AVAX TECHNOLOGIES, INC. CONVERTIBLE NOTE AND WARRANT PURCHASE AGREEMENT Dated as of October 15, 2009
Exhibit
10.34
AVAX
TECHNOLOGIES, INC.
CONVERTIBLE
NOTE AND WARRANT
Dated
as of October 15, 2009
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AVAX
TECHNOLOGIES, INC.
CONVERTIBLE
NOTE AND WARRANT
October
15, 2009
To
the Purchaser Listed on the Signature Page Hereto:
Sir:
AVAX
Technologies, Inc., a Delaware corporation (the “Company”), proposes, subject to
the terms and conditions contained herein, to sell to the Purchaser listed on
the signature page hereto (the “Purchaser”), $1,400,000.00 aggregate principal
amount of the Company’s 6% Convertible Secured Promissory Note due June 1, 2010
(the “Note”) and a warrant to purchase up to 93,333,333 fully paid and
non-assessable shares of common stock, par value $.004 per share, of the Company
(the “Common Stock”) for $0.015 per share (the “Warrant”) pursuant to this
Convertible Note and Warrant Purchase Agreement (the “Agreement”) and the
Intellectual Property Security Agreement between the Company and the Purchaser
dated October 15, 2009 (the “IP Security Agreement”). The Note will be
convertible into shares of Common Stock or other securities of the Company, as
more fully described therein.
The sale
of the Note and Warrant to the Purchaser will be made without registration of
the Note or Warrant under the Securities Act of 1933, as amended (the
“Securities Act”) in reliance upon an exemption from the registration
requirements of the Securities Act.
Section 1. Purchase
and Sale of Note and Warrant. Subject to the terms and
conditions of this Agreement, the Company will issue and sell to the Purchaser,
and the Purchaser will purchase from the Company (i) the Note at a purchase
price of 100% of the principal amount of the Note (the “Purchase Price”) and
(ii) the Warrant. The Purchase Price is set forth on that Purchaser’s signature
page, and the number of shares of Common Stock subject to the Warrant issued to
each Purchaser is set forth on the signature page for that Purchaser. The Note,
the Warrant and the equity securities issuable upon conversion or exercise
thereof are collectively referred to herein as the “Securities.”
Section 2. Closing. The closing (the
“Closing”) of the purchase and sale of the Note and the Warrant (the
“Transaction”) will take place by telephone, facsimile and express mail on such
date as the Purchaser and the Company may agree. The date of the Closing for the
Purchaser is referred to as the “Closing Date.” At the Closing, the Purchaser
shall deliver to the Company, by check or wire transfer of immediately available
funds to the Company’s bank account, the Purchase Price, and the Company shall
issue and deliver to the Purchaser the Note and the Warrant against payment of
the Purchase Price.
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Section 3. Conditions to the
Obligations of Purchaser at Closing. The
obligation of the Purchaser to purchase and pay for the Note and
the Warrant at Closing is subject to the satisfaction on or prior to the Closing
Date of the following conditions, each of which may be waived by the
Purchaser:
3.1 Representations and Warranties.
The representations and warranties of the Company contained in Section 6
and in the IP Security Agreement must be true and correct in all material
respects on and as of the Closing Date except to the extent that the
representations and warranties relate solely to an earlier date in which case
the representations and warranties must be true and correct in all material
respects on and as of such earlier date.
3.2 Performance of Covenants. The
Company will have performed or complied in all material respects with all
covenants and agreements required to be performed by it on or prior to the
Closing pursuant to this Agreement.
3.3 No Injunctions; etc. No court
or governmental injunction, order or decree prohibiting the purchase and sale of
the Note and Warrant, or the granting of a security interest in the Collateral
(as defined in the IP Security Agreement), will be in effect. There will not be
in effect any law, rule or regulation prohibiting or restricting the sale or
requiring any consent or approval of any person that has not been obtained which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
3.4 Closing Documents. The Company
will have delivered to the Purchaser (a) a certificate of the Corporate
Secretary of the Company, dated as of the first Closing Date, certifying (i) the
attached are true and complete copies of the Certificate of Incorporation and
Bylaws of the Company, as in effect on the date of such certification; (ii) the
attached are true and complete copies of the resolutions of the Board of
Directors of the Company authorizing the execution, delivery and performance of
this Agreement, the IP Security Agreement, the Note and the Warrant as in effect
on the date of such certification; and (iii) that as of the Closing Date, each
class of the Company’s voting stock is held of record by fewer than 2,000
stockholders.
3.5 Waivers and Consents. The
Company will have obtained all consents and waivers necessary to execute and
deliver this Agreement, the IP Security Agreement, and all related documents and
agreements and to issue and deliver the Note and the Warrant, and all consents
and waivers will be in full force and effect.
