UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 26, 2017 (June 19, 2017)
AVANT DIAGNOSTICS, INC. |
(Exact name of registrant as specified in its charter) |
Nevada | 000-54004 | 98-0599151 | ||
(State
or other jurisdiction
of incorporation) |
(Commission
File Number) |
(IRS
Employer
Identification No.) |
217 Perry Parkway, Suite 8
Gaithersburg, MD 20877
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (732) 410-9810
8561 East Anderson Drive, Suite 104
Scottsdale, AZ 85225
(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 ( see General Instruction A.2. below):
☐ | 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)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
June 2017 Financing
On June 19, 2017, the Company entered into a securities purchase agreement (the “Agreement”) with an accredited investor (the “June 2017 Investor”) pursuant to which the June 2017 Investor purchased a Senior Secured Convertible Note for an aggregate purchase price of $25,000 (the “June 2017 Note”). The June 2017 Notes bear interest at 8% and mature thirty-six months from the date of issuance. The June 2017 Notes will be convertible at the option of the holder at any time into shares of common stock, at an initial conversion price equal to $0.06 per share, subject to adjustment (“June 2017 Initial Conversion Price”).
In connection with the Agreement, the June 2017 Investor received an aggregate of 50,000 shares of common stock (the “June 2017 Commitment Shares”), a warrant to purchase such number of shares of common stock equal to 200% of their subscription amount divided by the June 2017 Initial Conversion Price (the “June 2017 Warrant”) and a purchase right to purchase such number of shares of common stock equal to 800% of their subscription amount divided by the June 2017 Initial Conversion Price (the “June 2017 Right”). The June 2017 Warrant is exercisable for a period of five years from the date of issuance at an initial exercise price of $0.06. The June 2017 Right is exercisable beginning on the eighteen (18) month anniversary of the date of issuance until the five year anniversary of the date of issuance at an initial exercise price of $0.06.
The conversion price of the June 2017 Note is subject to customary adjustments provisions for stock splits, stock dividends, recapitalizations and the like. The exercise price of the June 2017 Warrant and the June 2017 Right are subject to anti-dilution adjustment for subsequent lower price financings by the Company, as well as customary adjustments provisions for stock splits, stock dividends, recapitalizations and the like.
Following the six (6) month anniversary of the date of the Agreement, the June 2017 Investor shall have the option to call on the Company for the redemption of the June 2017 Note from the Investor, provided that the Company has raised sufficient funds to repay such June 2017 Note. In the event of such optional redemption, the June 2017 Investor shall be paid in the full principal amount and all other accrued and unpaid interest to the date of redemption.
The June 2017 Note provides that until the June 2017 Note is no longer outstanding, any subsequent financing by the Company, whether in debt or equity, shall require prior written consent of June 2017 Investor. In addition, in the event of a subsequent financing (except for certain exempt issuances as provided in the June 2017 Note) by the Company, the June 2017 Investor will have the right to participate in such subsequent financing up to an amount equal to the subscriber’s proportionate share of the subsequent financing based on such subscriber’s participation in the offering on the same terms, conditions and price provided for in the subsequent financing. The June 2017 Note also provide that for as long as the June 2017 Note is outstanding, in the event of a subsequent financing (except for certain exempt issuances as provided in the June 2017 Note), the subscriber may elect, in its sole discretion, to exchange all, but not less than all, of the Securities then held by June 2017 Investor for any securities issued in a subsequent financing based on the outstanding principal amount of the June 2017 Note.
The Company agreed that while the June 2017 Note is outstanding, it will not enter into any variable rate transactions with any investor.
The Company shall include on the next registration statement the Company files with SEC (or on the subsequent registration statement if such registration statement is withdrawn) all shares issuable upon conversion of the June 2017 Note and all shares issuable upon exercise of the June 2017 Warrant and June 2017 Rights, and the June 2017 Commitment Shares (the “Registrable Securities”). Failure to include such on the registration statement will result in liquidated damages of 25% of the outstanding principal balance of the June 2017 Note, but not less than $100,000, being immediately due and payable to the June 2017 Investor at its election in the form of cash payment provided however if the reason for such non-registration of all or any portion of the Registrable Securities is the result of either (i) in the case of an underwritten offering, the managing underwriter as set forth below or (ii) SEC Guidance (as defined in the June 2017 Note) under Rule 415 or similar rule which limits the number of Registrable Securities which may be included in a registration statement with respect to June 2017 Investor, no liquidated damages will be due and payable to the June 2017 Investor.
The June 2017 Investor shall have the right to appoint up to four directors on our board of directors.
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The full principal amount of the June 2017 Notes are due upon a default under the terms of the June 2017 Notes. The June 2017 Notes rank senior to all current and future indebtedness of the Company (but are pari passu with the senior secured notes issued between June 2017 and September 2017) and are secured by all of the assets of the Company pursuant to the terms of that certain pledge and security agreement, entered into in connection with the June 2017 Note.
As of the date hereof, the Company is obligated on $325,000 face amount of June 2017 Notes issued to the June 2017 Investor. The June 2017 Notes are a debt obligation arising other than in the ordinary course of business which constitute a direct financial obligation of the Company.
The securities sold in the June 2017 Financing were not registered under the Securities Act, or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Section 4(a)(2) under the Securities Act and Regulation D promulgated thereunder and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering. The June 2017 Investor is an “accredited investor” as such term is defined in Regulation D promulgated under the Securities Act. This Current Report shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall such securities be offered or sold in the United States absent registration or an applicable exemption from the registration requirements and certificates evidencing such shares contain a legend stating the same.
The foregoing information is a summary of the agreements involved in the transaction described above, is not complete, and is qualified in its entirety by reference to the full text of such agreements, copies of which are attached hereto as Exhibit 4.1, Exhibit 4.2, Exhibit 4.3, Exhibit 10.1 and Exhibit 10.2 and incorporated herein by reference. Readers should review such agreements for a complete understanding of the terms and conditions associated with this transaction.
July 2017 Black Mountain Settlement
On July 7, 2017, the Company entered into a satisfaction of note (the “Satisfaction of Note”) with Black Mountain Equity Partners LLC, the holder of a promissory note in the aggregate principal amount of $25,000 (the “Black Mountain Note”) Pursuant to the terms of the Satisfaction of Note, the Company agreed to pay off the Black Mountain Note for an aggregate principal amount of $25,000 by August 1, 2017 (the Black Mountain Settlement”) and 62,500 common stock. The parties have agreed to extend the payment of the Settlement Amount until October 31, 2017.
The securities sold pursuant to the Black Mountain Settlement were not registered under the Securities Act, or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Section 4(a)(2) under the Securities Act and Regulation D promulgated thereunder and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering. The investor is an “accredited investor” as such term is defined in Regulation D promulgated under the Securities Act. This Current Report shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall such securities be offered or sold in the United States absent registration or an applicable exemption from the registration requirements and certificates evidencing such shares contain a legend stating the same.
The foregoing information is a summary of the agreement involved in the transaction described above, is not complete, and is qualified in its entirety by reference to the full text of such agreement, a copy of which is attached hereto as Exhibit 10.3 and incorporated herein by reference. Readers should review such agreement for a complete understanding of the terms and conditions associated with this transaction.
July 2017 Coastal Exchange Agreement
On July 14, 2017, the Company entered into an Exchange Agreement (the “Coastal Exchange Agreement”) with Coastal Investment Partners, LLC. Prior to the execution of the Coastal Exchange Agreement, the Company agreed to exchange the principal amount due under the convertible promissory note issued July 6, 2016 plus accrued but unpaid interest and default and other amounts due and payable under such notes (the “July 2016 Notes”) in exchange for the issuance of new convertible promissory notes due January 15, 2018 in the aggregate principal amount of $380,250.00, which new notes are on substantially similar terms to the Nov 2016 Notes (the “New Coastal51 Note”). Pursuant to the terms of the Coastal Exchange Agreement, the Company and Coastal agreed to exchange the New Coastal51 Notes for the issuance of new convertible promissory notes due July 14, 2019 in the aggregate principal amount of $442,325.00, (the “New Coastal Note”). In connection with the Coastal Exchange Agreement, the Company and the investor agreed to a binding letter of intent whereby the Company agreed, to among other things, upon getting current and releasing the New Coastal Note from escrow to issue the investor 750,000 shares of the Company’s common stock related to an adjustment that resulted under the July 2016 Notes because of the issuance of the Nov 2016 Notes and the Company agreed to get current in its ongoing reporting requirements with the Securities and Exchange Commission within 90 days of the execution of the Coastal Exchange Agreement. If the Company does not get current within the 90-day period, the New Coastal Notes are null and void and shall revert back to the Coastal51 Notes issued to the investors.
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The notes issues to Coastal are secured by a first priority security interest to Coastal in the Company’s Equipment Assets (as defined in the pledge agreement) and a second prior security interest in the Company’s Intellectual Property Assets (as defined in the pledge agreement), all which are currently owned by the Company pursuant to the terms of that certain pledge and security agreement, entered into in connection with the Coastal Exchange Agreement.
The securities issued and sold is this transaction were not registered under the Securities Act, or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Section 3(a)(9) or Section 4(a)(2) under the Securities Act and Regulation D promulgated thereunder and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering. Each Investor is an “accredited investor” as such term is defined in Regulation D promulgated under the Securities Act. This Current Report shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall such securities be offered or sold in the United States absent registration or an applicable exemption from the registration requirements and certificates evidencing such shares contain a legend stating the same.
The foregoing information is a summary of the agreement involved in the transaction described above, is not complete, and is qualified in its entirety by reference to the full text of such agreements, copies of which is attached hereto as Exhibit 4.4, Exhibit 4.5, Exhibit 10.4, Exhibit 10.5 and Exhibit 10.6 and incorporated herein by reference. Readers should review such agreement for a complete understanding of the terms and conditions associated with this transaction.
July 2017 October 2016 Investors Exchange Agreement
On July 28, 2017, the Company entered into an Exchange Agreement (the “October 2016 Investors Exchange Agreement”) with the investors who purchased promissory notes in October 2016 (the “October 2016 Investors”). Pursuant to the terms of the October 2016 Exchange Agreement, the Company agreed to exchange the principal amount due under the convertible promissory notes issued to the October 2016 Investors plus other amounts due and payable under such notes in exchange for the issuance of new convertible promissory notes due July 28, 2019 in the aggregate principal amount of $51,200 (the “New October 2016 Notes”). In connection with the October 2016 Investors Exchange Agreement, the Company and the investors agreed to a binding letter of intent whereby the Company agreed, to among other things, the Company agreed to get current in its ongoing reporting requirements with the Securities and Exchange Commission within 120 days of the execution of the October 2016 Investors Exchange Agreement. If the Company does not get current within the 120-day period, the New October 2016 Notes are null and void and shall revert back to the original notes issued to the investors. In connection with the issuance of the New October 2016 Notes, the October 2016 Investors agreed to waive all accrued interest and penalties related to the October 2016 Notes, upon getting current and releasing from escrow to issue through the execution date of the exchange for the purchase of an aggregate of 793,390 shares of the Company’s common stock, which shares shall be kept by the October 2016 Investors whether or not the Company meets its conditions under the letter of intent.
The securities issued and sold is this transaction were not registered under the Securities Act, or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Section 3(a)(9) or Section 4(a)(2) under the Securities Act and Regulation D promulgated thereunder and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering. Each Investor is an “accredited investor” as such term is defined in Regulation D promulgated under the Securities Act. This Current Report shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall such securities be offered or sold in the United States absent registration or an applicable exemption from the registration requirements and certificates evidencing such shares contain a legend stating the same.
The foregoing information is a summary of the agreement involved in the transaction described above, is not complete, and is qualified in its entirety by reference to the full text of such agreements, copies of which is attached hereto as Exhibit 4.6, Exhibit 10.7 and Exhibit 10.8 and incorporated herein by reference. Readers should review such agreement for a complete understanding of the terms and conditions associated with this transaction.
August 2017 Financing
On August 8, 2017, the Company entered into a securities purchase agreement (the “August 2017 Agreement”) with an accredited investor (the “August 2017 Investor”) pursuant to which the August 2017 Investor purchased a Senior Secured Convertible Note for an aggregate purchase price of $75,000 (the “August 2017 Note”). The August 2017 Notes bear interest at 8% and mature thirty-six months from the date of issuance. The August 2017 Notes will be convertible at the option of the holder at any time into shares of common stock, at an initial conversion price equal to $0.06 per share, subject to adjustment (“August 2017 Initial Conversion Price”).
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In connection with the Agreement, the August 2017 Investor received an aggregate of 150,000 shares of common stock (the “August 2017 Commitment Shares”), a warrant to purchase such number of shares of common stock equal to 200% of their subscription amount divided by the August 2017 Initial Conversion Price (the “June 2017 Warrant”) and a purchase right to purchase such number of shares of common stock equal to 800% of their subscription amount divided by the August 2017 Initial Conversion Price (the “June 2017 Right”). The August 2017 Warrant is exercisable for a period of five years from the date of issuance at an initial exercise price of $0.06. The August 2017 Right is exercisable beginning on the eighteen (18) month anniversary of the date of issuance until the five year anniversary of the date of issuance at an initial exercise price of $0.06.
The conversion price of the August 2017 Note is subject to customary adjustments provisions for stock splits, stock dividends, recapitalizations and the like. The exercise price of the August 2017 Warrant and the August 2017 Right are subject to anti-dilution adjustment for subsequent lower price financings by the Company, as well as customary adjustments provisions for stock splits, stock dividends, recapitalizations and the like.
Following the six (6) month anniversary of the date of the Agreement, the August 2017 Investor shall have the option to call on the Company for the redemption of the June 2017 Note from the Investor, provided that the Company has raised sufficient funds to repay such June 2017 Note. In the event of such optional redemption, the June 2017 Investor shall be paid in the full principal amount and all other accrued and unpaid interest to the date of redemption.
The August 2017 Note provides that until the August 2017 Note is no longer outstanding, any subsequent financing by Company, whether in debt or equity, shall require prior written consent of August 2017 Investor. In addition, in the event of a subsequent financing (except for certain exempt issuances as provided in the August 2017 Note) by the Company, the August 2017 Investor will have the right to participate in such subsequent financing up to an amount equal to the subscriber’s proportionate share of the subsequent financing based on such subscriber’s participation in the offering on the same terms, conditions and price provided for in the subsequent financing. The August 2017 Note also provide that for as long as the August 2017 Note is outstanding, in the event of a subsequent financing (except for certain exempt issuances as provided in the August 2017 Note), the subscriber may elect, in its sole discretion, to exchange all, but not less than all, of the Securities then held by August 2017 Investor for any securities issued in a subsequent financing based on the outstanding principal amount of the August 2017 Note.
The Company agreed that while the August 2017 Note is outstanding, it will not enter into any variable rate transactions with any investor.
The Company shall include on the next registration statement the Company files with SEC (or on the subsequent registration statement if such registration statement is withdrawn) all shares issuable upon conversion of the August 2017 Note and all shares issuable upon exercise of the August 2017 Warrant and August 2017 Rights, and the August 2017 Commitment Shares (the “August 2017 Financing Registrable Securities”). Failure to include such on the registration statement will result in liquidated damages of 25% of the outstanding principal balance of the August 2017 Note, but not less than $100,000, being immediately due and payable to the August 2017 Investor at its election in the form of cash payment provided however if the reason for such non-registration of all or any portion of the August 2017 Financing Registrable Securities is the result of either (i) in the case of an underwritten offering, the managing underwriter as set forth below or (ii) SEC Guidance (as defined in the August 2017 Note) under Rule 415 or similar rule which limits the number of August 2017 Financing Registrable Securities which may be included in a registration statement with respect to August 2017 Investor, no liquidated damages will be due and payable to the August 2017 Investor.
The August 2017 Investor shall have the right to appoint up to two directors on our board of directors.
The full principal amount of the August 2017 Notes are due upon a default under the terms of the August 2017 Notes. The August 2017 Notes rank senior to all current and future indebtedness (but are pari passu with the senior secured notes issued between June 2017 and September 2017) of the Company and are secured by all of the assets of the Company pursuant to the terms of that certain pledge and security agreement, entered into in connection with the August 2017 Note.
As of the date hereof, the Company is obligated on $75,000 face amount of August 2017 Notes issued to the August 2017 Investor. The August 2017 Notes are a debt obligation arising other than in the ordinary course of business which constitute a direct financial obligation of the Company.
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The securities sold in the August 2017 Financing were not registered under the Securities Act, or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Section 4(a)(2) under the Securities Act and Regulation D promulgated thereunder and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering. The August 2017 Investor is an “accredited investor” as such term is defined in Regulation D promulgated under the Securities Act. This Current Report shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall such securities be offered or sold in the United States absent registration or an applicable exemption from the registration requirements and certificates evidencing such shares contain a legend stating the same.
The foregoing information is a summary of the agreements involved in the transaction described above, is not complete, and is qualified in its entirety by reference to the full text of such agreements, copies of which are attached hereto as Exhibit 4.7, Exhibit 4.8, Exhibit 4.9, Exhibit 10.9 and Exhibit 10.10 and incorporated herein by reference. Readers should review such agreements for a complete understanding of the terms and conditions associated with this transaction.
June 2017 Investor’s August 2017 Investment
On August 25, 2017, the Company entered into a securities purchase agreement (the “August 2017 SPA”) with the June 2017 Investor pursuant to which the June 2017 Investor purchased a Senior Secured Convertible Note for an aggregate purchase price of $50,000 on the same terms as the June 2017 Financing discussed above. In connection with the August 2017 SPA, the June 2017 Investor received an aggregate of 100,000 shares of common stock as commitment shares, a warrant to purchase such number of shares of common stock equal to 200% of their subscription amount divided by the June 2017 Initial Conversion Price and a purchase right to purchase such number of shares of common stock equal to 800% of their subscription amount divided by the June 2017 Initial Conversion Price, all on the same terms as the June 2017 Financing described above.
As of the date hereof, the Company is obligated on $375,000 face amount of notes issued to the June 2017 Investor. The notes issued to the June 2017 are a debt obligation arising other than in the ordinary course of business which constitute a direct financial obligation of the Company.
The securities sold were not registered under the Securities Act, or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Section 4(a)(2) under the Securities Act and Regulation D promulgated thereunder and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering. The June 2017 Investor is an “accredited investor” as such term is defined in Regulation D promulgated under the Securities Act. This Current Report shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall such securities be offered or sold in the United States absent registration or an applicable exemption from the registration requirements and certificates evidencing such shares contain a legend stating the same.
The foregoing information is a summary of the agreements involved in the transaction described above, is not complete, and is qualified in its entirety by reference to the full text of such agreements, copies of which are attached hereto as Exhibit 4.1, Exhibit 4.2, Exhibit 4.3, Exhibit 10.1 and Exhibit 10.2 and incorporated herein by reference. Readers should review such agreements for a complete understanding of the terms and conditions associated with this transaction.
Binding LOI with June 2017 Investor and August 2017 Investor
On August 25, 2017 the Company entered into a binding letter of intent with the June 2017 Investor and the August 2017 Investor (the “Investors”) whereby the parties agreed that the offering documents would be amended to add an additional conversion feature wherein the June 2017 Investment could be exchanged and/or converted into a class of the Company’s preferred stock to be created (the “Preferred Stock”) that is convertible into the equivalent of 49.99% of the then outstanding common stock of the Company pro-rata on an as converted basis based upon a total investment of $750,000 into the June 2017 Investment. The Preferred Stock shall also have the right to vote alongside the common stock on an as converted basis. The ability of the Investors to convert the June 2017 Investment into Preferred Stock is subject to the execution of definitive documentation between the parties.
The foregoing information is a summary of the agreement involved in the transaction described above, is not complete, and is qualified in its entirety by reference to the full text of such agreements, copies of which is attached hereto as Exhibit 10.11, and incorporated herein by reference. Readers should review such agreement for a complete understanding of the terms and conditions associated with this transaction.
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Commissiong Consulting Arrangement
On July 28, 2016, the Company entered into a consulting arrangement with Gerald E. Commissiong (the “Consultant”) pursuant to which consultant agreed to provide certain management consulting services to the Company in consideration for a fee of $225,000 per year. Mr. Commissiong has accrued his entire cash consulting compensation to the current date. The arrangement was extended for an additional year on March 1, 2017. In addition, as part of the consulting arrangement, the Company granted Mr. Commissiong the right to purchase 20,000,000 shares of the Company’s common stock at price of $0.00001 per share. In March 2017, Mr. Commissiong purchased 5,000,000 shares of the Company’s common stock for an aggregate purchase price $50. On August 25, 2017, Consultant purchased 15,000,000 shares of the Company’s common stock, to be vested over a 3 year period from the date of issuance, for an aggregate purchase price of $150. The securities sold were not registered under the Securities Act, or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Section 4(a)(2) under the Securities Act and Regulation D promulgated thereunder and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering. The Consultant is an “accredited investor” as such term is defined in Regulation D promulgated under the Securities Act.
September 2017 Financing
On September 5, 2017, the Company entered into a securities purchase agreement (the “September 2017 Agreement”) with an accredited investor (the “September 2017 Investor”) pursuant to which the September 2017 Investor purchased a Senior Secured Convertible Note for an aggregate purchase price of $75,000 (the “September 2017 Note”). The September 2017 Notes bear interest at 8% and mature thirty-six months from the date of issuance. The September 2017 Notes will be convertible at the option of the holder at any time into shares of common stock, at an initial conversion price equal to $0.06 per share, subject to adjustment (“September 2017 Initial Conversion Price”).
In connection with the September 2017 Agreement, the September 2017 Investor received an aggregate of 150,000 shares of common stock (the “September 2017 Commitment Shares”), a warrant to purchase such number of shares of common stock equal to 200% of their subscription amount divided by the September 2017 Initial Conversion Price (the “June 2017 Warrant”) and a purchase right to purchase such number of shares of common stock equal to 800% of their subscription amount divided by the August 2017 Initial Conversion Price (the “June 2017 Right”). The September 2017 Warrant is exercisable for a period of five years from the date of issuance at an initial exercise price of $0.06. The September 2017 Right is exercisable beginning on the eighteen (18) month anniversary of the date of issuance until the five year anniversary of the date of issuance at an initial exercise price of $0.06.
The conversion price of the September 2017 Note is subject to customary adjustments provisions for stock splits, stock dividends, recapitalizations and the like. The exercise price of the September 2017 Warrant and the September 2017 Right are subject to anti-dilution adjustment for subsequent lower price financings by the Company, as well as customary adjustments provisions for stock splits, stock dividends, recapitalizations and the like.
Following the six (6) month anniversary of the date of the Agreement, the September 2017 Investor shall have the option to call on the Company for the redemption of the June 2017 Note, provided that the Company has raised sufficient funds to repay such September 2017 Note. In the event of such optional redemption, the September 2017 Investor shall be paid in the full principal amount and all other accrued and unpaid interest to the date of redemption.
The September 2017 Note provides that until the September 2017 Note is no longer outstanding, any subsequent financing by Company, whether in debt or equity, shall require prior written consent of a majority of holders of senior secured notes. In addition, in the event of a subsequent financing (except for certain exempt issuances as provided in the September 2017 Note) by the Company, the September 2017 Investor will have the right to participate in such subsequent financing up to an amount equal to the subscriber’s proportionate share of the subsequent financing based on such subscriber’s participation in the offering on the same terms, conditions and price provided for in the subsequent financing. The September 2017 Note also provide that for as long as the September 2017 Note is outstanding, in the event of a subsequent financing (except for certain exempt issuances as provided in the September 2017 Note), the subscriber may elect, in its sole discretion, to exchange all, but not less than all, of the Securities then held by September 2017 Investor for any securities issued in a subsequent financing based on the outstanding principal amount of the September 2017 Note.
The Company agreed that while the September 2017 Note is outstanding, it will not enter into any variable rate transactions with any investor.
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The Company shall include on the next registration statement the Company files with SEC (or on the subsequent registration statement if such registration statement is withdrawn) all shares issuable upon conversion of the August 2017 Note and all shares issuable upon exercise of the September 2017 Warrant and September 2017 Rights, and the September 2017 Commitment Shares (the “September 2017 Financing Registrable Securities”). Failure to include such on the registration statement will result in liquidated damages of 25% of the outstanding principal balance of the August 2017 Note, but not less than $100,000, being immediately due and payable to the September 2017 Investor at its election in the form of cash payment provided however if the reason for such non-registration of all or any portion of the September 2017 Financing Registrable Securities is the result of either (i) in the case of an underwritten offering, the managing underwriter as set forth below or (ii) SEC Guidance (as defined in the September 2017 Note) under Rule 415 or similar rule which limits the number of September 2017 Financing Registrable Securities which may be included in a registration statement with respect to September 2017 Investor, no liquidated damages will be due and payable to the September 2017 Investor.
The full principal amount of the September 2017 Notes are due upon a default under the terms of the September 2017 Notes. The September 2017 Notes rank senior to all current and future indebtedness of the Company (but are pari passu with the senior secured notes issued between June 2017 and September 2017) and are secured by all of the assets of the Company pursuant to the terms of that certain pledge and security agreement, entered into in connection with the September 2017 Note.
As of the date hereof, the Company is obligated on $75,000 face amount of September 2017 Notes issued to the September 2017 Investor. The September 2017 Notes are a debt obligation arising other than in the ordinary course of business which constitute a direct financial obligation of the Company.
The securities sold in the September 2017 Financing were not registered under the Securities Act, or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Section 4(a)(2) under the Securities Act and Regulation D promulgated thereunder and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering. The September 2017 Investor is an “accredited investor” as such term is defined in Regulation D promulgated under the Securities Act. This Current Report shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall such securities be offered or sold in the United States absent registration or an applicable exemption from the registration requirements and certificates evidencing such shares contain a legend stating the same.
The foregoing information is a summary of the agreements involved in the transaction described above, is not complete, and is qualified in its entirety by reference to the full text of such agreements, copies of which are attached hereto as Exhibit 4.10, Exhibit 4.11, Exhibit 4.12, Exhibit 10.12 and Exhibit 10.13 and incorporated herein by reference. Readers should review such agreements for a complete understanding of the terms and conditions associated with this transaction.
Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Goix Appointment
On June 20, 2017, the board of directors of the Company added Philippe Goix, PhD, MBA as chief executive officer of the Company, effective immediately. On August 25, 2017, the board of directors of the Company added Philippe Goix, PhD, MBA as a director of the Company, effective immediately. Dr. Goix does not have any family relationship with any director, executive officer or person nominated or chosen by us to become a director or executive officer. There is no understanding or arrangement between Dr. Goix and any other person pursuant to which Dr. Goix was selected as an executive officer. There are no transactions in which Dr. Goix has an interest requiring disclosure under Item 404(a) of Regulation S-K.
Dr. Goix brings to Avant 20 years of experience in the Life Sciences tools, Diagnostics and Health Information areas, where he has raised over $140M in debt and equity capital. Most recently, Dr. Goix served as President & CEO of Prism Health Diagnostics, Inc. (PHDX), which he co-founded in late 2015 to establish ongoing wellness monitoring services as a business by delivering biomarker data to primary-care physicians and consumers to empower consumers to make better health decisions. Dr. Goix left PHDX in March of 2017 to pursue the opportunity with Avant. Prior to PHDX, Dr. Goix consulted for several healthcare companies from 2013 to 2015. Between 2004 through 2013, Dr. Goix served as President & CEO of Singulex, Inc., a personalized healthcare diagnostics company focused on improving outcomes in the $300B diabetes-cardiovascular space. During his tenure, Dr. Goix built a business comprising of three divisions: a laboratory testing division under CLIA, a proprietary pharma services division and an FDA-focused diagnostic development division. From 1997 to 2004, Dr. Goix served as President & CEO of Guava Technologies, Inc. where Dr. Goix successfully commercialized multiple commercial products still in use today. Guava Technologies was acquired by Merck Millipore in 2008. In academia, Dr. Goix served as a research scientist at Stanford University, Lawrence Livermore Laboratory, Sandia Research Laboratory and Centre National de Recherche Scientifique in France. Dr. Goix was also a post-doctoral fellow at UC Berkeley. Dr. Goix received his PhD in Physics from Universite de Rouen in France in 1987, and his MBA in Marketing with a Finance emphasis from University of San Francisco in 1995.
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Goix Offer Letter
The Company entered into an offer letter dated June 19, 2017 (the “Offer Letter”) with Dr. Goix. The Offer Letter has no specified term, and Dr. Goix’s employment with the Company will be on an at-will basis. Dr. Goix’s employment with the Company will commence on June 20, 2017 (the “Start Date”).
Base Salary and Bonus. Dr. Goix will receive an annual base salary of $120,000. Upon the Company raising at least an additional $1,750,000 through the sale of its equity and/or debt securities (the “Initial Financing”), Dr. Goix’s salary will increase to $240,000 per year. In addition, upon the Company listing its shares on a national securities exchange and completing an additional capital raise for aggregate gross proceeds of an additional $5,000,000 beyond the Initial Financing, Dr. Goix’s salary will increase to $360,000 per year.
Sign-on Bonus. Dr. Goix will receive a one-time sign-on bonus of $15,000 and reimbursement for accrued travel expenses incurred during the recruitment process of $4,500.
Performance Bonus. Upon the Company raising an additional $1,500,000 through the sale of its equity and/or debt securities (excluding any securities sold in the Company’s financing disclosed on a Current Report on Form 8-K filed with the Commission on June 20, 2017) (the “Financing”), Dr. Goix shall be entitled to a cash bonus equal to the following: (i) $50,000 if the Financing is completed within 3 months of the date of the Offer Letter, (ii) $40,000 if the Financing is completed within 5 months of the date of the Offer Letter, and (iii) $30,000 if the Financing is completed within 7 months of the date of the Offer Letter.
Equity Compensation . Subject to further approval of the Company’s board of directors, Dr. Goix will be granted an option to purchase up to 22 million shares of the Company’s common stock, subject to mutually agreed upon time milestones and success-based milestones. The exercise price per share will be equal to the fair market value per share on the date the option is granted. The options will be granted upon the Company raising aggregate gross proceeds of $500,000 from the sale of its equity and/or debt securities.
Other Benefits and Terms. Dr. Goix will be eligible to participate in the group benefit programs generally available to senior executives of the Company.
Dr. Goix has entered into the Company’s standard form of Employee Invention Assignment and Confidentiality Agreement, which is attached as Exhibit A to the Offer Letter.
The foregoing description of the Offer Letter is qualified in its entirety by reference to the full text of the Offer Letter, which is filed as Exhibit 10.14 to this Current Report on Form 8-K and is incorporated by reference herein. A copy of the press release announcing Dr. Goix’s appointment as Chief Executive Officer is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.
Linn Separation
On June 2, 2017, the Company entered into a Separation and Release Agreement (the “Separation Agreement”) with Gregg Linn, the Company’s former Chief Executive Officer, pursuant to which Mr. Linn’s status as chief executive officer and director of the Company ended effective June 2, 2017. Pursuant to the Agreement, the Company shall (a) pay Mr. Linn a lump sum cash payment of $30,000 upon on the Effective Date (as defined in the Agreement), (b) reimburse Mr. Linn for expenses paid on behalf of the Company, $2,500 of which will be paid on the Effective Date, and (c) upon the earliest occurrence of a Triggering Event (as defined in the Separation Agreement), the Company shall pay Mr. Linn a lump sum cash payment of $180,000 within three (3) business days of the date a Triggering Event occurs. In addition, the Company shall issue Mr. Linn 15,000,000 restricted shares of the Company’s common stock (“Equity Issue”) which Equity Issue shall vest quarterly over three (3) years from the termination date in accordance with the terms of that certain restricted stock award agreement. All shares of common stock currently held by Mr. Linn, including the Equity Issue, shall be subject to the terms of that certain lockup agreement, dated May 11, 2016. Finally, Mr. Linn was granted “piggyback” registration rights, subject to certain exceptions, to include on the next registration statement the Company files with SEC for a primary offering (excluding any securities to be included on Form S-4 or S-8) of its equity securities (or on the subsequent registration statement if such registration statement is withdrawn) such number of shares of the Company’s common stock held by the Mr. Linn and/or his assigns equal to eight percent (8%) of the aggregate value of the securities to be included on such registration statement, subject to certain limitations. Pursuant to the Agreement, Mr. Linn has agreed to comply with the confidential information and noncompetition and nonsolicitation provisions in the Executive Employment Agreement dated October 1, 2014 between Mr. Linn and the Company. The foregoing information is a summary of the agreements involved in the transaction described above, is not complete, and is qualified in its entirety by reference to the full text of such agreements, copies of which are attached hereto as Exhibits 10.15 and 10.16. Readers should review such agreements for a complete understanding of the terms and conditions associated with this transaction.
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Director Resignations
On June 2, 2017, Joe Roth resigned as a director of the Company, effective immediately. There was no disagreement or dispute between Mr. Roth and the Company which led to his resignation.
On June 2, 2017, Randall Letcavage resigned as a director of the Company, effective immediately. There was no disagreement or dispute between Mr. Letcavage and the Company which led to his resignation.
On August 25, 2017, the Board of Directors accepted the resignation of Gerald Commissiong from the Board of Directors of the Company, effective immediately. There was no disagreement or dispute between Mr. Commissiong and the Company which led to his resignation.
Item 5.03 | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year |
On September 13, 2017, the Company filed a Certificate of Withdrawal of Certificate of Designations (the “Certificate of Withdrawal”) with the Nevada Secretary of State. The Certificate of Withdrawal eliminates the Company’s Series B Preferred Stock, par value $0.001 per share, from the Company’s articles of incorporation, as amended. No shares of the Series B Preferred Stock were outstanding at the time of filing of the Certificate of Withdrawal. A copy of the Certificate of Withdrawal is included as Exhibit 3.1 to this current report on Form 8-K and is incorporated herein by reference.
