Exhibit 10.1
 
At Market Issuance Sales Agreement
 
October 14, 2009
 
Wm Smith & Co.
1700 Lincoln Street, Suite 2545
Denver CO 80203
 
Ladies and Gentlemen:
 
Generex Biotechnology Corporation, a Delaware corporation (the “Company”),
confirms its agreement (this “Agreement”) with Wm Smith & Co., a Colorado
corporation (“Wm Smith”), as follows:
 
1.           Issuance and Sale of Shares.  The Company agrees that, from time to
time during the term of this Agreement, on the terms and subject to the
conditions set forth herein, it may issue and sell through Wm Smith, acting as
agent, up to $20,000,000 of shares (the “Shares”) of the Company’s common stock,
par value $0.001 per share (the “Common Stock”); provided, however, that in no
event shall the Company issue or sell through Wm Smith such number of Shares
that would cause the Company to not satisfy the eligibility requirements for use
of Form S-3 (including Instruction I.B.6. thereof).  Notwithstanding anything to
the contrary contained herein, the parties hereto agree that compliance with the
limitations set forth in this Section 1 on the number of Shares issued and sold
under this Agreement shall be the sole responsibility of the Company and that Wm
Smith shall have no obligation in connection with such compliance.  The issuance
and sale of Shares through Wm Smith will be effected pursuant to the
Registration Statement (as defined below) filed by the Company and declared
effective by the Securities and Exchange Commission (the “Commission”), although
nothing in this Agreement shall be construed as requiring the Company to use the
Registration Statement to issue Common Stock.
 
The Company has filed, in accordance with the provisions of the Securities Act
of 1933, as amended, and the rules and regulations thereunder (collectively, the
“Securities Act”), with the Commission a registration statement on Form S-3
(File No. 333-139637), including a base prospectus, with respect to equity and
other offerings, including the Shares, and which incorporates by reference
documents that the Company has filed or will file in accordance with the
provisions of the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder (collectively, the “Exchange Act”).  The Company will
prepare a prospectus supplement (the “Prospectus Supplement”) to the base
prospectus included as part of such registration statement.  The Company will
furnish to Wm Smith, for use by Wm Smith, copies of the prospectus included as
part of such registration statement, as supplemented by the Prospectus
Supplement, relating to the Shares.  Except where the context otherwise
requires, such registration statement, as amended when it became effective,
including all documents filed as part thereof or incorporated by reference
therein, and including any information contained in a Prospectus (as defined
below) subsequently filed with the Commission pursuant to Rule 424(b) under the
Securities Act and also including any other registration statement filed
pursuant to Rule 462(b) under the Securities Act, collectively, are herein
called the “Registration Statement,” and the base prospectus, including all
documents incorporated therein by reference, included in the Registration
Statement, as it may be supplemented by the Prospectus Supplement, in the form
in which such prospectus and/or Prospectus Supplement have most recently been
filed by the Company with the Commission pursuant to Rule 424(b) under the
Securities Act is herein called the “Prospectus.” Any reference herein to the
Registration Statement, the Prospectus or any amendment or supplement thereto
shall be deemed to refer to and include the documents incorporated by reference
therein, and any reference herein to the terms “amend,” “amendment” or
“supplement” with respect to the Registration Statement or the Prospectus shall
be deemed to refer to and include the filing after the execution hereof of any
document with the Commission deemed to be incorporated by reference
therein.  For purposes of this Agreement, all references to the Registration
Statement, the Prospectus or to any amendment or supplement thereto shall be
deemed to include any copy filed with the Commission pursuant to its Electronic
Data Gathering Analysis and Retrieval System, or if applicable, the Interactive
Data Electronic Application system when used by the Commission ( collectively,
“EDGAR”).

 
 

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2.           Placements.  Each time that the Company wishes to issue and sell
Shares hereunder (each, a “Placement”), it will notify Wm Smith by email notice
(or other method mutually agreed to in writing by the Parties) of the number of
Shares (the “Placement Shares”) to be issued, the type of Shares, the time
period during which sales are requested to be made, any limitation on the number
of Shares that may be sold in any one day and any minimum price below which
sales may not be made (a “Placement Notice”), the form of which is attached
hereto as Schedule 1.  The Placement Notice shall originate from any of the
individuals from the Company set forth on Schedule 3 (with a copy to each of the
other individuals from the Company listed on such schedule), and shall be
addressed to each of the individuals from Wm Smith set forth on Schedule 3, as
such Schedule 3 may be amended from time to time.  The Placement Notice shall be
effective unless and until (i) the entire amount of the Placement Shares have
been sold, (ii) the Company suspends or terminates the Placement Notice,
(iii) the Agreement has been terminated under the provisions of Section 12,
(iv) Wm Smith determines that the certificate delivered by the Company pursuant
to Section 7(m) in connection with the respective Placement Notice was
incorrect, or (v) Wm Smith notifies the Company that Wm Smith, in its reasonable
and good faith judgment, is unable to perform its obligations thereunder as a
result of any action taken against Wm Smith by a regulatory authority with
jurisdiction over Wm Smith and the types of offerings that would include the
Placement.  The amount of any discount, commission or other compensation to be
paid by the Company to Wm Smith in connection with the sale of the Placement
Shares shall be calculated in accordance with the terms set forth in Schedule
2.  It is expressly acknowledged and agreed that neither the Company nor Wm
Smith will have any obligation whatsoever with respect to a Placement or any
Placement Shares unless and until the Company delivers a Placement Notice to Wm
Smith and Wm Smith does not decline such Placement Notice pursuant to the terms
set forth above, and then only upon the terms specified therein and herein.  In
the event of a conflict between the terms of this Agreement and the terms of a
Placement Notice, the terms of the Placement Notice will control.

 
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3.           Sale of Placement Shares by Wm Smith.  Subject to the terms and
conditions herein set forth, upon the Company’s issuance of a Placement Notice,
and unless the sale of the Placement Shares described therein has been declined,
suspended, or otherwise terminated in accordance with the terms of this
Agreement, Wm Smith will use its commercially reasonable efforts consistent with
its normal trading and sales practices to sell such Placement Shares up to the
amount specified, and otherwise in accordance with the terms of such Placement
Notice.  Wm Smith will provide written confirmation to the Company no later than
the opening of the Trading Day (as defined below) immediately following the
Trading Day on which it has made sales of Placement Shares hereunder setting
forth the number of Placement Shares sold on such day, the compensation payable
by the Company to Wm Smith pursuant to Section 2 with respect to such sales, and
the Net Proceeds (as defined below) payable to the Company.  Wm Smith may sell
Placement Shares by any method permitted by law deemed to be an “at the market”
offering as defined in Rule 415 of the Securities Act, including without
limitation sales made directly on NASDAQ Capital Market (the “Exchange”), on any
other existing trading market for the Common Stock or to or through a market
maker.  Wm Smith may also sell Placement Shares in privately negotiated
transactions.  The Company acknowledges and agrees that (i) there can be no
assurance that Wm Smith will be successful in selling Placement Shares, and
(ii) Wm Smith will incur no liability or obligation to the Company or any other
person or entity if it does not sell Placement Shares for any reason other than
a failure by Wm Smith to use its commercially reasonable efforts consistent with
its normal trading and sales practices to sell such Placement Shares as required
under this Section 3.  For the purposes hereof, “Trading Day” means any day on
which Common Stock is purchased and sold on the principal market on which the
Common Stock is listed or quoted.
 
4.           Suspension of Sales.  The Company may, upon notice to Wm Smith in
writing (including by email correspondence to each of the individuals set forth
on Schedule 3, if receipt of such correspondence is actually acknowledged by any
of the individuals to whom the notice is sent, other than via auto-reply) or by
telephone (confirmed immediately by verifiable facsimile transmission or email
correspondence to each of the individuals of the other Party set forth on
Schedule 3), suspend any sale of Placement Shares; provided, however, that such
suspension shall not affect or impair either party’s obligations with respect to
any Placement Shares sold hereunder prior to the receipt of such notice.  Each
of the Parties agrees that no such notice under this Section 4 shall be
effective against the other unless it is made to one of the individuals named on
Schedule 3 hereto, as such Schedule may be amended from time to time.
 
5.           Settlement.
 
(a)           Settlement of Placement Shares.  Unless otherwise specified in the
applicable Placement Notice, settlement for sales of Placement Shares will occur
on the third (3rd) Trading Day (or such earlier day as is industry practice for
regular-way trading) (each, a “Settlement Date”) following the respective Point
of Sale (as defined below).  The amount of proceeds to be delivered to the
Company on a Settlement Date against receipt of the Placement Shares sold (the
“Net Proceeds”) will be equal to the aggregate sales price received by Wm Smith
at which such Placement Shares were sold, after deduction for (i) Wm Smith’s
commission, discount or other compensation for such sales payable by the Company
pursuant to Section 2 hereof, (ii) any other amounts due and payable by the
Company to Wm Smith hereunder pursuant to Section 7(g) (Expenses) hereof, and
(iii) any transaction fees imposed by any governmental or self-regulatory
organization in respect of such sales (provided that any fees due and payable to
the Financial Industry Regulatory Authority (FINRA) in respect of this Agreement
or any transactions consummated hereunder shall be solely for the account of Wm
Smith).

 
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(b)           Delivery of Placement Shares.  On or before each Settlement Date,
the Company will, or will cause its transfer agent to, electronically transfer
the Placement Shares being sold by crediting Wm Smith’s or its designee’s
account at The Depository Trust Company through its Deposit and Withdrawal at
Custodian System or by such other means of delivery as may be mutually agreed
upon by the parties hereto which in all cases shall be freely tradeable,
transferable, registered shares in good deliverable form.  On each Settlement
Date, Wm Smith will deliver the related Net Proceeds in same day funds to an
account designated by the Company on, or prior to, the Settlement Date.  The
Company agrees that if the Company, or its transfer agent (if applicable),
defaults in its obligation to deliver Placement Shares on a Settlement Date, the
Company agrees that in addition to and in no way limiting the rights and
obligations set forth in Section 10(a) (Indemnification and Contribution)
hereto, it will (i) hold Wm Smith harmless against any loss, claim, damage, or
expense (including reasonable legal fees and expenses), as incurred, arising out
of or in connection with such default by the Company and (ii) pay to Wm Smith
any commission, discount, or other compensation to which it would otherwise have
been entitled absent such default.
 
