EXHIBIT 10.2
AGREEMENT
This Agreement (the "Agreement") sets forth the terms and
conditions upon which AVAX Technologies, Inc., a Delaware corporation ("AVAX"),
and Xxxxx X. Xxxxxxxxx, an individual ("Xxxxxxxxx") and Xxxx-Loup Xxxxxxxx, an
individual ("Xxxxxxxx") (collectively, Xxxxxxxxx and Xxxxxxxx are referred to
herein as the "Contributors"), agree to (i) resolve the Contributors' Tax Matter
(as defined below) and (ii) amend the Contribution Agreement (as defined below)
pursuant to Section 13.8 thereto. (Capitalized terms used herein but not defined
herein shall have the meaning attributed to them in the Contribution Agreement).
RECITAL
On July 17, 2000, AVAX and the Contributors, among others,
entered into that certain Stock Contribution Agreement (the "Contribution
Agreement") relating to the contribution of all of the Contributors' interest in
and to Genopoietic, S.A. and GPH, S.A. (which interests comprise roughly
eighty-three percent (83%) of all of the issued and outstanding capital stock of
such companies) to AVAX in exchange for AVAX Stock. In a side letter to the
Contribution Agreement dated July 17, 2000 (the "Side Letter"), AVAX and the
Contributors agreed to use commercially reasonable efforts to provide that, as
of September, 2001, the Contributors will have the ability to pay their capital
gains tax liability, if any, owing to the French tax authorities as a result of
the Contributors' acquisition pursuant to the Contribution Agreement of an
aggregate amount of 659,756 shares of AVAX Stock ("Contributors' AVAX Stock")
(the "Tax Matter"). The Contributors' collective tax obligation as a result of
the Tax Matter will be calculated by multiplying 659,756 times the closing price
of the shares ("Closing Price") of AVAX Technologies, Inc. traded on the NASDAQ
small cap market on the Closing Date, and then multiplying this result by zero
point two six (0.26) (the "Capital Gains Tax").
NOW, THEREFORE, in consideration for the premises and the
covenants and agreements herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
SECTION 1. AMENDMENTS TO CONTRIBUTION AGREEMENT.
(A) The parties hereto agree that Section 1.2 of the Contribution
Agreement is hereby deleted in its entirety and replaced with the following:
"SECTION 1.2 CONTRIBUTION CONSIDERATION. Subject to the
terms and conditions of this Agreement, the consideration to be
delivered to the Contributors by the Recipient in exchange for the
Shares (the "CONTRIBUTION CONSIDERATION") shall be deliverable as
follows:
(a) ESCROW STOCK CONSIDERATION. At the Closing,
Recipient shall deliver to the Escrow Agent (as defined in
the Escrow Agreement) to be held in escrow: (i) as partial
consideration for twenty-three (23) of the Holdings Shares
and one thousand nine hundred forty-eight (1,948) of the
Contributors' Subsidiary Shares to be delivered to Recipient
by Xxxx. Xxxxxxxx at the Closing, stock certificates payable
to Escrow Agent for the
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benefit of Xxxx. Xxxxxxxx and AVAX representing two hundred
thousand (200,000) restricted shares of AVAX Stock with an
aggregate market value of One Million Seven Hundred
Seventy-Five Thousand and 00/100 United States Dollars (US
$1,755,000.00) as of the close of trading on July 11, 2000;
and (ii) as partial consideration for twenty-three (23) of
the Holdings Shares and one thousand nine hundred
forty-eight (1,948) of the Contributors' Subsidiary Shares
to be delivered to Recipient by Xxxx. Xxxxxxxxx at the
Closing, stock certificates payable to Escrow Agent for the
benefit of Xxxx. Xxxxxxxxx and AVAX representing two hundred
thousand (200,000) restricted shares of AVAX Stock with an
aggregate market value of One Million Seven Hundred
Seventy-Five Thousand and 00/100 United States Dollars (US
$1,755,000.00) as of the close of trading on July 11, 2000
(collectively and together with sufficient stock transfer
forms duly executed in blank, the "ESCROW STOCK
CONSIDERATION"). The Escrow Stock Consideration shall be
held in escrow in accordance with the Escrow Agreement
substantially in the form attached hereto as EXHIBIT F (the
"ESCROW AGREEMENT") for the benefit of AVAX and the
Contributors for a period of thirty-six (36) months
commencing on the Closing Date (the "ESCROW PERIOD") and
shall be distributed to the Contributors by the Escrow Agent
upon the expiration of the Escrow Period, subject to the
provisions of the Escrow Agreement and Section 11.3(d)
hereof.