Item 8.01 | Other Events |
MemoryDX Litigation
On or about September 16, 2016, Memory DX, LLC (“MDX”) filed a lawsuit against Amarantus Biosciences Holdings, Inc. (“AMBS”), Amarantus Bioscience Holdings, Inc., Amarantus Diagnostics, Inc., the Company and Avant Diagnostics Acquisition Corporation, et al (collectively the “Defendants”) in the Superior Court of the State of Arizona, County of Maricopa (Case Number CV2016-015026) (the “AZ Court”). On or about December 14, 2016, a default judgment (the “Default Judgment”) was rendered in the Court against the Defendants. On or about February 15, 2017, MDX and the Defendants entered into a settlement agreement related to the satisfaction of the Default Judgment. On May 25, 2017, the parties entered into an amended and restated settlement agreement pursuant to which in consideration for fully satisfying the Default Judgment, the Company paid MDX $30,000, (the “Initial Cash Amount”). In addition, the Company agreed to pay MDX an aggregate of $175,000 by July 30, 2017 (the “Additional Cash Amount” and together with the Initial Cash Amount, the “Cash Consideration”). If the Additional Cash Amount was not paid by July 30, 2017, the Company agreed to pay MDX $20,000 per month beginning August 30, 2017 in full satisfaction of the Additional Cash Amount. On September 19, 2017, the parties entered into a second amended and restated settlement agreement pursuant to which in consideration for fully satisfying the Default Judgment, the Company agreed to provide MDX the following: (i) an aggregate of $250,000 (the “Cash Consideration”) payable as follows: (i) $35,000 which has been previously paid, (ii) $3,500 which was paid upon execution of the agreement (iii) $2,000 which will be payable on the last calendar day of each month for October and November 2017, (iv) $5,000 which will be payable on the last calendar day for December 2017 and each of January and February 2018 and (v) $10,000 which will be payable on the last calendar day of each month until the full consideration is paid. Notwithstanding the foregoing, upon the sale by the Company of its equity securities in a single offering for aggregate gross proceeds of at least $7,500,000 (the “Qualified Offering”) after the date of the agreement, the Company will pay any remaining amount of the Cash Consideration then outstanding upon the final closing of such Qualified Offering . The Company previously issued to MDX 5,000,000 restricted shares of common stock (the “Initial Shares”) on or prior to the date of the amended agreement as partial consideration for the Default Judgment. In addition, the Company agreed to issue MDX an additional 5,000,000 restricted shares of common stock (the “Additional Shares”). Within three (3) business days of the issuance of the Additional Shares, MDX shall take all necessary action to withdraw the recorded Default Judgment. The Default Judgment shall be set aside without prejudice. Upon a default of the obligations to timely pay the Cash Consideration, after written notice and five (5) business days to cure, MDX will be entitled to reinstate the Default Judgment. MDX shall assign the License Agreement between MDX and University of Leipzig dated May 22, 2013, as amended, to the Company, as well as assign the Asset Purchase Agreement between MDX and AMBS to the Company upon final settlement of this matter. The foregoing description of the settlement agreement is qualified in its entirety by reference to the full text of the settlement agreement, which is filed as Exhibit 10.17 to this Current Report on Form 8-K and is incorporated by reference herein.
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PHDX Transaction
On November 28, 2016, the Company entered into a Binding Letter of Intent (the “Binding LOI”) with Prism Health Dx, Inc. (“PHDX”) for a business combination transaction wherein the Company agreed to issue such number of shares of common stock equal to 50% of the post-transaction outstanding shares of the Company to the shareholders of PHDX in exchange for the acquisition of 100% of the outstanding common stock of PHDX. At the time, the Company and PHDX entered into the Binding LOI, Mr. Philippe Goix was the President & CEO of PHDX. The Binding LOI contained exclusivity provisions wherein PHDX agreed not to enter into negotiations or discussions with third parties regarding similar transactions for a period of 90 days from the date of the Binding LOI (the “Exclusivity Period”). Concurrently with the execution of the Binding LOI, the Company agreed to lend PHDX an aggregate of $200,000, which was evidenced by a promissory note that bears interest at 5% per annum and matures one year from the date of issuance to support PHDX’s ongoing working capital needs to complete the transaction (the “Bridge Note”). The transaction was not consummated within the Exclusivity Period and the parties are no longer pursuing the transaction. The Binding LOI was canceled in March 2017 and companies did not consummate the contemplated business combination transaction. On July 3, 2017 the Company entered into a settlement agreement with PHDX with respect to The Bridge Note wherein PHDX repaid $100,000 to the Company in exchange for the extinguishment of the Bridge Note.
THI Litigation
On or about April 24, 2017, John G. Hartwell (“Hartwell”) and Corrine Ramos (“Ramos” and collectively with Hartwell, the “Plaintiffs”) filed a lawsuit against the Company, Avant Diagnostics Acquisition Corp. and Gregg Linn (collectively the “Defendants”) in the Circuit Court for Montgomery County, Maryland (Case Number 432180-V) (the “MD Court”), On or about June 8, 2017, the parties entered into a settlement agreement pursuant to which the Company agreed to pay Defendants an aggregate of approximately $154,000 in installments as set forth in the agreement. The first payment of $29,819.99 was made by the Defendants to Plaintiffs on or about July 10, 2017. As a result of the first payment being made pursuant to the agreement, Plaintiffs dismissed the action against the Defendants without prejudice on or about July 13, 2017. The foregoing description of the settlement agreement is qualified in its entirety by reference to the full text of the settlement agreement, which is filed as Exhibit 10.18 to this Current Report on Form 8-K and is incorporated by reference herein.
EGS Settlement
On or about January 23, 2017, Ellenoff Grossman & Schole LLP (“EGS”) filed a complaint (the “EGS Complaint”) in the Supreme Court of the State of New York, County of New York (the “Court”), Case No. 650328/2017, against the Company alleging, among other things, breach of contract, account stated and quantum meruit. On or about June 19, 2017, the Company entered into a settlement agreement with EGS settling all of the allegations set forth in the EGS Complaint. The settlement agreement provides (a) a release of all claims by both parties, and (b) payment of $40,000 to EGS in 10 equal installments.
SFRK Litigation
On or about June 27, 2017, Sichenzia Ross Ference Kesner LLP (“SRFK”) filed a complaint (the “SRFK Complaint”) in the Court Case No. 654465/2017, alleging, among other things, breach of contract, account stated, quantum meruit and unjust enrichment against the Company, in connection with a retainer agreement, dated March 8, 2016, by and between the Company and SRFK (the “Agreement”). SRFK is seeking, among other things, compensatory damages in excess of $120,110, legal fees, interest and such other relief as the Court deems just and proper. The Company denies the material allegations of the SRFK Complaint and intends to vigorously defend itself in this action. The results of any litigation are inherently uncertain and there can be no assurance that we will prevail in the litigation matter stated above or otherwise.
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Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits. The following exhibits are filed with this report:
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
AVANT DIAGNOSTICS, INC. | ||
Dated: September 26, 2017 | By: | /s/ Philippe Goix |
Philippe
Goix
Chief Executive Officer |
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Exhibit 3.1
Exhibit 4.1
SENIOR SECURED CONVERTIBLE PROMISSORY NOTE
NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTIONS 3(c)(ii) AND 12(a) HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(ii) OF THIS NOTE.
AVANT DIAGNOSTICS, INC.
Senior Secured Convertible Promissory Note
Issuance Date: ______, 2017 | Original Principal Amount: U.S. $______ |
FOR VALUE RECEIVED, Avant Diagnostics, Inc., a Nevada corporation (the “ Company ”), hereby promises to pay to the order of Infusion 51a, L.P. or its assigns (“ Holder ”) the amount set forth above as the Original Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the “ Principal ”) when due, whether upon the Maturity Date (as defined below), or upon acceleration, redemption or otherwise (in each case in accordance with the terms hereof) and to pay interest (“ Interest ”) on any outstanding Principal at the applicable Interest Rate (as defined below) from the date set forth above as the Issuance Date (the “ Issuance Date ”) until the same becomes due and payable, whether upon the Maturity Date, or upon acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof). This Senior Secured Convertible Note (including all Senior Secured Convertible Notes issued in exchange, transfer or replacement hereof, this “ Note ”) is one of an issue of Senior Secured Convertible Notes issued pursuant to that Securities Purchase Agreement, dated as of _____, 2017 (the “ Subscription Date ”), by and among the Company and the investors (the “ Buyers ”) referred to therein, as amended from time to time (collectively, the “ Notes ”, and such other Senior Secured Convertible Notes, the “ Other Notes ”). Certain capitalized terms used herein are defined in Section 22.
1. PAYMENTS OF PRINCIPAL .
(a) On the Maturity Date, all outstanding Principal, accrued and unpaid Interest shall be due and payable to the Holder. Other than as specifically permitted by this Note, the Company may not prepay any portion of the outstanding Principal and accrued and unpaid Interest or accrued.
(b) Following the six (6) month anniversary of the Closing Date, the Holder shall have the option to call on the Company for the redemption of the Note from the Holder, provided that the Company has raised sufficient funds to repay this Note. In the event of such optional redemption, the Holder shall be paid in the full principal amount and all other accrued and unpaid interest to the date of redemption.
2. INTEREST; INTEREST RATE . Interest on this Note shall accrue monthly at a rate of eight (8%) per annum (the “ Interest Rate ”) on the outstanding Principal amount, and shall be computed on the basis of a 360-day year comprised of twelve (12) thirty (30) day months.
3. CONVERSION OF NOTES . At any time after the Issuance Date, but no later than the Maturity Date, this Note may be converted by the Holder into validly issued, fully paid and non-assessable shares of Company Common Stock (as defined below), on the terms and conditions set forth in this Section 3.
(a) Conversion Right . At any time or times on or after the Issuance Date, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into validly issued, fully paid and non-assessable shares of Company Common Stock (as defined below) in accordance with Section 3(c), at the applicable Conversion Rate (as defined below). The Company shall not issue any fraction of a share of Company Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Company Common Stock, the Company shall round such fraction of a share of Company Common Stock up to the nearest whole share. The Company shall pay any and all transfer, stamp, issuance and similar taxes, costs and expenses (including, without limitation, fees and expenses of the Transfer Agent (as defined below)) that may be payable with respect to the issuance and delivery of Company Common Stock upon conversion of any Conversion Amount.
(b) Conversion Rate . The number of shares of Company Common Stock, issuable upon conversion of any Conversion Amount pursuant to Section 3(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the “ Conversion Rate ”).
(i) “ Conversion Amount ” means the sum of (x) the portion of the Principal to be converted, redeemed or otherwise with respect to which this determination is being made and (y) all accrued and unpaid Interest with respect to such portion of the Principal amount, if any.
(ii) “ Conversion Price ” means, as of any Conversion Date or other date of determination, with respect to Company Common Stock, will be $0.06 per share.
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(c) Mechanics of Conversion .
(i) Conversion . To convert any Conversion Amount into shares of Common Stock on any date (a “ Conversion Date ”), the Holder shall deliver (whether via facsimile, electronic mail or otherwise), for receipt on or prior to 11:59 p.m., New York time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit I (the “ Conversion Notice ”) to the Company. If required by Section 3(c)(ii), within three (3) Trading Days following a conversion of this Note as aforesaid, the Holder shall surrender this Note to a nationally recognized overnight delivery service for delivery to the Company (or an indemnification undertaking with respect to this Note in the case of its loss, theft or destruction as contemplated by Section 12(b)). On or before the first (1st) Trading Day following the date of receipt of a Conversion Notice, the Company shall transmit by facsimile or electronic mail an acknowledgment of confirmation, in the form attached hereto as Exhibit II , of receipt of such Conversion Notice to the Holder and the Company’s transfer agent (the “ Transfer Agent ”) which confirmation shall constitute an instruction to the Transfer Agent to process such Conversion Notice in accordance with the terms herein. On or before the third (3rd) Trading Day following the date on which the Company has received a Conversion Notice the Company shall issue and deliver (via reputable overnight courier) to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for the number of shares of Company Common Stock to which the Holder shall be entitled pursuant to such conversion pursuant Section 3(c)(iii). If this Note is physically surrendered for conversion pursuant to Section 3(c)(ii) or 3(c)(iii) and the outstanding Principal of this Note is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than three (3) Business Days after receipt of this Note and at its own expense, issue and deliver to the Holder (or its designee) a new Note (in accordance with Section 12(d)) representing the outstanding Principal not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date.
(ii) Registration; Book-Entry . The Company shall maintain a register (the “ Register ”) for the recordation of the names and addresses of the holders of each Note and the principal amount of the Notes held by such holders held by such holders (the “ Registered Notes ”). The entries in the Register shall be conclusive and binding for all purposes absent manifest error. The Company and the holders of the Notes shall treat each Person whose name is recorded in the Register as the owner of a Note for all purposes (including, without limitation, the right to receive payments of Principal and Interest hereunder) notwithstanding notice to the contrary. A Registered Note may be assigned, transferred or sold in whole or in part only by registration of such assignment or sale on the Register. Upon its receipt of a written request to assign, transfer or sell all or part of any Registered Note by the holder thereof, the Company shall record the information contained therein in the Register and issue one or more new Registered Notes in the same aggregate principal amount as the principal amount of the surrendered Registered Note to the designated assignee or transferee pursuant to Section 12, provided that if the Company does not so record an assignment, transfer or sale (as the case may be) of all or part of any Registered Note within two (2) Business Days of such a request, then the Register shall be automatically deemed updated to reflect such assignment, transfer or sale (as the case may be). Notwithstanding anything to the contrary set forth in this Section 3, following conversion of any portion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless (A) the full Conversion Amount represented by this Note is being converted (in which event this Note shall be delivered to the Company following conversion thereof as contemplated by Section 3(c)(i)) or (B) the Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of this Note upon physical surrender of this Note. The Holder and the Company shall maintain records showing the Principal and Interest converted and/or paid (as the case may be) and the dates of such conversions and/or payments (as the case may be) or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Note upon conversion. If the Company does not update the Register to record such Principal and Interest converted and/or paid (as the case may be) and the dates of such conversions and/or payments (as the case may be) within two (2) Business Days of such occurrence, then the Register shall be automatically deemed updated to reflect such occurrence.
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(iii) Pro Rata Conversion; Disputes . In the event that the Company receives a Conversion Notice from more than one holder of Notes for the same Conversion Date and the Company can convert some, but not all, of such portions of the Notes submitted for conversion, the Company shall convert from each holder of Notes electing to have Notes converted on such date a pro rata amount of such holder’s portion of its Notes submitted for conversion based on the principal amount of Notes submitted for conversion on such date by such holder relative to the aggregate principal amount of all Notes submitted for conversion on such date. In the event of a dispute as to the number of shares of Company Common Stock issuable to the Holder in connection with a conversion of this Note, the Company shall issue to the Holder the number of shares of Company Common Stock not in dispute and resolve such dispute in accordance with Section 19.
4. RIGHTS OF HOLDER UPON EVENT OF DEFAULT .
(a) Event of Default . Each of the following events shall constitute an “ Event of Default ”:
(i) the Company’s failure to pay to the Holder any amount of Principal, Interest, or other amounts when and as due under this Note;
(ii) bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted by or against the Company or any Subsidiary and, if instituted against the Company by a third party, shall not be dismissed within thirty (30) days of their initiation;
(iii) a final judgment or judgments for the payment of money aggregating in excess of $250,000 are rendered against the Company on or after the Subscription Date which judgments are not, within thirty (30) days after the entry thereof, bonded, discharged, settled or stayed pending appeal, or are not discharged within thirty (30) days after the expiration of such stay; provided, however, any judgment which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $250,000 amount set forth above so long as the Company provides the Holder a written statement from such insurer or indemnity provider (which written statement shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company will receive the proceeds of such insurance or indemnity within thirty (30) days of the issuance of such judgment;
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(iv) other than as specifically set forth in another clause of this Section 4(a), the Company breaches any material representation, warranty, covenant or other term or condition of any Transaction Document, except, in the case of a breach of a covenant or other term or condition that is curable, only if such breach remains uncured for a period of fifteen (15) consecutive Business Days; or
(v) any Material Adverse Effect (as defined in the Securities Purchase Agreement) occurs.
(b) Holder’s Remedies Upon an Event of Default . Notwithstanding anything to the contrary herein, and notwithstanding any conversion that is then required or in process, upon any Event of Default, the Company shall immediately pay to the Holder an amount in cash representing all outstanding Principal and accrued and unpaid Interest in addition to any and all other amounts due hereunder, without the requirement for any notice or demand or other action by the Holder or any other person or entity, provided that the Holder may, in its sole discretion, waive such right to receive payment upon an Event of Default, in whole or in part, and any such waiver shall not affect any other rights of the Holder hereunder, including any other rights in respect of such Event of Default, any right to conversion. The Holder has the right to enforce all remedies available in law or equity as against the Company, including but not limited to foreclosing on the Pledge Agreement, without the need to make any election of remedies or to allocate recovery against the Company in any way whatsoever.
5. HOLDER’S RIGHTS UPON CHANGE OF CONTROL.
(a) No sooner than twenty (20) Trading Days nor later than ten (10) Trading Days prior to the consummation of a transaction that would result in a Change of Control (the “ Change of Control Date ”), but not prior to the public announcement of such Change of Control, the Company shall deliver written notice thereof via facsimile or electronic mail and overnight courier to the Holder (a “ Change of Control Notice ”). At any time during the period beginning after the Holder’s receipt of a Change of Control Notice or the Holder becoming aware of a Change of Control if a Change of Control Notice is not delivered to the Holder in accordance with the immediately preceding sentence (as applicable) and ending on the later of twenty (20) Trading Days after (A) consummation of such Change of Control or (B) the date of receipt of such Change of Control Notice, the Holder may elect (i) to declare this Note payable in cash on demand as of the closing of the transaction giving rise to a Change of Control or (ii) redeem this Note in full for a payment equal to the amount Holder would have received if the Note had been converted pursuant to Section 3 of this Note immediately prior to the transaction giving rise to a Change of Control, in each case to be paid in the same form of consideration (e.g. a mix of cash and stock) received by the other existing equity holders of the Company in connection with the transaction giving rise to a Change of Control.
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6. HOLDER’S FINANCING RIGHTS .
(a) Right of First Refusal. Within 5 days of receipt of any bona fide investment offer whereby the Company will, if such proposed transaction is consummated, either (i) obtain additional debt financing not in existence on the Issuance Date or (ii) sell or transfer shares of Company Common Stock owned by the Company to a third party, the Company shall deliver a written notice (the “ Company Transaction Notice ”) to Holder notifying Holder of the material terms of such proposed financing or sale of Company Common Stock. After receiving a Company Transaction Notice, Holder shall have the right (the “ Right of Refusal ”) to provide additional debt financing to the Company, or purchase shares of Company Common Stock, in the applicable Holder Pro-Rata Amount, within 10 days after the Company Transaction Notice has been delivered to Holder (the “ Right of Refusal Election Period ”). Holder may elect to exercise its Right of Refusal by delivering a written notice to the Company of such election setting forth the amount of debt financing it desires to provide in response to the Company Transaction Notice. Upon the expiration of the Right of Refusal Election Period, to the extent that Holder does not notify the company of its intent to exercise its Right of Refusal, then Holder’s Right of Refusal shall terminate.
(b) Most Favored Nation. During the term of the Note, if the Company engages in any future financing transactions with a third party investor, the Company will provide the Holder with written notice (the “ MFN Notice ”) thereof promptly but in no event less than 10 days prior to closing any financing transactions. Included with the MFN Notice shall be a copy of all documentation relating to such financing transaction and shall include, upon written request of the Holder, any additional information related to such subsequent investment as may be reasonably requested by the Holder. In the event the Holder determines that the terms of the subsequent investment are preferable to the terms of the Securities of the Company issued to the Holder pursuant to the terms of the Purchase Agreement, the Holder will notify the Company in writing. Promptly after receipt of such written notice from the Holder, the Company agrees to amend and restate the Securities, and, as necessary, adjust the number of bonus shares, to be identical to the instruments evidencing the subsequent investment and any bonus shares issued in connection therewith.
(c) Notwithstanding the foregoing, this Section 4.12 shall not apply in respect of (i) an Exempt Issuance, or (ii) an underwritten public offering of Common Stock.
7. VOTING RIGHTS . The Holder shall have no voting rights as the holder of this Note, except as required by law (including, without limitation, Chapter 78 of the Nevada Revised Statute) and as expressly provided in this Note.
8. COVENANTS . Until all of the Notes have been converted, redeemed or otherwise satisfied in accordance with their terms:
(a) Rank . The Note will rank senior in right of payment to all present senior indebtedness, liabilities and obligations of the Company for money borrowed from banks, insurance companies and other financial institutions in the business of regularly lending money, and also in right of payment to all other present and future unsecured obligations of the Company.
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(b) Change in Nature of Business . The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, engage in any material line of business substantially different from those lines of business conducted by or publicly contemplated to be conducted by the Company and each of its Subsidiaries on the Subscription Date. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, modify its or their corporate structure or purpose.
(c) Preservation of Existence, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, its existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of the Business makes such qualification necessary.
(d) Restricted Issuances . The Company shall not, directly or indirectly, without the prior written consent of the holders of a majority in aggregate principal amount of the Notes then outstanding issue any Notes or securities (other than as contemplated by the Securities Purchase Agreement and the Notes) that would cause a breach or default under the Notes.
9. SECURITY . This Note and the Other Notes are secured to the extent and in the manner set forth in the Transaction Documents (including, without limitation, the Pledge Agreement ).
10. AMENDING THE TERMS OF THIS NOTE . The prior written consent of the Holder shall be required for any change, waiver or amendment to this Note.
11. TRANSFER . This Note and any shares of Company Common Stock issued upon conversion of this Note may be offered, sold, assigned or transferred by the Holder without the consent of the Company, subject only to the provisions of Section 3(g) of the Securities Purchase Agreement.
12. REISSUANCE OF THIS NOTE .
(a) Transfer . If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Note, registered as the Holder may request, representing the outstanding Principal being transferred by the Holder and, if less than the entire outstanding Principal is being transferred, a new Note to the Holder representing the outstanding Principal not being transferred. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of Section 3(c)(ii) following conversion or redemption of any portion of this Note, the outstanding Principal represented by this Note may be less than the Principal stated on the face of this Note.
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(b) Lost, Stolen or Mutilated Note . Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note (as to which a written certification and the indemnification contemplated below shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder a new Note (in accordance with Section 12(d)) representing the outstanding Principal.
(c) Note Exchangeable for Different Denominations . This Note is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, (for a new Note or Notes and in principal amounts of at least $1,000) representing in the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion of such outstanding Principal as is designated by the Holder at the time of such surrender.
(d) Issuance of New Notes . Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining outstanding (or in the case of a new Note being issued pursuant to Section 12(a) or Section 12(c), the Principal designated by the Holder which, when added to the principal represented by the other new Notes issued in connection with such issuance, does not exceed the Principal remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have the same rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest and Late Charges on the Principal and Interest of this Note, from the Issuance Date.
13. REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF . The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity (including a decree of specific performance and/or other injunctive relief). The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any such breach or any such threatened breach, without the necessity of showing economic loss and without any bond or other security being required.
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14. PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS . If (a) this Note is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of the Company or other proceedings affecting Company creditors’ rights and involving a claim under this Note, then the Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, without limitation, attorneys’ fees and disbursements. The Company expressly acknowledges and agrees that no amounts due under this Note shall be affected, or limited, by the fact that the purchase price paid for this Note was less than the original Principal amount hereof.
15. CONSTRUCTION; HEADINGS . This Note shall be deemed to be jointly drafted by the Company and the initial Holder and shall not be construed against any such Person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of, or affect the interpretation of, this Note. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision in which they are found. Unless expressly indicated otherwise, all section references are to sections of this Note. Terms used in this Note and not otherwise defined herein, but defined in the other Transaction Documents, shall have the meanings ascribed to such terms on the Closing Date in such other Transaction Documents unless otherwise consented to in writing by the Holder.
16. NOTICES; CURRENCY; PAYMENTS .
(a) Notices . Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance with the notice provisions in the the Securities Purchase Agreement.
(b) Currency . All dollar amounts referred to in this Note are in United States Dollars (“ U.S. Dollars ”), and all amounts owing under this Note shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “ Exchange Rate ” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Note, the U.S. Dollar exchange rate as published in the Wall Street Journal on the relevant date of calculation (it being understood and agreed that where an amount is calculated with reference to, or over, a period of time, the date of calculation shall be the final date of such period of time).
17. CANCELLATION . After all Principal, accrued Interest, Late Charges and other amounts at any time owed on this Note have been paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.
18. WAIVER OF NOTICE . To the extent permitted by law, the Company hereby irrevocably waives demand, notice, presentment, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Securities Purchase Agreement.
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19. GOVERNING LAW . This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of Nevada. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.
20. SEVERABILITY . If any provision of this Note is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Note so long as this Note as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
21. MAXIMUM PAYMENTS . Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Company to the Holder and thus refunded to the Company.
22. CERTAIN DEFINITIONS . For purposes of this Note, (a) capitalized terms not otherwise defined herein shall have the meanings set forth in the Purchase Agreement and (b) the following terms shall have the following meanings:
(a) “ 1933 Act ” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
(b) “ 1934 Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
(c) “ Affiliate ” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person, it being understood for purposes of this definition that “control” of a Person means the power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of directors of such Person or direct or cause the direction of the management and policies of such Person whether by contract or otherwise.
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(d) “ Business Day ” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.
(e) “ Change of Control ” means any Fundamental Transaction other than (i) any merger of the Company or any of its, direct or indirect, wholly-owned Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization, recapitalization or reclassification of the shares of Common Stock in which holders of the Company’s voting power immediately prior to such reorganization, recapitalization or reclassification continue after such reorganization, recapitalization or reclassification to hold publicly traded securities and, directly or indirectly, are, in all material respects, the holders of the voting power of the surviving entity (or entities with the authority or voting power to elect the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities) after such reorganization, recapitalization or reclassification, or (iii) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company or any of its Subsidiaries.
(f) “ Closing Date ” shall have the meaning set forth in the Securities Purchase Agreement, which date is the date the Company initially issued Notes pursuant to the terms of the Securities Purchase Agreement.
(g) “ Company Common Stock ” means (i) the Company’s shares of common stock, $0.00001 par value per share, and (ii) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.
(h) “ Common Stock Equivalents ” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive Common Stock.
(i) “ Exempt Issuance ” means the issuance of (a) shares of Common Stock or options to employees, officers, consultants, advisors or directors of the Company pursuant to any stock or option plan duly adopted for such purpose by a majority of the members of the Board of Directors or a majority of the members of a committee of directors established for such purpose, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of the Purchase Agreement, (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person which is, itself or through its subsidiaries, an operating company in a business synergistic with the business of the Company and in which the Company receives benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities and (d) up to an aggregate of $500,000 of the Company’s equity and/or debt securities, on the same terms and conditions as the Securities issued pursuant to the Purchase Agreement.
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(j) “ Fundamental Transaction ” means (A) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of Regulation S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be subject to or have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or exchange offer that is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to, or Affiliated with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding; or (z) such number of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with one or more Subject Entities whereby all such Subject Entities, individually or in the aggregate, acquire, either (x) at least 50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such stock purchase agreement or other business combination were not outstanding; or (z) such number of shares of Common Stock such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its Common Stock, (B) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, allow any Subject Entity individually or the Subject Entities in the aggregate to be or become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock not held by all such Subject Entities as of the date of this Note calculated as if any shares of Common Stock held by all such Subject Entities were not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock or other equity securities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger or other transaction requiring other shareholders of the Company to surrender their shares of Common Stock without approval of the shareholders of the Company or (C) directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance of or the entering into any other instrument or transaction structured in a manner to circumvent, or that circumvents, the intent of this definition in which case this definition shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary to correct this definition or any portion of this definition which may be defective or inconsistent with the intended treatment of such instrument or transaction.
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(k) “ GAAP ” means United States generally accepted accounting principles, consistently applied.
(l) “ Group ” means a “group” as that term is used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5 thereunder.
(m) “ Holder Pro Rata Amount ” means a fraction (i) the numerator of which is the original Principal amount of this Note on the Closing Date and (ii) the denominator of which is the aggregate original principal amount of all Notes issued to the initial purchasers pursuant to the Securities Purchase Agreement on or prior to the Final Closing Date.
(n) “ Maturity Date ” shall mean June 19, 2020.
(o) “ Person ” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity or a government or any department or agency thereof.
(p) “ SEC ” means the United States Securities and Exchange Commission or the successor thereto.
(q) “ Securities Purchase Agreement ” means that certain securities purchase agreement, dated as of the Subscription Date, by and among the Company and the initial holders of the Notes pursuant to which the Company issued the Notes, as may be amended from time to time.
(r) “ Security Agreement ” shall have the meaning as set forth in the Securities Purchase Agreement.
(s) “ Subscription Date ” means June 19, 2017.
(t) “ Subsidiaries ” shall have the meaning as set forth in the Securities Purchase Agreement.
(u) “Subject Entity ” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.
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(v) “ Trading Day ” means, as applicable, (x) with respect to all price or trading volume determinations relating to the Common Stock, any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded, provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise designated as a Trading Day in writing by the Holder or (y) with respect to all determinations other than price determinations relating to the Common Stock, any day on which The New York Stock Exchange (or any successor thereto) is open for trading of securities.
23. DISCLOSURE . Upon receipt or delivery by the Company of any notice in accordance with the terms of this Note, unless the Company has in good faith determined that the matters relating to such notice do not constitute material, non-public information relating to the Company or any of its Subsidiaries, the Company shall within one (1) Business Day after any such receipt or delivery publicly disclose such material, non-public information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice contains material, non-public information relating to the Company or any of its Subsidiaries, the Company so shall indicate to the Holder contemporaneously with delivery of such notice, and in the absence of any such indication, the Holder shall be allowed to presume that all matters relating to such notice do not constitute material, non-public information relating to the Company or any of its Subsidiaries. If the Company or any of its Subsidiaries provides material non-public information to the Holder that is not simultaneously filed in a Current Report on Form 8-K and the Holder has not agreed to receive such material non-public information, the Company hereby covenants and agrees that the Holder shall not have any duty of confidentiality to the Company, any of its Subsidiaries or any of their respective officers, directors, employees, affiliates or agents with respect to, or a duty to any of the foregoing not to trade on the basis of, such material non-public information. Nothing contained in this Section 23 shall limit any obligations of the Company, or any rights of the Holder, under Section 4(i) of the Securities Purchase Agreement.
[ signature page follows ]
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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed as of the Issuance Date set out above.
AVANT DIAGNOSTICS, INC. | ||
By: | ||
Name: Gerald Commissiong | ||
Title: Executive Director |
Senior Convertible Note - Signature Page
EXHIBIT
I
AVANT
DIAGNOSTICS, INC.
CONVERSION NOTICE
Reference is made to the Convertible Note (the “ Note ”) issued to the undersigned by Avant Diagnostics, Inc., a Nevada corporation (the “ Company ”). In accordance with and pursuant to the Note, the undersigned hereby elects to convert the Conversion Amount (as defined in the Note) of the Note indicated below into shares of Company Common Stock as indicated below, as of the date specified below. Capitalized terms not defined herein shall have the meaning as set forth in the Note.
Date of Conversion: | |
Aggregate Principal to be converted: | |
Aggregate accrued and unpaid Interest with respect to such portion of the Aggregate Principal and such Aggregate Interest to be converted: | |
AGGREGATE CONVERSION AMOUNT TO BE CONVERTED: | |
Please confirm the following information: | |
Conversion Price: | |
Number of shares of Avant Common Stock to be issued: | |
Number of shares of Company Common Stock to be issued: |
Please issue Company Common Stock into which the Note is being converted to Holder, or for its benefit, as follows:
☐ Check here if requesting delivery as a certificate to the following name and to the following address:
Issue to: | |
Date: _____________ __, | |
Name of Registered Holder |
By: | |||
Name: | |||
Title: | |||
Tax ID: | |||
Facsimile: | |||
E-mail Address: |
ACKNOWLEDGMENT
The Company hereby acknowledges this Conversion Notice and hereby directs _________________ to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated _____________, 20__ from the Company and acknowledged and agreed to by ________________________.
AVANT DIAGNOSTICS, INC. | ||
By: | ||
Name: | ||
Title: |
Exhibit 4.2
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ ACT ”), OR ANY APPLICABLE STATE SECURITIES LAWS. IT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITY UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
COMMON STOCK PURCHASE WARRANTS
AVANT DIAGNOSTICS, INC.
Warrants Shares: _________ | Initial Exercise Date: ________, 2017 |
THIS COMMON STOCK PURCHASE WARRANTS (the “Warrants”) certifies that, for value received, Infusion 51a, L.P. and its permitted assigns (the “ Holder ”) is entitled, upon the terms and subject to the conditions hereinafter set forth, at any time on or after ______, 2017 (the “ Initial Exercise Date ”) and on or prior to the close of business on the five year anniversary of the Initial Exercise Date (the “ Termination Date ”) but not thereafter, to subscribe for and purchase from AVANT DIAGNOSTICS, INC, a Nevada corporation (the “ Company ”), up to ________ shares (as subject to adjustment hereunder, the “ Warrant Shares ”) of the Company’s common stock, $0.00001 par value (“ Common Stock ”). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1 . Definitions . Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “ Purchase Agreement ”), dated ________, 2017, among the Company and the Holder or in that certain Senior Secured Convertible Promissory Warrant, dated __________, 2017 among the Company and the Holder.
Section 2 . Exercise .
a) Exercise of the purchase warrants represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto. Within three (3) Trading Days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
b) Exercise Price . The exercise price per share of the Common Stock under this Warrant shall be $0.06 , subject to adjustment hereunder (the “ Exercise Price ”).
c) Mechanics of Exercise .
i. Delivery of Warrant Shares Upon Exercise . The Company will issue a stock certificate representing the Warrant Shares purchased hereunder to the Holder by the date that is five (5) Trading Days after the latest of (A) the delivery to the Company of the Notice of Exercise, (B) surrender of this Warrant (if required) and (C) payment of the aggregate Exercise Price as set forth above (such date, the “ Warrant Share Delivery Date ”). The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 2(c)(v) prior to the issuance of such shares, having been paid. Any certificate issued to Holder representing Warrant Shares shall contain the restrictive legend language specified in the Purchase Agreement.
ii. Delivery of New Warrants Upon Exercise . If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the warrants of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
iii. Rescission Warrants . If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(c)(i) by the Warrant Share Delivery Date, then the Holder will have the warrant to rescind such exercise.
iv. No Fractional Shares or Scrip . No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.
v. Charges, Taxes and Expenses . Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided , however , that in the event Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise.
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vi. Closing of Books . The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.
