properties, assets, liabilities,
or future prospects of GXPT as Advaxis or the Advaxis Shareholders from time to
time may request. Until the Release Time, GXPT will cause the independent
certified public accountants of GXPT to make available to Advaxis, its
independent certified public accountants, and the Advaxis Shareholders, the work
papers relating to the audits of GXPT referred to in Section 2.01(c) of this
Agreement.
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(c) Until the Release Time, GXPT will conduct its affairs so that on
the Closing Date no representation or warranty of GXPT will be inaccurate, no
covenant or agreement of GXPT will be breached, and no condition in this
Agreement will remain unfulfilled by reason of the actions or omissions of GXPT.
Except as otherwise consented to by Advaxis in writing, until the Release Time,
GXPT will conduct its affairs in all respects only in the ordinary course.
(d) Until the Release Time, GXPT will immediately advise Advaxis and
the Advaxis Shareholders in a detailed written notice of any material fact or
occurrence or any pending or threatened material occurrence of which it obtains
knowledge and which (if existing and known at the date of the execution of this
Agreement) would have been required to be set forth or disclosed in or pursuant
to this Agreement or in the GXPT Disclosure Letter, which (if existing and known
at any time prior to or at the Closing) would make the performance by any party
of a covenant contained in this Agreement impossible or make such performance
materially more difficult than in the absence of such fact or occurrence, or
which (if existing and known at the time of the Closing) would cause a condition
to any party's obligations under this Agreement not to be fully satisfied.
(e) GXPT shall insure that all confidential information which GXPT
or any of its officers, directors, employees, counsel, agents, investment
bankers, or accountants may now possess or may hereafter create or obtain
relating to the financial condition, results of operations, businesses,
properties, assets, liabilities, or future prospects of Advaxis, any affiliate
of Advaxis, or any customer or supplier of Advaxis or any such affiliate shall
not be published, disclosed, or made accessible by any of them to any other
person or entity without the prior written consent of Advaxis; provided,
however, that the restrictions of this sentence shall not apply (i) as may
otherwise be required by law, (ii) as may be necessary or appropriate in
connection with the enforcement of this Agreement, or (iii) to the extent the
information shall have otherwise become publicly available. GXPT shall, and
shall cause all other such persons and entities to, deliver to Advaxis all
tangible evidence of the confidential information relating to Advaxis, any
affiliate of Advaxis, or (insofar as such confidential information was provided
by, or on behalf of, Advaxis, or any such affiliate of Advaxis) any customer or
supplier of any of them or any such affiliate to which the restrictions of the
foregoing sentence apply immediately after the termination of this Agreement
pursuant to Article IV or V hereof.
(f) Before GXPT releases any information concerning this Agreement
or any of the other transactions contemplated hereby or in connection herewith
which is intended for or may result in public dissemination thereof, GXPT shall
cooperate with Advaxis, shall furnish drafts of all documents or proposed oral
statements to Advaxis for comment, and shall not release any such information
without the written consent of Advaxis. Nothing contained herein shall prevent
GXPT from releasing any information if required to do so by law.
27
(g) GXPT shall not make any agreement or reach any understanding not
approved in writing by Advaxis as a condition for obtaining any consent,
authorization, approval, order, license, certificate, or permit required for the
consummation of the transactions contemplated by this Agreement.
(h) GXPT shall promptly prepare all required by law or, in the
reasonable opinion of the parties hereto, appropriate public disclosures and
regulatory filings, if any are legally required, relating to this Agreement and
the transactions contemplated hereby and in connection herewith. GXPT shall
furnish or cause to be furnished, for inclusion in such public disclosures and
regulatory filings, such information about GXPT, and GXPT's security holders as
may be required or as may be reasonably requested by Advaxis, and shall continue
to furnish or cause to be furnished such information as is necessary to keep
such information correct and complete in all material respects until the Release
Time. GXPT represents and warrants that the information that it has furnished to
date, taken as a whole, does not now, and will not at any time prior to the
Release Time, (i) contain an untrue statement of a material fact or (ii) omit to
state a material fact required to be stated therein or necessary to make the
statements therein not false or misleading. GXPT shall take any action required
to be taken by it under state "blue-sky," securities, or take-over laws in
connection with the issuance of GXPT Common Stock pursuant to the transactions
contemplated hereby and in connection herewith. The filings made by GXPT within
the past five years with the SEC were, if filed under the Exchange Act, prepared
in accordance with the then existing requirements of the Exchange Act and the
rules and regulations thereunder and, if filed under the Securities Act,
prepared in accordance with the then existing requirements of the Securities Act
and the rules and regulations thereunder. Such filings when filed, and the press
releases and other public statements GXPT has made subsequent to the last such
filing when considered together with such filings, did not at the time of filing
or issuance of the press releases or other public statements, as the case may
be, and (with respect to the press releases and other public statements, when
considered together with such filings) do not now (i) contain an untrue
statement of a material fact or (ii) omit to state a material fact required to
be stated therein or necessary to make the statements therein not false or
misleading.
(i) If, prior to the Release Time, GXPT Common Stock shall be
recapitalized or reclassified or GXPT shall effect any stock dividend, stock
split, or reverse stock split of GXPT Common Stock, other than the contemplated
1 for 200 reverse stock split, then the shares of GXPT Common Stock to be
delivered under this Agreement or upon exercise, conversion, or exchange of any
security to be delivered under this Agreement or assumed by GXPT as contemplated
by this Agreement shall be appropriately and equitably adjusted to the kind and
amount of shares of stock and other securities and property to which the holders
of such shares of GXPT Common Stock or such other security would have been
entitled to receive had such stock or such other security been issued and
outstanding as of the record date for determining stockholders entitled to
participate in such corporate event.
(j) GXPT shall timely prepare and file any declaration or filing
necessary to comply with any transfer tax statutes that require any such filing
before the Closing.
(k) Until the Release Time, GXPT shall not, and shall not authorize
or permit any officer, director, employee, counsel, agent, investment banker,
accountant, or other representative of GXPT, directly or indirectly, to
contemplate or enter into any transaction the effect of which may be to
prohibit, restrict, or delay the consummation of the transactions contemplated
by this Agreement or impair the contemplated benefits to GXPT's stockholders of
the transactions contemplated by this Agreement.
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(l) Effective at the Closing, GXPT shall cause its certificate of
incorporation to be amended to (i) cause the corporate name thereof to be
changed to "Advaxis Inc.", (ii) have a 1 for 200 reverse stock split and (iii)
authorize the number of shares of GXPT Common Stock to be at least 50,000,000
shares.
(m) Effective at the Closing, each officer of GXPT shall tender his
or her respective resignation and each member of the Board of Directors of GXPT
shall tender his or her respective resignation therefrom and GXPT shall appoint
the following individuals as the sole directors of GXPT: Roni Appel, J. Todd
Derbin, Scott Flamm, Thomas McKearn and Steve Roth.
(n) On or prior to the Closing Date, GXPT shall deliver to Advaxis
and the Advaxis Shareholders the completed GXPT Disclosure Letter, which letter
shall be correct and complete in all material respects.
(o) On or prior to the Closing Date, the Board of Directors and
shareholders of GXPT shall (i) adopt the 2004 Stock Option Plan (the "Plan"),
substantially in the form attached hereto as Exhibit C and (ii) reserve
2,381,525 shares of GXPT Common Stock for issuance under the Plan, to be
effective upon Closing.
(p) On the Closing Date, 752,600 new shares of GXPT Common Stock
shall be issued and delivered in certificated form to, or to the order of,
Sunrise Securities Corp. and/or their respective designees.
(q) Prior to the Closing Date, the Board of Directors and
shareholders of GXPT shall have authorized and approved the execution and
delivery of this Agreement and all transactions contemplated hereby, including
without limitation the 1 for 200 reverse stock split.
SECTION 3.02 COVENANTS OF ADVAXIS. Advaxis covenants and agrees that,
after the date hereof and through the Release Time, unless GXPT will otherwise
approve in writing, which approval will not be unreasonably withheld:
(a) Until the Release Time, no amendment will be made in the
certificate of incorporation or by-laws (or, in each case, the comparable
charter documents, if any, under applicable law) of Advaxis.
(b) Until the Release Time, no share of Advaxis Capital Stock,
option or warrant for any such share, right to subscribe to or purchase any such
share, or security convertible into, or exchangeable or exercisable for, any
such share, shall be issued or sold by Advaxis, other than the issuance of
convertible promissory notes and the issuance of warrants related thereto (which
convertible promissory notes and warrants shall be exchanged for Units on the
same terms as the Advaxis Notes), or otherwise than as contemplated by, or in
connection with, this Agreement. Such subscribers or purchasers will be required
to comply with all of the securities transaction exemption requirements imposed
on the Advaxis Shareholders under this Agreement.
29
(c) Until the Release Time, no dividend or liquidating or other
distribution or stock split shall be authorized, declared, paid, or effected by
Advaxis in respect of the outstanding shares of Advaxis Capital Stock other than
in-kind dividends payable to holders of Advaxis Series A Preferred Stock of
Advaxis, as more fully described in Section C of the Advaxis Disclosure Letter.
Until the Release Time, no direct or indirect redemption, purchase, or other
acquisition shall be made by Advaxis of shares of Advaxis Capital Stock.
(d) Until the Release Time, except in the ordinary course of its
business, Advaxis shall not borrow money, guarantee the borrowing of money,
engage in any transaction, or enter into any material agreement other than in
connection with the transactions contemplated hereby or in connection herewith
or otherwise pursuant to any currently outstanding credit line of Advaxis, or
with respect to any agreements or modifications to agreements with the
University of Pennsylvania, or with respect to the incurrence of indebtedness
pursuant to the issuance of convertible promissory notes and the issuance of
warrants related thereto (which convertible promissory notes and warrants shall
be exchanged for Units on the same terms as the Advaxis Notes). For purposes of
this Agreement, references to "material", as well as correlative terms (e.g.,
materially, materiality, etc.), shall be deemed to refer to amounts of US$50,000
or more or effects or consequences of US$50,000 or more.
(e) Until the Release Time, Advaxis will afford the officers,
directors, employees, counsel, agents, investment bankers, accountants, and
other representatives of GXPT and lenders, investors, and prospective lenders
and investors free and full access to the plants, properties, books, and records
of Advaxis, will permit them to make extracts from and copies of such books and
records, and will from time to time furnish GXPT with such additional financial
and operating data and other information as to the financial condition, results
of operations, businesses, properties, assets, liabilities, or future prospects
of Advaxis as GXPT from time to time may request. Until the Release Time,
Advaxis will cause the independent certified public accountants of Advaxis to
make available to GXPT and its independent certified public accountants the work
papers relating to the audits of Advaxis referred to in Section 2.02(c) of this
Agreement.
(f) Until the Release Time, Advaxis will conduct its affairs so that
at the Closing, no representation or warranty of Advaxis will be inaccurate in
any material respect, no covenant or agreement of Advaxis will be breached, and
no condition in this Agreement will remain unfulfilled by reason of the actions
or omissions of Advaxis. Except as otherwise consented to by GXPT in writing,
until the Release Time, Advaxis will use its best efforts to preserve the
business operations of Advaxis intact, to keep available the services of its
present personnel, to preserve in full force and effect the contracts,
agreements, instruments, leases, licenses, arrangements, and understandings of
Advaxis, and to preserve the good will of its suppliers, customers, and others
having business relations with any of them. Until the Release Time, Advaxis will
conduct its affairs in all respects only in the ordinary course, other than in
connection with the matters referenced herein.
30
(g) Until the Release Time, Advaxis will immediately advise GXPT and
the Advaxis Shareholders in a detailed written notice of any material fact or
occurrence or any pending or threatened material occurrence of which it obtains
knowledge and which (if existing and known at the date of the execution of this
Agreement) would have been required to be set forth or disclosed in or pursuant
to this Agreement or the Advaxis Disclosure Letter, which (if existing and known
at any time prior to or at the Closing) would make the performance by any party
of a covenant contained in this Agreement impossible or make such performance
materially more difficult than in the absence of such fact or occurrence, or
which (if existing and known at the time of the Closing) would cause a condition
to any party's obligations under this Agreement not to be fully satisfied.
(h) Advaxis shall use its commercially reasonable efforts to insure
that all confidential information which Advaxis or any of its respective
officers, directors, employees, counsel, agents, investment bankers, or
accountants may now possess or may hereafter create or obtain relating to the
financial condition, results of operations, businesses, properties, assets,
liabilities, or future prospects of GXPT, any affiliate thereof, or any customer
or supplier thereof or of any such affiliate shall not be published, disclosed,
or made accessible by any of them to any other person or entity at any time or
used by any of them except in the ordinary course of business and for the
benefit of Advaxis; provided, however, that the restrictions of this sentence
shall not apply (A) after this Agreement is terminated pursuant to Article IV or
V hereof or otherwise, (B) as may otherwise be required by law, (C) as may be
necessary or appropriate in connection with the enforcement of this Agreement,
or (D) to the extent the information shall have otherwise become publicly
available.
(i) Before Advaxis releases any information concerning this
Agreement or any of the transactions contemplated by this Agreement which is
intended for, or may result in, public dissemination thereof, Advaxis shall
cooperate with GXPT, shall furnish drafts of all documents or proposed oral
statements to GXPT for comment, and shall not release any such information
without the written consent of GXPT, which consent shall not be unreasonably
withheld. Nothing contained herein shall prevent Advaxis from releasing any
information if required to do so by law or in connection with the Offering.
(j) Advaxis shall not make any agreement or reach any understanding
not approved in writing by GXPT as a condition for obtaining any consent,
authorization, approval, order, license, certificate, or permit required for the
consummation of the transactions contemplated by this Agreement.
(k) Advaxis shall furnish, or cause to be furnished, for inclusion
in the public disclosures or regulatory filings of GXPT or otherwise or for
inclusion in GXPT's filings under state "blue-sky," securities, or take-over
laws, such information about Advaxis or the Advaxis Shareholder as may be
required or as may be reasonably requested by GXPT, and shall continue to
furnish or cause to be furnished such information as is necessary to keep such
information correct and complete in all material respect until the Release Time.
Advaxis represents and warrants that the information that it has furnished to
date, taken as a whole, does not now, and will not at any time prior to the
Release Time, (i) contain an untrue statement of a material fact or (ii) omit to
state a material fact required to be stated therein or necessary to make the
statements therein not false or misleading.
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(l) Advaxis shall timely prepare and file any declaration or filing
necessary to comply with any transfer tax statutes that require any such filing
before the Closing.
(m) On or prior to the Closing Date, Advaxis shall deliver to GXPT
the completed Advaxis Disclosure Letter, which letter shall be correct and
complete in all material respects.
(n) Prior to the Closing Date, the Board of Directors and
shareholders of Advaxis shall have authorized and approved the execution and
delivery of this Agreement and all transactions contemplated hereby.
SECTION 3.03 COVENANTS OF THE ADVAXIS SHAREHOLDERS. The Advaxis
Shareholders covenant and agree, severally and not jointly, that, after the date
hereof and through the Release Time, unless GXPT will otherwise approve in
writing, which approval will not be unreasonably withheld, as follows:
(a) Those Advaxis Shareholders who are employees and members of the
management of Advaxis will use best efforts to cause Advaxis to perform each
covenant thereof set forth herein on a timely basis.
(b) Until the earlier of the Release Time, no Advaxis Shareholder
shall take any action the result of which shall be to cause Advaxis to make any
amendment in the certificate of incorporation or by-laws (or, in each case, the
comparable charter documents, if any, under applicable law) thereof.
(c) Before any of the Advaxis Shareholders releases any information
concerning this Agreement or any of the transactions contemplated by this
Agreement which is intended for, or may result in, public dissemination thereof,
such Advaxis Shareholder shall cooperate with GXPT, shall furnish drafts of all
documents or proposed oral statements to GXPT for comment, and shall not release
any such information without the written consent of GXPT, which consent shall
not be unreasonably withheld. Nothing contained herein shall prevent the Advaxis
Shareholders from releasing any information if required to do so by law or in
connection with the Offering.
(d) Each Advaxis Shareholder shall furnish, or cause to be
furnished, for inclusion in the public disclosure in connection with the
transactions contemplated by this Agreement, or for inclusion in GXPT's filings
under state "blue-sky," securities, or take-over laws, such information about
the Advaxis Shareholder as may be required under applicable law, and shall
continue to furnish or cause to be furnished such information as is necessary to
keep such information correct and complete in all material respect until the
Release Time. Each Advaxis Shareholder represents and warrants, solely with
respect to himself, herself or itself, that the information in writing that he,
she or it has furnished to date regarding himself, herself or itself for
inclusion in any registration statement or other related public filings with the
SEC or in any of GXPT's filings under state securities laws, taken as a whole,
does not now, and will not at any time prior to the Release Time, (i) contain an
untrue statement of a material fact or (ii) omit to state a material fact
required to be stated therein or necessary to make the statements therein not
false or misleading.
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ARTICLE IV
CONDITIONS; ABANDONMENT AND TERMINATION
SECTION 4.01 RIGHT OF GXPT TO ABANDON. GXPT's Board of Directors shall
have the right to abandon or terminate this Agreement if any of the following
conditions shall not be true or shall not have occurred, as the case may be, as
of the specified date or dates:
(a) All representations and warranties of Advaxis and the Advaxis
Shareholders contained in this Agreement shall be accurate when made and, in
addition, shall be accurate as of the Closing Date as though such
representations and warranties were then made in exactly the same language by
Advaxis or the Advaxis Shareholders, as applicable, and regardless of knowledge
or lack thereof on the part of Advaxis or the Advaxis Shareholders (as
applicable) or changes beyond its control; as of the Closing Date, Advaxis and
the Advaxis Shareholders shall have performed and complied with all covenants
and agreements and satisfied all conditions required to be performed and
complied with by it at or before the Closing Date, respectively, by this
Agreement; and GXPT shall have received a certificate executed by the chief
executive officer and the chief financial officer of Advaxis and the Advaxis
Shareholders, dated the Closing Date, to that effect.
(b) GXPT shall have received at the Closing Date certificates
executed by the chief executive officer and the chief financial officer of
Advaxis to the effect that they have carefully examined the representations and
warranties made by Advaxis herein, as well as the documents delivered to GXPT
pursuant hereto, and, to the best of their knowledge, (i) neither such
representations and warranties, nor any such document so delivered (A) contains
an untrue statement of a material fact or (B) omits to state a material fact
required to be stated therein or necessary to make the statements therein not
false or misleading, and (ii) since the date hereof, no event with respect to
Advaxis or the Advaxis security holder has occurred which should have been set
forth in an amendment hereto which has not been set forth in such an amendment.
(c) Advaxis and the Advaxis Shareholders, as applicable, shall have
delivered to GXPT at or prior to the Closing Date such other documents
(including certificates of officers of Advaxis) as GXPT may reasonably request
in order to enable GXPT to determine whether the conditions to their obligations
under this Agreement have been met and otherwise to carry out the provisions of
this Agreement.
(d) All actions, proceedings, instruments, and documents required by
Advaxis and the Advaxis Shareholders to carry out this Agreement or incidental
thereto and all other related legal matters shall be subject to the reasonable
approval of counsel to GXPT, and Advaxis and the Advaxis Shareholders shall have
furnished such counsel such documents as such counsel may have reasonably
requested for the purpose of enabling them to pass upon such matters.
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(e) At the Closing, there shall not be pending any legal proceeding
relating to, or seeking to prohibit or otherwise challenge the consummation of,
the transactions contemplated by this Agreement, or to obtain substantial
damages with respect thereto.
(f) There shall not have been any action taken, or any law, rule,
regulation, order, judgment, or decree proposed, promulgated, enacted, entered,
enforced, or deemed applicable to the transactions contemplated by this
Agreement by any federal, state, local, or other governmental authority or by
any court or other tribunal, including the entry of a preliminary or permanent
injunction, which, in the reasonable judgment of GXPT, (i) makes this Agreement
or any of the transactions contemplated by this Agreement illegal, results in a
delay in the ability of Advaxis or GXPT to consummate the transactions
contemplated by this Agreement, (iii) requires the divestiture by GXPT of a
material portion of the business of either GXPT or of Advaxis, (iv) imposes
material limitations on the ability of GXPT effectively to exercise full rights
of ownership of shares of Advaxis including the right to vote such shares on all
matters properly presented to the Advaxis Shareholders, or (v) otherwise
prohibits, restricts or delays consummation of the transactions contemplated by
this Agreement or impairs the contemplated benefits to GXPT of this Agreement or
any of the other transactions contemplated by this Agreement.
(g) The parties to this Agreement shall have obtained at or prior to
the Closing Date all unconditional written approval to this Agreement and to the
execution, delivery, and performance of this Agreement by each of them of
relevant governmental authorities, if any, having jurisdiction over GXPT or
Advaxis or the subject matter of this Agreement.
(h) The parties to this Agreement shall have obtained at or prior to
the Closing Date all consents required for the consummation of the transactions
contemplated by this Agreement from any unrelated third party to any contract,
agreement, instrument, lease, license, arrangement, or understanding to which
any of them is a party, or to which any of them or any of their respective
businesses, properties, or assets are subject.
(i) There shall not have been any material adverse change in the
condition (financial or otherwise), operations, business, assets, liabilities,
earnings or prospects of Advaxis since the date hereof.
(j) GXPT shall conduct a due diligence review of Advaxis, including,
without limitation, a review of the Advaxis Disclosure Letter and the documents
referenced therein delivered prior to the Closing Date, and shall be reasonably
satisfied with the result of such review.
SECTION 4.02 RIGHT OF ADVAXIS AND THE ADVAXIS SHAREHOLDERS TO ABANDON. By
the election of the Advaxis Shareholders, or otherwise, Advaxis's Board of
Directors shall have the right to abandon or terminate this Agreement if any of
the following conditions shall not be true or shall not have occurred, as the
case may be, as of the specified date or dates:
(a) All representations and warranties of GXPT contained in this
Agreement shall be accurate when made and, in addition, shall be accurate as of
the Closing Date as though such representations and warranties were then made in
exactly the same language by GXPT and regardless of knowledge or lack thereof on
the part of GXPT or changes beyond its control; as of the Closing Date, GXPT
shall have performed and complied with all covenants and agreements and
satisfied all conditions required to be performed and complied with by them at
or before the Closing Date by this Agreement; and Advaxis shall have received
certificates executed by the chief executive officer and the chief financial
officer of GXPT, dated the Closing Date, to that effect.