3.6 Satisfaction of Purchaser. All
proceedings to be taken in connection with the Transaction are to be consummated
at or prior to the Closing, and all documents incidental thereto shall be
reasonably satisfactory in form and substance to Purchaser and its counsel, and
Purchaser and its counsel shall have received copies of all documents and
information which it may have reasonably requested in connection with the
Transaction and of all corporate proceedings in connection therewith, in form
and substance reasonably satisfactory to Purchaser and its counsel.
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Section
4. Conditions to the Obligations of the
Company at Closing. The obligation of the Company to issue and sell the
Note and the Warrant to the Purchaser at Closing is subject to the satisfaction
on or prior to the Closing Date of the following conditions, each of which may
be waived by the Company:
4.1 Representations and Warranties.
The representations and warranties of the Purchaser contained in this
Agreement must be true and correct in all material respects as of the Closing
Date.
4.2 No Injunctions. No court or
governmental injunction, order or decree prohibiting the purchase or sale of the
Note and Warrant will be in effect.
Section
5. Representations and Warranties of
Purchaser. The Purchaser
represents and warrants to the Company that:
5.1 Authority, etc. Purchaser has
the power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery by Purchaser of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate or other action on the part of Purchaser.
If Purchaser is an individual, Purchaser has the legal capacity to enter into
this Agreement. This Agreement constitutes a legal, valid and binding obligation
of Purchaser, enforceable against Purchaser in accordance with its terms,
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies, and to limitations of public
policy.
5.2
Reliance on Exemptions.
Purchaser understands that the Securities are being offered and sold to
it in reliance on specific exemptions from the registration requirements of
United States federal and state securities laws and that the Company is relying
in part upon the truth and accuracy of, and such Purchaser's compliance with,
the representations, warranties, agreements, acknowledgments and understandings
of such Purchaser set forth in this Agreement in order to determine the
availability of such exemptions and the eligibility of such Purchaser to acquire
the Securities.
5.3 Legends. Purchaser understands
that the Note and the Warrant and any securities issued in respect of or
exchange for the Note and the Warrant, may bear one or all of the following
legends:
(a)
“THE SHARES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND
HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH,
THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION
OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT OF 1933.”
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(b) Any
legend required by the securities laws of any state to the extent such laws are
applicable to the shares represented by the certificate so
legended.
5.4 Accredited Investor. Purchaser
is an “accredited investor” as defined in Rule 501(a) of Regulation D under the
Securities Act. Purchaser is acquiring the Securities for its own account and
not with a present view to, or for sale in connection with, any distribution
thereof in violation of the registration requirements of the Securities Act. The
Purchaser has such knowledge and experience in financial, tax, and business
matters, including, without limitation, experience in investments by actual
participation, so as to enable it to utilize the information made available to
it in connection with the Agreement, to evaluate the merits and risks of an
investment in the Securities and to make an informed investment decision with
respect thereto.
5.5 Access to Information.
Purchaser acknowledges that it has been afforded (i) the opportunity to
ask the questions it deemed necessary of, and to receive answers from,
representatives of the Company concerning the Company and the terms and
conditions of the Transaction; and (ii) the opportunity to request such
additional information concerning the Company as the Company possesses or can
acquire without unreasonable effort or expense.
5.6
No General Solicitation. Purchaser is not purchasing the Note and the
Warrant as a result of any advertisement, article, notice or other communication
published in a newspaper or magazine or similar media or broadcast over
television or radio, whether closed circuit, or generally available, or any
seminar, meeting or other conference whose attendees were invited by any general
solicitation or general advertising.
5.7
Ability to Bear Economic Risk.
Purchaser acknowledges that investment in the Securities involves a high
degree of risk, and represents that it is able, without materially impairing its
financial condition, to hold the Securities for an indefinite period of time and
to suffer a complete loss of its investment.
5.8
Risk Factors. Purchaser
has carefully considered the potential risks relating to the Company and the
Securities. Purchaser fully understands that the Company is a development stage
company and that the Company is subject to all of the risks inherent in any
development stage company. Purchaser understands that Purchaser’s investment in
the Securities is a speculative investment which involves a high degree of risk
of loss of the Purchaser’s entire investment. Purchaser understands that the
Company has made no assurance that there will be any future financings or
liquidity in the Company.
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Section
6.
Representations and Warranties of the Company. The Company represents and warrants to
each Purchaser that as of the date hereof and the Closing Date:
6.1 Organization, Good Standing and
Qualification. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
Company has full corporate power and authority to own and hold its properties
and to conduct its business. The Company is duly licensed and qualified to do
business, and in good standing, in each jurisdiction in which the nature of its
business requires licensing, qualification or good standing, except for any
failure to be so licensed or qualified or in good standing that would not have a
material adverse effect on the Company or its business, properties, prospects,
results of operations, assets, condition (financial or otherwise), or on its
ability to perform its obligations (or the ability of any of its subsidiaries to
perform their obligations) under this Agreement or the IP Security
Agreement.