Section 3 . Certain Adjustments .
a) Stock Dividends and Splits . If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
b) Subsequent Equity Sales . If, at any time while this Warrant is outstanding, the Company or any Subsidiary, as applicable, sells or grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces any sale, grant or any option to purchase or other disposition), any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock at an effective price per share that is lower than the then Exercise Price (such lower price, the “ Base Share Price ” and such issuances, collectively, a “ Dilutive Issuance ”) (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is lower than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance), then the Exercise Price shall be reduced to equal the Base Share Price. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustment will be made under this Section 3(b) in respect of an Exempt Issuance. The Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this Section 3(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “ Dilutive Issuance Notice ”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Warrant Shares based upon the Base Share Price on or after the date of such Dilutive Issuance, regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise.
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c) Subsequent Rights Offerings . In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “ Purchase Rights ”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.
d) Pro Rata Distributions . During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a " Distribution "), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution.
e) Fundamental Transaction . If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “ Fundamental Transaction ”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “ Alternate Consideration ”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction. For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one (1) share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “ Successor Entity ”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents (as defined in the Purchase Agreement) in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the holder of this Warrant, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant prior to such Fundamental Transaction, and with a exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.
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f) Calculations . All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
g) Notice to Holder . Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
Section 4 . Transfer of Warrant .
a) Transferability . This Warrant and all warrants hereunder (including, without limitation, any registration warrants) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer, provided, however, that such transfer is in compliance with all applicable federal and state securities laws. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
b) New Warrants . This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c) Warrant Register . The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “ Warrant Register ”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
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Section 5 . Miscellaneous .
a) No Warrants as Stockholder Until Exercise . This Warrant does not entitle the Holder to any voting warrants, dividends or other warrants as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(c)(i).
b) Loss, Theft, Destruction or Mutilation of Warrant . The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
c) Saturdays, Sundays, Holidays, etc . If the last or appointed day for the taking of any action or the expiration of any warrant required or granted herein shall not be a Business Day, then, such action may be taken or such warrant may be exercised on the next succeeding Business Day.
d) Authorized Shares .
If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect in full the exercise of this Warrant, in addition to such other remedies as shall be available to the Holder, the Company will promptly take such corporate action as may, in the opinion of its counsel, be necessary to increase the number of authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including without limitation, using its best efforts to obtain the requisite shareholder approval necessary to increase the number of authorized shares of Common Stock. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary Warrant Shares upon the exercise of the purchase warrants under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase warrants represented by this Warrant will, upon exercise of the purchase warrants represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
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e) Jurisdiction . All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Warrant (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the State of New York for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of this Warrant), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any warrant to serve process in any other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant, then, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
f) Nonwaiver and Expenses . No course of dealing or any delay or failure to exercise any warrant hereunder on the part of Holder shall operate as a waiver of such warrant or otherwise prejudice the Holder’s warrants, powers or remedies. Without limiting any other provision of this Warrant or the Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its warrants, powers or remedies hereunder.
g) Notices . Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.
h) Limitation of Liability . No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the warrants or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
i) Remedies . The Holder, in addition to being entitled to exercise all warrants granted by law, including recovery of damages, will be entitled to specific performance of its warrants under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
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j) Successors and Assigns . Subject to applicable securities laws, this Warrant and the warrants and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.
k) Amendment . This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
l) Severability . Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
m) Headings . The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
********************
(Signature Page Follows)
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its authorized signatory as of date set forth above.
AVANT DIAGNOSTICS, INC. | ||
By: | ||
Name: | ||
Title: |
[Signature Page to Common Stock Purchase Warrant]
NOTICE OF EXERCISE
To: AVANT DIAGNOSTICS , INC.
(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
Payment in the form of lawful money of the United States in the amount of $__________ in payment of the aggregate Exercise Price will be made by means of:
______ Check
______ Wire transfer
(2) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
[SIGNATURE OF HOLDER]
Name: By: |
|
Signature | |
Title | |
Date | |
ASSIGNMENT FORM
(To
assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all warrants evidenced thereby are hereby assigned to
whose address is | ||||||
Dated | , | |||||
Holder’s Signature: | ||||||
Holder’s Address | ||||||
Signature Guaranteed: | ||||||
WARRANT: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.
Exhibit 4.3
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ ACT ”), OR ANY APPLICABLE STATE SECURITIES LAWS. IT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITY UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
COMMON STOCK RIGHTS
AVANT DIAGNOSTICS, INC.
Issue Date: _________, 2017
Rights Shares: ________ | Initial Exercise Date: _________, 2019 |
THIS COMMON STOCK RIGHTS (the “Rights”) certifies that, for value received, Infusion 51a, L.P. and its permitted assigns (the “ Holder ”) is entitled, upon the terms and subject to the conditions hereinafter set forth, at any time on or after _______, 2019 (the “ Initial Exercise Date ”) and on or prior to the close of business on the five year anniversary of the Issue Date (the “ Termination Date ”) but not thereafter, to subscribe for and purchase from AVANT DIAGNOSTICS, Inc, a Nevada corporation (the “ Company ”), up to ________ shares (as subject to adjustment hereunder, the “ Right Shares ”) of the Company’s common stock, $0.00001 par value (“ Common Stock ”). The purchase price of one share of Common Stock under this Right shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1 . Definitions . Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “ Purchase Agreement ”), dated ________, 2017, among the Company and the Holder or in that certain Senior Secured Convertible Promissory Note, dated ________, 2017 among the Company and the Holder.
Section 2 . Exercise .
a) Exercise of the Rights represented by this Right may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto. Within three (3) Trading Days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Right to the Company until the Holder has purchased all of the Right Shares available hereunder and the Right has been exercised in full, in which case the Holder shall surrender this Right to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Right resulting in purchases of a portion of the total number of Right Shares available hereunder shall have the effect of lowering the outstanding number of Right Shares purchasable hereunder in an amount equal to the applicable number of Right Shares purchased. The Holder and the Company shall maintain records showing the number of Right Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Right, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Right Shares hereunder, the number of Right Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
b) Exercise Price . The exercise price per share of the Common Stock under this Right shall be $0.06 , subject to adjustment hereunder (the “ Exercise Price ”).
c) Mechanics of Exercise .
i. Delivery of Right Shares Upon Exercise . The Company will issue a stock certificate representing the Right Shares purchased hereunder to the Holder by the date that is five (5) Trading Days after the latest of (A) the delivery to the Company of the Notice of Exercise, (B) surrender of this Right (if required) and (C) payment of the aggregate Exercise Price as set forth above (such date, the “ Right Share Delivery Date ”). The Right Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Right has been exercised, with payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 2(c)(v) prior to the issuance of such shares, having been paid. Any certificate issued to Holder representing Right Shares shall contain the restrictive legend language specified in the Purchase Agreement.
ii. Delivery of New Rights Upon Exercise . If this Right shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Right certificate, at the time of delivery of the Right Shares, deliver to the Holder a new Right evidencing the rights of the Holder to purchase the unpurchased Right Shares called for by this Right, which new Right shall in all other respects be identical with this Right.
iii. Rescission Rights . If the Company fails to cause the Transfer Agent to transmit to the Holder the Right Shares pursuant to Section 2(c)(i) by the Right Share Delivery Date, then the Holder will have the right to rescind such exercise.
iv. No Fractional Shares or Scrip . No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Right. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.
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v. Charges, Taxes and Expenses . Issuance of Right Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Right Shares, all of which taxes and expenses shall be paid by the Company, and such Right Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided , however , that in the event Right Shares are to be issued in a name other than the name of the Holder, this Right when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise.
vi. Closing of Books . The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Right, pursuant to the terms hereof.
Section 3 . Certain Adjustments .
a) Stock Dividends and Splits . If the Company, at any time while this Right is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Right), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Right shall be proportionately adjusted such that the aggregate Exercise Price of this Right shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
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b) Subsequent Equity Sales . If, at any time while this Rights is outstanding, the Company or any Subsidiary, as applicable, sells or grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces any sale, grant or any option to purchase or other disposition), any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock at an effective price per share that is lower than the then Exercise Price (such lower price, the “ Base Share Price ” and such issuances, collectively, a “ Dilutive Issuance ”) (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is lower than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance), then the Exercise Price shall be reduced to equal the Base Share Price. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustment will be made under this Section 3(b) in respect of an Exempt Issuance. The Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this Section 3(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “ Dilutive Issuance Notice ”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Exercise Shares based upon the Base Share Price on or after the date of such Dilutive Issuance, regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise.
c) Subsequent Rights Offerings . In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “ Rights ”), then the Holder will be entitled to acquire, upon the terms applicable to such Rights, the aggregate Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Rights immediately before the date on which a record is taken for the grant, issuance or sale of such Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Rights.
d) Pro Rata Distributions . During such time as this Rights is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a " Distribution "), at any time after the issuance of this Rights, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Rights immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution.
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e) Fundamental Transaction . If, at any time while this Rights is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “ Fundamental Transaction ”), then, upon any subsequent conversion of this Rights, the Holder shall have the right to receive, for each Exercise Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in Section 4(d) on the conversion of this Rights), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “ Alternate Consideration ”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Rights is convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 4(d) on the conversion of this Rights). For purposes of any such conversion, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one (1) share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Rights following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “ Successor Entity ”) to assume in writing all of the obligations of the Company under this Rights and the other Transaction Documents (as defined in the Purchase Agreement) in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the holder of this Rights, deliver to the Holder in exchange for this Rights a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Rights which is convertible for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Rights (without regard to any limitations on the conversion of this Rights) prior to such Fundamental Transaction, and with a conversion price which applies the conversion price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such conversion price being for the purpose of protecting the economic value of this Rights immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Rights and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Rights and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.
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f) Calculations . All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
g) Notice to Holder . Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Right Shares and setting forth a brief statement of the facts requiring such adjustment.
Section 4 . Transfer of Right .
a) Transferability . This Right and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Right at the principal office of the Company or its designated agent, together with a written assignment of this Right substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer, provided, however, that such transfer is in compliance with all applicable federal and state securities laws. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Right or Rights in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Right evidencing the portion of this Right not so assigned, and this Right shall promptly be cancelled. The Right, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Right Shares without having a new Right issued.
b) New Rights . This Right may be divided or combined with other Rights upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Rights are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Right or Rights in exchange for the Right or Rights to be divided or combined in accordance with such notice. All Rights issued on transfers or exchanges shall be dated the initial issuance date of this Right and shall be identical with this Right except as to the number of Right Shares issuable pursuant thereto.
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c) Right Register . The Company shall register this Right, upon records to be maintained by the Company for that purpose (the “ Right Register ”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Right as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
Section 5 . Miscellaneous .
a) No Rights as Stockholder Until Exercise . This Right does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(c)(i).
b) Loss, Theft, Destruction or Mutilation of Right . The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Right or any stock certificate relating to the Right Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Right, shall not include the posting of any bond), and upon surrender and cancellation of such Right or stock certificate, if mutilated, the Company will make and deliver a new Right or stock certificate of like tenor and dated as of such cancellation, in lieu of such Right or stock certificate.
c) Saturdays, Sundays, Holidays, etc . If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.
d) Authorized Shares .
If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect in full the exercise of this Right, in addition to such other remedies as shall be available to the Holder, the Company will promptly take such corporate action as may, in the opinion of its counsel, be necessary to increase the number of authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including without limitation, using its best efforts to obtain the requisite shareholder approval necessary to increase the number of authorized shares of Common Stock. The Company further covenants that its issuance of this Right shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary Right Shares upon the exercise of the Rights under this Right. The Company will take all such reasonable action as may be necessary to assure that such Right Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Right Shares which may be issued upon the exercise of the Rights represented by this Right will, upon exercise of the Rights represented by this Right and payment for such Right Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
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e) Jurisdiction . All questions concerning the construction, validity, enforcement and interpretation of this Right shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Right (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the State of New York for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of this Right), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Right and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Right, then, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
f) Nonwaiver and Expenses . No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Right or the Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of this Right, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
g) Notices . Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.
h) Limitation of Liability . No provision hereof, in the absence of any affirmative action by the Holder to exercise this Right to purchase Right Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
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i) Remedies . The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Right. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Right and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
j) Successors and Assigns . Subject to applicable securities laws, this Right and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Right are intended to be for the benefit of any Holder from time to time of this Right and shall be enforceable by the Holder or holder of Right Shares.
k) Amendment . This Right may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
l) Severability . Wherever possible, each provision of this Right shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Right shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Right.
m) Headings . The headings used in this Right are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Right.
********************
(Signature Page Follows)
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IN WITNESS WHEREOF, the Company has caused this Right to be executed by its authorized signatory as of the date set forth above.
AVANT DIAGNOSTICS, INC. | |||
By: | |||
Name: | Gerald Commissiong | ||
Title: | Executive Director |
[Signature Page to Common Stock Purchase Right]
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NOTICE OF EXERCISE
To: AVANT DIAGNOSTICS , INC.
(1) The undersigned hereby elects to purchase ________ Right Shares of the Company pursuant to the terms of the attached Right (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
Payment in the form of lawful money of the United States in the amount of $__________ in payment of the aggregate Exercise Price will be made by means of:
______ Check
______ Wire transfer
(2) Please issue said Right Shares in the name of the undersigned or in such other name as is specified below:
[SIGNATURE OF HOLDER]
Name: By: |
|
Signature | |
Title | |
Date | |
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ASSIGNMENT FORM
(To assign the foregoing right, execute
this form and supply required information.
Do not use this form to exercise the right.)
FOR VALUE RECEIVED, [____] all of or [_______] shares of the foregoing Right and all rights evidenced thereby are hereby assigned to
whose address is | |
Dated | , |
Holder’s Signature: | |
Holder’s Address | |
Signature Guaranteed: |
NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Right, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Right.
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Exhibit 4.4
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
Original Issue Date: November 16, 2016
Purchase Price: $292,500.00
Principal Amount: $380,250.00
PROMISSORY NOTE
DUE January 15, 2018
THIS 30% ORIGINAL ISSUE DISCOUNT SENIOR SECURED CONVERTIBLE PROMISSORY NOTE is one of a series of duly authorized and validly issued 30% Original Issue Discount Senior Secured Convertible Promissory Notes of AVANT DIAGNOSTICS INC ., (the “ Company ”), having its principal place of business at 8561 E Anderson Dr #104, Scottsdale, AZ 85255 , and COASTAL INVESTMENT PARTNERS, LLC (“Lender or “Holder”) designated as its 30% Original Issue Discount Senior Secured Convertible Promissory Note due January 15th, 2018 (this Note, the “ Note ” and, collectively with the other Notes of such series, the “ Notes ”) .
FOR VALUE RECEIVED, the Company promises to pay Holder $292,500 plus an annual amortized interest rate of 8% or its registered assigns , or shall have paid pursuant to the terms hereunder, the principal sum of $380,250, which amount is the $292,500 actual amount of the purchase price hereof plus a 30% original issue discount, on January 15, 2018 (the “ Maturity Date ”) or such earlier date as this Note is required or permitted to be repaid as provided hereunder. The company will issue immediately 750,000 shares of AVDX to the holder. All shares issued resulting from this agreement shall have piggy back registration rights. In the event that the company issues or registers a shelf then the shares associated with this note will be available from such shelf. This Note is subject to the following additional provisions:
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Section 1 . Definitions . For the purposes hereof, in addition to the terms defined elsewhere in this Note, (a) capitalized terms not otherwise defined herein shall have the meanings set forth in the Purchase Agreement and (b) the following terms shall have the following meanings:
“ Alternate Consideration ” shall have the meaning set forth in Section 5(e).
“ Alternate Conversion Price ” means 65% of the lowest VWAP in the twenty (20) Trading Days prior to the Conversion Date, as adjusted, from time to time, pursuant to Section 4(b) or Section 5(f).
“ Bankruptcy Event ” means any of the following events: (a) the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company or any Significant Subsidiary thereof, (b) there is commenced against the Company or any Significant Subsidiary thereof any such case or proceeding that is not dismissed within 60 days after commencement, (c) the Company or any Significant Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) the Company or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) the Company or any Significant Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the Company or any Significant Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts or (g) the Company or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.
“ Base Conversion Price ” shall have the meaning set forth in Section 5(b).
“ Beneficial Ownership Limitation ” shall have the meaning set forth in Section 4(d).
“ Business Day ” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
“ Buy-In ” shall have the meaning set forth in Section 4(c)(v).
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" Change of Control Transaction ” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of 50% of the voting securities of the Company (other than by means of conversion or exercise of the Notes and the Securities issued together with the Notes), (b) the Company merges into or consolidates with any other Person, or any Person merges into or consolidates with the Company and, after giving effect to such transaction, the stockholders of the Company immediately prior to such transaction own less than 50% of the aggregate voting power of the Company or the successor entity of such transaction, (c) the Company sells or transfers all or substantially all of its assets to another Person and the stockholders of the Company immediately prior to such transaction own less than 50% of the aggregate voting power of the acquiring entity immediately after the transaction, (d) a replacement at one time or within a six-month period of more than one-half of the members of the Board of Directors which is not approved by a majority of those individuals who are members of the Board of Directors on the Original Issue Date (or by those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board of Directors was approved by a majority of the members of the Board of Directors who are members on the date hereof), or (e) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth in clauses (a) through (d) above.
“ Conversion ” shall have the meaning ascribed to such term in Section 4.
“ Conversion Date ” shall have the meaning set forth in Section 4(a).
“ Conversion Price ” shall have the meaning set forth in Section 4(b).
“ Conversion Schedule ” means the Conversion Schedule in the form of Schedule 1 attached hereto.
“ Conversion Shares ” means, collectively, the shares of Common Stock issuable upon conversion of this Note in accordance with the terms hereof.
“ Dilutive Issuance ” shall have the meaning set forth in Section 5(b).
“ Dilutive Issuance Notice ” shall have the meaning set forth in Section 5(b).
“ DTC ” means the Depository Trust Company.
“ DTC/FAST Program ” means the DTC’s Fast Automated Securities Transfer Program.
“ DWAC ” means Deposit Withdrawal at Custodian as defined by the DTC.
“ DWAC Eligible ” means that (a) the Common Stock is eligible at DTC for full services pursuant to DTC’s Operational Arrangements, including without limitation transfer through DTC’s DWAC system, (b) the Company has been approved (without revocation) by the DTC’s underwriting department, (c) the Transfer Agent is approved as an agent in the DTC/FAST Program, (d) the Conversion Shares are otherwise eligible for delivery via DWAC, and (e) the Transfer Agent does not have a policy prohibiting or limiting delivery of the Conversion Shares via DWAC.
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“Equity Conditions” means, during the period in question, (a) no Event of Default shall have occurred, (b) the Company has timely filed (or obtained extensions in respect thereof and filed within the applicable grace period) all reports other than Form 8-K reports required to be filed by the Company after the date hereof pursuant to the Exchange Act, (c) on any date that the Company desires to make a payment of interest, the average daily dollar volume of the Common Stock for the previous twenty (20) Trading Days must be greater than $5,000, (d) the Common Stock must be DWAC Eligible and not subject to a “DTC chill”; (e) the Conversion Shares must be delivered via an “Automatic Conversion” of principal and/or interest; and (f) the Conversion Shares have been registered and are freely tradeable or are eligible to be sold under Rule 144 of the Securities Act.
“ Exempt Issuance ” means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the Company pursuant to any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the Original Issue Date, provided that such securities have not been amended since the Original Issue Date to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities, (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person (or to the equity holders of a Person) which is, itself or through its subsidiaries, an operating company, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, and (d) securities which are not Common Stock or Common Stock Equivalents in connection with a public offering.
“Event of Default” shall have the meaning set forth in Section 6(a).
“ Fundamental Transaction ” shall have the meaning set forth in Section 5(e).
“ Mandatory Default Amount ” means the payment of 18% of the outstanding principal amount of this Note, in addition to the payment of all other amounts, costs, expenses and liquidated damages due in respect of this Note.
“ New York Courts ” shall have the meaning set forth in Section 7(d).
“ Notice of Conversion ” shall have the meaning set forth in Section 4(a).
“ Original Issue Date ” means the date of the first issuance of the Notes, regardless of any transfers of any Note and regardless of the number of instruments which may be issued to evidence such Notes.
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“ Permitted Indebtedness ” means the indebtedness evidenced by the Notes.
“ Permitted Lien ” means the individual and collective reference to the following: (a) Liens for taxes, assessments and other governmental charges or levies not yet due or Liens for taxes, assessments and other governmental charges or levies being contested in good faith and by appropriate proceedings for which adequate reserves (in the good faith judgment of the management of the Company) have been established in accordance with GAAP, (b) Liens imposed by law which were incurred in the ordinary course of the Company’s business, such as carriers’, warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other similar Liens arising in the ordinary course of the Company’s business, and which (x) do not individually or in the aggregate materially detract from the value of such property or assets or materially impair the use thereof in the operation of the business of the Company and its consolidated Subsidiaries or (y) are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing for the foreseeable future the forfeiture or sale of the property or asset subject to such Lien and (c) Liens incurred in connection with Permitted Indebtedness.
“ Piggy Back Registration Rights” means a form of registration rights that grants the investor the right to register his or her unregistered stock when either the company or another investor initiates a registration.
“ Purchase Agreement ” means the Securities Purchase Agreement, dated as of July 5, 2016 among the Company and the original Holders, as amended, modified or supplemented from time to time in accordance with its terms.
“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“ Share Delivery Date ” shall have the meaning set forth in Section 4(c)(ii).
“ Successor Entity ” shall have the meaning set forth in Section 5(e).
“ Trading Day ” means a day on which the principal Trading Market is open for trading.
“ Trading Market ” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, the OTC Bulletin Board or OTCQB (or any successors to any of the foregoing).
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“ VWAP ” means, for or as of any date, the dollar volume-weighted average price for such security on the Trading Market (or, if the Trading Market is not the principal trading market for such security, then on the principal securities exchange or securities market on which such security is then traded) during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “HP” function (set to weighted average) or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). If the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization or other similar transaction during such period.
Section 2 . Interest; Prepayment .
a) Interest . Payment of Interest in Cash or Kind . The Company shall pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Note at the rate of 8% per annum. The Company will pay all of the interest inclusive with the final amortization payment.
b) Interest Calculations . Interest shall be calculated on the basis of a 365-day year, and shall accrue daily commencing on the Original Issue Date until payment in full of the outstanding principal, together with all accrued and unpaid interest, liquidated damages and other amounts which may become due hereunder, has been made. Interest hereunder will be paid to the Person in whose name this Note is registered on the records of the Company regarding registration and transfers of this Note (the “ Note Register ”).
c) Late Fee . All overdue accrued and unpaid interest to be paid hereunder shall entail a late fee at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted by applicable law which shall accrue daily from the date such interest is due hereunder through and including the date of actual payment in full. If late making a scheduled payment then every month the company will be required to issue an equal amount of stock for the unpaid balance for that month at $0.10 per share. In the event that AVDX is trading less than $0.10 a share then the share price will be issued at a 35% discount to the market for the previous 5 trading day VWAP.
d) Amortization and Installment Payments . Beginning on January 15th, 2017 the Company shall redeem one-twelfth (1/12th) of the face amount of this Note and any accrued but unpaid interest, as well as any prepayment due pursuant to the Prepayment Multiplier. Each Amortization Payment shall be made in cash or, subject to the Equity Conditions, in Common Stock pursuant to the Amortization Conversion Rate at the sole option of the holder. Notwithstanding any provision in this Note to the contrary, the Company will not be required to make any Amortization Payment to the extent any such Amortization Payment would result in the Company making aggregate Amortization Payments in an amount greater than the balance of the Note. Any outstanding unpaid principal and accrued interest on this Note as of the Maturity Date will be due and payable on the Maturity Date and may be paid in cash or, in the Holders discretion, subject to the Equity Conditions, in Common Stock.
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e) Prepayment . At any time upon five (5) days notice written notice to the Holder, (a “ Prepayment Notice ”), the Company may prepay any portion of the principal amount of this Note. If the Company exercises its right to prepay the Note, the Company shall within three (3) days after such five-day period (the “ Prepayment Period ”), make payment to the Holder of an amount in cash equal to the sum of the then outstanding principal amount of this Note that it desires to prepay, multiplied by (a) 1.1, during the first thirty (30) days after the execution of this Note, (b) 1.15, during the thirty-first (31st) to sixtieth (60th) days after the execution of this Note, (c) 1.20, during the sixty-first (61st) to ninetieth (90th) days after the execution of this Note, and (d) 1.25, on the ninety-first (91st) day and thereafter after the execution of this Note (the “ Prepayment Multiplier ”). If the Company does not make such payment within the relevant Prepayment Period, it shall be required to deliver a new Prepayment Notice, and repeat the procedures set forth in this Section 2, prior to pre-paying any portion of this Note. The Holder may continue to convert the Note from the date of its receipt of any Prepayment Notice until the beginning of the Prepayment Period. If the Company engages in any Subsequent Financing (as defined in the Purchase Agreement) in which the Holder elects not to participate, or sells any of its assets other than in the ordinary course, while any portion of this Note remains outstanding, any proceeds of such Subsequent Financing or asset sale in excess of $500,000 must be applied toward repayment of this Note, subject to the Prepayment Multiplier, within three (3) days of the closing of such Subsequent Financing or asset sale. For the avoidance of doubt, the Prepayment Multiplier shall be applicable to any payment of principal under this Note, including on the Maturity Date.
Section 3. Registration of Transfers and Exchanges .
a) Different Denominations . This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the Holder surrendering the same. No service charge will be payable for such registration of transfer or exchange.
b) Investment Representations . This Note has been issued subject to certain investment representations of the original Holder set forth in the Purchase Agreement and may be transferred or exchanged only in compliance with the Purchase Agreement and applicable federal and state securities laws and regulations.
c) Reliance on Note Register . Prior to due presentment for transfer to the Company of this Note, the Company and any agent of the Company may treat the Person in whose name this Note is duly registered on the Note Register as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Note is overdue, and neither the Company nor any such agent shall be affected by notice to the contrary.
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Section 4. Conversion .
a) Voluntary Conversion . At any time after the Original Issue Date until this Note is no longer outstanding, this Note shall be convertible, in whole or in part, into shares of Common Stock at the option of the Holder, at any time and from time to time (subject to the conversion limitations set forth in Section 4(d) hereof). The Holder shall effect conversions by delivering to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “ Notice of Conversion ”), specifying therein the principal amount of this Note to be converted and the date on which such conversion shall be effected (such date, the “ Conversion Date ”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder. No ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Conversion form be required. To effect conversions hereunder, the Holder shall not be required to physically surrender this Note to the Company unless the entire principal amount of this Note, plus all accrued and unpaid interest thereon, has been so converted. Conversions hereunder shall have the effect of lowering the outstanding principal amount of this Note in an amount equal to the applicable conversion. The Holder and the Company shall maintain records showing the principal amount(s) converted and the date of such conversion(s). The Company may deliver an objection to any Notice of Conversion within one (1) Business Day of delivery of such Notice of Conversion. In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest error. The Holder, and any assignee by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note may be less than the amount stated on the face hereof.
b) Conversion Price . The conversion price in effect on any Conversion Date shall be equal to $0.15 (the “ Conversion Price ”). Notwithstanding anything herein to the contrary, at any time after the occurrence of any Event of Default the Holder may require the Company to, at such Holder’s option and otherwise in accordance with the provisions for conversion herein, convert all or any part of this Note into Common Stock at the Alternate Conversion Price. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction that proportionately decreases or increases the Common Stock during such measuring period. Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section 6 hereof and the Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.
c) Mechanics of Conversion .
i. Conversion Shares Issuable Upon Conversion of Principal Amount . The number of Conversion Shares issuable upon a conversion hereunder shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of this Note to be converted by (y) the Conversion Price.
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ii. Delivery of Certificate Upon Conversion . Not later than three (3) Trading Days after each Conversion Date (the “ Share Delivery Date ”), the Company shall deliver, or cause to be delivered, to the Holder a certificate or certificates representing the Conversion Shares which, on or after the earlier of (i) the six month anniversary of the Original Issue Date or (ii) the Effective Date, shall be free of restrictive legends and trading restrictions (other than those which may then be required by the Purchase Agreement) representing the number of Conversion Shares being acquired upon the conversion of this Note. All certificate or certificates required to be delivered by the Company under this Section 4(c) shall be delivered electronically through the Depository Trust Company or another established clearing corporation performing similar functions. If the Conversion Date is prior to the earlier of (i) the six month anniversary of the Original Issue Date or (ii) the Effective Date, then the Conversion Shares shall bear a restrictive legend in the following form, as appropriate:
“NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.”
iii. Failure to Deliver Certificates . If, in the case of any Notice of Conversion, such certificate or certificates are not delivered to or as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to the Company at any time on or before its receipt of such certificate or certificates, to rescind such Conversion, in which event the Company shall promptly return to the Holder any original Note delivered to the Company and the Holder shall promptly return to the Company the Common Stock certificates issued to such Holder pursuant to the rescinded Conversion Notice.
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iv. Penalizations; Failure to Meet Terms . If the liable party shall fail to preform am material obligation under this Note Agreement set forth in total clause of the said document, including but not limited to the payment of feeds as required by Section 2, the payment of total taxes and interest, in the event of failure to adhere to monthly designated payments in a timely manner, will immediately face a penalty rate of 18%. Following any occurrence of excess payment deterrence, principle capital lenders reserve the right to freeze any share liquidity until debts plus penalty fees are collected.
v. Obligation Absolute; Partial Liquidated Damages . The Company’s obligations to issue and deliver the Conversion Shares upon conversion of this Note in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of such Conversion Shares; provided , however , that such delivery shall not operate as a waiver by the Company of any such action the Company may have against the Holder. In the event the Holder of this Note shall elect to convert any or all of the outstanding principal amount hereof, the Company may not refuse conversion based on any claim that the Holder or anyone associated or affiliated with the Holder has been engaged in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and or enjoining conversion of all or part of this Note shall have been sought and obtained, and the Company posts a surety bond for the benefit of the Holder in the amount of 150% of the outstanding principal amount of this Note, which is subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which shall be payable to the Holder to the extent it obtains judgment. In the absence of such injunction, the Company shall issue Conversion Shares or, if applicable, cash, upon a properly noticed conversion. If the Company fails for any reason to deliver to the Holder such certificate or certificates pursuant to Section 4(c)(ii) by the Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of principal amount being converted, $10 per Trading Day (increasing to $20 per Trading Day on the fifth (5th) Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Share Delivery Date until such certificates are delivered or Holder rescinds such conversion. Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section 6 hereof for the Company’s failure to deliver Conversion Shares within the period specified herein and the Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.
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vi. Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Conversion . In addition to any other rights available to the Holder, if the Company fails for any reason to deliver to the Holder such certificate or certificates by the Share Delivery Date pursuant to Section 4(c)(ii), and if after such Share Delivery Date the Holder is required by its brokerage firm to purchase (in an open market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Conversion Shares which the Holder was entitled to receive upon the conversion relating to such Share Delivery Date (a “ Buy-In ”), then the Company shall (A) pay in cash to the Holder (in addition to any other remedies available to or elected by the Holder) the amount, if any, by which (x) the Holder’s total purchase price (including any brokerage commissions) for the Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common Stock that the Holder was entitled to receive from the conversion at issue multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and (B) at the option of the Holder, either reissue (if surrendered) this Note in a principal amount equal to the principal amount of the attempted conversion (in which case such conversion shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued if the Company had timely complied with its delivery requirements under Section 4(c)(ii). For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of this Note with respect to which the actual sale price of the Conversion Shares (including any brokerage commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon conversion of this Note as required pursuant to the terms hereof.
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vii. Reservation of Shares Issuable Upon Conversion . The Company covenants that, subject to the terms and conditions set forth in the Purchase Agreement, it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock a number of shares of Common Stock at least equal to the following formula: 3 x (P/CP), where P equals the outstanding principal amount of this Note from time to time and CP equals the Conversion Price in effect from time to time, in the name of the Holder, for the sole purpose of issuance upon conversion of this Note, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder (and the other holders of the Notes), not less than such aggregate number of shares of the Common Stock as shall (subject to the terms and conditions set forth in the Purchase Agreement) be issuable (taking into account the adjustments and restrictions of Section 5) upon the conversion of the then outstanding principal amount of this Note. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and non-assessable.
viii. Fractional Shares . No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this Note. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the Company shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion Price or round up to the next whole share.
ix. Transfer Taxes and Expenses . The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates, provided that, the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of this Note so converted and the Company shall not be required to issue or deliver such certificates unless or until the Person or Persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Conversion.
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d) Holder’s Conversion Limitations . The Company shall not effect any conversion of this Note, and a Holder shall not have the right to convert any portion of this Note, to the extent that after giving effect to the conversion set forth on the applicable Notice of Conversion, the Holder (together with the Holder’s Affiliates, and any Persons acting as a group together with the Holder or any of the Holder’s Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon conversion of this Note with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (i) conversion of the remaining, unconverted principal amount of this Note beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein (including, without limitation, any other Notes or the Warrants) beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 4(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section 4(d) applies, the determination of whether this Note is convertible (in relation to other securities owned by the Holder together with any Affiliates) and of which principal amount of this Note is convertible shall be in the sole discretion of the Holder, and the submission of a Notice of Conversion shall be deemed to be the Holder’s determination of whether this Note may be converted (in relation to other securities owned by the Holder together with any Affiliates) and which principal amount of this Note is convertible, in each case subject to the Beneficial Ownership Limitation. To ensure compliance with this restriction, the Holder will be deemed to represent to the Company each time it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 4(d), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (i) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (ii) a more recent public announcement by the Company, or (iii) a more recent written notice by the Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Note, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Note held by the Holder. The Holder, upon not less than 61 days’ prior notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 4(d), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of this Note held by the Holder and the Beneficial Ownership Limitation provisions of this Section 4(d) shall continue to apply. Any such increase or decrease will not be effective until the 61st day after such notice is delivered to the Company. The Beneficial Ownership Limitation provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 4(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Note.
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Section 5 . Certain Adjustments .
a) Stock Dividends and Stock Splits . If the Company, at any time while this Note is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion of, the Notes), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Company) outstanding immediately before such event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
b) Subsequent Equity Sales . If, at any time while this Note is outstanding, the Company or any Subsidiary, as applicable, sells or grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces any sale, grant or any option to purchase or other disposition), any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock at an effective price per share that is lower than the then Conversion Price (such lower price, the “ Base Conversion Price ” and such issuances, collectively, a “ Dilutive Issuance ”) (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is lower than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion Price on such date of the Dilutive Issuance), then the Conversion Price shall be reduced to equal the Base Conversion Price. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustment will be made under this Section 5(b) in respect of an Exempt Issuance. The Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this Section 5(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “ Dilutive Issuance Notice ”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 5(b), upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Conversion Shares based upon the Base Conversion Price on or after the date of such Dilutive Issuance, regardless of whether the Holder accurately refers to the Base Conversion Price in the Notice of Conversion.
