EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
AVAX Technologies, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Ladies & Gentlemen:
The undersigned (the "Investor"), hereby confirms its agreement with
you as follows:
1. This Securities Purchase Agreement (the "Agreement") is made effective
as of February __, 2007, between AVAX Technologies, Inc., a Delaware
corporation (the "Company"), and the Investor.
2. The Company has authorized, subject to adjustment by the Company's
Board of Directors, the issuance and sale of shares of common stock of
the Company, $0.004 par value per share (the "Common Stock"), and
warrants to purchase shares of Common Stock (the "Warrant"), with an
exercise price of $0.15 per share for the Series 2007A Warrants
pursuant to the forms of Warrants delivered simultaneously with this
Agreement, to certain investors in a private placement (the
"Offering"). For every share of Common Stock purchased by the Investor
in this Offering, such Investor shall be entitled to receive one Series
0000X Xxxxxxx to purchase one share of Common Stock. The purchase price
for the Common Stock and the associated Warrants will be $0.125 ("Price
Per Share") for each share of Common Stock. The purchase price is
allocated as follows: $0.11 per share of Common Stock, $0.015 per
Series 2007A Warrant purchased.
3. The Company and the Investor agree that the Investor will purchase from
the Company and the Company will issue and sell to the Investor the
number of shares of Common Stock set forth on the signature page for a
Price Per Share of $0.125 per share of Common Stock and associated
Warrant, or an aggregate purchase price set forth on the signature
page, pursuant to the Terms and Conditions for Purchase of Common Stock
and Warrants attached hereto as ANNEX I and incorporated herein by
reference as if fully set forth herein. Unless otherwise requested by
the Investor, certificates representing the Common Stock and Warrants
purchased by the Investor will be registered in the Investor's name and
address as set forth below.
4. To subscribe for shares of Common Stock and Warrants, each Investor
must fully and completely answer each of the following questions:
A. In the past three years, has Investor or any person affiliated
with Investor had any position, office or other material
relationship with the AVAX Technologies, Inc. or any of its
affiliates?
YES _____ NO ____
If YES, please describe that position, office or other material
relationship:
10.1-1
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B. Does Investor or any group of which Investor is a member or to
which it is related, beneficially own (including the right to
acquire or vote) any securities of the AVAX Technologies,
Inc.?
YES _____ NO ____
If YES, please list the number and type of securities of AVAX
Technologies, Inc. owned by Investor or any members of that group:
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C. Is Investor directly or indirectly affiliated or associated
with any member of the U.S. National Association of Securities
Dealers?
YES _____ NO ____
If YES, please list the NASD members with which Investor is affiliated
or associated:
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D. Name or natural person or persons (not companies or entities)
who are the ultimate controlling persons of Investor. The
ultimate controlling person or persons, if any, are the
natural person or persons who have the controlling stock or
voting position, if any, in Investor or the ultimate parent
entity of Investor. If the stock of Investor or Investor's
ultimate parent corporation is publicly traded on any U.S.,
European, Japanese or other stock exchange or market, then
Investor may not have an ultimate controlling natural person.
In that case, please list the name of the ultimate parent
entity whose stock is publicly traded on any market or stock
exchange.
Natural Person(s) who Controls Investor: ______________________________
Parent entity of Investor whose stock is publicly traded: _____________
(If the answer is none for either question, write "none." "None" is not
an acceptable answer to both questions without further information
being provided to AVAX Technologies to explain those answers.)
E. Has Investor or any person affiliated with or acting at the
direction of Investor traded in the Common Stock of AVAX
Technologies, Inc. at any time within the 30 days prior to the
date of this Agreement, including without limitation any sales
of Common Stock, any short sales of Common Stock or any other
transactions that may have the effect of affecting the trading
price of the Common Stock of the AVAX Technologies, Inc.?
YES _____ NO ____
If YES, please describe the trading activities by Investor, its
affiliate or persons acting at its direction within the past 30 days:
10.1-2
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Please confirm that the foregoing correctly sets forth the agreement
between us by signing in the space provided below for that purpose.
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"INVESTOR"
By:
--------------------------------
(Signature)
Print Name:
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Title:
-----------------------------
Address:
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Tax ID No.:
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Contact Name:
----------------------
Telephone:
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Facsimile:
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Name in which shares should be registered (if different):
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U.S. Dollar Amount Invested: $_____________
Number of shares of Common Stock: ___________________
Number of Series 0000X Xxxxxxxx: ___________________
Date: ____________________, 2007
AGREED AND ACCEPTED:
AVAX Technologies, Inc.
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By: Xxxxxxx X. Xxxxxx
Title: President
Date: ________________, 2007
[SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]
10.1-3
If Investor is a Registered Representative with a NASD member firm,
have the following acknowledgment signed by the appropriate party:
The undersigned NASD member firm acknowledges receipt of the notice required by
Article 3, Sections 28(a) and (b) of the Rules of Fair Practice.
By:
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Name of NASD Member Firm
By:
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Authorized Officer
[SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]
10.1-4
ANNEX I
TERMS AND CONDITIONS FOR PURCHASE OF COMMON STOCK AND WARRANTS
1. Authorization and Sale of the Common Stock and Warrants. Subject to
the terms and conditions of this Agreement, the Company has authorized the sale
of up to 200,000,000 shares of Common Stock, and the issuance of Series 2007A
Warrants to purchase up to 200,000,000 shares of Common Stock. The Company
reserves the right to increase or decrease these numbers.
2. Agreement to Sell and Purchase the Common Stock and Warrants;
Subscription Date.
2.1 At the Closing (as defined in SECTION 3), the Company will sell
to the Investor, and the Investor will purchase from the Company, upon the terms
and conditions hereinafter set forth, the number of shares of Common Stock and
Warrants set forth on the signature page hereto at the purchase price set forth
on such signature page.
2.2 The Company is entering into this same form of Securities
Purchase Agreement with certain other investors (the "Other Investors")
effective as of the date hereof (the "Subscription Date") and expects to
complete sales of Common Stock and Warrants to them. (The Investor and the Other
Investors are hereinafter sometimes collectively referred to as the "Investors,"
and this Agreement and the Securities Purchase Agreements executed by the Other
Investors are hereinafter sometimes collectively referred to as the
"Agreements.")
2.3 At the time Investor executes this Agreement, Investor will
deposit the purchase price set forth on the signature page hereto into the
account established at UMB Bank, N.A., as "Escrow Agent," in accordance with the
wire transfer instruction attached hereto as EXHIBIT A.