34
(b) Advaxis and the Advaxis Shareholders shall have received at the
Closing Date certificates executed by the chief executive officer and the chief
financial officer of GXPT as of such date, to the effect that they have
carefully examined the representations and warranties made by GXPT made herein,
as well as the documents delivered to Advaxis pursuant hereto, and, to the best
of their knowledge, (i) neither such representations and warranties, nor any
such document so delivered (A) contains an untrue statement of a material fact
or (B) omits to state a material fact required to be stated therein or necessary
to make the statements therein not false or misleading, (ii) since the date
hereof, no event with respect to GXPT has occurred which should have been set
forth in an amendment hereto which has not been set forth in such an amendment,
(iii) any contract, agreement, instrument, lease or license regarding GXPT
required to by filed as an exhibit to any regulatory filing required by the SEC
has been filed as an exhibit to or has been incorporated as an exhibit by
reference into such regulatory filing and (iv) to the effect of clause (k) of
this Section 4.02.
(c) GXPT shall have delivered to Advaxis and the Advaxis
Shareholders at or prior to the Closing such other documents (including
certificates of officers of GXPT) as Advaxis and the Advaxis Shareholders may
reasonably request in order to enable Advaxis and the Advaxis Shareholders to
determine whether the conditions to GXPT's obligations under this Agreement have
been met and otherwise to carry out the provisions of this Agreement.
(d) All actions, proceedings, instruments, and documents required by
GXPT to carry out this Agreement or incidental thereto and all other related
legal matters shall be subject to the reasonable approval of counsel to Advaxis
and the Advaxis Shareholders, and GXPT shall have furnished such counsel such
documents as such counsel may have reasonably requested for the purpose of
enabling them to pass upon such matters.
(e) At the Closing Date, there shall not be pending any legal
proceeding relating to, or seeking to prohibit or otherwise challenge the
consummation of, the transactions contemplated by this Agreement, or to obtain
substantial damages with respect thereto.
(f) There shall not have been any action taken, or any law, rule,
regulation, order, judgment, or decree proposed, promulgated, enacted, entered,
enforced, or deemed applicable to the transactions contemplated by this
Agreement by any federal, state, local, or other governmental authority or by
any court or other tribunal, including the entry of a preliminary or permanent
injunction, which, in the reasonable judgment of Advaxis or the Advaxis
Shareholders, (i) makes this Agreement or any of the transactions contemplated
by this Agreement illegal, or (ii) results in a delay in the ability of GXPT or
Advaxis to consummate any of the transactions contemplated by this Agreement or
(iii) otherwise prohibits, restricts or delays consummation of the other
transactions contemplated by this Agreement or impairs the contemplated benefits
to the Advaxis Shareholders of this Agreement or any of the transactions
contemplated by this Agreement.
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(g) The parties to this Agreement shall have obtained at or prior to
the Closing Date all unconditional written approval to this Agreement and to the
execution, delivery, and performance of this Agreement by each of them of
relevant governmental authorities, if any, having jurisdiction over GXPT or
Advaxis or the subject matter of this Agreement.
(h) At or prior to the Closing Date, GXPT shall have made all
filings, and taken all actions, necessary to comply with all reporting
requirements under federal and state securities laws (including without
limitation, applicable "blue-sky" laws with regard to the issuance of GXPT
Common Stock as contemplated by this Agreement) other than the filing of Form D
up to 15 days following the Closing. Without limiting the generality of the
foregoing, any prescribed periods within which a "blue sky" or securities law
administrator may disallow GXPT's notice of reliance on an exemption from such
state's requirements, shall have elapsed at or prior to the Closing Date.
(i) The parties to this Agreement shall have obtained at or prior to
the Closing Date all consents required for the consummation of the transactions
contemplated by this Agreement from any unrelated third party to any contract,
agreement, instrument, lease, license, arrangement, or understanding to which
any of them is a party, or to which any of them or any of their respective
businesses, properties, or assets are subject.
(j) Advaxis shall conduct a due diligence review of GXPT, including,
without limitation, a review of the GXPT Disclosure Letter and the documents
referenced therein delivered prior to the Closing Date, and same shall be
satisfactory in the reasonable opinion of Advaxis.
(k) At the Closing Date, GXPT shall have no assets and no
liabilites, determined in accordance with GAAP in effect in the United States
applied on a basis consistent with that of the financial statements of GXPT
hereinabove referenced.
(l) At or prior to the Closing Date, a minimum investment of at
least $1,500,000 shall be placed in escrow with Continental Transfer and Trust
Company, the escrow agent, in connection with the Offering.
(m) At or prior to the Closing Date, the officers, directors, and
holders of 5% or more of the outstanding GXPT Common Stock immediately prior to
such date shall have executed and delivered to Advaxis an agreement mutually
acceptable in form and substance to each of such person or entity, on the one
hand, and Advaxis, on the other hand, providing for restrictions on resale and a
"leak-out" of securities for a 90 day period following the Closing Date.
SECTION 4.03 OPTIONAL ABANDONMENT. In addition to the provisions of
Section 4.01 and Section 4.02 above, the transactions contemplated by this
Agreement may be abandoned or terminated at or before the Closing
notwithstanding adoption and approval of this Agreement and the transactions
contemplated hereby by the stockholders of the parties hereto:
(a) by mutual agreement of the Boards of Directors of GXPT and
Advaxis;
36
(b) at the option of GXPT's Board of Directors, if facts exist which
render impossible compliance with one or more of the conditions set forth in
Section 4.01 and such are not waived by GXPT;
(c) at the option of Advaxis's Board of Directors or by the election
of the Advaxis Shareholders if facts exist which render impossible compliance
with one or more of the conditions set forth in Section 4.02 and such are not
waived by Advaxis; and
(d) at the option of Advaxis's Board of Directors and GXPT's Board
of Directors, if the Closing Date shall not have occurred on or before the
Initial Closing Date; provided, that if Advaxis pays GXPT $15,000 (such amount
is non-refundable) prior to the Initial Closing Date, then the Closing Date
shall be extended for an additional forty-five (45) day period.
SECTION 4.04 EFFECT OF ABANDONMENT. If the transactions contemplated by
this Agreement are abandoned or terminated as provided for in this Article IV,
except for Sections 3.01(e), 3.02(h), 4.01, 4.02 and 4.03, this Agreement shall
forthwith become wholly void and of no further force or effect without liability
on the part of either party to this Agreement or on the part of any officer,
director, controlling person (if any), employee, counsel, agent, or stockholder
thereof; provided, however, that nothing in this Section 4.04 shall release GXPT
or Advaxis or any officer, director, controlling person (if any), employee,
counsel, agent, or stockholder thereof from liability for a willful failure to
carry out its respective obligations under this Agreement.
ARTICLE V
MISCELLANEOUS
SECTION 5.01 EXPENSES. Whether or not the transactions contemplated in
this Agreement are consummated, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby, will be paid by
the party incurring such expense or as otherwise agreed to herein.
SECTION 5.02 BROKERS AND FINDERS. Except as set forth on Schedule 5.2,
each of the parties hereto represents, as to itself, that no agent, broker,
investment banker or firm or person is or will be entitled to any broker's or
finder's fee or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement, except as may be otherwise set
forth herein or by separate document.
SECTION 5.03 NECESSARY ACTIONS. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
In the event at any time after the Closing, any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper executive
officers and/or directors of GXPT or Advaxis, as the case may be, or the
relevant Advaxis Shareholders or Advaxis Shareholders will take all such
necessary action.
38
SECTION 5.04 EXTENSION OF TIME; WAIVERS. At any time prior to the Closing
Date:
(a) GXPT may (i) extend the time for the performance of any of the
obligations or other acts of Advaxis or any Advaxis Shareholders, (ii) waive any
inaccuracies in the representations and warranties of Advaxis or any Advaxis
Shareholders or, or contained herein or in any document delivered pursuant
hereto by Advaxis or any Advaxis Shareholders, and (iii) waive compliance with
any of the agreements or conditions contained herein to be performed by Advaxis
or any Advaxis Shareholders. Any agreement on the part of GXPT to any such
extension or waiver will be valid only if set forth in an instrument, in
writing, signed on behalf of GXPT.
(b) Advaxis and the Advaxis Shareholders (by action of the Advaxis
Shareholders), may (i) extend the time for the performance of any of the
obligations or other acts of GXPT, (ii) waive any inaccuracies in the
representations and warranties of GXPT contained herein or in any document
delivered pursuant hereto by GXPT and (iii) waive compliance with any of the
agreements or conditions contained herein to be performed by GXPT. Any agreement
on the part of Advaxis and to any such extension or waiver will be valid only if
set forth in an instrument, in writing, signed on behalf of Advaxis.
SECTION 5.05 NOTICES. Any notice to any party hereto pursuant to this
Agreement will be in writing and given by Certified or Registered Mail or by
facsimile, addressed as follows:
If to Advaxis: Advaxis, Inc.
212 Carnegie Center, Suite 206
Princeton, New Jersey 08540
Attention: J. Todd Derbin
Fax: (801) 459-3596
If to the Advaxis
Shareholders: At the addresses set forth on the signature page.
With a copy to: Reitler Brown & Rosenblatt LLC
800 Third Avenue, 21st Floor
New York, New York 10022
Attention: Edward G. Reitler, Esq.
Fax: (212) 371-5500
If to GXPT: Great Expectations and Associates, Inc.
4105 East Florida Avenue, Suite 100
Denver, Colorado 80222
(303) 756-5703
With a copy to: Francona, Joiner, Goodman
4750 Table Mesa Drive
Boulder, Colorado 80305
Attention: Gary Joiner, Esq.
Fax: 303-494-6309
39
Additional notices are to be given as to each party, at such other address
as should be designated in writing complying as to delivery with the terms of
this Section 5.05. All such notices will be effective when received.
SECTION 5.06 PARTIES IN INTEREST. This Agreement will inure to the benefit
of and be binding upon the parties hereto and the respective successors and
assigns. Nothing in this Agreement is intended to confer, expressly or by
implication, upon any other person any rights or remedies under or by reason of
this Agreement.
SECTION 5.07 COUNTERPART. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all together will
constitute one document. The delivery by facsimile of an executed counterpart of
this Agreement will be deemed to be an original and will have the full force and
effect of an original executed copy.
SECTION 5.08 SEVERABILITY. The provisions of this Agreement will be deemed
severable and the invalidity or unenforceability of any provision hereof will
not affect the validity or enforceability of any of the other provisions hereof.
If any provisions of this Agreement, or the application thereof to any person or
any circumstance, is illegal, invalid or unenforceable, (a) a suitable and
equitable provision will be substituted therefor in order to carry out, so far
as may be valid and enforceable, the intent and purpose of such invalid or
unenforceable provision, and (b) the remainder of this Agreement and the
application of such provision to other persons or circumstances will not be
affected by such invalidity or unenforceability, nor will such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
SECTION 5.09 HEADINGS. The Article and Section headings are provided
herein for convenience of reference only and do not constitute a part of this
Agreement and will not be deemed to limit or otherwise affect any of the
provisions hereof.
SECTION 5.10 GOVERNING LAW. This Agreement will be deemed to be made in
and in all respects will be interpreted, construed and governed by and in
accordance with the law of the State of COLORADO, without regard to the conflict
of law principles thereof.
SECTION 5.11 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All terms,
conditions, representations and warranties set forth in this Agreement or in any
instrument, certificate, opinion, or other writing providing for in it, will
survive the Closing and the delivery of the shares of GXPT Common Stock to be
issued hereunder at the Closing for a period of two years after Closing,
regardless of any investigation made by or on behalf of any of the parties
hereto.
40
SECTION 5.12 ASSIGNABILITY. This Agreement will not be assignable by
operation of law or otherwise and any attempted assignment of this Agreement in
violation of this subsection will be void ab initio.
SECTION 5.13 AMENDMENT. This Agreement may be amended with the approval of
a majority of the Advaxis Shareholders and the boards of directors of each of
GXPT and Advaxis at any time. This Agreement may not be amended except by an
instrument, in writing, signed on behalf of each of the parties hereto.
SECTION 5.14. AGREEMENT TO INDEMNIFY. (a) To the extent permitted by law,
Advaxis agrees to indemnify and hold The Trustees of the University of
Pennsylvania harmless from and against all losses, claims, damages, liabilities
and obligations of any kind and description ("LOSSES"), including any reasonable
attorney fees incurred by The Trustees of the University of Pennsylvania in
investigating, defending or settling such Losses arising out of the Offering and
matters related thereto other than: (i) Losses arising out of the gross
negligence, willful misconduct or misrepresentations of The Trustees of the
University of Pennsylvania or (ii) Losses arising out of a decline in the value
of the GXPT Common Stock issuable to The Trustees of the University of
Pennsylvania. Notwithstanding the foregoing, Advaxis agrees to indemnify and
hold The Trustees of the University of Pennsylvania harmless from and against
any third party claims or suits against The Trustees of the University of
Pennsylvania in connection with a decline in value of the GXPT Common Stock held
by such third parties.
(b) To the extent permitted by law, Advaxis agrees to indemnify and hold
the officers, directors and principal shareholder of GXPT harmless from and
against any and all Losses incurred by GXPT in investigating, defending or
settling such Losses arising out of the Offering and matters related thereto
other than Losses arising out of the gross negligence, willful misconduct or
misrepresentations of GXPT's officers, directors or principal shareholder.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
41
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement in a manner legally binding upon them as of the date first above
written.
GREAT EXPECTATIONS AND ASSOCIATES, INC.
BY /s/ Fred Mahlke
-------------------------------------
NAME: Fred Mahlke
TITLE: President
ATTEST:
/s/ Daniel A. Unrein
- ------------------------------
NAME: Daniel A. Unrein
TITLE: Secretary
ADVAXIS, INC.
BY /s/ J. Todd Derbin
-------------------------------------
NAME: J. TODD DERBIN
TITLE: CHIEF EXECUTIVE OFFICER
ATTEST:
/s/ Roni Appel
- ------------------------------
NAME: Roni Appel
TITLE: CFO
ADVAXIS SHAREHOLDERS:
TECHVECTORS, LLC
BY: /s/ Roni Appel
------------------------------------
NAME: Roni Appel
TITLE:
ADDRESS: c/o Roni Appel
22 Ruth Lane
Demarest, NJ 07627
42
THE TRUSTEES OF THE
UNIVERSITY OF PENNSYLVANIA
BY: /s/ Louis Berneman
------------------------------------
NAME: Louis Berneman
TITLE: Managing Director
ADDRESS: University Of Pennsylvania
Center for Technology
Transfer
3160 Chestnut Street
Suite 200
Philadelphia, PA 19104
CRESTWOOD, LLC
BY: /s/ Ron Nizan
------------------------------------
NAME: Ron Nizan
TITLE: Manager
ADDRESS: 109 Boulevard Drive
Danbury, CT 06810
FLAMM FAMILY PARTNERS, LP
BY: /s/ Scott Flamm
------------------------------------
NAME: Scott Flamm
TITLE: President
ADDRESS: c/o Scott Flamm
70 West Road
Short Hills, NJ 07078
TRINITA LLC
BY: /s/ Morton Kielland
------------------------------------
NAME: Morton Kielland
TITLE: President
ADDRESS: c/o Morten Kielland,
22 Painters Lane,
Chesterbrook, PA 19087
43
/s/ Yvonne Paterson
---------------------------------------
YVONNE PATERSON
ADDRESS: 323 Johnson Pavilion
36th St. and Hamilton Walk
Philadelphia, PA 19104-6076
/s/ James Patton
---------------------------------------
JAMES PATTON
ADDRESS: c/o Millennium Oncology
Management
250 West Lancaster Avenue
Suite 100
Paoli, PA 19301
/s/ Roni Appel
---------------------------------------
RONI APPEL
ADDRESS: 22 Ruth Lane
Demarest, NJ 07627
/s/ William Kahn
---------------------------------------
WILLIAM KAHN
ADDRESS: 7903 Long Meadow Road
Baltimore, MD 21208
/s/ Richard Yelovich
---------------------------------------
RICHARD YELOVICH
ADDRESS: C/O Millennium Oncology
Management
250 West Lancaster Avenue
Suite 100
Paoli, PA 19301
/s/ Charles Kwon
---------------------------------------
CHARLES KWON
ADDRESS: 834 Monroe Street
Evanston, IL 60202
/s/ Tracy Yun
---------------------------------------
TRACY YUN
ADDRESS: 90 LaSalle Street
Apt. #13G
New York, NY 10027
/s/ Thomas McKearn
---------------------------------------
THOMAS MCKEARN
ADDRESS: 6040 Lower Mountain Road
New Hope, PA 18938
44
SCHEDULE A
NAME NUMBER OF SHARES*
TechVectors, LLC 7,043,647
The Trustees of the University of Pennsylvania 6,339,282
Yvonne Paterson 704,365
Crestwood, LLC 151,887
Flamm Family Partner, LP 243,019
James Patton 330,785
Roni Appel 121,509
William Kahn 151,517
Trinita LLC 151,289
Richard Yelovich 151,289
Charles Kwon 60,197
Tracy Yun 60,197
Thomas McKearn 88,741
* Numbers reflect the Post-Closing Amounts
TechVectors, LLC, the current shareholder of Advaxis will distribute its shares
of Advaxis to its members at Closing. Its member are:
Flamm Family Partners, LP
Roni Appel
James Patton
Open Ventures LLC
45
SCHEDULE B
POST CLOSING / PRE FINANCING FULLY DILUTED CAPITALIZATION TABLE
- --------------------------------------------------------------------------------
TOTAL ON A
FULLY
NAME: OPTIONS WARRANTS SHARES DILUTED BASIS
- --------------------------------------------------------------------------------
GXPT previous owners 752,600 752,600
- --------------------------------------------------------------------------------
Sunrise Securities Corp. and/or
its designees 752,600 752,600
- --------------------------------------------------------------------------------
Flamm Family Partners, LP* 8,910 2,585,094 2,594,004
- --------------------------------------------------------------------------------
Roni Appel* 14,449 2,463,584 2,478,033
- --------------------------------------------------------------------------------
James Patton* 56,349 36,551 2,672,860 2,765,760
- --------------------------------------------------------------------------------
Open Ventures, LLC* 17,422 17,422
- --------------------------------------------------------------------------------
The Trustees of the University
of Pennsylvania 6,339,282 6,339,282
- --------------------------------------------------------------------------------
Yvonne Paterson 169,048 704,365 873,413
- --------------------------------------------------------------------------------
Crestwood, LLC 22,274 151,887 174,161
- --------------------------------------------------------------------------------
William Kahn 151,517 151,517
- --------------------------------------------------------------------------------
Trinita LLC 151,289 151,289
- --------------------------------------------------------------------------------
Richard Yelovich 151,289 151,289
- --------------------------------------------------------------------------------
Charles Kwon 8,910 60,147 69,107
- --------------------------------------------------------------------------------
Tracy Yun 60,197 60,197
- --------------------------------------------------------------------------------
Thomas McKearn 82,763 22,274 88,741 193,778
- --------------------------------------------------------------------------------
Marilyn Mendell 31,184 31,184
- --------------------------------------------------------------------------------
J. Todd Derbin 1,172,767 73,049 1,245,816
- --------------------------------------------------------------------------------
Carmel Ventures, Inc. 70,436 57,913 128,349
- --------------------------------------------------------------------------------
Scott Flamm 70,436 31,184 101,620
- --------------------------------------------------------------------------------
Jonnas Grossman 8,910 8,910
- --------------------------------------------------------------------------------
Kerry Propper 22,274 22,274
- --------------------------------------------------------------------------------
Gina Ferarri 8,910 8,910
- --------------------------------------------------------------------------------
Adele Pfenninger 4,455 4,455
- --------------------------------------------------------------------------------
Gene Mancino 142,555 142,555
- --------------------------------------------------------------------------------
Port of technology 46,956 46,956
- --------------------------------------------------------------------------------
Fern 8,910 8,910
- --------------------------------------------------------------------------------
Cornucopia Pharmaceutical 35,218 35,218
- --------------------------------------------------------------------------------
Thorsten Verch 56,348 56,348
- --------------------------------------------------------------------------------
Christian Peters 228,919 228,919
- --------------------------------------------------------------------------------
Pentegram 35,639 35,639
- --------------------------------------------------------------------------------
Joy Cavagnaro 84,524 84,524
- --------------------------------------------------------------------------------
Bruce Mackler 52,827 52,827
- --------------------------------------------------------------------------------
Madison Keats 28,175 28,175
- --------------------------------------------------------------------------------
DNA Bridges 16,200 16,200
- --------------------------------------------------------------------------------
46
Pramod Srivastava 58,110 58,110
- --------------------------------------------------------------------------------
Steve Roth 82,763 82,763
- --------------------------------------------------------------------------------
Dr. Lorber 58,110 58,110
- --------------------------------------------------------------------------------
Carl June 58,110 58,110
- --------------------------------------------------------------------------------
TOTALS: 2,381,525 584,885 17,102,923 20,069,333
- --------------------------------------------------------------------------------
* TechVectors, LLC, the current shareholder of Advaxis will distribute its
shares of Advaxis to its members at Closing as follows:
Flamm Family Partners, LP: 2,341,320
Roni Appel: 2,341,320
James Patton: 2,341,320
Open Ventures LLC: 17,422
47
Section 5.02
Pursuant to the terms of the Investment Banking Agreement between Advaxis and
Sunrise Securities Corp., Sunrise Securities Corp. and/or its designees are to
receive 752,600 shares of common stock of GXPT
48
EXHIBIT X
FORM OF INVESTOR REPRESENTATION LETTER
GREAT EXPECTATIONS AND ASSOCIATES, INC.
To the Board of Directors of
Great Expectations and Associates, Inc.
The undersigned (the "Investor") represents that:
(i) He, she or it is acquiring the shares of common stock (the
"Shares"), of Great Expectations and Associates, Inc., a Colorado corporation
(the "Company") to be issued pursuant to the Share Exchange and Reorganization
Agreement, among the Company, Advaxis, Inc., a Delaware corporation ("Advaxis"),
and the shareholders of Advaxis (the "Agreement") for his, her or its own
account and for investment only and not with a view to distribution or resale
thereof within the meaning of such phrase as defined under the Securities Act of
1933, as amended (the "Securities Act"). The Investor shall not dispose of any
part or all of such Shares in violation of the provisions of the Securities Act
and the rules and regulations promulgated under the Securities Act by the
Securities and Exchange Commission (the "SEC"), and all applicable provisions of
state securities laws and regulations.