(b) ESCROW TAX STOCK CONSIDERATION. At the Closing,
Recipient shall deliver to Escrow Agent to be held in
escrow: (i) as partial consideration for the remaining
twenty-four (24) Contributors' Holdings Shares and one
thousand nine hundred forty-eight (1,948) Contributors'
Subsidiary Shares to be delivered to Recipient by Xxxx.
Xxxxxxxx at the Closing, stock certificates payable to
Escrow Agent for the benefit of Xxxx. Xxxxxxxx and AVAX
representing thirty-three thousand four hundred twenty-two
(33,422) restricted shares of AVAX Stock with an aggregate
market value of Two Hundred Ninety-Six Thousand Six Hundred
Twenty and 25/100 United States Dollars (US $296,620.25) as
of the close of trading on July 11, 2000; and (ii) in
consideration for remaining twenty-three (23) Contributors'
Holdings Shares and one thousand nine hundred forty-eight
(1,948) Contributors' Subsidiary Shares to be delivered to
Recipient by Xxxx. Xxxxxxxxx at the Closing, stock
certificates payable to Escrow Agent for the benefit of
Xxxx. Xxxxxxxxx and AVAX representing twenty-six thousand
three hundred thirty-four (26,334) restricted shares of AVAX
Stock with an aggregate market value of Two Hundred
Thirty-Three Thousand Seven Hundred Fourteen and 25/100
United States Dollars (US $233,714.25) as of the close of
trading on July 11, 2000 (collectively and together with
sufficient stock transfer forms duly executed in blank, the
"ESCROW TAX STOCK CONSIDERATION"). The Escrow Tax Stock
Consideration shall be held in escrow in accordance with the
Escrow Agreement for the benefit of AVAX and the
Contributors until such time as the Escrow Agent receives
joint written instructions from AVAX and both of the
Contributors related to the proper distribution of such
Escrow Tax Stock Consideration.
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(c) CASH CONSIDERATION. At the Closing, Recipient
shall deliver: (i) to Xxxx. Xxxxxxxxx, a check in the amount
of Two Thousand Five Hundred and 00/100 United States
Dollars (US $2,500); and (ii) to Xxxx. Xxxxxxxx, a check in
the amount of Two Thousand Five Hundred and 00/100 United
States Dollars (US $2,500) (collectively, the "CASH
CONSIDERATION").
(d) ESCROW INTELLECTUAL PROPERTY STOCK
CONSIDERATION. At the Closing, Recipient shall deliver to
the Escrow Agent to be held in escrow: (i) stock
certificates payable to Escrow Agent for the benefit of
Xxxx. Xxxxxxxx and AVAX representing one hundred thousand
(100,000) restricted shares of AVAX Stock with an aggregate
market value of Eight Hundred Eighty-Seven Thousand Five
Hundred and 00/100 United States Dollars (US $887,500.00) as
of the close of trading on July 11, 2000; and (ii) stock
certificates payable to Escrow Agent for the benefit of
Xxxx. Xxxxxxxxx and AVAX representing one hundred thousand
(100,000) restricted shares of AVAX Stock with an aggregate
market value of Eight Hundred Eighty-Seven Thousand Five
Hundred and 00/100 United States Dollars (US $887,500.00) as
of the close of trading on July 11, 2000 (collectively and
together with sufficient stock transfer forms duly executed
in blank, the "ESCROW INTELLECTUAL PROPERTY STOCK
CONSIDERATION"). The Escrow Intellectual Property Stock
Consideration shall be held in escrow by the Escrow Agent in
accordance with the Escrow Agreement for the benefit of AVAX
and the Contributors and shall be distributed to the
Contributors when and if the Contributors are able to obtain
the Resolution of the Intellectual Property Issue (as
defined in Article XII hereof) on or before the date that is
twenty-four (24) months after the Closing Date.
(e) EARN OUT CONSIDERATION; RIGHTS AGREEMENT. At
the Closing, Recipient shall deliver to each of Xxxx.
Xxxxxxxx and Xxxx. Xxxxxxxxx, as an earn-out payment, a
Rights Agreement substantially in the form attached hereto
as EXHIBIT G ("RIGHTS AGREEMENT")."