6.2
Corporate Power, Authorization;
Enforceability. (a) The Company (and each of its subsidiaries, if
applicable) has full corporate power and authority to execute, deliver and enter
into this Agreement and the IP Security Agreement and to consummate the
transactions contemplated hereby. All action on the part of the Company (or any
of its subsidiaries), its directors or stockholders (or those of any of its
subsidiaries) necessary for the authorization, execution, delivery and
performance of this Agreement and the IP Security Agreement by the Company (or
by any of its subsidiaries), the authorization, sale, issuance and delivery of
the Securities contemplated hereby and the performance of the Company’s
obligations (and those of any of its subsidiaries) hereunder and under the IP
Security Agreement has been taken. Each of the Note and the Warrant to be
purchased on the Closing Date has been duly authorized and, when issued in
accordance with this Agreement, will constitute a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms and will not be subject to any preemptive rights or other similar
rights of stockholders of the Company. This Agreement and the IP Security
Agreement have each been duly executed and delivered by the Company (and by its
subsidiaries, as applicable) and each constitutes a legal, valid and binding
obligation of the Company (and of such subsidiaries), enforceable against the
Company (and against its subsidiaries) in accordance with its terms, subject to
laws of general application relating to bankruptcy, insolvency and the relief of
debtors and rules of law governing specific performance, injunctive relief or
other equitable remedies, and to limitations of public policy.
(b)
When the Note and the
Warrant are delivered and paid for pursuant to this Agreement on the Closing
Date, the Note will be convertible into Common Stock or other securities of the
Company in accordance with its terms and the Warrant will be exercisable for
shares of Common Stock in accordance with its terms; the Common Stock initially
issuable upon conversion of the Note and upon exercise of the Warrant has been
duly authorized and reserved for issuance upon such conversion or exercise and,
when and if issued upon such conversion of the Note or exercise of the Warrant,
will be validly issued, fully paid and nonassessable, and the stockholders of
the Company have no preemptive rights with respect to the
Securities.
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6.3 Financial
Statements and SEC Documents. (a) Included in the Company’s Form 10-K for
the year ended December 31, 2007, are true and complete copies of the audited
consolidated balance sheet (the “Balance Sheet”) of the Company as of December
31, 2007, and the related audited consolidated statements of operations,
stockholders’ equity and cash flows for the years ended December 31, 2007 and
2006 and for the period from January 12, 1990 (incorporation) to December 31,
2007 (the “Audited Financial Statements”), accompanied by the report of Xxxxxx,
Xxxxxxx & Xxxxxxxxx, LLP with respect to the years ended December 31, 2007
and 2006. The Company’s Quarterly Reports on Form 10-Q for the quarter ending
September 30, 2008 is included and is available to the Purchaser on the
Securities and Exchange Commission’s (the “SEC”) XXXXX System. Included in the
Quarterly Report are the requisite unaudited consolidated balance sheets of the
Company and the related unaudited consolidated statements of operations and
statements of cash flows (the “Unaudited Financial Statements,” and together
with the “Audited Financial Statements,” the “Financial Statements”). The
Financial Statements have been prepared in accordance with generally accepted
accounting principles, applied consistently with the past practices of the
Company (except as may be indicated in the notes thereto), and as of their
respective dates, fairly present, in all material respects, the financial
position of the Company and the results of its operations as of the time and for
the periods indicated therein.
(b)
A copy of each
report, schedule, effective registration statement and definitive proxy
statement filed by the Company with the SEC (as the documents may have been
amended since the time of their filing, the “SEC Documents”), has also been made
available to the Purchaser via the SEC’s XXXXX System. As of their respective
filing dates, each SEC Document complied in all material respects with the
requirements of the Securities Act or the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), as applicable, and the rules and regulations of
the SEC thereunder applicable to the SEC Document. The SEC Documents, taken as a
whole, neither contain any untrue statement of a material fact nor omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(c)
The Company’s
obligation to file certain reports and forms with the SEC, including its
periodic and current reporting obligations pursuant to Sections 13 and 15 of the
Exchange Act, has been suspended upon filing a Form 15 on or about March 30,
2009. The deregistration and suspension of the Company’s reporting obligations
became effective 90 days after filing.
6.4 Material Misstatements. The
information (i) contained in the SEC Documents, including the Financial
Statements, and (ii) provided to the Purchaser (or any of the Purchaser’s
representatives or consultants) in respect of any period including or following
the quarter ending September 30, 2008 does not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made herein and therein, in light of the circumstances under which
they were made, not misleading.
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6.5 No Integration. Neither the
Company, nor any of its affiliates, nor any person acting on their behalf, has
directly or indirectly made any offers or sales of any security or solicited any
offers to buy any security under circumstances that would prevent the parties
hereto from consummating the transactions contemplated hereby pursuant to an
exemption from registration under the Securities Act pursuant to the provisions
of Regulation D. The transactions contemplated hereby are exempt from the
registration requirements of the Securities Act, assuming the accuracy of the
representations and warranties herein contained of Purchaser to the extent
relevant for such determination. The issuance of the Securities to the Purchaser
will not be integrated with any other issuance of the Company’s securities (past
or current) that requires stockholder consent or that would result in a
violation of the Securities Act.