(ii) If the Investor is a natural person, the Investor has reached
the age of maturity in the jurisdiction in which the Investor resides, has
adequate means of providing for the Investor's current financial needs and
contingencies, is able to bear the substantial economic risks of an investment
in the Shares for an indefinite period of time, has no need for liquidity in
such investment and, at the present time, could afford a complete loss of such
investment.
(iii) The Investor acknowledges that he, she or it has been afforded
access to all material information which it has requested relevant to its
decision to acquire the Shares and to ask questions of the Company's management
and that, neither the Company nor anyone acting on behalf of the Company has
made any representations or warranties to the Investor which have induced,
persuaded, or stimulated the Investor to acquire the Shares.
(iv) Either alone, or together with its investment advisor(s), the
Investor has the knowledge and experience in financial and business matters to
be capable of evaluating the merits and risks of the prospective investment in
the Shares, and each the Investor is and will be able to bear the economic risk
of the investment in the Shares.
(v) The Investor acknowledges that the certificate or certificates
representing the Shares shall bear a legend in substantially the form as
follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED
FOR SALE, SOLD, OR OTHERWISE DISPOSED OF, EXCEPT IN COMPLIANCE WITH
THE REGISTRATION PROVISIONS OF SUCH ACT OR PURSUANT TO AN EXEMPTION
FROM SUCH REGISTRATION PROVISIONS, THE AVAILABILITY OF WHICH IS TO
BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY.
49
(vi) The Investor acknowledges being informed that the Shares to be
issued pursuant to the Agreement shall be unregistered, shall be "restricted
securities" as defined in paragraph (a) of Rule 144 under the Securities Act,
and must be held indefinitely unless (a) they are subsequently registered under
the Securities Act, or (b) an exemption from such registration is available.
(vii) The following information should be provided by the person
making the investment decision whether on his own behalf or on behalf of an
entity:
(1) Name of Investor: Age:
----------------------------------- -------
(2) Name of person making investment decision
Age:
----------------------------------------------------- -------
(Print)
(3) Principal residence address and telephone number: (___) ________
----------------------------------------------------------------
Email Address:
----------------------------------------------------------------
(4) Secondary residence address and telephone number: (___) ________
----------------------------------------------------------------
----------------------------------------------------------------
The undersigned has no present intention of becoming a resident of
any other state or jurisdiction.
(5) Name, address, telephone number and facsimile number of
employer or business:
----------------------------------------------------------------
----------------------------------------------------------------
----------------------------------------------------------------
----------------------------------------------------------------
(i) Nature of business
------------------------------------------
(ii) Position and nature of responsibilities
-----------------------------------------------------------
(6) Length of employment or in current position
---------------------
50
(7) Prior employment, positions or occupations during the past five
years (and the inclusive dates of each) are as follows:
Nature of Employment,
or Occupation Position/Duties From/To
----------------------------------------------------------------
----------------------------------------------------------------
----------------------------------------------------------------
Attach additional pages to answer any questions in greater detail,
if necessary.
The undersigned should answer the following questions, which pertain
to income, tax rate, net worth, liquid assets, and non-liquid assets by
including spousal contribution even though the investment shall be held in
single name.
(8) Business or professional education and the degree(s) received
are as follows:
School Degree Year Received
----------------------------------------------------------------
----------------------------------------------------------------
(viii) ACCREDITED INVESTOR REPRESENTATIONS. Initial all appropriate
spaces on the following pages indicating the basis upon which the undersigned
qualifies as an accredited investor (please initial only where appropriate).
[MUST INITIAL ONE]
For Individual Investors Only:
(1) ____ I certify that I am an accredited investor because I have
an individual net worth, or my spouse and I have combined net
worth, in excess of $1,000,000. For purposes of this question,
"net worth" means the excess of total assets at fair market
value, including home, home furnishings and automobiles, over
total liabilities.
(2a) ____ I certify that I am an accredited investor because I had
individual income (exclusive of any income attributable to my
spouse) of more than $200,000 in 2002 and 2003 and I
reasonably expect to have an individual income in excess of
$200,000 this year.
51
(2b) ____ Alternatively, my spouse and I have joint income in
excess of $300,000 in each applicable year.
(3) ____ I am a director or executive officer of the Company.
Other Investors:
(4) ____ The undersigned certifies that it is one of the
following: any bank as defined in Section 3(a)(2) of the
Securities Act whether acting in its individual or fiduciary
capacity; any broker or dealer registered pursuant to section
15 of the Securities Exchange Act of 1934; insurance company
as defined in Section 2(13) of the Securities Act; investment
company registered under the Investment Company Act of 1940 or
a business development company as defined in Section 2(a)(48)
of that Act; Small Business Investment Company licensed by the
U.S. Small Business Administration under Section 301(c) or (d)
of the Small Business Investment Act of 1958; any plan
established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or
its political subdivisions, for the benefit of its employees,
if such plan has total assets in excess of $5,000,000;
employee benefit plan within the meaning of Title I of the
Employee Retirement Income Security Act of 1974, if the
investment decision is made by a plan fiduciary, as defined in
Section 3(21) of such Act, which is either a bank, savings and
loan association, insurance company, or registered investment
advisor, or if the employee benefit plan has total assets in
excess of $5,000,000, or if a self-directed plan, with
investment decisions made solely by persons that are
accredited investors.
(5) ____ The undersigned certifies that it is a private business
development company as defined in Section 202(a)(22) of the
Investment Advisors Act of 1940.
(6) ____ The undersigned certifies that it is a organization
described in Section 501(c)(3) of the U.S. Internal Revenue
Code, corporation, Massachusetts or similar business trust or
partnership, not formed for the specific purpose of acquiring
the securities offered, with total assets in excess of
$5,000,000.
(7) ____ The undersigned certifies that it is a trust, with total
assets in excess of $5,000,000, not formed for the specific
purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person as described in Rule
506(b)(2)(ii) of the Securities Act.
(8) ____ The undersigned certifies that it is an entity in which
all of the equity owners are accredited investors.
52
Individual Investors:
- --------------------------------------------------------------------------------
Social Security Number Print Name of Investor No. 1
----------------------------------------
Signature of Investor No. 1
- --------------------------------------- ----------------------------------------
Social Security Number Print Name of Investor No. 2
----------------------------------------
Signature of Investor No. 2
Manner in which Shares are to be held:
_____ Individual Ownership _____ Partnership
_____ Tenants-in-Common _____ Trust
_____ Joint Tenant With Right of Survivorship _____ Corporation
_____ Community Property _____ Employee Benefit Plan
_____ Separate Property _____ Other (please indicate)
Corporate or Other Entity:
- ----------------------------------- -----------------------------------
Federal ID Number Print Name of Entity
By:
-------------------------------------
Signature, Title
DATED: _______________, 2004
53
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "AGREEMENT") is among GREAT
EXPECTATIONS AND ASSOCIATES, INC., a Colorado corporation, which as soon as
possible following the closing of the Share Exchange and Reorganization
Agreement (as defined below) intends to change its name to Advaxis, Inc. (the
"COMPANY"), and the Investors (as defined below) signatory hereto, and dated,
with respect to the Company, as of September 14, 2004 and, with respect to each
Investor, as of such Investor's date of execution set forth on such Investor's
signature page hereto.
WHEREAS, subject to the terms and conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act (as defined below) and Rule
506 promulgated thereunder, the Company desires to issue and sell to each
Investor, and each Investor, severally and not jointly, desires to purchase from
the Company certain securities of the Company, as more fully described in this
Agreement; and
WHEREAS, pursuant to that certain Escrow Agreement, dated as of the date
hereof, among the Company, Continental Stock Transfer & Trust Company (the
"ESCROW AGENT") as escrow agent, and Sunrise Securities Corp. (the "PLACEMENT
AGENT"), all subscriptions for the Company's securities pursuant to this
Agreement will be held in escrow (the "ESCROW") by the Escrow Agent in a
non-interest bearing account entitled "CST&T Advaxis Escrow Account" until
accepted and until the Closing at which such subscription monies will be
delivered as payment for securities purchased hereunder.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Investors agree
as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms shall have
the meanings indicated in this Section 1.1:
"ACTION" means any action, claim, suit, inquiry, notice of
violation, proceeding (including any partial proceeding such as a deposition) or
investigation pending or threatened in writing against or affecting the Company,
any Subsidiary or any of their respective properties before or by any court,
arbitrator, governmental or administrative agency, regulatory authority
(federal, state, county, local or foreign), stock market, stock exchange or
trading facility.
"ADVAXIS" means Advaxis, Inc., a Delaware corporation.
"AFFILIATE" means 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.
"BUSINESS DAY" means any day except Saturday, Sunday and any day
which shall be a federal legal holiday or a day on which banking institutions in
the State of New York are authorized or required by law or other governmental
action to close.
"CLOSING" means the closing of the purchase and sale of the
Securities on the Initial Closing Date or any Subsequent Closing Date pursuant
to Section 2.1.
"CLOSING DATE" shall mean any of the Initial Closing Date or any
Subsequent Closing Date.
"COMBINED COMPANY" means the Company after the closing of the Share
Exchange and Reorganization Agreement.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the common stock of the Company, no par value
per share, and any securities into which such common stock may hereafter be
reclassified.
"COMPANY COUNSEL" means Reitler Brown & Rosenblatt LLC.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"GXPT" means Great Expectations and Associates, Inc., a Colorado
corporation, prior to the closing of the Share Exchange and Reorganization
Agreement.
"INITIAL CLOSING" means the initial closing of the purchase and sale
of the Securities pursuant to Section 2.1(a).
"INITIAL CLOSING DATE" means the date of the Initial Closing.
"INVESTMENT AMOUNT" means, with respect to each Investor, the
investment amount indicated below such Investor's name on the signature page of
this Agreement.
"INVESTORS" means collectively, each Person who shall subscribe for
Securities hereunder and execute an Investor Counterpart to this Agreement, each
individually being an "Investor".
"LIEN" means any lien, charge, encumbrance, security interest, right
of first refusal or other restrictions of any kind.
"MAJORITY OF INVESTORS" means, at the time of determination,
Investors who have subscribed for or purchased at least 50.1% of the Shares
which have, at such time, been subscribed for and/or purchased, pursuant to this
Agreement.
"PENN" means The Trustees of the University of Pennsylvania.
2
"PENN LICENSE" means the License Agreement, effective as of June 17,
2002 between the Company and Penn, as amended.
"PER SHARE PURCHASE PRICE" equals $0.287.
"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.
"PPM" means the private placement offering memorandum dated as of
September 15, 2004, of Units of the Company whereby each Unit consists of 87,108
shares of Common Stock and a Warrant to purchase 87,108 shares of Common Stock
at a price of $25,000 per Unit.
"PROCEEDING" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"REGISTRATION STATEMENT" means a registration statement meeting the
requirements set forth in the Registration Rights Agreement and covering the
resale by the Investors of the Shares.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the date of this Agreement, among the Company and the
Investors, in the form of Exhibit A hereto.
"RULE 144" means Rule 144 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"SECURITIES" means the Shares and the Warrants.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARE EXCHANGE AND REORGANIZATION AGREEMENT" means the Share
Exchange and Reorganization Agreement, dated as of August 25, 2004, among the
Company, Advaxis and the shareholders of Advaxis.
"SHARES" means the shares of Common Stock issued or issuable to the
Investors pursuant to this Agreement, including without limitation, the Shares
issuable to the Investors upon exercise of the Warrants.
"SUBSEQUENT CLOSING" means the closing of the purchase and sale of
the Securities pursuant to Section 2.1(b).
"SUBSEQUENT CLOSING DATE" means the date of a Subsequent Closing.
3
"SUBSIDIARY" means any "significant subsidiary" of the Company as
defined in Rule 1-02(w) of Regulation S-X promulgated by the Commission under
the Exchange Act.
"TERMINATION DATE" has the meaning set forth in Section 6.1(a)
hereof.
"TRADING DAY" means (i) a day on which the Common Stock is traded on
a Trading Market, or (ii) if the Common Stock is not listed on a Trading Market,
a day on which the Common Stock is traded in the over-the-counter market is
quoted in the over-the-counter market as reported by the National Quotation
Bureau Incorporated (or any similar organization or agency succeeding to its
functions of reporting prices); provided, that in the event that the Common
Stock is not listed or quoted as set forth in (i) or (ii) hereof, then Trading
Day shall mean a Business Day.
"TRADING MARKET" means whichever of the New York Stock Exchange, the
American Stock Exchange, the NASDAQ National Market, the NASDAQ SmallCap Market,
the Over-The-Counter Bulletin Board or the "Pink Sheets" published by the
National Quotation Bureau Incorporated Sheets on which the Common Stock is
listed or quoted for trading on the date in question.
"TRANSACTION DOCUMENTS" means this Agreement, the Registration
Rights Agreement, Warrants and any other documents or agreements executed in
connection with the transactions contemplated hereunder.
"WARRANTS" means the five year warrants to purchase up to an
aggregate of 87,108 shares of Common Stock at exercise price of $0.40 per share
in the form attached hereto as Exhibit B, which Warrants are subject to early
cancellation if the average Closing Prices (as defined in the Warrant) of the
Company's Common Stock for any 30 Trading Days is at least $1.00, the average
daily trading volume of the Common Stock during such 30-Trading Day period is at
least 100,000 shares and a registration statement covering the resale of the
shares of Common Stock issuable upon exercise is then effective.
ARTICLE II.
PURCHASE AND SALE
2.1 Closings.
(a) Initial Closing. Subject to the terms and conditions set forth
in this Agreement, at the initial closing of the sale and purchase of Securities
under this Agreement (the "INITIAL CLOSING") to and by the Investors thereat,
the Company shall issue and sell to each such Investor, and each such Investor
shall, severally and not jointly, purchase from the Company Securities for the
consideration equal to such Investor's Investment Amount. The Initial Closing
shall take place at the offices of Reitler Brown & Rosenblatt LLC, 800 Third
Avenue, 21st Floor, New York, New York 10022 at such time that an aggregate of
at least $1,500,000 is held in Escrow for the purchase of Securities (the
"INITIAL CLOSING DATE") or at such other location or time as the Company and the
Placement Agent may agree.
4
(b) Subsequent Closings. The subsequent closings of the sale and
purchase of Securities under this Agreement to and by Investors (each, a
"SUBSEQUENT CLOSING" and together with the Initial Closing, the "CLOSINGS" and
each, a "CLOSING"), shall take place at the offices of Reitler Brown &
Rosenblatt LLC, 800 Third Avenue, 21st Floor, New York, New York 10022 on any
date between the Initial Closing Date and the Termination Date as the Company
and the Placement Agent may mutually agree (each such date is hereinafter
referred to as a "SUBSEQUENT CLOSING DATE") or at such other location or time as
the Company and the Placement Agent may agree. Notwithstanding anything herein
to the contrary, the aggregate Investment Amount of the Investors shall not
exceed $7,000,000 without the prior written consent of the Placement Agent, the
Issuer and a Majority of the Investors; provided, however, the Issuer, in its
sole discretion, shall have the option to increase the Investment Amount to up
to $10,000,000 without the consent of a Majority of the Investors or the
Placement Agent.
2.2 Closing Deliveries. (a) At each Closing, the Company shall deliver or
cause to be delivered to each Investor who or which is purchasing Securities at
such Closing the following:
(i) a stock certificate evidencing such number of Shares as is
equal to such Investor's Investment Amount divided by the Per Share Purchase
Price, registered in the name of such Investor;
(ii) a Warrant to purchase such number of Shares as is equal
to such Investor's Investment Amount divided by the Per Share Purchase Price,
registered in the name of such Investor;
(iii) the legal opinion of Company Counsel, in form and
substance reasonably acceptable to the Placement Agent and its counsel; and
(iv) the Registration Rights Agreement, duly executed by the
Company.
(b) At each Closing, each Investor who or which is purchasing
Securities at such Closing shall deliver or cause to be delivered to the Company
the following:
(i) his, her or its Investment Amount, in United States
dollars and in immediately available funds, by wire transfer to an account
designated in writing by the Company for such purpose; and
(ii) the Registration Rights Agreement, duly executed by such
Investor.
5
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company hereby
represents and warrants to each Investor with respect to GXPT as of the date of
this Agreement and with respect to the Combined Company as of each Closing Date
as follows, except as set forth on the Schedules attached hereto, which
Schedules may be updated (as contemplated by Section 5.1(a)) with respect to the
representations and warranties made by the Company as of any Subsequent Closing,
but which such amendments shall only be applicable to the purchase of Securities
at such Subsequent Closing:
(a) Subsidiaries. The Company has no direct or indirect Subsidiaries
other than those listed in Schedule 3.1(a). Except as disclosed in Schedule
3.1(a), the Company owns, directly or indirectly, all of the capital stock of
each Subsidiary free and clear of any and all Liens, 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.
(b) Organization and Qualification. Each of the Company and each
Subsidiary 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
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 each Subsidiary 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, individually or in the aggregate, have
or reasonably be expected to result in (i) an adverse effect on the legality,
validity or enforceability of any Transaction Document, (ii) a material and
adverse effect on the results of operations, assets, prospects, business or
condition (financial or otherwise) of the Company and the Subsidiaries, taken as
a whole, or (iii) an adverse impairment to the Company's ability to perform on a
timely basis its obligations under any Transaction Document (any of (i), (ii) or
(iii), a "MATERIAL ADVERSE EFFECT").
(c) 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 its stockholders and no further action is required by
the Company in connection therewith. Each Transaction Document has been (or upon
delivery will have 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.
6
(d) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated thereby do not and will 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, 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), such as could not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect.
(e) Filings, Consents and Approvals. Except as set forth in Schedule
3.1(e), 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 in connection with the execution, delivery and performance by the Company
of the Transaction Documents, other than (i) the filing with the Commission of
(A) one or more Registration Statements in accordance with the requirements of
the Registration Rights Agreement and (B) a Notice of Sale of Securities on Form
D within 15 days of the relevant Closing Date, (ii) filings required by state
securities laws, which the Company will promptly, and in any event prior to (A)
the due date prescribed by applicable law and (B) the Effectiveness Date (as
such term is defined in the Registration Rights Agreement) under the
Registration Statement, make (at the sole expense of the Company) in order to
permit the holders of the Securities to resell Shares to Persons in each State
in the U.S.A., and (iii) those that have been made or obtained prior to the date
of this Agreement.
(f) Issuance of the Securities. The Securities have been duly
authorized and, when issued and paid for in accordance with the Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens. The Company has reserved from its duly authorized
capital stock all of the Shares issuable pursuant to this Agreement and pursuant
to the Warrants.
(g) Capitalization.
(i) The number of shares and type of all authorized, issued
and outstanding capital stock, options and other securities of the Company
(whether or not presently convertible into or exchangeable for or exercisable
into shares of capital stock of the Company), and all shares of Common Stock
reserved for issuance under the Company's various option and incentive plans, is
set forth in Schedule 3.1(g). All outstanding shares of capital stock of the
Company are duly authorized, validly issued, fully paid and non-assesable and
7
have been issued in compliance with all applicable securities laws. Except as
set forth in Schedule 3.1(g), no securities of the Company are entitled to
preemptive or similar rights, and 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. Except as a result
of the purchase and sale of the Securities and except as disclosed in Schedule
3.1(g), there are no outstanding options, warrants, scrip rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities,
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.
Except as set forth in Schedule 3.1(g), there are no anti-dilution or price
adjustment provisions contained in any security issued by the Company or other
agreement and the issue and sale of the Securities will not, immediately or with
the passage of time, obligate the Company to issue shares of Common Stock or
other securities to any Person (other than the Investors) and will not result in
a right of any holder of Company securities to adjust the exercise, conversion,
exchange or reset price under such securities. Except as set forth on Schedule
3.1(g) attached hereto, to the knowledge of the Company, no Person or group of
related Persons beneficially owns (as determined pursuant to Rule 13d-3 under
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 outstanding Common Stock, ignoring for such purposes any limitation on the
number of shares that may be owned at any one time.
(ii) Immediately following the Closing, the Company's issued
and outstanding shares of capital stock, on a fully diluted basis, shall be
allocated as set forth on Schedule 3.1(g)(ii).
(h) Commission Reports; Financial Statements. The Common Stock of
the Company has been registered under Section 12 of the Exchange Act and the
Company is subject to the periodic reporting requirements of Section 13 of the
Exchange Act. The financial statements of the Company to be provided to the
Investors prior to the relevant Closing 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 U.S. 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, or in the case of unaudited interim financial
statements, to the extent they may exclude footnotes or may be condensed or
summary statements and fairly present in all material respects the financial
position of the Company 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. The financial statements referred to in this Section
3.1(h) contain all certifications and statements required by the SEC's Order,
dated June 27, 2002, pursuant to Section 21(a)(1) of the Exchange Act (File No.
4-460), Rule 13a-14 or 15d-14 under the Exchange Act, or 18 U.S.C. Section 1350
(Sections 302 and 906 of the Sarbanes-Oxley Act of 2002) with respect to the
report relating thereto. The financial statements referred to in this Section
3.1(h) comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the Commission with
respect thereto, have been prepared in accordance with GAAP (except as may be
indicated in the notes thereto or, in the case of unaudited financial
statements, as permitted by the rules and regulations of the Commission) and
fairly present, subject in the case of the unaudited financial statements, to
customary year end audit adjustments, the financial position of the Company as
at the dates thereof and the results of its operations and cash flows.
8
(i) Press Releases. The press releases disseminated by the Company
during the two (2) years preceding the date of this Agreement taken as a whole
do not contain any untrue statement of a material fact or omit 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 they they were made, not
misleading.
(j) Material Changes. Since the date of the latest audited financial
statements except as set forth on Schedule 3.1(j) attached hereto, (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 in
nature and amount 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 or the identity of its auditors, (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, except
pursuant to existing Company stock option plans. The Company does not have
pending before the Commission any request for confidential treatment of
information.
(k) Litigation. There is no Action which (i) adversely affects or
challenges the legality, validity or enforceability of any of the Transaction
Documents or the Securities or could, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect. Except as set
forth in Schedule 3.1(k) attached hereto, 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 best 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.
(l) 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.
