Contract
Exhibit
10.33
THIS NOTE
AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.
NEITHER THIS NOTE NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE
TRANSFERRED EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR (B)
IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS. THIS NOTE IS SUBJECT TO
THAT CERTAIN CONVERTIBLE NOTE AND WARRANT PURCHASE AGREEMENT, DATED OCTOBER 15,
2009, BY AND AMONG AVAX AND THE PURCHASER NAMED THEREIN.
AVAX
TECHNOLOGIES, INC.
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$1,400,000.00
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October
15, 2009
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AVAX
TECHNOLOGIES, INC., a Delaware corporation (“AVAX”), for value received,
promises to pay to Firebird Global Master Fund, Ltd., having an address at c/o
FGS Advisors, LLC, 000 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000 or
registered assigns (“Firebird”), the principal sum of One Million Four Hundred
Thousand Dollars ($1,400,000.00) on June 1, 2010, and interest (computed on the
basis of a 365-day year) from the date hereof on the unpaid principal amount
from time to time outstanding at the rate of six percent (6%) per annum, due and
payable in arrears on the maturity date hereof, unless payment is required at an
earlier date pursuant to the terms hereof.
1.
Conversion
(a) Voluntary
Conversion. At
any time after the date hereof until this Note is no longer outstanding, this
Note shall be convertible, in whole or in part, into shares of Common Stock,
$.004 par value per share, of AVAX (“Common Stock”) at the option of Firebird,
at any time and from time to time, at a rate of one (1) share of Common Stock
for each $0.01 (subject to adjustment, the “Conversion Price”) of unpaid
principal of and interest on this Note on the Conversion Date (as defined
below). Firebird shall effect conversions by delivering to AVAX a Notice of
Conversion specifying therein the principal amount of the Note to be converted
and the date on which such conversion shall be effected (such date, the
“Conversion Date”). If no Conversion Date is specified in a Notice of
Conversion, the Conversion Date shall be the date that such Notice of Conversion
is deemed delivered hereunder. Conversions hereunder shall have the effect of
lowering the outstanding principal amount of the Note in an amount equal to the
applicable conversion. Firebird and AVAX shall maintain records showing the
principal amount(s) converted and the date of such
conversion(s).
(b) Mandatory
Conversion. This
Note shall automatically convert into the securities described below and at the
conversion ratios described below upon the closing of the Offering (as defined
in Section 1(c)) if the closing of the Offering occurs on or prior to the
maturity date of this Note. Upon the closing of the Offering, all principal of
and accrued and unpaid interest on this Note will automatically convert, at the
election of Firebird, into either (i) 1 share of Common Stock, $.004 par value
per share, of AVAX (“Common Stock”) for each $0.01 of unpaid principal of and
interest on this Note on the conversion date, or (ii) into that number of
securities issued by AVAX in the Offering equal to the quotient obtained by
dividing the principal and accrued interest owed hereunder on the conversion
date by the lesser of (a) $.01 or (b) ninetynine percent (99%) of the price at
which the securities are issued in the Offering and otherwise on the same terms
and conditions and with the same rights and preferences as the securities issued
in the Offering. To exercise this election as to the form and amount of
securities to be received upon conversion of this Note, Firebird shall deliver
to AVAX during usual business hours at AVAX’s principal executive office written
notice in form satisfactory to AVAX that Firebird elects to receive the
conversion securities specified in either clause (i) or clause (ii) above. Such
notice shall also state the name or names (with address) in which the
certificate or certificates for shares (or other securities) that are issuable
on such conversion are to be registered.
(c) Offering
of Securities. In
accordance with Section 7.3 of the Convertible Note and Warrant Purchase
Agreement dated the date hereof (the “Agreement”), AVAX will use its best
efforts to close an offering of securities on or before January 1, 2010, in
which the gross proceeds to AVAX are not less than $25,000,000 (the “Offering”).
Upon the closing of the Offering, the Note will automatically convert into
either (i) shares of Common Stock, or (ii) the securities issued in the
Offering, in accordance with Section 1(b).
(d) Surrender
of Note and Delivery of Certificates. When surrendered for
automatic conversion this Note shall, unless the shares (or other securities)
issuable on conversion are to be issued in the same name as the name in which
this Note is then registered, be duly endorsed by, or accompanied by instruments
of transfer in form satisfactory to AVAX duly executed by, Firebird or his or
its duly authorized attorney. As promptly as practicable after the surrender of
this Note for conversion and the receipt of the notice specified above, AVAX
shall deliver or cause to be delivered to Firebird, or on Firebird’s written
order, a certificate or certificates for the number of full shares (or other
securities) issuable upon the conversion of this Note, in accordance with the
provisions hereof. Such conversion shall be deemed to have been made
automatically on the closing of the Offering, and from and after such time, the
holder will have no rights hereunder other than the right to receive the
conversion shares (or other securities) and Firebird in whose name any
certificate or certificates for shares of shall be issuable upon such conversion
shall be deemed to have become on the Conversion Date the holder of record of
the shares represented thereby.