3. Delivery of the Securities at Closing. The completion of the
purchase and sale of the Common Stock and Warrants (the "Closing") shall occur
(the "Closing Date") within 5 business days after the Subscription Date (or upon
such earlier date as the Company and the Investors shall agree), at the offices
of the Company. Upon each Investor's execution of this Agreement, each Investor
will wire transfer to the UMB Bank, N.A., as escrow agent (in accordance with
the wire transfer instructions attached hereto as EXHIBIT A) the full amount of
the purchase price for the Common Stock and Warrants being purchased hereunder
as set forth on the signature page hereto, and at the Closing the Company shall
deliver to the Investor the certificates representing such shares of Common
Stock and the Warrants set forth on the signature page hereto, each such
certificate to be registered in the name of the Investor or, if so indicated on
the signature page hereto, in the name of a nominee designated by the Investor.
The Company's obligation to issue the Common Stock and Warrants to the Investor
shall be subject to the following conditions, any one or more of which may be
waived by the Company: (a) receipt of a wire transfer of funds (in accordance
with the wire transfer instructions attached hereto as EXHIBIT A) in the full
amount of the purchase price for the Common Stock and Warrants being purchased
hereunder as set forth on the signature page hereto; (b) completion of the
purchases and sales under the Agreements with the Other Investors such that a
minimum of $10,000,000 aggregate Purchase Price of shares of Common Stock and
Warrants are sold pursuant to the Agreements; and (c) the accuracy of the
representations and warranties made by the Investors and the fulfillment of
those undertakings of the Investors to be fulfilled prior to the Closing. The
Investor's obligation to purchase the Common Stock and Warrants shall be subject
to the following conditions, any one or more of which may be waived by the
Investor: (a) receipt by the Investor or its authorized agent of one or more
certificates representing the number of shares of Common Stock and Warrants set
forth on the signature page hereto; (b) receipt by the Investor of an opinion
letter, dated as of the Closing Date, from Xxxxxxx & Xxxx, P.C., counsel to the
Company, in form
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reasonably satisfactory to the Investor; (c) the accuracy of the representations
and warranties when made by the Company and as if made by the Company at the
Closing and the fulfillment of those undertakings of the Company to be fulfilled
prior to the Closing; (d) on the Closing Date, no legal action, suit or
proceeding shall be pending or threatened which seeks to restrain or prohibit
the transactions contemplated by the Agreements; (e) the Company shall have
delivered to the Investors its certificate, dated the Closing Date, duly
executed by its Chief Executive Officer to the effect set forth in clause (c)
above; (f) the receipt by the Investors of a certificate, dated the Closing
Date, of the Secretary or Assistant Secretary of the Company certifying as to
(i) the accuracy of the certificate of incorporation and bylaws of the Company
as in effect on the Closing Date (which shall be attached to such certificate as
an exhibit), (ii) the accuracy of all resolutions of the board of directors (and
committees thereof) of the Company relating to the Agreements and the
transactions contemplated thereby (which shall be attached to such certificate
as an exhibit) and (iii) the incumbency and signatures of all officers of the
Company executing the Agreements and any other agreement or document
contemplated thereby.
4. Representations, Warranties and Covenants of the Company. Except as
otherwise described in the Company's SEC Documents (as defined in SECTION 4.4)
or in the Confidential Private Placement Memorandum dated February ___, 2007, as
supplemented or amended and including all exhibits attached thereto and
incorporated by reference therein (the "Memorandum"), which qualify the
following representations, warranties and covenants in their entirety, the
Company hereby represents and warrants to, and covenants with, the Investor, as
follows:
4.1 Organization. Each of the Company and its Subsidiaries is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization. Each of the Company and its Subsidiaries (as
defined in Rule 405 under the Securities Act of 1933, as amended (the
"Securities Act")) has full power and authority to own, operate and occupy its
properties and to conduct its business as presently conducted and is registered
or qualified to do business and in good standing in each jurisdiction in which
it owns or leases property or transacts business and where the failure to be so
qualified would have a material adverse effect upon the financial condition or
business, operations or assets of the Company and its Subsidiaries, considered
as one enterprise, and no proceeding has been instituted in any such
jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit or
curtail, such power and authority or qualification, other than the winding down
or dissolution of certain Subsidiaries no actively longer used in the operation
of the Company's business.
4.2 Due Authorization. The Company has all requisite power and
authority to execute, deliver and perform its obligations under the Agreements,
and the Agreements have been duly authorized and validly executed and delivered
by the Company and constitute legal, valid and binding agreements of the Company
enforceable against the Company in accordance with their terms, except as rights
to indemnity and contribution may be limited by state or federal securities laws
or the public policy underlying such laws, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' and contracting parties' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
4.3 Non-Contravention. The execution and delivery of the Agreements,
the issuance and sale of the Common Stock and Warrants to be sold by the Company
under the Agreements, the fulfillment of the terms of the Agreements and the
consummation of the transactions contemplated thereby will not (A) conflict with
or constitute a violation of, or default (with or without the giving of notice
or the passage of time or both) under, (i) any material bond, debenture, note or
other evidence of indebtedness, or under any material lease, indenture,
mortgage, deed of trust, loan agreement, joint venture or other agreement or
instrument to which the Company or any Subsidiary is a party or by which it or
any of its Subsidiaries or their respective properties are bound, (ii) the
charter, bylaws or other
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organizational documents of the Company or any Subsidiary, or (iii) any law,
administrative regulation, ordinance or order of any court or governmental
agency, arbitration panel or authority applicable to the Company or any
Subsidiary or their respective properties, except where such conflict, violation
or default would not have a material adverse effect on the financial condition
or results of operations of the Company and Subsidiaries taken as one
enterprise, (B) result in the creation or imposition of any lien, encumbrance,
claim, security interest or restriction whatsoever upon any of the material
properties or assets of the Company or any Subsidiary or an acceleration of
indebtedness pursuant to any obligation, agreement or condition contained in any
material bond, debenture, note or any other evidence of indebtedness or any
material indenture, mortgage, deed of trust or any other agreement or instrument
to which the Company or any Subsidiary is a party or by which any of them is
bound or to which any of the property or assets of the Company or any Subsidiary
is subject. No consent, approval, authorization or other order of, or
registration, qualification or filing with, any regulatory body, administrative
agency, self-regulatory organization, stock exchange or market, or other
governmental body in the United States is required for the execution and
delivery of the Agreements and the valid issuance and sale of the Common Stock
and Warrants to be sold pursuant to the Agreements, other than such as have been
made or obtained, and except for any securities filings required to be made
under federal or state securities laws.
4.4 Reporting Status. The Company has filed in a timely manner all
documents that the Company was required to file under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), during the 12 months preceding the
date of this Agreement. The following documents complied in all material
respects with the Securities and Exchange Commission's ("SEC") requirements as
of their respective filing dates, and the information contained therein as of
the date thereof did 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 where they were made not
misleading, except to the extent that information contained in any such document
has been revised or superseded by a later filed SEC Document (as defined below):
(i) the Company's Annual Report on Form 10-KSB for the year ended
December 31, 2005, including the exhibits thereto (the "Form
10-KSB");
(ii) the Company's Quarterly Report on Form 10-QSB for the quarter
ended September 30, 2006; and
(iii) all other documents, including the exhibits thereto, filed by
the Company with the SEC since December 31, 2005, pursuant to
the reporting requirements of the Exchange Act (together with
the Form 10-KSB, the "SEC Documents").