9
(m) Compliance. 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 relating to taxes, environmental protection, occupational
health and safety, product quality and safety and employment and labor matters,
except in each case as could not, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect. The Company is in
compliance with the applicable requirements of the Sarbanes-Oxley Act of 2002,
as amended, and the rules and regulations thereunder, except where such
noncompliance could not have or reasonably be expected to result in a Material
Adverse Effect.
(n) 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 Schedule 3.1(n) attached hereto, except
where the failure to possess such permits would not, individually or in the
aggregate, 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.
(o) Title to Assets. The Company and the Subsidiaries have good and
marketable title to all real property owned by them that is material to their
respective businesses and good and marketable title in all personal property
owned by them that is material to their respective businesses, in each case free
and clear of all Liens, except for Liens as do not materially affect the value
of such property and do not materially interfere with the use made and proposed
to be made of such property by 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, except as could not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect.
(p) Patents and Trademarks. (i) The PPM accurately describes (i) all
issued Patents and registrations and applications for all Patents, Trademarks
and Copyrights owned by or licensed to the Company or any Subsidiary relating to
Intellectual Property, and (iii) all material contracts, agreements and
arrangements relating to Intellectual Property (whether in writing or oral) to
which the Company or any Subsidiary is a party, by which any of their respective
assets or properties are bound or which are used or useful in the business of
the Company and/or any Subsidiary as currently conducted or as proposed to be
conducted. As used herein, the term "INTELLECTUAL PROPERTY" means (i) all
compounds and inventions (whether patentable or unpatentable and whether or not
reduced to practice) and all improvements thereon, (ii) all patents, patent
applications and patent disclosures, together with all reissuances,
10
continuations, continuations-in-part, revisions, extensions and reexaminations
thereof (collectively, "PATENTS"), (iii) all trademarks, service marks, trade
dress, logos, trade names and corporate names (collectively, "TRADEMARKS"),
including all goodwill associated therewith, and all applications, registrations
and renewals in connection therewith, (iv) all copyrightable works, all
copyrights and all applications, registrations and renewals in connection
therewith (collectively, "COPYRIGHTS"), (v) all mask works and all applications,
registrations and renewals in connection therewith, (vi) all trade secrets and
confidential business information (including, without limitation, ideas,
research and development, data, results, know-how, formulas, compositions,
manufacturing and production processes and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing and cost
information and business and marketing plans and proposals), (vii) all computer
software (including data and related documentation) and (viii) all other
proprietary rights.
(ii) The Company or its Subsidiary, as applicable, owns, is
licensed to use, or otherwise has the right to use all Company Intellectual
Property and all such Company Intellectual Property will be owned or available
for use by the Company and/or the Subsidiary, as applicable, following the
relevant Closing. The Company and the Subsidiaries have taken all necessary and
commercially reasonable actions to maintain and protect their material owned or
licensed Company Intellectual Property. As used herein, "COMPANY INTELLECTUAL
PROPERTY" means all Intellectual Property used or held for use by the Company or
any Subsidiary in the conduct of the business of the Company or any Subsidiary
as currently conducted or as proposed to be conducted.
(iii) To the best knowledge of the Company, neither the
Company nor any Subsidiary has infringed upon or misappropriated any
Intellectual Property rights of third parties, and the continued operation of
the Company and the Subsidiaries as currently conducted and as proposed to be
conducted does not infringe upon or misappropriate or otherwise violate any
Intellectual Property rights of third parties. To the Company's best knowledge,
no Person has infringed upon or misappropriated or otherwise violated any
Company Intellectual Property.
(iv) Except as disclosed in the PPM or as set forth on
Schedule 3.1(p) attached hereto, with respect to each item of Company
Intellectual Property: (i) the Company or a Subsidiary possesses all right,
title (if owned) and interest in and to the item, free and clear of any Lien
(other than, in the case of licensed Intellectual Property, restrictions created
by the licenses themselves); (ii) the item of Company Intellectual Property is
not subject to any outstanding order, injunction, judgment, decree or ruling of
any Regulatory Authority (other than the applicable patent and trademark
prosecution protection proceedings themselves); (iii) all of the issued Patents
are valid and enforceable; and (iv) none of the Patents have been abandoned. As
used herein, the term "Regulatory Authority" means any applicable government
regulatory authority, domestic or foreign, involved in granting approvals for
the manufacturing, marketing, reimbursement and/or pricing of any Product of the
Company or any Subsidiary: the term "Product" means preparations in final form
for sale by prescription, over-the-counter or any other method that contains
Compound or one or more active ingredients; the term "Compound" means compound
or compounds described in the PPM as belonging to the Company or any Subsidiary
or claimed by the Company or a Subsidiary in one or more of Patents.
11
(v) The rights to all inventions of any of the Company's or
any Subsidiary's employees or consultants, former employees or consultants made
while either not employed or retained by the Company or Subsidiary, as
applicable, which are utilized by the Company in the conduct of the Company's or
any Subsidiary's business as presently conducted or as proposed to be conducted
have been fully assigned or licensed to the Company or the Subsidiary, as
applicable. The rights to all inventions of any of the Company's or any
Subsidiary's employees or consultants, former employees or consultants made
while employed or retained by the Company or any Subsidiary, which are utilized
by the Company in the conduct of the Company's or any Subsidiary's business as
presently conducted or as proposed to be conducted have been fully assigned or
licensed to the Company or the Subsidiary, as applicable.
(q) 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. The Company has no 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.
(r) Transactions With Affiliates and Employees. Except as set forth
on Schedule 3.1(r) attached hereto, 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.
(s) Internal Accounting Controls. The Company is subject to the
periodic reporting requirements of Section 13 of the Exchange Act. Except as set
forth on Schedule 3.1(s), the Company maintains disclosure controls and
procedures required by Rule 13a-15 or 15d-15 under the Exchange Act; such
controls and procedures are effective to ensure that all material information
concerning the Company is made known on a timely basis to the individuals
responsible for the preparation of the Company's financial statements.
(t) Solvency. Following the consummation of the transactions
contemplated hereby, (i) the Company's fair saleable value of its assets in an
orderly liquidation exceeds the amount that will be required to be paid on or in
respect of the Company's existing debts and other liabilities (including known
contingent liabilities) as they mature; (ii) the Company's assets do not
constitute unreasonably small capital to carry on its business for the current
fiscal year as now conducted and as proposed to be conducted including its
capital needs taking into account the particular capital requirements of the
business conducted by the Company, and projected capital requirements and
capital availability thereof; (iii) the current cash flow of the Company,
together with the proceeds the Company would receive, were it to liquidate all
of its assets, after taking into account all anticipated uses of the cash, would
be sufficient to pay all amounts on or in respect of its debt when such amounts
are required to be paid; and (iv) the Company's total indebtedness shall not
exceed $1,1000,000 (exclusive of approximately $580,000 of notes to be converted
upon the Initial Closing and amounts owing to Penn under the Penn License of up
to $485,000 through December 15, 2007). The Company does not intend to incur
debts beyond its ability to pay such debts as they mature (taking into account
the timing and amounts of cash to be payable on or in respect of its debt).
12
(u) Certain Fees. Except as described in Schedule 3.1(u), 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 this Agreement. The Investors shall have no obligation with
respect to any fees or with respect to any claims (other than such fees or
commissions owed by an Investor pursuant to written agreements executed by such
Investor which fees or commissions shall be the sole responsibility of such
Investor) 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.
(v) Certain Registration Matters. Assuming the accuracy of the
Investors' representations and warranties set forth in Section 3.3(b)-(e), no
registration under the Securities Act is required for the offer and sale of the
Securities by the Company to the Investors under the Transaction Documents.
Except for the Registration Rights Agreement and/or as described in Schedule
3.1(v), 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 that
have not been satisfied.
(w) Listing and Maintenance Requirements. Except as specified on
Schedule 3.1(w) attached hereto, the Company has not, in the two years preceding
the date hereof, received notice from any Trading Market to the effect that the
Company is not in compliance with the listing or maintenance requirements
thereof. The Company is, and has no reason to believe that it will not in the
foreseeable future continue to be, in compliance with the listing and
maintenance requirements for continued listing of the Common Stock on the
Trading Market on which the Common Stock is currently listed or quoted,
including the applicable eligibility rules thereunder. The issuance and sale of
the Securities under the Transaction Documents does not contravene the rules and
regulations of the Trading Market on which the Common Stock is currently listed
or quoted, and no approval of the shareholders of the Company thereunder is
required for the Company to issue and deliver to the Investors the Securities
contemplated by Transaction Documents.
(x) Investment Company. The Company is not, and is not an Affiliate
of, an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
(y) Application of Takeover Protections. There is no control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company's
Certificate of Incorporation (or similar charter documents) or the laws of its
state of incorporation that is or could become applicable to the Investors as a
result of the Investors and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including without
limitation the Company's issuance of the Securities and the Investors' ownership
of the Securities.
13
(z) No Additional Agreements. The Company does not have any
agreement or understanding with any Investor with respect to the transactions
contemplated by the Transaction Documents other than as specified in this
Agreement.
(aa) Private Placement. Neither the Company nor any Person acting on
the Company's behalf has sold or offered to sell or solicited any offer to buy
the Securities by means of any form of general solicitation or advertising.
Other than as set forth on Schedule 3.1(aa) attached hereto, neither the Company
nor any of its Affiliates nor any Person acting on the Company's behalf has,
directly or indirectly, at any time within the past six months, made any offer
or sale of any security or solicitation of any offer to buy any security under
the circumstances that would eliminate the availability of the exemption from
registration under Regulation D under the Securities Act in connection with the
offer and sale of the Securities contemplated hereby.
(bb) Form SB-2 Eligibility. The Company is eligible to register its
Common Stock for resale by the Investors using Form SB-2 promulgated under the
Securities Act.
(cc) Going Concern. Following consummation of the transactions
contemplated hereby (after taking into account the proceeds received by the
Company from the sale of the Securities) the Company has no knowledge or reason
to believe that the Company's independent public accountants will issue an audit
letter containing a "going concern" opinion in connection with the Company's
quarterly report on Form 10-QSB pursuant to Section 13 or 15(d) under the
Exchange Act for the period ended July 31, 2004 or otherwise.
(dd) Foreign Corrupt Practice. Neither the Company no any director,
officer, agent, employee or other person acting on behalf of the Company has, in
the course of his actions for, or on behalf of, the Company used any corporate
funds for any unlawful contribution, gift entertainment or other unlawful
expenses relating to political activity; made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate fund; violated or is in violation of any provision of the U.S. Foreign
Corrupt Practices Act of 1977; or made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.
(ee) Share Exchange and Reorganization Agreement. Each of the
representations and warranties of GXPT and Advaxis contained in the Share
Exchange and Reorganization Agreement is true and correct as of the date of such
agreement and (except as modified by the closing of the transactions
contemplated hereby and thereby) as of the relevant Closing.
14
(ff) Disclosure. The Company understands and confirms that the
Investors will rely on the foregoing representations and covenants in effecting
transactions in securities of the Company. All disclosure provided to the
Investors regarding the Company, its business and the transactions contemplated
hereby, furnished by or on behalf of the Company (including, without limitation,
the Company's representations and warranties set forth in this Agreement and the
disclosure contained in the PPM) 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. No event or circumstance has
occurred or information exists with respect to the Company or any of its
Subsidiaries or its or their business, properties, prospects, operations or
financial conditions, which, under applicable law, rule or regulation, requires
public disclosure or announcement by the Company which has not been so publicly
announced or disclosed. The Company acknowledges and agrees that no Investor
makes or has made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
Section 3.2.
3.2 Representations and Warranties of the Investors. Each Investor hereby,
for itself and for no other Investor, represents and warrants to the Company as
follows:
(a) Organization; Authority. Such Investor, if an entity, is 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 applicable Transaction Documents and otherwise to carry out
its obligations thereunder. Such Investor, if a natural person, has the legal
capacity and has the power and authority to enter into and to consummate the
transactions contemplated by the applicable Transaction Documents and otherwise
to carry out his or her obligations thereunder. The execution, delivery and
performance by such Investor, if an entity, of the transactions contemplated by
this Agreement has been duly authorized by all necessary corporate or, if such
Investor is not a corporation, such partnership, limited liability company or
other applicable like action, on the part of such Investor. Each of this
Agreement and the Registration Rights Agreement has been duly executed by such
Investor, and when delivered by such Investor in accordance with terms hereof,
will constitute the valid and legally binding obligation of such Investor,
enforceable against him, her or it in accordance with its terms.
(b) Investment Intent. Such Investor 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 Investor's right at all times to sell or otherwise
dispose of all or any part of such Securities in compliance with applicable
federal and state securities laws. Subject to the immediately preceding
sentence, nothing contained herein shall be deemed a representation or warranty
by such Investor to hold the Securities for any period of time. Such Investor
does not have any agreement or understanding, directly or indirectly, with any
Person to distribute any of the Securities.
15
(c) Investor Status/Residence. At the time such Investor was offered
the Securities, he, she or it was, and at the date hereof he, she or it is, an
"accredited investor" as defined in Rule 501(a) under the Securities Act. Such
Investor is not a registered broker-dealer under Section 15 of the Exchange Act.
Each Investor represents that, to the extent that he or she is an individual,
that he or she is a resident of the state set forth opposite his or her name on
signature page, and, to the extent that it is an organizational entity, they it
has been organized under the laws of the state or country set forth opposite its
name on signature page.
(d) General Solicitation. Such Investor is not purchasing the
Securities as a result of 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.
(e) Access to Information. Such Investor acknowledges that it has
reviewed this Agreement, the Disclosure Schedules and the PPM 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 Subsidiaries and their respective 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 that 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 Investor or its representatives
or counsel shall modify, amend or affect such Investor's right to rely on the
truth, accuracy and completeness of this Agreement, the Disclosure Schedules and
the PPM and the Company's representations and warranties contained in the
Transaction Documents. The Transaction Documents, the Disclosure Schedules and
the PPM supersede any other documents separately provided to the Investor by the
Company or the Placement Agent.
(f) Independent Investment Decision. Such Investor has independently
evaluated the merits of its decision to purchase Securities pursuant to this
Agreement, such decision has been independently made by such Investor and such
Investor confirms that it has only relied on the advice of its own business
and/or legal counsel and not on the advice of any other Investor's business
and/or legal counsel in making such decision.
The Company acknowledges and agrees that each Investor does not make or has not
made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 3.2.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Restrictive Legends.
(a) Securities may only be disposed of in compliance with state and
federal securities laws. In connection with any transfer of the Securities other
than pursuant to an effective registration statement, to the Company, to an
Affiliate of an Investor or in connection with a pledge as contemplated in the
legend contained in Section 4.1(b), 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 of such transferred Securities under the Securities Act.
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(b) Certificates evidencing the Securities will contain the
following legend, until such time as they are not required under Section 4.1(c):
THESE SECURITIES HAVE NOT 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 AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE
OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT SECURED BY SUCH SECURITIES.
(c) Certificates evidencing the Shares shall not contain any legend
(including the legend set forth in Section 4.1(b)): (i) while a Registration
Statement covering the resale of such securities is effective under the
Securities Act, or (ii) following a sale of such Securities pursuant to Rule
144, or (iii) while such Securities are eligible for sale under Rule 144(k), or
(iv) 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) provided in the case of (iv), however, that the
beneficial owner of the Securities is not an Affiliate of the Company. Following
such time as restrictive legends are not required to be placed on certificates
representing Securities, the Company will, not later than five Trading Days
following the delivery by an Investor to the Company or the Company's transfer
agent of a certificate representing such Securities containing a restrictive
legend, deliver or cause to be delivered to such Investor a certificate
representing such Securities that is free from all restrictive and other
legends. The Company may not make any notation on its records or give
instructions to any transfer agent of the Company that enlarge the restrictions
on transfer set forth in this Section.
4.2 Furnishing of Information. As long as any Investor owns the Securities
and the Company is subject thereto, 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. As long as any Investor owns Securities, if the
Company is not required to file reports pursuant to such laws, it will prepare
and furnish to the Investors and make publicly available in accordance with Rule
144(c) such information as is required for the Investors to sell such Securities
under Rule 144. 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 such Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144.
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4.3 Securities Laws Disclosure; Publicity. On the Initial Closing Date,
the Company shall issue a press release reasonably acceptable to a Majority of
the Investors disclosing the transactions contemplated hereby and file with the
Commission a Current Report on Form 8-K (reasonably acceptable to a Majority of
the Investors by written consent or telephonic conference call as the Company
may determine in its sole discretion) disclosing the material terms of the
transactions contemplated hereby. In addition, the Company will make such other
filings and notices in the manner and time required by the Commission and the
Trading Market on which the Common Stock is listed. Notwithstanding the
foregoing, the Company shall not publicly disclose the name of any Investor, or
include the name of any Investor in any filing with the Commission (other than
the Registration Statement filed pursuant to the Registration Rights Agreement
and any exhibits to filings made in respect of this transaction in accordance
with periodic filing requirements under the Exchange Act) or any regulatory
agency or Trading Market, without the prior written consent of such Investor,
except to the extent such disclosure is required by law or Trading Market
regulations, in which case the Company shall provide the Investors with prior
notice of such disclosure.
4.4 Blue Sky Filings. The Company shall file all applicable federal and
state securities laws filings required in connection with the sale of the
Securities.
4.5 Indemnification of Investors. In addition to the indemnity provided in
the Registration Rights Agreement, the Company will indemnify and hold the
Investors and their respective directors, officers, managers, shareholders,
partners, members, employees and agents (each, an "INVESTOR PARTY") harmless
from any and all losses, liabilities, obligations, claims, contingencies,
damages, costs and expenses, including all judgments, amounts paid in
settlements, court costs and reasonable attorneys' fees and costs of
investigation (collectively, "LOSSES") that any such Investor Party may suffer
or incur as a result of or relating to any misrepresentation, breach or
inaccuracy of any representation, warranty, covenant or agreement made by the
Company in any Transaction Document. In addition to the indemnity contained
herein, the Company will reimburse each Investor Party for its reasonable legal
and other expenses (including the cost of any investigation, preparation and
travel in connection therewith) incurred in connection therewith, as such
expenses are incurred.
4.6 Non-Public Information. The Company covenants and agrees that neither
it nor any other Person acting on its behalf will provide any Investor or its
agents or counsel with any information that the Company believes constitutes
material non-public information, unless prior thereto such Investor shall have
executed a written agreement regarding the confidentiality and use of such
information. The Company understands and confirms that each Investor shall be
relying on the foregoing representations in effecting transactions in securities
of the Company.
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4.7 Use of Proceeds. The Company shall use the net proceeds from the sale
of the Securities hereunder as set forth in the PPM; provided, however, the
Company agrees that it shall use no more than $300,000 of the proceeds from the
Initial Closing to satisfy Company indebtedness outstanding as of the Initial
Closing Date (including without limitation a maximum of $178,000 that may be
paid to Penn under the Penn License out of such proceeds).
4.8 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 of the Company
that would be intergrated 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 Investors.
4.9 Reservation of Listing of Securities. The Company shall maintain a
reserve from its duly authorized shares of Common Stock for issuance pursuant to
the Transaction Documents in such amount as may be required to fulfill its
obligations in full under the Transaction Documents. In the event that at any
time the then authorized shares of Common Stock are insufficient for the Company
to satisfy its obligations in full under the Transaction Documents, the Company
shall promptly take such actions as may be required to increase the number of
authorized shares.
4.10 Trading Market. The Company shall use its best efforts to apply, as
soon as practicable, to have the Common Stock (including, without limitation,
the Shares) listed upon the American Stock Exchange or included for quotation on
the Nasdaq National Stock Market.
4.11 Conduct of Business by the Company Pending the Termination Date. The
Company covenants and agrees that, between the date hereof and the Termination
Date, the Company shall not conduct any business or take any action other than
in connection with the maintenance and preservation of its corporate existence,
the compliance with applicable laws (including federal and state securities
laws) or as expressly required or permitted by this Agreement or as contemplated
or required by the Share Exchange and Reorganization Agreement or as disclosed
in the PPM, unless a Majority of the Investors shall otherwise agree by written
consent or by telephonic conference call. By way of amplification and not
limitation, except as expressly permitted by this Agreement or as contemplated
by the Share Exchange and Reorganization Agreement, the Company shall not and
shall not permit or cause any Subsidiary to, between the date hereof and the
Termination Date, directly or indirectly do, or propose to do, any of the
following with the prior written consent of a Majority of the Investors:
(a) amend or otherwise change the Certificate of Incorporation or
By-laws or alter through merger, liquidation, reorganization, restructuring or
in any other fashion the corporate structure or ownership of the Company;
19
(b) issue, sell, transfer, pledge, dispose of or encumber, or
authorize the issuance, sale, transfer, pledge, disposition or encumbrance of,
any shares of capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of capital stock,
other than with respect to the incurrence of indebtedness pursuant to the
issuance of convertible promissory notes and the issuance of warrants related
thereto (which convertible promissory notes and warrants shall be exchanged for
Units on the same terms as the Advaxis Notes), or any other ownership interest
of the Company; or sell, transfer, pledge, dispose of or encumber, or authorize
the sale, transfer, pledge, disposition or encumbrance of any assets of the
Company or redeem, purchase or otherwise acquire, directly or indirectly, any of
the capital stock of the Company other than pursuant to a stock option plan
approved by the Company's board of directors or other agreement or arrangement
approved by the Company's board of directors;
(c) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or other securities or property or any combination
thereof, other than the payment in kind of accrued but unpaid dividends to
holders of preferred stock of the Subsidiary prior to the Termination Date) in
respect of any of its capital stock or other equity interests, split, combine or
reclassify any of its capital stock or other securities or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or amend the terms of, repurchase,
redeem or otherwise acquire any of its securities, or propose to do any of the
foregoing;
(d) sell, transfer, lease, license, sublicense, mortgage, pledge,
dispose of, encumber, grant or otherwise dispose of any material properties or
assets, or amend or modify in any way any existing agreements with respect to
any material properties or assets other than in the ordinary course of business;
(e) purchase, acquire (by merger, consolidation, acquisition of
stock or other securities or assets or otherwise), lease, license, sublicense or
otherwise obtain any interest in any properties or assets other than in the
ordinary course of business and consistent with past practice; incur any
indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse or otherwise as an accommodation become responsible for,
the obligations of any Person, or make any loans, advances or enter into any
financial commitments, in each case other than in the ordinary course of
business and consistent with past practice;
(f) change any accounting policies or procedures (including
procedures with respect to reserves, revenue recognition, payments of accounts
payable and collection of accounts receivable) unless required by statutory
accounting principles or U.S. generally acceptable accounting principles;
(g) create, incur, suffer to exist or assume any liability or
obligation (absolute, accrued, contingent or otherwise) other than up to an
aggregate of $100,000 in indebtedness incurred for the purposes of undertaking
actions permitted under the first sentence of this Section 4.11, or with respect
to the incurrence of indebtedness pursuant to the issuance of convertible
promissory notes and the issuance of warrants related thereto (which convertible
promissory notes and warrants shall be exchanged for Units on the same terms as
the Advaxis Notes), or in the ordinary course or business and consistent with
past practice or any lien on any of its material assets;
20
(h) engage in any transaction, or enter into any agreement,
arrangement, or understanding with, directly or indirectly, any related party,
other than those existing as of the date hereof;
(i) fail to maintain in full force and effect all self-insurance and
insurance, as the case may be, currently in effect;
(j) hire or terminate any senior level or key employee or
consultant; increase the compensation (including, without limitation, bonus)
payable or to become payable to its officers or employees, or grant any
severance or termination pay or stock options to, or enter into any employment
or severance agreement with any director, officer or other senior level or key
employee of the Company, or establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock or other equity
option, restricted stock or other restricted security, pension, retirement,
deferred compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any current or
former directors, officers or employees;
(k) (A) enter into any material agreement, contract or commitment of
any kind or nature whatsoever, (B) modify, amend or transfer or terminate any
material agreement other than in the ordinary course of business to which the
Company is a party, including, without limitation, the Share Exchange and
Reorganization Agreement, or waive, release or assign any material rights or
claims thereunder that adversely the rights of the Investors or (C) enter into
any lease with respect to real property with any third party other than as
approved by the Company's board of directors;
(l) pay, discharge, satisfy or settle any litigation or waive,
assign or release any rights or claims, or pay, discharge or satisfy any
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), except in an amount or value not exceeding $25,000 in
any instance or series of related instances or $50,000 in the aggregate or in
connection with any amounts owed Penn pursuant to the Penn License;
(m) issue any press release or make any public announcement which
has not been approved by a Majority of the Investors, provided that a Majority
of the Investors may not unreasonably withhold consent for any press release or
announcement required by applicable law; or
(n) authorize, recommend, propose or announce an intention to do any
of the foregoing, or agree or enter into any agreement, contract commitment or
arrangement to do any of the foregoing.