2. Adjustment of Conversion
Price.
(a) Stock
Dividends, Stock Splits, etc. If AVAX:
(i)
declares a dividend of Common Stock on its Common Stock,
(ii)
subdivides its outstanding Common Stock into a larger number of shares of Common
Stock by reclassification, stock split or otherwise, or
(iii)
combines its outstanding Common Stock into a smaller number of shares of Common
Stock by reclassification, reverse stock split or otherwise,
the
number of shares of Common Stock issuable upon conversion of this Note pursuant
to Section 1 immediately prior to any such event shall be adjusted
proportionately so that thereafter Firebird shall be entitled to receive upon
conversion of this Note the number of shares of Common Stock which such Holder
would have owned after the happening of any of the events described above had
this Note been converted immediately prior to the happening of such event,
provided that the Conversion Price shall in no event be reduced to less than the
par value of the shares issuable upon conversion. An adjustment made pursuant to
this Section 2 will become effective immediately after the record date in the
case of a dividend and will become effective immediately after the effective
date in the case of a subdivision or combination.
(b) Merger or
Consolidation.
If, prior to maturity of this Note, AVAX at any time consolidates or
merges with another corporation (other than a merger or consolidation in which
AVAX is the surviving corporation), Firebird hereof will thereafter be entitled
to receive, upon the conversion hereof, the securities or property to which a
holder of the number of shares of Common Stock then deliverable upon the
conversion hereof would have been entitled upon such consolidation or merger,
and AVAX shall take such steps in connection with such consolidation or merger
as may be necessary to ensure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to any securities or
property thereafter deliverable upon the conversion of this Note.
(c) Subsequent
Equity Sales. (i)
If, at any time while this Note is outstanding, AVAX issues additional shares of
Common Stock or rights, warrants, options or other securities or debt
convertible, exercisable or exchangeable for shares of Common Stock or otherwise
entitling any person to acquire shares of Common Stock (collectively, “Common
Stock Equivalents”) at a price (exclusive of commissions payable by AVAX in
connection therewith) per share of Common Stock less than the Conversion Price
(as adjusted hereunder to such date), then the Conversion Price shall be reduced
to such price. For purposes of this paragraph, in connection with any issuance
of any Common Stock Equivalents, (A) the maximum number of shares of Common
Stock potentially issuable at any time upon conversion, exercise or exchange of
such Common Stock Equivalents (the “Deemed Number”) shall be deemed to be
outstanding upon issuance of such Common Stock Equivalents, (B) the Effective Price
applicable to such Common Stock shall equal the minimum dollar value of
consideration payable to AVAX to purchase such Common Stock Equivalents and to
convert, exercise or exchange them into Common Stock (net of any discounts,
fees, commissions and other expenses), divided by the Deemed Number, and (C) no
further adjustment shall be made to the Conversion Price upon the actual
issuance of Common Stock upon conversion, exercise or exchange of such Common
Stock Equivalents.
(ii) If,
at any time while this Note is outstanding, AVAX issues Common Stock Equivalents
with an Effective Price or a number of underlying shares that floats or resets
or otherwise varies or is subject to adjustment based (directly or indirectly)
on market prices of the Common Stock (a “Floating Price Security”), then for
purposes of applying the preceding paragraph in connection with any subsequent
conversion, the Effective Price will be determined separately on each Conversion
Date and will be deemed to equal the lowest Effective Price at which any holder
of such Floating Price Security is entitled to acquire Common Stock on such
Conversion Date (regardless of whether any such holder acquires any shares on
such date).
(d) Notice. If AVAX proposes to take any
action referred to in this Section 2, or to effect the liquidation, dissolution
or winding up of AVAX, then AVAX shall cause notice thereof to be mailed to
Firebird at least ten (10) days prior to the record date or effective date, as
applicable, of the stock dividend, merger, consolidation or other event subject
to this Section.
(e) Statement
of Adjustment.