6.           Representations and Warranties of the Company.  The Company
represents and warrants to, and agrees with, Wm Smith that as of the date of
this Agreement and as of each Representation Date (as defined in Section 7(m)
below) on which a certificate is required to be delivered pursuant to Section
7(m) of this Agreement, as the case may be, except as may be disclosed in the
Registration Statement or a Disclosure Schedule delivered in connection
herewith:
 
(a)           Registration Statement and Prospectus.  The Company and, assuming
no act or omission on the part of Wm Smith that would make such statement
untrue, the transactions contemplated by this Agreement meet the requirements
for and comply with the conditions for the use of Form S-3 under the Securities
Act.  The Registration Statement has been filed with the Commission and has been
declared effective under the Securities Act.  The Prospectus Supplement will
name Wm Smith as an underwriter, acting as principal and/or agent, that the
Company might engage in the section entitled “Plan of Distribution.” The Company
has not received, and has no notice of, any order of the Commission preventing
or suspending the use of the Registration Statement, or threatening or
instituting proceedings for that purpose.  The Registration Statement and the
offer and sale of Shares as contemplated hereby meet the requirements of
Rule 415 under the Act and comply in all material respects with said Rule.  Any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement have been so described or filed.  Copies
of the Registration Statement, the Prospectus, and any such amendments or
supplements and all documents incorporated by reference therein that were filed
with the Commission on or prior to the date of this Agreement have been
delivered, or are available through EDGAR, to Wm Smith and their counsel.  The
Company has not distributed and, prior to the later to occur of each Settlement
Date and completion of the distribution of the Placement Shares, will not
distribute any offering material in connection with the offering or sale of the
Placement Shares other than the Registration Statement and the Prospectus and
any Issuer Free Writing Prospectus (as defined below) to which Wm Smith has
consented.  The Common Stock is currently listed on the NASDAQ Capital Market
under the trading symbol “GNBT”.  Except as disclosed in the Registration
Statement, the Company has not, in the 12 months preceding the date hereof,
received notice from the Exchange to the effect that the Company is not in
compliance with the listing or maintenance requirements except that the Company
has been notified of its failure to comply with the $1 minimum bid listing
maintenance requirement of the NASDAQ Capital Market.  The Company has no reason
to believe that it will not in the foreseeable future continue to be in
compliance with all such listing and maintenance requirements save and except as
aforesaid.

 
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(b)           No Misstatement or Omission.  The Registration Statement, when it
became or becomes effective, and the Prospectus, and any amendment or supplement
thereto, on the date of such Prospectus or amendment or supplement, conformed or
will conform in all material respects with the requirements of the Securities
Act.  At each Settlement Date, the Registration Statement and the Prospectus, as
of such date, will conform in all material respects with the requirements of the
Act.  The Registration Statement, when it became or becomes effective, did not,
or will not, 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 not misleading.  The Prospectus and any amendment or supplement thereto,
on the date thereof and at each Point of Sale, did not or will not include an
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.  The documents incorporated by reference in the
Prospectus or any Prospectus Supplement did not, and any further documents filed
and incorporated by reference therein will not, when filed with the Commission,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated in such document or necessary to make the statements in
such document, in light of the circumstances under which they were made, not
misleading.  The foregoing shall not apply to statements in, or omissions from,
any such document made in reliance upon, and in conformity with, information
furnished to the Company by Wm Smith specifically for use in the preparation
thereof.  “Point of Sale” means, for a Placement, the time at which an acquiror
of Placement Shares entered into a contract, binding upon such acquiror, to
acquire such Shares.
 
(c)           Conformity with Securities Act and Exchange Act.  The documents
incorporated by reference in the Registration Statement, the Prospectus or any
amendment or supplement thereto, when such documents were or are filed with the
Commission under the Securities Act or the Exchange Act or became or become
effective under the Securities Act, as the case may be, conformed or will
conform in all material respects with the requirements of the Securities Act and
the Exchange Act, as applicable.

 
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(d)           Financial Information.  The consolidated financial statements and
the related notes thereto included or incorporated by reference in the
Registration Statement and the Prospectus comply with the applicable
requirements of the Act and the Exchange Act, as applicable, and present fairly,
the financial position of the Company and its Subsidiaries (as defined below) as
of the dates indicated and the results of their operations and the changes in
their consolidated cash flows for the periods specified; such financial
statements have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods covered thereby
(except (i) as may be otherwise indicated in such financial statements or the
notes thereto or (ii) in the case of unaudited interim financial statements, to
the extent that they may not include footnotes or may be condensed or summary
statements), and the other financial information included or incorporated by
reference in the Registration Statement and the Prospectus has been derived from
the accounting records of the Company and its Subsidiaries and presents fairly
the information shown thereby.  Any pro forma financial statements or data
included or incorporated by reference in the Registration Statement and the
Prospectus comply with the requirements of Regulation S-X of the Securities Act,
including, without limitation, Article 11 thereof, and the assumptions used in
the preparation of such pro forma financial statements and data are reasonable,
the pro forma adjustments used therein are appropriate to give effect to the
circumstances referred to therein and the pro forma adjustments have been
properly applied to the historical amounts in the compilation of those
statements and data.  No other financial statements or schedules of the Company
or any other entity are required by the Act to be included in the Registration
Statement or the Prospectus.  All disclosures contained in the Registration
Statement, the Pricing Disclosure Materials and the Prospectus regarding
“non-GAAP financial measures” (as such term is defined by Item 10 of Regulation
S-K under the Act) comply with Regulation G of the Exchange Act and Item 10 of
Regulation S-K under the Act, to the extent applicable.  The Company does not
have any material liabilities or obligations, direct or contingent (including
any off-balance sheet obligations and any “variable interest entities” within
the meaning of Financial Accounting Standards Board Interpretation No. 46), not
disclosed in the Registration Statement, the Pricing Disclosure Materials and
the Prospectus.
 
(e)           Conformity with EDGAR Filing.  The Prospectus delivered to Wm
Smith for use in connection with the sale of the Placement Shares pursuant to
this Agreement will be identical to the versions of the Prospectus created to be
transmitted to the Commission for filing via EDGAR, except to the extent
permitted by Regulation S-T.
 
(f)           Organization.  The Company and each of its Subsidiaries are, and
will be, duly organized, validly existing as a corporation and in good standing
under the laws of their respective jurisdictions of organization.  The Company
and each of its Subsidiaries are, and will be, duly licensed or qualified as a
foreign corporation for transaction of business and in good standing under the
laws of each other jurisdiction in which their respective ownership or lease of
property or the conduct of their respective businesses requires such license or
qualification, and have all corporate power and authority necessary to own or
hold their respective properties and to conduct their respective businesses as
described in the Registration Statement and the Prospectus, except where the
failure to be so qualified or in good standing or have such power or authority
would not, individually or in the aggregate, have a material adverse effect or
would reasonably be expected to have a material adverse effect on or affecting
the business, properties, management, consolidated financial position,
stockholders’ equity or results of operations of the Company and its
Subsidiaries taken as a whole (a “Material Adverse Effect”).
 
(g)           Subsidiaries.  Generex Pharmaceuticals Inc., Generex (Bermuda),
Inc., Antigen Express, Inc., Generex Pharmaceuticals (USA) LLC, SIA “Generex
Biotechology BALTIC” and Generex Marketing & Distribution Inc. (collectively,
the “Subsidiaries”), are the Company’s only significant subsidiaries (as such
term is defined in Rule 1-02 of Regulation S-X promulgated by the
Commission).  Except as set forth in the Registration Statement in and the
Prospectus, the Company owns, directly or indirectly, all of the membership
interests of the Subsidiaries free and clear of any lien, charge, security
interest, encumbrance, right of first refusal or other restriction, and all the
membership interests of the Subsidiaries are validly issued and are fully paid,
nonassessable and free of preemptive and similar rights.

 
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(h)           No Violation or Default.  Neither the Company nor any of its
Subsidiaries are (i) in violation of its charter or by-laws or similar
organizational documents; (ii) in default, and no event has occurred that, with
notice or lapse of time or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or its Subsidiaries are a party or by which the
Company or its Subsidiaries are bound or to which any of the property or assets
of the Company or its Subsidiaries are subject; or (iii) in violation of any law
or statute or any judgment, order, rule or regulation of any court or arbitrator
or governmental or regulatory authority, except, in the case of each of clauses
(ii) and (iii) above, for any such violation or default that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.  To the Company’s knowledge, no other party under any material
contract or other agreement to which it or a Subsidiary is a party is in default
in any respect thereunder where such default would have a Material Adverse
Effect.
 
(i)           No Material Adverse Change.  Except as set forth in or otherwise
contemplated by the Registration Statement (exclusive of any amendment thereof)
or the Prospectus (exclusive of any supplement thereto), since the date of the
most recent financial statements of the Company included or incorporated by
reference in the Registration Statement and the Prospectus and prior to each
Settlement Date, (i) there has not been and will not have been any change in the
capital stock of the Company (except for changes in the number of outstanding
shares of Common Stock of the Company due to the issuance of shares upon the
exercise or conversion of securities exercisable for, or convertible into,
shares of Common Stock outstanding on the date hereof) or long-term debt of the
Company or of its Subsidiaries or any dividend or distribution of any kind
declared, set aside for payment, paid or made by the Company on any class of
capital stock, that has resulted in or that would reasonably be expected to
result in a Material Adverse Effect to the Company and its Subsidiaries taken as
a whole; (ii) other than this Agreement, neither the Company nor its
Subsidiaries have entered or will enter into any transaction or agreement, not
in the ordinary course of business, that is material to the Company and its
Subsidiaries taken as a whole or incurred or will incur any liability or
obligation, direct or contingent, not in the ordinary course of business, that
is material to the Company and its Subsidiaries taken as a whole; (iii) there
has not been any material adverse change in the business, properties,
management, financial position, stockholders’ equity, or results of operations
of the Company and its Subsidiaries, taken as a whole; and (iv) neither the
Company nor its Subsidiaries have sustained any material loss or interference
with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor disturbance or dispute or any action,
order or decree of any court or arbitrator or governmental or regulatory
authority.

 
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(j)           Capitalization.  The issued and outstanding shares of capital
stock of the Company have been validly issued, are fully paid and nonassessable
and, other than as disclosed in or contemplated by the Registration Statement or
the Prospectus, are not subject to any preemptive rights, rights of first
refusal or similar rights.  The Company has an authorized, issued and
outstanding capitalization as set forth in the Registration Statement and the
Prospectus as of the dates referred to therein (other than the grant of
additional options under the Company’s existing stock option plans, or changes
in the number of outstanding shares of Common Stock of the Company due to the
issuance of shares upon the exercise or conversion of securities exercisable
for, or convertible into, shares of Common Stock outstanding on the date hereof)
and such authorized capital stock conforms to the description thereof set forth
in the Registration Statement and the Prospectus.  The description of the
securities of the Company in the Registration Statement and the Prospectus is
complete and accurate in all material respects.  Except as disclosed in or
contemplated by the Registration Statement or the Prospectus, as of the date
referred to therein, the Company does not have outstanding any options to
purchase, or any rights or warrants to subscribe for, or any securities or
obligations convertible into, or exchangeable for, or any contracts or
commitments to issue or sell, any shares of capital stock or other securities.
 
(k)           Authorization; Enforceability.  The Company has full legal right,
power and authority to enter into this Agreement and perform the transactions
contemplated hereby.  This Agreement has been duly authorized, executed and
delivered by the Company and is a legal, valid and binding agreement of the
Company enforceable in accordance with its terms, except to the extent that
(i) enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors’ rights generally and by general
equitable principles and (ii) the indemnification and contribution provisions of
Section 10 hereof may be limited by federal or state securities laws and public
policy considerations in respect thereof.
 
(l)           Authorization of Placement Shares.  The Placement Shares, when
issued and delivered pursuant to the terms approved by the Board of Directors or
a duly designated committee thereof, against payment therefor as provided
herein, will be duly and validly authorized and issued and fully paid and
nonassessable, free and clear of any pledge, lien, encumbrance, security
interest or other claim, including any statutory or contractual preemptive
rights, resale rights, rights of first refusal or other similar rights, and will
be registered pursuant to Section 12 of the Exchange Act.  The Placement Shares,
when issued, will conform in all material respects to the description thereof
set forth in or incorporated into the Prospectus.
 
