UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): December 1, 2014
CHAMPIONS ONCOLOGY, INC.
(Exact name of registrant as specified in its charter)
|(State or Other Jurisdiction||(Commission File Number)||(IRS Employer|
|of Incorporation)||Identification No.)|
1 University Plaza, Suite 307, Hackensack, New Jersey 07601
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code: (201) 808-8400
(Former Name or Former Address if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
|¨||Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)|
|¨||Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)|
|¨||Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))|
|¨||Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))|
INFORMATION TO BE INCLUDED IN THE REPORT
Item 1.01 Entry into a Material Definitive Agreement
On December 1, 2014, Champions Oncology, Inc. (the “Company”) entered into note purchase agreements with and issued convertible promissory notes in the principal amount of $1 million each to Joel Ackerman, the Company’s Chief Executive Officer, and Dr. Ronnie Morris, the Company’s President, to finance the operations of the Company. The transaction was approved by the Company’s audit committee.
The notes bear interest at 12% per annum and have a term of 90 days. The notes, including any accrued but unpaid interest, are convertible at the option of each noteholder: (a) upon the closing of any equity financing that occurs during the term of the notes, into the securities offered in the financing to other investors at a 5% discount to the price per share paid by other investors in the financing; and (b) upon the maturity date of the notes, into the Company’s common stock at the volume weighted average closing price of the common stock for the five trading days prior to such conversion.
The foregoing description is a summary only and is qualified in its entirety by reference to the full text of the note purchase agreements and the notes, forms of each of which are attached to this Form 8-K as Exhibits 10.1 and 10.2, respectively, and incorporated herein by reference.
The Company’s press release describing the transaction is attached hereto as Exhibit 99.1.
The notes were will be sold to accredited investors in a private placement in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Regulation D promulgated thereunder
Item 3.02 Unregistered Sales of Equity Securities
The information required by this Item is described in Item 1.01 above.
Item 9.01. Exhibits.
The following exhibits filed herewith:
|10.1||Form of Note Purchase Agreement, dated December 1, 2014.|
|10.2||Form of Convertible Promissory Note, dated December 1, 2014.|
|99.1||Press Release dated December 5, 2014.|
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|CHAMPIONS ONCOLOGY, INC.|
|Date: December 4, 2014||By:||/s/ Joel Ackerman|
|Name: Joel Ackerman|
|Title: Chief Executive Officer|
NOTE PURCHASE AGREEMENT
THIS NOTE PURCHASE AGREEMENT (this “ Agreement ”), made as of the date set forth on the signature page hereto, is between Champions Oncology, Inc., a Delaware corporation (the “ Company ”), and the other party hereto (the “ Purchaser ”).
WHEREAS, the Company desires to sell an unsecured convertible promissory note in the form attached hereto as Exhibit A (the “ Note ”) in the principal amount (the “ Principal Amount ”) set forth on the signature page hereto, convertible into shares of common stock of the Company (the “ Common Stock ”);
WHEREAS, on the terms and subject to the conditions set forth herein, the Purchaser desires to purchase from the Company, and the Company desires to sell to the Purchaser, the Note.
NOW, THEREFORE, in consideration of the mutual promises herein made and in consideration of the representations, warranties, and covenants herein contained, the Purchaser and the Company hereby agree as follows:
SALE OF THE Note; CLOSING
1.1 The Note . Subject to all of the terms and conditions hereof, at the Closing (as hereinafter defined), the Company agrees to issue and to sell to the Purchaser, and the Purchaser agrees to purchase, the Note.
1.2 The Closing . The sale and purchase of the Note issued pursuant to Section 1.1 hereof shall take place at a closing (the “ Closing ”) to be held at such place and time as the Company and the Purchaser may determine (the “ Closing Date ”). At the Closing, the Company shall deliver to the Purchaser the Note, against receipt by the Company from the Purchaser of the Principal Amount (the “ Purchase Price ”). The Note delivered by the Company at the Closing will be registered in the Purchaser’s name in the Company’s records.
1.3 Sale of Other Note . For the avoidance of doubt, notwithstanding anything to the contrary contained herein, the Purchaser acknowledges that the Company is selling an additional Note to one other purchaser.