4.5 Capitalization. As of the date hereof, the authorized capital
stock of the Company consists of 500,000,000 shares of Common Stock and
5,000,000 shares of preferred stock, par value $0.004 per share, of the Company
(the "Preferred Stock"). As of February 1, 2007, there were approximately (i)
61,414,998 shares of Common Stock issued and outstanding, (ii) 3,054,283 shares
of Common Stock reserved for issuance under the Company's stock option plans,
(iii) 895,000 shares issuable upon exercise of outstanding stock options issued
by the Company to current or former employees, consultants and directors of the
Company and its Subsidiaries and (iii) 21,221,290 shares issuable upon exercise
of warrants to acquire shares of Common Stock. All outstanding shares of Common
Stock are duly authorized, validly issued, fully paid and nonassessable, free
from any liens or any other encumbrances created by the Company with respect to
the issuance and delivery thereof and not subject to preemptive rights. Other
than as disclosed in the SEC Documents or the Memorandum, there are no
outstanding rights, options, warrants, preemptive rights, rights of first
refusal agreements, commitments or similar rights for the purchase or
acquisition from the Company of any securities of the Company. The Common Stock
and Warrants to be sold pursuant to the Agreements have been duly
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authorized, and when issued and paid for in accordance with the terms of the
Agreements will be duly and validly issued, fully paid and nonassessable, free
and clear of all pledges, liens, encumbrances and other restrictions (other than
those arising under federal or state securities laws as a result of the private
placement of the Common Stock and Warrants to the Investors). Other than with
respect to the conversion rights for the outstanding bridge notes described in
the Memorandum, no preemptive right, co-sale right, right of first refusal or
other similar right exists with respect to the Common Stock and Warrants or the
issuance and sale thereof. No further approval or authorization of any
stockholder, the Board of Directors of the Company or others is required for the
issuance and sale of the Common Stock and Warrants. Except as set forth in the
SEC Documents and the registration rights of the holders of the bridge notes
described in the SEC Documents and the Memorandum, no holder of any of the
securities of the Company has any rights ("demand," "piggyback" or otherwise) to
have such securities registered by reason of the intention to file, filing or
effectiveness of a Registration Statement (as defined in SECTION 7.1 hereof).
The Company has agreed to include the shares of Common Stock issuable to the
holders of the bridge notes in the Registration Statement.
4.6 Legal Proceedings. There is no material legal or governmental
proceeding pending or, to the knowledge of the Company, threatened to which the
Company or any Subsidiary or any officer or director of the Company or any
Subsidiary in their capacity as such officer or director is or may be a party or
of which the business or property of the Company or any Subsidiary is subject
that is not disclosed in the SEC Documents. There is no action, suit,
proceeding, inquiry or investigation before or by any court, public board or
body (including, without limitation, the SEC) pending or, to the knowledge of
the Company, threatened against or affecting the Company or any of its
Subsidiaries wherein an unfavorable decision, ruling or fording could adversely
affect the validity or enforceability of, or the authority or ability of the
Company to perform its obligations under the Agreements.
4.7 No Violations. Neither the Company nor any Subsidiary is in
violation of its charter, bylaws, or other organizational document, or in
violation of any law, administrative regulation, ordinance or order of any court
or governmental agency, arbitration panel or authority applicable to the Company
or any Subsidiary, including the rules, regulations and policies of the SEC and
the Food and Drug Administration of the U.S. Department of Health and Human
Services (the "FDA") and which violation, individually or in the aggregate,
would be reasonably likely to have a material adverse effect on the business,
operations, assets or financial condition of the Company and its Subsidiaries,
considered as one enterprise, or is in default (and there exists no condition
which, with or without the passage of time or giving of notice or both, would
constitute a default) in any material respect in the performance of any bond,
debenture, note or any other evidence of indebtedness in any indenture,
mortgage, deed of trust or any other material agreement or instrument to which
the Company or any Subsidiary is a party or by which the Company or any
Subsidiary is bound or by which the properties of the Company or any Subsidiary
are bound, which would be reasonably likely to have a material adverse effect
upon the business, operations, assets or financial condition of the Company and
its Subsidiaries, considered as one enterprise.
4.8 Governmental Permits, Etc. With the exception of the matters
which are dealt with separately in SECTIONS 4.1, 4.4, 4.13 and 4.14, each of the
Company and it Subsidiaries has all necessary franchises, licenses, certificates
and other authorizations from any foreign, federal, state or local government or
governmental agency, department, or body that are currently necessary for the
operation of the business of the Company and its Subsidiaries as currently
conducted, except where the failure to currently possess could not reasonably be
expected to have a material adverse effect upon the business, operations, assets
or financial condition of the Company and its Subsidiaries, considered as one
enterprise.
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4.9 Intellectual Property. Each of the Company and its Subsidiaries
owns or possesses sufficient rights to use all patents, patent rights,
trademarks, copyrights, licenses, inventions, trade secrets, trade names and
know-how (collectively, "Intellectual Property") that are necessary for the
conduct of its business as now conducted, and as proposed to be conducted in the
SEC Documents, except where the failure to currently own or possess could not
reasonably be expected to have a material adverse effect on the financial
condition or business of the Company and its Subsidiaries considered as one
enterprise. Except as set forth in the SEC Documents, (i) neither the Company
nor any of its Subsidiaries has received any notice of, or has any knowledge of,
any infringement of asserted rights of a third party with respect to any
Intellectual Property that, individually or in the aggregate, would have a
material adverse effect on the financial condition or business, operations or
assets of the Company and its Subsidiaries considered as one enterprise and (ii)
neither the Company nor any of its Subsidiaries has received any notice of any
infringement rights by a third party with respect to any Intellectual Property
that, individually or in the aggregate, would have a material adverse effect
upon the business, operations, assets or financial condition of the Company and
its Subsidiaries, considered as one enterprise.
4.10 Environmental Matters. The Company and its Subsidiaries (i) are
in compliance in all material respects with any and all applicable foreign,
federal, state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), (ii) have received
all material permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses, and (iii)
are in compliance with all terms and conditions of any permit, license or
approval, except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a material adverse effect on the Company and
its Subsidiaries taken as a whole.
4.11 Financial Statements. The financial statements of the Company
and the related notes thereto included in the SEC Documents present fairly in
all material respects, in accordance with generally accepted accounting
principles, the financial position of the Company and its Subsidiaries as of the
dates indicated, and the results of its operations and cash flows for the
periods therein specified. Such consolidated financial statements (including the
related notes) have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
therein specified, except as set forth in the SEC Documents and subject, in the
case of unaudited financial statements, to normal year-end audit adjustments.