6.6 Litigation. Except as set
forth in the SEC Documents and updates provided by the Company to the Purchaser,
there is no material action, suit, proceeding, inquiry or investigation before
or by any court, public board, governmental agency or authority, or
self-regulatory organization or body pending or threatened against or affecting
the Company or any of its directors or officers in their capacities as
such.
6.7 Laboratory Conditions. The
Company’s laboratory, equipment and operations located at 0000 Xxxxxxxx Xxxxxx
Xxxxx 000, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000 (the “Lab”) are in condition to
achieve full GMP certification, and there are no facts, circumstances, events,
or occurrences that would, individually or in the aggregate, interfere in any
material respect with the achievement of full GMP certification for the Lab by
December 1, 2009.
6.8 Liens. Other than certain
liens held by Cancer Treatment Centers of America, Inc., an Illinois corporation
(“CTCA”) over property pursuant to that certain Services, Loan and Security
Agreement made and entered into as of April 27, 2009 by and between the Company
and CTCA, and that certain Production Agreement previously entered into by the
Company and CTCA in 2007 (the “Production Agreement”), there are no liens senior
to those of CTCA on any of the personal property of the Company located at or
relating to the Lab, whether now owned or hereafter acquired or arising,
including all goods (including inventory, furniture, fixtures, equipment, and
any accessions thereto), general intangibles, insurance claims relating to the
foregoing and proceeds and products of the foregoing and all intellectual
property owned by the Company and used in connection with the Lab.
6.9 Subsidiary. The Company owns,
and shall not transfer, all of the outstanding securities of AVAX International
IP Holdings, Inc., a Delaware corporation (the “IP Sub”), and will do, or will
cause the IP Sub to do, any and all things as are required to fulfill the
obligations of the Company and of the IP Sub hereunder and under the terms of
the IP Security Agreement.
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Section
7. Covenants of the Company. The
Company covenants and agrees as follows:
7.1 Form D. The Company will file
a Form D within 15 days of the Closing Date with respect to the Note and the
Warrant with the SEC as required under Regulation D under the Securities Act,
and will provide a copy thereof to the Purchaser.
7.2 Integration. The Company will
insure that the issuance of the Note and the Warrant to the Purchaser will not
be integrated with any other issuance of the Company’s securities in the future,
which requires stockholder approval or which would result in a violation of the
Securities Act.
7.3 Offering of Securities. The
Company will use its best efforts to close an offering of securities on or
before January 1, 2010, in which the gross proceeds to the Company are not less
than $25,000,000 (the “Offering”). Upon the closing of the Offering, the Note
will automatically convert into shares of Common Stock or the other securities
issued in the Offering, in accordance with the terms of the Note.
7.4 Operation of Business. From
and after the Closing Date until the closing of the Offering, the Company (and
the IP Sub) will use its best efforts to:
(i)
remain current in the prompt payment of all of its operating expenses and
trade obligations relating to the Lab, including the payment of all taxes,
employment expenses, vendor obligations (including its landlord Rodin Partners
and all critical suppliers and utilities);
(ii)
discharge its obligations to (and/or obtain a release from) or otherwise
satisfy Xxxxxxx Xxxxxx with respect to his judgment claims;
(iii)
begin to produce in the Lab for CTCA’s patients the vaccines described in
the Production Agreement on or before December 2, 2009; provided
however, that such date
shall be extended by any period during which achievement of production of such
vaccines is delayed, impeded or rendered impossible by forces beyond the
Company’s control, including acts of war, terrorism, civil or military
disturbances, nuclear or natural catastrophes or acts of God, and general
failure of any utility being supplied to the Lab (each a “Force Majeure
Event”);
(iv)
continue, until the discharge of the Company’s liabilities under the
Production Agreement, to produce at the Lab or otherwise all of CTCA’s ongoing
requirements for such vaccines as specified in the Production Agreement,
following December 2, 2009; provided however,
that the Company may halt such production for any period during which production
of such vaccines is delayed, impeded or rendered impossible by a Force Majeure
Event;
(v)
maintain the Lab open and operating during normal business hours at all
times; provided
however, that the Company may close the Lab for reasonable statutory or
customary holiday periods, and for any period during which the Lab’s operation
is impeded or rendered impossible by a Force Majeure Event; and
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(vi)
maintain the Lab in good working order, including all equipment and
systems located therein; provided however,
that the Company shall not be responsible for the impact of a Force Majeure
Event on the Lab, its equipment and systems or operations.
Section
8. Survival of Representations and
Warranties. Notwithstanding any investigation made by any party to this
Agreement, all representations and warranties made by the Company (and its
subsidiaries) and the Purchaser herein and in the Note and the Warrant delivered
pursuant hereto, shall survive for a period of one year after the Closing Date
and shall thereupon expire together with the associated right to indemnification
pursuant to Section 10(a)(iv), unless a claim for indemnification (whether or
not fixed as to liability or liquidated as to amount) shall be made with respect
thereto prior to the end of such period, in which case such representation or
warranty with respect to which such claim has been made, and the associated
right to indemnification shall survive until such claim is satisfied, settled or
dismissed.