21
4.12 Notification. Between the date of this Agreement and the Termination
Date, the Company will promptly notify the Investors and Advaxis in writing of
the following:
(a) any fact or any condition that causes any of the Company's
representations and warranties in this Agreement to be materially inaccurate as
of the date of this Agreement, or if the Company becomes aware of the occurrence
after the date of this Agreement of any fact or condition that would cause any
such representation or warranty to be materially inaccurate had such
representation and warranty been made as of the time of the occurrence or
discovery of such fact or condition;
(b) any fact or any condition that causes any of the Company's or
Advaxis' representations and warranties in the Share Exchange and Reorganization
Agreement to be materially inaccurate as of the date of such agreement, or if
the Company becomes aware of the occurrence after the date of this Agreement of
any fact or condition that would cause any such representation or warranty to be
materially inaccurate had such representation and warranty been made as of the
time of the occurrence or discovery of such fact or condition;
(c) any breach by the Company or by Advaxis of the Share Exchange
and Reorganization Agreement; or
(d) any fact or circumstance which might reasonably be expected to
delay or prevent the closing of the transactions contemplated by the Share
Exchange and Reorganization Agreement or this Agreement.
4.13 Best Efforts. Between the date of this Agreement and the Closing
Date, the Company will use its best efforts to comply with the provisions of the
Share Exchange and Reorganization Agreement and to consummate the transactions
contemplated thereby and to cause the conditions in Sections 5.1 and 5.2 to be
satisfied.
4.14 Additional Covenants. After the Initial Closing Date and until the
earlier to occur of the eighteenth month anniversary of the Termination Date and
the date which is 90 days following the date on which a Registration Statement
covering the resale of the Shares is declared effective by the Commission:
(a) the Company shall not, and shall not permit or cause any
Subsidiary to, directly or indirectly do, or propose to take any action which
could have or reasonably be expected to result in a material and adverse effect
on the results of operations, assets, prospects, business or condition
(financial or otherwise) of the Company and its Subsidiaries;
(b) unless otherwise approved by a Majority of Investors, the
Company shall not cause or permit (i) the issuance, sale, transfer, pledge,
disposition or encumbrance of any shares of the Subsidiary's capital stock
(other than the issuance of shares of capital stock of the Company) other than
as disclosed in the PPM, (ii) the sale, transfer, lease, license, sublicense,
mortgage, pledge, disposition or encumbrance of any of the Subsidiary's assets,
other than in the ordinary course of the Subsidiary's business consistent with
past practice or as otherwise disclosed in the PPM, or (iii) the merger,
consolidation or similar transaction involving the Subsidiary, as a result of
which the Company is no longer the sole equity holder of the Subsidiary or the
company surviving the transaction; as used in this Section 4.14(b), the term
"Subsidiary" refers only to the Company's sole Subsidiary as of the Initial
Closing;
22
(c) the Company shall comply with all applicable laws, including,
without limitation, federal and state securities laws and the Sarbanes-Oxley Act
of 2002, except where such noncompliance could not have or reasonably be
expected to result in a Material Adverse Effect;
(d) the Company shall use its best efforts to file, as soon as
practicable following the final Closing Date, a Schedule 14C Information
Statement (in form and substance reasonably satisfactory to the Placement Agent
and its counsel) with the Commission relating to an amended and restated
certificate of incorporation with the Secretary of State of the State of
Colorado, to effect (i) a change in the par value of its Common Stock to $0.001
per share, (ii) creation of "blank check" preferred stock, and (iii) changing
the name of the Company to Advaxis, Inc.;
(e) the Company shall use its best efforts to file, within 30 days
following the Initial Closing Date, with the National Association of Securities
Dealers, Inc., or its affiliates, all information required by Rule 15c2-11 under
the Exchange Act, if required to enable a market maker to begin trading in the
Company's Common Stock; and
(f) as soon as practicable after the Initial Closing, the Company
shall change its transfer agent to Continental Stock Transfer & Trust, American
Stock Transfer or such other agent as the Company and the Placement Agent may
agree.
ARTICLE V.
CONDITIONS TO CLOSINGS
5.1 Conditions to Investors' Obligations at the Closings. With respect to
each Closing, the obligation of each Investor to purchase Securities at such
Closing is subject to the satisfaction or waiver by such Investor, at or prior
to such Closing Date, of the following conditions:
(a) Representations and Warranties True; Performance of Obligations.
The representations and warranties made by the Company in Section 3.1 hereof
shall be true and correct as of such Closing Date and with respect to the
Combined Company with the same force and effect as if they had been made as of
such Closing Date, and with respect to Subsequent Closings, the Company shall
have updated the Schedules to this Agreement setting forth exceptions to such
representations and warranties up through the relevant Subsequent Closing, and
the Company shall have performed all obligations and conditions herein required
to be performed or observed by it on or prior to such Closing. The Company shall
have delivered to the Investors a certificate, duly executed by its Chief
Executive Officer, attesting to the satisfaction of the foregoing conditions.
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(b) Legal Investment. On such Closing Date, the sale and issuance of
the Securities shall be legally permitted by all laws and regulations to which
the Investors and the Company are subject.
(c) Consents, Permits, and Waivers. The Company shall have obtained
any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by this Agreement and made all
necessary or appropriate filings under applicable "blue sky" laws or otherwise
(except for such as may be properly obtained subsequent to such Closing).
(d) Share Exchange and Reorganization Agreement. The closing of the
Share Exchange and Reorganization Agreement shall have occurred and the
Investors shall have received satisfactory evidence of the same.
(e) Minimum Investment. The aggregate Investment Amount of all
Investors shall be at least $1,500,000.
(f) Reverse Split. On or prior to the Initial Closing Date, the
Company shall have effected a recapitalization having the same effect as a 1 for
200 reverse stock split (whether through a reverse split or a contribution of
shares for cancellation) (the "REVERSE SPLIT") and, if effected through a
contribution of shares of Common Stock for cancellation, certificates
representing such surrendered shares shall have been received in proper form and
shall have been cancelled by the Company giving effect to the Reverse Split.
(g) Secretary's Certificate. The Company shall have delivered to the
Investors, a certificate having attached thereto (i) the Company's Charter,
certified by the Secretary of State of the State of Colorado, as in effect at
the time of such Closing, (ii) the Company's By-Laws as in effect at the time of
such Closing, (iii) resolutions approved by the Board of Directors of the
Company authorizing the transactions contemplated hereby, (iv) resolutions
approved by the Company's stockholders authorizing the filing of the Charter,
and (v) good standing certificates (including tax good standing) with respect to
the Company from the applicable authority(ies) in Colorado and any other
jurisdiction in which the Company is qualified to do business, dated a recent
date before such Closing.
(h) Conversion of Advaxis Notes. On the Initial Closing Date, the
outstanding bridge notes of Advaxis set forth on Schedule 5.1(h) (the "ADVAXIS
NOTES"), shall have been converted into Units pursuant to an agreement among the
holders of the Advaxis Notes and Advaxis.
(i) Plan. The Company's 2004 Stock Option and Incentive Plan shall
have been adopted by the Board of Directors and the stockholders of the Company
and 2,381,525 shares of Common Stock shall have been reserved for issuance under
the Plan.
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(j) Exchange of Options and Warrants. On or prior to the Initial
Closing, (i) all of the issued and outstanding warrants to purchase shares of
Advaxis capital stock shall be exchanged for warrants to purchase 584,885 shares
of Common Stock and (ii) all of the issued and outstanding options to purchase
shares of Advaxis capital stock shall be exchanged for options to purchase an
aggregate of 2,381,525 shares of Common Stock.
(k) Standstill Agreement. On or prior to the Initial Closing, the
shareholders of Advaxis immediately prior to the closing of the transactions
contemplated by the Share Exchange and Reorganization Agreement shall have
agreed in writing not to sell any of their interests in the Combined Company
until such time as there shall have been filed with and declared effective by
the Commission, a registration statement in respect of the Shares purchased by
the Investors hereunder.
(l) No Material Adverse Change. From the date of this Agreement to
the Initial Closing Date, there shall have been no material adverse change in
the business, operations or financial condition of the Company.
(m) Other Documents. All other documents, instruments and writing
required by the Investors, to be delivered to them pursuant to this Agreement,
in form and substance satisfactory to the Investors.
5.2 Conditions to Obligations of the Company. With respect to each
Closing, the Company's obligation to issue and sell the Shares at such Closing
is subject to the satisfaction, on or prior to such Closing, of the following
conditions:
(a) Representations and Warranties True. The representations and
warranties in Section 3.2 made by the Investors who or which are purchasing
Securities at such Closing shall be true and correct at the date of such
Closing, with the same force and effect as if they had been made on and as of
said date.
(b) Performance of Obligations. The Investors who or which are
purchasing Securities at such Closing shall have performed and complied with all
agreements and conditions herein required to be performed or complied with by
such Investors on or before such Closing.
(c) Consents, Permits, and Waivers. The Company shall have obtained
any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement (except for such
as may be properly obtained subsequent to such Closing).
(d) Share Exchange and Reorganization Agreement. The closing of the
Share Exchange and Reorganization Agreement shall have occurred and the
Investors shall have received satisfactory evidence of the same.
(e) Minimum Investment. The aggregate Investment Amount of all
Investors shall be at least $1,500,000.
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(f) Reverse Split. On or prior to the Initial Closing Date, the
Company shall have effected the Reverse Split.
(g) Conversion of Advaxis Notes. On the Initial Closing Date, the
Advaxis Notes shall have been converted into Units pursuant to an agreement
among the holders of the Advaxis Notes and Advaxis.
(h) Plan. The Company's Plan shall have been adopted by the Board of
Directors and the stockholders of the Company and 2,381,525 shares of Common
Stock shall have been reserved for issuance under the Plan.
(i) Exchange of Options and Warrants. On or prior to the Initial
Closing, (i) all of the issued and outstanding warrants to purchase shares of
Advaxis capital stock shall be exchanged for warrants to purchase 584,885 shares
of Common Stock and (ii) all of the issued and outstanding options to purchase
shares of Advaxis capital stock shall be exchanged for options to purchase an
aggregate of 2,381,525 shares of Common Stock.
(j) Release of Escrow. On such Closing Date, the Investment Amount
payable by each Investor who or which are purchasing Securities at such Closing
shall be released from Escrow and delivered to the Company.
ARTICLE VI.
TERMINATION
6.1 (a) This Agreement shall terminate on the earliest to occur of any of
the following events (such date of termination, the "TERMINATION DATE"):
(i) termination or rescission of the Share Exchange and
Reorganization Agreement;
(ii) the mutual written agreement of a Majority of the Investors and
the Company; or
(iii) the close of business on October 15, 2004, or such later date
as may be agreed upon by the Company and the Placement Agent, provided, that, if
any Closings under this Agreement have occurred prior to such October 15th or
later date, then this Agreement shall terminate only as to provisions relating
to Subsequent Closings following such date and the representations, warranties,
agreements, covenants and obligations of the parties hereto pursuant to this
Agreement, as they shall relate to any Closings which have so occurred, will
survive.
(b) If the Agreement is terminated pursuant to Section 6.1(a), the
funds held in Escrow shall be released and delivered to the applicable
Investors.
26
ARTICLE VII.
MISCELLANEOUS
7.1 Fees and Expenses. The Company shall pay the fees and expenses of its
own advisors, counsel, accountants and other experts, and up to $50,000 of the
fees and expenses of the Placement Agent's advisors, 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 the
Transaction Documents. The Company shall pay all stamp and other taxes and
duties levied in connection with the issuance of the Securities under this
Agreement.
7.2 Entire Agreement. 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.
7.3 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 (a) the date of transmission, if
such notice or communication is delivered via confirmed facsimile at the
facsimile number specified in this Section prior to 4:00 p.m. (New York City
time) on a Trading Day, (b) the next Trading Day after the date of transmission,
if such notice or communication is delivered via confirmed facsimile at the
facsimile number specified in this Section on a day that is not a Trading Day or
later than 4:00 p.m. (New York City time) on any Trading Day, (c) the Trading
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 follows:
If to the Company
or Advaxis: Great Expectations and Associates, Inc.
c/o Advaxis, Inc.
212 Carnegie Center
Suite 206
Princeton, New Jersey 08540
Attn: J. Todd Derbin
Facsimile Number: (609) 497-9299
With a copy to: Reitler Brown & Rosenblatt LLC
800 Third Avenue
21st Floor
New York, New York 10022
Attn: Gary Schonwald
Facsimile Number: (212) 371-5500
If to an Investor: To the address set forth under such Investor's name
on the signature pages hereof;
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
27
7.4 Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed by (a) the Company, (b) Advaxis
and (c) the relevant Investor(s) if such amendment or waiver relates only to
certain Investors, or a Majority of the Investors. 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 subsequent
default 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.
7.5 Construction. 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. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party. This Agreement
shall be construed as if drafted jointly by the parties, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement or any of the Transaction
Documents.
7.6 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 a Majority of the Investors. Any Investor
may assign any or all of its rights under this Agreement to any Person to whom
such Investor assigns or transfers any Securities.
7.7 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, except as otherwise set forth in Section 4.5 as to each
Investor Party.
7.8 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement 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. Each party
agrees that all Proceedings concerning the interpretations, enforcement and
defense of the transactions contemplated by this Agreement and any other
Transaction Documents (whether brought against a party hereto or its respective
Affiliates, employees or agents) may be commenced non-exclusively in the state
and federal courts sitting in the City of New York, Borough of Manhattan (the
"NEW YORK COURTS"). Each party hereto hereby irrevocably submits to the
non-exclusive jurisdiction of the New York Courts for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
28
hereby or discussed herein (including with respect to the enforcement of the any
of the Transaction Documents), and hereby irrevocably waives, and agrees not to
assert in any Proceeding, any claim that it is not personally subject to the
jurisdiction of any such New York Court, or that such Proceeding has been
commenced in an improper or inconvenient forum. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such Proceeding by mailing a copy thereof via registered or
certified mail or 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. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. IF EITHER PARTY SHALL
COMMENCE A PROCEEDING TO ENFORCE ANY PROVISIONS OF A TRANSACTION DOCUMENT, THEN
THE PREVAILING PARTY IN SUCH PROCEEDING SHALL BE REIMBURSED BY THE OTHER PARTY
FOR ITS ATTORNEY'S FEES AND OTHER COSTS AND EXPENSES INCURRED WITH THE
INVESTIGATION, PREPARATION AND PROSECUTION OF SUCH PROCEEDING.
7.9 Survival. The representations, warranties, agreements and covenants
contained herein shall survive each Closing and the delivery of the Securities.
7.10 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) with the same force and effect as if such facsimile signature page
were an original thereof.
7.11 Severability. If any provision of this Agreement is held to 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
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
7.12 Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Investor exercises a right, election, demand
or option under a Transaction Document and the Company does not timely perform
its related obligations within the periods therein provided, then such Investor
may rescind or withdraw, in its sole discretion from time to time upon written
notice to the Company, any relevant notice, demand or election in whole or in
part without prejudice to its future actions and rights.
29
7.13 Replacement of Securities. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities. If a replacement
certificate or instrument evidencing any Securities is requested due to a
mutilation thereof, the Company may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance of a
replacement.
7.14 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Investors and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
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.
7.15 Payment Set Aside. To the extent that the Company makes a payment or
payments to any Investor pursuant to any Transaction Document or an Investor
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
7.16 Independent Nature of Investors' Obligations and Rights. The
obligations of each Investor under any Transaction Document are several and not
joint with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under any Transaction Document. The decision of each Investor to
purchase Securities pursuant to the Transaction Documents has been made by such
Investor independently of any other Investor. Nothing contained herein or in any
Transaction Document, and no action taken by any Investor pursuant thereto,
shall be deemed to constitute the Investors as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Document. Each
Investor acknowledges that no other Investor has acted as agent for such
Investor in connection with making its investment hereunder and that no Investor
will be acting as agent of such Investor in connection with monitoring its
investment in the Securities or enforcing its rights under the Transaction
Documents. Each Investor shall be entitled to independently protect and enforce
its rights, including without limitation the rights arising out of this
Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Investor to be joined as an additional party in any
proceeding for such purpose.
30
7.17 Limitation of Liability. Notwithstanding anything herein to the
contrary, the Company acknowledges and agrees that the liability of an Investor
arising directly or indirectly, under any Transaction Document of any and every
nature whatsoever shall be satisfied solely out of the assets of such Investor,
and that no trustee, officer, other investment vehicle or any other Affiliate of
such Investor or any investor, shareholder or holder of shares of beneficial
interest of such a Investor shall be personally liable for any liabilities of
such Investor.
7.18 Adjustments in Share Numbers and Prices. In the event of any stock
split (other than the Reverse Split), subdivision, dividend or distribution
payable in shares of Common Stock (or other securities or rights convertible
into, or entitling the holder thereof to receive directly or indirectly shares
of Common Stock (other than conversion of the Advaxis Notes)), combination or
other similar recapitalization or event occurring after the date hereof, each
reference in the Transaction Document to a number of shares or a price per share
shall be amended to appropriately account for such event.
7.19 Further Assurances. Each party agrees to execute such other
documents, instruments, agreements and consents, and take such other actions as
may be reasonable requested by the other parties hereto to effectuate the
purposes of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOLLOW]
31
COMPANY COUNTERPART TO
SECURITIES PURCHASE AGREEMENT
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.
GREAT EXPECTATIONS AND ASSOCIATES, INC.
---------------------------------------
Name:
Title:
Acknowledged and Agreed this __ day of September, 2004
ADVAXIS, INC.
- ---------------------------------------
Name:
Title:
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR INVESTORS FOLLOW]
32
INVESTOR COUNTERPART TO
SECURITIES PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Securities Purchase
Agreement as of this _____ day of _________________________, 2004.
- ------------------------------
Number of Units subscribed for
INDIVIDUAL:
- ------------------------------ ----------------------------------
Investment Amount Name:
SS#
-------------------------------
NON-INDIVIDUAL:
----------------------------------
Name of Entity
By:
-------------------------------
Name:
Title:
Tax ID #:
-------------------------
ADDRESS*:
----------------------------------
----------------------------------
----------------------------------
Attention:
------------------------
Facsimile:
------------------------
* INDIVIDUALS SHOULD LIST THEIR PRIMARY RESIDENCE; COMPANIES AND OTHER
NON-NATURAL PERSONS SHOULD LIST THEIR PRINCIPAL PLACE OF BUSINESS.
33
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "AGREEMENT") is made and
entered into by and among ADVAXIS, INC., a Colorado corporation (the "COMPANY"),
and the investors and other persons and entities signatory hereto (each a
"INVESTOR" and collectively, the "INVESTORS"), as of November 12, 2004.
This Agreement is made pursuant to and in connection with the
Securities Purchase Agreement, dated as of the date herewith among the Company
and certain of the Investors (the "PURCHASE AGREEMENT").
The Company and the Investors hereby agree as follows:
1. Definitions. Capitalized terms used and not otherwise defined herein
that are defined in the Purchase Agreement shall have the meanings given such
terms in the Purchase Agreement. As used in this Agreement, the following terms
shall have the respective meanings set forth in this Section 1:
"EFFECTIVE DATE" means the date that a Registration Statement filed
pursuant to Section 2(a) is first declared effective by the SEC.
"EFFECTIVENESS DATE" means: with respect to any Registration
Statement required to be filed to cover the resale by the Holders of the
Registrable Securities, the earlier of: (a) the 60th day following the
applicable Filing Date; provided, that, if the SEC reviews and has written
comments to the filed Registration Statement that would require the filing of a
pre-effective amendment thereto with the SEC, then the Effectiveness Date under
this clause (a)(i) shall be the 90th day following the applicable Filing Date,
and (b) the fifth Trading Day following the date on which the Company is
notified by the SEC that any such Registration Statement will not be reviewed or
is no longer subject to further review and comments
"EFFECTIVENESS PERIOD" shall have the meaning set forth in Section
2(a).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FILING DATE" means (a) with respect to the initial Registration
Statement required to be filed to cover the resale by the Holders of the
Registrable Securities, the later of (i) the 30th day following the Initial
Closing Date (as defined in the Purchase Agreement); (ii) the 5th day following
the last Subsequent Closing (as defined in the Purchase Agreement) and (iii) the
5th day following the date referred to in Section 6.1(a)(iii) of the Purchase
Agreement, and (b) with respect to any additional Registration Statements that
may be required pursuant to Section 2(a), the 30th day following the date on
which the Company first knows, or reasonably should have known, that such
additional Registration Statement is required under such Section.