(m)           No Consents Required.  No consent, approval, authorization, order,
registration or qualification of or with any court or arbitrator or governmental
or regulatory authority is required for the execution, delivery and performance
by the Company this Agreement, the issuance and sale by the Company of the
Placement Shares, except for the registration of the Placement Shares under the
Act and such consents, approvals, authorizations, orders and registrations or
qualifications as may be required under applicable state securities laws or by
the by-laws and rules of the Financial Industry Regulatory Authority (“FINRA”)
or the Exchange in connection with the sale of the Placement Shares by Wm Smith.
 
(n)           No Preferential Rights.  Except as set forth in the Registration
Statement, the Prospectus or in a separate disclosure letter delivered to Wm
Smith concurrently with the execution and delivery of this Agreement, (i) no
person, as such term is defined in Rule 1-02 of Regulation S-X promulgated under
the Securities Act (each, a “Person”), has the right, contractual or otherwise,
to cause the Company to issue or sell to such Person any shares of Common Stock
or shares of any other capital stock or other securities of the Company, (ii) no
Person has any preemptive rights, resale rights, rights of first refusal, or any
other rights (whether pursuant to a “poison pill” provision or otherwise) to
purchase any shares of Common Stock or shares of any other capital stock or
other securities of the Company, (iii)  no Person has the right to act as an
underwriter or as a financial advisor to the Company in connection with the
offer and sale of the Shares, and (iv) no Person has the right, contractual or
otherwise, to require the Company to register under the Securities Act any
shares of Common Stock or shares of any other capital stock or other securities
of the Company, or to include any such shares or other securities in the
Registration Statement or the offering contemplated thereby, whether as a result
of the filing or effectiveness of the Registration Statement or the sale of the
Placement Shares as contemplated thereby or otherwise.

 
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(o)           Independent Public Accountant.  MSCM LLP (the “Accountant”), whose
report on the consolidated financial statements of the Company is filed with the
Commission as part of the Registration Statement and the Prospectus, are and,
during the periods covered by their report, were independent public accountants
within the meaning of the Securities Act and the Public Company Accounting
Oversight Board (United States).  To the Company’s knowledge, after due and
careful inquiry, the Accountant is not in violation of the auditor independence
requirements of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) with
respect to the Company.
 
(p)           Enforceability of Agreements.  To the knowledge of the Company,
all agreements between the Company and third parties expressly referenced in the
Prospectus are legal, valid and binding obligations of the Company enforceable
in accordance with their respective terms, except to the extent that
(i) enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors’ rights generally and by general
equitable principles and (ii) the indemnification provisions of certain
agreements may be limited be federal or state securities laws or public policy
considerations in respect thereof and except for any unenforceability that,
individually or in the aggregate, would not unreasonably be expected to have a
Material Adverse Effect.
 
(q)           No Litigation.  Except as set forth in the Registration Statement
or the Prospectus, there are no legal, governmental or regulatory actions, suits
or proceedings pending, nor, to the Company’s knowledge, any legal, governmental
or regulatory investigations, to which the Company or a Subsidiary is a party or
to which any property of the Company or any of its Subsidiaries is the subject
that, individually or in the aggregate, if determined adversely to the Company
or any of its Subsidiaries, would reasonably be expected to have a Material
Adverse Effect or materially and adversely affect the ability of the Company to
perform its obligations under this Agreement; to the Company’s knowledge, no
such actions, suits or proceedings are threatened or contemplated by any
governmental or regulatory authority or threatened by others; and (i) there are
no current or pending legal, governmental or regulatory investigations, actions,
suits or proceedings that are required under the Act to be described in the
Prospectus that are not so described; and (ii) there are no contracts or other
documents that are required under the Act to be filed as exhibits to the
Registration Statement that are not so filed.

(r)           Licenses and Permits.  Except as set forth in the Registration
Statement or the Prospectus, the Company and each of its Subsidiaries possess or
have obtained, and at each Settlement Date will possess and will have obtained,
all licenses, certificates, consents, orders, approvals, permits and other
authorizations issued by, and have made all declarations and filings with, the
appropriate federal, state, local or foreign governmental or regulatory
authorities that are necessary for the ownership or lease of their respective
properties or the conduct of their respective businesses as described in the
Registration Statement and the Prospectus (the “Permits”), except where the
failure to possess, obtain or make the same would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.  Except as
disclosed in the Registration Statement or the Prospectus, neither the Company
nor any of its Subsidiaries have received written notice of any proceeding
relating to revocation or modification of any such Permit or has any reason to
believe that such Permit will not be renewed in the ordinary course, except
where the failure to obtain any such renewal would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
 
 
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(s)           Market Capitalization.  As of the close of trading on the Exchange
on the Trading Day immediately prior to the date of this Agreement, the
aggregate market value of the outstanding voting and non-voting common equity
(as defined in Securities Act Rule 405) of the Company held by persons other
than affiliates of the Company (pursuant to Securities Act Rule 144, those that
directly, or indirectly through one or more intermediaries, control, or are
controlled by, or are under common control with, the Company)  (the
“Non-Affiliate Shares”), was greater than $75 million (calculated by multiplying
(x) the price at which the common equity of the Company was last sold on the
Exchange on the Trading Day immediately prior to the date of this Agreement
times (y) the number of Non-Affiliate Shares).  The Company is not a shell
company (as defined in Rule 405 under the Securities Act) and has not been a
shell company for at least 12 calendar months previously and if it has been a
shell company at any time previously, has filed current Form 10 information (as
defined in Instruction I.B.6 of Form S-3) with the Commission at least 12
calendar months previously reflecting its status as an entity that is not a
shell company.
 
(t)           No Material Defaults.  Neither the Company nor any of the
Subsidiaries has defaulted on any installment on indebtedness for borrowed money
or on any rental on one or more long-term leases, which defaults, individually
or in the aggregate, could reasonably be expected to have a Material Adverse
Effect.  The Company has not filed a report pursuant to Section 13(a) or 15(d)
of the Exchange Act since the filing of its last Annual Report on Form 10-K,
indicating that it (i) has failed to pay any dividend or sinking fund
installment on preferred stock or (ii) has defaulted on any installment on
indebtedness for borrowed money or on any rental on one or more long-term
leases, which defaults, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
 
(u)           Certain Market Activities.  Neither the Company, nor any of the
Subsidiaries, nor any of their respective directors, officers or controlling
persons has taken, directly or indirectly, any action designed, or that has
constituted or might reasonably be expected to cause or result in, under the
Exchange Act or otherwise, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Placement
Shares.
 
(v)           Broker/Dealer Relationships.  Neither the Company nor any of the
Subsidiaries or any related entities (i) is required to register as a “broker”
or “dealer” in accordance with the provisions of the Exchange Act or
(ii) directly or indirectly through one or more intermediaries, controls or is a
“person associated with a member” or “associated person of a member” (within the
meaning of Article I of the NASD Manual administered by FINRA).

 
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(w)           No Reliance.  The Company has not relied upon Wm Smith or legal
counsel for Wm Smith for any legal, tax or accounting advice in connection with
the offering and sale of the Placement Shares.
 
(x)           Taxes.  The Company and each of its Subsidiaries have filed all
federal, state, local and foreign tax returns which have been required to be
filed and paid all taxes shown thereon through the date hereof, to the extent
that such taxes have become due and are not being contested in good
faith.  Except as otherwise disclosed in or contemplated by the Registration
Statement or the Prospectus, no tax deficiency has been determined adversely to
the Company or any of its Subsidiaries which has had, or would reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect.  The Company has no knowledge of any federal, state or other
governmental tax deficiency, penalty or assessment which has been or might be
asserted or threatened against it which could have a Material Adverse Effect.
 
(y)           Title to Real and Personal Property.  Except as set forth in the
Registration Statement or the Prospectus, the Company and its Subsidiaries have
good and valid title in fee simple to all items of real property and good and
valid title to all personal property described in the Registration Statement or
Prospectus as being owned by them that are material to the businesses of the
Company or such Subsidiary, in each case free and clear of all liens,
encumbrances and claims, except those that (i) do not materially interfere with
the use made and proposed to be made of such property by the Company and any of
its Subsidiaries or (ii) would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect.  Any real property described
in the Registration Statement or Prospectus as being leased by the Company and
any of its Subsidiaries is held by them under valid, existing and enforceable
leases, except those that (A) do not materially interfere with the use made or
proposed to be made of such property by the Company or any of its Subsidiaries
or (B) would not be reasonably expected, individually or in the aggregate, to
have a Material Adverse Effect.
 
(z)           Intellectual Property.  Except as set forth in the Registration
Statement or the Prospectus, the Company and its Subsidiaries own or possess
adequate enforceable rights to use all patents, patent applications, trademarks
(both registered and unregistered), service marks, trade names, trademark
registrations, service mark registrations, copyrights, licenses and know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) (collectively, the
“Intellectual Property”), necessary for the conduct of their respective
businesses as conducted as of the date hereof, except to the extent that the
failure to own or possess adequate rights to use such Intellectual Property
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; the Company and any of its Subsidiaries have not
received any written notice of any claim of infringement or conflict which
asserted Intellectual Property rights of others, which infringement or conflict,
if the subject of an unfavorable decision, would result in a Material Adverse
Effect; the Company has conducted searches of the United States patents of
record and published foreign patents issued to third parties that may interfere
with any of the Company’s or its Subsidiaries’ patents or patent applications
and it has determined that none of the Company’s or its Subsidiaries’ patents or
patent applications interfere with any other United States patents or United
States patent applications which correspond to published foreign patents; the
Company has conducted an infringement search and determined that no patent held
by any third party is infringed by the activities of the Company and its
Subsidiaries; there are no pending, or to the Company’s knowledge, threatened
judicial proceedings or interference proceedings challenging the Company’s or
its Subsidiaries’ rights in or to or the validity of the scope of any of the
Company’s or its Subsidiaries’ patents, patent applications or proprietary
information; no other entity or individual has any right or claim in any of the
Company’s or its Subsidiaries’ patents, patent applications or any patent to be
issued therefrom by virtue of any contract, license or other agreement entered
into between such entity or individual and the Company or by any non-contractual
obligation, other than by written licenses granted by the Company; the Company
and its Subsidiaries have not received any written notice of any claim
challenging the rights of the Company or a Subsidiary in or to any Intellectual
Property owned, licensed or optioned by the Company or such Subsidiary which
claim, if the subject of an unfavorable decision would result in an Material
Adverse Effect.

 
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(aa)         Compliance Program.  The Company has established and administers a
compliance program applicable to the Company, to assist the Company and the
directors, officers and employees of the Company in complying with applicable
regulatory guidelines.
 
(bb)         Environmental Laws.  Except as set forth in the Registration
Statement or the Prospectus, the Company and its Subsidiaries (i) are in
compliance with any and all applicable federal, state, local and foreign laws,
rules, regulations, decisions and orders relating to the protection of human
health and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants (collectively, “Environmental Laws”); (ii) have
received and are in compliance with all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their respective
businesses as described in the Registration Statement and the Prospectus; and
(iii) have not received notice of any actual or potential liability for the
investigation or remediation of any disposal or release of hazardous or toxic
substances or wastes, pollutants or contaminants, except, in the case of any of
clauses (i), (ii) or (iii) above, for any such failure to comply or failure to
receive required permits, licenses, other approvals or liability as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
 
(cc)         Disclosure Controls.  The Company and each of its Subsidiaries
maintain systems of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorizations; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability;
(iii) access to assets is permitted only in accordance with management’s general
or specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.  The Company has established
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 and
15d-15) for the Company and designed such disclosure controls and procedures to
ensure that material information relating to the Company and each of its
Subsidiaries is made known to the certifying officers by others within those
entities, particularly during the period in which the Company’s Annual Report on
Form 10-K or Quarterly Report on Form 10-Q, as the case may be, is being
prepared.  The Company’s certifying officers have evaluated the effectiveness of
the Company’s controls and procedures as of a date within 90 days prior to the
filing date of the Form 10-K for the fiscal year ended July 31, 2008 (such date,
the “Evaluation Date”).  The Company presented in its Form 10-K for the fiscal
year ended July 31, 2008 the conclusions of the certifying officers about the
effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date.  Since the Evaluation Date, there have
been no significant changes in the Company’s internal controls (as such term is
defined in Item 307(b) of Regulation S-K under the Act) or, to the Company’s
knowledge, in other factors that could significantly affect the Company’s
internal controls.