1.4 Deliveries at the Closing .
(a) At the Closing, the Company shall deliver to the Purchaser the Note registered in the name of the Purchaser.
(b) At the Closing, the Purchaser shall deliver to the Company the Purchase Price for the Note.
CONDITIONS TO THE OBLIGATIONS OF THE PARTIES
2.1 Conditions to the Obligations of the Purchaser . The obligation of the Purchaser to consummate the transactions to be performed by it in connection with the Closing are, unless otherwise indicated, subject to the satisfaction or waiver by the Purchaser of the following conditions as of the Closing:
(a) Representations and Warranties . The representations and warranties set forth in this Agreement shall be true, correct and complete in all respects on and as of the Closing Date.
(b) Absence of Litigation . There shall not be (i) any order of any nature issued by a governmental entity with competent jurisdiction directing that the transactions provided for herein or any aspect of them not be consummated as herein provided or (ii) any proceeding before any governmental entity pending wherein an unfavorable order would prevent the performance of this Agreement or the Note or the consummation of any aspect of the transactions or events contemplated hereby, declare unlawful any aspect of the transactions or events contemplated by this Agreement, cause any aspect of the transactions contemplated by this Agreement to be rescinded or, in the reasonable opinion of the Purchaser, have a material adverse effect on the Company.
(c) No Consent or Approval Required . No consent, approval or authorization of, or declaration to or filing with, any person or entity is required for the valid authorization, execution and delivery by the Company of the Note or for its consummation of the transactions contemplated hereby or thereby or for the valid authorization, issuance and delivery of the Note or for the valid authorization, reservation, issuance and delivery of the Common Stock issuable upon conversion of the Note, other than those consents, approvals, authorizations, declarations or filings which have been obtained or made, as the case may be, or as may be required by federal and/or state securities laws.
(d) Corporate Action and Other Proceedings . All corporate action and other proceedings required to be taken by the Company in connection with the transactions contemplated hereby to be consummated at or prior to the Closing shall have been taken.
(e) Due Diligence . As of the Closing, the Purchaser shall be satisfied in its sole discretion with the results of its due diligence investigation and review of the Company.
(f) Concurrent Closings . The closing of the sale of a Note to the other purchaser referred to in Section 1.3 shall have occurred concurrently with the Closing.
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2.2 Conditions to the Obligations of the Company . The obligations of the Company to consummate the transactions to be performed by it in connection with any Closing are, unless otherwise indicated, subject to the satisfaction or waiver by the Company of the following conditions as of the Closing:
(a) Representations and Warranties . The representations and warranties of the Purchaser set forth in this Agreement shall be true, correct and complete in all respects on and as of the Closing Date.
(b) Documents and Certificates . Each document and any other instrument, certificate or document referred to in Section 1.4 to which the Purchaser is a party shall have been duly executed and delivered by the Purchaser and shall be in full force and effect.
(c) Payment of Purchase Price . The Purchaser shall have delivered to the Company the Purchase Price.
REPRESENTATIONS AND WARRANTIES OF COMPANY
As a material inducement to the Purchaser to enter into and perform its obligations under this Agreement, the Company hereby represents and warrants to the Purchasers as of the date hereof and, except as otherwise specifically provided herein, the Closing Date as follows:
3.1 Authorization .
(a) The Company has all requisite power and authority to execute and deliver this Agreement and the Note and any and all instruments necessary or appropriate in order to effectuate fully the terms and conditions of each such document and all related transactions and to perform its obligations under each such document. Each of this Agreement and the Note has been duly authorized by all necessary action (corporate or otherwise) on the part of the Company, and each such document has been duly executed and delivered by the Company, and constitutes the valid and legally binding obligation of the Company, enforceable in accordance with its terms and conditions, except as enforceability thereof may be limited by any applicable bankruptcy, reorganization, insolvency or other laws affecting creditors’ rights generally or by general principles of equity.