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c) Subsequent Rights Offerings . In addition to any adjustments pursuant to Section 5(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “ Purchase Rights ”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
d) Pro Rata Distributions . During such time as this Note is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “ Distribution ”), at any time after the issuance of this Note, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Note (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution ( provided , however , to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
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e) Fundamental Transaction . If, at any time while this Note is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “ Fundamental Transaction ”), then, upon any subsequent conversion of this Note, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in Section 4(d) on the conversion of this Note), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “ Alternate Consideration ”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Note is convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 4(d) on the conversion of this Note). For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one (1) share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Note following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “ Successor Entity ”) to assume in writing all of the obligations of the Company under this Note and the other Transaction Documents (as defined in the Purchase Agreement) in accordance with the provisions of this Section 5(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the holder of this Note, deliver to the Holder in exchange for this Note a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Note which is convertible for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Note (without regard to any limitations on the conversion of this Note) prior to such Fundamental Transaction, and with a conversion price which applies the conversion price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such conversion price being for the purpose of protecting the economic value of this Note immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Note and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Note and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.
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f) Calculations . All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Company) issued and outstanding.
g) Notice to the Holder .
i. Adjustment to Conversion Price . Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5, the Company shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.
ii. Notice to Allow Conversion by Holder . If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of this Note, and shall cause to be delivered to the Holder at its last address as it shall appear upon the Note Register, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to convert this Note during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
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Section 6 . Collateral Context .
a) | Unless otherwise agreed, Lender shall transfer Loaned Securities and note amount to Borrower hereunder on the before the cutoff date agreed to by the Borrower and Lender for the commencement of the Note. |
b) | The Collateral transferred by Borrower to lender, as adjusted pursuant of Section 8, shall be security for the Borrower’s obligations in respect of such to the Note and for any obligations of Borrower to lender hereunder. Borrower hereby pledges with, assigns to, and grants lender a continuing first priority security interest in, and a lien upon, the Collateral, which shall attach upon the transfer of the Loaned note by lender to Borrower and which shall cease upon the transfer of the Loaned Securities by Borrower to lender when full principle amount is reconstituted. |
c) | Except as otherwise provided herein, upon transfer to Lender of the Loaned Note on the day of note, Lender shall be obligated to transfer the Collateral to borrower no later than the cutoff time. |
d) | If Borrower transfers Collateral to Lender and provided in Section 4, and Lender does not transfer the Loaned Securities to Borrower, Borrower shall have the absolute right to return of the Collateral; and if Lender transfers Loaned Securities to Borrower and Borrower does not transfer Collateral to Lender as provided in Section 4, Lender shall have the absolute right to the return |
e) | The borrower is offering all of its office and laboratory equipment as collateral for this transaction. The list of such items is itemized under ANEX B and the full spreadsheet shall be delivered to the lender. |
f) | In the event of default, the Lender will have the right to call the collateral and liquidate a portion of such collateral to satisfy the unpaid balance of the entire note plus an additional 100% penalty of the beginning principal amount added to the unpaid balance plus the cost for all fees associated for calling and selling the collateral and enforcing the note, including but not limited to legal fees, travel fees, brokerage fees… |
g) | The borrower will not offer the listed assets as collateral to any other lender and will not hold any other type of lien on the collateral listed outside of the combined lenders of this series of notes. |
h) | In the event that the Borrower is able to secure asset based lending on the collateral within this agreement of an amount greater then $200,000 then the Holders will agree to release the collateral. The borrower will agree to pay 20% of all proceeds raised according to this asset based lending as a payment to the principal balance of this note. |
Section 7 . Events of Default .
a) “ Event of Default ” means, wherever used herein, any of the following events (whatever the reason for such event and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
i. any default in the payment of the principal amount of this Note and other amounts owing to the Holder of this Note, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise);
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ii. the Company shall fail to observe or perform any other material covenant or material agreement contained in the Notes (other than a breach by the Company of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed in clause (ix) below) which failure is not cured, if possible to cure, within the earlier to occur of (A) 5 Trading Days after notice of such failure sent by the Holder or by any other Holder to the Company and (B) 10 Trading Days after the Company has become or should have become aware of such failure;
iii. a material default or event of default (subject to any grace or cure period provided in the applicable agreement, document or instrument) shall occur under (A) any of the Transaction Documents or (B) any other material agreement, lease, document or instrument to which the Company or any Subsidiary is obligated (and not covered by clause (vi) below);
iv. any material representation or warranty made in this Note, any other Transaction Documents, any written statement pursuant hereto or thereto or any other report, financial statement or certificate made or delivered to the Holder or any other Holder shall be untrue or incorrect in any material respect as of the date when made or deemed made;
v. the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) shall be subject to a Bankruptcy Event;
vi. the Company or any Subsidiary shall default on any of its obligations under any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced, any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation greater than $200,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;
vii. the Common Stock shall not be eligible for listing or quotation for trading on a Trading Market and shall not be eligible to resume listing or quotation for trading thereon within five Trading Days or the transfer of shares of Common Stock through the Depository Trust Company System is no longer available or “chilled”;
viii. the Company shall be a party to any Change of Control Transaction or Fundamental Transaction or shall agree to sell or dispose of all or substantially all of its assets in one transaction or a series of related transactions (whether or not such sale would constitute a Change of Control Transaction);
ix. the Company shall fail for any reason to deliver certificates via DWAC to a Holder prior to the third Trading Day after a Conversion Date pursuant to Section 4(c) or the Company shall provide at any time notice to the Holder, including by way of public announcement, of the Company’s intention to not honor requests for conversions of any Notes in accordance with the terms hereof;
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x. Default shall occur if the lender fails to submit collateral (in the form of equipment in this case) that is free of leans or any past financial commitments. Items of collateral shall hereunder be marked through serial number or bill of sale to legitimize its collateral to debt.
xi. Borrower is required to use proceeds to complete and submit all quarterly filings to Lender(s). All regulator papers such as quarterly or annual audits must be submitted on time or Borrower shall face a 25% penalty on the totality of the unpaid balance remaining on the Note.
xii. Note is to be secured as senior with several debt owned issuers.
xiii. the Company fails to file with the Commission any required reports under Section 13 or 15(d) of the Exchange Act such that it is not in compliance with Rule 144(c)(1) (or Rule 144(i)(2), if applicable), provided that the Company shall have five (5) Trading Days to cure such failure;
xiv. if the Borrower or any Significant Subsidiary shall: (i) apply for or consent to the appointment of a receiver, trustee, custodian or liquidator of it or any of its properties, (ii) admit in writing its inability to pay its debts as they mature, (iii) make a general assignment for the benefit of creditors, (iv) be adjudicated a bankrupt or insolvent or be the subject of an order for relief under Title 11 of the United States Code or any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute of any other jurisdiction or foreign country, or (v) file a voluntary petition in bankruptcy, or a petition or an answer seeking reorganization or an arrangement with creditors or to take advantage or any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against it in any proceeding under any such law, or (vi) take or permit to be taken any action in furtherance of or for the purpose of effecting any of the foregoing;
xv. if any order, judgment or decree shall be entered, without the application, approval or consent of the Borrower or any Significant Subsidiary, by any court of competent jurisdiction, approving a petition seeking liquidation or reorganization of the Borrower or any Subsidiary, or appointing a receiver, trustee, custodian or liquidator of the Borrower or any Subsidiary, or of all or any substantial part of its assets, and such order, judgment or decree shall continue unstayed and in effect for any period of sixty (60) days;
xvi. the occurrence of any levy upon or seizure or attachment of, or any uninsured loss of or damage to, any property of the Borrower or any Subsidiary having an aggregate fair value or repair cost (as the case may be) in excess of $200,000 individually or in the aggregate, and any such levy, seizure or attachment shall not be set aside, bonded or discharged within thirty (30) days after the date thereof;
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xvii. the Company shall fail to maintain sufficient reserved shares pursuant to Section 4(c)(vi) of this Note;
xviii. any monetary judgment, writ or similar final process shall be entered or filed against the Company, any subsidiary or any of their respective property or other assets for more than $200,000, and such judgment, writ or similar final process shall remain unvacated, unbonded or unstayed for a period of 45 calendar days;
xix. the Company shall fail, within a month of the Original Issue Date, to be up to date with their required filings with the Commission;
xx. the Company shall fail, within a month of the Original Issue Date, to hire an investment banker acceptable to the Holder;
xxi. the Company, within a month of the Original Issue Date, changes transfer agents without the written consent of the Holder.
b) Remedies Upon Event of Default . If any Event of Default occurs, then the outstanding principal amount of this Note, liquidated damages and other amounts owing in respect thereof through the date of acceleration, shall become, at the Holder’s election, immediately due and payable in cash at the Mandatory Default Amount. After the occurrence of any Event of Default that results in the eventual acceleration of this Note, the Note shall accrue interest at an interest rate equal to the lesser of 1.5 % per month (18% per annum) or the maximum rate permitted under applicable law (the “ Default Rate ”). The Default Rate shall be computed from the occurrence of the Event of Default until the date upon which the event of default is cured. Interest calculated at the Default Rate shall be immediately added to the principal due under the Note, without any action on the part of the Holder. Upon the payment in full of the Mandatory Default Amount, the Holder shall promptly surrender this Note to or as directed by the Company. In connection with such acceleration described herein, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of the Note until such time, if any, as the Holder receives full payment pursuant to this Section 6(b). No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.
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Section 8 . Miscellaneous .
a) Notices . Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service, addressed to the Company, at the address set forth above, or such other facsimile number or address as the Company may specify for such purposes by notice to the Holder delivered in accordance with this Section 7(a). Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number or address of the Holder appearing on the books of the Company, or if no such facsimile number or address appears on the books of the Company, at the principal place of business of such Holder, as set forth in the Purchase Agreement. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (iv) upon actual receipt by the party to whom such notice is required to be given.
b) Absolute Obligation . Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and liquidated damages, as applicable, on this Note at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation of the Company. This Note ranks pari passu with all other Notes now or hereafter issued under the Purchase Agreement.
c) Lost or Mutilated Note . If this Note shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, reasonably satisfactory to the Company.
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d) Governing Law . All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan (the “ New York Courts ”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Note and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Note or the transactions contemplated hereby. If any party shall commence an action or proceeding to enforce any provisions of this Note, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.
e) Use of proceeds. The company agrees to use part of the proceeds to become current with all their SEC filings and further agrees that the company will stay current with all their SEC filings for the term of this note.
f) Waiver . Any waiver by the Company or the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Company or the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note on any other occasion. Any waiver by the Company or the Holder must be in writing.
g) Disclosure. In the event any future financing occurs, International Infusion LP must sign off on any other financial doctrines until the entire Borrower Note is fulfilled.
h) Note Holder Payment (Schedule 1) The payment for amortized amounts to note holders shall be administered through an escrow account that must maintain the two months of payments in advance for security purposes. NO additional ‘fees’ (such as, late fees, admin. Fees) are to be deducted from this account.
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i) Severability . If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.
j) Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Note. The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any such breach or any such threatened breach, without the necessity of showing economic loss and without any bond or other security being required. The Company shall provide all information and documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of this Note.
k) Next Business Day . Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
l) Headings . The headings contained herein are for convenience only, do not constitute a part of this Note and shall not be deemed to limit or affect any of the provisions hereof.
*********************
(Signature Pages Follow)
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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by a duly authorized officer as of the date first above indicated.
AVANT DIAGNOSTICS, INC. | ||
By: | ||
Name: | ||
Title: | ||
COASTAL INVESTMENT PARTNERS, LLC | ||
By: | ||
Name: | ||
Title: |
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ANNEX A
NOTICE OF CONVERSION
The undersigned hereby elects to convert principal under the 30% Original Issue Discount Senior Secured Convertible Promissory Note due January 15, 2018 of Avant Diagnostics, Inc. (the “ Company ”), into shares of common stock (the “ Common Stock ”), of the Company according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.
By the delivery of this Notice of Conversion the undersigned represents and warrants to the Company that its ownership of the Common Stock does not exceed the amounts specified under Section 4 of this Note, as determined in accordance with Section 13(d) of the Exchange Act.
The undersigned agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer of the aforesaid shares of Common Stock.
Conversion calculations:
Date to Effect Conversion:
Principal Amount of Note to be Converted:
Number of shares of Common Stock to be issued:
Signature:
Name:
DWAC Instructions:
Broker No: ______________
Account No: ____________
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ANNEX B
Collateralized Items Computers |
|
Laptop | |
Computers | |
Computers | |
Computers (Joe’s Laptop) | |
Computers | |
ICS | |
Server | |
Laptop | |
Desktops | |
Laptop | |
Computer | |
Computer | |
Computer | |
Computer | |
Firewall | |
Microcenter (John’s LT) | |
Corrine Computer | |
Glenn Computer | |
Lab Equipment | |
Aushon | arrayer 2470 |
Dako | Autostainer Plus |
Rainin | |
Fridgerator | Refrigerator (4C) |
Fisher | |
Isotemp Freezer | Freezer (-20C) |
Various Lab captilized items | |
Various Lab captilized items | |
eppcent5415 | Centrifuge |
microplate carrier | Centrifuge |
Rotor and adapter | Centrifuge |
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Misc. Lab Equipment | |
Freezer | Freezer (-20C) |
Various Lab captilized items | |
Various Lab captilized items | |
Various Lab captilized items | |
Various Lab captilized items | |
Various Lab captilized items | |
Various Lab captilized items | |
Lab Machine | |
Lab Machine | |
Dako | Autostainer Plus |
Refrigerator | Refrigerator (4C) |
Lab equipment - add on | |
Microscope | Micromaster |
Scanner | GenePix Autoloader 4200AL Microarray Scanner |
Aushon | arrayer 2470 |
Scanner | GenePix Autoloader 4200AL Microarray Scanner |
Scanner | |
Aushon | arrayer 2470 |
Microtome | Leica RM2235 |
Scanner - to add tax value back | |
Viaflo | Auto Pipetter |
Aushon | arrayer 2470 |
Richard Allen Scientific | Section Dryer |
Microscope | Olympus |
Tecan | Infinite F200 Pro |
Dako | Autostainer Plus |
New GenePix Autoloader 4200AL Microarray Scanner | GenePix Autoloader 4200AL Microarray Scanner |
Dako Autostrainer Plus | Autostainer Plus |
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Exhibit 4.5
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
Original Issue Date: July 14, 2017 [Exchanged under Section 3(a)(9) for Convertible Promissory Note issued effective November 16, 2016]
Principal Amount: $442,325.00
CONVERTIBLE PROMISSORY NOTE
DUE JULY 14, 2019
THIS CONVERTIBLE PROMISSORY NOTE is one of a series of duly authorized and validly issued Convertible Promissory Notes of Avant Diagnostics, Inc., (the “ Company ”), having its principal place of business at, (this Note, the “ Note ” and, collectively with the other Notes of such series, the “ Notes ”).
FOR VALUE RECEIVED, the Company promises to pay to Coastal Investment Partners LLC or its registered assigns (the “ Holder ”), or shall have paid pursuant to the terms hereunder, the principal sum of $442,325.00(which amount is the $340,250 actual amount owed as of the date hereof plus a 30% original issue discount), together with all interest as provided in Section 2 of this Note, on July 14, 2019 (the “ Maturity Date ”) or such earlier date as this Note is required or permitted to be repaid as provided hereunder.
This Note is subject to the following additional provisions:
Section 1 . Definitions . For the purposes hereof, in addition to the terms defined elsewhere in this Note, (a) capitalized terms not otherwise defined herein shall have the meanings set forth in the Purchase Agreement and/or the Exchange Agreement and (b) the following terms shall have the following meanings:
“ Bankruptcy Event ” means any of the following events: (a) the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company or any Significant Subsidiary thereof, (b) there is commenced against the Company or any Significant Subsidiary thereof any such case or proceeding that is not dismissed within 60 days after commencement, (c) the Company or any Significant Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) the Company or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) the Company or any Significant Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the Company or any Significant Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts or (g) the Company or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.
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“ Beneficial Ownership Limitation ” shall have the meaning set forth in Section 4(d).
“ Business Day ” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of Nevada are authorized or required by law or other governmental action to close.
“ Buy-In ” shall have the meaning set forth in Section 4(c)(v).
“ Change of Control Transaction ” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of 50% of the voting securities of the Company (other than by means of conversion or exercise of the Notes and the Securities issued together with the Notes), (b) the Company merges into or consolidates with any other Person, or any Person merges into or consolidates with the Company and, after giving effect to such transaction, the stockholders of the Company immediately prior to such transaction own less than 50% of the aggregate voting power of the Company or the successor entity of such transaction, (c) the Company sells or transfers all or substantially all of its assets to another Person and the stockholders of the Company immediately prior to such transaction own less than 50% of the aggregate voting power of the acquiring entity immediately after the transaction, (d) at any date after September 1, 2017, a replacement at one time or within a six-month period of more than one-half of the members of the Board of Directors which is not approved by a majority of those individuals who are members of the Board of Directors on the Original Issue Date (or by those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board of Directors was approved by a majority of the members of the Board of Directors who are members on the date hereof), or (e) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth in clauses (a) through (d) above.
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“ Conversion ” shall have the meaning ascribed to such term in Section 4.
“ Conversion Date ” shall have the meaning set forth in Section 4(a).
“ Conversion Price ” shall have the meaning set forth in Section 4(b).
“ Conversion Schedule ” means the Conversion Schedule in the form of Schedule 1 attached hereto.
“ Conversion Shares ” means, collectively, the shares of Common Stock issuable upon conversion of this Note in accordance with the terms hereof.
“ Dilutive Issuance ” shall have the meaning set forth in Section 5(b).
“ Dilutive Issuance Notice ” shall have the meaning set forth in Section 5(b).
“ DTC ” means the Depository Trust Company.
“ DTC/FAST Program ” means the DTC’s Fast Automated Securities Transfer Program.
“ DWAC ” means Deposit Withdrawal at Custodian as defined by the DTC.
“ DWAC Eligible ” means that (a) the Common Stock is eligible at DTC for full services pursuant to DTC’s Operational Arrangements, including without limitation transfer through DTC’s DWAC system, (b) the Company has been approved (without revocation) by the DTC’s underwriting department, (c) the Transfer Agent is approved as an agent in the DTC/FAST Program, (d) the Conversion Shares are otherwise eligible for delivery via DWAC, and (e) the Transfer Agent does not have a policy prohibiting or limiting delivery of the Conversion Shares via DWAC.
“ Equity Conditions ” means, during the period in question, (a) no Event of Default shall have occurred, (b) the Company has timely filed (or obtained extensions in respect thereof and filed within the applicable grace period) all reports other than Form 8-K reports required to be filed by the Company after the date hereof pursuant to the Exchange Act, (c) on any date that the Company desires to make a payment of interest, the average daily dollar volume of the Common Stock for the previous twenty (20) Trading Days must be greater than $15,000, and (d) the Common Stock must be DWAC Eligible and not subject to a “DTC chill”..
“ Exchange Agreement ” means the Exchange Agreement, dated as of July __, 2017 among the Company and the Holder, as amended, modified or supplemented from time to time in accordance with its terms, pursuant to which this Note has been issued.
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“ Exempt Issuance ” means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the Company pursuant to any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the Original Issue Date, provided that such securities have not been amended since the Original Issue Date to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities, (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person (or to the equity holders of a Person) which is, itself or through its subsidiaries, an operating company, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, and (d) securities which are not Common Stock or Common Stock Equivalents in connection with a public offering.
“ Event of Default ” shall have the meaning set forth in Section 6(a).
“ Fundamental Transaction ” shall have the meaning set forth in Section 5(e).
“ Mandatory Default Amount ” means the payment of 18% of the outstanding principal amount of this Note, in addition to the payment of all other amounts, costs, expenses and liquidated damages due in respect of this Note.
“ Monthly Redemption ” means the redemption of this Note pursuant to Section 7(b) hereof.
“ Monthly Redemption Amount ” means, as to a Monthly Redemption, $17,908.00, which includes accrued and unpaid interest, but not any liquidated damages and any other amounts then owing to the Holder in respect of this Note.
“ Monthly Redemption Date ” means the 30th of each month, commencing on January ___, 2018, and terminating upon the full redemption of this Note.
“ Monthly Redemption Notice ” shall have the meaning set forth in Section 7(b) hereof.
“ Nevada Courts ” shall have the meaning set forth in Section 8(d).
“ Notice of Conversion ” shall have the meaning set forth in Section 4(a).
“ Original Issue Date ” means the date of the first issuance of the Notes, regardless of any transfers of any Note and regardless of the number of instruments which may be issued to evidence such Notes.
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“ Permitted Indebtedness ” means (a) the indebtedness evidenced by the Notes (b) the indebtedness issued to International Infusion LP, Infusion 51A LP and its related entities between November 2016 and January 2017 (the “ Infusion Notes ”), (c) an aggregate of up to $750,000 of indebtedness to be issued within 90 days of the Original Issue Date, provided such indebtedness is on the same terms as such securities issued to Infusion 51A LP on July 19, 2017 and (d) indebtedness that (i) is expressly subordinate to the Notes pursuant to a written subordination agreement with the Purchasers that is acceptable to each Purchaser in its sole and absolute discretion and (ii) matures at a date later than the 91 st day following the Maturity Date.
“ Permitted Lien ” means the individual and collective reference to the following: (a) Liens for taxes, assessments and other governmental charges or levies not yet due or Liens for taxes, assessments and other governmental charges or levies being contested in good faith and by appropriate proceedings for which adequate reserves (in the good faith judgment of the management of the Company) have been established in accordance with GAAP, (b) Liens imposed by law which were incurred in the ordinary course of the Company’s business, such as carriers’, warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other similar Liens arising in the ordinary course of the Company’s business, and which (x) do not individually or in the aggregate materially detract from the value of such property or assets or materially impair the use thereof in the operation of the business of the Company and its consolidated Subsidiaries or (y) are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing for the foreseeable future the forfeiture or sale of the property or asset subject to such Lien and (c) Liens incurred in connection with Permitted Indebtedness, including but not limited to the grant of a senior security interest associated with the Infusion Notes.
“Pledge Agreement” means that Pledge Agreement executed with this Note between the Company and Holder, by which the Holder has secured repayment obligations under this Note by pledging certain assets.
“ Purchase Agreement ” means the Securities Purchase Agreement, dated as of July 5, 2016 among the Company and the original Holders, as amended, modified or supplemented from time to time in accordance with its terms.
“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“ Share Delivery Date ” shall have the meaning set forth in Section 4(c)(ii).
“Subsequent Financing ” means the sale by the Company of its equity and/or debt securities for aggregate gross proceeds of at least $2,000,000 on or after the Original Issue Date.
“ Successor Entity ” shall have the meaning set forth in Section 5(e).
“ Trading Day ” means a day on which the principal Trading Market is open for trading.
5
“ Trading Market ” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, the OTC Bulletin Board or OTCQB (or any successors to any of the foregoing).
Section 2 . Interest; Prepayment .
a) Interest . Payment of Interest in Cash or Kind . The Company shall pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Note at the rate of 8% per annum. All interest payments hereunder will be payable in cash, or subject to the Equity Conditions in the event of a conversion, in cash or Common Stock in the Holder’s discretion. Accrued and unpaid interest shall be due and payable on each Conversion Date (as to that principal amount then being converted) , Prepayment Date (as to that principal amount then being prepaid) , on each Monthly Conversion Date (as to that principal amount then being redeemed) and/or Maturity Date, or as otherwise set forth herein.
b) Interest Calculations . Interest shall be calculated on the basis of a 365-day year, consisting of actual calendar day periods, and shall accrue daily commencing on the Original Issue Date until payment in full of the outstanding principal, together with all accrued and unpaid interest, liquidated damages and other amounts which may become due hereunder, has been made. Interest hereunder will be paid to the Person in whose name this Note is registered on the records of the Company regarding registration and transfers of this Note (the “ Note Register ”).
c) Late Fee . All overdue accrued and unpaid interest to be paid hereunder shall entail a late fee at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted by applicable law which shall accrue daily from the date such interest is due hereunder through and including the date of actual payment in full.
b) Prepayment . At any time upon five (5) days notice written notice to the Holder, (a “ Prepayment Notice ”), the Company may prepay any portion of the principal amount of this Note. If the Company does not make such payment within the relevant Prepayment Period, it shall be required to deliver a new Prepayment Notice, and repeat the procedures set forth in this Section 2, prior to pre-paying any portion of this Note. The Holder may continue to convert the Note from the date of its receipt of any Prepayment Notice until the beginning of the Prepayment Period. For the avoidance of doubt, the partial principal payment of $50,000 made on the Original Issue Date shall be excluded from the application of any of the prepayment requirements of this Section.
Section 3. Registration of Transfers and Exchanges .
a) Different Denominations . This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the Holder surrendering the same. No service charge will be payable for such registration of transfer or exchange.
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b) Investment Representations . This Note has been issued subject to certain investment representations of the original Holder set forth in the Purchase Agreement and Exchange Agreement and may be transferred or exchanged only in compliance with the Purchase Agreement and Exchange Agreement and applicable federal and state securities laws and regulations.
c) Reliance on Note Register . Prior to due presentment for transfer to the Company of this Note, the Company and any agent of the Company may treat the Person in whose name this Note is duly registered on the Note Register as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Note is overdue, and neither the Company nor any such agent shall be affected by notice to the contrary.
Section 4. Conversion .
a) Voluntary Conversion . At any time after the Original Issue Date until this Note is no longer outstanding, this Note shall be convertible, in whole or in part, into shares of Common Stock at the option of the Holder, at any time and from time to time (subject to the conversion limitations set forth in Section 4(d) hereof). The Holder shall effect conversions by delivering to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “ Notice of Conversion ”), specifying therein the principal amount of this Note to be converted and the date on which such conversion shall be effected (such date, the “ Conversion Date ”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder. No ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Conversion form be required. To effect conversions hereunder, the Holder shall not be required to physically surrender this Note to the Company unless the entire principal amount of this Note, plus all accrued and unpaid interest thereon, has been so converted. Conversions hereunder shall have the effect of lowering the outstanding principal amount of this Note in an amount equal to the applicable conversion. The Holder and the Company shall maintain records showing the principal amount(s) converted and the date of such conversion(s). The Company may deliver an objection to any Notice of Conversion within one (1) Business Day of delivery of such Notice of Conversion. In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest error. The Holder, and any assignee by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note may be less than the amount stated on the face hereof.
b) Conversion Price . The conversion price in effect on any Conversion Date shall be equal to six cents ($0.06), subject adjustment herein (the “ Conversion Price ”).
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c) All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction that proportionately decreases or increases the Common Stock during such measuring period. Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section 6 hereof and the Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.
d) Mechanics of Conversion .
i. Conversion Shares Issuable Upon Conversion of Principal Amount . The number of Conversion Shares issuable upon a conversion hereunder shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of this Note to be converted by (y) the Conversion Price.
ii. Delivery of Certificate Upon Conversion . Not later than three (3) Trading Days after each Conversion Date (the “ Share Delivery Date ”), the Company shall deliver, or cause to be delivered, to the Holder a certificate or certificates representing the Conversion Shares which, subject to applicable securities laws, on or after the earlier of (i) the six month anniversary of the Original Issue Date or (ii) the Effective Date, shall be free of restrictive legends and trading restrictions (other than those which may then be required by the Purchase Agreement) representing the number of Conversion Shares being acquired upon the conversion of this Note. All certificate or certificates required to be delivered by the Company under this Section 4(c) shall be delivered electronically through the Depository Trust Company or another established clearing corporation performing similar functions. Subject to applicable securities laws, if the Conversion Date is prior to the earlier of (i) the six month anniversary of the Original Issue Date or (ii) the Effective Date, then the Conversion Shares shall bear a restrictive legend in the following form, as appropriate:
“NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.”
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iii. Failure to Deliver Certificates . If, in the case of any Notice of Conversion, such certificate or certificates are not delivered to or as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to the Company at any time on or before its receipt of such certificate or certificates, to rescind such Conversion, in which event the Company shall promptly return to the Holder any original Note delivered to the Company and the Holder shall promptly return to the Company the Common Stock certificates issued to such Holder pursuant to the rescinded Conversion Notice.
iv. Obligation Absolute; Partial Liquidated Damages . The Company’s obligations to issue and deliver the Conversion Shares upon conversion of this Note in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of such Conversion Shares; provided , however , that such delivery shall not operate as a waiver by the Company of any such action the Company may have against the Holder. In the event the Holder of this Note shall elect to convert any or all of the outstanding principal amount hereof, the Company may not refuse conversion based on any claim that the Holder or anyone associated or affiliated with the Holder has been engaged in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and or enjoining conversion of all or part of this Note shall have been sought and obtained, and the Company posts a surety bond for the benefit of the Holder in the amount of 150% of the outstanding principal amount of this Note, which is subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which shall be payable to the Holder to the extent it obtains judgment. In the absence of such injunction, the Company shall issue Conversion Shares or, if applicable, cash, upon a properly noticed conversion. If the Company fails for any reason to deliver to the Holder such certificate or certificates pursuant to Section 4(c)(ii) by the Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of principal amount being converted, $10 per Trading Day (increasing to $20 per Trading Day on the fifth (5 th ) Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Share Delivery Date until such certificates are delivered or Holder rescinds such conversion. Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section 6 hereof for the Company’s failure to deliver Conversion Shares within the period specified herein and the Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.
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v. Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Conversion . In addition to any other rights available to the Holder, if the Company fails for any reason to deliver to the Holder such certificate or certificates by the Share Delivery Date pursuant to Section 4(c)(ii), and if after such Share Delivery Date the Holder is required by its brokerage firm to purchase (in an open market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Conversion Shares which the Holder was entitled to receive upon the conversion relating to such Share Delivery Date (a “ Buy-In ”), then the Company shall (A) pay in cash to the Holder (in addition to any other remedies available to or elected by the Holder) the amount, if any, by which (x) the Holder’s total purchase price (including any brokerage commissions) for the Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common Stock that the Holder was entitled to receive from the conversion at issue multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and (B) at the option of the Holder, either reissue (if surrendered) this Note in a principal amount equal to the principal amount of the attempted conversion (in which case such conversion shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued if the Company had timely complied with its delivery requirements under Section 4(c)(ii). For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of this Note with respect to which the actual sale price of the Conversion Shares (including any brokerage commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon conversion of this Note as required pursuant to the terms hereof.
vi. Reservation of Shares Issuable Upon Conversion . The Company covenants that, subject to the terms and conditions set forth in the Purchase Agreement, it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock a number of shares of Common Stock at least equal to the following formula: 3 x (P/CP), where P equals the outstanding principal amount of this Note from time to time and CP equals the Conversion Price in effect from time to time, in the name of the Holder, for the sole purpose of issuance upon conversion of this Note, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder (and the other holders of the Notes), not less than such aggregate number of shares of the Common Stock as shall (subject to the terms and conditions set forth in the Purchase Agreement) be issuable (taking into account the adjustments and restrictions of Section 5) upon the conversion of the then outstanding principal amount of this Note. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and non-assessable.
vii. Fractional Shares . No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this Note. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the Company shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion Price or round up to the next whole share.
viii. Transfer Taxes and Expenses . The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates, provided that, the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of this Note so converted and the Company shall not be required to issue or deliver such certificates unless or until the Person or Persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Conversion.
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ix. Holder’s Conversion Limitations . The Company shall not effect any conversion of this Note, and a Holder shall not have the right to convert any portion of this Note, to the extent that after giving effect to the conversion set forth on the applicable Notice of Conversion, the Holder (together with the Holder’s Affiliates, and any Persons acting as a group together with the Holder or any of the Holder’s Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon conversion of this Note with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (i) conversion of the remaining, unconverted principal amount of this Note beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein (including, without limitation, any other Notes or the Warrants) beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 4(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section 4(d) applies, the determination of whether this Note is convertible (in relation to other securities owned by the Holder together with any Affiliates) and of which principal amount of this Note is convertible shall be in the sole discretion of the Holder, and the submission of a Notice of Conversion shall be deemed to be the Holder’s determination of whether this Note may be converted (in relation to other securities owned by the Holder together with any Affiliates) and which principal amount of this Note is convertible, in each case subject to the Beneficial Ownership Limitation. To ensure compliance with this restriction, the Holder will be deemed to represent to the Company each time it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 4(d), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (i) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (ii) a more recent public announcement by the Company, or (iii) a more recent written notice by the Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Note, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported.
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Section 5 . Certain Adjustments .
a) Stock Dividends and Stock Splits . If the Company, at any time while this Note is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion of, the Notes), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Company) outstanding immediately before such event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
b) Calculations . All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Company) issued and outstanding.
c) Notice to the Holder .
i. Adjustment to Conversion Price . Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5, the Company shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.