Section
9. Registration
Rights.
9.1 In
connection with the Offering, the Company anticipates filing a registration
statement with the SEC to register for reoffering and resale the securities sold
by the Company in the Offering. Upon completion of the Offering, the Purchaser
shall have the right, upon the same terms as the investors in the Offering, to
include in any registration statement of the Company filed in connection
therewith, all of the Registrable Securities held by the Purchaser. For the
purposes of this Agreement, “Registrable Securities” means the Common Stock or
other securities of the Company issuable upon conversion of the Note and the
Common Stock issuable upon exercise of the Warrant.
9.2 If
the Offering has not been completed by January 1, 2010, or if the Offering has
been completed by such date but does not obligate the Company to register the
securities issued thereby with the SEC, at any time thereafter, the Purchaser
may demand, and Company shall be required to (i) use its best efforts to conduct
an offering of the Registrable Securities in which such Registrable Securities
are sold to an underwriter for reoffering to the public, and (ii) upon written
request of the Purchaser (the “Registration Request”), that the Company prepare,
and, as soon as practicable but in no event later than 120 days after the date
of the Registration Request (the “Filing Deadline”), file with the SEC a
Registration Statement on Form S-3 covering the resale of all of the Registrable
Securities. In the event that Form S-3 is unavailable for such a registration,
the Company shall use such other form as is available for such a registration.
Any registration statement prepared pursuant hereto (including (in each case)
the prospectus, amendments and supplements to such registration statement or
prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by
reference in such registration statements, the “Registration Statement”) shall
register for resale all Registrable Securities held by Purchaser. The Company
shall use its best efforts to have the Registration Statement declared effective
by the SEC as soon as practicable, but in no event later than the date that is
120 days after Filing Deadline (the “Effectiveness Deadline”). The Company shall
use commercially reasonable efforts to keep the Registration Statement
continuously effective under the Securities Act until the fifth anniversary of
the date such Registration Statement is declared effective by the SEC or such
earlier date when all Registrable Securities covered by such Registration
Statement have been sold publicly or may be sold pursuant to paragraph (k) of
Rule 144 (the “Effectiveness Period”).
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9.3 If
at any time the SEC takes the position that the offering of some or all of the
Registrable Securities in a Registration Statement is not eligible to be made on
a delayed or continuous basis under the provisions of Rule 415 as a result of a
characterization by the SEC of the transaction described by the Registration
Statement as a primary offering by the Company, the Company shall use its
reasonable best efforts to persuade the SEC that the offering contemplated by
the Registration Statement is a valid secondary offering and not an offering “by
or on behalf of the issuer” as defined in Rule 415. In the event that, despite
the Company’s reasonable best efforts and compliance with the terms of this
Section 9, the SEC refuses to alter its position, the Company shall, upon
obtaining consent of the Purchaser, (i) remove from the Registration Statement
such portion of the Registrable Securities (the “Cut Back Shares”) and/or (ii)
agree to such restrictions and limitations on the registration and resale of the
Registrable Securities as the SEC may require to assure the Company’s compliance
with the requirements of Rule 415. Any Registrable Securities not able to be
included in a Registration Statement filed pursuant to this Section 9 shall
reduce the number of Registrable Securities of each Holder covered by such
Registration Statement on a pro-rata basis based on the number of
Registrable Securities purchased by each such Holder and the Company shall have
no liability to any Holder as a result of the Registration Statement covering
less than all of the Registrable Securities under the circumstances described in
this proviso. Within 9 months, or such earlier time as permitted by the SEC, of
the initial registration filed hereunder being declared effective, the Company
shall file an additional registration statement containing the Cut Back Shares.
With regard to the new Registration Statement, all of the provisions of this
Section 9 shall again be applicable to the Cut Back Shares.
9.4 In
connection with the Company’s registration obligations hereunder, the Company
shall:
(a) (i)
Prepare and file with the SEC such amendments, including post-effective
amendments, to each Registration Statement and the prospectus used in connection
therewith as may be necessary to keep the Registration Statement continuously
effective as to the applicable Registrable Securities for the Effectiveness
Period and prepare and file with the SEC such additional Registration Statements
in order to register for resale under the Securities Act all of the Registrable
Securities; (ii) cause the related prospectus to be amended or supplemented by
any required prospectus supplement, and as so supplemented or amended to be
filed pursuant to Rule 424; (iii) respond as promptly as reasonably possible,
and in any event within twenty-one days, to any comments received from the SEC
with respect to the Registration Statement or any amendment thereto and as
promptly as reasonably possible provide the Purchaser true and complete copies
of all correspondence from and to the SEC relating to the Registration
Statement; and (iv) comply in all material respects with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities
covered by the Registration Statement during the applicable period in accordance
with the intended methods of disposition by the Purchaser thereof set forth in
the Registration Statement as so amended or in such prospectus as so
supplemented.