"HOLDER" or "HOLDERS" means the holder or holders, as the case may
be, from time to time of Registrable Securities.
"INDEMNIFIED PARTY" shall have the meaning set forth in Section
5(c).
"INDEMNIFYING PARTY" shall have the meaning set forth in Section
5(c).
"LOSSES" shall have the meaning set forth in Section 5(a).
"PENALTY SHARES" SHALL have the meaning set forth in Section 2(b).
"PROCEEDING" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"PROSPECTUS" means the prospectus included in a Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
"REGISTRABLE SECURITIES" means (a) the shares of Common Stock issued
or issuable to the Investors pursuant to the Purchase Agreement, (b) shares of
Common Stock issued or issuable upon exercise of the Warrants issued to the
Investors pursuant to the Purchase Agreement, (c) shares of Common Stock issued
to Sunrise Securities Corp. ("SUNRISE"), and/or its designee(s), (d) shares of
Common Stock issued or issuable upon exercise of warrants issued to Sunrise
and/or its designee(s), (e) shares of Common Stock issued or issuable to the
Persons identified on Schedule A attached hereto, (f) shares of Common Stock
issued or issuable upon exercise of warrants issued to the Persons identified on
Schedule A attached hereto, (g) Penalty Shares, and (h) all shares of Common
stock issued or issuable in respect of the shares referred to in subsection (a)
through (g) above by virtue of any stock split, stock dividend, recapitalization
or similar event.
"REGISTRATION STATEMENT" means the initial registration statement
required to be filed in accordance with Section 2(a) and any additional
registration statement(s) required to be filed under Section 2(b), including (in
each case) the Prospectus, amendments and supplements to such registration
statements or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statements.
"RULE 144" means Rule 144 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC having substantially the same
effect as such Rule.
"RULE 415" means Rule 415 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC having substantially the same
effect as such Rule.
2
"RULE 424" means Rule 424 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC having substantially the same
effect as such Rule.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
2. Registration.
(a) On or prior to the applicable Filing Date, the Company shall
prepare and file with the SEC a Registration Statement covering the resale of
all Registrable Securities not already covered by an existing and effective
Registration Statement for an offering to be made on a continuous basis pursuant
to Rule 415. If for any reason the SEC does not permit all of the Registrable
Securities to be included in such Registration Statement, then the Company shall
prepare and file with the SEC a separate Registration Statement with respect to
any such Registrable Securities not included in the initial Registration
Statement, as expeditiously as possible, but in no event later than the
applicable Filing Date. The Registration Statement shall contain (except if
otherwise required pursuant to written comments received from the SEC upon a
review of such Registration Statement) the "Plan of Distribution" attached
hereto as Annex A. The Company shall cause each such Registration Statement to
be declared effective under the Securities Act as soon as possible but, in any
event, no later than the Effectiveness Date, and shall use its best efforts to
keep each such Registration Statement effective under the Securities Act until
the date which is three years after the Effectiveness Date for such Registration
Statement, or such earlier date as of which all of the Registrable Securities
registered for resale thereunder have been sold (the "EFFECTIVENESS PERIOD").
(b) If: a Registration Statement is not declared effective by the
SEC on or prior to its required Effectiveness Date, (any such failure or breach
being referred to as an "EVENT," and, the date on which such Event occurs,
"EVENT DATE"), then, in addition to any other rights available to the Holders
under this Agreement or under applicable law, until the applicable Event is
cured, with respect to each 30-day period, following such Event Date the Company
shall on the last business day of each 30-day period, issue to each Holder
shares of Common Stock as follows: (i) with respect to Holders who or which were
party to the Purchase Agreement and purchased Registrable Securities thereunder,
the Company shall issue to each such Holder such number of shares of Common
Stock as shall equal 2% of such Holder's Investment Amount under the Purchase
Agreement based on the per Share Purchase Price and (ii) with respect to Sunrise
and/or its designee(s), the Company shall issue to each such Holder such number
of shares of Common Stock as shall equal 2% of such Holder's Deemed Investment
Amount. As used herein, the term "Deemed Investment Amount" shall mean, with
respect to a particular Holder, the amount equal to the product of (A) the
number of Registrable Securities held by such Holder (other than Penalty
Shares), and (B) an amount equal to the Per Share Purchase Price. Any shares
issued to Holders under this Section 2(b) shall be referred to as "PENALTY
SHARES."
3
(c) The Company shall not, prior to the Effective Date of the
initial Registration Statement filed under Section 2(a), prepare and file with
the SEC a registration statement relating to an offering for its own account or
the account of others (other than as contemplated in this Agreement) under the
Securities Act of any of its equity securities.
(d) Unless otherwise agreed to by Holders of no less than 50.1% of
the Registrable Securities, neither the Company nor any of its securities
holders (other than the Holders) may include securities of the Company in any
Registration Statement filed pursuant to Section 2(a) other than the Registrable
Securities, and that Company shall not after the date hereof enter into any
agreement in contravention of the foregoing.
(e) If at any time during the Effectiveness Period, there is not one
or more Registration Statements covering the resale of all Registrable
Securities and the Company shall determine to prepare and file with the SEC a
registration statement relating to an offering for its own account or the
account of others under the Securities Act of any of its equity securities,
other than of Form S-4 or Form S-8 (each as promulgated under the Securities
Act) or their then equivalents relating to equity securities to be issued solely
in connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other employee benefit
plans, then the Company shall send to each Holder written notice of such
determination and if, within 15 Trading Days after receipt of such notice any
such Holder shall so request in writing, the Company shall include in such
registration statement the Registrable Securities requested by the Holders to be
so included.
3. Registration Procedures
In connection with the Company's registration obligations hereunder,
the Company shall:
(a) Not less than five Trading Days prior to the filing of a
Registration Statement or any related Prospectus or any amendment or supplement
thereto, the Company shall furnish to the Holders copies of the "Selling
Stockholders" section of such document, the "Plan of Distribution," any risk
factor contained in such document that addresses specifically this transaction
or the Selling Stockholders, as proposed to be filed which documents will be
subject to the review and comment of such Holders, together with a Selling
Holder Questionnaire (as defined below) and instructions to complete and return
the same to the Company within the time frame prescribed by Section 3(j). The
Company shall not file a Registration Statement or any such Prospectus or any
amendments or supplements thereto that does not contain the disclosure
containing such Holder as a "Selling Stockholder" as provided to the Company by
such Holder in connection therewith.
(b) (i) Prepare and file with the SEC pre- or post-effective
amendments to each Registration Statement and the Prospectus used in connection
therewith to include Registrable Securities issued to Investors pursuant to the
Purchase Agreement in a Subsequent Closing (as defined in the Purchase
Agreement); (ii) prepare and file with the SEC such amendments, including
post-effective amendments, to each Registration Statement and the Prospectus
used in connection therewith as may be necessary to keep such Registration
Statement continuously effective as to the applicable Registrable Securities for
its Effectiveness Period and prepare and file with the SEC such additional
Registration Statements in order to register for resale under the Securities Act
all of the Registrable Securities; (ii) cause the related Prospectus to be
amended or supplemented by any required Prospectus supplement, and as so
supplemented or amended to be filed pursuant to Rule 424; (iii) respond as
promptly as reasonably possible to any comments received from the SEC with
respect to each Registration Statement or any amendment thereto and, as promptly
as reasonably possible provide the Holders true and complete copies of all
correspondence from and to the SEC relating to such Registration Statement that
would not result in the disclosure to the Holders of material and non-public
information concerning the Company; and (iv) comply in all material respects
with the provisions of the Securities Act and the Exchange Act with respect to
the Registration Statements and the disposition of all Registrable Securities
covered by each Registration Statement.
4
(c) Notify the Holders as promptly as reasonably possible (and, in
the case of (i)(A) below, not less than three Trading Days prior to such filing)
and (if requested by any such Person) confirm such notice in writing no later
than one Trading Day following the day: (i)(A) when a Prospectus or any
Prospectus supplement or post-effective amendment to a Registration Statement is
proposed to be filed; (B) when the SEC notifies the Company whether there will
be a "review" of such Registration Statement and whenever the SEC comments in
writing on such Registration Statement (the Company shall provide true and
complete copies thereof and all written responses thereto to each of the Holders
that pertain to the Holders as a Selling Stockholder or to the Plan of
Distribution, but not information which the Company believes would constitute
material and non-public information); and (C) with respect to each Registration
Statement or any post-effective amendment, when the same has become effective;
(ii) of any request by the SEC or any other Federal or state governmental
authority for amendments or supplements to a Registration Statement or
Prospectus or for additional information; (iii) of the issuance by the SEC of
any stop order suspending the effectiveness of a Registration Statement covering
any or all of the Registrable Securities or the initiation of any Proceedings
for that purpose; (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from qualification
of any of the Registrable Securities for sale in any jurisdiction, or the
initiation or threatening of any Proceeding for such purpose; and (v) of the
occurrence of any event or passage of time that makes the financial statements
included in a Registration Statement ineligible for inclusion therein or any
statement made in such Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to such Registration Statement,
Prospectus or other documents so that, in the case of such Registration
Statement or the Prospectus, as the case may be, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(d) Use its best efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of (i) any order suspending the effectiveness of a
Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.
(e) Furnish to each Holder, without charge, at least one conformed
copy of each Registration Statement and each amendment thereto and all exhibits
to the extent requested by such Person (including those previously furnished)
promptly after the filing of such documents with the SEC.
5
(f) Promptly deliver to each Holder, without charge, as many copies
of each Prospectus or Prospectuses (including each form of prospectus) and each
amendment or supplement thereto as such Persons may reasonably request. The
Company hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders in connection with the
offering and sale of the Registrable Securities covered by such Prospectus and
any amendment or supplement thereto.
(g) Prior to any public offering of Registrable Securities, to
register or qualify or cooperate with the selling Holders in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of all jurisdictions within the United States, to
keep each such registration or qualification (or exemption therefrom) effective
during the Effectiveness Period and to do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by the Registration Statements.
(h) Cooperate with the Holders to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be delivered
to a transferee pursuant to the Registration Statements, which certificates
shall be free, to the extent permitted by the Purchase Agreement, of all
restrictive legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any such Holders may request.
(i) Upon the occurrence of any event contemplated by Section
3(c)(v), as promptly as reasonably possible, prepare a supplement or amendment,
including a post-effective amendment, to the affected Registration Statements or
a supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, no Registration Statement nor any Prospectus will
contain an 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, in
light of the circumstances under which they were made, not misleading.
(j) Each Holder agrees to furnish to the Company a completed
Questionnaire in the form attached to this Agreement as Annex B (a "SELLING
HOLDER QUESTIONNAIRE"). The Company shall not be required to include in a
Registration Statement the Registrable Securities of a Holder and shall not be
required to pay any damages under Section 2(c) hereof to such Holder who fails
to furnish to the Company a fully completed Selling Holder Questionnaire at
least two Trading Days prior to the Filing Date (subject to the requirements set
forth in Section 3(a)).
(k) In the time and manner required by each Trading Market, (i)
prepare and file with such Trading Market an additional shares listing
application covering all the Registrable Securities, (ii) take all steps
necessary to cause such Registrable Securities to be approved for listing on
each Trading Market as soon as possible thereafter, (iii) if requested by any
Holder, provide to such Holder evidence of such listing and (iv) maintain the
listing of all such Registrable Securities on each such Trading Market.
6
(l) Cooperate with any due diligence investigation undertaken by the
Holders in connection with the sale of the Registrable Securities, including,
without limitation, by making available any documents and information; provided,
that the Company will not deliver or make available to any Holder material,
nonpublic information unless such Holder specifically requests in writing to
receive such material, nonpublic information.
(m) Comply with all applicable rules and regulations of the SEC.
4. Registration Expenses. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to a
Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with any Trading Market on which the Common Stock is then
listed for trading, and (B) in compliance with applicable state securities or
Blue Sky laws), (ii) printing expenses (including, without limitation, expenses
of printing certificates for Registrable Securities and of printing prospectuses
if the printing of prospectuses is reasonably requested by the holders of a
majority of the Registrable Securities included in the Registration Statement),
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, (v) Securities Act liability insurance, if the Company
so desires such insurance, (vi) fees and expenses of all other Persons retained
by the Company in connection with the consummation of the transactions
contemplated by this Agreement, and (vii) listing fees to be paid by the Company
to any Trading Market. In addition, the Company shall be responsible for all of
its internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. Notwithstanding the foregoing, the
fees and expenses shall not include underwriting discounts and selling fees
applicable to the sale.
5. Indemnification.
(a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, agents, investment advisors, partners,
members, managers, stockholders, trustees and employees of each of them, each
Person who controls any such Holder (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and the officers, directors,
agents, partners, members, managers, stockholders, trustees and employees of
each such controlling Person, to the fullest extent permitted by applicable law,
from and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, reasonable costs of preparation and reasonable
attorneys' fees) and expenses (collectively, "LOSSES"), as incurred, arising out
of or relating to (i) any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, any Prospectus or any form of
prospectus or in any amendment or supplement thereto or in any preliminary
7
prospectus, or arising out of or relating to any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in light of the circumstances under which they were made)
not misleading or (ii) any violation or alleged violation by the Company of the
Securities Act, the Securities and Exchange Act of 1934, as amended, state
("blue sky") securities laws or any rule or regulation promulgated thereunder
and relating to action or inaction required of the Company in connection with
any such Registration Statement, Prospectus, amendment or supplement, except to
the extent, but only to the extent, that (A) such untrue statements or omissions
are based solely upon information regarding such Holder furnished in writing to
the Company by such Holder expressly for use therein, or to the extent that such
information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in the Registration Statement, such
Prospectus or such form of Prospectus or in any amendment or supplement thereto
(it being understood that the Holder has approved Annex A hereto for this
purpose) or (B) in the case of an occurrence of an event of the type specified
in Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective
Prospectus after the Company has notified such Holder in writing that the
Prospectus is outdated or defective and prior to the receipt by such Holder of
Advice or an amended or supplemented Prospectus, but only if and to the extent
that following the receipt of Advice or the amended or supplemented Prospectus
the misstatement or omission giving rise to such Loss would have been corrected.
The Company shall notify the Holders promptly of the institution, threat or
assertion of any Proceeding of which the Company is aware in connection with the
transactions contemplated by this Agreement.
(b) Indemnification by Holders. Each Holder shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling Persons, to the
fullest extent permitted by applicable law, from and against all Losses, as
incurred, arising solely out of or based solely upon: (x) such Holder's failure
to comply with the prospectus delivery requirements of the Securities Act or (y)
any untrue statement of a material fact contained in any Registration Statement,
any Prospectus, or any form of prospectus, or in any amendment or supplement
thereto, or arising solely out of or based solely upon any omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading to the extent, but only to the extent that, (i) such
untrue statements or omissions are based solely upon information regarding such
Holder furnished in writing to the Company by such Holder expressly for use
therein, or to the extent that such information relates to such Holder or such
Holder's proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly for use in
the Registration Statement (it being understood that the Holder has approved
Annex A hereto for this purpose), such Prospectus or such form of Prospectus or
in any amendment or supplement thereto or (ii) in the case of an occurrence of
an event of the type specified in Section 3(c)(ii)-(v), the use by such Holder
of an outdated or defective Prospectus after the Company has notified such
Holder in writing that the Prospectus is outdated or defective and prior to the
receipt by such Holder of Advice or an amended or supplemented Prospectus, but
only if and to the extent that following the receipt of Advice or the amended or
supplemented Prospectus the misstatement or omission giving rise to such Loss
would have been corrected. In no event shall the liability of any selling Holder
hereunder be greater in amount than the dollar amount of the net proceeds
received by such Holder upon the sale of the Registrable Securities giving rise
to such indemnification obligation.
8
(c) Conduct of Indemnification Proceedings. If any Proceeding shall
be brought or asserted against any Person entitled to indemnity hereunder (an
"INDEMNIFIED PARTY"), such Indemnified Party shall promptly notify the Person
from whom indemnity is sought (the "INDEMNIFYING PARTY") in writing, and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnified Party and the payment of all
fees and expenses incurred in connection with defense thereof; provided, that
the failure of any Indemnified Party to give such notice shall not relieve the
Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
except (and only) to the extent that it shall be finally determined by a court
of competent jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have proximately and materially
adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party
or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall have been advised by counsel that a conflict of interest is likely to
exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement requires only the payment of cash or other consideration by the
Indemnifying Party on behalf of the Indemnified Party and includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.
All fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within ten Trading
Days of written notice thereof to the Indemnifying Party (regardless of whether
it is ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses to
the extent it is finally judicially determined that such Indemnified Party is
not entitled to indemnification hereunder).
9
(d) Contribution. If a claim for indemnification under Section 5(a)
or 5(b) is unavailable to an Indemnified Party (by reason of public policy or
otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 5(c), any reasonable attorneys' or other
reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available to
such party in accordance with its terms.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which the
proceeds actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission.
The indemnity and contribution agreements contained in this Section
are in addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation.
6. Miscellaneous
(a) Remedies. In the event of a breach by the Company or by a
Holder, of any of their obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
10
(b) Compliance. Each Holder covenants and agrees that it will comply
with the prospectus delivery requirements of the Securities Act as applicable to
it in connection with sales of Registrable Securities pursuant to the
Registration Statement.
(c) Discontinued Disposition. Each Holder agrees that, upon receipt
of a notice from the Company of the occurrence of any event of the kind
described in Section 3(c)(ii) - (v), such Holder will forthwith discontinue
disposition of such Registrable Securities under the Registration Statement
until such Holder's receipt of the copies of the supplemented Prospectus and/or
amended Registration Statement or until it is advised in writing ("ADVICE") by
the Company that the use of the applicable Prospectus may be resumed, and, in
either case, has received copies of any additional or supplemental filings that
are incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement. The Company may provide appropriate stop orders to
enforce the provisions of this paragraph.
(d) Amendments and Waivers. No provision of this Agreement may be
waived or amended except in a written instrument signed by the Company and the
Holders of no less than 50.1% of the outstanding Registrable Securities. 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 subsequent default 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.
(e) 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 confirmed
facsimile at the facsimile telephone number specified in this Section prior to
4:00 p.m. (New York City time) on a Trading Day, (ii) the Trading Day after the
date of transmission, if such notice or communication is delivered via confirmed
facsimile at the facsimile telephone number specified in this Agreement later
than 4:00 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 Trading Day following the date of
mailing, if sent by nationally recognized overnight courier service, 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: Advaxis, Inc.
212 Carnegie Center
Suite 206
Princeton, New Jersey 08540
Attn: J. Todd Derbin
If to the Company: Reitler Brown & Rosenblatt LLC
800 Third Avenue
21st Floor
New York, New York 10022
Attn: Gary Schonwald
11
If to an Investor: To the address set forth under such Investor's
name on the signature pages hereto.
If to any other Person who is then the registered Holder:
To the address of such Holder as it appears in the
stock transfer books of the Company
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties and shall inure to the benefit of each Holder. The Company may not
assign its rights or obligations hereunder without the prior written consent of
each Holder. Each Holder may assign their respective rights hereunder in the
manner and to the Persons as permitted under the Purchase Agreement.
(g) Execution and Counterparts. This Agreement may be executed in
any number of counterparts, each of which when so executed shall be deemed to be
an original and, all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid 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 were the original
thereof.
(h) Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement 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. Each
party agrees that all Proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement (whether brought
against a party hereto or its respective Affiliates, employees or agents) may be
commenced non-exclusively in the state and federal courts sitting in the City of
New York, Borough of Manhattan, (the "NEW YORK COURTS"). Each party hereto
hereby irrevocably submits to the non-exclusive jurisdiction of the New York
Courts for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any Proceeding, any claim that
it is not personally subject to the jurisdiction of any New York Court, or that
such Proceeding has been commenced in an improper or inconvenient forum. Each
party hereto hereby irrevocably waives personal service of process and consents
to process being served in any such Proceeding by mailing a copy thereof via
registered or certified mail or 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. EACH PARTY
HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. IF EITHER
PARTY SHALL COMMENCE A PROCEEDING TO ENFORCE ANY PROVISIONS OF THIS AGREEMENT,
THEN THE PREVAILING PARTY IN SUCH PROCEEDING SHALL BE REIMBURSED BY THE OTHER
PARTY FOR ITS ATTORNEY'S FEES AND OTHER COSTS AND EXPENSES INCURRED WITH THE
INVESTIGATION, PREPARATION AND PROSECUTION OF SUCH PROCEEDING.
12
(i) Cumulative Remedies. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.
(j) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
(k) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(l) Independent Nature of Investors' Obligations and Rights. The
obligations of each Investor hereunder is several and not joint with the
obligations of any other Investor hereunder, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor hereunder. The decision of each Investor to acquire Registrable
Securities pursuant to the Transaction Documents has been made independently of
any other Investor. Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any Investor pursuant
hereto or thereto, shall be deemed to constitute the Investors as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Investors are in any way acting in concert with respect to
such obligations or the transactions contemplated by this Agreement. Each
Investor acknowledges that no other Investor has acted as agent for such
Investor in connection with making its investment hereunder and that no Investor
will be acting as agent of such Investor in connection with monitoring its
investment in the Securities or enforcing its rights under the Transaction
Documents. Each Investor shall be entitled to protect and enforce its rights,
including without limitation the rights arising out of this Agreement, and it
shall not be necessary for any other Investor to be joined as an additional
party in any Proceeding for such purpose.
(m) Further Assurances. Each party agrees to execute such other
documents, instruments, agreements and consents, and take such other actions as
may be reasonable requested by the other parties hereto to effectuate the
purposes of this Agreement.
(n) Entire Agreement. This Agreement and the Purchase Agreement,
together with the Exhibit, Annexes and Schedules hereto and 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.
13
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SIGNATURE PAGES TO FOLLOW]
14
IN WITNESS WHEREOF, the parties have executed this Registration
Rights Agreement as of the date first written above.