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ii. Notice to Allow Conversion by Holder . If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of this Note, and shall cause to be delivered to the Holder at its last address as it shall appear upon the Note Register, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to convert this Note during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
Section 6 . Events of Default .
a “ Event of Default ” means, wherever used herein, any of the following events (whatever the reason for such event and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
i. any default in the payment of the principal amount of this Note and other amounts owing to the Holder of this Note, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise), w hich default, is not cured within 5 Trading Days ;
ii. the Company shall fail to observe or perform any other material covenant or material agreement contained in the Notes (other than a breach by the Company of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed in clause (ix) below) which failure is not cured, if possible to cure, within the earlier to occur of (A) 5 Trading Days after notice of such failure sent by the Holder or by any other Holder to the Company and (B) 10 Trading Days after the Company has become or should have become aware of such failure;
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iii. a material default or event of default (subject to any grace or cure period provided in the applicable agreement, document or instrument) shall occur under (A) any of the Transaction Documents or (B) any other material agreement, lease, document or instrument to which the Company or any Subsidiary is obligated (and not covered by clause (vi) below);
iv. any material representation or warranty made in this Note, any other Transaction Documents, any written statement pursuant hereto or thereto or any other report, financial statement or certificate made or delivered to the Holder or any other Holder shall be untrue or incorrect in any material respect as of the date when made or deemed made;
v. the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) shall be subject to a Bankruptcy Event;
vi. the Company or any Subsidiary shall default on any of its obligations under any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced, any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation greater than $200,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;
vii. the Common Stock shall not be eligible for listing or quotation for trading on a Trading Market and shall not be eligible to resume listing or quotation for trading thereon within five Trading Days or the transfer of shares of Common Stock through the Depository Trust Company System is no longer available or “chilled” w hich default, is not cured within 5 Trading Days ;
viii. the Company shall be a party to any Change of Control Transaction or Fundamental Transaction or shall agree to sell or dispose of all or substantially all of its assets in one transaction or a series of related transactions (whether or not such sale would constitute a Change of Control Transaction);
ix. the Company shall fail for any reason to deliver certificates via DWAC to a Holder prior to the third Trading Day after a Conversion Date pursuant to Section 4(c) or the Company shall provide at any time notice to the Holder, including by way of public announcement, of the Company’s intention to not honor requests for conversions of any Notes in accordance with the terms hereof;
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x. if the Company or any Significant Subsidiary shall: (i) apply for or consent to the appointment of a receiver, trustee, custodian or liquidator of it or any of its properties, (ii) admit in writing its inability to pay its debts as they mature, (iii) make a general assignment for the benefit of creditors, (iv) be adjudicated a bankrupt or insolvent or be the subject of an order for relief under Title 11 of the United States Code or any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute of any other jurisdiction or foreign country, or (v) file a voluntary petition in bankruptcy, or a petition or an answer seeking reorganization or an arrangement with creditors or to take advantage or any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against it in any proceeding under any such law, or (vi) take or permit to be taken any action in furtherance of or for the purpose of effecting any of the foregoing;
xi. if any order, judgment or decree shall be entered, without the application, approval or consent of the Company or any Significant Subsidiary, by any court of competent jurisdiction, approving a petition seeking liquidation or reorganization of the Company or any Subsidiary, or appointing a receiver, trustee, custodian or liquidator of the Company or any Subsidiary, or of all or any substantial part of its assets, and such order, judgment or decree shall continue unstayed and in effect for any period of sixty (60) days;
xii. the occurrence of any levy upon or seizure or attachment of, or any uninsured loss of or damage to, any property of the Company or any Subsidiary having an aggregate fair value or repair cost (as the case may be) in excess of $200,000 individually or in the aggregate, and any such levy, seizure or attachment shall not be set aside, bonded or discharged within thirty (30) days after the date thereof;
xiii. the Company shall fail to maintain sufficient reserved shares pursuant to Section 4(c)(vi) of this Note;
xiv. any monetary judgment, writ or similar final process shall be entered or filed against the Company, any subsidiary or any of their respective property or other assets for more than $200,000, and such judgment, writ or similar final process shall remain unvacated, unbonded or unstayed for a period of 45 calendar days.
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b) Remedies Upon Event of Default . If any Event of Default occurs, then the outstanding principal amount of this Note, and other amounts owing in respect thereof excluding liquidated damages through the date of acceleration, shall become, at the Holder’s election, immediately due and payable in cash at the Mandatory Default Amount. After the occurrence of any Event of Default that results in the eventual acceleration of this Note, the Note shall accrue interest at an interest rate equal to the lesser of 1.5 % per month (18% per annum) or the maximum rate permitted under applicable law (the “ Default Rate ”). The Default Rate shall be computed from the occurrence of the Event of Default until the date upon which the Event of Default is cured. Should the Event of Default be cured, such Interest calculated at the Default Rate shall be immediately added to the principal due under the Note, if not previously paid, without any action on the part of the Holder. Upon the payment in full of the Mandatory Default Amount, the Holder shall promptly surrender this Note to or as directed by the Company. In connection with such acceleration described herein, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of the Note until such time, if any, as the Holder receives full payment pursuant to this Section 6(b). No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon. Additionally, upon an Event of Default, this Note shall be deemed automatically amended and restated to reflect the new principal amount owed to the Holder, inclusive of the outstanding principal amount of this Note, accrued interest as set forth in Section 2(a), and other amounts owing in respect thereof excluding liquidated damages through the date of acceleration. In such event, at the Holder’s option, the Company shall issue to the Holder such an amended and restated Note within five (5) business days of the acceleration.
Section 7 . Redemption .
a) Monthly Redemption . On each Monthly Redemption Date, the Company shall redeem the Monthly Redemption Amount (the “ Monthly Redemption ”). The Monthly Redemption Amount payable on each Monthly Redemption Date shall be paid in cash; provided , however , as to any Monthly Redemption and upon 5 Trading Days’ prior written revocable notice (the “ Monthly Redemption Notice ”), in lieu of a cash redemption payment the Holder may elect to receive all or part of a Monthly Redemption Amount in Conversion Shares based on a conversion price equal to the then Conversion Price (subject to adjustment for any stock dividend, stock split, stock combination or other similar event affecting the Common Stock during such 5 Trading Day period) (the price calculated during the 5 Trading Day period immediately prior to the Monthly Redemption Date, the “ Monthly Conversion Price ” and such 5 Trading Day period, the “ Monthly Conversion Period ”); provided , further , that the Company may not pay the Monthly Redemption Amount in Conversion Shares unless from the date the Holder receives the duly delivered Monthly Redemption Notice through and until the date such Monthly Redemption is paid in full, the Equity Conditions have been satisfied, unless waived in writing by the Holder. The Holder may convert, pursuant to Section 4(a), any principal amount of this Note subject to a Monthly Redemption at any time prior to the date that the Monthly Redemption Amount, plus accrued but unpaid interest, liquidated damages and any other amounts then owing to the Holder are due and paid in full. Unless otherwise indicated by the Holder in the applicable Notice of Conversion, any principal amount of this Note converted during the applicable Monthly Conversion Period until the date the Monthly Redemption Amount is paid in full shall be first applied to the principal amount subject to the Monthly Redemption Amount payable in cash and then to the Monthly Redemption Amount payable in Conversion Shares. Any principal amount of this Note converted during the applicable Monthly Conversion Period in excess of the Monthly Redemption Amount shall be applied against the last principal amount of this Note scheduled to be redeemed hereunder, in reverse time order from the Maturity Date. The Company’s determination to pay a Monthly Redemption in cash, shares of Common Stock or a combination thereof shall be applied ratably to all of the holders of the then outstanding Notes based on their (or their predecessor’s) initial purchases of Notes pursuant to the Purchase Agreement.
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b) Redemption Procedure . The payment of cash or issuance of Common Stock, as applicable, pursuant to a Monthly Redemption shall be payable on the Monthly Redemption Date, as applicable. Notwithstanding anything herein contained to the contrary, if any portion of the Monthly Redemption Amount remains unpaid after such date, the Holder may elect, by written notice to the Company given at any time thereafter, to invalidate such Monthly Redemption, ab initio . The Holder may elect to convert the outstanding principal amount of the Note pursuant to Section 4 prior to actual payment in cash for any redemption under this Section by the delivery of a Notice of Conversion to the Company.
c) Redemption Upon Uplisting to a National Securities Exchange . Subject to the provisions of this Section, upon the earlier of (i) the first Trading Day after the Company’s registration statement for an offering that is intended to result in the Common Stock being listed for trading on a registered national securities exchange (for clarity, neither the OTCQB or OTCQX are considered a national securities exchange) is filed and the Company has given the Holder written notice of the commencement of the roadshow for such offering or (ii) the Company’s securities have been approved for trading on a national securities exchange (collectively, an “ Uplisting Event ”), the Holder shall, within one (1) Trading Day of such notice, give the Company written notice of whether such Holder will convert this Note upon the occurrence of such Uplisting Event or elect to be redeemed in cash. If the Holder elects to convert its Note, such conversion will be at the Conversion Price then in effect, without giving effect to the provisions of Section 4(e) of this Note.
d) Financing Redemption . As long as the Note is due and payable, upon the closing of a Subsequent Financing, the Company shall pay the Holder twenty-five percent (25%) of the outstanding Note principal plus the accrued and unpaid pro-rata interest. Any additional closing or additional financing conducted by the Company after the first closing of a Subsequent Financing shall also require that the Company shall pay the Holder twenty-five percent (25%) of the outstanding Note principal plus the accrued and unpaid pro-rata interest, until all amounts due and payable under this Note are satisfied in full.
Section 8 . Miscellaneous .
a) Notices . Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service, addressed to the Company, at the address set forth above, or such other facsimile number or address as the Company may specify for such purposes by notice to the Holder delivered in accordance with this Section 7(a). Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number or address of the Holder appearing on the books of the Company, or if no such facsimile number or address appears on the books of the Company, at the principal place of business of such Holder, as set forth in the Purchase Agreement. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30 p.m. (Eastern time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (Eastern time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (iv) upon actual receipt by the party to whom such notice is required to be given.
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b) Absolute Obligation . Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and liquidated damages, as applicable, on this Note at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation of the Company. This Note ranks pari passu with all other Notes now or hereafter issued under the Exchange Agreement.
c) Lost or Mutilated Note . If this Note shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, reasonably satisfactory to the Company.
d) Governing Law . All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by and construed and enforced in accordance with the internal laws of the State of Nevada, without regard to the principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the State of Nevada, (the “Nevada Courts ”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the Nevada Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such Nevada Courts, or such Nevada Courts are improper or inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Note and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Note or the transactions contemplated hereby. If any party shall commence an action or proceeding to enforce any provisions of this Note, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.
e) Waiver . Any waiver by the Company or the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Company or the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note on any other occasion. Any waiver by the Company or the Holder must be in writing.
f) Severability . If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.
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g) Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief . The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Note. The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any such breach or any such threatened breach, without the necessity of showing economic loss and without any bond or other security being required. The Company shall provide all information and documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of this Note.
h) Next Business Day . Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
i) Headings . The headings contained herein are for convenience only, do not constitute a part of this Note and shall not be deemed to limit or affect any of the provisions hereof.
j) Security . The repayment obligations under this Note are secured to the extent and in the manner set forth in the Pledge Agreement.
*********************
(Signature Pages Follow)
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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by a duly authorized officer as of the date first above indicated.
AVANT DIAGNOSTICS, inc. | ||
By: | ||
Name: | ||
Title: | ||
Facsimile No. for delivery of Notices:_______________ |
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ANNEX A
NOTICE OF CONVERSION
The undersigned hereby elects to convert principal under the Convertible Promissory Note due July __, 2019 of Avant Diagnostics, Inc. (the “ Company ”), into shares of common stock (the “ Common Stock ”), of the Company according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.
By the delivery of this Notice of Conversion the undersigned represents and warrants to the Company that its ownership of the Common Stock does not exceed the amounts specified under Section 4 of this Note, as determined in accordance with Section 13(d) of the Exchange Act.
The undersigned agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer of the aforesaid shares of Common Stock.
Conversion calculations: | ||
Date to Effect Conversion: | ||
Principal Amount of Note to be Converted: | ||
Number of shares of Common Stock to be issued: | ||
Signature: | ||
Name: | ||
DWAC Instructions: | ||
Broker No: |
||
Account No: |
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Schedule 1
CONVERSION SCHEDULE
This Convertible Promissory Note due on July __, 2019 in the original principal amount of $340,250 is issued by Avant Diagnostics, Inc. This Conversion Schedule reflects conversions made under Section 4 of the above referenced Note.
Dated:
Date of Conversion
(or for first entry, Original Issue Date) |
Amount of
Conversion |
Aggregate
Principal Amount Remaining Subsequent to Conversion (or original Principal Amount) |
Company Attest | |||||
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Exhibit 4.6
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
Original Issue Date: July 28, 2017 [Exchanged under Section 3(a)(9) for Convertible Promissory Note issued October 28, 2016]
Purchase Price: $20,000
Principal Amount: $25,600
CONVERTIBLE PROMISSORY NOTE
DUE JULY 28, 2019
THIS CONVERTIBLE PROMISSORY NOTE is one of a series of duly authorized and validly issued Convertible Promissory Notes of Avant Diagnostics, Inc., (the “ Company ”), having its principal place of business at 217 Perry Parkway, Suite 8, Gaithersburg, MD 20877, (this Note, the “ Note ” and, collectively with the other Notes of such series, the “ Notes ”).
FOR VALUE RECEIVED, the Company promises to pay to Greentree Financial Group, Inc. or its registered assigns (the “ Holder ”), or shall have paid pursuant to the terms hereunder, the principal sum of $25,600.00 (which amount is the $20,000 actual amount of the purchase price hereof plus an 28% original issue discount), together with all interest as provided in Section 2 of this Note, on July 28, 2019 (the “ Maturity Date ”) or such earlier date as this Note is required or permitted to be repaid as provided hereunder.
This Note is subject to the following additional provisions:
Section 1 . Definitions . For the purposes hereof, in addition to the terms defined elsewhere in this Note, (a) capitalized terms not otherwise defined herein shall have the meanings set forth in the Purchase Agreement and/or the Exchange Agreement and (b) the following terms shall have the following meanings:
“ Bankruptcy Event ” means any of the following events: (a) the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company or any Significant Subsidiary thereof, (b) there is commenced against the Company or any Significant Subsidiary thereof any such case or proceeding that is not dismissed within 60 days after commencement, (c) the Company or any Significant Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) the Company or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) the Company or any Significant Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the Company or any Significant Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts or (g) the Company or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.
“ Beneficial Ownership Limitation ” shall have the meaning set forth in Section 4(d).
“ Business Day ” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of Nevada are authorized or required by law or other governmental action to close.
“ Buy-In ” shall have the meaning set forth in Section 4(c)(v).
“ Change of Control Transaction ” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of 50% of the voting securities of the Company (other than by means of conversion or exercise of the Notes and the Securities issued together with the Notes), (b) the Company merges into or consolidates with any other Person, or any Person merges into or consolidates with the Company and, after giving effect to such transaction, the stockholders of the Company immediately prior to such transaction own less than 50% of the aggregate voting power of the Company or the successor entity of such transaction, (c) the Company sells or transfers all or substantially all of its assets to another Person and the stockholders of the Company immediately prior to such transaction own less than 50% of the aggregate voting power of the acquiring entity immediately after the transaction, (d) at any date after September 1, 2017, a replacement at one time or within a six-month period of more than one-half of the members of the Board of Directors which is not approved by a majority of those individuals who are members of the Board of Directors on the Original Issue Date (or by those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board of Directors was approved by a majority of the members of the Board of Directors who are members on the date hereof), or (e) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth in clauses (a) through (d) above.
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“ Conversion ” shall have the meaning ascribed to such term in Section 4.
“ Conversion Date ” shall have the meaning set forth in Section 4(a).
“ Conversion Price ” shall have the meaning set forth in Section 4(b).
“ Conversion Schedule ” means the Conversion Schedule in the form of Schedule 1 attached hereto.
“ Conversion Shares ” means, collectively, the shares of Common Stock issuable upon conversion of this Note in accordance with the terms hereof.
“ DTC ” means the Depository Trust Company.
“ DTC/FAST Program ” means the DTC’s Fast Automated Securities Transfer Program.
“ DWAC ” means Deposit Withdrawal at Custodian as defined by the DTC.
“ DWAC Eligible ” means that (a) the Common Stock is eligible at DTC for full services pursuant to DTC’s Operational Arrangements, including without limitation transfer through DTC’s DWAC system, (b) the Company has been approved (without revocation) by the DTC’s underwriting department, (c) the Transfer Agent is approved as an agent in the DTC/FAST Program, (d) the Conversion Shares are otherwise eligible for delivery via DWAC, and (e) the Transfer Agent does not have a policy prohibiting or limiting delivery of the Conversion Shares via DWAC.
“ Equity Conditions ” means, during the period in question, (a) no Event of Default shall have occurred, (b) the Company has timely filed (or obtained extensions in respect thereof and filed within the applicable grace period) all reports other than Form 8-K reports required to be filed by the Company after the date hereof pursuant to the Exchange Act, (c) on any date that the Company desires to make a payment of interest, the average daily dollar volume of the Common Stock for the previous twenty (20) Trading Days must be greater than $15,000, and (d) the Common Stock must be DWAC Eligible and not subject to a “DTC chill”..
“ Exchange Agreement ” means the Exchange Agreement, dated as of July 28, 2017 among the Company and the Holder, as amended, modified or supplemented from time to time in accordance with its terms, pursuant to which this Note has been issued.
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“ Exempt Issuance ” means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the Company pursuant to any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the Original Issue Date, provided that such securities have not been amended since the Original Issue Date to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities, (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person (or to the equity holders of a Person) which is, itself or through its subsidiaries, an operating company, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, and (d) securities which are not Common Stock or Common Stock Equivalents in connection with a public offering.
“ Event of Default ” shall have the meaning set forth in Section 6(a).
“ Mandatory Default Amount ” means the payment of 18% of the outstanding principal amount of this Note, in addition to the payment of all other amounts, costs, expenses and liquidated damages due in respect of this Note.
“ Monthly Redemption ” means the redemption of this Note pursuant to Section 7(b) hereof.
“ Monthly Redemption Amount ” means, as to a Monthly Redemption, $1482.10, which includes accrued and unpaid interest, but not any liquidated damages and any other amounts then owing to the Holder in respect of this Note.
“ Monthly Redemption Date ” means the 1 st of each month, commencing on January 1, 2018, and terminating upon the full redemption of this Note.
“ Monthly Redemption Notice ” shall have the meaning set forth in Section 7(b) hereof.
“ Nevada Courts ” shall have the meaning set forth in Section 8(d).
“ Notice of Conversion ” shall have the meaning set forth in Section 4(a).
“ Original Issue Date ” means the date of the first issuance of the Notes, regardless of any transfers of any Note and regardless of the number of instruments which may be issued to evidence such Notes.
“ Permitted Indebtedness ” means(a) the indebtedness evidenced by the Notes (b) the indebtedness issued to International Infusion LP, Infusion 51A LP and its related entities between November 2016 and January 2017 (the “ Infusion Notes ”), (c) an aggregate of up to $750,000 of indebtedness to be issued within 90 days of the Original Issue Date, provided such indebtedness is on the same terms as such securities issued to Infusion 51A LP on June 19, 2017 and (d) indebtedness that (i) is expressly subordinate to the Notes pursuant to a written subordination agreement with the Purchasers that is acceptable to each Purchaser in its sole and absolute discretion and (ii) matures at a date later than the 91 st day following the Maturity Date.
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“ Permitted Lien ” means the individual and collective reference to the following: (a) Liens for taxes, assessments and other governmental charges or levies not yet due or Liens for taxes, assessments and other governmental charges or levies being contested in good faith and by appropriate proceedings for which adequate reserves (in the good faith judgment of the management of the Company) have been established in accordance with GAAP, (b) Liens imposed by law which were incurred in the ordinary course of the Company’s business, such as carriers’, warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other similar Liens arising in the ordinary course of the Company’s business, and which (x) do not individually or in the aggregate materially detract from the value of such property or assets or materially impair the use thereof in the operation of the business of the Company and its consolidated Subsidiaries or (y) are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing for the foreseeable future the forfeiture or sale of the property or asset subject to such Lien and (c) Liens incurred in connection with Permitted Indebtedness, including but not limited to the grant of a senior security interest associated with the Infusion Notes.
“ Purchase Agreement ” means the Securities Purchase Agreement, dated as of October 28, 2016 among the Company and the original Holders, as amended, modified or supplemented from time to time in accordance with its terms.
“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“ Share Delivery Date ” shall have the meaning set forth in Section 4(c)(ii).
“ Trading Day ” means a day on which the principal Trading Market is open for trading.
“ Trading Market ” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, the OTC Bulletin Board or OTCQB (or any successors to any of the foregoing).
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Section 2 . Interest; Prepayment .
a) Interest . Payment of Interest in Cash or Kind . The Company shall pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Note at the rate of 10% per annum. All interest payments hereunder will be payable in cash, or subject to the Equity Conditions in the event of a conversion, in cash or Common Stock in the Holder’s discretion. Accrued and unpaid interest shall be due and payable on each Conversion Date (as to that principal amount then being converted) , Prepayment Date (as to that principal amount then being prepaid) , on each Monthly Conversion Date (as to that principal amount then being redeemed) and/or Maturity Date, or as otherwise set forth herein.
b) Interest Calculations . Interest shall be calculated on the basis of a 365-day year, consisting of actual calendar day periods, and shall accrue daily commencing on the Original Issue Date until payment in full of the outstanding principal, together with all accrued and unpaid interest, liquidated damages and other amounts which may become due hereunder, has been made. Interest hereunder will be paid to the Person in whose name this Note is registered on the records of the Company regarding registration and transfers of this Note (the “ Note Register ”).
c) Late Fee . All overdue accrued and unpaid interest to be paid hereunder shall entail a late fee at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted by applicable law which shall accrue daily from the date such interest is due hereunder through and including the date of actual payment in full.
b) Prepayment . At any time upon five (5) days notice written notice to the Holder, (a “ Prepayment Notice ”), the Company may prepay any portion of the principal amount of this Note. If the Company does not make such payment within the relevant Prepayment Period, it shall be required to deliver a new Prepayment Notice, and repeat the procedures set forth in this Section 2, prior to pre-paying any portion of this Note. The Holder may continue to convert the Note from the date of its receipt of any Prepayment Notice until the beginning of the Prepayment Period.
Section 3. Registration of Transfers and Exchanges .
a) Different Denominations . This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the Holder surrendering the same. No service charge will be payable for such registration of transfer or exchange.
b) Investment Representations . This Note has been issued subject to certain investment representations of the original Holder set forth in the Purchase Agreement and Exchange Agreement and may be transferred or exchanged only in compliance with the Purchase Agreement and Exchange Agreement and applicable federal and state securities laws and regulations.
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c) Reliance on Note Register . Prior to due presentment for transfer to the Company of this Note, the Company and any agent of the Company may treat the Person in whose name this Note is duly registered on the Note Register as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Note is overdue, and neither the Company nor any such agent shall be affected by notice to the contrary.
Section 4. Conversion .
a) Voluntary Conversion . At any time after the Original Issue Date until this Note is no longer outstanding, this Note shall be convertible, in whole or in part, into shares of Common Stock at the option of the Holder, at any time and from time to time (subject to the conversion limitations set forth in Section 4(d) hereof). The Holder shall effect conversions by delivering to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “ Notice of Conversion ”), specifying therein the principal amount of this Note to be converted and the date on which such conversion shall be effected (such date, the “ Conversion Date ”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder. No ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Conversion form be required. To effect conversions hereunder, the Holder shall not be required to physically surrender this Note to the Company unless the entire principal amount of this Note, plus all accrued and unpaid interest thereon, has been so converted. Conversions hereunder shall have the effect of lowering the outstanding principal amount of this Note in an amount equal to the applicable conversion. The Holder and the Company shall maintain records showing the principal amount(s) converted and the date of such conversion(s). The Company may deliver an objection to any Notice of Conversion within one (1) Business Day of delivery of such Notice of Conversion. In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest error. The Holder, and any assignee by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note may be less than the amount stated on the face hereof.
b) Conversion Price . The conversion price in effect on any Conversion Date shall be equal to six cents ($0.06), subject adjustment herein (the “ Conversion Price ”).
c) All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction that proportionately decreases or increases the Common Stock during such measuring period. Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section 6 hereof and the Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.
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d) Mechanics of Conversion .
i. Conversion Shares Issuable Upon Conversion of Principal Amount . The number of Conversion Shares issuable upon a conversion hereunder shall be determined by the quotient obtained by dividing (x) the outstanding principal amount and interest (if issued in shares in accordance with Section 2(a) above) of this Note to be converted by (y) the Conversion Price.
ii. Delivery of Certificate Upon Conversion . Not later than three (3) Trading Days after each Conversion Date (the “ Share Delivery Date ”), the Company shall deliver, or cause to be delivered, to the Holder a certificate or certificates representing the Conversion Shares which, subject to applicable securities laws, on or after the earlier of (i) the six month anniversary of the Original Issue Date or (ii) the Effective Date, shall be free of restrictive legends and trading restrictions (other than those which may then be required by the Purchase Agreement) representing the number of Conversion Shares being acquired upon the conversion of this Note. All certificate or certificates required to be delivered by the Company under this Section 4(c) shall be delivered electronically through the Depository Trust Company or another established clearing corporation performing similar functions. Subject to applicable securities laws, if the Conversion Date is prior to the earlier of (i) the six month anniversary of the Original Issue Date or (ii) the Effective Date, then the Conversion Shares shall bear a restrictive legend in the following form, as appropriate:
“NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.”
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iii. Failure to Deliver Certificates . If, in the case of any Notice of Conversion, such certificate or certificates are not delivered to or as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to the Company at any time on or before its receipt of such certificate or certificates, to rescind such Conversion, in which event the Company shall promptly return to the Holder any original Note delivered to the Company and the Holder shall promptly return to the Company the Common Stock certificates issued to such Holder pursuant to the rescinded Conversion Notice.
iv. Obligation Absolute; Partial Liquidated Damages . The Company’s obligations to issue and deliver the Conversion Shares upon conversion of this Note in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of such Conversion Shares; provided , however , that such delivery shall not operate as a waiver by the Company of any such action the Company may have against the Holder. In the event the Holder of this Note shall elect to convert any or all of the outstanding principal amount hereof, the Company may not refuse conversion based on any claim that the Holder or anyone associated or affiliated with the Holder has been engaged in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and or enjoining conversion of all or part of this Note shall have been sought and obtained, and the Company posts a surety bond for the benefit of the Holder in the amount of 150% of the outstanding principal amount of this Note, which is subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which shall be payable to the Holder to the extent it obtains judgment. In the absence of such injunction, the Company shall issue Conversion Shares or, if applicable, cash, upon a properly noticed conversion. If the Company fails for any reason to deliver to the Holder such certificate or certificates pursuant to Section 4(c)(ii) by the Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of principal amount being converted, $10 per Trading Day (increasing to $20 per Trading Day on the fifth (5 th ) Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Share Delivery Date until such certificates are delivered or Holder rescinds such conversion. Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section 6 hereof for the Company’s failure to deliver Conversion Shares within the period specified herein and the Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.
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v. Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Conversion . In addition to any other rights available to the Holder, if the Company fails for any reason to deliver to the Holder such certificate or certificates by the Share Delivery Date pursuant to Section 4(c)(ii), and if after such Share Delivery Date the Holder is required by its brokerage firm to purchase (in an open market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Conversion Shares which the Holder was entitled to receive upon the conversion relating to such Share Delivery Date (a “ Buy-In ”), then the Company shall (A) pay in cash to the Holder (in addition to any other remedies available to or elected by the Holder) the amount, if any, by which (x) the Holder’s total purchase price (including any brokerage commissions) for the Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common Stock that the Holder was entitled to receive from the conversion at issue multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and (B) at the option of the Holder, either reissue (if surrendered) this Note in a principal amount equal to the principal amount of the attempted conversion (in which case such conversion shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued if the Company had timely complied with its delivery requirements under Section 4(c)(ii). For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of this Note with respect to which the actual sale price of the Conversion Shares (including any brokerage commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon conversion of this Note as required pursuant to the terms hereof.
vi. Reservation of Shares Issuable Upon Conversion . The Company covenants that, subject to the terms and conditions set forth in the Purchase Agreement, it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock a number of shares of Common Stock at least equal to the following formula: 3 x (P/CP), where P equals the outstanding principal amount of this Note from time to time and CP equals the Conversion Price in effect from time to time, in the name of the Holder, for the sole purpose of issuance upon conversion of this Note, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder (and the other holders of the Notes), not less than such aggregate number of shares of the Common Stock as shall (subject to the terms and conditions set forth in the Purchase Agreement) be issuable (taking into account the adjustments and restrictions of Section 5) upon the conversion of the then outstanding principal amount of this Note. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and non-assessable. The Company shall have executed and on file with the transfer agent irrevocable instructions for the transfer agent to reserve and issue common shares in accordance with the terms of this Note.
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vii. Fractional Shares . No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this Note. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the Company shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion Price or round up to the next whole share.
viii. Transfer Taxes and Expenses . The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates, provided that, the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of this Note so converted and the Company shall not be required to issue or deliver such certificates unless or until the Person or Persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Conversion.
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ix. Holder’s Conversion Limitations . The Company shall not effect any conversion of this Note, and a Holder shall not have the right to convert any portion of this Note, to the extent that after giving effect to the conversion set forth on the applicable Notice of Conversion, the Holder (together with the Holder’s Affiliates, and any Persons acting as a group together with the Holder or any of the Holder’s Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon conversion of this Note with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (i) conversion of the remaining, unconverted principal amount of this Note beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein (including, without limitation, any other Notes or the Warrants) beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 4(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section 4(d) applies, the determination of whether this Note is convertible (in relation to other securities owned by the Holder together with any Affiliates) and of which principal amount of this Note is convertible shall be in the sole discretion of the Holder, and the submission of a Notice of Conversion shall be deemed to be the Holder’s determination of whether this Note may be converted (in relation to other securities owned by the Holder together with any Affiliates) and which principal amount of this Note is convertible, in each case subject to the Beneficial Ownership Limitation. To ensure compliance with this restriction, the Holder will be deemed to represent to the Company each time it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 4(d), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (i) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (ii) a more recent public announcement by the Company, or (iii) a more recent written notice by the Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Note, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “ Beneficial Ownership Limitation ” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Note held by the Holder. The Holder, upon not less than 61 days’ prior notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section, provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of this Note held by the Holder and the Beneficial Ownership Limitation provisions of this Section shall continue to apply. Any such increase or decrease will not be effective until the 61 st day after such notice is delivered to the Company. The Beneficial Ownership Limitation provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Note.
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Section 5 . Certain Adjustments .
a) Stock Dividends and Stock Splits . If the Company, at any time while this Note is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion of, the Notes), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Company) outstanding immediately before such event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
b) Calculations . All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Company) issued and outstanding.
c) Notice to the Holder .
i. Adjustment to Conversion Price . Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5, the Company shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.
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ii. Notice to Allow Conversion by Holder . If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of this Note, and shall cause to be delivered to the Holder at its last address as it shall appear upon the Note Register, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to convert this Note during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
Section 6 . Events of Default .
a) “ Event of Default ” means, wherever used herein, any of the following events (whatever the reason for such event and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
i. any default in the payment of the principal amount of this Note and other amounts owing to the Holder of this Note, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise), w hich default, is not cured within 5 Trading Days ;
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ii. the Company shall fail to observe or perform any other material covenant or material agreement contained in the Notes (other than a breach by the Company of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed in clause (ix) below) which failure is not cured, if possible to cure, within the earlier to occur of (A) 5 Trading Days after notice of such failure sent by the Holder or by any other Holder to the Company and (B) 10 Trading Days after the Company has become or should have become aware of such failure;
iii. a material default or event of default (subject to any grace or cure period provided in the applicable agreement, document or instrument) shall occur under (A) any of the Transaction Documents or (B) any other material agreement, lease, document or instrument to which the Company or any Subsidiary is obligated (and not covered by clause (vi) below);
iv. any material representation or warranty made in this Note, any other Transaction Documents, any written statement pursuant hereto or thereto or any other report, financial statement or certificate made or delivered to the Holder or any other Holder shall be untrue or incorrect in any material respect as of the date when made or deemed made;
v. the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) shall be subject to a Bankruptcy Event;
vi. except for the Infusion Notes which are currently in default, the Company or any Subsidiary shall default on any of its obligations under any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced, any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation greater than $200,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;
vii. the Common Stock shall not be eligible for listing or quotation for trading on a Trading Market and shall not be eligible to resume listing or quotation for trading thereon within five Trading Days or the transfer of shares of Common Stock through the Depository Trust Company System is no longer available or “chilled” w hich default, is not cured within 5 Trading Days ;
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viii. the Company shall be a party to any Change of Control Transaction or Fundamental Transaction or shall agree to sell or dispose of all or substantially all of its assets in one transaction or a series of related transactions (whether or not such sale would constitute a Change of Control Transaction);
ix. the Company shall fail for any reason to deliver certificates via DWAC to a Holder prior to the third Trading Day after a Conversion Date pursuant to Section 4(c) or the Company shall provide at any time notice to the Holder, including by way of public announcement, of the Company’s intention to not honor requests for conversions of any Notes in accordance with the terms hereof;
x. if the Company or any Significant Subsidiary shall: (i) apply for or consent to the appointment of a receiver, trustee, custodian or liquidator of it or any of its properties, (ii) admit in writing its inability to pay its debts as they mature, (iii) make a general assignment for the benefit of creditors, (iv) be adjudicated a bankrupt or insolvent or be the subject of an order for relief under Title 11 of the United States Code or any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute of any other jurisdiction or foreign country, or (v) file a voluntary petition in bankruptcy, or a petition or an answer seeking reorganization or an arrangement with creditors or to take advantage or any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against it in any proceeding under any such law, or (vi) take or permit to be taken any action in furtherance of or for the purpose of effecting any of the foregoing;
xi. if any order, judgment or decree shall be entered, without the application, approval or consent of the Company or any Significant Subsidiary, by any court of competent jurisdiction, approving a petition seeking liquidation or reorganization of the Company or any Subsidiary, or appointing a receiver, trustee, custodian or liquidator of the Company or any Subsidiary, or of all or any substantial part of its assets, and such order, judgment or decree shall continue unstayed and in effect for any period of sixty (60) days;
xii. the occurrence of any levy upon or seizure or attachment of, or any uninsured loss of or damage to, any property of the Company or any Subsidiary having an aggregate fair value or repair cost (as the case may be) in excess of $200,000 individually or in the aggregate, and any such levy, seizure or attachment shall not be set aside, bonded or discharged within thirty (30) days after the date thereof;
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xiii. the Company shall fail to maintain sufficient reserved shares pursuant to Section 4(c)(vi) of this Note;
xiv. any monetary judgment, writ or similar final process shall be entered or filed against the Company, any subsidiary or any of their respective property or other assets for more than $200,000, and such judgment, writ or similar final process shall remain unvacated, unbonded or unstayed for a period of 45 calendar days.
xv. Beginning after the filing of the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2017, the Company shall fail to timely file with the SEC any periodic report or XBRL data required under the Securities Exchange Act of 1934, or to post the same on its website.
b) Remedies Upon Event of Default . If any Event of Default occurs, then the outstanding principal amount of this Note, and other amounts owing in respect thereof excluding liquidated damages through the date of acceleration, shall become, at the Holder’s election, immediately due and payable in cash at the Mandatory Default Amount. After the occurrence of any Event of Default that results in the eventual acceleration of this Note, the Note shall accrue interest at an interest rate equal to the lesser of 1.5% per month (18% per annum) or the maximum rate permitted under applicable law (the “ Default Rate ”). The Default Rate shall be computed from the occurrence of the Event of Default until the date upon which the Event of Default is cured. Should the Event of Default be cured, such Interest calculated at the Default Rate shall be immediately added to the principal due under the Note, if not previously paid, without any action on the part of the Holder. Upon the payment in full of the Mandatory Default Amount, the Holder shall promptly surrender this Note to or as directed by the Company. In connection with such acceleration described herein, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of the Note until such time, if any, as the Holder receives full payment pursuant to this Section 6(b). No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon. Additionally, upon an Event of Default, this Note shall be deemed automatically amended and restated to reflect the new principal amount owed to the Holder, inclusive of the outstanding principal amount of this Note, accrued interest as set forth in Section 2(a), and other amounts owing in respect thereof excluding liquidated damages through the date of acceleration. In such event, at the Holder’s option, the Company shall issue to the Holder such an amended and restated Note within five (5) business days of the acceleration.