(b) The authorization, issuance, sale and delivery of the Note have been duly authorized by all requisite action of the Company’s board of directors and shareholders, including, but not limited to, with respect to conflicts of interest and the Purchaser being an executive officer of the Company. The Note, when issued in compliance with the provisions of this Agreement, will be validly issued, fully paid and nonassessable. The Common Stock issuable upon conversion of the Note, when issued, will be validly issued, fully paid and nonassessable.
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3.2 Non-contravention . The execution, delivery and performance by the Company of this Agreement and the Note, the consummation of the transactions documented hereby and compliance with the provisions hereof, including the issuance, sale and delivery of the Note have not and shall not, and the issuance, sale and delivery of the Common Stock issuable upon conversion of the Note, shall not, except as specifically contemplated hereby or thereby, (a) violate any law to which the Company or any of its assets is subject, (b) violate any provision of the Company’s Certificate of Incorporation or Bylaws, (c) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice under any contract to which the Company is a party or by which any of the assets of the Company is bound or (d) result in the imposition of any lien upon any of the assets of the Company. Other than federal securities filings and state “blue sky” securities filings, the Company has not been or is not required to give any notice to, make any filing with, or obtain any authorization, consent or approval of any governmental entity or any other person for the valid authorization, issuance and delivery of the Note or for the valid authorization, reservation, issuance and delivery of the Common Stock issuable upon conversion of the Note.
3.3 Offering Exemption . Based in part upon and assuming the accuracy of the representations of the Purchaser in Article IV, the offering, sale and issuance of the Note and the Common Stock issuable upon conversion of the Note have been, are, and will be, exempt from registration under the Act, and such offering, sale and issuance is also exempt from registration under applicable state securities and “blue sky” laws. The Company has made or will make all requisite filings and has taken or will take all action necessary to be taken to comply with all federal and state securities or “blue sky” laws applicable to the offering, sale and issuance of the Note and the Common Stock issuable upon conversion of the Note.
3.4 Brokers or Finders . There are no claims for brokerage commissions or finder’s fees or similar compensation in connection with the transactions contemplated by this Agreement or the Note based on any arrangement made by or on behalf of the Company, and the Company agrees to indemnify and hold the Purchaser harmless from and against any costs or damages incurred as a result of any such claim.
Representations and Warranties of THE Purchaser
As a material inducement to the Company to enter into and perform its obligations under this Agreement, the Purchaser hereby represents and warrants to the Company as follows:
4.1 Authorization .
The Purchaser has full power and authority to enter into this Agreement and the other documents to which it is a party, and any and all instruments necessary or appropriate in order to effectuate fully the terms and conditions of each such document and all related transactions and to perform its obligations under each such document. Each document has been duly authorized by all necessary action (corporate or otherwise) on the part of the Purchaser, and each such document constitutes valid and legally binding obligations of the Purchaser, enforceable in accordance with its terms except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally and (b) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.
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4.2 Experience . The Purchaser is an accredited investor within the meaning of Regulation D promulgated by the Securities and Exchange Commission under the Act and, by virtue of its experience in evaluating and investing in private placement transactions of securities in companies similar to the Company, the Purchaser is capable of evaluating the merits and risks of its investment in the Company and has the capacity to protect its own interests. The Purchaser has had access to the Company’s senior management and has had the opportunity to conduct such due diligence review as it has deemed appropriate.
4.3 Investment . The Purchaser is acquiring the Note for investment for its own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution of any part thereof. The Purchaser understands that the Note and the Common Stock issuable upon conversion of the Note have not been registered under the Act or applicable state and other securities laws by reason of a specific exemption from the registration provisions of the Act and applicable state and other securities laws, the availability of which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Purchaser’s representations expressed herein.
4.4 Legends . To the extent applicable, each certificate or other document evidencing any of the Note and any Common Stock issued upon conversion of the Note, as the case may be, shall be endorsed with the legend set forth below, and the Purchaser covenants that, except to the extent such restrictions are waived by the Company, the Purchaser shall not transfer the Note or Common Stock represented by any such certificate without complying with the restrictions on transfer described in the legends endorsed on such certificate:
“ [THIS SECURITY AND, IF APPLICABLE, THE SECURITIES ISSUABLE UPON CONVERSION OR EXERCISE HEREOF]/[THE SECURITIES REPRESENTED BY THIS CERTIFICATE] HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY BE OFFERED AND SOLD ONLY IN ACCORDANCE WITH THAT CERTAIN NOTE PURCHASE AGREEMENT BETWEEN THE COMPANY AND THE OTHER PARTY NAMED THEREIN, AND IF REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED.”