 
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(dd)         Sarbanes-Oxley.  To the knowledge of the Company, there is and has
been no failure on the part of the Company and any of the Company’s directors or
officers, in their capacities as such, to comply with any applicable provisions
of the Sarbanes-Oxley Act and the rules and regulations promulgated
thereunder.  Each of the principal executive officer and the principal financial
officer of the Company (or each former principal executive officer of the
Company and each former principal financial officer of the Company as
applicable) has made all certifications required by Sections 302 and 906 of the
Sarbanes-Oxley Act with respect to all reports, schedules, forms, statements and
other documents required to be filed by it or furnished by it to the
Commission.  For purposes of the preceding sentence, “principal executive
officer” and “principal financial officer” shall have the meanings given to such
terms in the Sarbanes-Oxley Act.
 
(ee)         Finder’s Fees.  Neither the Company nor any of the Subsidiaries has
incurred any liability for any finder’s fees, brokerage commissions or similar
payments in connection with the transactions herein contemplated, except as may
otherwise exist with respect to Wm Smith pursuant to this Agreement.
 
(ff)           Labor Disputes.  No labor disturbance by or dispute with
employees of the Company or any of its Subsidiaries exists or, to the knowledge
of the Company, is threatened which would reasonably be expected to result in a
Material Adverse Effect
 
(gg)        Investment Company Act.  Neither the Company nor any of the
Subsidiaries is or, after giving effect to the offering and sale of the
Placement Shares, will be an “investment company” or an entity “controlled” by
an “investment company,” as such terms are defined in the Investment Company Act
of 1940, as amended (the “Investment Company Act”).
 
(hh)        Operations.  The operations of the Company and its Subsidiaries are
and have been conducted at all times in compliance with applicable financial
record keeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the money laundering statutes of
all jurisdictions to which the Company or its Subsidiaries are subject, the
rules and regulations thereunder and any related or similar rules, regulations
or guidelines, issued, administered or enforced by any governmental agency
(collectively, the “Money Laundering Laws”), except as would not reasonably be
expected to result in a Material Adverse Effect; and no action, suit or
proceeding by or before any court or governmental agency, authority or body or
any arbitrator involving the Company or any of its Subsidiaries with respect to
the Money Laundering Laws is pending or, to the knowledge of the Company,
threatened.

 
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(ii)           Off-Balance Sheet Arrangements.  There are no transactions,
arrangements and other relationships between and/or among the Company, and/or,
to the knowledge of the Company, any of its affiliates and any unconsolidated
entity, including, but not limited to, any structural finance, special purpose
or limited purpose entity (each, an “Off Balance Sheet Transaction”) that could
reasonably be expected to affect materially the Company’s liquidity or the
availability of or requirements for its capital resources, including those Off
Balance Sheet Transactions described in the Commission’s Statement about
Management’s Discussion and Analysis of Financial Conditions and Results of
Operations (Release Nos.  33-8056; 34-45321; FR-61), required to be described in
the Prospectus which have not been described as required.
 
(jj)           Underwriter Agreements.  The Company is not a party to any
agreement with an agent or underwriter for any other “at-the-market” or
continuous equity transaction.
 
(kk)         ERISA.  To the knowledge of the Company, each material employee
benefit plan, within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”), that is maintained,
administered or contributed to by the Company or any of its affiliates for
employees or former employees of the Company and any of its Subsidiaries has
been maintained in material compliance with its terms and the requirements of
any applicable statutes, orders, rules and regulations, including but not
limited to ERISA and the Internal Revenue Code of 1986, as amended (the “Code”);
no prohibited transaction, within the meaning of Section 406 of ERISA or Section
4975 of the Code, has occurred which would result in a material liability to the
Company with respect to any such plan excluding transactions effected pursuant
to a statutory or administrative exemption; and for each such plan that is
subject to the funding rules of Section 412 of the Code or Section 302 of ERISA,
no “accumulated funding deficiency” as defined in Section 412 of the Code has
been incurred, whether or not waived, and the fair market value of the assets of
each such plan (excluding for these purposes accrued but unpaid contributions)
exceeds the present value of all benefits accrued under such plan determined
using reasonable actuarial assumptions.
 
(ll)           Forward Looking Statements.  No forward-looking statement (within
the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act) (a “Forward Looking Statement”) contained in the Registration Statement and
the Prospectus has been made or reaffirmed without a reasonable basis or has
been disclosed other than in good faith.  The Forward Looking Statements
incorporated by reference in the Registration Statement and the Prospectus from
the Company’s Annual Report on Form 10-K for the fiscal year most recently ended
(i) are within the coverage of the safe harbor for forward looking statements
set forth in Section 27A of the Act, Rule 175(b) under the Act or Rule 3b-6
under the Exchange Act, as applicable, (ii) were made by the Company with a
reasonable basis and in good faith and reflect the Company’s good faith
commercially reasonable best estimate of the matters described therein, and
(iii) have been prepared in accordance with Item 10 of Regulation S-K under the
Act.
 
(mm)       Wm Smith Purchases.  The Company acknowledges and agrees that Wm
Smith has informed the Company that Wm Smith may, to the extent permitted under
the Securities Act and the Exchange Act, purchase and sell shares of Common
Stock for its own account while this Agreement is in effect, provided, that
(i) no such purchase or sales shall take place while a Placement Notice is in
effect (except to the extent Wm Smith may engage in sales of Placement Shares
purchased or deemed purchased from the Company as a “riskless principal” or in a
similar capacity) and (ii) the Company shall not be deemed to have authorized or
consented to any such purchases or sales by Wm Smith.

 
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(nn)         Margin Rules.  Neither the issuance, sale and delivery of the
Shares nor the application of the proceeds thereof by the Company as described
in the Registration Statement and the Prospectus will violate Regulation T, U or
X of the Board of Governors of the Federal Reserve System or any other
regulation of such Board of Governors.
 
(oo)         Insurance.  The Company and each of its Subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as the Company and
each of its Subsidiaries reasonably believe are adequate for the conduct of
their properties and as is customary for companies engaged in similar businesses
in similar industries.
 
(pp)         No Improper Practices.  (i) Neither the Company nor, to the
Company’s knowledge, the Subsidiaries, nor to the Company’s knowledge, any of
their respective executive officers has, in the past five years, made any
unlawful contributions to any candidate for any political office (or failed
fully to disclose any contribution in violation of law) or made any contribution
or other payment to any official of, or candidate for, any federal, state,
municipal, or foreign office or other person charged with similar public or
quasi-public duty in violation of any law or of the character required to be
disclosed in the Prospectus; (ii) no relationship, direct or indirect, exists
between or among the Company or, to the Company’s knowledge, any Subsidiary or
any affiliate of any of them, on the one hand, and the directors, officers and
stockholders of the Company or, to the Company’s knowledge, any Subsidiary, on
the other hand, that is required by the Securities Act to be described in the
Registration Statement and the Prospectus that is not so described; (iii) no
relationship, direct or indirect, exists between or among the Company or any
Subsidiary or any affiliate of them, on the one hand, and the directors,
officers, stockholders or directors of the Company or, to the Company’s
knowledge, any Subsidiary, on the other hand, that is required by the rules of
FINRA to be described in the Registration Statement and the Prospectus that is
not so described; and (iv) except as described in the Prospectus, there are no
material outstanding loans or advances or material guarantees of indebtedness by
the Company or, to the Company’s knowledge, any Subsidiary to or for the benefit
of any of their respective officers or directors or any of the members of the
families of any of them.
 
(qq)         Status Under the Securities Act.  The Company was not and is not an
ineligible issuer as defined in Rule 405 under the Securities Act at the times
specified in Rules 164 and 433 under the Act in connection with the offering of
the Shares.
 
(rr)           No Misstatement or Omission in an Issuer Free Writing
Prospectus.  Each issuer free writing prospectus, as defined in Rule 405 under
the Act (an “Issuer Free Writing Prospectus,” and together with the Preliminary
Prospectus the “Pricing Disclosure Materials”), when considered together with
the Pricing Disclosure Materials as of the applicable Point of Sale, did not or
will not 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; provided, however, that the Company makes no representation or
warranty with respect to any statement contained in any Issuer Free Writing
Prospectus in reliance upon and in conformity with information concerning Wm
Smith and furnished by Wm Smith to the Company expressly for use in the Issuer
Free Writing Prospectus.

 
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(ss)         Conformity of Issuer Free Writing Prospectus.  Each Issuer Free
Writing Prospectus conformed or will conform in all material respects to the
requirements of the Act on the date of first use, and the Company has complied
or will comply with any filing requirements applicable to such Issuer Free
Writing Prospectus pursuant to the Act.  Each Issuer Free Writing Prospectus, as
of its issue date and at all subsequent times through the completion of the
public offer and sale of the Shares, did not, does not and will not include any
information that conflicted, conflicts or will conflict with the information
contained in the Registration Statement or the Prospectus, including any
document incorporated by reference therein that has not been superseded or
modified.  The Company has not made any offer relating to the Shares that would
constitute an Issuer Free Writing Prospectus without the prior written consent
of Wm Smith.  The Company has retained in accordance with the Act all Issuer
Free Writing Prospectuses that were not required to be filed pursuant to the
Act.
 
(tt)           Pricing Disclosure Materials.  The Pricing Disclosure Materials
did not, as of the applicable Point of Sale 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; provided, however, that the Company makes
no representation or warranty with respect to any statement contained in the
Pricing Disclosure Materials in reliance upon and in conformity with information
concerning Wm Smith and furnished in writing by Wm Smith to the Company
expressly for use in the Pricing Disclosure Materials.
 
(uu)         No Conflicts.  Neither the execution of this Agreement, nor the
issuance, offering or sale of the Shares, nor the consummation of any of the
transactions contemplated herein and therein, nor the compliance by the Company
with the terms and provisions hereof and thereof will conflict with, or will
result in a breach of, any of the terms and provisions of, or has constituted or
will constitute a default under, or has resulted in or will result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company pursuant to the terms of any contract or other agreement
to which the Company may be bound or to which any of the property or assets of
the Company is subject, except (i) such conflicts, breaches or defaults as may
have been waived and (ii) such conflicts, breaches and defaults that would not
have a Material Adverse Effect; nor will such action result (x) in any violation
of the provisions of the organizational or governing documents of the Company,
or (y) in any material violation of the provisions of any statute or any order,
rule or regulation applicable to the Company or of any court or of any federal,
state or other regulatory authority or other government body having jurisdiction
over the Company.
 
(vv)          Stock Transfer Taxes.  On each Settlement Date, all stock transfer
or other taxes (other than income taxes) which are required to be paid in
connection with the sale and transfer of the Shares to be sold hereunder will
be, or will have been, fully paid or provided for by the Company and all laws
imposing such taxes will be or will have been fully complied with.
 