4.12 No Material Adverse Change. Except as disclosed in the SEC
Documents, since December 31, 2005 there has not been (i) any material adverse
change in the financial condition or earnings of the Company and its
Subsidiaries considered as one enterprise nor has any material adverse event
occurred to the Company or its Subsidiaries, (ii) any material adverse event
affecting the Company or any of its Subsidiaries, (iii) any obligation, direct
or contingent, that is material to the Company and its Subsidiaries considered
as one enterprise, incurred by the Company, except obligations incurred in the
ordinary course of business, (iv) any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company or any of its
Subsidiaries, or (v) any loss or damage (whether or not insured) to the physical
property of the Company which has been sustained which has a material adverse
effect on the condition (financial or otherwise), earnings, operations or
business of the Company and its Subsidiaries considered as one enterprise.
Except as disclosed in the SEC Documents, neither the Company nor any of its
Subsidiaries has (i) sold, assigned, transferred, abandoned, mortgaged, pledged
or subjected to lien any of its material properties, tangible or intangible, or
rights under any material contract, permit, license, franchise or other
agreement or (ii) waived or cancelled any material indebtedness or other
obligations owed to the Company or any such Subsidiary.
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4.13 No Manipulation of Stock. The Company has not taken and will
not, in violation of applicable law, take, any action designed to or that might
reasonably be expected to cause or result in stabilization or manipulation of
the price of the Common Stock to facilitate the sale or resale of the Common
Stock and the Common Stock issuable upon exercise of the Warrants.
4.14 Insurance. The Company maintains and will continue to maintain
insurance against loss or damage by fire or other casualty and such other
insurance, including, but not limited to, product liability insurance, in such
amounts and covering such risks as is reasonably adequate consistent with
industry practice for the conduct of its business and the value of its
properties, all of which insurance is in full force and effect.
4.15 Tax Matters. The Company has filed all material federal, state
and local income and franchise and other tax returns required to be filed and
has paid or accrued all taxes due in accordance therewith, and no tax deficiency
has been determined adversely to the Company which has had (nor does the Company
have any knowledge of any tax deficiency which, if determined adversely to the
Company, might have) a material adverse effect on the condition (financial or
otherwise), earnings, operations or business of the Company and its Subsidiaries
considered as one enterprise.
4.16 Investment Company. The Company is not an "investment company"
within the meaning of such term under the Investment Company Act of 1940 and the
rules and regulations of the SEC thereunder and will not become an investment
company upon the receipt and application of the net proceeds of this offering.
4.17 No Registration. Assuming the accuracy of the representations
and warranties made by, and compliance with the covenants of, the Investors in
SECTION 5 hereof, no registration of the Common Stock and Warrants under the
Securities Act of 1933, as amended (the "Securities Act"), is required in
connection with the offer and sale of the Common Stock and Warrants by the
Company to the Investors as contemplated by the Agreements.
4.18 Form D. The Company agrees to file one or more Forms D with
respect to the Common Stock and Warrants on a timely basis as required under
Regulation D under the Securities Act to claim the exemption provided by Rule
506 of Regulation D and to, upon request, provide a copy thereof to the
Investors and their counsel.
4.19 Certain Future Financings and Related Actions.
(a) The Company will not sell, offer to sell, solicit offers
to buy or otherwise negotiate in respect of any "security" (as defined in the
Securities Act) that is or could be integrated with the sale of the Common Stock
and Warrants in a manner that would require the registration of the Common Stock
and Warrants under the Securities Act.
(b) The Company shall not offer, sell, contract to sell or
issue (or engage any person to assist the Company in taking any such action) any
equity securities or securities convertible into, exchangeable for or otherwise
entitling the holder to acquire, any Common Stock at a price below the market
price of the Common Stock during the period from the date of this Agreement to
the effective date of the Registration Statement; provided, however, that
nothing in this SECTION 4.19(b) shall prohibit the Company from issuing
securities (v) to employees, directors, officers, advisors or consultants of the
Company; (w) upon exercise of conversion, exchange, purchase or similar rights
issued, granted or given by the Company and outstanding as of the date of this
Agreement; (x) pursuant to a public offering underwritten on a firm commitment
basis registered under the Securities Act; (y) for the purpose of funding the
acquisition of securities or assets of any entity in a single transaction or a
series of related
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transactions; or (z) pursuant to a strategic partnership or alliance agreement,
loan agreement, equipment lease or similar commercial agreement (including
licensing and similar arrangements).
4.20 Use of Proceeds. The Company will use the net proceeds from the
sale of the Common Stock and Warrants for continued research and development of
the Company's AC Vaccine program and small molecule compounds, as well as
working capital and other general corporate purposes.
5. Representations, Warranties and Covenants of the Investor. The
Investor hereby represents and warrants to, and covenants with, the Company as
follows:
5.1 (i) The Investor is an "accredited investor" as defined in
Regulation D under the Securities Act and the Investor has the knowledge,
sophistication and experience necessary to make, and is qualified to make
decisions with respect to, investments in shares presenting an investment
decision like that involved in the purchase of the Common Stock and Warrants,
including investments in securities issued by the Company and investments in
comparable companies, and has requested, received, reviewed and considered all
information it deemed relevant in making an informed decision to purchase the
Common Stock and Warrants, including without limitation, the Memorandum and the
Company's SEC Documents all delivered to the Investor; (ii) the Investor is
acquiring the number of shares of Common Stock and Warrants set forth on the
signature pages hereto for its own account for investment only and with no
present intention of distributing any of the shares of Common Stock, Warrants
and shares of Common Stock issuable upon exercise of the Warrants, in violation
of the Securities Act or any arrangement or understanding with any other persons
regarding the distribution of the shares of Common Stock, Warrants and the
shares of Common Stock issuable upon exercise of the Warrants; (iii) the
Investor's answers to each of the questions on the signature pages to this
Agreement are true, correct and complete as of the date of this Agreement, (iv)
the Investor will not, directly or indirectly, offer, sell, pledge, transfer or
otherwise dispose of (or solicit any offers to buy, purchase or otherwise
acquire or take a pledge of) any of the Common Stock, Warrants and shares of
Common Stock issuable upon exercise of the Warrants except in compliance with
the Securities Act, applicable state securities laws and the respective rules
and regulations promulgated thereunder; (v) the Investor has filled in all
requested information on the signature page hereto for use in preparation of the
Registration Statement and the answers thereto are true and correct as of the
date hereof and will be true and correct as of the Closing Date; (vi) the
Investor will notify the Company promptly of any change in any of such
information until such time as the Investor has sold all of its Common Stock,
Warrants and shares of Common Stock issued upon exercise of the Warrants or
until the Company is no longer required to keep the Registration Statement
effective; and (vii) the Investor has, in connection with its decision to
purchase the number of shares of Common Stock and Warrants set forth on the
signature page hereto, relied only upon the SEC Documents, other publicly
available information and the representations and warranties of the Company
contained herein. The Investor understands that its acquisition of the Common
Stock and Warrants has not been registered under the Securities Act or
registered or qualified under any state securities laws in reliance on specific
exemptions therefrom, which exemptions may depend upon, among other things, the
truth and accuracy of, and the Investor's compliance with, the representations,
warranties, agreements and covenants of the Investor set forth in this Agreement
and the bona fide nature of the Investor's investment intent as expressed
herein.