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(c)
Use commercially reasonable efforts to avoid the issuance of
or, if issued, obtain the withdrawal of (i) any order suspending the
effectiveness of any Registration Statement, or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, as soon as possible.
(e)
Furnish to the Purchaser, without charge, at least one conformed
copy of each Registration Statement and each amendment thereto, including
financial statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference, and all exhibits to the extent requested by
the Purchaser (including those previously furnished or incorporated by
reference) promptly after the filing of such documents with the
SEC.
(f)
Promptly deliver to the Purchaser, without charge, as many copies of the
prospectus or prospectuses (including each form of prospectus) as the Purchaser
may reasonably request. The Company hereby consents to the use of such
prospectus by the Purchaser in connection with the offering and sale of the
Registrable Securities covered by such prospectus.
(g)
(i) In the time and manner required by the Over the Counter Bulletin
Board, or any national securities exchange, market or trading or quotation
facility on which the Common Stock is then listed or quoted (each a “Trading
Market”), prepare and file with such Trading Market an additional shares listing
application covering all of the Registrable Securities; (ii) take all steps
necessary to cause such Registrable Securities to be approved for listing on
each Trading Market as soon as possible thereafter; (iii) provide to the
Purchaser evidence of such listing; and (iv) maintain the listing of such
Registrable Securities on each such Trading Market.
(h)
Prior to any public offering of Registrable Securities, use its best
efforts to register or qualify or cooperate with the Purchaser in connection
with the registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
the Purchaser requests in writing, to keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness Period
and to do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by a
Registration Statement; provided however,
that the Company shall not be obligated to file any general consent to service
of process or to qualify as a foreign corporation or as a dealer in securities
in any jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is not
otherwise subject.
-12-
(i)
Cooperate with the Purchaser to facilitate the
timely preparation and delivery of certificates representing Registrable
Securities to be delivered to a transferee pursuant to a Registration Statement,
which certificates shall be free, to the extent permitted by this Agreement, of
all restrictive legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as the Purchaser may
request.
(j)
As promptly as reasonably possible, prepare any appropriate
supplement or amendment, including a post-effective amendment, to the
Registration Statement or a supplement to the related prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file any
other required document so that, as thereafter delivered, neither the
Registration Statement nor such prospectus will contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(k)
Cooperate with any due diligence investigation undertaken by the Purchaser in
connection with the sale of Registrable Securities, including, without
limitation, by making available any documents and information requested by the
Purchaser; provided
however, that the Company will not deliver or make available to the
Purchaser material, nonpublic information unless the Purchaser specifically
requests in advance to receive material, nonpublic information in
writing.
(l)
Comply with all applicable rules and regulations of the
SEC.
Section
10. Indemnification. (a) The
Company and the IP Sub, jointly and severally, will indemnify, to the extent
permitted by law, the Purchaser and each director, officer or controlling person
of the Purchaser within the meaning of Section 15 of the Securities Act against
all losses, claims, damages, liabilities and expenses, (or action in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on (i) any untrue
statement or alleged untrue statement of a material fact contained in, or
information incorporated by reference into, any registration statement or
prospectus (or any amendment or supplement thereto) or any preliminary
prospectus prepared in connection with the registration contemplated by Section
9, (ii) any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, (iii) any failure by the Company or the IP Sub to fulfill and
perform any agreement, covenant or undertaking herein, or (iv) any failure or
breach of the representations and warranties of the Company or the IP Sub set
forth in Section 6 to be accurate as of the date hereof and as of the Closing
Date, and will promptly reimburse the Purchaser and each director, officer or
controlling person of the Purchaser for reasonable legal and other expenses
incurred in connection with investigating or defending any claim, loss, damage,
liability or action as incurred; provided however,
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises directly out of or is based upon
an untrue statement or alleged untrue statement or by any omission or alleged
omission made in such registration statement or prospectus made in reliance upon
and in conformity with written information furnished by the Purchaser
specifically for use in the preparation of the registration statement or
prospectus, provided
further, however, that the Company will not be liable in any such case to
the extent that any such loss, claim, damage, liability or action arises
directly out of or is based primarily upon an untrue statement or omission made
in any preliminary prospectus or final prospectus if (i) the Purchaser failed to
send or deliver a copy of the final prospectus or prospectus supplement with or
prior to the delivery of written confirmation of the sale of the Registrable
Securities, and (ii) the final prospectus or prospectus supplement would have
corrected such untrue statement or omission. The indemnification obligation of
the Company and the IP Sub with respect to clause (iv) above, will survive for a
period ending on the first anniversary of the Closing Date, unless a claim for
indemnification (whether or not fixed as to liability or liquidated as to
amount) is made with respect hereto prior to the end of such period, in which
case the right to indemnification shall survive until such claim is satisfied,
settled or dismissed.