Whenever the Conversion Price is adjusted as provided in Section 2, AVAX
shall promptly file at its principal executive office, a statement, signed by
the Chairman of the Board, the President or any Vice President of AVAX, showing
in reasonable detail the facts requiring such adjustment and the Conversion
Price that will be effective after such adjustment. AVAX shall also cause a
notice setting forth any such adjustment to be sent by mail, first class,
postage prepaid, to Firebird. Where appropriate, such notice may be given in
advance and may be included as part of a notice required to be mailed under the
provisions of Section 2(d).
(f) Fractional
Shares. No
fractional shares of Common Stock will be issued upon conversion of this Note,
but a payment in cash will be made in respect of any fraction of a share which
would otherwise be issuable upon the conversion of this Note. Such payment shall
be based on the fair market value of the Common Stock at the time of conversion
of this Note.
(g) Securities
Act of 1933. Upon
conversion of this Note, Firebird may be required to execute and deliver to AVAX
an instrument, in form satisfactory to AVAX, representing that the shares (or
other securities) issuable upon conversion hereof are being acquired for
investment only and not with a view to distribution within the meaning of the
Securities Act of 1933, as amended.
3. Prepayment of Principal.
The principal amount of this Note may NOT be prepaid in whole or in part,
without the prior written consent of Firebird.
4.
Security.
(a) As
security for the prompt and complete payment and performance in full of all
obligations under this Note, AVAX and its subsidiary, AVAX International IP
Holdings, Inc. a Delaware corporation (the “IP Sub”), each hereby pledges and
hereby grants to Firebird, a first priority security interest (the “Security
Interest”) in, and a lien on all of the Intellectual Property Assets owned by
AVAX or by the IP Sub other than the patents rights described in that certain
License Agreement dated November 20, 1995, by and between AVAX and Xxxxxx
Xxxxxxxxx University to the extent that a prior security interest has been
granted in such patent rights to Cancer Treatment Centers of America, Inc., an
Illinois corporation. For purposes of this Note, “Intellectual Property Assets”
shall mean all right, title and interest of AVAX and the IP Sub in or to all or
any Intellectual Property, which is defined as:
(i) each
and all of the patents and patent applications owned by, issued or granted to,
filed by or hereafter issued or granted to filed by or acquired by AVAX or by
the IP Sub, whether or not on a joint basis with any other person or entity,
including without limitation those patents and patent applications listed in
Schedule 1 attached hereto (collectively, the “Patents”);
(ii) all
rights to xxx for past, present and future infringements of any and all of
the
Patents;
(iii) all
proceeds, including without limitation license royalties and proceeds of
infringement suits, based on or relating to any or all of the
Patents;
(iv)
all licenses and other agreements under which AVAX or the IP
Sub is licensor, and all fees, rents, royalties, proceeds or monies thereunder,
based on or relating to any or all of the Patents and the use
thereof;
(v)
all rights granted to AVAX or to the IP Sub under a license or
other agreement pertaining to patent rights of any third party;
(vi)
all formulae, processes, compounds, methods, know-how, and trade
secrets relating to the manufacture of AVAX’s or the IP Sub’s products under,
utilizing, or in connection with, the Patents;
(vii) all
products and proceeds of the foregoing, in any form, including without
limitation insurance proceeds and all claims against third parties for loss or
damage to or destruction of any or all of the foregoing; and
(viii) all
other Collateral (as defined in that certain Intellectual Property Security
Agreement between and among AVAX, the IP Sub and Firebird dated October 15,
2009).
(b) Upon
either the complete voluntary or mandatory conversion of this Convertible
Secured Promissory Note by Firebird according to Section 1 such that no
principal or interest remain with respect hereto, Firebird will relinquish its
Security Interest in the Intellectual Property Assets of AVAX and of the IP
Sub.
5.
Default; Remedies.