4.5 Rule 144 . The Purchaser acknowledges and understands that it must bear the economic risk of this investment for an indefinite period of time because the Note (and the Common Stock issuable upon conversion of the Note) must be held indefinitely unless subsequently registered under the Act and applicable state and other securities laws or unless an exemption from such registration is available. The Purchaser acknowledges and understands that Rule 144 promulgated under the Act requires, among other conditions, a one-year holding period prior to the resale of securities acquired in a non-public offering without having to satisfy the registration requirements under the Act.
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4.6 No Public Market . The Purchaser understands that no public market now exists for the Note and that there is no assurance that a public market will ever exist for the Note.
4.7 Brokers or Finders . There are no claims for brokerage commissions or finder’s fees or similar compensation in connection with the transactions contemplated by this Agreement or the Note based on any arrangement made by or on behalf of the Purchaser, and the Purchaser agrees to indemnify and hold the Company harmless from and against any costs or damages incurred as a result of any such claim.
5.1 Restrictions on Transfer of the Note and Common Stock . The Note and the Common Stock issuable upon conversion thereof may be sold, transferred, assigned, pledged, distributed, encumbered or otherwise disposed of, either voluntarily or involuntarily, directly or indirectly, only in accordance with applicable law.
5.2 Transaction Expenses and Taxes . The Company shall pay its own expenses and the expenses of Purchaser, including any legal fees and expenses, arising in connection with the negotiation and execution of this Agreement, the Note and the other documents, the related due diligence and the consummation of the transactions contemplated hereby and thereby.
6.1 No Third Party Beneficiaries . Except as expressly provided herein, this Agreement shall not confer any rights or remedies upon any person other than the parties hereto and their respective successors and permitted assigns, personal representatives, heirs and estates, as the case may be.
6.2 Entire Agreement . This Agreement, the Note and the other documents contemplated hereby constitute the entire agreement among the parties hereto and supersede any prior understandings, agreements or representations by or among such parties, written or oral, that may have related in any way to the subject matter of any document, including, without limitation, any term sheet or letter of intent, between the Company and the Purchaser.
6.3 Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. No party hereto may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other party hereto.
6.4 Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which, together, shall constitute one and the same instrument.
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6.5 Notices . All notices, requests, demands, claims, and other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly given if delivered personally, sent by nationally recognized overnight courier or mailed by registered or certified mail (return receipt requested), postage prepaid, to the parties hereto at the following respective addresses (or at such other address for any such party as shall be specified by like notice):
If to the Company, to:
Champions Oncology, Inc.
One University Plaza, Suite 307
Hackensack, NJ 07601
Attention: David Sidransky
with a copy to:
Epstein, Becker & Green, P.C.
1227 25 th Street NW, Suite 700
Washington, DC 20037
Attention: Christopher M. Locke, Esq.
If to the Purchaser, to the address set forth for the Purchaser on the signature page attached hereto.
All such notices and other communications shall be deemed to have been given and received (a) in the case of personal delivery, on the date of such delivery, (b) in the case of delivery by nationally recognized overnight courier, on the third business day following dispatch, and (c) in the case of mailing, on the seventh business day following such mailing.
6.6 Governing Law . THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE, OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF NEW YORK WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION'S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.
6.7 Amendments and Waivers . No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by the Company and the Purchaser. No waiver by any party hereto of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.
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6.8 Incorporation of Exhibits . The Exhibits identified in this Agreement are incorporated herein by reference and made a part hereof.