(B) The parties hereto agree that the following Section 4.35 is added
to the Contribution Agreement:
"4.35 PROGENICS TERMINATION. As of the Closing Date, the
Progenics Termination has been duly and validly executed by all parties
thereto, is in full force and effect and is binding on each of the
parties thereto. A facsimile copy of the Progenics Termination executed
by Progenics has previously been delivered by Xxxx. Xxxxxxxxx to
Recipient. The Contributors will deliver to Recipient the original
execution copy of the Progenics Termination within thirty (30) days
after the Closing Date."
Except as modified herein, the Contribution Agreement shall remain in
full force and effect.
SECTION 2. TREATMENT OF TAX MATTER. AVAX hereby agrees that it will
take the action described in one (1) of the steps described in Section A or
Section B below, at its sole option.
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A. IF AVAX ELECTS TO DEVELOP A PLAN FOR SALE OF STOCK.
Upon appropriate documentation of the Contributors' Capital Gains
Tax liability reasonably acceptable to AVAX, AVAX may elect to develop a plan
("Plan") whereby it is reasonably anticipated that the Contributors will be able
to sell that number of shares (the "Tax Payment Shares") of AVAX Stock that will
enable the Contributors to pay their Capital Gains Tax to the French government
in September of 2001 and to realize a net value per share of AVAX Stock of no
less than eighty percent (80%) of the Closing Price ("Minimum Price"). The Plan
may be implemented by AVAX at any time during the period beginning on the date
that the precise Capital Gains Tax can be calculated (presumably the Closing
Date) and ending fifteen (15) days prior to the date on which the Contributors
actually pay the Capital Gains Tax to the French tax authorities. The Plan will
include freeing the Tax Payment Shares from the "lock-up" restriction contained
in the Contribution Agreement and, at AVAX's option, causing the Tax Payment
Shares to be "registered" with the U.S. Securities and Exchange Commission. If
AVAX elects to develop such a Plan and it is reasonably anticipated that the
Contributors will realize net per share proceeds from the sale of their Tax
Payment Shares of no less than the Minimum Price, then the Contributors will
have the option of whether to proceed with the Plan or not, in accordance with
the following:
1. IF THE CONTRIBUTORS ELECT TO PROCEED WITH THE PLAN. If the
Contributors elect to proceed with the Plan, then AVAX shall arrange for the
sale of the Tax Payment Shares, beginning with the Escrow Tax Stock
Consideration, the Escrow Intellectual Property Stock Consideration and the
Escrow Stock Consideration, in that order, and the proceeds of such sale shall
be used by the Contributors to pay the Contributors' actual capital gains tax
liability as a result of their receipt of AVAX Stock pursuant to the
Contribution Agreement. In such event, AVAX shall have a lien against any and
all shares of AVAX Stock to be received by the Contributors pursuant to either
of the Rights Agreements and such shares shall be made available to and used by
the Escrow Agent to replace the Tax Payment Shares. In the event the Escrow
Period has terminated and the Escrow Agent shall have delivered to AVAX all of
the Escrow Stock Consideration then remaining in escrow, then, upon achievement
of any Milestone(s), AVAX shall be entitled to retain that number of shares of
AVAX Stock that were withdrawn from escrow as Tax Payment Shares and shall
promptly deliver to the Contributors any excess shares of AVAX Stock owing to
the Contributors. In the event the Escrow Period has terminated and the Escrow
Agent shall not have delivered to AVAX all of the Escrow Stock Consideration
then remaining in escrow, then, upon achievement of any Milestone(s), the
Contributors shall be entitled to receive all shares of AVAX Stock then owing to
the Contributors as a result of the achievement of the Milestone(s).
Within ten (10) days of the Contributors' paying their capital
gains tax to the French authorities in 2001, the Contributors shall provide AVAX
with a copy of each of their capital gains tax returns showing the precise
amount of the capital gains tax actually paid by the Contributors. In the event
the amount of capital gains tax actually paid by the Contributors is less than
the amount of the Capital Gains Tax, then the Contributors shall immediately pay
to AVAX a fee in the amount of the difference, which amount shall immediately
become the sole and exclusive property of AVAX (a "Discrepancy Charge").
2. IF THE CONTRIBUTORS DO NOT ELECT TO PROCEED WITH THE PLAN.
If the Contributors do not elect to proceed with the Plan, then AVAX shall be
relieved of, and the Contributors shall be deemed to have conclusively waived
all rights with regard to, any obligation on the part of AVAX to assist the
Contributors with regard to the Tax Matter and this Letter Agreement shall
immediately terminate.