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Section 7 . Redemption .
a) Monthly Redemption . On each Monthly Redemption Date, the Company shall redeem the Monthly Redemption Amount (the “ Monthly Redemption ”). The Monthly Redemption Amount payable on each Monthly Redemption Date shall be paid in cash; provided , however , as to any Monthly Redemption and upon 5 Trading Days’ prior written revocable notice (the “ Monthly Redemption Notice ”), in lieu of a cash redemption payment the Holder may elect to receive all or part of a Monthly Redemption Amount in Conversion Shares based on a conversion price equal to the then Conversion Price (subject to adjustment for any stock dividend, stock split, stock combination or other similar event affecting the Common Stock during such 5 Trading Day period) (the price calculated during the 5 Trading Day period immediately prior to the Monthly Redemption Date, the “ Monthly Conversion Price ” and such 5 Trading Day period, the “ Monthly Conversion Period ”); provided , further , that the Company may not pay the Monthly Redemption Amount in Conversion Shares unless from the date the Holder receives the duly delivered Monthly Redemption Notice through and until the date such Monthly Redemption is paid in full, the Equity Conditions have been satisfied, unless waived in writing by the Holder. The Holder may convert, pursuant to Section 4(a), any principal amount of this Note subject to a Monthly Redemption at any time prior to the date that the Monthly Redemption Amount, plus accrued but unpaid interest, liquidated damages and any other amounts then owing to the Holder are due and paid in full. Unless otherwise indicated by the Holder in the applicable Notice of Conversion, any principal amount of this Note converted during the applicable Monthly Conversion Period until the date the Monthly Redemption Amount is paid in full shall be first applied to the principal amount subject to the Monthly Redemption Amount payable in cash and then to the Monthly Redemption Amount payable in Conversion Shares. Any principal amount of this Note converted during the applicable Monthly Conversion Period in excess of the Monthly Redemption Amount shall be applied against the last principal amount of this Note scheduled to be redeemed hereunder, in reverse time order from the Maturity Date. The Company’s determination to pay a Monthly Redemption in cash, shares of Common Stock or a combination thereof shall be applied ratably to all of the holders of the then outstanding Notes based on their (or their predecessor’s) initial purchases of Notes pursuant to the Purchase Agreement.
b) Redemption Procedure . The payment of cash or issuance of Common Stock, as applicable, pursuant to a Monthly Redemption shall be payable on the Monthly Redemption Date, as applicable. Notwithstanding anything herein contained to the contrary, if any portion of the Monthly Redemption Amount remains unpaid after such date, the Holder may elect, by written notice to the Company given at any time thereafter, to invalidate such Monthly Redemption, ab initio . The Holder may elect to convert the outstanding principal amount of the Note pursuant to Section 4 prior to actual payment in cash for any redemption under this Section by the delivery of a Notice of Conversion to the Company.
c) Redemption Upon Uplisting to a National Securities Exchange . Subject to the provisions of this Section, upon the earlier of (i) the first Trading Day after the Company’s registration statement for an offering that is intended to result in the Common Stock being listed for trading on a registered national securities exchange (for clarity, neither the OTCQB or OTCQX are considered a national securities exchange) is filed and the Company has given the Holder written notice of the commencement of the roadshow for such offering or (ii) the Company’s securities have been approved for trading on a national securities exchange (collectively, an “ Uplisting Event ”), the Holder shall, within one (1) Trading Day of such notice, give the Company written notice of whether such Holder will continue to convert this Note following the occurrence of such Uplisting Event or elect to be redeemed in cash.
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d) Financing Redemption . As long as the Note is due and payable, upon the aggregate raising of $2,000,000.00 by the Company, the Company shall pay the Holder twenty-five percent (25%) of the outstanding Note principal plus the accrued and unpaid pro-rata interest. If the $2,000,000 shall be raised by the Company, any subsequent financings by the Company, whether in debt or equity, shall also require that the Company shall pay the Holder twenty-five percent (25%) of the outstanding Note principal plus the accrued and unpaid pro-rata interest.
Section 8 . Miscellaneous .
a) Notices . Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service, addressed to the Company, at the address set forth above, or such other facsimile number or address as the Company may specify for such purposes by notice to the Holder delivered in accordance with this Section 7(a). Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number or address of the Holder appearing on the books of the Company, or if no such facsimile number or address appears on the books of the Company, at the principal place of business of such Holder, as set forth in the Purchase Agreement. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30 p.m. (Eastern time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (Eastern time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (iv) upon actual receipt by the party to whom such notice is required to be given.
b) Absolute Obligation . Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and liquidated damages, as applicable, on this Note at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation of the Company. This Note ranks pari passu with all other Notes now or hereafter issued under the Exchange Agreement.
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c) Lost or Mutilated Note . If this Note shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, reasonably satisfactory to the Company.
d) Governing Law . All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by and construed and enforced in accordance with the internal laws of the State of Nevada, without regard to the principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the State of Nevada, (the “Nevada Courts ”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the Nevada Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such Nevada Courts, or such Nevada Courts are improper or inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Note and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Note or the transactions contemplated hereby. If any party shall commence an action or proceeding to enforce any provisions of this Note, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.
e) Waiver . Any waiver by the Company or the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Company or the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note on any other occasion. Any waiver by the Company or the Holder must be in writing.
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f) Severability . If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.
g) Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief . The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Note. The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any such breach or any such threatened breach, without the necessity of showing economic loss and without any bond or other security being required. The Company shall provide all information and documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of this Note.
h) Next Business Day . Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
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i) Headings . The headings contained herein are for convenience only, do not constitute a part of this Note and shall not be deemed to limit or affect any of the provisions hereof.
j) Assumption . Any successor to the Company or any surviving entity in a Change of Control Transaction shall (i) assume, prior to such Change of Control Transaction, all of the obligations of the Company under this Note pursuant to written agreements in form and substance satisfactory to the Holder (such approval not to be unreasonably withheld or delayed) and (ii) issue to the Holder a new note of such successor entity evidenced by a written instrument substantially similar in form and substance to this Note, including, without limitation, having a principal amount and interest rate equal to the principal amount and the interest rate of this Note and having similar ranking to this Note, which shall be satisfactory to the Holder (any such approval not to be unreasonably withheld or delayed). The provisions of this Section shall apply similarly and equally to successive Change of Control Transactions and shall be applied without regard to any limitations of this Note.
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(Signature Pages Follow)
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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by a duly authorized officer as of the date first above indicated.
AVANT DIAGNOSTICS, inc. |
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By: | ||
Name: Title:
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Facsimile No. for delivery of Notices: |
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ANNEX A
NOTICE OF CONVERSION
The undersigned hereby elects to convert principal under the Convertible Promissory Note due July 28, 2019 of Avant Diagnostics, Inc. (the “ Company ”), into shares of common stock (the “ Common Stock ”), of the Company according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.
By the delivery of this Notice of Conversion the undersigned represents and warrants to the Company that its ownership of the Common Stock does not exceed the amounts specified under Section 4 of this Note, as determined in accordance with Section 13(d) of the Exchange Act.
The undersigned agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer of the aforesaid shares of Common Stock.
Conversion calculations:
Date to Effect Conversion: | |
Principal Amount of Note to be Converted: | |
Number of shares of Common Stock to be issued: | |
Signature: | |
Name: | |
DWAC Instructions: | |
Broker No: | |
Account No: |
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Schedule 1
CONVERSION SCHEDULE
This Convertible Promissory Note due on July 28, 2019 in the original principal amount of $25,600 is issued by Avant Diagnostics, Inc. This Conversion Schedule reflects conversions made under Section 4 of the above referenced Note.
Dated:
Date of Conversion
(or for first entry, Original Issue Date) |
Amount of Conversion |
Aggregate Principal Amount Remaining Subsequent to Conversion
(or original Principal Amount) |
Company Attest | |||||
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Exhibit 4.7
SENIOR SECURED CONVERTIBLE PROMISSORY NOTE
NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTIONS 3(c)(ii) AND 12(a) HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(ii) OF THIS NOTE .
AVANT DIAGNOSTICS, INC.
Senior Secured Convertible Promissory Note
Issuance Date: August_8, 2017 | Original Principal Amount: US $75,000.00 |
FOR VALUE RECEIVED, Avant Diagnostics, Inc., a Nevada corporation (the “ Company ”), hereby promises to pay to the order of Xpress Group International Limited, a Hong Kong Limited company located at Unit B, 17th Floor, Greatmany Centre, 109-111 Queen's Road East, Wan Chai, Hong Kong or its assigns (“ Holder ”) the amount set forth above as the Original Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the “ Principal ”) when due, whether upon the Maturity Date (as defined below), or upon acceleration, redemption or otherwise (in each case in accordance with the terms hereof) and to pay interest (“ Interest ”) on any outstanding Principal at the applicable Interest Rate (as defined below) from the date set forth above as the Issuance Date (the “ Issuance Date ”) until the same becomes due and payable, whether upon the Maturity Date, or upon acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof). This Senior Secured Convertible Note (including all Senior Secured Convertible Notes issued in exchange, transfer or replacement hereof, this “ Note ”) is one of an issue of Senior Secured Convertible Notes issued pursuant to that Securities Purchase Agreement, dated as of August 8, 2017 (the “ Subscription Date ”), by and among the Company and the investors (the “ Buyers ”) referred to therein, as amended from time to time (collectively, the “ Notes ”, and such other Senior Secured Convertible Notes, the “ Other Notes ”). Certain capitalized terms used herein are defined in Section 22.
1. PAYMENTS OF PRINCIPAL .
(a) On the Maturity Date, all outstanding Principal, accrued and unpaid Interest shall be due and payable to the Holder. Other than as specifically permitted by this Note, the Company may not prepay any portion of the outstanding Principal and accrued and unpaid Interest or accrued.
(b) Following the six (6) month anniversary of the Closing Date, the Holder shall have the option to call on the Company for the redemption of the Note from the Holder, provided that the Company has raised sufficient funds to repay this Note. In the event of such optional redemption, the Holder shall be paid in the full principal amount and all other accrued and unpaid interest to the date of redemption.
2. INTEREST; INTEREST RATE . Interest on this Note shall accrue monthly at a rate of eight (8%) per annum (the “ Interest Rate ”) on the outstanding Principal amount, and shall be computed on the basis of a 360-day year comprised of twelve (12) thirty (30) day months.
3. CONVERSION OF NOTES . At any time after the Issuance Date, but no later than the Maturity Date, this Note may be converted by the Holder into validly issued, fully paid and non-assessable shares of Company Common Stock (as defined below), on the terms and conditions set forth in this Section 3.
(a) Conversion Right . Subject to the provisions of Section 3, at any time or times on or after the Issuance Date, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into validly issued, fully paid and non-assessable shares of Company Common Stock (as defined below) in accordance with Section 3(c), at the applicable Conversion Rate (as defined below). The Company shall not issue any fraction of a share of Company Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Company Common Stock, the Company shall round such fraction of a share of Company Common Stock up to the nearest whole share. The Company shall pay any and all transfer, stamp, issuance and similar taxes, costs and expenses (including, without limitation, fees and expenses of the Transfer Agent (as defined below)) that may be payable with respect to the issuance and delivery of Company Common Stock upon conversion of any Conversion Amount.
(b) Conversion Rate . The number of shares of Company Common Stock, issuable upon conversion of any Conversion Amount pursuant to Section 3(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the “ Conversion Rate ”).
(i) “ Conversion Amount ” means the sum of (x) the portion of the Principal to be converted, redeemed or otherwise with respect to which this determination is being made and (y) all accrued and unpaid Interest with respect to such portion of the Principal amount, if any.
(ii) “ Conversion Price ” means, as of any Conversion Date or other date of determination, with respect to Company Common Stock, will be $0.06 per share.
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(c) Mechanics of Conversion .
(i) Conversion . To convert any Conversion Amount into shares of Common Stock on any date (a “ Conversion Date ”), the Holder shall deliver (whether via facsimile, electronic mail or otherwise), for receipt on or prior to 11:59 p.m., New York time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit I (the “ Conversion Notice ”) to the Company. If required by Section 3(c)(ii), within three (3) Trading Days following a conversion of this Note as aforesaid, the Holder shall surrender this Note to a nationally recognized overnight delivery service for delivery to the Company (or an indemnification undertaking with respect to this Note in the case of its loss, theft or destruction as contemplated by Section 12(b)). On or before the first (1st) Trading Day following the date of receipt of a Conversion Notice, the Company shall transmit by facsimile or electronic mail an acknowledgment of confirmation, in the form attached hereto as Exhibit II , of receipt of such Conversion Notice to the Holder and the Company’s transfer agent (the “ Transfer Agent ”) which confirmation shall constitute an instruction to the Transfer Agent to process such Conversion Notice in accordance with the terms herein. On or before the third (3rd) Trading Day following the date on which the Company has received a Conversion Notice the Company shall issue and deliver (via reputable overnight courier) to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for the number of shares of Company Common Stock to which the Holder shall be entitled pursuant to such conversion pursuant Section 3(c)(iii). If this Note is physically surrendered for conversion pursuant to Section 3(c)(ii) or 3(c)(iii) and the outstanding Principal of this Note is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than three (3) Business Days after receipt of this Note and at its own expense, issue and deliver to the Holder (or its designee) a new Note (in accordance with Section 12(d)) representing the outstanding Principal not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date.
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(ii) Registration; Book-Entry . The Company shall maintain a register (the “ Register ”) for the recordation of the names and addresses of the holders of each Note and the principal amount of the Notes held by such holders held by such holders (the “ Registered Notes ”). The entries in the Register shall be conclusive and binding for all purposes absent manifest error. The Company and the holders of the Notes shall treat each Person whose name is recorded in the Register as the owner of a Note for all purposes (including, without limitation, the right to receive payments of Principal and Interest hereunder) notwithstanding notice to the contrary. A Registered Note may be assigned, transferred or sold in whole or in part only by registration of such assignment or sale on the Register. Upon its receipt of a written request to assign, transfer or sell all or part of any Registered Note by the holder thereof, the Company shall record the information contained therein in the Register and issue one or more new Registered Notes in the same aggregate principal amount as the principal amount of the surrendered Registered Note to the designated assignee or transferee pursuant to Section 12, provided that if the Company does not so record an assignment, transfer or sale (as the case may be) of all or part of any Registered Note within two (2) Business Days of such a request, then the Register shall be automatically deemed updated to reflect such assignment, transfer or sale (as the case may be). Notwithstanding anything to the contrary set forth in this Section 3, following conversion of any portion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless (A) the full Conversion Amount represented by this Note is being converted (in which event this Note shall be delivered to the Company following conversion thereof as contemplated by Section 3(c)(i)) or (B) the Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of this Note upon physical surrender of this Note. The Holder and the Company shall maintain records showing the Principal and Interest converted and/or paid (as the case may be) and the dates of such conversions and/or payments (as the case may be) or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Note upon conversion. If the Company does not update the Register to record such Principal and Interest converted and/or paid (as the case may be) and the dates of such conversions and/or payments (as the case may be) within two (2) Business Days of such occurrence, then the Register shall be automatically deemed updated to reflect such occurrence.
(iii) Pro Rata Conversion; Disputes . In the event that the Company receives a Conversion Notice from more than one holder of Notes for the same Conversion Date and the Company can convert some, but not all, of such portions of the Notes submitted for conversion, the Company, subject to Section shall convert from each holder of Notes electing to have Notes converted on such date a pro rata amount of such holder’s portion of its Notes submitted for conversion based on the principal amount of Notes submitted for conversion on such date by such holder relative to the aggregate principal amount of all Notes submitted for conversion on such date. In the event of a dispute as to the number of shares of Company Common Stock issuable to the Holder in connection with a conversion of this Note, the Company shall issue to the Holder the number of shares of Company Common Stock not in dispute and resolve such dispute in accordance with Section 19.
4. RIGHTS OF HOLDER UPON EVENT OF DEFAULT .
(a) Event of Default . Each of the following events shall constitute an “ Event of Default ”:
(i) the Company’s failure to pay to the Holder any amount of Principal, Interest, or other amounts when and as due under this Note;
(ii) bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted by or against the Company or any Subsidiary and, if instituted against the Company by a third party, shall not be dismissed within thirty (30) days of their initiation;
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(iii) a final judgment or judgments for the payment of money aggregating in excess of $250,000 are rendered against the Company on or after the Subscription Date which judgments are not, within thirty (30) days after the entry thereof, bonded, discharged, settled or stayed pending appeal, or are not discharged within thirty (30) days after the expiration of such stay; provided, however, any judgment which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $250,000 amount set forth above so long as the Company provides the Holder a written statement from such insurer or indemnity provider (which written statement shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company will receive the proceeds of such insurance or indemnity within thirty (30) days of the issuance of such judgment;
(iv) other than as specifically set forth in another clause of this Section 4(a), the Company breaches any material representation, warranty, covenant or other term or condition of any Transaction Document, except, in the case of a breach of a covenant or other term or condition that is curable, only if such breach remains uncured for a period of fifteen (15) consecutive Business Days; or
(v) any Material Adverse Effect (as defined in the Securities Purchase Agreement) occurs.
(b) Holder’s Remedies Upon an Event of Default . Notwithstanding anything to the contrary herein, and notwithstanding any conversion that is then required or in process, upon any Event of Default, the Company shall immediately pay to the Holder an amount in cash representing all outstanding Principal and accrued and unpaid Interest in addition to any and all other amounts due hereunder, without the requirement for any notice or demand or other action by the Holder or any other person or entity, provided that the Holder may, in its sole discretion, waive such right to receive payment upon an Event of Default, in whole or in part, and any such waiver shall not affect any other rights of the Holder hereunder, including any other rights in respect of such Event of Default, any right to conversion. The Holder has the right to enforce all remedies available in law or equity as against the Company, including but not limited to foreclosing on the Pledge Agreement, without the need to make any election of remedies or to allocate recovery against the Company in any way whatsoever.
5. HOLDER’S RIGHTS UPON CHANGE OF CONTROL.
(a) No sooner than twenty (20) Trading Days nor later than ten (10) Trading Days prior to the consummation of a transaction that would result in a Change of Control (the “ Change of Control Date ”), but not prior to the public announcement of such Change of Control, the Company shall deliver written notice thereof via facsimile or electronic mail and overnight courier to the Holder (a “ Change of Control Notice ”). At any time during the period beginning after the Holder’s receipt of a Change of Control Notice or the Holder becoming aware of a Change of Control if a Change of Control Notice is not delivered to the Holder in accordance with the immediately preceding sentence (as applicable) and ending on the later of twenty (20) Trading Days after (A) consummation of such Change of Control or (B) the date of receipt of such Change of Control Notice, the Holder may elect (i) to declare this Note payable in cash on demand as of the closing of the transaction giving rise to a Change of Control or (ii) redeem this Note in full for a payment equal to the amount Holder would have received if the Note had been converted pursuant to Section 3 of this Note immediately prior to the transaction giving rise to a Change of Control, in each case to be paid in the same form of consideration (e.g. a mix of cash and stock) received by the other existing equity holders of the Company in connection with the transaction giving rise to a Change of Control.
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6. HOLDER’S FINANCING RIGHTS .
(a) Right of First Refusal. Within 5 days of receipt of any bona fide investment offer whereby the Company will, if such proposed transaction is consummated, either (i) obtain additional debt financing not in existence on the Issuance Date or (ii) sell or transfer shares of Company Common Stock owned by the Company to a third party, the Company shall deliver a written notice (the “ Company Transaction Notice ”) to Holder notifying Holder of the material terms of such proposed financing or sale of Company Common Stock. After receiving a Company Transaction Notice, Holder shall have the right (the “ Right of Refusal ”) to provide additional debt financing to the Company, or purchase shares of Company Common Stock, in the applicable Holder Pro-Rata Amount, within 10 days after the Company Transaction Notice has been delivered to Holder (the “ Right of Refusal Election Period ”). Holder may elect to exercise its Right of Refusal by delivering a written notice to the Company of such election setting forth the amount of debt financing it desires to provide in response to the Company Transaction Notice. Upon the expiration of the Right of Refusal Election Period, to the extent that Holder does not notify the company of its intent to exercise its Right of Refusal, then Holder’s Right of Refusal shall terminate.
(b) Most Favored Nation. During the term of the Note, if the Company engages in any future financing transactions with a third party investor, the Company will provide the Holder with written notice (the “ MFN Notice ”) thereof promptly but in no event less than 10 days prior to closing any financing transactions. Included with the MFN Notice shall be a copy of all documentation relating to such financing transaction and shall include, upon written request of the Holder, any additional information related to such subsequent investment as may be reasonably requested by the Holder. In the event the Holder determines that the terms of the subsequent investment are preferable to the terms of the Securities of the Company issued to the Holder pursuant to the terms of the Purchase Agreement, the Holder will notify the Company in writing. Promptly after receipt of such written notice from the Holder, the Company agrees to amend and restate the Securities, and, as necessary, adjust the number of bonus shares, to be identical to the instruments evidencing the subsequent investment and any bonus shares issued in connection therewith.
(c) Notwithstanding the foregoing, this Section 4.12 shall not apply in respect of (i) an Exempt Issuance, or (ii) an underwritten public offering of Common Stock.
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7. VOTING RIGHTS . The Holder shall have no voting rights as the holder of this Note, except as required by law (including, without limitation, Chapter 78 of the Nevada Revised Statute) and as expressly provided in this Note.
8. COVENANTS . Until all of the Notes have been converted, redeemed or otherwise satisfied in accordance with their terms:
(a) Rank . The Note will rank senior in right of payment to all present senior indebtedness, liabilities and obligations of the Company for money borrowed from banks, insurance companies and other financial institutions in the business of regularly lending money, and also in right of payment to all other present and future unsecured obligations of the Company .
(b) Change in Nature of Business . The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, engage in any material line of business substantially different from those lines of business conducted by or publicly contemplated to be conducted by the Company and each of its Subsidiaries on the Subscription Date. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, modify its or their corporate structure or purpose.
(c) Preservation of Existence, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, its existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of the Business makes such qualification necessary.
(d) Restricted Issuances . The Company shall not, directly or indirectly, without the prior written consent of the holders of a majority in aggregate principal amount of the Notes then outstanding issue any Notes or securities (other than as contemplated by the Securities Purchase Agreement and the Notes) that would cause a breach or default under the Notes.
9. SECURITY . This Note and the Other Notes are secured to the extent and in the manner set forth in the Transaction Documents (including, without limitation, the Pledge Agreement ).
10. AMENDING THE TERMS OF THIS NOTE . The prior written consent of the Holder shall be required for any change, waiver or amendment to this Note.
11. TRANSFER . This Note and any shares of Company Common Stock issued upon conversion of this Note may be offered, sold, assigned or transferred by the Holder without the consent of the Company, subject only to the provisions of Section 3(g) of the Securities Purchase Agreement.
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12. REISSUANCE OF THIS NOTE .
(a) Transfer . If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Note, registered as the Holder may request, representing the outstanding Principal being transferred by the Holder and, if less than the entire outstanding Principal is being transferred, a new Note to the Holder representing the outstanding Principal not being transferred. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of Section 3(c)(ii) following conversion or redemption of any portion of this Note, the outstanding Principal represented by this Note may be less than the Principal stated on the face of this Note.
(b) Lost, Stolen or Mutilated Note . Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note (as to which a written certification and the indemnification contemplated below shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder a new Note (in accordance with Section 12(d)) representing the outstanding Principal.
(c) Note Exchangeable for Different Denominations . This Note is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, (for a new Note or Notes and in principal amounts of at least $1,000) representing in the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion of such outstanding Principal as is designated by the Holder at the time of such surrender.
(d) Issuance of New Notes . Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining outstanding (or in the case of a new Note being issued pursuant to Section 12(a) or Section 12(c), the Principal designated by the Holder which, when added to the principal represented by the other new Notes issued in connection with such issuance, does not exceed the Principal remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have the same rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest and Late Charges on the Principal and Interest of this Note, from the Issuance Date.
13. REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF . The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity (including a decree of specific performance and/or other injunctive relief). The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any such breach or any such threatened breach, without the necessity of showing economic loss and without any bond or other security being required.
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14. PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS . If (a) this Note is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of the Company or other proceedings affecting Company creditors’ rights and involving a claim under this Note, then the Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, without limitation, attorneys’ fees and disbursements. The Company expressly acknowledges and agrees that no amounts due under this Note shall be affected, or limited, by the fact that the purchase price paid for this Note was less than the original Principal amount hereof.
15. CONSTRUCTION; HEADINGS . This Note shall be deemed to be jointly drafted by the Company and the initial Holder and shall not be construed against any such Person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of, or affect the interpretation of, this Note. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision in which they are found. Unless expressly indicated otherwise, all section references are to sections of this Note. Terms used in this Note and not otherwise defined herein, but defined in the other Transaction Documents, shall have the meanings ascribed to such terms on the Closing Date in such other Transaction Documents unless otherwise consented to in writing by the Holder.
16. NOTICES; CURRENCY; PAYMENTS .
(a) Notices . Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance with the notice provisions in the the Securities Purchase Agreement.
(b) Currency . All dollar amounts referred to in this Note are in United States Dollars (“ U.S. Dollars ”), and all amounts owing under this Note shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “ Exchange Rate ” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Note, the U.S. Dollar exchange rate as published in the Wall Street Journal on the relevant date of calculation (it being understood and agreed that where an amount is calculated with reference to, or over, a period of time, the date of calculation shall be the final date of such period of time).
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17. CANCELLATION . After all Principal, accrued Interest, Late Charges and other amounts at any time owed on this Note have been paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.
18. WAIVER OF NOTICE . To the extent permitted by law, the Company hereby irrevocably waives demand, notice, presentment, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Securities Purchase Agreement.
19. GOVERNING LAW . This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of Nevada. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.
20. SEVERABILITY . If any provision of this Note is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Note so long as this Note as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
21. MAXIMUM PAYMENTS . Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Company to the Holder and thus refunded to the Company.
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22. CERTAIN DEFINITIONS . For purposes of this Note, (a) capitalized terms not otherwise defined herein shall have the meanings set forth in the Purchase Agreement and (b) the following terms shall have the following meanings:
(a) “ 1933 Act ” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
(b) “ 1934 Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
(c) “ Affiliate ” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person, it being understood for purposes of this definition that “control” of a Person means the power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of directors of such Person or direct or cause the direction of the management and policies of such Person whether by contract or otherwise.
(d) “ Business Day ” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.
(e) “ Change of Control ” means any Fundamental Transaction other than (i) any merger of the Company or any of its, direct or indirect, wholly-owned Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization, recapitalization or reclassification of the shares of Common Stock in which holders of the Company’s voting power immediately prior to such reorganization, recapitalization or reclassification continue after such reorganization, recapitalization or reclassification to hold publicly traded securities and, directly or indirectly, are, in all material respects, the holders of the voting power of the surviving entity (or entities with the authority or voting power to elect the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities) after such reorganization, recapitalization or reclassification, or (iii) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company or any of its Subsidiaries.
(f) “ Closing Date ” shall have the meaning set forth in the Securities Purchase Agreement.
(g) “ Company Common Stock ” means (i) the Company’s shares of common stock, $0.00001 par value per share, and (ii) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.
(h) “ Common Stock Equivalents ” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive Common Stock.
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(i) “ Exempt Issuance ” means the issuance of (a) shares of Common Stock or options to employees, officers, consultants, advisors or directors of the Company pursuant to any stock or option plan duly adopted for such purpose by a majority of the members of the Board of Directors or a majority of the members of a committee of directors established for such purpose, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of the Purchase Agreement, (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person which is, itself or through its subsidiaries, an operating company in a business synergistic with the business of the Company and in which the Company receives benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities and (d) up to an aggregate of $500,000 of the Company’s equity and/or debt securities, on the same terms and conditions as the Securities issued pursuant to the Purchase Agreement.
(j) “ Fundamental Transaction ” means (A) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of Regulation S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be subject to or have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or exchange offer that is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to, or Affiliated with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding; or (z) such number of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with one or more Subject Entities whereby all such Subject Entities, individually or in the aggregate, acquire, either (x) at least 50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such stock purchase agreement or other business combination were not outstanding; or (z) such number of shares of Common Stock such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its Common Stock, (B) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, allow any Subject Entity individually or the Subject Entities in the aggregate to be or become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock not held by all such Subject Entities as of the date of this Note calculated as if any shares of Common Stock held by all such Subject Entities were not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock or other equity securities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger or other transaction requiring other shareholders of the Company to surrender their shares of Common Stock without approval of the shareholders of the Company or (C) directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance of or the entering into any other instrument or transaction structured in a manner to circumvent, or that circumvents, the intent of this definition in which case this definition shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary to correct this definition or any portion of this definition which may be defective or inconsistent with the intended treatment of such instrument or transaction.
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(k) “ GAAP ” means United States generally accepted accounting principles, consistently applied.
(l) “ Group ” means a “group” as that term is used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5 thereunder.
(m) “ Holder Pro Rata Amount ” means a fraction (i) the numerator of which is the original Principal amount of this Note on the Closing Date and (ii) the denominator of which is the aggregate original principal amount of all Notes issued to the initial purchasers pursuant to the Securities Purchase Agreement on or prior to the Final Closing Date.
(n) “ Maturity Date ” shall mean August 1, 2020.
(o) “ Person ” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity or a government or any department or agency thereof.
(p) “ SEC ” means the United States Securities and Exchange Commission or the successor thereto.
(q) “ Securities Purchase Agreement ” means that certain securities purchase agreement, dated as of the Subscription Date, by and among the Company and the initial holders of the Notes pursuant to which the Company issued the Notes, as may be amended from time to time.
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(r) “ Security Agreement ” shall have the meaning as set forth in the Securities Purchase Agreement.
(s) “ Subscription Date ” means August 8, 2017.
(t) “ Subsidiaries ” shall have the meaning as set forth in the Securities Purchase Agreement.
(u) “Subject Entity ” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.
(v) “ Trading Day ” means, as applicable, (x) with respect to all price or trading volume determinations relating to the Common Stock, any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded, provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise designated as a Trading Day in writing by the Holder or (y) with respect to all determinations other than price determinations relating to the Common Stock, any day on which The New York Stock Exchange (or any successor thereto) is open for trading of securities.
23. DISCLOSURE . Upon receipt or delivery by the Company of any notice in accordance with the terms of this Note, unless the Company has in good faith determined that the matters relating to such notice do not constitute material, non-public information relating to the Company or any of its Subsidiaries, the Company shall within one (1) Business Day after any such receipt or delivery publicly disclose such material, non-public information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice contains material, non-public information relating to the Company or any of its Subsidiaries, the Company so shall indicate to the Holder contemporaneously with delivery of such notice, and in the absence of any such indication, the Holder shall be allowed to presume that all matters relating to such notice do not constitute material, non-public information relating to the Company or any of its Subsidiaries. If the Company or any of its Subsidiaries provides material non-public information to the Holder that is not simultaneously filed in a Current Report on Form 8-K and the Holder has not agreed to receive such material non-public information, the Company hereby covenants and agrees that the Holder shall not have any duty of confidentiality to the Company, any of its Subsidiaries or any of their respective officers, directors, employees, affiliates or agents with respect to, or a duty to any of the foregoing not to trade on the basis of, such material non-public information. Nothing contained in this Section 23 shall limit any obligations of the Company, or any rights of the Holder, under Section 4(i) of the Securities Purchase Agreement.
[ signature page follows ]
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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed as of the Issuance Date set out above.
AVANT DIAGNOSTICS, INC. |
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By: | ||
Name: Philippe Goix | ||
Title: CEO |
Senior Convertible Note - Signature Page
EXHIBIT
I
AVANT DIAGNOSTICS, INC.
CONVERSION NOTICE
Reference is made to the Convertible Note (the “ Note ”) issued to the undersigned by Avant Diagnostics, Inc., a Nevada corporation (the “ Company ”). In accordance with and pursuant to the Note, the undersigned hereby elects to convert the Conversion Amount (as defined in the Note) of the Note indicated below into shares of Company Common Stock as indicated below, as of the date specified below. Capitalized terms not defined herein shall have the meaning as set forth in the Note.
Date of Conversion: | |||||
Aggregate Principal to be converted: | |||||
Aggregate accrued and unpaid Interest with respect to such portion of the Aggregate Principal and such Aggregate Interest to be converted: | |||||
AGGREGATE CONVERSION AMOUNT TO BE CONVERTED: | |||||
Please confirm the following information: | |||||
Conversion Price: | |||||
Number of shares of Avant Common Stock to be issued: | |||||
Number of shares of Company Common Stock to be issued: | |||||
Please issue Company Common Stock into which the Note is being converted to Holder, or for its benefit, as follows:
☐ Check here if requesting delivery as a certificate to the following name and to the following address:
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Issue to: | |||||
Date: _____________ __, ____ | |
Name of Registered Holder |
By: | ||
Name: | ||
Title: | ||
Tax ID: ______________________ | ||
Facsimile: ____________________ | ||
E-mail Address: |
ACKNOWLEDGMENT
The Company hereby acknowledges this Conversion Notice and hereby directs _________________ to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated _____________, 20__ from the Company and acknowledged and agreed to by ________________________.
AVANT DIAGNOSTICS, INC. | ||
By: | ||
Name: | ||
Title: |
Exhibit 4.8
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ ACT ”), OR ANY APPLICABLE STATE SECURITIES LAWS. IT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITY UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
COMMON STOCK PURCHASE WARRANTS
AVANT DIAGNOSTICS, INC.