6.9 Construction . Where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any such party.
6.10 Interpretation . Accounting terms used but not otherwise defined herein shall have the meanings given to them under GAAP. As used in this Agreement (including the Exhibits and amendments hereto and thereto), the masculine, feminine and neuter gender and the singular or plural number shall be deemed to include the others whenever the context so requires. References to Articles and Sections refer to articles and sections of this Agreement. Similarly, references to Exhibits refer to the exhibits attached to this Agreement. Unless the content requires otherwise, words such as “hereby,” “herein,” “hereinafter,” “hereof,” “hereto,” “hereunder” and words of like import refer to this Agreement. The article and section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.
6.11 Independence of Covenants and Representations and Warranties . All covenants hereunder shall be given independent effect so that if a certain action or condition constitutes a default under a certain covenant, the fact that such action or condition is permitted by another covenant shall not affect the occurrence of such default, unless expressly permitted under an exception to such initial covenant. In addition, all representations and warranties hereunder shall be given independent effect so that if a particular representation or warranty proves to be incorrect or is breached, the fact that another representation or warranty concerning the same or similar subject matter is correct or is not breached will not affect the incorrectness of or a breach of a representation and warranty hereunder.
6.12 Remedies . The parties hereto shall each have and retain all other rights and remedies existing in their favor at law or equity, including, without limitation, any actions for specific performance and/or injunctive or other equitable relief (including, without limitation, the remedy of rescission) to enforce or prevent any violations of the provisions of this Agreement.
6.13 Severability . It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.
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6.14 Waiver of Jury Trial . EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER DOCUMENT.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year written below.
CHAMPIONS ONCOLOGY, INC.
|Name: David Sidransky|
|Title: Chairman of the Board of Directors|
|Name (please print)|
|City, State, Zip Code|
|Principal amount of Note|
|December 1, 2014|
Signature Page to Note Purchase Agreement
FORM OF NOTE
THIS NOTE AND, IF APPLICABLE, THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ ACT ”), OR THE SECURITIES LAWS OF ANY STATE, AND MAY BE OFFERED AND SOLD ONLY IN ACCORDANCE WITH THAT CERTAIN NOTE PURCHASE AGREEMENT BETWEEN THE ISSUER AND THE OTHER PARTY NAMED THEREIN, AND IF REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE ISSUER IS PROVIDED AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT REGISTRATION AND QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED.
CHAMPIONS ONCOLOGY, INC.
CONVERTIBLE PROMISSORY NOTE
ISSUE DATE: DECEMBER 1, 2014
FOR VALUED RECEIVED, pursuant to the terms of this convertible promissory note (the “ Note ”), the undersigned, CHAMPIONS ONCOLOGY, INC. (the “ Issuer ”), hereby promises to pay to the order of ____________ or its assigns (the “ Noteholder ”), the principal sum of One Million Dollars ($1,000,000) (the “ Principal Amount ”) , together with any accrued interest thereon, in the manner set forth below. All payments hereunder shall be made as set forth below, and each such payment shall be made in lawful money of the United States of America.
This Note is subject to the following terms and conditions:
Section 1. Note Purchase Agreement . This Note is one of two “Notes” issued pursuant to Note Purchase Agreements between the Issuer and the respective purchasers named therein (the “ Note Purchase Agreements ”). This Note is subject to the terms and conditions of that certain Note Purchase Agreement by and between the Issuer and the original Noteholder hereof (the “ Note Purchase Agreement ”), and capitalized terms not expressly defined herein shall have the meaning ascribed to such terms in the Note Purchase Agreement.
Section 2. Payment . The entire balance of this Note, including any accrued but unpaid interest, shall be due and payable, if not already converted, no later than ninety (90) days after the issuance of this Note (the “ Maturity Date ”). Such payment shall be made (i) upon surrender of this Note to the Issuer at its offices at One University Plaza, Suite 307, Hackensack, NJ 07601, or at such other place as is designated in writing by the Issuer and (ii) by wire transfer of immediately available funds to an account designated by the Noteholder by written notice to the Issuer prior to the issuance of the Note.
Section 3. Interest .
(a) The per annum rate of interest to be charged on the Principal Amount shall be [twelve percent (12%)] simple interest, payable on the Maturity Date, with interest accruing from the date hereof (the “ Issue Date ”). Interest shall be computed on the basis of a year of 360 days (consisting of twelve 30-day months) and the actual number of days elapsed. .