5.2 The Investor acknowledges that the Company has represented that
no action has been or will be taken in any jurisdiction outside the United
States by the Company that would permit an offering of the Common Stock and
Warrants, or possession or distribution of offering materials in connection with
the issuance of the Common Stock and Warrants, in any jurisdiction outside the
United States where action for that purpose is required. If the Investor is
located or domiciled outside the United States it agrees to comply with all
applicable laws and regulations in each foreign jurisdiction in which it
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purchases, offers, sells or delivers the shares of Common Stock and Warrants or
has in its possession or distributes any offering material, in all cases at its
own expense.
5.3 The Investor represents and warrants that neither Investor nor
any person affiliated with or acting at the direction of Investor traded in the
Common Stock of the Company at any time within the 30 days prior to the date of
this Agreement, including without limitation any sales of Common Stock, any
short sales of Common Stock or any other transactions that may have the effect
of affecting the trading pricing of the Common Stock of the Company. The
Investor hereby covenants with the Company not to make any sale of the Common
Stock and Warrants without complying with the provisions of this Agreement,
including SECTION 7.2 hereof, provided that the Company complies with its
obligations under SECTION 7.1, without effectively causing the prospectus
delivery requirement under the Securities Act to be satisfied, if applicable,
and the Investor acknowledges that the certificates evidencing the Common Stock
and Warrants will be imprinted with a legend that prohibits their transfer
except in accordance therewith. The Investor acknowledges that there may
occasionally be times when the Company, based on the advice of its counsel,
determines that, subject to the limitations of SECTION 7.2, it must suspend the
use of the Prospectus forming a part of the Registration Statement until such
time as an amendment to the Registration Statement has been filed by the Company
and declared effective by the SEC or until the Company has amended or
supplemented such Prospectus.
5.4 The Investor further represents and warrants to, and covenants
with, the Company that (i) the Investor has full right, power, authority and
capacity to enter into this Agreement and to consummate the transactions
contemplated hereby and has taken all necessary action to authorize the
execution, delivery and performance of this Agreement and (ii) this Agreement
constitutes a valid and binding obligation of the Investor enforceable against
the Investor in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' and contracting parties' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and except as the indemnification and contribution agreements
of the Investors herein may be legally unenforceable.
5.5 Investor will not, prior to the effectiveness of the
Registration Statement, directly or indirectly, sell, offer to sell, solicit
offers to buy, dispose of, loan, pledge or grant any right with respect to
(collectively, a "Disposition"), the Common Stock of the Company in violation of
the Securities Act, nor will Investor engage in any hedging or other transaction
which is designed to or could reasonably be expected to lead to or result in a
Disposition of Common Stock of the Company by the Investor or any other person
or entity in violation of the Securities Act. Such prohibited hedging or other
transactions would include without limitation effecting any short sale or having
in effect any short position (whether or not such sale or position is against
the box and regardless of when such position was entered into) or any purchase,
sale or grant of any right (including without limitation any put or call option)
with respect to the Common Stock of the Company or with respect to any security
(other than a broad-based market basket or index) that includes, relates to or
derives any significant part of its value from the Common Stock of the Company.
The Investor acknowledges that the Common Stock, Warrants and shares of Common
Stock issuable upon exercise of the Warrants shall bear a restrictive legend to
the effect that the Common Stock, Warrants and Common Stock issuable upon
exercise of the Warrants have not been registered under the Securities Act of
1933, as amended and such securities may not be sold or transferred in the
absence of an effective registration statement or pursuant to an exemption from
registration.
5.6 The Investor understands that nothing in this Agreement or any
other materials presented to the Investor in connection with the purchase and
sale of the Common Stock and Warrants constitutes legal, tax or investment
advice. The Investor has consulted such legal, tax and investment
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advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of the Common Stock and Warrants.
5.7 The Investor shall hold in strict confidence all information
concerning this Agreement and the Offering of the Common Stock and Warrants
until the earlier of such time as the Company has made a public announcement
concerning this Agreement or the Offering of the Common Stock and Warrants.
5.8 If the Investor is an individual, the Investor certifies that
he or she is not nor to his or her knowledge has been designated, a "suspected
terrorist" as defined in Executive Order 13224. If the Investor is a
corporation, trust, partnership, limited liability company or other
organization, the Investor certifies that, to the best of its knowledge, the
Investor has not been designated, and is not owned or controlled by, a
"suspected terrorist" as defined in Executive Order 13224. The Investor hereby
acknowledges that the Company seeks to comply with all applicable laws covering
money laundering and related activities. In furtherance of those efforts, the
Investor hereby represents, warrants and agrees that: (a) none of the cash or
property that the Investor will pay or will contribute to the Company has been
or shall be derived from, or related to, any activity that is deemed criminal
under United States law; and (b) no contribution or payment by the Investor to
the Company, to the extent that they are within the Investor's control, shall
cause the Company to be in violation of the United States Bank Secrecy Act, the
United States Money Laundering Control Act of 1986 or the United States
International Money Laundering Abatement and Anti-Terrorist Financing Act of
2001. The Investor shall promptly notify the Company if any of these
representations ceases to be true and accurate regarding the Investor. The
Investor agrees to provide the Company any additional information regarding the
Investor that the Company deems necessary or convenient to ensure compliance
with all applicable laws concerning money laundering and similar activities. The
Investor understands and agrees that if at any time it is discovered that any of
the foregoing representations are incorrect, or if otherwise required by
applicable law or regulation related to money laundering similar activities, the
Company may undertake appropriate actions to ensure compliance with applicable
law or regulation, including but not limited to segregation and/or redemption of
the Investor's investment in the Company. The Investor further understands that
the Company may release confidential information about the Investor and, if
applicable, any underlying beneficial owners, to proper authorities if the
Company, in its sole discretion, determines that it is in the best interest of
the Company in light of relevant rules and regulations under the laws set forth
in subsection (b) above.
6. Survival of Representations, Warranties and Agreements.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Investor herein shall survive the execution of this Agreement, the delivery
to the Investor of the Common Stock and Warrants being purchased and the payment
therefor for a period of one (1) year from the Closing Date.