 
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7.           Covenants of the Company.  The Company covenants and agrees with Wm
Smith that:
 
(a)           Registration Statement Amendments.  After the date of this
Agreement and during any period in which a Prospectus relating to any Placement
Shares is required to be delivered by Wm Smith under the Securities Act
(including in circumstances where such requirement may be satisfied pursuant to
Rule 172 under the Securities Act), (i) the Company will notify Wm Smith
promptly of the time when any subsequent amendment to the Registration
Statement, other than documents incorporated by reference, has been filed with
the Commission and/or has become effective or any subsequent supplement to the
Prospectus has been filed and of any request by the Commission for any amendment
or supplement to the Registration Statement or Prospectus or for additional
information, (ii) the Company will prepare and file with the Commission,
promptly upon Wm Smith’s request, any amendments or supplements to the
Registration Statement or Prospectus that, in Wm Smith’s reasonable opinion, may
be necessary or advisable in connection with the distribution of the Placement
Shares by Wm Smith (provided, however, that the failure of Wm Smith to make such
request shall not relieve the Company of any obligation or liability hereunder,
or affect Wm Smith’s right to rely on the representations and warranties made by
the Company in this Agreement and provided, further, that the only remedy Wm
Smith shall have with respect to the failure to make such filing shall be to
cease making sales under this Agreement until such amendment or supplement is
filed); (iii) the Company will not file any amendment or supplement to the
Registration Statement or Prospectus relating to the Placement Shares or a
security convertible into the Placement Shares unless a copy thereof has been
submitted to Wm Smith within a reasonable period of time before the filing and
Wm Smith has not reasonably objected thereto (provided, however, that the
failure of Wm Smith to make such objection shall not relieve the Company of any
obligation or liability hereunder, or affect Wm Smith’s right to rely on the
representations and warranties made by the Company in this Agreement and
provided, further, that the only remedy Wm Smith shall have with respect to the
failure to by the Company to obtain such consent shall be to cease making sales
under this Agreement) and the Company will furnish to Wm Smith at the time of
filing thereof a copy of any document that upon filing is deemed to be
incorporated by reference into the Registration Statement or Prospectus, except
for those documents available via EDGAR; and (iv) the Company will cause each
amendment or supplement to the Prospectus to be filed with the Commission as
required pursuant to the applicable paragraph of Rule 424(b) of the Securities
Act or, in the case of any document to be incorporated therein by reference, to
be filed with the Commission as required pursuant to the Exchange Act, within
the time period prescribed (the determination to file or not file any amendment
or supplement with the Commission under this Section 7(a), based on the
Company’s reasonable opinion or reasonable objections, shall be made exclusively
by the Company).
 
(b)           Notice of Commission Stop Orders.  The Company will advise Wm
Smith, promptly after it receives notice or obtains knowledge thereof, of the
issuance or threatened issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement, of the suspension of the
qualification of the Placement Shares for offering or sale in any jurisdiction,
or of the initiation or threatening of any proceeding for any such purpose; and
it will promptly use its commercially reasonable efforts to prevent the issuance
of any stop order or to obtain its withdrawal if such a stop order should be
issued.  The Company will advise Wm Smith promptly after it receives any request
by the Commission for any amendments to the Registration Statement or any
amendment or supplements to the Prospectus or any Issuer Free Writing Prospectus
or for additional information related to the offering of the Shares or for
additional information related to the Registration Statement, the Prospectus or
any Issuer Free Writing Prospectus.

 
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(c)           Delivery of Prospectus; Subsequent Changes.  During any period in
which a Prospectus relating to the Placement Shares is required to be delivered
by Wm Smith under the Securities Act with respect to the offer and sale of the
Placement Shares, (including in circumstances where such requirement may be
satisfied pursuant to Rule 172 under the Securities Act), the Company will
comply with all requirements imposed upon it by the Securities Act, as from time
to time in force, and to file on or before their respective due dates all
reports and any definitive proxy or information statements required to be filed
by the Company with the Commission pursuant to Sections 13(a), 13(c), 14, 15(d)
or any other provision of or under the Exchange Act.  If the Company has omitted
any information from the Registration Statement pursuant to Rule 430A under the
Act, it will use its best efforts to comply with the provisions of and make all
requisite filings with the Commission pursuant to said Rule 430A and to notify
Wm Smith promptly of all such filings.  If during such period any event occurs
as a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances then
existing, not misleading, or if during such period it is necessary to amend or
supplement the Registration Statement or Prospectus to comply with the
Securities Act, the Company will promptly notify Wm Smith to suspend the
offering of Placement Shares during such period and the Company will promptly
amend or supplement the Registration Statement or Prospectus (at the expense of
the Company) so as to correct such statement or omission or effect such
compliance.
 
(d)           Listing of Placement Shares.  During any period in which the
Prospectus relating to the Placement Shares is required to be delivered by Wm
Smith under the Securities Act with respect to the offer and sale of the
Placement Shares, the Company will use its reasonable best efforts to cause the
Placement Shares to be listed on the Exchange and to qualify the Placement
Shares for sale under the securities laws of such jurisdictions as Wm Smith
reasonably designates and to continue such qualifications in effect so long as
required for the distribution of the Placement Shares; provided, however, that
the Company shall not be required in connection therewith to qualify as a
foreign corporation or dealer in securities or file a general consent to service
of process in any jurisdiction.
 
(e)           Delivery of Registration Statement and Prospectus.  The Company
will furnish to Wm Smith and its counsel (at the expense of the Company) copies
of the Registration Statement, the Prospectus (including all documents
incorporated by reference therein) and all amendments and supplements to the
Registration Statement or Prospectus that are filed with the Commission during
any period in which a Prospectus relating to the Placement Shares is required to
be delivered under the Securities Act (including all documents filed with the
Commission during such period that are deemed to be incorporated by reference
therein), in each case as soon as reasonably practicable and in such quantities
as Wm Smith may from time to time reasonably request and, at Wm Smith’s request,
will also furnish copies of the Prospectus to each exchange or market on which
sales of the Placement Shares may be made; provided, however, that the Company
shall not be required to furnish any document (other than the Prospectus) to Wm
Smith to the extent such document is available on EDGAR.

 
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(f)           Earnings Statement.  The Company will make generally available to
its security holders as soon as practicable, but in any event not later than 15
months after the end of the Company’s current fiscal quarter, an earnings
statement covering a 12-month period that satisfies the provisions of Section
11(a) and Rule 158 of the Securities Act.
 
(g)          Expenses.  The Company, whether or not the transactions
contemplated hereunder are consummated or this Agreement is terminated, in
accordance with the provisions of Section 12 hereunder, will pay all expenses
incident to the performance of its obligations hereunder, including, but not
limited to, expenses relating to (i) the preparation, printing and filing of the
Registration Statement and each amendment and supplement thereto, of each
Prospectus and of each amendment and supplement thereto, (ii) the preparation,
issuance and delivery of the Placement Shares, (iii) the qualification of the
Placement Shares under securities laws in accordance with the provisions of
Section 7(d) of this Agreement, including filing fees, (iv) the printing and
delivery to Wm Smith of copies of the Prospectus and any amendments or
supplements thereto, and of this Agreement, (v) the fees and expenses incurred
in connection with the listing or qualification of the Placement Shares for
trading on the Exchange, and (vi) filing fees and expenses, if any, of the
Commission.  Any fees and expenses due and payable to the Financial Industry
Regulatory Authority (FINRA) or legal counsel for Wm Smith in respect of this
Agreement or any transactions consummated hereunder will be solely for the
account of Wm Smith.
 
(h)          Use of Proceeds.  The Company will use the Net Proceeds as
described in the Prospectus in the section entitled “Use of Proceeds.”
 
(i)           Notice of Other Sales.  Without the prior written consent of Wm
Smith, the Company will not, directly or indirectly, in any other continuous
equity transaction, offer to sell, sell, contract to sell, grant any option to
sell or otherwise dispose of any shares of Common Stock (other than the Shares
offered pursuant to the provisions of this Agreement) or securities convertible
into or exchangeable for Common Stock, warrants or any rights to purchase or
acquire, Common Stock prior to the termination of this Agreement.
 
(j)           Change of Circumstances.  The Company will, at any time during the
pendency of a Placement Notice advise Wm Smith promptly after it shall have
received notice or obtained knowledge thereof, of any information or fact that
would alter or affect in any material respect any opinion, certificate, letter
or other document required to be provided to Wm Smith pursuant to this
Agreement.
 
(k)          Due Diligence Cooperation.  The Company will cooperate with any
reasonable due diligence review conducted by Wm Smith or its agents in
connection with the transactions contemplated hereby, including, without
limitation, providing information and making available documents and senior
corporate officers, during regular business hours and at the Company’s principal
offices, as Wm Smith may reasonably request.

 
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(l)           Required Filings Relating to Placement of Placement Shares.  The
Company agrees that on such dates as the Securities Act shall require, the
Company will (i) file a prospectus supplement with the Commission under the
applicable paragraph of Rule 424(b) under the Securities Act (each and every
filing under Rule 424(b), a “Filing Date”), which prospectus supplement will set
forth, within the relevant period, the amount of Placement Shares sold through
Wm Smith, the Net Proceeds to the Company and the compensation payable by the
Company to Wm Smith with respect to such Placement Shares, and (ii) deliver such
number of copies of each such prospectus supplement to each exchange or market
on which such sales were effected as may be required by the rules or regulations
of such exchange or market.
 
(m)         Representation Dates; Certificate.  During the term of this
Agreement, on the date of each Placement Notice given hereunder and each time
the Company (i) files the Prospectus relating to the Placement Shares or amends
or supplements the Registration Statement or the Prospectus relating to the
Placement Shares (other than a prospectus supplement filed in accordance with
Section 7(l) of this Agreement) by means of a post-effective amendment, sticker,
or supplement but not by means of incorporation of document(s) by reference to
the Registration Statement or the Prospectus relating to the Placement Shares;
(ii) files an annual report on Form 10-K under the Exchange Act; (iii) files its
quarterly reports on Form 10-Q under the Exchange Act; (iv) files a report on
Form 8-K containing amended financial information (other than an earnings
release, to “furnish” information pursuant to Items 2.02 or 7.01 of Form 8-K or
to provide disclosure pursuant to Item 8.01 of Form 8-K relating to the
reclassifications of certain properties as discontinued operations in accordance
with Statement of Financial Accounting Standards No. 144) under the Exchange Act
or (v) files a Form 8-K under the Exchange Act for any other purpose (other than
to “furnish” information pursuant to Items 2.02 or 7.01 of revised Form 8-K)
(each date of filing of one or more of the documents referred to in clauses (i)
through (v) shall be a “Representation Date”); the Company shall furnish Wm
Smith (but in the case of clause (v) above only if Wm Smith reasonably
determines that the information contained in such Form 8-K is material) with a
certificate, in the form attached hereto as Exhibit 7(m).  The requirement to
provide a certificate under this Section 7(m) shall be waived for any
Representation Date occurring at a time at which no Placement Notice is pending,
which waiver shall continue until the earlier to occur of the date the Company
delivers a Placement Notice hereunder (which for such calendar quarter shall be
considered a Representation Date) and the next occurring Representation Date;
provided, however, that such waiver shall not apply for any Representation Date
on which the Company files its annual report on Form 10-K.  Notwithstanding the
foregoing, if the Company subsequently decides to sell Placement Shares
following a Representation Date when the Company relied on such waiver and did
not provide Wm Smith with a certificate under this Section 7(m), then before the
Company delivers the Placement Notice or Wm Smith sells any Placement Shares,
the Company shall provide Wm Smith with a certificate, in the form attached
hereto as Exhibit 7(m), dated the date of the Placement Notice.
 