(b) Notwithstanding anything to the contrary in this Note or any related writing, all agreements between the Issuer and the Noteholder, whether now existing or hereafter arising and whether written or oral, are hereby limited so that in no contingency, whether by reason of demand for payment or acceleration of the maturity hereof or otherwise, shall the interest contracted for, charged or received by the Noteholder exceed the maximum amount permissible under applicable law. The right to accelerate maturity of sums due under this Note does not include the right to accelerate any interest which has not otherwise accrued on the date of such acceleration, and the Noteholder does not intend to charge or collect any unearned interest in the event of acceleration. If, from any circumstance whatsoever, interest would otherwise be payable to the Noteholder in excess of the maximum lawful amount, the interest payable to the Noteholder shall be reduced to the maximum amount permitted under applicable law; and if from any circumstance the Noteholder shall ever receive anything of value deemed interest by applicable law in excess of the maximum lawful amount, an amount equal to any excessive interest shall be applied to the reduction of the principal hereof and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of the principal hereof such excess shall be refunded to the Issuer. All interest paid or agreed to be paid to the Noteholder shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full period until payment in full of the principal (including the period of any extension or renewal hereof) so that the interest hereon for such full period shall not exceed the maximum amount permitted by applicable law. This paragraph shall control all agreements between the Issuer and the Noteholder.
Section 4. Affirmative Covenants . So long as this Note remains outstanding, the Issuer covenants and agrees that:
(a) Notice of Event of Default . The Issuer will provide the Noteholder with prompt written notice upon the occurrence of any Event of Default (as defined in Section 9).
(b) Reservation and Availability of Common Stock . The Issuer shall at all times have authorized and reserved, free from any preemptive or similar rights, and shall keep available out of its authorized and unissued Common Stock (the “ Common Stock ”), the number of shares of Common Stock that will be sufficient to permit the conversion in full of this Note. “The Company shall use its best efforts to cause the shares of Common Stock into which this Note is convertible, to be listed on any domestic securities exchange upon which shares of Common Stock are listed at the time of such conversion.
Section 5. Optional Conversion at Equity Financing . The Principal Amount outstanding under this Note and any unpaid accrued interest thereon, upon the closing of the first equity financing of the Issuer that occurs after the issuance of this Note (the “ Equity Financing ”), may be, at the option of the Noteholder, converted into the securities issued in such Equity Financing (the “ Securities ”). The number of shares of Issuer stock issuable upon conversion of this Note in such an optional conversion shall be equal to the quotient obtained by dividing (x) the Principal Amount plus any unpaid accrued interest thereon by (y) the product (the “ Discounted Per Share Price ”) obtained by multiplying (A) the per share price paid in the Equity Financing, by (B) 0.95; provided that if warrants are issued in the Equity Financing, then upon such optional conversion, the Noteholder shall be issued the number of such warrants that the Noteholder would have been issued had the Noteholder purchased Securities, at the Discounted Per Share Price, for the conversion amount in the Equity Financing.
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Section 6. Optional Conversion at Maturity . The Principal Amount outstanding under this Note and unpaid accrued interest hereon shall be convertible at the option of the Noteholder upon written notice to the Issuer, if the Equity Financing has not occurred by the Maturity Date. The number of shares of Common Stock issuable upon conversion of this Note in such an optional conversion shall be equal to the quotient obtained by dividing (x) the Principal Amount plus any unpaid accrued interest thereon by (y) the volume weighted average closing price of the Issuer’s Common Stock for the five trading days prior to conversion.
Section 7. Cancellation of Note Upon Conversion; No Fractional Shares . The Issuer and the Noteholder each agree to execute any and all documents that may be required in connection with any such conversion, and upon receipt by the Noteholder of a stock certificate representing Common Stock issued pursuant to a conversion, the Noteholder shall surrender this Note to the Issuer for cancellation. No fractional shares of Common Stock will be issued upon conversion of this Note. In lieu of any fractional shares to which the Noteholder would otherwise be entitled, the Issuer shall pay cash equal to such fractional share.