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B. IF AVAX ELECTS NOT TO DEVELOP A PLAN FOR SALE OF STOCK.
If AVAX elects not to develop a Plan, or is unable to develop
such a Plan, then AVAX agrees that, upon appropriate documentation of the
Contributors' Capital Gains Tax liability, AVAX will loan to the Contributors on
commercially reasonable terms, including those set forth herein, an amount of
United States Dollars equal to the Capital Gains Tax ("Loan") in exchange for
the execution by each of the Contributors of a Promissory Note ("Note") and a
Pledge Agreement ("Pledge Agreement"), each of which will be subject to the
Uniform Commercial Code then effective in the state of Missouri and in form and
substance reasonably satisfactory to AVAX. The proceeds of the Loan shall be
used by the Contributors to pay the Contributors' actual capital gains tax
liability as a result of their receipt of AVAX Stock pursuant to the
Contribution Agreement. Interest on the Note shall begin to accrue immediately
upon funding and shall be payable at a rate of five percent (5%) per annum. The
principal amount of the Note, together with all interest due thereon, shall be
due and payable on the day immediately preceding the date on which the Escrow
Period (as defined in the Escrow Agreement) expires. The security for the Loan
will be the Pledge Agreement, pursuant to which the Contributors will assign and
pledge to AVAX, and grant AVAX a lien against, all of the Contributors' right,
title and interest in and to all AVAX Stock received, or which may be received
at some later date, by the Contributors pursuant to the Contribution Agreement
and/or pursuant to either Rights Agreement. In the event shares of AVAX Stock
are earned by the Contributors pursuant to the Rights Agreement upon achievement
of any Milestone ("Milestone Shares"), such Milestone Shares shall be placed in
escrow with the Escrow Agent and shall be held in escrow in accordance with and
subject to both the Pledge Agreement and the Escrow Agreement and such shares of
AVAX Stock shall be made part of the Escrow Tax Stock Consideration. If the
Contributors sell shares of AVAX Stock to repay the Note (including interest
thereon), the provisions of Section A1 (above) shall apply to any such sale.
Upon timely repayment of the Note in full by the Contributors
(including all interest thereon), the Pledge Agreement shall be terminated and
any shares remaining in the Escrow Tax Stock Consideration (including any
Milestone Shares) shall be promptly delivered to the Contributors and released
from the escrow. In the event the Note is not repaid by the Contributors on or
before expiration of the Escrow Period, then as its sole remedy against the
Contributors for the Contributors' failure to repay the Note, AVAX shall be
entitled to all right, title and interest in and to all shares of AVAX Stock
held pursuant to the Escrow Agreement as well as all shares of AVAX Stock that,
but for the execution of the Note and the Pledge Agreement, would otherwise have
been delivered to, or might be earned by, either or both Contributors (including
pursuant to the Rights Agreements) until AVAX has received that number of shares
of AVAX Stock the fair market value of which equals the amount due by the
Contributors pursuant to the Note.
Within ten (10) days of the Contributors' paying their capital
gains tax to the French authorities in 2001, the Contributors shall provide AVAX
with a copy of each of their capital gains tax returns showing the precise
amount of the capital gains tax actually paid by the Contributors. In the event
the amount of capital gains tax actually paid by the Contributors is less than
the amount of the Capital Gains Tax, then the Contributors shall immediately pay
to AVAX a fee in the amount of the difference, which amount shall immediately
become the sole and exclusive property of AVAX (a "Discrepancy Charge").
In the event AVAX elects not to develop a Plan but is unable to
fund the Loan to the Contributors, then AVAX agrees that upon the written
request of the Contributors AVAX will use commercially reasonable efforts to
allow the Contributors to sell shares of AVAX Stock held in escrow pursuant to
the Escrow Agreement in accordance with the terms and conditions of Section A
(above).
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AVAX agrees that the Chief Executive Officer will not use his
discretionary powers under the AVAX Sales Policy to prevent the Contributors
from selling those certain shares of AVAX Stock sufficient to enable the
Contributors to pay in September of 2001 their actual capital gains tax
liability as a result of their receipt of AVAX Stock pursuant to the
Contribution Agreement; provided, however, that nothing contained herein shall
be deemed to enable or permit the Contributors to violate applicable securities
laws nor shall anything herein be deemed to require the Chief Executive Officer
of AVAX to do anything that he believes, based on advice of counsel to AVAX,
might be construed as potentially in conflict with any applicable law or
regulation.