(n)          Legal Opinion.  Within ten days following the date of this
Agreement (but, in no event, later than the date of the initial Placement Notice
given hereunder) and, thereafter, within ten days following each date that the
Company files an annual report on Form 10-K under the Exchange Act or a
quarterly report on Form 10-Q under the Exchange Act during the term of this
Agreement, the Company shall cause to be furnished to Wm Smith a written opinion
of Eckert Seamans Cherin Mellott, LLC (“Company Counsel”) in form and substance
satisfactory to Wm Smith and its counsel, substantially similar to the form
attached hereto as Exhibit 7(n), modified, as necessary, to relate to the
Registration Statement and the Prospectus as then amended or supplemented;
provided, however, the Company shall be required to furnish to Wm Smith no more
than one opinion hereunder per calendar quarter; provided, further, that in lieu
of such opinions for subsequent periodic filings under the Exchange Act, counsel
may furnish Wm Smith with a letter (a “Reliance Letter”) to the effect that Wm
Smith may rely on a prior opinion delivered under this Section 7(n) to the same
extent as if it were dated the date of such letter (except that statements in
such prior opinion shall be deemed to relate to the Registration Statement and
the Prospectus as amended or supplemented as of the date of the Reliance
Letter).

 
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(o)          Comfort Letter.  During the term of this Agreement, no later than
ten Trading Days following the date the Company files its annual report on Form
10-K for the year ended July 31, 2009 and thereafter within ten Trading Days
following each subsequent date the Company files an annual report on Form 10-K
under the Exchange Act, during any period in which the Prospectus relating to
the Placement Shares is required to be delivered by Wm Smith (including in
circumstances where such requirement may be satisfied pursuant to Rule 172 under
the Act) and with respect to which the Company is obligated to deliver a
certificate in the form attached hereto as Exhibit 7(m) for which no waiver is
applicable, the Company shall cause its independent accountants to furnish Wm
Smith letters (the “Comfort Letters”), dated the date the Comfort Letter is
delivered; provided, that if requested by Wm Smith, the Company shall cause a
Comfort Letter to be furnished to Wm Smith within ten Trading Days of the date
of occurrence of any material transaction or event, including the restatement of
the Company’s financial statements.  The Comfort Letter from the Company’s
independent accountants shall be in a form and substance reasonably satisfactory
to Wm Smith, (i) confirming that they are an independent public accounting firm
within the meaning of the Securities Act and the PCAOB, (ii) stating, as of such
date, the conclusions and findings of such firm with respect to the financial
information and other matters ordinarily covered by accountants’ “comfort
letters” to underwriters in connection with registered public offerings (the
first such letter, the “Initial Comfort Letter”) and (iii) updating the Initial
Comfort Letter with any information that would have been included in the Initial
Comfort Letter had it been given on such date and modified as necessary to
relate to the Registration Statement and the Prospectus, as amended and
supplemented to the date of such letter.
 
(p)          Market Activities.  The Company will not, directly or indirectly,
(i) take any action designed to cause or result in, or that constitutes or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Shares or (ii) sell, bid for, or purchase the Shares, or pay anyone any
compensation for soliciting purchases of the Shares other than Wm Smith.
 
(q)          Investment Company Act.  The Company will conduct its affairs in
such a manner so as to reasonably ensure that neither it nor the Subsidiaries
will be or become, at any time prior to the termination of this Agreement, an
“investment company,” as such term is defined in the Investment Company Act,
assuming no change in the Commission’s current interpretation as to entities
that are not considered an investment company.
 
(r)           No Offer to Sell.  Other than an Issuer Free Writing Prospectus
approved in advance by the Company and Wm Smith in its capacity as principal or
agent hereunder, neither Wm Smith nor the Company (including its agents and
representatives, other than Wm Smith in its capacity as such) will make, use,
prepare, authorize, approve or refer to any written communication (as defined in
Rule 405 under the Act), required to be filed with the Commission, that
constitutes an offer to sell or solicitation of an offer to buy Shares
hereunder.

 
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(s)          Sarbanes-Oxley Act.  The Company and the Subsidiaries will maintain
and keep accurate books and records reflecting their assets and maintain
internal accounting controls in a manner designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally
accepted accounting principles and including those policies and procedures that
(i) pertain to the maintenance of records that in reasonable detail accurately
and fairly reflect the transactions and dispositions of the assets of the
Company, (ii) provide reasonable assurance that transactions are recorded as
necessary to permit the preparation of the Company’s consolidated financial
statements in accordance with generally accepted accounting principals,
(iii) that receipts and expenditures of the Company are being made only in
accordance with management’s and the Company’s directors’ authorization, and
(iv) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Company’s assets that could
have a material effect on its financial statements.  The Company and the
Subsidiaries will maintain such controls and other procedures, including,
without limitation, those required by Sections 302 and 906 of the Sarbanes-Oxley
Act, and the applicable regulations thereunder that are designed to ensure that
information required to be disclosed by the Company in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Commission’s rules and forms,
including, without limitation, controls and procedures designed to ensure that
information required to be disclosed by the Company in the reports that it files
or submits under the Exchange Act is accumulated and communicated to the
Company’s management, including its Chief Executive Officer and principal
financial officer, or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure and to ensure that material
information relating to the Company or the Subsidiaries is made known to them by
others within those entities, particularly during the period in which such
periodic reports are being prepared.
 
8.           Covenants of Wm Smith.  Wm Smith covenants and agrees that it is
duly registered as a broker-dealer under FINRA, the Exchange Act and the
applicable statutes and regulations of each state in which the Shares will be
offered and sold, except such states in which Wm Smith is exempt from
registration or such registration is not otherwise required.  Wm Smith shall
continue, for the term of this Agreement, to be duly registered as a
broker-dealer under FINRA, the Exchange Act and the applicable statutes and
regulations of each state in which the Shares will be offered and sold, except
such states in which Wm Smith is exempt from registration or such registration
is not otherwise required, during the term of this Agreement.
 
9.           Conditions to Wm Smith’s Obligations.  The obligations of Wm Smith
hereunder with respect to a Placement will be subject to the continuing accuracy
and completeness of the representations and warranties made by the Company
herein, to the due performance by the Company of its obligations hereunder, to
the completion by Wm Smith of a due diligence review satisfactory to Wm Smith in
its reasonable judgment, and to the continuing satisfaction (or waiver by Wm
Smith in its sole discretion) of the following additional conditions:
 
(a)          Registration Statement Effective.  The Registration Statement shall
have become effective and shall be available for the (i) resale of all Placement
Shares issued to Wm Smith and not yet sold by Wm Smith and (ii) the sale of all
Placement Shares contemplated to be issued by any Placement Notice.

 
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(b)          No Material Notices.  None of the following events shall have
occurred and be continuing: (i) receipt by the Company of any request for
additional information from the Commission or any other federal or state
governmental authority during the period of effectiveness of the Registration
Statement, the response to which would require any post-effective amendments or
supplements to the Registration Statement or the Prospectus; (ii) the issuance
by the Commission or any other federal or state governmental authority of any
stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose; (iii) receipt by the Company of
any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Placement Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for such purpose
(other than the notification referred to in paragraph 6(a) hereof in respect of
NASDAQ’s $1 minimum bid requirement); or (iv) the occurrence of any event that
makes any material statement made in the Registration Statement or the
Prospectus or any material document incorporated or deemed to be incorporated
therein by reference untrue in any material respect or that requires the making
of any changes in the Registration Statement, related Prospectus or documents so
that, in the case of the Registration Statement, it will not contain any
materially 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
not misleading and, that in the case of the Prospectus, it will not contain any
materially 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 the light of the circumstances under which they were made, not misleading.
 
(c)          No Misstatement or Material Omission.  Wm Smith shall not have
advised the Company that the Registration Statement or Prospectus, or any
amendment or supplement thereto, contains an untrue statement of fact that in Wm
Smith’s reasonable opinion is material, or omits to state a fact that in Wm
Smith’s opinion is material and is required to be stated therein or is necessary
to make the statements therein not misleading.
 
(d)          Material Changes.  Except as contemplated in the Prospectus, or
disclosed in the Company’s reports filed with the Commission, there shall not
have been any material adverse change, on a consolidated basis, in the
authorized capital stock of the Company or any Material Adverse Effect, or any
development that could reasonably be expected to cause a Material Adverse
Effect, or a downgrading in or withdrawal of the rating assigned to any of the
Company’s securities (other than asset backed securities) by any rating
organization or a public announcement by any rating organization that it has
under surveillance or review its rating of any of the Company’s securities
(other than asset backed securities), the effect of which, in the case of any
such action by a rating organization described above, in the reasonable judgment
of Wm Smith (without relieving the Company of any obligation or liability it may
otherwise have), is so material as to make it impracticable or inadvisable to
proceed with the offering of the Placement Shares on the terms and in the manner
contemplated in the Prospectus.
 
(e)          Legal Opinion.  Wm Smith shall have received the opinions of
Company Counsel required to be delivered pursuant Section 7(n) on or before the
date on which such delivery of such opinion is required pursuant to Section
7(n).

 
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(f)           Comfort Letter.  Wm Smith shall have received the Comfort Letter
required to be delivered pursuant Section 7(o) on or before the date on which
such delivery of such opinion is required pursuant to Section 7(o).
 
(g)          Representation Certificate.  Wm Smith shall have received the
certificate required to be delivered pursuant to Section 7(m) on or before the
date on which delivery of such certificate is required pursuant to Section 7(m).
 
(h)          No Suspension.  Trading in the Shares shall not have been suspended
on the Exchange.
 
(i)           Other Materials.  On each date on which the Company is required to
deliver a certificate pursuant to Section 7(m), the Company shall have furnished
to Wm Smith such appropriate further information, certificates and documents as
Wm Smith may reasonably request.  All such opinions, certificates, letters and
other documents will be in compliance with the provisions hereof.  The Company
will furnish Wm Smith with such conformed copies of such opinions, certificates,
letters and other documents as Wm Smith shall reasonably request.
 
(j)           Securities Act Filings Made.  All filings with the Commission
required by Rule 424 under the Securities Act to have been filed prior to the
issuance of any Placement Notice hereunder shall have been made within the
applicable time period prescribed for such filing by Rule 424.
 
(k)          Approval for Listing.  The Placement Shares shall either have been
approved for listing on the Exchange, subject only to notice of issuance, or
(ii) the Company shall have filed an application for listing of the Placement
Shares on the Exchange at, or prior to, the issuance of any Placement Notice.
 
(l)           No Termination Event.  There shall not have occurred any event
that would permit Wm Smith to terminate this Agreement pursuant to Section
12(a).
 