ADVAXIS, INC.
By:
----------------------------------------
Name: J. Todd Derbin
Title: Chief Executive Officer
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES OF INVESTOR TO FOLLOW]
15
IN WITNESS WHEREOF, the parties have executed this Registration
Rights Agreement as of the date first written above.
INVESTOR
INDIVIDUAL:
--------------------------------------
Name:
NON-INDIVIDUAL:
--------------------------------------
Name of Entity
By:
-----------------------------------
Name:
Title:
ADDRESS*:
--------------------------------------
--------------------------------------
--------------------------------------
Attention:
----------------------------
Facsimile:
----------------------------
* INDIVIDUALS SHOULD LIST THEIR PRIMARY RESIDENCE; COMPANIES AND OTHER
NON-NATURAL PERSONS SHOULD LIST THEIR PRINCIPAL PLACE OF BUSINESS
16
Annex A
Plan of Distribution
The Selling Stockholders and any of their pledgees, donees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of Common Stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The Selling Stockholders may use any one or more of the
following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits Investors;
o block trades in which the broker-dealer will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;
o an exchange distribution in accordance with the rules of the applicable
exchange;
o privately negotiated transactions;
o short sales (other than short sales established prior to the effectiveness
of the Registration Statement to which this Prospectus is a part)
o broker-dealers may agree with the Selling Stockholders to sell a specified
number of such shares at a stipulated price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
Broker-dealers engaged by the Selling Stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The Selling Stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
The Selling Stockholders may from time to time pledge or grant a security
interest in some or all of the Registrable Securities owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell shares of Common Stock from time to time under this
prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act of 1933 amending the list of
selling stockholders to include the pledgee, transferee or other successors in
interest as selling stockholders under this prospectus.
17
Upon the Company being notified in writing by a Selling Stockholder that
any material arrangement has been entered into with a broker-dealer for the sale
of Common Stock through a block trade, special offering, exchange distribution
or secondary distribution or a purchase by a broker or dealer, a supplement to
this prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act, disclosing (i) the name of each such Selling Stockholder and of
the participating broker-dealer(s), (ii) the number of shares involved, (iii)
the price at which such the shares of Common Stock were sold, (iv) the
commissions paid or discounts or concessions allowed to such broker-dealer(s),
where applicable, (v) that such broker-dealer(s) did not conduct any
investigation to verify the information set out or incorporated by reference in
this prospectus, and (vi) other facts material to the transaction. In addition,
upon the Company being notified in writing by a Selling Stockholder that a donee
or pledge intends to sell more than 500 shares of Common Stock, a supplement to
this prospectus will be filed if then required in accordance with applicable
securities law.
The Selling Stockholders also may transfer the shares of common stock in
other circumstances, in which case the transferees, pledgees or other successors
in interest will be the selling beneficial owners for purposes of this
prospectus.
The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. Each Selling Stockholders has
represented and warranted to the Company that it does not have any agreement or
understanding, directly or indirectly, with any person to distribute the Common
Stock.
The Company is required to pay all fees and expenses incident to the
registration of the shares. The Company has agreed to indemnify the Selling
Stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
18
Schedule A
Open Ventures, LLC
University of Pennsylvania
Yvonne Paterson
Crestwood, LLC
Flamm Family Partners LP
James Patton
Roni Appel
William Kahn
Trinita LLC
Richard Yelovich
Charles Kwon
Tracy Yun
Thomas McKearn
Carmel Ventures, Inc.
Gene Mancino
Lilian Flamm
Marilyn Mendell
J. Todd Derbin
Scott Flamm
Jonas Grossman
Kerry Propper
19
Annex B
SELLING HOLDER QUESTIONNAIRE
A. GENERAL INFORMATION
1. Name:
Date:
2. Principal Office:
Address:
Telephone:
Telecopy:
B. BENEFICIAL OWNERSHIP OF EQUITY SECURITIES OF THE COMPANY
3. As of the date hereof:
(a) you,
(b) your spouse,*
(c) your minor children,*
(d) any other relative of yours or of your spouse who shares your
home (if applicable, please name each such relative),*
(e) any affiliate of yours, or
(f) any other associate of yours (if applicable, please name each
such associate)
owned beneficially, directly or indirectly, the following equity
securities of the Company and any subsidiary of the Company:
- --------
* Please refer to the definitions of beneficial ownership in Appendix A
regarding the views of the Securities and Exchange Commission and some courts
with respect to securities held by family members.
20
Number of Shares
Beneficially
Owned
Person Common Stock Warrants Stock Options
TOTAL:
4. Does any person other than you have the power to vote any of the
preceding shares, or the power to dispose of such shares, or does any person
share either of those powers with you?
If so, please describe.
C. TRANSACTIONS AND RELATIONSHIPS WITH THE COMPANY
5. The following describes any transaction within the past three years or
any proposed transaction to which the Company or any subsidiary was, is or is to
be a party (whether or not in the ordinary course of business) and in which
(a) you,
(b) any of your immediate family members,
(c) any firm, corporation, or other entity in which you or any of
your immediate family members had, have or will have a
position or relationship,
(d) any affiliate of yours, or
(e) any associate of yours
had, have or will have any direct or indirect interest:
21
6. Have you had, or propose to have, any position, office or other
relationship in the past three years with the Company, any subsidiary, or any
predecessor of the Company?
If so, please describe:
D. AFFILIATION WITH BROKER DEALERS
7. Are you a member of the NASD, an affiliate of a member, a person
associated with a member, an associated person of a member or do you have any
association or other affiliation through share ownership or otherwise with a
member of the NASD?
If so, please describe:
* * *
The statements supplied by the undersigned in this questionnaire are true,
complete and correct to the best knowledge of the undersigned after reasonable
inquiry as of the date hereof. The undersigned hereby confirms that he or it has
not entered into any arrangement with an agent or broker-dealer for the sale of
the securities held by the undersigned. The undersigned agrees promptly to
notify Gary Schonwald of Reitler Brown & Rosenblatt LLC, outside counsel to the
Company (212/209-3050), or J. Todd Derbin at the Company (609/497-7555), if any
event of which the undersigned becomes aware should occur between now and the
termination of the distribution of securities pursuant to the resales
contemplated by the Registration Statement that would cause the answer to any
question to change or cause the Registration Statement or any amendment to
contain a misrepresentation or omission of a material fact relating to the
undersigned.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
22
APPENDIX A
Affiliate - An "affiliate" of a specified person is a person that, directly or
indirectly through one or more intermediaries, controls, or is controlled by or
is under common control with the person specified. For these purposes, "control"
(including the terms "controlling," "controlled by" and "under common control
with") means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a person, whether through the
ownership of voting securities, by contract, or otherwise.
Associate - The term "associate" with respect to a person means (a) any
corporation or organization (except the Company and its Subsidiaries) of which a
person is an officer or partner, or of which such person is, directly or
indirectly, the owner beneficially of 10% or more of any class of equity
security and (b) any trust or other estate in which a person has a beneficial
interest or as to which such person serves as trustee or in a similar fiduciary
capacity.
Beneficially - The term "beneficially" as applied to an interest in securities
describes any interest in the securities in question which entitles a person to
any of the rights or benefits of ownership, even though such person is not the
holder or owner of record. Interests in securities held in an estate, trust or
partnership, or by a nominee, are examples of beneficial interests.
If a person has any contract, understanding, relationship, agreement or
other arrangement with any other person with respect to securities, pursuant to
which such first person obtains benefits substantially equivalent to the
ownership of securities, that person should consider such securities as
"beneficially owned" by it. For purposes of this questionnaire, a person will be
regarded as having benefits substantially equivalent to ownership of securities
if:
(a) directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise such person has or shares
(i) voting power, which includes the power to vote, or to direct
the voting of, the security; and/or
(ii) investment power, which includes the power to dispose of, or
to direct the disposition of, the security;
(b) such person has the right to acquire beneficial ownership of the
security, within 60 days, including, but not limited to, any right
to acquire
(i) through the exercise of any option, warrant or right;
(ii) through the conversion of a security;
(iii) pursuant to a power to revoke a trust, discretionary account
or similar arrangement; or
(iv) pursuant to the automatic termination of a trust,
discretionary account or similar arrangement; or
(c) such person can apply income from the securities to meet expenses
which such person otherwise would meet from other sources.
23
A person is also considered to be the beneficial owner of a security if
such person, directly or indirectly, creates or uses a trust, proxy, power of
attorney, pooling arrangement or any other contract, arrangement or device with
the purpose or effect of divesting such person of beneficial ownership of such
security or preventing the vesting of such beneficial ownership as part of a
plan or scheme to evade the reporting requirements of Section 13(d) or 13(g) of
the Securities Exchange Act.
If a person has any reason to believe that any interest such person has in
securities, however remote, might be described as a beneficial interest, such
interest should be described.
The Securities and Exchange Commission has taken the view, with which some
courts have agreed, that a person may be regarded as the beneficial owner of
securities held in the name of his spouse, minor children or other relatives of
his or his spouse who shares his home, if such relationship results in such
person obtaining benefits substantially equivalent to ownership of such
securities. We will assume, however, that you do not consider that you
beneficially own any securities you list in answer to Question 3 and 4 as being
owned by such persons. If you do consider that you are the beneficial owner of
such securities, please list them as being owned by you.
Conflict of interest - Presumed to exist when: (a) a member and/or its
associated persons, parent or affiliates in the aggregate beneficially own 10%
or more of the outstanding subordinated debt of a company; (b) a member and/or
its associated persons, parent or affiliates in the aggregate beneficially own
10% or more of the common equity of a company which is a corporation, or
beneficially own a general limited or special partnership interest in 10% or
more of the distributable profits or losses of a company; or (c) a member and/or
its associated persons, parent or affiliates in the aggregate beneficially own
10% or more of the preferred equity of a company.
Immediate Family Member - The term "immediate family member" includes a person's
spouse, parents, children, siblings, mothers and fathers-in-law, sons and
daughters-in-law, and brothers and sisters-in-law.
Issuer - The issuer of the securities offered to the public, any selling
security holder offering securities to the public, any affiliate of the issuer
or selling security holder, and the officers or general partners, directors,
employees and security holders thereof.
Member - any individual, partnership, corporation or other legal entity that is
a broker or dealer admitted to membership in the NASD.
An entity is deemed to have participated in a public offering where such entity
participates in the preparation of the offering or other documents, participates
in the distribution of the offering on an underwritten, non-underwritten, or any
other basis, furnishes customer and/or broker lists for solicitation, or
participates in an advisory or consulting capacity to the issuer related to the
offering.
Person - The term "person" refers both to natural persons as well as to business
entities such as corporations, partnerships, limited liability companies,
associations, joint stock companies, business trusts and unincorporated
organizations.
24
Person associated with a member or associated person of a member - Every sole
proprietor, general or limited partner, officer, director or branch manager of
any member, or any natural person occupying a similar status or performing
similar functions, or any natural person engaged in the investment banking or
securities business who is directly or indirectly controlling or controlled by
such member (for example, any employee), whether or not any such person is
registered or exempt from registration with the NASD. Thus, person associated
with a member or associated person of a member includes a sole proprietor,
general or limited partner, officer, director or branch manager of an
organization of any kind (whether a corporation, partnership or other business
entity) which itself is either a member or a person associated with a member or
associated person of a member. In addition, an organization of any kind is a
person associated with a member or associated person of a member if its sole
proprietor or any one of its general or limited partners, officers, directors or
branch managers is a member, person associated with a member or associated
person of a member.
Underwriter or related person - Underwriters, underwriter's counsel, financial
consultants and advisors, finders, members of the selling or distribution group,
any member (2) participating in the public offering and any and all other
persons associated with or related to, and members of the Immediate Family of,
any of such persons.
25
STANDSTILL AGREEMENT, dated as of November 12, 2004 (this
"Agreement"), by and among Great Expectations and Associates, Inc.,
a Colorado corporation (the "Company"), and the persons listed on
Schedule I attached hereto (collectively, the "Stockholders").
--------------------------------------------------------------------
INTRODUCTION
Certain of the Stockholders are party to a Share Exchange and
Reorganization Agreement, dated as of August 25, 2004 (the "Share Exchange"), by
and among the Company, Advaxis and such Stockholders, pursuant to which (a) the
Company will acquire all of the issued and outstanding shares of capital stock
of Advaxis in exchange for shares of the Company's common stock, and (b) Advaxis
will become as a wholly-owned subsidiary of Company (the "Acquisition");
The Company has entered into that certain Securities Purchase
Agreement, dated as of September 14, 2004 (the "Purchase Agreement"), by and
between the Company and the investors signatory thereto (collectively, the
"Investors"), pursuant to which the Company is offering to sell to the Investors
a minimum of $1,500,000 of its securities and a maximum of $7,000,000 of its
securities (subject to an increase to $10,000,000 at the election of the
Company) (the "Offering");
Pursuant to Section 5.1(k) of the Purchase Agreement, it is a
condition precedent to the Initial Closing (as defined in the Purchase
Agreement) of the Offering that the Stockholders agree in writing not to sell
any of their interests in the Company until such time as there shall have been
filed with and declared effective by the Securities and Commission, a
registration statement in respect of the Shares (as defined in the Purchase
Agreement) purchased by the Investors thereunder.
The Stockholders acknowledge and agree that they will benefit from
the consummation of the Offering and, in order to induce the Company and the
Investors to consummate the Offering contemplated by the Purchase Agreement, and
for other good and valuable consideration, the receipt and sufficiency of which
are acknowledged, the parties hereto agree as follows:
AGREEMENT
SECTION 1. Definitions. Capitalized terms used herein and not
otherwise defined herein shall have the meaning given such terms in the Purchase
Agreement to the extent the same are defined therein.
SECTION 2. Standstill. Each Stockholder agrees not to effect any
sale, transfer or distribution of his, her or its equity securities in the
Company, or any securities convertible into or exchangeable or exercisable for
such securities, during the period from the closing of the Acquisition until the
earlier of (i) the date that a registration statement with respect to the Shares
purchased by the Investors pursuant to the Purchase Agreement has been filed
with and declared effective by the Securities and Exchange Commission and (ii)
the first year anniversary of the date hereof, unless (a) such sale, transfer or
distribution is approved in writing by a Majority of the Investors, and (b) the
transferee of such sold, transferred or distributed securities agrees in writing
to be bound by the terms of this Agreement to the same extent as if they had
originally been a party hereto.
SECTION 3. Further Assurances. Each party agrees to execute such
other documents, instruments, agreements and consents, and take such other
actions as may be reasonably requested by the other parties hereto or by a
Majority of the Investors to effectuate the purposes of this Agreement.
SECTION 4. Miscellaneous.
(a) Notices. Any consent, notice or report required or permitted to
be given or made under this Agreement by one of the parties hereto to the other
shall be in writing, delivered personally or by facsimile (and promptly
confirmed by personal delivery, U.S. first class mail or courier),
internationally recognized courier service, postage prepaid (where applicable),
addressed to such other party at its address indicated below, or to such other
address as the addressee shall have last furnished in writing to the addressor
and (except as otherwise provided in this Agreement) shall be effective upon
receipt by the addressee.
If to the Company: Great Expectations and Associates, Inc.
c/o Advaxis, Inc.
212 Carnegie Center, Suite 206
Princeton, New Jersey 08540
Attn: J. Todd Derbin
Facsimile Number: (609) 497-9299
With a copy to: Reitler Brown & Rosenblatt LLC
800 Third Avenue, 21st Floor
New York, New York 10022
Attn: Gary Schonwald
Facsimile Number: (212) 371-5500
If to a Stockholder: To the address set forth under such Stockholder's
name on the signature page;
(b) Assignment. This Agreement may not be assigned or otherwise
transferred, nor, except as expressly provided hereunder, may any right or
obligations hereunder be assigned or transferred by either party without the
prior written consent of the other party. Any permitted assignee shall assume
all obligations of its assignor under this Agreement.
(c) Headings. The captions to the several Articles and Sections
hereof are not a part of this Agreement, but are merely guides or labels to
assist in locating and reading the several Articles and Sections hereof.
(d) Severability. If one or more provisions of this Agreement be or
become invalid, the parties hereto shall substitute, by mutual consent, valid
provisions for such invalid provisions which valid provisions in their economic
effect are sufficiently similar to the invalid provisions that it can be
reasonably assumed that the parties would have entered into this Agreement with
such provisions. In case such provisions cannot be agreed upon, the invalidity
of one or several provisions of this Agreement shall not affect the validity of
this Agreement as a whole, unless the invalid provisions are of such essential
importance to this Agreement that it is to be reasonably assumed that the
parties would not have entered into this Agreement without the invalid
provisions.
(e) Waiver. The waiver by either party hereto of any right hereunder
or the failure to perform or of a breach by the other party shall not be deemed
a waiver of any other right hereunder or of any other breach or failure by said
other party whether of a similar nature or otherwise.
(f) Entire Agreement. This Agreement is the agreement referred to in
Section 5.1(k) of the Purchase Agreement and, together with the Purchase
Agreement, contains the entire understanding of the parties with respect to the
subject matter hereof. All express or implied agreements and understandings,
either oral or written, heretofore made are expressly superseded by this
Agreement. This Agreement may be amended, or any term hereof modified, only by a
written instrument duly executed by both parties hereto and the written consent
of a Majority of Investors. No prior drafts of this Agreement may be used in the
construction or interpretation of this Agreement.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO
ANY CHOICE OR CONFLICT OF LAWS PROVISIONS).
(h) CONSENT TO JURISDICTION. EACH OF THE PARTIES HEREBY IRREVOCABLY
AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF ANY FEDERAL OR STATE COURT OF
NEW YORK SITTING IN NEW YORK CITY AND IRREVOCABLY AGREES THAT ALL ACTIONS OR
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY SHALL BE LITIGATED EXCLUSIVELY IN SUCH COURTS. EACH OF THE
PARTIES AGREES NOT TO COMMENCE ANY LEGAL PROCEEDING RELATED HERETO EXCEPT IN
SUCH COURT. EACH OF THE PARTIES IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING IN ANY
SUCH COURT AND HEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES
NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION, SUIT OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(i) WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT.
(j) Third Party Beneficiaries. The Investors shall be deemed third party
beneficiaries to this Agreement and shall be entitled to rely on the terms and
provisions hereof as if party hereto.
[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement in a manner legally binding upon them as of the date first above
written.
GREAT EXPECTATIONS AND ASSOCIATES, INC.
BY____________________________
NAME:
TITLE:
OPEN VENTURES, LLC
BY: ________________________
NAME:
TITLE:
ADDRESS: c/o Roni Appel
22 Ruth Lane
Demarest, NJ 07627
THE TRUSTEES OF THE
UNIVERSITY OF PENNSYLVANIA
BY:________________________
NAME:
TITLE:
ADDRESS: University Of Pennsylvania
Transfer
3160 Chestnut Street
Suite 200
Philadelphia, PA 19104
CRESTWOOD, LLC
BY:________________________
NAME:
TITLE:
ADDRESS: 109 Boulevard Drive
Danbury, CT 06810
FLAMM FAMILY PARTNERS, LP
BY:________________________
NAME:
TITLE:
ADDRESS: c/o Scott Flamm
70 West Road
Short Hills, NJ 07078
TRINITA LLC
BY:________________________
NAME:
TITLE:
ADDRESS: c/o Morten Kielland,
22 Painters Lane,
Chesterbrook, PA 19087
___________________________
YVONNE PATERSON
ADDRESS: 323 Johnson Pavilion
36th St. and Hamilton Walk
Philadelphia, PA 19104_6076
___________________________
JAMES PATTON
ADDRESS: c/o Millennium Oncology
Management
250 West Lancaster Avenue
Suite 100
Paoli, PA 19301
___________________________
RONI APPEL
ADDRESS: 22 Ruth Lane
Demarest, NJ 07627
___________________
WILLIAM KAHN
ADDRESS: 7903 Long Meadow Road
Baltimore, MD 21208
___________________________
RICHARD YELOVICH
ADDRESS: C/O Millennium Oncology
Management
250 West Lancaster Avenue
Suite 100
Paoli, PA 19301
___________________________
CHARLES KWON
ADDRESS: 834 Monroe Street
Evanston, IL 60202
___________________________
TRACY YUN
ADDRESS: 90 LaSalle Street
Apt. #13G
New York, NY 10027
___________________________
THOMAS MCKEARN
ADDRESS: 6040 Lower Mountain Road
New Hope, PA 18938
___________________________
J. TODD DERBIN
CARMEL VENTURES, INC.
BY: ________________________
NAME: RONI APPEL
TITLE:
ADDRESS: 22 Ruth Lane
Demarest, NJ 07627
CRESTWOOD HOLDINGS, LLC
BY:________________________
NAME:
TITLE:
ADDRESS: c/o Ran Nizan
109 Boulevard Drive
Danbury, CTO 06810
__________________________
ADELE PFENNINGER
ADDRESS: 12 Spring Brook Road
Annandale, NJ 08801
________________________
EUGENE MANCINO
ADDRESS: Blau Mancino
12 Roszel Road
Suite C-101
Princeton, NJ 08540
________________________
ITAI PORTNIO
ADDRESS: 26 Yakinton Street
Haifa, Israel 34406
_______________________
KELLY PROPPER
ADDRESS: 59 Horatio Street
New York, NY 10015
________________________
MORDECHAI MASHIACH
ADDRESS: 8 Shlomzion Hamalka
Haifa, Israel 33406
3701 LIMITED PARTNERSHIP
BY:________________________
NAME:
TITLE:
ADDRESS:
CORNUCOPIA PHARMACEUTICALS, INC.
BY:________________________
NAME:
TITLE:
ADDRESS:
___________________________
JAMES PAUL
ADDRESS:
___________________________
MARILYN MANDELL
ADDRESS: 5257 Fountains Dr. South
Apt. 304
Lake Worth, FL 33467
___________________________
CATHERINE JANUS
ADDRESS: 4817 Creak Drive
Western Spring, IL 60558
___________________________
JONAS GROSSMAN
ADDRESS: 59 Horatio Street
New York, NY 10014
___________________________
MARY ANN RYAN FRANCIS
ADDRESS:1115 Beanaqt Ave.