Section 8. Payment of Note; Seniority; Unsecured . Subject to Section 1 hereof, the Issuer will punctually pay or cause to be paid the amounts due hereunder at the dates and places and in the manner specified herein. Any sums required to be withheld from any payment on this Note by operation of law or pursuant to any order, judgment, execution, treaty, rule or regulation may be withheld by the Issuer and paid over in accordance therewith. Payment of the Principal Amount and interest on this Note shall be senior in right of payment to all junior indebtedness of the Issuer, including but not limited to indebtedness for borrowed money from institutional investors and lease financings, but shall rank pari pasu with the indebtedness incurred pursuant to the other Note Purchase Agreement. The performance of the Issuer’s obligations under this Note is not secured by any of the Issuer’s assets or revenues.
Section 9. Events of Default . The following are Events of Default hereunder:
(a) any failure by the Issuer to pay when due all or any Principal Amount and interest hereunder; or
(b) any material representation or warranty by the Issuer set forth in the Note Purchase Agreement pursuant to which the Note was purchased proves to have been incorrect, false or misleading in any material respect; or
(c) the Issuer, pursuant to or within the meaning of any Bankruptcy Law (as defined below):
(i) commences a voluntary case or proceeding;
(ii) consents to the entry of an order for relief against it in an involuntary case or proceeding;
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(iii) consents to the appointment of a Custodian (as defined below) of it or for all or substantially all of its property;
(iv) makes a general assignment for the benefit of its creditors; or
(v) admits in writing its inability to pay its debts as the same become due; or
(d) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:
(i) is for relief against the Issuer or any of its subsidiaries in an involuntary case;
(ii) appoints a Custodian of the Issuer or any of its subsidiaries or for all or substantially all of the property of the Issuer or any of its subsidiaries; or
(iii) orders the liquidation of the Issuer or any of its subsidiaries;
and, in each case, such order or decree remains unstayed and in effect for sixty (60) consecutive days.
The term “Bankruptcy Law” means title 11 of the U.S. Code, or any similar United States federal or state law for the relief of debtors. The term “Custodian” means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.
Section 10. Remedies on Default . Upon the occurrence or existence of an Event of Default, the Noteholder, by notice in writing to the Issuer (the “ Acceleration Notice ”), may declare the principal amount of the Note and all accrued and unpaid interest to be due and payable immediately, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived, in the event that the Issuer shall not have cured such Event of Default within ten (10) business days after receipt of such notice, except in the case of any Event of Default under Sections (9)(c) and (d) above, in which event acceleration shall be automatic, become immediately due and payable. Upon the occurrence of any Event of Default, the Noteholder may, in addition to declaring all amounts due hereunder to be immediately due and payable, pursue any available remedy, whether at law or in equity.
Section 11. Loss, Theft, Destruction or Mutilation of Note . Upon notice by the Noteholder to the Issuer of the loss, theft, destruction or mutilation of this Note, and of indemnity or security reasonably satisfactory to the Issuer, and upon reimbursement to the Issuer of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Note, if mutilated, the Issuer will make and deliver a new Note of like tenor, in lieu of this Note.
Section 12. Notice . Except as otherwise expressly specified herein, all notices, requests and other communications required or permitted hereunder shall be in writing and shall be sent by a nationally recognized overnight courier service; by certified or registered mail, return receipt requested; or by hand delivery:
If to the Issuer:
Champions Oncology, Inc.
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One University Plaza, Suite 307
Hackensack, NJ 07601
Attention: David Sidransky
If to the Noteholder, to the address set forth in the signature page in the Note Purchase Agreement pursuant to which this Note was issued or such other address as provided by the Noteholder to the Issuer in writing.
Any party may designate a different notice address or contact person with respect to such party by providing a notice describing such changes to the other party hereto in accordance with the provisions of this Section 12. Any notice sent by a nationally recognized overnight mail courier service shall be deemed to be delivered to the address shown on the mailing receipt on the third business day after dispatch upon proper evidence of mailing for purposes of this Section 12. Any notice sent by certified or registered mail, return receipt requested, shall be deemed to be delivered five business days after mailing. Any notice sent by hand delivery shall be deemed delivered as of the date of delivery.