10.           Indemnification and Contribution.
 
(a)          Company Indemnification.  The Company agrees to indemnify and hold
harmless Wm Smith, the directors, officers, partners, employees and agents of Wm
Smith and each person, if any, who (i) controls Wm Smith within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, or (ii) is
controlled by or is under common control with Wm Smith (a “Wm Smith Affiliate”)
from and against any and all losses, claims, liabilities, expenses and damages
(including, but not limited to, any and all reasonable investigative, legal and
other expenses incurred in connection with, and any and all amounts paid in
settlement (in accordance with Section 10(c)) of, any action, suit or proceeding
between any of the indemnified parties and any indemnifying parties or between
any indemnified party and any third party, or otherwise, or any claim asserted),
as and when incurred, to which Wm Smith, or any such person, may become subject
under the Securities Act, the Exchange Act or other federal or state statutory
law or regulation, at common law or otherwise, insofar as such losses, claims,
liabilities, expenses or damages arise out of or are based, directly or
indirectly, on (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus or any
amendment or supplement to the Registration Statement or the Prospectus or in
any Issuer Free Writing Prospectus or in any application or other document
executed by or on behalf of the Company or based on written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify the Shares under the securities laws thereof or filed with the
Commission, (ii) the omission or alleged omission to state in any such document
a material fact required to be stated in it or necessary to make the statements
in it not misleading or (iii) any breach by any of the indemnifying parties of
any of their respective representations, warranties and agreements contained in
this Agreement; provided, however, that this indemnity agreement shall not apply
to the extent that such loss, claim, liability, expense or damage arises from
the sale of the Placement Shares pursuant to this Agreement and is caused
directly or indirectly by an untrue statement or omission made in reliance on
and in conformity with information relating to Wm Smith.  This indemnity
agreement will be in addition to any liability that the Company might otherwise
have.

 
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(b)          Wm Smith Indemnification.  Wm Smith agrees to indemnify and hold
harmless the Company and its directors and each officer of the Company who
signed the Registration Statement, and each person, if any, who (i) controls the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act or (ii) is controlled by or is under common control with the
Company (a “Company Affiliate”) against any and all loss, liability, claim,
damage and expense described in the indemnity contained in Section 10(c), as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendments thereto) or the Prospectus (or any amendment or supplement thereto)
in reliance upon and in conformity with information relating to Wm Smith and
furnished to the Company by Wm Smith.
 
(c)          Procedure.  Any party that proposes to assert the right to be
indemnified under this Section 10 will, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section 10, notify
each such indemnifying party of the commencement of such action, enclosing a
copy of all papers served, but the omission so to notify such indemnifying party
will not relieve the indemnifying party from (i) any liability that it might
have to any indemnified party otherwise than under this Section 10 and (ii) any
liability that it may have to any indemnified party under the foregoing
provision of this Section 10 unless, and only to the extent that, such omission
results in the forfeiture of substantive rights or defenses by the indemnifying
party.  If any such action is brought against any indemnified party and it
notifies the indemnifying party of its commencement, the indemnifying party will
be entitled to participate in and, to the extent that it elects by delivering
written notice to the indemnified party promptly after receiving notice of the
commencement of the action from the indemnified party, jointly with any other
indemnifying party similarly notified, to assume the defense of the action, with
counsel reasonably satisfactory to the indemnified party, and after notice from
the indemnifying party to the indemnified party of its election to assume the
defense, the indemnifying party will not be liable to the indemnified party for
any legal or other expenses except as provided below and except for the
reasonable costs of investigation subsequently incurred by the indemnified party
in connection with the defense.  The indemnified party will have the right to
employ its own counsel in any such action, but the fees, expenses and other
charges of such counsel will be at the expense of such indemnified party unless
(1) the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based on advice of counsel) that there may be legal defenses
available to it or other indemnified parties that are different from or in
addition to those available to the indemnifying party, (3) a conflict or
potential conflict exists (based on advice of counsel to the indemnified party)
between the indemnified party and the indemnifying party (in which case the
indemnifying party will not have the right to direct the defense of such action
on behalf of the indemnified party) or (4) the indemnifying party has not in
fact employed counsel to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties.  It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm admitted to
practice in such jurisdiction at any one time for all such indemnified party or
parties.  All such fees, disbursements and other charges will be reimbursed by
the indemnifying party promptly as they are incurred.  An indemnifying party
will not, in any event, be liable for any settlement of any action or claim
effected without its written consent.  No indemnifying party shall, without the
prior written consent of each indemnified party, settle or compromise or consent
to the entry of any judgment in any pending or threatened claim, action or
proceeding relating to the matters contemplated by this Section 10 (whether or
not any indemnified party is a party thereto), unless such settlement,
compromise or consent includes an unconditional release of each indemnified
party from all liability arising or that may arise out of such claim, action or
proceeding.

 
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(d)          Contribution.  In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in the
foregoing paragraphs of this Section 10 is applicable in accordance with its
terms but for any reason is held to be unavailable from the Company or Wm Smith,
the Company and Wm Smith will contribute to the total losses, claims,
liabilities, expenses and damages (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted, but after
deducting any contribution received by the Company from persons other than Wm
Smith, such as persons who control the Company within the meaning of the
Securities Act, officers of the Company who signed the Registration Statement
and directors of the Company, who also may be liable for contribution) to which
the Company and Wm Smith may be subject in such proportion as shall be
appropriate to reflect the relative benefits received by the Company on the one
hand and Wm Smith on the other.  The relative benefits received by the Company
on the one hand and Wm Smith on the other hand shall be deemed to be in the same
proportion as the total net proceeds from the sale of the Placement Shares
(before deducting expenses) received by the Company bear to the total
compensation received by Wm Smith (before deducting expenses) from the sale of
Placement Shares on behalf of the Company.  If, but only if, the allocation
provided by the foregoing sentence is not permitted by applicable law, the
allocation of contribution shall be made in such proportion as is appropriate to
reflect not only the relative benefits referred to in the foregoing sentence but
also the relative fault of the Company, on the one hand, and Wm Smith, on the
other, with respect to the statements or omission that resulted in such loss,
claim, liability, expense or damage, or action in respect thereof, as well as
any other relevant equitable considerations with respect to such offering.  Such
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the Company
or Wm Smith, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or
omission.  The Company and Wm Smith agree that it would not be just and
equitable if contributions pursuant to this Section 10(d) were to be determined
by pro rata allocation or by any other method of allocation that does not take
into account the equitable considerations referred to herein.  The amount paid
or payable by an indemnified party as a result of the loss, claim, liability,
expense, or damage, or action in respect thereof, referred to above in this
Section 10(d) shall be deemed to include, for the purpose of this Section 10(d),
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim to the
extent consistent with Section 10(c) hereof.  Notwithstanding the foregoing
provisions of this Section 10(d), Wm Smith shall not be required to contribute
any amount in excess of the commissions received by it under this Agreement and
no person found guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) will be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.  For purposes of
this Section 10(d), any person who controls a party to this Agreement within the
meaning of the Securities Act, and any officers, directors, partners, employees
or agents of Wm Smith, will have the same rights to contribution as that party,
and each officer of the Company who signed the Registration Statement will have
the same rights to contribution as the Company, subject in each case to the
provisions hereof.  Any party entitled to contribution, promptly after receipt
of notice of commencement of any action against such party in respect of which a
claim for contribution may be made under this Section 10(d), will notify any
such party or parties from whom contribution may be sought, but the omission to
so notify will not relieve that party or parties from whom contribution may be
sought from any other obligation it or they may have under this Section 10(d)
except to the extent that the failure to so notify such other party materially
prejudiced the substantive rights or defenses of the party from whom
contribution is sought.  Except for a settlement entered into pursuant to the
last sentence of Section 10(c) hereof, no party will be liable for contribution
with respect to any action or claim settled without its written consent if such
consent is required pursuant to Section 10(c) hereof.

 
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11.           Representations and Agreements to Survive Delivery.  The indemnity
and contribution agreements contained in Section 10 of this Agreement and all
representations and warranties of the Company herein or in certificates
delivered pursuant hereto shall survive, as of their respective dates,
regardless of (i) any investigation made by or on behalf of Wm Smith, any
controlling persons, or the Company (or any of their respective officers,
directors or controlling persons), (ii) delivery and acceptance of the Placement
Shares and payment therefor or (iii) any termination of this Agreement.
 
12.           Termination.
 
(a)          Wm Smith shall have the right by giving notice as hereinafter
specified at any time to terminate this Agreement if (i) any Material Adverse
Effect, or any development that has actually occurred and that is reasonably
expected to cause a Material Adverse Effect has occurred that, in the reasonable
judgment of Wm Smith, may materially impair the ability of Wm Smith to sell the
Placement Shares hereunder, (ii) the Company shall have failed, refused or been
unable to perform any agreement on its part to be performed hereunder; provided,
however, in the case of any failure of the Company to deliver (or cause another
person to deliver) any certification, opinion, or letter required under Sections
7(m), 7(n), or 7(o), Wm Smith’s right to terminate shall not arise unless such
failure to deliver (or cause to be delivered) continues for more than thirty
days from the date such delivery was required; or (iii) any other condition of
Wm Smith’s obligations hereunder is not fulfilled, or (iv), any suspension or
limitation of trading in the Placement Shares or in securities generally on the
Exchange shall have occurred.  Any such termination shall be without liability
of any party to any other party except that the provisions of Section 7(g)
(Expenses), Section 9 (Indemnification), Section 11 (Survival of
Representations), Section 17 (Applicable Law; Consent to Jurisdiction) and
Section 18 (Waiver of Jury Trial) hereof shall remain in full force and effect
notwithstanding such termination.  If Wm Smith elects to terminate this
Agreement as provided in this Section 12(a), Wm Smith shall provide the required
notice as specified in Section 13 (Notices).

 
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(b)          The Company shall have the right, by giving ten days’ notice as
hereinafter specified to terminate this Agreement in its sole discretion at any
time after the date of this Agreement.  Any such termination shall be without
liability of any party to any other party except that the provisions of Section
7(g), Section 10, Section 11, Section 17 and Section 18 hereof shall remain in
full force and effect notwithstanding such termination.
 
(c)          Wm Smith shall have the right, by giving ten days notice as
hereinafter specified to terminate this Agreement in its sole discretion at any
time after the date of this Agreement.  Any such termination shall be without
liability of any party to any other party except that the provisions of Section
7(g), Section 10, Section 11, Section 17 and Section 18 hereof shall remain in
full force and effect notwithstanding such termination.
 
(d)          Unless earlier terminated pursuant to this Section 12, this
Agreement shall automatically terminate upon the issuance and sale of all of the
Placement Shares through Wm Smith on the terms and subject to the conditions set
forth herein; provided that the provisions of Section 7(g), Section 10, Section
11, Section 17 and Section 18 hereof shall remain in full force and effect
notwithstanding such termination.
 
(e)          This Agreement shall remain in full force and effect unless
terminated pursuant to Sections 12(a), (b), (c), or (d) above or otherwise by
mutual agreement of the parties; provided, however, that any such termination by
mutual agreement shall in all cases be deemed to provide that Section 7(g),
Section 10, Section 11, Section 17 and Section 18 shall remain in full force and
effect.
 
(f)           Any termination of this Agreement shall be effective on the date
specified in such notice of termination; provided, however, that such
termination shall not be effective until the close of business on the date of
receipt of such notice by Wm Smith or the Company, as the case may be.  If such
termination shall occur prior to the Settlement Date for any sale of Placement
Shares, such Placement Shares shall settle in accordance with the provisions of
this Agreement.
 