Warrants Shares: 2,500,000 | Initial Exercise Date: August 8 , 2017 |
THIS COMMON STOCK PURCHASE WARRANTS (the “Warrants”) certifies that, for value received, Xpress Group International Limited, a Hong Kong Limited company located at Unit B, 17th Floor, Greatmany Centre, 109-111 Queen's Road East, Wan Chai, Hong Kong . and its permitted assigns (the “ Holder ”) is entitled, upon the terms and subject to the conditions hereinafter set forth, at any time on or after August 8, 2017 (the “ Initial Exercise Date ”) and on or prior to the close of business on the five year anniversary of the Initial Exercise Date (the “ Termination Date ”) but not thereafter, to subscribe for and purchase from AVANT DIAGNOSTICS, INC, a Nevada corporation (the “ Company ”), up to 2,500,000 shares (as subject to adjustment hereunder, the “ Warrant Shares ”) of the Company’s common stock, $0.00001 par value (“ Common Stock ”). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1 . Definitions . Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “ Purchase Agreement ”), dated August 8, 2017, among the Company and the Holder or in that certain Senior Secured Convertible Promissory Note, dated August 8, 2017 among the Company and the Holder.
Section 2 . Exercise .
a) Exercise of the purchase warrants represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto. Within three (3) Trading Days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
b) Exercise Price . The exercise price per share of the Common Stock under this Warrant shall be $0.06 , subject to adjustment hereunder (the “ Exercise Price ”).
c) Mechanics of Exercise .
i. Delivery of Warrant Shares Upon Exercise . The Company will issue a stock certificate representing the Warrant Shares purchased hereunder to the Holder by the date that is five (5) Trading Days after the latest of (A) the delivery to the Company of the Notice of Exercise, (B) surrender of this Warrant (if required) and (C) payment of the aggregate Exercise Price as set forth above (such date, the “ Warrant Share Delivery Date ”). The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 2(c)(v) prior to the issuance of such shares, having been paid. Any certificate issued to Holder representing Warrant Shares shall contain the restrictive legend language specified in the Purchase Agreement.
ii. Delivery of New Warrants Upon Exercise . If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the warrants of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
iii. Rescission Warrants . If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(c)(i) by the Warrant Share Delivery Date, then the Holder will have the warrant to rescind such exercise.
iv. No Fractional Shares or Scrip . No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.
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v. Charges, Taxes and Expenses . Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided , however , that in the event Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise.
vi. Closing of Books . The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.
Section 3 . Certain Adjustments .
a) Stock Dividends and Splits . If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
b) Subsequent Equity Sales . If, at any time while this Warrant is outstanding, the Company or any Subsidiary, as applicable, sells or grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces any sale, grant or any option to purchase or other disposition), any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock at an effective price per share that is lower than the then Exercise Price (such lower price, the “ Base Share Price ” and such issuances, collectively, a “ Dilutive Issuance ”) (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is lower than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance), then the Exercise Price shall be reduced to equal the Base Share Price. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustment will be made under this Section 3(b) in respect of an Exempt Issuance. The Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this Section 3(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “ Dilutive Issuance Notice ”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Warrant Shares based upon the Base Share Price on or after the date of such Dilutive Issuance, regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise.
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c) Subsequent Rights Offerings . In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “ Purchase Rights ”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.
d) Pro Rata Distributions . During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a " Distribution "), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution.
e) Fundamental Transaction . If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “ Fundamental Transaction ”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “ Alternate Consideration ”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction. For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one (1) share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “ Successor Entity ”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents (as defined in the Purchase Agreement) in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the holder of this Warrant, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant prior to such Fundamental Transaction, and with a exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.
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f) Calculations . All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
g) Notice to Holder . Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
Section 4 . Transfer of Warrant .
a) Transferability . This Warrant and all warrants hereunder (including, without limitation, any registration warrants) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer, provided, however, that such transfer is in compliance with all applicable federal and state securities laws. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
b) New Warrants . This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c) Warrant Register . The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “ Warrant Register ”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
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Section 5 . Miscellaneous .
a) No Warrants as Stockholder Until Exercise . This Warrant does not entitle the Holder to any voting warrants, dividends or other warrants as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(c)(i).
b) Loss, Theft, Destruction or Mutilation of Warrant . The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
c) Saturdays, Sundays, Holidays, etc . If the last or appointed day for the taking of any action or the expiration of any warrant required or granted herein shall not be a Business Day, then, such action may be taken or such warrant may be exercised on the next succeeding Business Day.
d) Authorized Shares .
If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect in full the exercise of this Warrant, in addition to such other remedies as shall be available to the Holder, the Company will promptly take such corporate action as may, in the opinion of its counsel, be necessary to increase the number of authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including without limitation, using its best efforts to obtain the requisite shareholder approval necessary to increase the number of authorized shares of Common Stock. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary Warrant Shares upon the exercise of the purchase warrants under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase warrants represented by this Warrant will, upon exercise of the purchase warrants represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
e) Jurisdiction . All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of Nevada, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Warrant (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the State of Nevada. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the State of New York for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of this Warrant), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any warrant to serve process in any other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant, then, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
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f) Nonwaiver and Expenses . No course of dealing or any delay or failure to exercise any warrant hereunder on the part of Holder shall operate as a waiver of such warrant or otherwise prejudice the Holder’s warrants, powers or remedies. Without limiting any other provision of this Warrant or the Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its warrants, powers or remedies hereunder.
g) Notices . Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.
h) Limitation of Liability . No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the warrants or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
i) Remedies . The Holder, in addition to being entitled to exercise all warrants granted by law, including recovery of damages, will be entitled to specific performance of its warrants under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
j) Successors and Assigns . Subject to applicable securities laws, this Warrant and the warrants and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.
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k) Amendment . This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
l) Severability . Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
m) Headings . The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
********************
(Signature Page Follows)
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its authorized signatory as of August___, 2017.
AVANT DIAGNOSTICS, INC. | ||
By: | ||
Name: Philippe Goix | ||
Title: CEO |
[Signature Page to Common Stock Purchase Warrant]
NOTICE OF EXERCISE
To: AVANT DIAGNOSTICS , INC.
(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
Payment in the form of lawful money of the United States in the amount of $__________ in payment of the aggregate Exercise Price will be made by means of:
______ Check
______ Wire transfer
(2) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
[SIGNATURE OF HOLDER]
Name: | |
By: |
|
Signature | |
Title | |
Date | |
ASSIGNMENT FORM
(To
assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all warrants evidenced thereby are hereby assigned to
whose address is | ||||||
Dated | , | |||||
Holder’s Signature: | ||||||
Holder’s Address | ||||||
Signature Guaranteed: | ||||||
WARRANT: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.
Exhibit 4.9
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ ACT ”), OR ANY APPLICABLE STATE SECURITIES LAWS. IT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITY UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
COMMON STOCK RIGHTS
AVANT DIAGNOSTICS, INC.
Issue Date: August 8, 2017
Rights Shares: 10,000,000 | Initial Exercise Date: February __, 2019 |
THIS COMMON STOCK RIGHTS (the “Rights”) certifies that, for value received, Xpress Group International Limited, a Hong Kong Limited company located at Unit B, 17th Floor, Greatmany Centre, 109-111 Queen's Road East, Wan Chai, Hong Kong and its permitted assigns (the “ Holder ”) is entitled, upon the terms and subject to the conditions hereinafter set forth, at any time on or after February 1, 2019 (the “ Initial Exercise Date ”) and on or prior to the close of business on the five year anniversary of the Issue Date (the “ Termination Date ”) but not thereafter, to subscribe for and purchase from AVANT DIAGNOSTICS, Inc, a Nevada corporation (the “ Company ”), up to 10,000,000 (as subject to adjustment hereunder, the “ Right Shares ”) of the Company’s common stock, $0.00001 par value (“ Common Stock ”). The purchase price of one share of Common Stock under this Right shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1 . Definitions . Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “ Purchase Agreement ”), dated August 8, 2017, among the Company and the Holder or in that certain Senior Secured Convertible Promissory Note, dated August 8, 2017 among the Company and the Holder.
Section 2 . Exercise .
a) Exercise of the Rights represented by this Right may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto. Within three (3) Trading Days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Right to the Company until the Holder has purchased all of the Right Shares available hereunder and the Right has been exercised in full, in which case the Holder shall surrender this Right to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Right resulting in purchases of a portion of the total number of Right Shares available hereunder shall have the effect of lowering the outstanding number of Right Shares purchasable hereunder in an amount equal to the applicable number of Right Shares purchased. The Holder and the Company shall maintain records showing the number of Right Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Right, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Right Shares hereunder, the number of Right Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
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b) Exercise Price . The exercise price per share of the Common Stock under this Right shall be $0.06 , subject to adjustment hereunder (the “ Exercise Price ”).
c) Mechanics of Exercise .
i. Delivery of Right Shares Upon Exercise . The Company will issue a stock certificate representing the Right Shares purchased hereunder to the Holder by the date that is five (5) Trading Days after the latest of (A) the delivery to the Company of the Notice of Exercise, (B) surrender of this Right (if required) and (C) payment of the aggregate Exercise Price as set forth above (such date, the “ Right Share Delivery Date ”). The Right Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Right has been exercised, with payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 2(c)(v) prior to the issuance of such shares, having been paid. Any certificate issued to Holder representing Right Shares shall contain the restrictive legend language specified in the Purchase Agreement.
ii. Delivery of New Rights Upon Exercise . If this Right shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Right certificate, at the time of delivery of the Right Shares, deliver to the Holder a new Right evidencing the rights of the Holder to purchase the unpurchased Right Shares called for by this Right, which new Right shall in all other respects be identical with this Right.
iii. Rescission Rights . If the Company fails to cause the Transfer Agent to transmit to the Holder the Right Shares pursuant to Section 2(c)(i) by the Right Share Delivery Date, then the Holder will have the right to rescind such exercise.
iv. No Fractional Shares or Scrip . No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Right. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.
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v. Charges, Taxes and Expenses . Issuance of Right Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Right Shares, all of which taxes and expenses shall be paid by the Company, and such Right Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided , however , that in the event Right Shares are to be issued in a name other than the name of the Holder, this Right when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise.
vi. Closing of Books . The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Right, pursuant to the terms hereof.
Section 3 . Certain Adjustments .
a) Stock Dividends and Splits . If the Company, at any time while this Right is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Right), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Right shall be proportionately adjusted such that the aggregate Exercise Price of this Right shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
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b) Subsequent Equity Sales . If, at any time while this Rights is outstanding, the Company or any Subsidiary, as applicable, sells or grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces any sale, grant or any option to purchase or other disposition), any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock at an effective price per share that is lower than the then Exercise Price (such lower price, the “ Base Share Price ” and such issuances, collectively, a “ Dilutive Issuance ”) (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is lower than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance), then the Exercise Price shall be reduced to equal the Base Share Price. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustment will be made under this Section 3(b) in respect of an Exempt Issuance. The Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this Section 3(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “ Dilutive Issuance Notice ”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Exercise Shares based upon the Base Share Price on or after the date of such Dilutive Issuance, regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise.
c) Subsequent Rights Offerings . In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “ Rights ”), then the Holder will be entitled to acquire, upon the terms applicable to such Rights, the aggregate Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Rights immediately before the date on which a record is taken for the grant, issuance or sale of such Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Rights.
d) Pro Rata Distributions . During such time as this Rights is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a " Distribution "), at any time after the issuance of this Rights, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Rights immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution.
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e) Fundamental Transaction . If, at any time while this Rights is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “ Fundamental Transaction ”), then, upon any subsequent conversion of this Rights, the Holder shall have the right to receive, for each Exercise Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in Section 4(d) on the conversion of this Rights), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “ Alternate Consideration ”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Rights is convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 4(d) on the conversion of this Rights). For purposes of any such conversion, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one (1) share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Rights following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “ Successor Entity ”) to assume in writing all of the obligations of the Company under this Rights and the other Transaction Documents (as defined in the Purchase Agreement) in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the holder of this Rights, deliver to the Holder in exchange for this Rights a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Rights which is convertible for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Rights (without regard to any limitations on the conversion of this Rights) prior to such Fundamental Transaction, and with a conversion price which applies the conversion price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such conversion price being for the purpose of protecting the economic value of this Rights immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Rights and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Rights and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.
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f) Calculations . All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
g) Notice to Holder . Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Right Shares and setting forth a brief statement of the facts requiring such adjustment.
Section 4 . Transfer of Right .
a) Transferability . This Right and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Right at the principal office of the Company or its designated agent, together with a written assignment of this Right substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer, provided, however, that such transfer is in compliance with all applicable federal and state securities laws. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Right or Rights in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Right evidencing the portion of this Right not so assigned, and this Right shall promptly be cancelled. The Right, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Right Shares without having a new Right issued.
b) New Rights . This Right may be divided or combined with other Rights upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Rights are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Right or Rights in exchange for the Right or Rights to be divided or combined in accordance with such notice. All Rights issued on transfers or exchanges shall be dated the initial issuance date of this Right and shall be identical with this Right except as to the number of Right Shares issuable pursuant thereto.
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c) Right Register . The Company shall register this Right, upon records to be maintained by the Company for that purpose (the “ Right Register ”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Right as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
Section 5 . Miscellaneous .
a) No Rights as Stockholder Until Exercise . This Right does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(c)(i).
b) Loss, Theft, Destruction or Mutilation of Right . The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Right or any stock certificate relating to the Right Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Right, shall not include the posting of any bond), and upon surrender and cancellation of such Right or stock certificate, if mutilated, the Company will make and deliver a new Right or stock certificate of like tenor and dated as of such cancellation, in lieu of such Right or stock certificate.
c) Saturdays, Sundays, Holidays, etc . If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.
d) Authorized Shares .
If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect in full the exercise of this Right, in addition to such other remedies as shall be available to the Holder, the Company will promptly take such corporate action as may, in the opinion of its counsel, be necessary to increase the number of authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including without limitation, using its best efforts to obtain the requisite shareholder approval necessary to increase the number of authorized shares of Common Stock. The Company further covenants that its issuance of this Right shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary Right Shares upon the exercise of the Rights under this Right. The Company will take all such reasonable action as may be necessary to assure that such Right Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Right Shares which may be issued upon the exercise of the Rights represented by this Right will, upon exercise of the Rights represented by this Right and payment for such Right Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
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e) Jurisdiction . All questions concerning the construction, validity, enforcement and interpretation of this Right shall be governed by and construed and enforced in accordance with the internal laws of the State of Nevada, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Right (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the State of Nevada. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the State of Nevada for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of this Right), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Right and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Right, then, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
f) Nonwaiver and Expenses . No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Right or the Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of this Right, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
g) Notices . Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.
h) Limitation of Liability . No provision hereof, in the absence of any affirmative action by the Holder to exercise this Right to purchase Right Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
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i) Remedies . The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Right. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Right and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
j) Successors and Assigns . Subject to applicable securities laws, this Right and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Right are intended to be for the benefit of any Holder from time to time of this Right and shall be enforceable by the Holder or holder of Right Shares.
k) Amendment . This Right may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
l) Severability . Wherever possible, each provision of this Right shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Right shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Right.
m) Headings . The headings used in this Right are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Right.
********************
(Signature Page Follows)
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IN WITNESS WHEREOF, the Company has caused this Right to be executed by its authorized signatory as of August___, 2017.
AVANT DIAGNOSTICS, INC. | ||
By: | ||
Name: Philippe Goix | ||
Title: CEO |
[Signature Page to Common Stock Purchase Right]
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NOTICE OF EXERCISE
To: AVANT DIAGNOSTICS , INC.
(1) The undersigned hereby elects to purchase ________ Right Shares of the Company pursuant to the terms of the attached Right (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
Payment in the form of lawful money of the United States in the amount of $__________ in payment of the aggregate Exercise Price will be made by means of:
______ Check
______ Wire transfer
(2) Please issue said Right Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
[SIGNATURE OF HOLDER]
Name: By: |
|
Signature | |
Title | |
Date | |
ASSIGNMENT FORM
(To
assign the foregoing right, execute
this form and supply required information.
Do not use this form to exercise the right.)
FOR VALUE RECEIVED, [____] all of or [_______] shares of the foregoing Right and all rights evidenced thereby are hereby assigned to
whose address is | ||||||
Dated | , | |||||
Holder’s Signature: | ||||||
Holder’s Address | ||||||
Signature Guaranteed: | ||||||
NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Right, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Right.
Exhibit 4.10
SENIOR SECURED CONVERTIBLE PROMISSORY NOTE
NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTIONS 3(c)(ii) AND 12(a) HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(C)(ii) OF THIS NOTE.
AVANT DIAGNOSTICS, INC.
Senior Secured Convertible Promissory Note
Issuance Date: September 5, 2017 | Original Principal Amount: U.S. $75,000 |
FOR VALUE RECEIVED, Avant Diagnostics, Inc., a Nevada corporation (the “Company”), hereby promises to pay to the order of Anand Gokel or its assigns (“Holder”) the amount set forth above as the Original Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the “Principal”) when due, whether upon the Maturity Date (as defined below), or upon acceleration, redemption or otherwise (in each case in accordance with the terms hereof) and to pay interest (“Interest”) on any outstanding Principal at the applicable Interest Rate (as defined below) from the date set forth above as the Issuance Date (the “Issuance Date”) until the same becomes due and payable, whether upon the Maturity Date, or upon acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof). This Senior Secured Convertible Note (including all Senior Secured Convertible Notes issued in exchange, transfer or replacement hereof, this “Note”) is one of an issue of Senior Secured Convertible Notes issued pursuant to that Securities Purchase Agreement, dated as of September 5th, 2017 (the “Subscription Date”), by and among the Company and the investors (the “Buyers”) referred to therein, as amended from time to time (collectively, the “Notes”, and such other Senior Secured Convertible Notes, the “Other Notes”). Certain capitalized terms used herein are defined in Section 22.
1. PAYMENTS OF PRINCIPAL.
(a) On the Maturity Date, all outstanding Principal, accrued and unpaid Interest shall be due and payable to the Holder. Other than as specifically permitted by this Note, the Company may not prepay any portion of the outstanding Principal and accrued and unpaid Interest or accrued.
(b) Following the six (6) month anniversary of the Closing Date, the Holder shall have the option to call on the Company for the redemption of the Note from the Holder, provided that the Company has raised sufficient funds to repay this Note. In the event of such optional redemption, the Holder shall be paid in the full principal amount and all other accrued and unpaid interest to the date of redemption.
2. INTEREST; INTEREST RATE. Interest on this Note shall accrue monthly at a rate of eight (8%) per annum (the “Interest Rate”) on the outstanding Principal amount, and shall be computed on the basis of a 360-day year comprised of twelve (12) thirty (30) day months.
3. CONVERSION OF NOTES. At any time after the Issuance Date, but no later than the Maturity Date, this Note may be converted by the Holder into validly issued, fully paid and non-assessable shares of either Company Common Stock or Company Preferred Stock, on the terms and conditions set forth in this Section 3.
(a) Conversion Right. Subject to the provisions of Section 3(d), at any time or times on or after the Issuance Date, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into validly issued, fully paid and non-assessable shares of Company Common Stock or Company Preferred Stock in accordance with Section 3(c), at the applicable Common Conversion Rate or the Preferred Conversion Rate. The Company shall not issue any fraction of a share of Company Common Stock or Company Preferred Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Company Common Stock or Company Preferred Stock, the Company shall round such fraction of a share of Company Common Stock or Company Preferred Stock up to the nearest whole share. The Company shall pay any and all transfer, stamp, issuance and similar taxes, costs and expenses (including, without limitation, fees and expenses of the Transfer Agent (as defined below)) that may be payable with respect to the issuance and delivery of Company Common Stock or Company Preferred Stock upon conversion of any Conversion Amount.
(b) Conversion Rate
(i) Common Conversion Rate. The number of shares of Company Common Stock, issuable upon conversion of any Conversion Amount pursuant to Section 3(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the “Common Conversion Rate”).
(1) “ Conversion Amount ” means the sum of (x) the portion of the Principal to be converted, redeemed or otherwise with respect to which this determination is being made and (y) all accrued and unpaid Interest with respect to such portion of the Principal amount, if any.
(2) “ Conversion Price ” means, as of any Conversion Date or other date of determination, with respect to Company Stock, will be $0.06 per share.
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(ii) Preferred Conversion Rate. The number of shares of Company Preferred Stock, issuable upon conversion of any Conversion Amount pursuant to Section 3(a) shall be determined by dividing (x) such Conversion Amount by (y) the Aggregate Amount and multiplying such number by the Maximum Preferred Shares (the “Conversion Rate”).
(1) “ Aggregate Amount ” means $750,000.
(2) “ Conversion Amount ” means the sum of (x) the portion of the Principal to be converted, redeemed or otherwise with respect to which this determination is being made and (y) all accrued and unpaid Interest with respect to such portion of the Principal amount, if any.
(3) “ Maximum Preferred Shares ” means, as of any Conversion Date or other date of determination, with respect to Company Preferred Stock, will be 4,999.
(c) Mechanics of Conversion.
(i) Conversion. To convert any Conversion Amount into shares of Company Common Stock or Company Preferred Stock on any date (a “Conversion Date”), the Holder shall deliver (whether via facsimile, electronic mail or otherwise), for receipt on or prior to 11:59 p.m., New York time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit I (the “Conversion Notice”) to the Company. If required by Section 3(c)(ii), within three (3) Trading Days following a conversion of this Note as aforesaid, the Holder shall surrender this Note to a nationally recognized overnight delivery service for delivery to the Company (or an indemnification undertaking with respect to this Note in the case of its loss, theft or destruction as contemplated by Section 12(b)). On or before the first (1st) Trading Day following the date of receipt of a Conversion Notice, the Company shall transmit by facsimile or electronic mail an acknowledgment of confirmation, in the form attached hereto as Exhibit II, of receipt of such Conversion Notice to the Holder and the Company’s transfer agent (the “Transfer Agent”) which confirmation shall constitute an instruction to the Transfer Agent to process such Conversion Notice in accordance with the terms herein. On or before the third (3rd) Trading Day following the date on which the Company has received a Conversion Notice the Company shall issue and deliver (via reputable overnight courier) to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for the number of shares of Company Common Stock or Company Preferred Stock to which the Holder shall be entitled pursuant to such conversion pursuant Section 3(c)(iii). If this Note is physically surrendered for conversion pursuant to Section 3(c)(ii) or 3(c)(iii) and the outstanding Principal of this Note is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than three (3) Business Days after receipt of this Note and at its own expense, issue and deliver to the Holder (or its designee) a new Note (in accordance with Section 12(d)) representing the outstanding Principal not converted. The Person or Persons entitled to receive the shares of Company Common Stock or Company Preferred Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such shares of Company Common Stock or Company Preferred Stock on the Conversion Date.
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(ii) Registration; Book-Entry. The Company shall maintain a register (the “Register”) for the recordation of the names and addresses of the holders of each Note and the principal amount of the Notes held by such holders held by such holders (the “Registered Notes”). The entries in the Register shall be conclusive and binding for all purposes absent manifest error. The Company and the holders of the Notes shall treat each Person whose name is recorded in the Register as the owner of a Note for all purposes (including, without limitation, the right to receive payments of Principal and Interest hereunder) notwithstanding notice to the contrary. A Registered Note may be assigned, transferred or sold in whole or in part only by registration of such assignment or sale on the Register. Upon its receipt of a written request to assign, transfer or sell all or part of any Registered Note by the holder thereof, the Company shall record the information contained therein in the Register and issue one or more new Registered Notes in the same aggregate principal amount as the principal amount of the surrendered Registered Note to the designated assignee or transferee pursuant to Section 12, provided that if the Company does not so record an assignment, transfer or sale (as the case may be) of all or part of any Registered Note within two (2) Business Days of such a request, then the Register shall be automatically deemed updated to reflect such assignment, transfer or sale (as the case may be). Notwithstanding anything to the contrary set forth in this Section 3, following conversion of any portion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless (A) the full Conversion Amount represented by this Note is being converted (in which event this Note shall be delivered to the Company following conversion thereof as contemplated by Section 3 (c)(i)) or (B) the Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of this Note upon physical surrender of this Note. The Holder and the Company shall maintain records showing the Principal and Interest converted and/or paid (as the case may be) and the dates of such conversions and/or payments (as the case may be) or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Note upon conversion. If the Company does not update the Register to record such Principal and Interest converted and/or paid (as the case may be) and the dates of such conversions and/or payments (as the case may be) within two (2) Business Days of such occurrence, then the Register shall be automatically deemed updated to reflect such occurrence.
(iii) Pro Rata Conversion; Disputes. In the event that the Company receives a Conversion Notice from more than one holder of Notes for the same Conversion Date and the Company can convert some, but not all, of such portions of the Notes submitted for conversion, the Company, subject to Section 3(d), shall convert from each holder of Notes electing to have Notes converted on such date a pro rata amount of such holder’s portion of its Notes submitted for conversion based on the principal amount of Notes submitted for conversion on such date by such holder relative to the aggregate principal amount of all Notes submitted for conversion on such date. In the event of a dispute as to the number of shares of Company Common Stock or Company Preferred Stock issuable to the Holder in connection with a conversion of this Note, the Company shall issue to the Holder the number of shares of Company Common Stock or Company Preferred Stock not in dispute and resolve such dispute in accordance with Section 19.
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4. RIGHTS OF HOLDER UPON EVENT OF DEFAULT.
(a) Event of Default. Each of the following events shall constitute an “Event of Default”:
(i) the Company’s failure to pay to the Holder any amount of Principal, Interest, or other amounts when and as due under this Note;
(ii) bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted by or against the Company or any Subsidiary and, if instituted against the Company by a third party, shall not be dismissed within thirty (30) days of their initiation;
(iii) a final judgment or judgments for the payment of money aggregating in excess of $250,000 are rendered against the Company on or after the Subscription Date which judgments are not, within thirty (30) days after the entry thereof, bonded, discharged, settled or stayed pending appeal, or are not discharged within thirty (30) days after the expiration of such stay; provided, however, any judgment which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $250,000 amount set forth above so long as the Company provides the Holder a written statement from such insurer or indemnity provider (which written statement shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company will receive the proceeds of such insurance or indemnity within thirty (30) days of the issuance of such judgment;
(iv) other than as specifically set forth in another clause of this Section 4(a), the Company breaches any material representation, warranty, covenant or other term or condition of any Transaction Document, except, in the case of a breach of a covenant or other term or condition that is curable, only if such breach remains uncured for a period of fifteen (15) consecutive Business Days; or
(v) any Material Adverse Effect (as defined in the Securities Purchase Agreement) occurs.
(b) Holder’s Remedies Upon an Event of Default. Notwithstanding anything to the contrary herein, and notwithstanding any conversion that is then required or in process, upon any Event of Default, the Company shall immediately pay to the Holder an amount in cash representing all outstanding Principal and accrued and unpaid Interest in addition to any and all other amounts due hereunder, without the requirement for any notice or demand or other action by the Holder or any other person or entity, provided that the Holder may, in its sole discretion, waive such right to receive payment upon an Event of Default, in whole or in part, and any such waiver shall not affect any other rights of the Holder hereunder, including any other rights in respect of such Event of Default, any right to conversion. The Holder has the right to enforce all remedies available in law or equity as against the Company, including but not limited to foreclosing on the Pledge Agreement, without the need to make any election of remedies or to allocate recovery against the Company in any way whatsoever.
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5. HOLDER’S RIGHTS UPON CHANGE OF CONTROL.
(a) No sooner than twenty (20) Trading Days nor later than ten (10) Trading Days prior to the consummation of a transaction that would result in a Change of Control (the “Change of Control Date”), but not prior to the public announcement of such Change of Control, the Company shall deliver written notice thereof via facsimile or electronic mail and overnight courier to the Holder (a “Change of Control Notice”). At any time during the period beginning after the Holder’s receipt of a Change of Control Notice or the Holder becoming aware of a Change of Control if a Change of Control Notice is not delivered to the Holder in accordance with the immediately preceding sentence (as applicable) and ending on the later of twenty (20) Trading Days after (A) consummation of such Change of Control or (B) the date of receipt of such Change of Control Notice, the Holder may elect (i) to declare this Note payable in cash on demand as of the closing of the transaction giving rise to a Change of Control or (ii) redeem this Note in full for a payment equal to the amount Holder would have received if the Note had been converted pursuant to Section 3 of this Note immediately prior to the transaction giving rise to a Change of Control, in each case to be paid in the same form of consideration (e.g. a mix of cash and stock) received by the other existing equity holders of the Company in connection with the transaction giving rise to a Change of Control.
6. HOLDER’S FINANCING RIGHTS.
(a) Right of First Refusal. Within 5 days of receipt of any bona fide investment offer whereby the Company will, if such proposed transaction is consummated, either (i) obtain additional debt financing not in existence on the Issuance Date or (ii) sell or transfer shares of Company Common Stock owned by the Company to a third party, the Company shall deliver a written notice (the “Company Transaction Notice”) to Holder notifying Holder of the material terms of such proposed financing or sale of Company Common Stock. After receiving a Company Transaction Notice, Holder shall have the right (the “Right of Refusal”) to provide additional debt financing to the Company, or purchase shares of Company Common Stock, in the applicable Holder Pro-Rata Amount, within 10 days after the Company Transaction Notice has been delivered to Holder (the “Right of Refusal Election Period”). Holder may elect to exercise its Right of Refusal by delivering a written notice to the Company of such election setting forth the amount of debt financing it desires to provide in response to the Company Transaction Notice. Upon the expiration of the Right of Refusal Election Period, to the extent that Holder does not notify the company of its intent to exercise its Right of Refusal, then Holder’s Right of Refusal shall terminate.
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(b) Most Favored Nation. During the term of the Note, if the Company engages in any future financing transactions with a third party investor, the Company will provide the Holder with written notice (the “MFN Notice”) thereof promptly but in no event less than 10 days prior to closing any financing transactions. Included with the MFN Notice shall be a copy of all documentation relating to such financing transaction and shall include, upon written request of the Holder, any additional information related to such subsequent investment as may be reasonably requested by the Holder. In the event the Holder determines that the terms of the subsequent investment are preferable to the terms of the Securities of the Company issued to the Holder pursuant to the terms of the Purchase Agreement, the Holder will notify the Company in writing. Promptly after receipt of such written notice from the Holder, the Company agrees to amend and restate the Securities, and, as necessary, adjust the number of bonus shares, to be identical to the instruments evidencing the subsequent investment and any bonus shares issued in connection therewith.
(c) Notwithstanding the foregoing, this Section 4.12 shall not apply in respect of (i) an Exempt Issuance, or (ii) an underwritten public offering of Common Stock.
7. VOTING RIGHTS. The Holder shall have no voting rights as the holder of this Note, except as required by law (including, without limitation, Chapter 78 of the Nevada Revised Statute) and as expressly provided in this Note.
8. COVENANTS. Until all of the Notes have been converted, redeemed or otherwise satisfied in accordance with their terms:
(a) Rank. The Note will rank senior in right of payment to all present senior indebtedness, liabilities and obligations of the Company for money borrowed from banks, insurance companies and other financial institutions in the business of regularly lending money, and also in right of payment to all other present and future unsecured obligations of the Company.
(b) Change in Nature of Business. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, engage in any material line of business substantially different from those lines of business conducted by or publicly contemplated to be conducted by the Company and each of its Subsidiaries on the Subscription Date. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, modify its or their corporate structure or purpose.
(c) Preservation of Existence, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, its existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of the Business makes such qualification necessary.
(d) Restricted Issuances. The Company shall not, directly or indirectly, without the prior written consent of the holders of a majority in aggregate principal amount of the Notes then outstanding issue any Notes or securities (other than as contemplated by the Securities Purchase Agreement and the Notes) that would cause a breach or default under the Notes.
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9. SECURITY. This Note and the Other Notes are secured to the extent and in the manner set forth in the Transaction Documents (including, without limitation, the Pledge Agreement ).
10. AMENDING THE TERMS OF THIS NOTE. The prior written consent of the Holder shall be required for any change, waiver or amendment to this Note.
11. TRANSFER. This Note and any shares of Company Common Stock or Company Preferred Stock issued upon conversion of this Note may be offered, sold, assigned or transferred by the Holder without the consent of the Company, subject only to the provisions of Section 3(g) of the Securities Purchase Agreement.
12. REISSUANCE OF THIS NOTE.
(a) Transfer. If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Note, registered as the Holder may request, representing the outstanding Principal being transferred by the Holder and, if less than the entire outstanding Principal is being transferred, a new Note to the Holder representing the outstanding Principal not being transferred. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of Section 3(c)(ii) following conversion or redemption of any portion of this Note, the outstanding Principal represented by this Note may be less than the Principal stated on the face of this Note.
(b) Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note (as to which a written certification and the indemnification contemplated below shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder a new Note (in accordance with Section 12(d)) representing the outstanding Principal.
(c) Note Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, (for a new Note or Notes and in principal amounts of at least $1,000) representing in the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion of such outstanding Principal as is designated by the Holder at the time of such surrender.
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(d) I ssuance of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining outstanding (or in the case of a new Note being issued pursuant to Section 12(a) or Section 12(c), the Principal designated by the Holder which, when added to the principal represented by the other new Notes issued in connection with such issuance, does not exceed the Principal remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have the same rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest and Late Charges on the Principal and Interest of this Note, from the Issuance Date.
13. REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity (including a decree of specific performance and/or other injunctive relief). The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any such breach or any such threatened breach, without the necessity of showing economic loss and without any bond or other security being required.
14. PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of the Company or other proceedings affecting Company creditors’ rights and involving a claim under this Note, then the Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, without limitation, attorneys’ fees and disbursements. The Company expressly acknowledges and agrees that no amounts due under this Note shall be affected, or limited, by the fact that the purchase price paid for this Note was less than the original Principal amount hereof.
15. CONSTRUCTION; HEADINGS. This Note shall be deemed to be jointly drafted by the Company and the initial Holder and shall not be construed against any such Person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of, or affect the interpretation of, this Note. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof’ and words of like import refer to this entire Agreement instead of just the provision in which they are found. Unless expressly indicated otherwise, all section references are to sections of this Note. Terms used in this Note and not otherwise defined herein, but defined in the other Transaction Documents, shall have the meanings ascribed to such terms on the Closing Date in such other Transaction Documents unless otherwise consented to in writing by the Holder.