Seaside Park, NJ 08752
___________________________
GINA FERARRI
ADDRESS: 36 Stone Run Road
Bedmingter, NJ 07921
___________________________
CHAIM CYMERMAN,
ADDRESS:
___________________________
PEGGY FERN
ADDRESS: 1548 Herlong Court
Rock Hill, SC 29732
___________________________
SCOTT FLAMM
ADDRESS: 70 West Road
Short Hills, NJ 07078
___________________________
LILLIAN FLAMM
ADDRESS: c/o Scott Flamm
70 West Road
Short Hills, NJ 07078
SCHEDULE I
----------
Open Ventures, LLC
The Trustees of the University of Pennsylvania
Yvonne Paterson
Crestwood, LLC
Flamm Family Partner, LP
James Patton
Roni Appel
William Kahn
Trinita LLC
Richard Yelovich
Charles Kwon
Tracy Yun
Thomas McKearn
J. Todd Derbin
Crestwood Holdings, LLC
Marilyn Mendell
Scott Flamm
Jonas Grossman
Lillian Flamm
Kelly Propper
Gina Ferarri
Adele Pfenninger
Peggy Fern
Eugene Mancino
James Paul
Catherine Janus
Mary Ann Ryan Francis
Mordechai Mashiach
Itai Portnio
Cornucopia Pharmaceuticals, Inc.
3701 Limited Partnership
Chaim Cymerman
Exhibit 14.1
CODE OF BUSINESS CONDUCT AND ETHICS
OF
Great Expectations and Associates, Inc.
EFFECTIVE DATE: November 12, 2004
INTRODUCTION
Great Expectations and Associates, Inc. expects that directors, officers and
employees will conduct themselves ethically and properly as a matter or course
and comply with the guidelines set forth below.
This Code of Business Conduct and Ethics (this "Code") is prepared, in large
part, due to the requirements of the Sarbanes-Oxley Act of 2002 and rules of New
York Stock Exchange, NASD Stock Market and/or any exchange upon which the
Company's stock may be traded and is applicable to Great Expectations and
Associates, Inc. and all direct and indirect U.S. subsidiaries (hereinafter
referred to collectively as the "Company"). Directors, officers and employees of
foreign subsidiaries are also expected to act properly and consistent with
country-specific guidelines developed for such subsidiaries.
This Code exists to provide the Company's directors, officers, employees,
shareholders, suppliers and members of the general public with an official
statement as to how the Company conducts itself internally and in the
marketplace and certain standards that the Company shall require of its
directors, officers and employees.
The Company's Compliance Officer on the Effective Date of this Code is J. Todd
Derbin and the term "Compliance Officer", as used in this Code, refers to the
Company's current Compliance Officer and any subsequent person appointed to that
office.
PURPOSE
This Code is intended to provide a codification of standards that is reasonably
designed to deter wrongdoing and to promote the following:
o Honest and ethical conduct, including the ethical handling of actual or
apparent conflicts of interest between personal and professional
relationships;
o Full, fair, accurate, timely and understandable disclosure in reports and
documents that the Company files with, or submits to, the Securities and
Exchange Commission (the "SEC") and in other public communications made by
the Company;
o Compliance with applicable governmental laws, rules and regulations;
o The prompt internal reporting to an appropriate person or persons
identified in this Code for violations of this Code; and
o Accountability for adherence to this Code.
SCOPE
This Code applies to the Company's Chairman of the Board, Chief Executive
Officer, Chief Financial Officer, Controller and persons performing similar
functions as well as to all directors, officers and employees of the Company. As
used herein, the term "employees" shall be deemed to include each of the
foregoing persons unless specifically stated otherwise or unless the context
clearly indicates otherwise.
POLICY PROVISIONS
Under this Code, all directors, officers (including the Company's Chairman of
the Board, Chief Executive Officer, Chief Financial Officer, Controller and
persons performing similar functions) and employees are expected to conduct
business for the Company in the full spirit of honest and lawful behavior and
shall not cause another director, officer, employee or non-employee to act
otherwise, either through inducement or coercion.
I. Conflicts of Interest and Other Matters
Conflicts of interest may arise when an employee's position or responsibilities
with the Company present an opportunity for personal gain apart from the normal
compensation provided through employment. The following guidelines are provided:
A. Protection and Proper Use of Company Funds and Assets
The assets of the Company are much more than its properties, facilities,
equipment, corporate funds and computer systems; they include technologies and
concepts, business strategies and plans, as well as information about its
business. These assets may not be improperly used and/or used to provide
personal benefits for employees. In addition, employees may not provide outside
persons with assets of the Company for the employee's personal gain or in such a
manner as to be detrimental to the Company. Employees should protect the
Company's assets and ensure their efficient and proper use. Theft, carelessness
and waste have a direct impact on the Company's profitability. All Company
assets should be used for legitimate business purposes.
B. Confidential Information
As part of an employee's job, he/she may have access to confidential information
about the Company, its employees, agents, contractors, customers, suppliers and
competitors. Unless released to the public by management, this information
should not be disclosed to fellow employees who did not have a business need to
know or to non-employees for any reason, except in accordance with established
corporate procedures. Confidential information of this sort includes, but is not
limited to, information or data on operations, business strategies and growth,
business relationships, processes, systems, procedures and financial
information.
C. Outside Financial Interests Influencing an Employee's Decisions or Actions
Employees should avoid any outside financial interest that might influence their
decisions or actions on matters involving the Company or its businesses or
property. Such interests include, among other things: (i) a significant personal
or immediate family interest in an enterprise that has significant business
relations with the Company; or (ii) an enterprise or contract with a supplier,
service-provider or any other company or entity where the employee or a member
of the immediate family of the employee is a principal or financial beneficiary
other than as an employee. All such interests should be disclosed by the
employee to the Company's Compliance Officer.
D. Outside Activities Having Negative Impact On Job Performance
Employees should avoid outside employment or activities that would have a
negative impact on their job performance with the Company, or which are likely
to conflict with their job or their obligations to the Company.
2
E. Business Opportunities; Competitive Interests; Corporate Opportunities
No employee may enter into any contract or arrangement, own any interest or be a
director, officer or consultant in or for an entity which enters into any
contract or arrangement (except for the ownership of non-controlling interests
in publicly-traded entities) with the Company for the providing of services to
the Company unless and until the material facts as to the relationship or
interest and the contract or transaction are fully disclosed to the Company's
Compliance Officer and, if approved by the Company, the Company's Compliance
Officer shall provide written confirmation of the approval of said contract or
transaction.
Employees owe a duty to the Company to advance its legitimate interests when the
opportunity arises to do so. Employees should refrain from and shall be
prohibited from: (i) taking for themselves or for their personal benefit
opportunities that could advance the interests of the Company or benefit the
Company when such opportunities are discovered through the use of Company
property, information or position; (ii) using Company property, information or
position for personal gain; or (iii) competing with the Company.
II. Dealing With Suppliers, Customers And Other Employees
The Company obtains and keeps its business because of the quality of its
operations. Conducting business, however, with other employees, suppliers and
customers can pose ethical or even legal problems. The following guidelines are
intended to help all employees make the appropriate decision in potentially
difficult situations.
A. Bribes and Kickbacks
No employee of the Company may ever accept or pay bribes, kickbacks or other
types of unusual payments from or to any organization or individual seeking to
do business with, doing business with or competing with the Company.
B. Gifts
Employees may accept gifts or entertainment of nominal value as part of the
normal business process if public knowledge of the employee's acceptance could
cause the Company no conceivable embarrassment. Even a nominal gift and/or
entertainment should not be accepted if it might appear to an observer that the
gift and/or entertainment would influence the employee's business decisions. The
term "nominal value" applies to the amount of the gift and/or its frequency;
i.e., frequent gifts, even if of nominal value, are unacceptable. The term
"entertainment" includes, but is not limited to, meals, charitable and sporting
events, parties, plays and concerts. If you have any questions about the
acceptance of entertainment or gifts, ask the Company's Compliance Officer for
advice.
C. Travel and Entertainment Expenses
Employees must comply with the Company's policy on travel and entertainment
expenses as set forth in the Company's policies and procedures, as the same may
be amended or supplemented from time to time.
D. Relations with Government Personnel
The Company will not offer, give or reimburse expenses for entertainment or
gratuities (including transportation, meals at business meetings or tickets to
sporting or other events) to government officials or employees who are
prohibited from receiving such by applicable government regulations.
E. Payments to Agents, Consultants, Distributors, Contractors
Agreements with agents, sales representatives, distributors, contractors and
consultants should be in writing and should clearly and accurately set forth the
services to be performed, the basis for earning the commission or fee involved
and the applicable rate or fee. Payments should be reasonable in amount and not
excessive in light of the practice in the trade and commensurate with the value
of services rendered.
3
F. Fair Dealing
Each employee should endeavor to deal fairly with the Company's customers,
suppliers, competitors and other employees.
III. Books and Records
False or misleading entries shall not be made in any reports, ledgers, books or
records of the Company nor shall any misrepresentation be made regarding the
content thereof. No employee may engage in an arrangement that in any way may be
interpreted or construed as misstating or otherwise concealing the nature or
purpose of any entries in the books and records of the Company. No payment or
receipt on behalf of the Company may be approved or made with the intention or
understanding that any part of the payment or receipt is to be used for a
purpose other than that described in the documents supporting the transaction.
IV. Competitive Practices
In business, it is inevitable that the Company and its competitors will meet and
talk from time to time; this is neither against the law nor to be avoided. What
will not be tolerated is collaboration with competitors in violation of the law
on such things as pricing, production, marketing, inventories, product
development, sales territories and goals, market studies and proprietary or
confidential information.
As a vigorous competitor in the marketplace, the Company seeks economic
knowledge about its competitors; however, it will not engage in illegal acts to
acquire a competitor's trade secrets, financial data, information about company
facilities, technical developments or operations.
V. Political Activities & Contributions
The Company encourages each of its employees to be good citizens and to
participate in the political process. Employees should, however, be aware that:
(1) federal law and the statutes of some states in the U.S. prohibit the Company
from contributing, directly or indirectly, to political candidates, political
parties or party officials; and (2) employees who participate in partisan
political activities should ensure that they do not leave the impression that
they speak or act for the Company.
VI. Compliance with Laws, Rules and Regulations
The Company proactively promotes compliance by all employees with applicable
laws, rules and regulations of any governmental unit, agency or divisions
thereof and the rules and regulations of the New York Stock Exchange, The NASD
Stock Market and/or any exchange upon which the Company's stock may be traded.
The Company requires its employees to abide by the provisions of applicable law
on trading on inside information and all employees of the Company are directed
to refrain from trading in the Company's stock based on inside information. The
Company requires its employees to abide by applicable law and the Company's
procedures with respect to periods of time within which all or some
cross-section of the Company's employees will be prevented from trading in the
Company' stock. The Company requires its employees to abide by applicable law
and the Company's policies with respect to disclosures of material non-public
information (Regulation FD).
VII. Protection of Employees from Reprisal for Whistleblowing ("Whistleblowing
Policy")
A. Purpose
To encourage employees to report Alleged Wrongful Conduct.
To prohibit supervisory personnel from taking Adverse Personnel Action against a
Company employee as a result of the employee's good faith disclosure of Alleged
Wrongful Conduct to a Designated Company Officer or Director or to the Company's
Audit Committee. An employee who discloses and subsequently suffers an adverse
Personnel Action as a result is subject to the protection of this Whistleblowing
Policy.
4
B. Applicability
All employees of the Company who disclose Alleged Wrongful Conduct, as defined
in this Whistleblowing Policy, and, who, as a result of the disclosure, are
subject to an Adverse Personnel Action.
C. Whistleblowing Policy
All employees of the Company are encouraged promptly to report Alleged Wrongful
Conduct. No Adverse Personnel Action may be taken against a Company employee in
Knowing Retaliation for any lawful disclosure of information to a Designated
Company Officer or Director or to the Company's Audit Committee, which
information the employee in good faith believes evidences: (i) a violation of
any law; (ii) fraudulent or criminal conduct or activities; (iii) questionable
accounting or auditing matters or matters; (iv) misappropriation of Company
funds; or (v) violations of provisions of this Code (such matters being
collectively referred to herein as "Alleged Wrongful Conduct").
No supervisor, officer, director, department head or any other employee with
authority to make or materially influence significant personnel decisions shall
take or recommend an Adverse Personnel Action against an employee in Knowing
Retaliation for disclosing Alleged Wrongful Conduct to a Designated Company
Officer or Director or to the Company's Audit Committee.
D. Definitions
In addition to other terms as defined above, the terms set forth on Exhibit A
attached hereto shall have the meanings set forth thereon for purposes of this
Whistleblowing Policy.
E. Making A Disclosure
An employee who becomes aware of Alleged Wrongful Conduct is encouraged to make
a Disclosure to a Designated Company Officer or Director or to the Company's
Audit Committee as soon as possible.
F. Legitimate Employment Action
This Whistleblowing Policy may not be used as a defense by an employee against
whom an Adverse Personnel Action has been taken for legitimate reasons or cause.
It shall not be a violation of this Whistleblowing Policy to take Adverse
Personnel Action against an employee whose conduct or performance warrants that
action separate and apart from the employee making a disclosure.
G. Whistleblowing Statutes
An employee's protection under this Whistleblowing Policy is in addition to any
protections such employee may have pursuant to any applicable state or federal
law and this Whistleblowing Policy shall not be construed as limiting any of
such protections.
VIII. Audit Committee Procedures - Receipt, Retention and Treatment of
Complaints Regarding Accounting, Internal Accounting Controls or Auditing
Matters
Pursuant to the requirements of the Sarbanes-Oxley Act of 2002, the Company's
Audit Committee (and in absence of an Audit Committee, the Company's Board of
Directors) has established the following procedures for the receipt, retention
and treatment of complaints by Company employees regarding the Company's
accounting, internal accounting controls or auditing matters.
5
A. Purpose
To promote and encourage Company employees to report complaints, problems or
questionable practices relative to accounting, internal accounting controls or
auditing matters (collectively referred to herein as "Accounting Concerns").
B. Applicability
All employees of the Company.
C. Procedures
Any Company employee who has, knows of or has reason to know or suspect the
existence of any Accounting Concern is encouraged to report such Accounting
Concern, promptly and in writing, to the Company's Compliance Officer and the
Audit Committee (and in the absence of the Audit Committee, the Company's Board
of Directors) at the following address:
Compliance Officer
Great Expectations and Associates, Inc.
212 Carnegie Center
Suite 206
Princeton, NJ 08540
with a copy to:
Chairman of the Board of Directors
Great Expectations and Associates, Inc.
212 Carnegie Center
Suite 206
Princeton, NJ 08540
Submissions by Company employees of Accounting Concerns may be signed by the
employee or may be anonymous. Submissions by Company employees of Accounting
Concerns should be sufficiently detailed so as to provide the necessary
information to the Company's Audit Committee as to the nature of the Accounting
Concerns, the violation or potential violation of any federal or state law or
regulation or the nature of any questionable accounting or auditing practice or
matter. Company employees are encouraged to include as much factual data as
possible in any submissions of Accounting Concerns and Company employees shall
not utilize the submission of an Accounting Concern for the sole purpose of
harassing another Company employee or officer. Submissions by Company employees
of Accounting Concerns shall be copied by the Compliance Officer's
Administrative Assistant and retained in a file entitled "Accounting Concerns
Report File" to be kept separate from the files of the Company's Accounting
Department.
The Chairman of the Audit Committee (or in the absence of an Audit Committee,
the Chairman of the Board of Directors) shall review and investigate or cause to
be investigated each submission by Company employees of Accounting Concerns that
suggests any violation of Company policies, violation of any federal or state
laws or regulations or any questionable accounting or auditing practice or
matter. The Chairman of the Audit Committee (or in the absence of an Audit
Committee, the Chairman of the Board of Directors) may utilize the services of
the Company's outside legal counsel in any such investigations. In the event the
Chairman of the Audit Committee (or in the absence of an Audit Committee, the
Chairman of the Board of Directors) shall determine that any Accounting Concern
is of sufficient veracity and significance so as to mandate any action by the
Company, the Chairman of the Audit Committee (or in the absence of an Audit
Committee, the Chairman of the Board of Directors) shall report the Accounting
Concern to the Audit Committee and, if necessary, to the Company's Board of
Directors with a recommendation as to specific action to be taken. In extreme
cases where an Accounting Concern has been reported that involves a violation or
potential violation of federal or state laws or regulations and the Chairman of
the Audit Committee (or in the absence of an Audit Committee, the Chairman of
the Board of Directors) has determined that such report is accurate or that
sufficient evidence exists to create a significant concern as to whether such
violation has occurred or will occur, the Chairman of the Audit Committee (or in
the absence of an Audit Committee, the Chairman of the Board of Directors) may
report such Accounting Concern to the appropriate government authority.
6
D. Protections
Company employees who submit reports of Accounting Concerns shall be entitled to
the protection of the Whistleblowing Policy set forth above.
IX. Public Company Reporting
As a public company, it is important that the Company's filings with the SEC and
other public disclosures of information be complete, fair, accurate and timely.
An employee, officer or director of the Company may be called upon to provide
necessary information to ensure that the Company's public reports are complete,
fair and accurate. The Company expects each Company employee, officer and
director to take this responsibility seriously and to provide prompt, complete,
fair and accurate responses to inquiries with respect to the Company's public
disclosure requirements. With respect to the Company's employees, officers and
directors who may be participating in the preparation of reports, information,
press releases, forms or other information to be publicly disclosed through
filings with the SEC or as mandated by the SEC, such employees, officers and
directors are expected to use their diligent efforts to ensure that such
reports, press releases, forms or other information are complete, fair, accurate
and timely.
X. Compliance and Discipline
All Company employees are required to comply with this Code. Employees are
expected to report violations of this Code and assist the Company, when
necessary, in investigating violations. All department heads, managers and
supervisors are charged with the responsibility of supervising their employees
in accordance with this Code.
Failure to comply with this Code will result in disciplinary action that may
include suspension, termination, referral for criminal prosecution and/or
reimbursement to the Company for any losses or damages resulting from the
violation. The Company reserves the right to terminate any employee immediately
for a single violation of this Code.
All employees of the Company may be asked from to time to reaffirm their
understanding of and willingness to comply with this Code by signing an
appropriate certificate (see Appendix A).
XI. Adoption, Amendment and Waiver
A. Adoption and Amendment
This Code has been adopted by the Company's Board of Directors and may be
changed , altered or amended at any time. The interpretation of any matter with
respect to this Code by the Board of Directors shall be final and binding.
B. Waiver
Waivers of the provisions of this Code may be granted or withheld from time to
time by the Company in its sole discretion. Waivers are only effective if set
forth in writing after full disclosure of the facts and circumstances
surrounding the waiver. Waivers for the benefit of directors and executive
officers must be approved by the Board of Directors and will be publicly
disclosed by the Company. All other waivers may be approved by the Compliance
Officer and may be publicly disclosed by the Company.
NO EMPLOYMENT CONTRACT
Nothing contained herein shall be construed as limiting the Company's right to
terminate an employee immediately for any reason. This Code does not provide any
guarantees of continued employment, nor does it constitute an employment
contract between the Company and any employee.
7
APPENDIX A
EMPLOYEE STATEMENT
I acknowledge having received a copy of the Company's Code of Business Conduct
and Ethics. I have read it completely and I understand that the Code applies to
me. I understand the Code does not constitute an employment contract and I agree
to comply fully with each of the provisions of the Code, including such changes
to the Code as the Company may announce from time to time. I have reviewed with
my department head or the Compliance Officer any matters concerning ownership or
other activities which are required to be disclosed to the Company by the Code.
Employee Name _________________________________________________
Employee Signature ____________________________________________
Date __________________________________________________________
8
EXHIBIT A
DEFINED TERMS -- WHISTLEBLOWING POLICY
1. "Adverse Personnel Action": an employment-related act or decision or a
failure to take appropriate action by a supervisor or higher level
authority which affects an employee negatively as follows:
(a) Termination of employment;
(b) Demotion;
(c) Suspension;
(d) Written reprimand;
(e) Retaliatory investigation;
(f) Decision not to promote;
(g) Receipt of an unwarranted performance rating;
(h) Withholding of appropriate salary adjustments;
(i) Elimination of the employees' position, absent an overall reduction in
work force, reorganization, or a decrease in or lack of sufficient
funding, monies, or work load; or
(j) Denial of awards, grants, leaves or benefits for which the employee is
then eligible.
2. "Disclosure": oral or written report by an employee to a Designated
Company Officer or Director or to the Company's Audit Committee of Alleged
Wrongful Conduct.
3. "Knowing Retaliation": An Adverse Personnel Action taken by a supervisor
or other authority against an employee where such employee's prior
disclosure of Alleged Wrongful Conduct is a direct or indirect reason or
basis for the Adverse Personnel Action.
4. "Designated Company Officer or Director": The Company's Compliance
Officer, any executive officer of the Company of the level of Senior Vice
President or above and any member of the Company's Board of Directors.
9
Tannenbaum & Company, P.C.
Certified Public Accountants
November 18, 2004
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20540
Re: Great Expectations and Associates, Inc.
Commission File No. 0001100397
Dear Commissioners:
We have read the statements contained in Item 4 "Changes in Registrant's
Certified Accountant" of the Form 8-K of Great Expectations and Associates, Inc.
filed with the Securities and Exchange Commission on November 18, 2004 and agree
with the statements contained therein.
Very truly yours,
/s/ Tannenbaum & Company, P.C.
------------------------------
Certified Public Accountants
4155 E. Jewell Ave o Suite 610 o Denver, Colorado 80222 o
(303) 756-5216 o Fax (303) 756-7567
stevetann@aol.com
Exhibit 17.1 Board of Directors Great Expectations & Associates Inc. P.O. Box 440842 Aurora, CO 80044 November 12, 2004 Please be advised that I hereby resign as President and as a member of the Board of Directors of the Corporation effective immediately. Very truly yours, /s/Fred Mahlke - ----------------- Fred Mahlke
Exhibit 17.2
================================================================================
BOARD OF DIRECTORS
GREAT EXPECTATIONS & ASSOCIATES INC.
P.O. BOX 440842 AURORA COLORADO 60044
Dear Miles
PLEASE BE ADVISED THAT I HEREBY RESIGN AS SECRETARY AND AS A MEMBER OF THE BOARD
OF DIRECTORS OF THE CORPORATION EFFECTIVE IMMEDIATELY.
VERY TRULY YOURS,
Daniel A. Unrein Jr.
/s/ Daniel A. Unrein Jr.