Section 13. Amendments . This Note may not be changed orally, but only, in the case of an amendment or modification by an agreement in writing and signed by the Issuer and the Noteholders representing at least 51% in interest of the then outstanding Notes (determined by principal amount), and in the case of a waiver, by the party (or in the case of the Noteholder, by the Noteholders representing at least 51% in interest of the then outstanding Notes) against whom enforcement of any waiver is sought; provided, that no such amendment, modification or waiver shall be binding on a Noteholder without such Noteholder’s consent in the event that the amendment, modification or waiver (i) reduces the rate, or extends the time of payment, of any interest on any Note; (ii) reduces the amount, or extends the time of payment of any installment or other payment of principal on any Note; or (iii) decreases or forgives the principal amount of any Note.
Section 14. Governing Law; Waiver of Jury Trial; Forum . This Note shall be construed in accordance with and governed by the laws of the State of New York without regard to principles of conflicts of laws. EACH PARTY HEREBY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING FOR THE ENFORCEMENT OR COLLECTION OF THIS NOTE . In the event that a judicial proceeding is necessary, the exclusive forums for resolving disputes arising out of or relating to this Note are either the Supreme Court of the State of New York in and for the County of New York or the federal courts for such State and County, and all related appellate courts; the parties hereby irrevocably consent to the jurisdiction of such courts and agree to said venue.
Section 15. Collection Costs . In the event that the Noteholder shall, after the occurrence and during the continuance of an Event of Default (and provided that the Noteholder shall be permitted, at such time, to enforce its rights hereunder and retain payments received hereunder), turn this Note over to an attorney for collection, the Issuer shall further be obligated to the Noteholder for the Noteholder’s reasonable attorneys’ fees and expenses incurred in connection with such collection, if successful.
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Section 16. Severability . The holding of any provision of this Note to be invalid or unenforceable by a court of competent jurisdiction shall not affect any other provision of this Note, which shall remain in full force and effect. If any provision of this Note shall be declared by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced in whole or in part, such provision shall be interpreted so as to remain enforceable to the maximum extent permissible consistent with applicable law and the remaining conditions and provisions or portions thereof shall nevertheless remain in full force and effect and enforceable to the extent they are valid, legal and enforceable, and no provisions shall be deemed dependent upon any other covenant or provision unless so expressed herein.
Section 17. Successors and Assigns; Assignment . All the covenants, stipulation, promises and agreements in this Note contained by or on behalf of the Issuer shall bind its successors and assigns, whether or not so expressed. Notwithstanding anything to the contrary in this Note or any related writing, the Noteholder shall have the right to assign all or any portion of this Note at any time, and from time to time, to an affiliate of the Noteholder.
Section 18. Headings . The headings in this Note are solely for convenience of reference and shall be given no effect in the construction or interpretation of this Note.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Issuer has duly caused this Note to be signed on its behalf, in its corporate name and by its duly authorized officer as of Issue Date set forth above.
|CHAMPIONS ONCOLOGY, INC.|
|Name: David Sidransky|
|Title: Chairman of the Board of Directors|
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Champions Oncology Closes Convertible Debt Financing
Hackensack, NJ – December 5, 2014 – Champions Oncology, Inc. , a company engaged in the development of advanced technology solutions and services to personalize the development and use of oncology drugs, today announced the closing of a $2 million convertible debt financing with two of its executive officers. Joel Ackerman, CEO, and Dr. Ronnie Morris, President, have each invested $1 million in convertible promissory notes to finance the operations of the Company.
The notes will bear interest at 12% per annum and have a term of 90 days. The notes, including any accrued but unpaid interest, are convertible at the option of each noteholder: (a) upon the closing of any equity financing that occurs during the term of the notes, into the securities offered in the financing to other investors at a 5% discount to the price per share paid by other investors in the financing; and (b) upon the maturity date of the notes, into the Company’s common stock at the volume weighted average closing price of the common stock for the five trading days prior to such conversion.