In the event that AVAX funds the Loan, the parties agree to use
commercially reasonable efforts to ensure the sale of shares of AVAX Stock owned
by the Contributors necessary to pay back the Loan (together with all interest
thereon).
In the event that at the time the Contributors are obligated to
repay the Loan (together with interest thereon) the shares of AVAX Stock have a
value below the Minimum Price per share, AVAX agrees to use commercially
reasonable efforts to allow the Contributors to find alternate financing sources
to repay the Loan (together with all interest thereon).
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In the event that the Contributors do not pay any capital gains
tax on the acquisition of AVAX Stock at any time during 2001, AVAX will have no
obligation under this Agreement. In the event that the Contributors sell shares
of AVAX Stock in accordance with Section A above and then do not pay the Capital
Gains Tax to the French authorities in 2001, the Contributors shall immediately
pay to AVAX one-half (1/2) of the amount received by them in exchange for the
shares of AVAX Stock sold by them, which amount shall immediately become the
sole and exclusive property of AVAX (a "Discrepancy Charge"). In the event that
the Contributors receive a Loan from AVAX in accordance with Section B above and
then do not pay the Capital Gains Tax to the French authorities in 2001, then
the full amount of the Loan shall immediately be due and payable on January 1,
2002, and the Contributors shall immediately repay the full amount of the Loan
(with interest) to AVAX plus all of AVAX's reasonable fees (including attorneys
fees) and expenses in making the Loan to the Contributors.
In the event that circumstances giving rise to a Discrepancy
Charge hereunder are caused because of an action on the part of the French
government that occurs between the date hereof and September of 2001 and reduces
the capital gains tax rate generally applicable to transactions of the nature
contemplated in the Contribution Agreement, then the Contributors shall be
relieved of their obligation to pay to AVAX such Discrepancy Charge; provided,
however, that the Contributors shall immediately place into escrow, subject to
the Escrow Agreement, all proceeds of any nature whatsoever received by them
(together with any proceeds of proceeds and any interest earned thereon)
("Proceeds"), which Proceeds shall, at AVAX's option, be deemed to replace any
shares of AVAX Stock that have previously been withdrawn from escrow in
accordance with the terms hereof or shall be used to pay down any amount
then-owing to AVAX by the Contributors, including all principal and interest
outstanding pursuant to any Loan.
In the event that the Contributors discover that their capital
gains tax liability to the French government upon their receipt of the 659,756
shares of AVAX Stock pursuant to the Contribution Agreement will be less than
the Capital Gains Tax, they will notify AVAX in writing within five (5) days of
such discovery (a "Tax Notice"). In the event that AVAX receives such a Tax
Notice prior to the time when AVAX begins the implementation a Plan or funds the
Loan, the Contributors shall be relieved of their obligation to pay to AVAX the
relevant Discrepancy Charge; provided, however, that AVAX is
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given reasonable advance notice to enable AVAX to reduce the amount of the Loan
and/or to reduce the number of shares of the Contributors' AVAX Stock sold
pursuant to a Plan.
The parties agree that this letter agreement satisfies the
condition to Closing contained in the Side Letter, and the Side Letter is hereby
terminated and of no further force or effect.
In addition, the Contributors hereby waive the condition to
Closing contained in Section 9.6(g) of the Contribution Agreement.
IN WITNESS WHEREOF, the Contributors and AVAX have caused this
Agreement to be executed as of this ____ day of August, 2000.
AVAX TECHNOLOGIES, INC., a Delaware
Corporation ("AVAX")
By:
---------------------------------------------
Name: Xxxxxxx X. Xxxxx, M.D.
Title: President and Chief Executive Officer
GPH, S.A., a French SOCIETE ANONYME ("Holdings")
By:
---------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: President Directeur General
GENOPOIETIC, S.A., a French SOCIETE
ANONYME ("Subsidiary")
By:
---------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: President Directeur General
------------------------------------
XXXX. XXXX-XXXX XXXXXXXX, an individual
and resident of Paris, France
------------------------------------
XXXX. XXXXX XXXXXX XXXXXXXXX, an individual
and resident of Xxxxx, Xxxxxx
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