(a) The
entire unpaid principal of this Note and the interest then accrued on this Note
shall become and be immediately due and payable, upon written demand of
Firebird, or at the option of Firebird, in its sole discretion, convertible in
accordance with Section 1(a) hereof, in either case without any other notice or
demand of any kind or any presentment or protest, if any one of the following
events occurs and be continuing at the time of such demand:
(i)
If the Offering has not closed on or before the maturity date hereof
and AVAX fails to pay the principal amount of and all accrued interest on this
Note on the maturity date hereof; or
(ii)
If AVAX defaults in the performance of any other obligation under
this Note or the Agreement, and such default continues for ten (10) days after
notice thereof by Firebird hereof to AVAX; or
(iii)
If AVAX (i) makes an assignment for the benefit of creditors, (ii)
applies for, consents to, acquiesces in, files a petition seeking or admits (by
answer, default or otherwise) the material allegations of a petition filed
against it seeking the appointment of a trustee, receiver or liquidator, in
bankruptcy or otherwise, of itself or of all or a substantial portion of its
assets, or a reorganization, arrangement with creditors or other remedy, relief
or adjudication available to or against a bankrupt, insolvent or debtor under
any bankruptcy or insolvency law or any law affecting the rights of creditors
generally, or (iii) admits in writing its inability to pay its debts generally
as they become due; or
(iv)
If an order for relief shall have been entered by a bankruptcy court
or if a decree, order or judgment shall have been entered adjudging AVAX
insolvent, or appointing a receiver, liquidator, custodian or trustee, in
bankruptcy or otherwise, for it or for all or a substantial portion of its
assets, or approving the winding-up or liquidation of its affairs on the grounds
of insolvency or nonpayment of debts, and such order for relief, decree, order
or judgment shall remain undischarged or unstayed for a period of sixty (60)
days; or
(v)
If any substantial part of the property of AVAX is sequestered or
attached and is not returned to the possession of AVAX or released from such
attachment within sixty (60) days.
(b)
Upon the occurrence and during the continuance of a default under
this section, AVAX and the IP Sub each agrees to deliver each item of Collateral
to Firebird on demand, and it is agreed that Firebird shall have the right to
take any of or all the following actions at the same or different times to the
extent permitted by applicable law: (i) on demand, to cause the security
interest to become an assignment, transfer and conveyance of any of or all
Collateral by the AVAX or by the IP Sub, as applicable, to Firebird, or to
license or sublicense, whether general, special or otherwise, and whether on an
exclusive or nonexclusive basis, any Collateral throughout the world on such
terms and conditions and in such manner as Firebird shall determine (other than
in violation of any then-existing licensing arrangements to the extent that
waivers cannot be obtained) and (ii) with or without legal process and with or
without prior notice or demand for performance, to take possession of the
Collateral and without liability for trespass to enter any premises where the
Collateral may be located for the purpose of taking possession of or removing
the Collateral and, generally, to exercise any and all rights afforded to a
secured party under the Uniform Commercial Code or other applicable law. Without
limiting the generality of the foregoing, AVAX and the IP Sub each agrees that
Firebird shall have the right to sell or otherwise dispose of all or any part of
the Collateral at a public or private sale or at any broker’s board or on any
securities exchange, for cash, upon credit or for future delivery as Firebird
shall deem appropriate. Firebird shall be authorized at any such sale (if it
deems it advisable to do so) to restrict the prospective bidders or purchasers
to persons who will represent and agree that they are purchasing the Collateral
for their own account for investment and not with a view to the distribution or
sale thereof, and upon consummation of any such sale Firebird shall have the
right to assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any such sale shall hold the property
sold absolutely, free from any claim or right on the part of AVAX or the IP Sub,
and AVAX and the IP Sub each hereby waives (to the extent permitted by law) all
rights of redemption, stay and appraisal which AVAX or the IP Sub now has or may
at any time in the future have under any rule of law or statute now existing or
hereafter enacted.
Firebird
shall give AVAX or the IP Sub, as applicable, 10 days’ written notice (which
AVAX and the IP Sub each agrees is reasonable notice within the meaning of the
Uniform Commercial Code in effect from time to time in Delaware or its
equivalent in other jurisdictions) of Firebird’s intention to make any sale of
Collateral. Such notice, in the case of a public sale, shall state the time and
place for such sale and, in the case of a sale at a broker’s board or on a
securities exchange, shall state the board or exchange at which such sale is to
be made and the day on which the Collateral, or portion thereof, will first be
offered for sale at such board or exchange. Any such public sale shall be held
at such time or times within ordinary business hours and at such place or places
as Firebird may fix and state in the notice (if any) of such sale. At any such
sale, the Collateral, or portion thereof, to be sold may be sold in one lot as
an entirety or in separate parcels, as Firebird may (in its sole and absolute
discretion) determine. Firebird shall not be obligated to make any sale of any
Collateral if it shall determine not to do so, regardless of the fact that
notice of sale of such Collateral shall have been given. Firebird may, without
notice or publication, adjourn any public or private sale or cause the same to
be adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. In case any sale of all or any part of the
Collateral is made on credit or for future delivery, the Collateral so sold may
be retained by Firebird until the sale price is paid by the purchaser or
purchasers thereof, but Firebird shall not incur any liability in case any such
purchaser or purchasers shall fail to take up and pay for the Collateral so sold
and, in case of any such failure, such Collateral may be sold again upon like
notice. At any public (or private) sale made pursuant to this Agreement,
Firebird may bid for or purchase, free from any right of redemption, stay,
valuation or appraisal on the part of AVAX or the IP Sub (all said rights being
also hereby waived and released), the Collateral or any part thereof offered for
sale and may make payment on account thereof by using any claim then due and
payable to Firebird from AVAX or the IP Sub as a credit against the purchase
price, and Firebird may, upon compliance with the terms of sale, hold, retain
and dispose of such property without further accountability to AVAX or to the IP
Sub therefor. For purposes hereof, a written agreement to purchase the
Collateral or any portion thereof shall be treated as a sale thereof; Firebird
shall be free to carry out such sale pursuant to such agreement and AVAX and the
IP Sub shall not be entitled to the return of the Collateral or any portion
thereof subject thereto, notwithstanding the fact that after Firebird shall have
entered into such an agreement all defaults shall have been remedied and the
obligations hereunder paid in full. As an alternative to exercising the power of
sale herein conferred upon it, Firebird may proceed by a suit or suits at law or
in equity to foreclose under this Note and to sell the Collateral or any portion
thereof pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any sale
pursuant to the provisions of this subsection shall be deemed to conform to the
commercially reasonable standards as provided in the Uniform Commercial Code in
effect from time to time in Delaware or its equivalent in other
jurisdictions.