7. Registration; Compliance with the Securities Act.
7.1 Registration Procedures and Expenses. The Company shall:
(a) subject to receipt of necessary information from the
Investors, use its reasonable best efforts to prepare and file with the SEC,
within 90 days after the Closing Date, a registration statement (the
"Registration Statement") on Form SB-2 or any other available form to enable the
resale of the Registrable Shares (as defined below) by the Investors on a
delayed or continuous basis under Rule 415 of the Securities Act. The
Registration Statement may include shares of common stock other than those held
by the Investor and the Other Investors, provided that the inclusion of those
shares would not affect the plan of distribution included in the Registration
Statement. "Registrable Shares"
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means (a) all shares of Common Stock purchased in the Offering, (b) all shares
of Common Stock underlying the Warrants, and (c) any shares of capital stock
issued or issuable, from time to time, upon any reclassification, share
combination, share subdivision, stock split, share dividend, merger,
consolidation or similar transaction or event or otherwise as a distribution on,
in exchange for or with respect to any of the foregoing, in each case held at
the relevant time by an Investor;
(b) use its reasonable best efforts, subject to receipt of
necessary information from the Investors, to cause the Registration Statement to
become effective within 150 days after the Closing Date;
(c) use its reasonable best efforts to prepare and file with
the SEC such amendments and supplements to the Registration Statement and the
Prospectus used in connection therewith and take all such other actions as may
be necessary to keep the Registration Statement current and effective for a
period (the "Registration Period") not exceeding, with respect to each
Investor's Registrable Shares, the earlier of (i) the second anniversary of the
Closing Date, (ii) the date on which the Investor may sell all the shares of
Common Stock, Warrants and shares of Common Stock issuable upon exercise of the
Warrants then held by the Investor without restriction by the volume limitations
of Rule 144(e) of the Securities Act, and (iii) such time as all Registrable
Shares held by such Investor have been sold (A) pursuant to a registration
statement, (B) to or through a broker or dealer or underwriter in a public
distribution or a public securities transaction, and/or (C) in a transaction
exempt from the registration and prospectus delivery requirements of the
Securities Act under SECTION 4(1) thereof so that all transfer restrictions and
restrictive legends with respect thereto, if any, are removed upon the
consummation of such sale;
(d) promptly furnish to the Investor with respect to the
Registrable Shares registered under the Registration Statement such number of
copies of the Registration Statement, Prospectuses and Preliminary Prospectuses
in conformity with the requirements of the Securities Act and such other
documents as the Investor may reasonably request, in order to facilitate the
public sale or other disposition of all or any of the Registrable Shares by the
Investor;
(e) promptly take such action as may be necessary to qualify,
or obtain, an exemption for the Registrable Shares under such of the state
securities laws of United States jurisdictions as shall be necessary to qualify,
or obtain an exemption for, the sale of the Registrable Shares in states
specified in writing by the Investor; provided, however, that the Company shall
not be required to qualify to do business or consent to service of process in
any jurisdiction in which it is not now so qualified or has not so consented;
(f) bear all expenses in connection with the procedures in
paragraph (a) through (c) of this SECTION 7.1 and the registration of the
Registrable Shares pursuant to the Registration Statement, regardless of whether
a Registration Statement becomes effective, including without limitation: (i)
all registration and filing fees and expenses; (ii) fees and expenses of
compliance with federal securities and state "blue sky" or securities laws;
(iii) expenses of printing (including printing certificates for the Registrable
Shares and Prospectuses), messenger and delivery services and telephone; (iv)
all application and filing fees in connection with listing the Registrable
Shares on a national securities exchange or automated quotation system pursuant
to the requirements hereof; and (v) all fees and disbursements of counsel of the
Company and independent certified public accountants of the Company; provided,
however, that each Investor shall be responsible for paying the underwriting
commissions or brokerage fees, and taxes of any kind (including, without
limitation, transfer taxes) applicable to any disposition, sale or transfer of
such Investor's Registrable Shares and any fees and expenses of counsel or other
advisors to the Investor or Other Investors. The Company shall, in any event,
bear its internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing
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legal or accounting duties), the expense of any annual audit, rating agency fees
and the fees and expenses of any person, including special experts, retained by
the Company;
(g) advise the Investors, within two business days by e-mail,
fax or other type of communication, and, if requested by such person, confirm
such advice in writing: (i) after it shall receive notice or obtain knowledge of
the issuance of any stop order by the SEC delaying or suspending the
effectiveness of the Registration Statement or of the initiation or threat of
any proceeding for that purpose, or any other order issued by any state
securities commission or other regulatory authority suspending the qualification
or exemption from qualification of such Registrable Shares under state
securities or "blue sky" laws; and it will promptly use its best efforts to
prevent the issuance of any stop order or other order or to obtain its
withdrawal at the earliest possible moment if such stop order or other order
should be issued; (ii) when the Prospectus or any Prospectus Supplement or
post-effective amendment has been filed, and, with respect to the Registration
Statement or any post-effective amendment thereto, when the same has become
effective; and (iii) after the Company shall receive notice or obtain knowledge
of the existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the Prospectus,
any amendment or supplement thereto, or any document incorporated by reference
therein untrue, or that requires the making of any additions to or changes in
the Registration Statement or the Prospectus in order to make the statements
therein not misleading;
(h) otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the SEC which could affect the sale of
the Registrable Shares;
(i) use its reasonable best efforts to cause all Registrable
Shares to be listed on each securities exchange or market, if any, on which
equity securities issued by the Company are then listed; and
(j) use its reasonable best efforts to take all other steps
necessary to effect the registration of the Registrable Shares contemplated
hereby and to enable the Investors to sell the Registrable Shares under Rule
144.
7.2 Transfer; Suspension.
(a) The Investor agrees that it will not effect any Disposition
of the Common Stock or shares of Common Stock issuable upon exercise of the
Warrants or its right to purchase the Common Stock or shares of Common Stock
issuable upon exercise of the Warrants that would constitute a sale within the
meaning of the Securities Act except as contemplated in the Registration
Statement referred to in SECTION 7.1 and as described below or otherwise in
accordance with the Securities Act, and that it will promptly notify the Company
of any changes in the information set forth in the Registration Statement
regarding the Investor or its plan of distribution.
(b) Except in the event that paragraph (c) below applies, the
Company shall, at all times during the Registration Period, promptly (i) prepare
and file from time to time with the SEC a post-effective amendment to the
Registration Statement or a supplement to the related Prospectus or a supplement
or amendment to any document incorporated therein by reference or file any other
required document so that such Registration Statement 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, and
so that, as thereafter delivered to purchasers of the Registrable Shares being
sold thereunder, such Prospectus 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; (ii) provide the Investor copies of any
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documents filed pursuant to SECTION 7.2(b)(i); and (iii) inform each Investor
that the Company has complied with its obligations in SECTION 7.2(b)(i) (or
that, if the Company has filed a post-effective amendment to the Registration
Statement which has not yet been declared effective, the Company will notify the
Investor to that effect, will use its best efforts to secure the effectiveness
of such post-effective amendment as promptly as possible and will promptly
notify the Investor pursuant to SECTION 7.2(b)(i) hereof when the amendment has
become effective).