13.           Notices.  All notices or other communications required or
permitted to be given by any party to any other party pursuant to the terms of
this Agreement shall be in writing, unless otherwise specified, and if sent to
Wm Smith, shall be delivered to:

 
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Wm Smith & Co.
1700 Lincoln Street, Suite 2545
Denver, CO  80203
Attention:            William S. Smith
Facsimile:             303-831-0881
 
with a copy to:
 
Holme Roberts & Owen LLP
1700 Lincoln Street, Suite 4100
Denver, CO  80203
Attention:            Garth B. Jensen
Facsimile:             303-866-0200
 
and if to the Company, shall be delivered to:
 
Generex Biotechnology Corporation
33 Harbour Square
Suite 202
Toronto, Ontario
Canada M5J 2G2
Attention:            Mark A. Fletcher
Facsimile:             416-364-9363

Each party to this Agreement may change such address for notices by sending to
the parties to this Agreement written notice of a new address for such
purpose.  Each such notice or other communication shall be deemed given (i) when
delivered personally or by verifiable facsimile transmission (with an original
to follow) on or before 4:30 p.m., New York City time, on a Business Day or, if
such day is not a Business Day, on the next succeeding Business Day, (ii) on the
next Business Day after timely delivery to a nationally-recognized overnight
courier and (iii) on the Business Day actually received if deposited in the U.S.
mail (certified or registered mail, return receipt requested, postage
prepaid).  For purposes of this Agreement, “Business Day” shall mean any day on
which the Exchange and commercial banks in the City of New York are open for
business.
 
An electronic communication (“Electronic Notice”) shall be deemed written notice
for purposes of this Section 13 if sent to the electronic mail address specified
by the receiving party under separate cover.  Electronic Notice shall be deemed
received at the time the party sending Electronic Notice receives verification
of receipt by the receiving party.  Any party receiving Electronic Notice may
request and shall be entitled to receive the notice on paper, in a nonelectronic
form (“Nonelectronic Notice”) which shall be sent to the requesting party within
ten (10) days of receipt of the written request for Nonelectronic Notice.

 
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14.           Successors and Assigns.  This Agreement shall inure to the benefit
of and be binding upon the Company and Wm Smith and their respective successors
and the affiliates, controlling persons, officers and directors referred to in
Section 10 hereof.  References to any of the parties contained in this Agreement
shall be deemed to include the successors and permitted assigns of such
party.  Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto or their respective successors and
permitted assigns any rights, remedies, obligations or liabilities under or by
reason of this Agreement, except as expressly provided in this
Agreement.  Neither party may assign its rights or obligations under this
Agreement without the prior written consent of the other party; provided,
however, that Wm Smith may assign its rights and obligations hereunder to an
affiliate of Wm Smith without obtaining the Company’s consent.
 
15.           Adjustments for Stock Splits.  The parties acknowledge and agree
that all share-related numbers contained in this Agreement shall be adjusted to
take into account any stock split, stock dividend or similar event effected with
respect to the Shares.
 
16.           Entire Agreement; Amendment; Severability.  This Agreement
(including all schedules and exhibits attached hereto and Placement Notices
issued pursuant hereto) constitutes the entire agreement and supersedes all
other prior and contemporaneous agreements and undertakings, both written and
oral, among the parties hereto with regard to the subject matter
hereof.  Neither this Agreement nor any term hereof may be amended except
pursuant to a written instrument executed by the Company and Wm Smith.  In the
event that any one or more of the provisions contained herein, or the
application thereof in any circumstance, is held invalid, illegal or
unenforceable as written by a court of competent jurisdiction, then such
provision shall be given full force and effect to the fullest possible extent
that it is valid, legal and enforceable, and the remainder of the terms and
provisions herein shall be construed as if such invalid, illegal or
unenforceable term or provision was not contained herein, but only to the extent
that giving effect to such provision and the remainder of the terms and
provisions hereof shall be in accordance with the intent of the parties as
reflected in this Agreement.
 
17.           Applicable Law; Consent to Jurisdiction.  This Agreement shall be
governed by, and construed in accordance with, the internal laws of New York
without regard to the principles of conflicts of laws.  Each party hereby
irrevocably submits to the non-exclusive jurisdiction of the state and federal
courts sitting in New York, New York, for the adjudication of any dispute
hereunder or in connection with any transaction contemplated hereby, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is brought in an inconvenient forum
or that the venue of such suit, action or proceeding is improper.  Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof
(certified or registered mail, return receipt requested) 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.
 
18.           Waiver of Jury Trial.  The Company and Wm Smith each hereby
irrevocably waives any right it may have to a trial by jury in respect of any
claim based upon or arising out of this agreement or any transaction
contemplated hereby.

 
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19.           Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.  Delivery of an executed
Agreement by one party to the other may be made by facsimile transmission.
 
[Remainder of Page Intentionally Blank]

 
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If the foregoing correctly sets forth the understanding between the Company and
Wm Smith, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between the Company
and Wm Smith.
 

 
Very truly yours,
 
GENEREX BIOTECHNOLOGY CORPORATION
 
By:
/s/ Anna E. Gluskin
 
Name: Anna E. Gluskin
 
Title: President, Chief Executive Officer
   
By:
/s/ Rose C. Perri
 
Name:  Rose C. Perri
 
Title: Chief Financial Officer

 
ACCEPTED as of the date
first-above written:
 
WM SMITH & CO.
 
By:
/s/ Patrice McNicoll
 
Name:  Patrice McNicoll
 
Title:  Managing Director
   

 
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SCHEDULE 1
 

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FORM OF PLACEMENT NOTICE
 

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From:
Rose C. Perri,
 
Chief Financial Officer,
 
Generex Biotechnology Corporation
   
To:
Wm Smith & Co.
 
Attention:  William Smith and Patrice McNicoll
   
Subject:
At Market Issuance—Placement Notice

 
Gentlemen:
 
Pursuant to the terms and subject to the conditions contained in the At Market
Issuance Sales Agreement between Generex Biotechnology Corporation, a Delaware
corporation (the “Company”), and Wm Smith & Co., a Colorado corporation (“Wm
Smith”) dated October 14, 2009, the Company hereby requests that Wm Smith sell
up to ____________ shares of the Company’s common stock, par value $0.001 per
share, at a minimum market price of $_______ per share, during the time period
beginning [month, day, time] and ending [month, day, time].
 
The aggregate market value of securities sold by or on behalf of the Company
pursuant to Instruction I.B.6. of Form S-3 during the 12 calendar month-period
immediately prior to the sale contemplated by the previous paragraph, together
with the aggregate market value of securities to be sold in the sale
contemplated by the previous paragraph, will not exceed one-third of the
aggregate market value of the voting and non-voting common equity held by
non-affiliates of the Company, as measured immediately prior to the sale
contemplated by the previous paragraph.

 
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SCHEDULE 2
 

--------------------------------------------------------------------------------

 
Compensation
 

--------------------------------------------------------------------------------

 
The Company shall pay to Wm Smith in cash, upon each sale of Shares pursuant to
this Agreement, an amount equal to no more than 3% of the gross proceeds from
each sale of Shares.

 
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SCHEDULE 3
 
Company:

Rose C. Perri
Chief Financial Officer
t:           416.364.2551, ext 234
e:          rperri@generex.com

Mark A. Fletcher
Executive Vice-President, General Counsel
t:           416.364.2551, ext 235
e:          mfletcher@generex.com

Wm Smith:

Bill Smith
t:           303.861.9696
e:          bsmith@wmsmith.com
 
Patrice McNicoll
t:           212.769.1907
e:          pMcNicoll@wmsmith.com

 
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EXHIBIT 7(m)
 
Form of Representation Date Certificate
 
This Officers Certificate (this “Certificate”) is executed and delivered in
connection with Section 7(m) of the At Market Issuance Sales Agreement (the
“Agreement”), dated October 14, 2009, and entered into between Generex
Biotechnology Corporation (the “Company”) and Wm Smith & Co. (“Wm Smith”).  All
capitalized terms used but not defined herein shall have the meanings given to
such terms in the Agreement
 
The undersigned, a duly appointed and authorized officer of the Company, having
made all necessary inquiries to establish the accuracy of the statements below
and having been authorized by the Company to execute this certificate, hereby
certifies as follows:
 
1.           As of the date of this Certificate, (i) the Registration Statement
does 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 not misleading and (ii) neither the Prospectus nor the
Pricing Disclosure Materials 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 which
they were made, not misleading and (iii) no event has occurred as a result of
which it is necessary to amend or supplement the Prospectus in order to make the
statements therein not untrue or misleading.
 
2.           Each of the representations and warranties of the Company contained
in the Agreement were, when originally made, and are, as of the date of this
Certificate, true and correct in all material respects.  For the avoidance of
doubt, the market capitalization representation and warranty contained in
Section 6(s) shall be true and correct as of the close of trading on the
Exchange on the Trading Day immediately prior to the date of the Agreement.
 
3.           Each of the covenants required to be performed by the Company in
the Agreement on or prior to the date of the Agreement, this Representation
Date, and each such other date as set forth in the Agreement, has been duly,
timely and fully performed in all material respects and each condition required
to be complied with by the Company on or prior to the date of the Agreement,
this Representation Date, and each such other date as set forth in the Agreement
or in the Waivers has been duly, timely and fully complied with in all material
respects.
 
4.           Subsequent to the date of the most recent financial statements in
the Prospectus, there has been no material adverse change.
 
5.           No stop order suspending the effectiveness of the Registration
Statement or of any part thereof has been issued, and no proceedings for that
purpose have been instituted or are pending or threatened by any securities or
other governmental authority (including, without limitation, the Commission).

 
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6.           No order suspending the effectiveness of the Registration Statement
or the qualification or registration of the Shares under the securities or Blue
Sky laws of any jurisdiction are in effect and no proceeding for such purpose is
pending before, or threatened, to the Company's knowledge or in writing by, any
securities or other governmental authority (including, without limitation, the
Commission).
 
7.           During the 12 calendar months preceding the date hereof, the
aggregate market value of securities sold by or on behalf of the Company
pursuant to Instruction I.B.6 of Form S-3 is $_____________.  The aggregate
market value of  voting and non-voting common equity held by non-affiliates of
the Company as of the date hereof is $___________.
 
The undersigned has executed this Officer's Certificate as of the date first
written above.
 

   
Name:  Rose C. Perri
 
Title:    Chief Financial Officer

 
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EXHIBIT 7(n)
 
Form of Legal Opinion

Capitalized terms used and not defined herein shall have the meanings ascribed
to them in the At Market Issuance Sales Agreement.
 
(i) The authorized capital stock of the Company conforms in all material
respects as to legal matters to the descriptions thereof set forth in the
Registration Statement, Prospectus and the Prospectus Supplement. The Shares
have been duly authorized and, when issued and delivered pursuant to the terms
of the Agreement, will be validly issued, fully paid and non-assessable; and
will not have been issued in violation of any preemptive rights granted under
the Company’s Certificate of Incorporation or under the corporate laws of the
State of Delaware.
 
(ii) The Company is a validly existing corporation in good standing under the
laws of the State of Delaware, the jurisdiction of its organization.  The
Company has the corporate power to execute and deliver the Agreement and to
issue, sell and deliver the Shares.
 
(iii) The execution and delivery of the Agreement by the Company and the
performance by the Company of its obligations under the Agreement have been duly
authorized by all requisite corporate action on behalf of the Company.  The
Agreement has been duly executed and delivered by the Company and constitutes
the legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms.
 
(iv) The sale and issuance by the Company of the Shares has been duly authorized
by all requisite corporate action on behalf of the Company.
 
(v) The Registration Statement, Prospectus and the Prospectus Supplement (other
than the financial statements and schedules and other financial data included or
incorporated by reference therein, as to which we express no opinion), as of
their respective effective and issue dates, complied as to form in all material
respects with the requirements of the Securities Act and the rules and
regulations thereunder.

The opinion of counsel will be accompanied by a standard Rule 10b-5 negative
assurance letter.

 
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