(c)
Firebird shall apply the proceeds of any collection, sale, foreclosure or other
realization upon any Collateral, including any Collateral consisting of cash, in
its sole and absolute discretion. Firebird shall have sole and absolute
discretion as to the time of application of any such proceeds, moneys or
balances in accordance with this Note. Upon any sale of Collateral by Firebird
(including pursuant to a power of sale granted by statute or under a judicial
proceeding), the receipt of Firebird or of the officer making the sale shall be
a sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to Firebird or such
officer or be answerable in any way for the misapplication thereof.
(d)
For the purpose of enabling Firebird to exercise rights and remedies under
this Agreement at such time as Firebird shall be lawfully entitled to exercise
such rights and remedies, AVAX and the IP Sub each hereby grants to Firebird an
irrevocable, nonexclusive license (exercisable without payment of royalty or
other compensation to AVAX or to the IP Sub), to use, license or sublicense any
of the Collateral now owned or hereafter acquired by AVAX or by the IP Sub, and
wherever the same may be located, and including in such license reasonable
access to all media in which any of the licensed items may be recorded or stored
and to all computer software and programs used for the compilation or printout
thereof. The use of such license by Firebird may be exercised, at the option of
Firebird, only upon the occurrence and during the continuation of a default;
provided, however, that
any license, sublicense or other transaction entered into by Firebird in
accordance herewith shall be binding upon AVAX and the IP Sub notwithstanding
any subsequent cure of an default.
6.
General.
(a) Successors
and Assigns. This
Note, and the obligations and rights of AVAX and of the IP Sub hereunder, shall
be binding upon and inure to the benefit of AVAX, the IP Sub, Firebird, and
their respective successors and assigns.
(b) Recourse. Recourse under this Note is
to the assets of AVAX and the IP Sub jointly and severally (including, without
limitation, the Collateral) only and in no event to the officers, directors or
stockholders of AVAX.
(c) Changes. Changes in or additions to
this Note may be made or compliance with any term, covenant, agreement,
condition or provision set forth herein may be omitted or waived (either
generally or in a particular instance and either retroactively or
prospectively), upon written consent of AVAX and Firebird.
(d) Currency. All payments shall be made
in such coin or currency of the United States of America as at the time of
payment is legal tender therein for the payment of public and private
debts.
(e) Saturdays,
Sundays, Holidays.
If any date specified in this Note as a date for the making of any
payment of principal or interest under this Note falls on a Saturday, Sunday or
on a day that is a legal holiday in the State of Pennsylvania, then the date for
the making of that payment shall be the next subsequent day that is not a
Saturday, Sunday or legal holiday.
(f) Governing
Law. This Note
shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the laws of the State of
Delaware.
IN WITNESS WHEREOF, this Note
has been executed and delivered on the date first above written by the duly
authorized representative of AVAX.
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AVAX
TECHNOLOGIES, INC.
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By:
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/s/
Xxxx Xxxxxxxxxxx
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Name:
Xxxx Xxxxxxxxxxx
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Title:
Chairman and CEO
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AVAX
INTERNATIONAL IP HOLDINGS, INC.
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By:
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/s/
Xxxx Xxxxxxxxxxx
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Name:
Xxxx Xxxxxxxxxxx
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Title:
Chairman and
CEO
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