(c) Subject to paragraph (d) below, in the event (i) of any
request by the SEC or any other federal or state governmental authority during
the period of effectiveness of the Registration Statement for amendments or
supplements to a Registration Statement or related Prospectus or for additional
information; (ii) of the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose;
(iii) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Shares for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose; or (iv) of any event or circumstance which
necessitates the making of any changes in the Registration Statement or
Prospectus, or any document incorporated or deemed to be incorporated therein by
reference, so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or any omission to state a
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 untrue statement of a material fact or any omission 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; then the Company shall deliver a certificate in writing to the
Investor (the "Suspension Notice") to the effect of the foregoing and, upon
receipt of such Suspension Notice, the Investor will refrain from selling any
Registrable Shares pursuant to the Registration Statement (a "Suspension") until
the Investor's receipt of copies of a supplemented or amended Prospectus
prepared and filed by the Company, or until it is advised in writing by the
Company that the current Prospectus may be used, and has received copies of any
additional or supplemental filings that are incorporated or deemed incorporated
by reference in any such Prospectus. In the event of any Suspension, the Company
will use its best efforts to cause the use of the Prospectus so suspended to be
resumed as soon as reasonably practicable after the delivery of a Suspension
Notice to the Investor. In addition to and without limiting any other remedies
(including, without limitation, at law or at equity) available to the Investor,
the Investor shall be entitled to specific performance in the event that the
Company fails to comply with the provisions of this SECTION 7.2(c).
(d) Notwithstanding the foregoing paragraphs of this SECTION
7.2, the Investor shall not be prohibited from selling Registrable Shares under
the Registration Statement as a result of Suspensions on more than two occasions
(for two separate suspension events) of not more than 30 days each in any
twelve-month period.
(e) Provided that a Suspension is not then in effect, the
Investor may sell Registrable Shares under the Registration Statement, provided
that it arranges for delivery of a current Prospectus to the transferee of such
Registrable Shares. Upon receipt of a request therefor, the Company has agreed
to provide, at its own expense, an adequate number of current Prospectuses
(including documents incorporated by reference therein) to the Investor and to
supply copies to any other parties requiring such Prospectuses.
(f) In the event of a sale of Registrable Shares by the
Investor under the Registration Statement, the Investor must also deliver to the
Company's transfer agent, with a copy to the Company, a Certificate of
Subsequent Sale substantially in the form attached hereto as EXHIBIT B, so that
the Registrable Shares may be properly transferred.
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7.3 Indemnification. For the purpose of this SECTION 7.3:
(i) the term "Selling Stockholder" shall include the Investor and
any affiliate of such Investor;
(ii) the term "Registration Statement" shall include any final
Prospectus, exhibit, supplement or amendment included in or relating to the
Registration Statement referred to in SECTION 7.1; and
(iii) the term "untrue statement" shall include any untrue
statement or alleged untrue statement, or any omission or alleged omission to
state in the Registration Statement or Prospectus 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.
(a) The Company agrees to indemnify and hold harmless each
Selling Stockholder from and against any losses, claims, damages, liabilities or
expenses to which such Selling Stockholder may become subject (under the
Securities Act or otherwise) insofar as such losses, claims, damages,
liabilities or expenses (or actions or proceedings in respect thereof) arise out
of, or are based upon (i) any untrue statement of a material fact contained in
the Registration Statement or Prospectus, (ii) any failure by the Company to
fulfill any undertaking included in the Registration Statement, or (iii) any
breach of any representation, warranty or covenant made by the Company in this
Agreement, and the Company will promptly reimburse such Selling Stockholder for
any reasonable legal or other expenses incurred in investigating, defending or
preparing to defend, settling, compromising or paying any such action,
proceeding or claim, provided, however, that the Company shall not be liable in
any such case to the extent that such loss, claim, damage, liability or expense
arises solely out of, or is based solely upon, an untrue statement made in such
Registration Statement in reliance upon and in conformity with written
information furnished to the Company by such Selling Stockholder specifically
for use in preparation of the Registration Statement or the failure of such
Selling Stockholder to comply with its covenants and agreements contained in
SECTIONS 5.3 or 7.2 hereof respecting sale of the Common Stock and Warrants or
any statement or omission in any Prospectus that is corrected in any subsequent
Prospectus that was delivered to the Investor at least three business days prior
to the pertinent sale or sales by the Investor. Notwithstanding the foregoing,
the Company shall not be liable to any Selling Stockholder for any consequential
damages, including lost profits, solely with respect to losses, claims, damages,
liabilities or expenses to which such Selling Stockholder may become subject
arising out of, or based upon, any breach of any representation, warranty or
covenant made by the Company in this Agreement.
(b) The Investor agrees (severally and not jointly with any
Other Investor) to indemnify and hold harmless the Company (and each person, if
any, who controls the Company within the meaning of Section 15 of the Securities
Act, each officer of the Company who signs the Registration Statement and each
director of the Company) from and against any losses, claims, damages,
liabilities or expenses to which the Company (or any such officer, director or
controlling person) may become subject (under the Securities Act or otherwise),
insofar as such losses, claims, damages, liabilities or expenses (or actions or
proceedings in respect thereof) arise solely out of, or are based solely upon,
(i) any failure to comply with, or breach of, the representations, covenants and
agreements contained in SECTION 5 or 7.2 hereof respecting sale of the Common
Stock and Warrants, or (ii) any untrue statement of a material fact contained in
the Registration Statement if such untrue statement was made in reliance upon
and in conformity with written information furnished by the Investor
specifically for use in preparation of the Registration Statement (provided,
however, that no Investor shall be liable in any such case for any untrue
statement in any Registration Statement or Prospectus if such statement has been
corrected in writing by such Investor and delivered to the Company at least
three business days prior to the pertinent sale or sales by the Investor), and
the Investor will reimburse the Company (or such officer, director or
controlling
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person), as the case may be, for any legal or other expenses reasonably incurred
in investigating, defending or preparing to defend, settling, compromising or
paying any such action, proceeding or claim. Notwithstanding the foregoing, (x)
the Investor's aggregate liability pursuant to this subsection (b) and
subsection (d) shall be limited to the net amount received by the Investor from
the sale of the Registrable Shares and (y) the Investor shall not be liable to
the Company for any consequential damages, including lost profits, solely with
respect to losses, claims, damages, liabilities or expenses to which the Company
(or any officer, director or controlling person as set forth above) may become
subject (under the Securities Act or otherwise), arising out of, or based upon,
any failure to comply with the covenants and agreements contained in SECTION 5.3
or 7.2 hereof respecting sale of the Registrable Shares.