-13-
(b) In
connection with any Registration Statement in which the Purchaser may
participate, the Purchaser will furnish to the Company in writing the
information as is reasonably requested by the Company for use in the
Registration Statement or prospectus and will indemnify, to the extent permitted
by law, the Company, its directors and officers and each person or entity, if
any, who controls the Company within the meaning of Section 15 of the Securities
Act, against any losses, claims, damages, liabilities and expenses resulting
from any untrue statement of a material fact or any omission of a material fact
required to be stated in the shelf registration statement or prospectus or any
amendment thereof or supplement thereto or necessary to make the statements
therein not misleading, but only to the extent the losses, claims, damages,
liabilities or expenses are caused by an untrue statement or by an omission made
in reliance upon and in conformity with the written information specifically
furnished by the Purchaser to the Company for use in connection with the
preparation of the shelf registration statement or prospectus; provided however,
that the indemnity will not apply to the extent that the loss, claim, damage,
liability or expense arises out of or is based upon a violation of this
Agreement by the Company. If the offering pursuant to any registration is made
through underwriters, the Purchaser agrees to enter into an underwriting
agreement in customary form with the underwriters and to indemnify the
underwriters, their officers and directors, if any, and each person or entity
who controls the underwriters within the meaning of the Securities Act to the
same extent as hereinabove provided with respect to indemnification by the
Purchaser. Notwithstanding the foregoing or any other provision of this
Agreement, in no event will the Purchaser be liable for any losses, claims,
damages, liabilities or expenses in excess of the net proceeds received by
Purchaser upon the disposition of Registrable Securities pursuant to the
registration statement giving rise to such claim.
-14-
(c) Promptly
after receipt by an indemnified party under Section 10(a) or (b) of notice of
any claim as to which indemnity may be sought, including the commencement of any
action or proceeding, the indemnified party will, if a claim in respect thereof
may be made against the indemnifying party under this Section, promptly notify
the indemnifying party in writing of the commencement thereof; provided that the
failure of the indemnified party to so notify the indemnifying party will not
relieve the indemnifying party from its obligations under this Section except to
the extent that the indemnifying party is adversely affected by the failure. In
case any action or proceeding is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party and its counsel may conduct the defense of any action with counsel
approved by the indemnified party (which approval will not be unreasonably
withheld or delayed) although in such event the indemnified party will be
entitled to participate therein at the indemnified party’s expense, and after
notice from the indemnifying party to the indemnified party of its election to
so assume the defense thereof, the indemnifying party will not be liable to the
indemnified party under that Section for any legal or any other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof unless incurred at the written request of the indemnifying party.
Notwithstanding the above, the indemnified party will have the right to employ
counsel of its own choice in any action or proceeding (and be reimbursed by the
indemnifying party for the reasonable fees and expenses of the counsel and other
reasonable costs of the defense) if representation of the indemnified party by
the counsel retained by the indemnifying party would be inappropriate due to
actual or potential differing interests or conflicts between the indemnified
party and any other party represented by the counsel in the action or proceeding
or counsel to the indemnified party is of the opinion that it would not be
desirable for the same counsel to represent both the indemnifying party and the
indemnified party because the representation might result in a conflict of
interest; provided
however, that the indemnifying party will not in connection with any one
action or proceeding or separate but substantially similar actions or
proceedings arising out of the same general allegations, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for all indemnified parties, except to the extent that local counsel, in
addition to regular counsel, is required in order to effectively defend against
the action or proceeding. An indemnifying party will not be liable to any
indemnified party for any settlement or entry of judgment concerning any action
or proceeding effected without the consent of the indemnifying
party.
(d) If
the indemnification provided for in Section 10(a) or (b) is held by a court of
competent jurisdiction to be unavailable under applicable law to an indemnified
party in respect of any losses, claims, damages or liabilities referred to
therein, then each applicable indemnifying party, in lieu of indemnifying the
indemnified party, will contribute to the amount paid or payable by the
indemnified party as a result of the losses, claims, damages or liabilities in
the proportion as is appropriate to reflect the relative fault of the Company on
the one hand and of the indemnified party on the other in connection with the
statements or omissions which resulted in the losses, claims, damages, or
liabilities, as well as any other relevant equitable considerations including
the relative benefits to the parties. The relative fault of the Company on the
one hand and of the indemnified party on the other will be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission to state a material fact relates to
information supplied by the Company or by the indemnified party and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent the statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages and liabilities referred to above will be
deemed to include, subject to the limitations set forth in Section 10(c), any
legal or other fees or expenses reasonably incurred by the party in connection
with investigating or defending any action or claim. No person or entity guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person or entity that
is not guilty of fraudulent misrepresentation.
-15-
Section
11. Miscellaneous.
11.1 Notices.
Any notice or other communication given hereunder will be deemed
sufficient if in writing and sent by registered or certified mail, return
receipt requested, or delivered by hand against written receipt therefor, or
sent by confirmed facsimile, addressed to:
If to the
Company or to the IP Sub:
AVAX
Technologies, Inc.