(c) Promptly after receipt by any indemnified person of a
notice of a claim or the beginning of any action in respect of which indemnity
is to be sought against an indemnifying person pursuant to this SECTION 7.3,
such indemnified person shall notify the indemnifying person in writing of such
claim or of the commencement of such action, but the omission to so notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party under this SECTION 7.3 (except to the extent that such
omission materially and adversely affects the indemnifying party's ability to
defend such action) or from any liability otherwise than under this SECTION 7.3.
Subject to the provisions hereinafter stated, in case any such action shall be
brought against an indemnified person, the indemnifying person shall be entitled
to participate therein, and, to the extent that it shall elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid notice
from such indemnified party, shall be entitled to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified person. After notice
from the indemnifying person to such indemnified person of its election to
assume the defense thereof, such indemnifying person shall not be liable to such
indemnified person for any legal expenses subsequently incurred by such
indemnified person in connection with the defense thereof, provided further,
however, that if there exists or shall exist a conflict of interest that would
make it inappropriate, in the opinion of counsel to the indemnified person, for
the same counsel to represent both the indemnified person and such indemnifying
person or any affiliate or associate thereof, the indemnified person shall be
entitled to retain its own counsel at the expense of such indemnifying person;
provided, however, that no indemnifying person shall be responsible for the fees
and expenses of more than one separate counsel (together with appropriate local
counsel) for all indemnified parties. In no event shall any indemnifying person
be liable in respect of any amounts paid in settlement of any action unless the
indemnifying person shall have approved the terms of such settlement; provided
that such consent shall not be unreasonably withheld. No indemnifying person
shall, without the prior written consent of the indemnified person, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified person is or could have been a party and indemnification could have
been sought hereunder by such indemnified person, unless such settlement
includes an unconditional release of such indemnified person from all liability
on claims that are the subject matter of such proceeding.
(d) If the indemnification provided for in this SECTION 7.3 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages,
liabilities or expenses (or actions or proceedings in respect thereof) referred
to therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the Company on the one hand and the
Investor on the other in connection with the statements or omissions or other
matters which resulted in such losses, claims, damages, liabilities or expenses
(or actions in respect thereof), as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, in the case of an untrue statement, whether the untrue statement
relates to information supplied by the Company on the one hand or an Investor on
the other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement. The Company and the
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Investor each agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation (even if
the Investor and its affiliates were treated as one entity for such purpose) or
by any other method of allocation which does not take into account the equitable
considerations referred to above in this subsection (d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this subsection
(d) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection (d), the
Investor shall not be required to contribute any amount in excess of the net
amount received by the Investor from the sale of the Registrable Shares. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Investor's
obligations in this subsection to contribute are several in proportion to their
sales of Registrable Shares to which such loss relates and not joint.
(e) The parties to this Agreement hereby acknowledge that they
are sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof including, without limitation, the
provisions of this SECTION 7.3, and are fully informed regarding said
provisions.
7.4 Rule 144. For a period of two years following the date hereof,
the Company agrees with each holder of Registrable Shares to:
(a) comply with the requirements of Rule 144(c) under the
Securities Act with respect to current public information about the Company;
(b) use its best efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time it is subject to such reporting
requirements); and
(c) furnish to any holder of Registrable Shares upon request
(i) a written statement by the Company as to its compliance with the
requirements of said Rule 144(c) and the reporting requirements of the
Securities Act and the Exchange Act (at any time it is subject to such reporting
requirements), (ii) a copy of the most recent annual or quarterly report of the
Company, and (iii) such other publicly-filed reports and documents of the
Company as such holder may reasonably request to avail itself of any similar
rule or regulation of the SEC allowing it to sell any such securities without
registration.
7.5 Termination of Conditions and Obligations. The conditions
precedent imposed by SECTION 5 or this SECTION 7 upon Dispositions of the
Registrable Shares by the Investor shall cease and terminate as to any
particular number of the Registrable Shares and the restrictive legend shall be
removed when such Registrable Shares shall have been effectively registered
under the Securities Act and sold or otherwise disposed of in accordance with
the intended method of disposition set forth in the Registration Statement
covering such Registrable Shares or at such time as an opinion of counsel
reasonably satisfactory to the Company shall have been rendered to the effect
that such conditions are not necessary in order to comply with the Securities
Act (provided that such opinion shall not be required if the Company shall be
furnished with written documentation reasonably satisfactory to it that such
Registrable Shares are being transferred in a customary transaction exempt from
registration under Rule 144 under the Securities Act).
8. Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed (A) if within domestic United
States by first-class registered or certified airmail,
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or nationally recognized overnight express courier, postage prepaid, or by
facsimile, or (B) if delivered from outside the United States, by International
Federal Express or facsimile, and shall be deemed given (i) if delivered by
first-class registered or certified mail domestic, three business days after so
mailed, (ii) if delivered by nationally recognized overnight carrier, one
business day after so mailed, (iii) if delivered by International Federal
Express, two business days after so mailed, and (iv) if delivered by facsimile,
upon electric confirmation of receipt and shall be delivered as addressed as
follows:
(a) if to the Company, to:
AVAX Technologies, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, President
with a copy to:
Xxxxxxx & Xxxx, P.C.
0000 Xxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Xx.
(b) if to the Investor, at its address on the signature page hereto,
or at such other address or addresses as may have been furnished to the Company
in writing.
9. Changes. This Agreement may not be modified or amended except
pursuant to an instrument in writing signed by the Company and the Investor.
10. Headings. The headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be part of this Agreement.
11. Severability. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
12. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the internal laws of the State of New York, without giving
effect to the principles of conflicts of law.
13. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto pertaining to the subject matter hereof, and any and
all other written or oral agreements relating to such subject matter are
expressly cancelled.
14. Finder's Fees. Except for placement fees payable to Privateq
Advisors and __________ by the Company, neither the Company nor the Investor nor
any affiliate thereof has incurred any obligation which will result in the
obligation of the other party to pay any finder's fee or commission in
connection with this transaction.
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15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
16. Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of the Company and
the Investors, including without limitation and without the need for an express
assignment, affiliates of the Investors. With respect to transfers that are not
made pursuant to the Registration Statement, the rights and obligations of an
Investor under this Agreement shall be automatically assigned by such Investor
to any transferee of all or any portion of such Investor's Registrable Shares
who is a Permitted Transferee (as defined below); provided, however, that within
two business days prior to the transfer, (i) the Company is provided notice of
the transfer including the name and address of the transferee and the number of
Registrable Shares transferred; and (ii) that such transferee agrees in writing
to be bound by the terms of this Agreement. (For purposes of this Agreement, a
"Permitted Transferee" shall mean any Person who is an "accredited investor," as
that term is defined in Rule 501 (a) of Regulation D under the Securities Act.
Upon any transfer permitted by this SECTION 16, the Company shall be obligated
to such transferee to perform all of its covenants under this Agreement as if
such transferee were an Investor.
17. Expenses. Each of the Company and the Investors shall bear its own
expenses in connection with the preparation and negotiation of the Agreement.
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