0000
Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx,
XX 00000
Attn:
Xxxx Xxxxxxxxxxx
Facsimile:
(000) 000-0000
With a
copy to:
Mintz,
Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
Chrysler
Center
000 Xxxxx
Xxxxxx
Xxx Xxxx,
XX 00000
Attn:
Xxxxx Xxxxxxx
Facsimile:
(000) 000-0000
If to the
Purchaser:
Firebird
Global Master Fund, Ltd.
c/o
Trident Trust Company
(Cayman)
Limited
One
Capital Place, P.O. Box 847
Xxxxxx
Town, Grand Cayman
KY1-1103
Cayman Islands
With a
copy to:
FGS
Advisors, LLC
000 Xxxx
00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx,
XX 00000
Attn:
Xxxxx Xxxxxx
Facsimile:
(000) 000-0000
-16-
Notices
will be deemed to have been given or delivered on the date of mailing, except
notices of change of address, which will be deemed to have been given or
delivered when received.
11.2 Successors and Assigns. This
Agreement will be binding upon and inure to the benefit of the parties hereto
and to their respective heirs, legal representatives, successors and
assigns.
11.3 Entire Agreement. This
Agreement, the Note and the Warrant collectively set forth the entire agreement
and understanding among the parties as to the subject matter hereof and merges
and supersedes all prior discussions, agreements and understandings of any and
every nature among them. This Agreement may be amended only by mutual written
agreement of the Company and the Purchaser.
11.4
Governing Law. The terms and provisions hereof will be construed in
accordance with and governed by the laws of the State of Delaware without regard
to that State’s conflicts of law principles.
11.5 Severability. The holding of
any provision of this Agreement to be invalid or unenforceable by a court of
competent jurisdiction will not affect any other provision of this Agreement,
which will remain in full force and effect. If any provision of this Agreement
is declared by a court of competent jurisdiction to be invalid, illegal or
incapable of being enforced in whole or in part, the provision will be
interpreted so as to remain enforceable to the maximum extent permissible
consistent with applicable law and the remaining conditions and provisions or
portions thereof will nevertheless remain in full force and effect and
enforceable to the extent they are valid, legal and enforceable, and no
provisions will be deemed dependent upon any other covenant or provision unless
so expressed herein.
1.1.6 No Waiver. A waiver by either
party of a breach of any provision of this Agreement will not operate, or be
construed, as a waiver of any subsequent breach by that same party.
11.7 Further Assurances. The
parties agree to execute and deliver all further documents, agreements and
instruments and take further action as may be necessary or appropriate to carry
out the purposes and intent of this Agreement. Any documentary, stamp tax or
similar issuance or transfer taxes due as a result of the conveyance, transfer
or sale of the Note and the Warrant between the Purchaser (or any permitted
transferee), on the one hand, and the Company, on the other hand, pursuant to
this Agreement will be borne by the Company.
11.8 Counterparts. This Agreement
may be executed in two or more counterparts, each of which will be deemed an
original, but all of which will together constitute the same
instrument.
-17-
11.9 No Third Party Beneficiaries.
Nothing in this Agreement creates in any person not a party to this
Agreement or specifically identified in this Agreement any legal or equitable
right, remedy or claim under this Agreement, and this Agreement is for the
exclusive benefit of the parties hereto and those persons specifically
identified by the parties hereto in the provisions above, including, for the
avoidance of doubt, where applicable each director, officer or controlling
person of the Purchaser. The parties expressly recognize that this Agreement is
not intended to create a partnership, joint venture or other similar arrangement
between any of the parties or their respective affiliates.
-18-
IN WITNESS WHEREOF, the
undersigned have duly executed this Note Purchase Agreement as of the date first
above written.
|
FIREBIRD
GLOBAL
|
AVAX
TECHNOLOGIES, INC.
|
|||
|
MASTER
FUND, LTD.
|
||||
|
By:
|
/s/ Xxxxx Xxxxxx |
By:
|
/s/ Xxxx Xxxxxxxxxxx | |
|
Name:
|
Xxxxx Xxxxxx | Xxxx Xxxxxxxxxxx | ||
|
Title:
|
Director | Executive Chairman | ||
|
Dated: October
28, 2009
|
Dated: October
28, 2009
|
|||
|
AVAX
INTERNATIONAL IP HOLDINGS, INC.
|
||||
|
Address:
Firebird Global Master Fund, Ltd.
c/o Trident Trust Company
(Cayman) Limited
One Capital Place, P.O. Box 847
Xxxxxx Town, Grand Cayman
XX0-0000 Xxxxxx Islands
|
||||
|
Facsimile:
|
By:
|
/s/ Xxxx Xxxxxxxxxxx | ||
|
Tax
Id No.:
|
Xxxx
Xxxxxxxxxxx
|
|||
|
Executive
Chairman
|
||||
Principal
Amount of Note Purchased:
$1,400,000.00
Warrant
to purchase 93,333,333 shares of Common Stock
Purchase
Price: $1,400,000
Closing
Date: October 15, 2009