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16. NOTICES; CURRENCY; PAYMENTS.
(a) Notices. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance with the notice provisions in the Securities Purchase Agreement.
(b) Currency. All dollar amounts referred to in this Note are in United States Dollars (“U.S. Dollars”), and all amounts owing under this Note shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Note, the U.S. Dollar exchange rate as published in the Wall Street Journal on the relevant date of calculation (it being understood and agreed that where an amount is calculated with reference to, or over, a period of time, the date of calculation shall be the final date of such period of time).
17. CANCELLATION. After all Principal, accrued Interest, Late Charges and other amounts at any time owed on this Note have been paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.
18. WAIVER OF NOTICE. To the extent permitted by law, the Company hereby irrevocably waives demand, notice, presentment, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Securities Purchase Agreement.
19. GOVERNING LAW. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of Nevada. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.
20. SEVERABILITY. If any provision of this Note is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Note so long as this Note as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
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21. MAXIMUM PAYMENTS. Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Company to the Holder and thus refunded to the Company.
22. C ERTAIN DEFINITIONS. For purposes of this Note, (a) capitalized terms not otherwise defined herein shall have the meanings set forth in the Purchase Agreement and (b) the following terms shall have the following meanings:
(a) “ 1933 Act ” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
(b) “ 1934 Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
(c) “ Affiliate ” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person, it being understood for purposes of this definition that “control” of a Person means the power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of directors of such Person or direct or cause the direction of the management and policies of such Person whether by contract or otherwise.
(d) “ Business Day ” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.
(e) “ Change of Control ” means any Fundamental Transaction other than (i) any merger of the Company or any of its, direct or indirect, wholly-owned Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization, recapitalization or reclassification of the shares of Common Stock in which holders of the Company’s voting power immediately prior to such reorganization, recapitalization or reclassification continue after such reorganization, recapitalization or reclassification to hold publicly traded securities and, directly or indirectly, are, in all material respects, the holders of the voting power of the surviving entity (or entities with the authority or voting power to elect the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities) after such reorganization, recapitalization or reclassification, or (iii) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company or any of its Subsidiaries.
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(f) “ Closing Date ” shall have the meaning set forth in the Securities Purchase Agreement, which date is the date the Company initially issued Notes pursuant to the terms of the Securities Purchase Agreement.
(g) “ Company Common Stock ” means (i) the Company’s shares of common stock, $0.00001 par value per share, and (ii) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.
(h) “ Company Preferred Stock ” means (i) the Company’s shares of series A convertible preferred stock, par value $0.001 per share, and (ii) any capital stock into which such series A preferred stock shall have been changed or any share capital resulting from a reclassification of such series A preferred stock.
(i) “ Common Stock Equivalents ” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive Common Stock.
(j) “ Exempt Issuance ” means the issuance of (a) shares of Common Stock or options to employees, officers, consultants, advisors or directors of the Company pursuant to any stock or option plan duly adopted for such purpose by a majority of the members of the Board of Directors or a majority of the members of a committee of directors established for such purpose, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of the Purchase Agreement, (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person which is, itself or through its subsidiaries, an operating company in a business synergistic with the business of the Company and in which the Company receives benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities and (d) up to an aggregate of $500,000 of the Company’s equity and/or debt securities, on the same terms and conditions as the Securities issued pursuant to the Purchase Agreement.
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(k) “ Fundamental Transaction ” means (A) that the Company shall, directlyor indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of Regulation S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be subject to or have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or exchange offer that is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to, or Affiliated with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding; or (z) such number of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with one or more Subject Entities whereby all such Subject Entities, individually or in the aggregate, acquire, either (x) at least 50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such stock purchase agreement or other business combination were not outstanding; or (z) such number of shares of Common Stock such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its Common Stock, (B) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, allow any Subject Entity individually or the Subject Entities in the aggregate to be or become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock not held by all such Subject Entities as of the date of this Note calculated as if any shares of Common Stock held by all such Subject Entities were not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock or other equity securities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger or other transaction requiring other shareholders of the Company to surrender their shares of Common Stock without approval of the shareholders of the Company or (C) directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance of or the entering into any other instrument or transaction structured in a manner to circumvent, or that circumvents, the intent of this definition in which case this definition shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary to correct this definition or any portion of this definition which may be defective or inconsistent with the intended treatment of such instrument or transaction.
(1) “ GAAP ” means United States generally accepted accounting principles, consistently applied.
(m) “ Group ” means a “group” as that term is used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5 thereunder.
(n) “ Holder Pro Rata Amount ” means a fraction (i) the numerator of which is the original Principal amount of this Note on the Closing Date and (ii) the denominator of which is the aggregate original principal amount of all Notes issued to the initial purchasers pursuant to the Securities Purchase Agreement on or prior to the Final Closing Date.
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(o) “ Maturity Date ” shall mean September 1, 2020.
(p) “ Person ” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity or a government or any department or agency thereof.
(q) “ SEC ” means the United States Securities and Exchange Commission or the successor thereto.
(r) “ Securities Purchase Agreement ” means that certain securities purchase agreement, dated as of the Subscription Date, by and among the Company and the initial holders of the Notes pursuant to which the Company issued the Notes, as may be amended from time to time.
(s) “ Security Agreement ” shall have the meaning as set forth in the Securities Purchase Agreement.
(t) “ Subscription Date ” means September 5, 2017.
(u) “ Subsidiaries ” shall have the meaning as set forth in the Securities Purchase Agreement.
(v) “ Subject Entity ” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.
(w) “ Trading Day ” means, as applicable, (x) with respect to all price or trading volume determinations relating to the Common Stock, any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded, provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise designated as a Trading Day in writing by the Holder or (y) with respect to all determinations other than price determinations relating to the Common Stock, any day on which The New York Stock Exchange (or any successor thereto) is open for trading of securities.
23. DISCLOSURE. Upon receipt or delivery by the Company of any notice in accordance with the terms of this Note, unless the Company has in good faith determined that the matters relating to such notice do not constitute material, non-public information relating to the Company or any of its Subsidiaries, the Company shall within one (1) Business Day after any such receipt or delivery publicly disclose such material, non-public information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice contains material, non-public information relating to the Company or any of its Subsidiaries, the Company so shall indicate to the Holder contemporaneously with delivery of such notice, and in the absence of any such indication, the Holder shall be allowed to presume that all matters relating to such notice do not constitute material, non-public information relating to the Company or any of its Subsidiaries. If the Company or any of its Subsidiaries provides material non-public information to the Holder that is not simultaneously filed in a Current Report on Form 8-K and the Holder has not agreed to receive such material non-public information, the Company hereby covenants and agrees that the Holder shall not have any duty of confidentiality to the Company, any of its Subsidiaries or any of their respective officers, directors, employees, affiliates or agents with respect to, or a duty to any of the foregoing not to trade on the basis of, such material non-public information. Nothing contained in this Section 23 shall limit any obligations of the Company, or any rights of the Holder, under Section 4(i) of the Securities Purchase Agreement.
[signature page follows]
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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed as of the Issuance Date set out above.
AVANT DIAGNOSTICS, INC. | ||
By: | /s/ Philippe Goix | |
Name: Philippe Goix | ||
Title: Chief Executive Officer |
Senior Convertible Note - Signature Page
EXHIBIT I
AVANT DIAGNOSTICS, INC. CONVERSION NOTICE
Reference is made to the Convertible Note (the “Note”) issued to the undersigned by Avant Diagnostics, Inc., a Nevada corporation (the “Company”). In accordance with and pursuant to the Note, the undersigned hereby elects to convert the Conversion Amount (as defined in the Note) of the Note indicated below into shares of Company Common Stock or Company Preferred Stock as indicated below, as of the date specified below. Capitalized terms not defined herein shall have the meaning as set forth in the Note.
Date of Conversion: | |||||
Aggregate Principal to be converted: | |||||
Aggregate accrued and unpaid Interest with respect to such portion of the Aggregate Principal and such Aggregate Interest to be converted: | |||||
AGGREGATE CONVERSION AMOUNT TO BE CONVERTED: | |||||
Please confirm the following information: | |||||
Conversion Price: | |||||
Number of shares of Company Common Stock or Company Preferred Stock to be issued: |
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Please issue Company Common Stock into which the Note is being converted to Holder, or for its benefit, as follows:
☐ Check here if requesting delivery as a certificate to the following name and to the following address:
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Issue to: | |||||
Date: _____________ __, | |
Name of Registered Holder |
By: | ||
Name: | ||
Title: | ||
Tax ID: ______________________ | ||
Facsimile: ____________________ | ||
E-mail Address: |
ACKNOWLE DGMENT
The Company hereby acknowledges this Conversion Notice and hereby directs__________________ to issue the above indicated number of shares of Company Common Stock or Company Preferred Stock in accordance with the Transfer Agent Instructions dated _____________ , 20________ from the Company.
AVANT DIAGNOSTICS, INC. | ||
By: | ||
Name: | ||
Title: |
Exhibit 4.11
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ ACT ”), OR ANY APPLICABLE STATE SECURITIES LAWS. IT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITY UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
COMMON STOCK PURCHASE WARRANTS
AVANT DIAGNOSTICS, INC.
Warrants Shares: 2,500,000 | Initial Exercise Date: September 5th, 2017 |
THIS COMMON STOCK PURCHASE WARRANTS (the “Warrants”) certifies that, for value received, Anand Gokel and its permitted assigns (the “ Holder ”) is entitled, upon the terms and subject to the conditions hereinafter set forth, at any time on or after September 5 th 2017 (the “ Initial Exercise Date ”) and on or prior to the close of business on the five year anniversary of the Initial Exercise Date (the “ Termination Date ”) but not thereafter, to subscribe for and purchase from AVANT DIAGNOSTICS, INC, a Nevada corporation (the “ Company ”), up to 2,500,000 shares (as subject to adjustment hereunder, the “ Warrant Shares ”) of the Company’s common stock, $0.00001 par value (“ Common Stock ”). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1 . Definitions . Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “ Purchase Agreement ”), dated September 5th, 2017, among the Company and the Holder or in that certain Senior Secured Convertible Promissory Warrant, dated September 5th, 2017 among the Company and the Holder.
Section 2 . Exercise .
a) Exercise of the purchase warrants represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto. Within three (3) Trading Days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
b) Exercise Price . The exercise price per share of the Common Stock under this Warrant shall be $0.06 , subject to adjustment hereunder (the “ Exercise Price ”).
c) Mechanics of Exercise .
i. Delivery of Warrant Shares Upon Exercise . The Company will issue a stock certificate representing the Warrant Shares purchased hereunder to the Holder by the date that is five (5) Trading Days after the latest of (A) the delivery to the Company of the Notice of Exercise, (B) surrender of this Warrant (if required) and (C) payment of the aggregate Exercise Price as set forth above (such date, the “ Warrant Share Delivery Date ”). The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 2(c)(v) prior to the issuance of such shares, having been paid. Any certificate issued to Holder representing Warrant Shares shall contain the restrictive legend language specified in the Purchase Agreement.
ii. Delivery of New Warrants Upon Exercise . If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the warrants of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
iii. Rescission Warrants . If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(c)(i) by the Warrant Share Delivery Date, then the Holder will have the warrant to rescind such exercise.
iv. No Fractional Shares or Scrip . No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.
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v. Charges, Taxes and Expenses . Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided , however , that in the event Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise.
vi. Closing of Books . The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.
Section 3 . Certain Adjustments .
a) Stock Dividends and Splits . If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
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b) Subsequent Equity Sales . If, at any time while this Warrant is outstanding, the Company or any Subsidiary, as applicable, sells or grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces any sale, grant or any option to purchase or other disposition), any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock at an effective price per share that is lower than the then Exercise Price (such lower price, the “ Base Share Price ” and such issuances, collectively, a “ Dilutive Issuance ”) (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is lower than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance), then the Exercise Price shall be reduced to equal the Base Share Price. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustment will be made under this Section 3(b) in respect of an Exempt Issuance. The Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this Section 3(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “ Dilutive Issuance Notice ”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Warrant Shares based upon the Base Share Price on or after the date of such Dilutive Issuance, regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise.
c) Subsequent Rights Offerings . In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “ Purchase Rights ”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.
d) Pro Rata Distributions . During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “ Distribution ”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution.
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e) Fundamental Transaction . If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “ Fundamental Transaction ”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “ Alternate Consideration ”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction. For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one (1) share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “ Successor Entity ”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents (as defined in the Purchase Agreement) in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the holder of this Warrant, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant prior to such Fundamental Transaction, and with a exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.
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f) Calculations . All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
g) Notice to Holder . Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
Section 4 . Transfer of Warrant .
a) Transferability . This Warrant and all warrants hereunder (including, without limitation, any registration warrants) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer, provided, however, that such transfer is in compliance with all applicable federal and state securities laws. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
b) New Warrants . This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c) Warrant Register . The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “ Warrant Register ”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
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Section 5 . Miscellaneous .
a) No Warrants as Stockholder Until Exercise . This Warrant does not entitle the Holder to any voting warrants, dividends or other warrants as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(c)(i).
b) Loss, Theft, Destruction or Mutilation of Warrant . The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
c) Saturdays, Sundays, Holidays, etc . If the last or appointed day for the taking of any action or the expiration of any warrant required or granted herein shall not be a Business Day, then, such action may be taken or such warrant may be exercised on the next succeeding Business Day.
d) Authorized Shares .
If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect in full the exercise of this Warrant, in addition to such other remedies as shall be available to the Holder, the Company will promptly take such corporate action as may, in the opinion of its counsel, be necessary to increase the number of authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including without limitation, using its best efforts to obtain the requisite shareholder approval necessary to increase the number of authorized shares of Common Stock. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary Warrant Shares upon the exercise of the purchase warrants under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase warrants represented by this Warrant will, upon exercise of the purchase warrants represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
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e) Jurisdiction . All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Warrant (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the State of New York for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of this Warrant), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any warrant to serve process in any other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant, then, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
f) Nonwaiver and Expenses . No course of dealing or any delay or failure to exercise any warrant hereunder on the part of Holder shall operate as a waiver of such warrant or otherwise prejudice the Holder’s warrants, powers or remedies. Without limiting any other provision of this Warrant or the Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its warrants, powers or remedies hereunder.
g) Notices . Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.
h) Limitation of Liability . No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the warrants or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
i) Remedies . The Holder, in addition to being entitled to exercise all warrants granted by law, including recovery of damages, will be entitled to specific performance of its warrants under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
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j) Successors and Assigns . Subject to applicable securities laws, this Warrant and the warrants and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.
k) Amendment . This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
l) Severability . Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
m) Headings . The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
********************
(Signature Page Follows)
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its authorized signatory as of date set forth above.
AVANT DIAGNOSTICS, INC. | ||
By: | /s/ Philippe Goix | |
Name: Philippe Goix | ||
Title: Chief Executive Officer |
[Signature Page to Common Stock Purchase Warrant]
NOTICE OF EXERCISE
TO: AVANT DIAGNOSTICS , INC.
(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
Payment in the form of lawful money of the United States in the amount of $__________ in payment of the aggregate Exercise Price will be made by means of:
______ Check
______ Wire transfer
(2) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
[SIGNATURE OF HOLDER]
Name: By: |
|
Signature | |
Title | |
Date | |
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all warrants evidenced thereby are hereby assigned to
whose address is | ||||||
Dated | , | |||||
Holder’s Signature: | ||||||
Holder’s Address | ||||||
Signature Guaranteed: | ||||||
WARRANT: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.
Exhibit 4.12
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ ACT ”), OR ANY APPLICABLE STATE SECURITIES LAWS. IT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITY UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
COMMON STOCK RIGHTS
AVANT DIAGNOSTICS, INC.
Issue Date: September 5th, 2017
Rights Shares: 10,000,000 | Initial Exercise Date: March 5th, 2019 |
THIS COMMON STOCK RIGHTS (the “Rights”) certifies that, for value received, Anand Gokel and its permitted assigns (the “ Holder ”) is entitled, upon the terms and subject to the conditions hereinafter set forth, at any time on or after March 5th, 2019 (the “ Initial Exercise Date ”) and on or prior to the close of business on the five year anniversary of the Issue Date (the “ Termination Date ”) but not thereafter, to subscribe for and purchase from AVANT DIAGNOSTICS, Inc, a Nevada corporation (the “ Company ”), up to 10,000,000 shares (as subject to adjustment hereunder, the “ Right Shares ”) of the Company’s common stock, $0.00001 par value (“ Common Stock ”). The purchase price of one share of Common Stock under this Right shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1 . Definitions . Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “ Purchase Agreement ”), dated September 5th, 2017, among the Company and the Holder or in that certain Senior Secured Convertible Promissory Note, dated September 5th, 2017 among the Company and the Holder.
Section 2 . Exercise .
a) Exercise of the Rights represented by this Right may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto. Within three (3) Trading Days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Right to the Company until the Holder has purchased all of the Right Shares available hereunder and the Right has been exercised in full, in which case the Holder shall surrender this Right to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Right resulting in purchases of a portion of the total number of Right Shares available hereunder shall have the effect of lowering the outstanding number of Right Shares purchasable hereunder in an amount equal to the applicable number of Right Shares purchased. The Holder and the Company shall maintain records showing the number of Right Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Right, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Right Shares hereunder, the number of Right Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
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b) Exercise Price . The exercise price per share of the Common Stock under this Right shall be $0.06 , subject to adjustment hereunder (the “ Exercise Price ”).
c) Mechanics of Exercise .
i. Delivery of Right Shares Upon Exercise . The Company will issue a stock certificate representing the Right Shares purchased hereunder to the Holder by the date that is five (5) Trading Days after the latest of (A) the delivery to the Company of the Notice of Exercise, (B) surrender of this Right (if required) and (C) payment of the aggregate Exercise Price as set forth above (such date, the “ Right Share Delivery Date ”). The Right Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Right has been exercised, with payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 2(c)(v) prior to the issuance of such shares, having been paid. Any certificate issued to Holder representing Right Shares shall contain the restrictive legend language specified in the Purchase Agreement.
ii. Delivery of New Rights Upon Exercise . If this Right shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Right certificate, at the time of delivery of the Right Shares, deliver to the Holder a new Right evidencing the rights of the Holder to purchase the unpurchased Right Shares called for by this Right, which new Right shall in all other respects be identical with this Right.
iii. Rescission Rights . If the Company fails to cause the Transfer Agent to transmit to the Holder the Right Shares pursuant to Section 2(c)(i) by the Right Share Delivery Date, then the Holder will have the right to rescind such exercise.
iv. No Fractional Shares or Scrip . No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Right. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.
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v. Charges, Taxes and Expenses . Issuance of Right Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Right Shares, all of which taxes and expenses shall be paid by the Company, and such Right Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided , however , that in the event Right Shares are to be issued in a name other than the name of the Holder, this Right when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise.
vi. Closing of Books . The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Right, pursuant to the terms hereof.
Section 3 . Certain Adjustments .
a) Stock Dividends and Splits . If the Company, at any time while this Right is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Right), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Right shall be proportionately adjusted such that the aggregate Exercise Price of this Right shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
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b) Subsequent Equity Sales . If, at any time while this Rights is outstanding, the Company or any Subsidiary, as applicable, sells or grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces any sale, grant or any option to purchase or other disposition), any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock at an effective price per share that is lower than the then Exercise Price (such lower price, the “ Base Share Price ” and such issuances, collectively, a “ Dilutive Issuance ”) (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is lower than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance), then the Exercise Price shall be reduced to equal the Base Share Price. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustment will be made under this Section 3(b) in respect of an Exempt Issuance. The Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this Section 3(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “ Dilutive Issuance Notice ”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Exercise Shares based upon the Base Share Price on or after the date of such Dilutive Issuance, regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise.
c) Subsequent Rights Offerings . In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “ Rights ”), then the Holder will be entitled to acquire, upon the terms applicable to such Rights, the aggregate Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Rights immediately before the date on which a record is taken for the grant, issuance or sale of such Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Rights.
d) Pro Rata Distributions . During such time as this Rights is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a " Distribution "), at any time after the issuance of this Rights, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Rights immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution.
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e) Fundamental Transaction . If, at any time while this Rights is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “ Fundamental Transaction ”), then, upon any subsequent conversion of this Rights, the Holder shall have the right to receive, for each Exercise Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in Section 4(d) on the conversion of this Rights), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “ Alternate Consideration ”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Rights is convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 4(d) on the conversion of this Rights). For purposes of any such conversion, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one (1) share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Rights following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “ Successor Entity ”) to assume in writing all of the obligations of the Company under this Rights and the other Transaction Documents (as defined in the Purchase Agreement) in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the holder of this Rights, deliver to the Holder in exchange for this Rights a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Rights which is convertible for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Rights (without regard to any limitations on the conversion of this Rights) prior to such Fundamental Transaction, and with a conversion price which applies the conversion price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such conversion price being for the purpose of protecting the economic value of this Rights immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Rights and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Rights and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.
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f) Calculations . All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
g) Notice to Holder . Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Right Shares and setting forth a brief statement of the facts requiring such adjustment.
Section 4 . Transfer of Right .
a) Transferability . This Right and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Right at the principal office of the Company or its designated agent, together with a written assignment of this Right substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer, provided, however, that such transfer is in compliance with all applicable federal and state securities laws. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Right or Rights in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Right evidencing the portion of this Right not so assigned, and this Right shall promptly be cancelled. The Right, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Right Shares without having a new Right issued.
b) New Rights . This Right may be divided or combined with other Rights upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Rights are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Right or Rights in exchange for the Right or Rights to be divided or combined in accordance with such notice. All Rights issued on transfers or exchanges shall be dated the initial issuance date of this Right and shall be identical with this Right except as to the number of Right Shares issuable pursuant thereto.
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c) Right Register . The Company shall register this Right, upon records to be maintained by the Company for that purpose (the “ Right Register ”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Right as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
Section 5 . Miscellaneous .
a) No Rights as Stockholder Until Exercise . This Right does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(c)(i).
b) Loss, Theft, Destruction or Mutilation of Right . The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Right or any stock certificate relating to the Right Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Right, shall not include the posting of any bond), and upon surrender and cancellation of such Right or stock certificate, if mutilated, the Company will make and deliver a new Right or stock certificate of like tenor and dated as of such cancellation, in lieu of such Right or stock certificate.
c) Saturdays, Sundays, Holidays, etc . If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.
d) Authorized Shares .
If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect in full the exercise of this Right, in addition to such other remedies as shall be available to the Holder, the Company will promptly take such corporate action as may, in the opinion of its counsel, be necessary to increase the number of authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including without limitation, using its best efforts to obtain the requisite shareholder approval necessary to increase the number of authorized shares of Common Stock. The Company further covenants that its issuance of this Right shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary Right Shares upon the exercise of the Rights under this Right. The Company will take all such reasonable action as may be necessary to assure that such Right Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Right Shares which may be issued upon the exercise of the Rights represented by this Right will, upon exercise of the Rights represented by this Right and payment for such Right Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
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e) Jurisdiction . All questions concerning the construction, validity, enforcement and interpretation of this Right shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Right (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the State of New York for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of this Right), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Right and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Right, then, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
f) Nonwaiver and Expenses . No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Right or the Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of this Right, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
g) Notices . Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.
h) Limitation of Liability . No provision hereof, in the absence of any affirmative action by the Holder to exercise this Right to purchase Right Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
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i) Remedies . The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Right. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Right and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
j) Successors and Assigns . Subject to applicable securities laws, this Right and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Right are intended to be for the benefit of any Holder from time to time of this Right and shall be enforceable by the Holder or holder of Right Shares.
k) Amendment . This Right may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
l) Severability . Wherever possible, each provision of this Right shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Right shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Right.
m) Headings . The headings used in this Right are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Right.
********************
(Signature Page Follows)
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IN WITNESS WHEREOF, the Company has caused this Right to be executed by its authorized signatory as of the date set forth above.
AVANT DIAGNOSTICS, INC. | ||
By: | /s/ Philippe Goix | |
Name: Philippe Goix | ||
Title: Chief Executive Officer |
[Signature Page to Common Stock Purchase Right]
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NOTICE OF EXERCISE
TO: AVANT DIAGNOSTICS , INC.
(1) The undersigned hereby elects to purchase ________ Right Shares of the Company pursuant to the terms of the attached Right (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
Payment in the form of lawful money of the United States in the amount of $__________ in payment of the aggregate Exercise Price will be made by means of:
______ Check
______ Wire transfer
(2) Please issue said Right Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
[SIGNATURE OF HOLDER]
Name: By: |
|
Signature | |
Title | |
Date | |
ASSIGNMENT FORM
(To assign the foregoing right, execute
this form and supply required information.
Do not use this form to exercise the right.)
FOR VALUE RECEIVED, [____] all of or [_______] shares of the foregoing Right and all rights evidenced thereby are hereby assigned to
whose address is | ||||||
Dated | , | |||||
Holder’s Signature: | ||||||
Holder’s Address | ||||||
Signature Guaranteed: | ||||||
NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Right, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Right.
Exhibit 10.2
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT ( as the same may be amended, restated or otherwise modified from time to time, this “ Agreement ”) , dated as of ______________, 2017, by and between AVANT DIAGNOSTICS, INC., a Nevada corporation, (the “ Pledgor ” ), and Infusion 51a L.P. (the “ Lender ”) .
PRELIMINARY STATEMENTS:
WHEREAS , on June 19, 2017 Lender purchased Three Hundred Thousand Dollars ($300,000.00) of Senior Secured Convertible Notes of Pledgor, having an office and an address for purposes of notices and legal process at 217 Perry Parkway, Suite 8, Gaithersburg, MD 20877 and as of the date set forth above, the Lender has agreed to purchase Twenty-Five Thousand Dollars ($25,000.00) of Senior Secured Convertible Notes of Pledgor (collectively, the “ Loan ” ), partially in reliance on Pledgor’s agreement to enter into this Agreement as further security for Pledgor’s payment and performance (hereinafter, Pledgor’s “ Obligations ” ) under the Loan by Pledgor, as maker, in favor of Lender, as payee; and
WHEREAS , the Note and all other agreements, documents or instruments executed or delivered by Pledgor others in connection with the Loan (including but not limited to the Securities Purchase Agreement, dated __________, 2017) are hereinafter collectively referred to as the “ Loan Documents ” ; and
WHEREAS , Lender’s agreement to make the Loan is conditioned upon, among other things, the Pledgor entering into this Agreement and pledging a security interest to Lender in and to all of the respective Assets Pledgor owns.
NOW THEREFORE , to secure the Obligations of the Pledgor, and in consideration of the Lender making the Loan to the Pledgor, the Pledgor hereby agrees for the benefit of the Lender as follows:
1. INTERPRETATION OF THIS AGREEMENT
1.1 Terms defined
All capitalized terms used herein but not defined herein shall have the respective meanings set forth in the Loan Documents from Pledgor to Lender of even date herewith which secures the Loan. As used herein, the following terms shall have the respective meanings set forth below:
(a) “ Collateral ” shall mean all of Pledgor’s Assets, all rights and privileges related thereto, and all books and records relating thereto and all rights in and to any insurance proceeds of the foregoing, and which are listed on Exhibit A.
(b) “ Lender ” shall have the meaning set forth in the introductory paragraph hereof.
(d) “ Loan Documents ” shall have the meaning set forth in the preliminary statement above.
(e) “ Obligations ” shall mean all of the obligations of Pledgor under the Loan Documents, and all obligations of Pledgor pursuant to this Agreement.
(f) “ Pledgor ” shall have the meaning set forth in the introductory paragraph hereof.
(g) “ Security Interest ” shall have the meaning set forth in Section 2.1 hereof.
(h) “ Uniform Commercial Code ” shall mean the Uniform Commercial Code as in effect from time to time in the State of Nevada.
1.2 Directly or Indirectly
Where any provision herein refers to action to be taken by any party, or provides that such party is prohibited from taking any action, such provision shall be applicable whether such action is taken directly or indirectly by such party.
1.3 Section Headings and Construction
(a) Section Headings. The titles of the sections of this Agreement appear as a matter of convenience only, do not constitute a part hereof and shall not affect the construction hereof. The words “herein,” “hereunder” and “hereto” refer to this Agreement as a whole and not to any particular section or other subdivision. References to sections are, unless otherwise specified, references to sections of this Agreement.
(b) Construction. Each covenant contained herein shall be construed (absent an express contrary provision herein) as being independent of each other covenant contained herein, and compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with one or more other covenants.
1.4 Governing Law
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEVADA, AND THE FEDERAL LAWS OF THE UNITED STATES OF AMERICA IN FORCE THEREIN, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
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2. GRANT OF SECURITY INTEREST
2.1 Grant of Security Interest
As security for the payment or performance, as the case may be, of the Obligations, the Pledgor does hereby pledge and grant a security interest (the “ Security Interest ” ) to the Lender in all of the Collateral.
2.2 Perfection of Security Interest in Collateral
(a) Contemporaneously with the execution of this Agreement, the Pledgor (i) shall deliver, or cause to be delivered, to the Lender, all instruments evidencing the Collateral (ii) authorizes the Lender to file one or more financing statements under the Uniform Commercial Code, with respect to the Security Interest, with the proper filing and recording agencies in any jurisdiction deemed proper by it, (iii) shall register the pledge of the Collateral hereunder in its books and records, and/or (iv) take such other action as the Lender may direct in order to perfect the Security Interest.
(b) Delivery of Other Collateral . If the Pledgor shall become entitled to receive or shall receive any certificate or other instrument, option or rights or other similar property in respect of the Collateral, whether as an addition to, in substitution of, or in exchange for, such Collateral or otherwise, the Pledgors agree:
(i) to accept the same as the agent of the Lender;
(ii) to hold the same in trust on behalf of and for the benefit of the Lender; and
(iii) to deliver the same to the Lender, or to such other party as the Lender may direct, on or before the close of business on the second business day following the receipt thereof by the Pledgor, in the exact form received, with the endorsement in blank of the Pledgor when necessary and with appropriate undated powers of attorney duly executed in blank (with signatures properly guaranteed), when necessary, to be held by the Lender, or such other party as directed by the Lender, subject to the terms of this Agreement, as additional Collateral.
2.3 Further Assurances
The Pledgor agrees, at its expense, to cooperate with the Lender and to execute and deliver, or cause to be executed and delivered, all such powers, proxies, instruments and documents, and take all such actions, as the Lender may from time to time reasonably request, for the better assuring and preserving of the perfection of the Security Interest herein granted to the Lender and the rights and remedies created hereby.
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3. REPRESENTATIONS, WARRANTIES AND COVENANTS
3.1 Representations, Warranties and Covenants of Pledgor
The Pledgor represents, warrants and covenants that:
(a) Right to Grant Security Interest . The Pledgor has the right to pledge and grant a security interest in the Collateral free of any encumbrances other than the lien created hereby;
(b) Governmental Authorities . The Pledgor’s execution and delivery of this Agreement and the pledging of the Collateral hereunder does not require the consent, approval or authorization of, or filing, registration or qualification with, any governmental authority having jurisdiction thereover (other than filing of UCC financing statements);
(c) Authority to Pledge . The Pledgor has rights in and good title to the Collateral and has full right, power and authority to pledge the Collateral pursuant hereto and to execute, deliver and perform his obligations in accordance with the terms of this Agreement, without the consent or approval of any other party (other than the consent of Pledgor, which consent is set forth below);
(d) Validity of Security Interest . Once the pledge of the Collateral hereunder is effective by virtue of the execution and delivery of this Agreement and the filing of the UCC financing statements in connection therewith, the Lender will have a valid, legal and perfected first and prior security interest in all of the Collateral, and no party, other than the Lender shall have priority in such security interest; and
(e) Absence of Other Liens . The Pledgor is the legal and equitable owner of the Collateral free and clear of any pledge, security interest, lien, charge or other encumbrance of any nature whatsoever, and the Pledgor will make no further sale, assignment, pledge, mortgage, hypothecation or transfer of the Collateral.
4. EVENTS OF DEFAULT; REMEDIES
4.1 Events of Default
An “ Event of Default ” shall exist if any of the following occurs and is continuing:
(a) Covenants : Any Pledgor shall fail to comply with any of the provisions hereof, and such failure continues for more than ten (10) days after the date on which the Pledgor shall have received written notice of such failure from the Lender; or
(b) Warranties or Representations : Any warranty, representation or other written statement by or on behalf of any Pledgor contained herein or in any certificate, instrument or other statement furnished in compliance herewith or with the Loan Documents shall have been false or misleading in any material respect when made; or
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(c) Collateral : All or any part of the Collateral shall be attached or levied upon or seized in any legal proceeding, or held by virtue of any lien or distress, in any case for a period in excess of twenty (20) days; or
(d) Events of Default Under Loan Documents : Any “Event of Default” exists under and as defined in the Loan Documents.
4.2 Remedies
At any time during the continuance of an Event of Default, the Lender may take any or all of the following actions with respect to the Collateral:
(a) The Lender may exercise all of the rights and remedies of a secured party under the Uniform Commercial Code and other applicable law and all of the rights and remedies conferred hereby, it being expressly understood that no such remedy is intended to be exclusive of any other remedy or remedies, but each and every remedy shall be cumulative and shall be in addition to every other remedy given herein or now or hereafter existing at law or in equity or by statute, and may be exercised from time to time as often as may be deemed expedient by the Lender.
(b) The Lender shall have the right, subject to the mandatory requirements of applicable law, to sell or otherwise dispose of all or any part of the Collateral, at public or private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery as the Lender shall deem appropriate. Each purchaser at any such sale shall hold the Collateral sold absolutely free from any claim or right on the part of the Pledgor, and the Pledgor hereby waives (to the extent permitted by law) all rights of redemption, stay and appraisal that the Pledgor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.
4.3 Method of Sale and Conduct of Remedies
(a) The Pledgor and the Lender agree that ten (10) days’ notice to any Pledgor of any or private sale or other disposition of the Collateral or any portion thereof shall be reasonable notice thereof, and such sale shall be at such locations as the Lender shall designate in such notice and during ordinary business hours, and any other requirement of notice, demand or advertisement for sale, to the extent permitted by law, is hereby waived by the Pledgor. The Lender shall have the right to bid at any public sale.
(b) The Lender shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. The Lender may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned.
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(c) In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Lender until the sale price is paid by the purchaser or purchasers thereof, but the Lender shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice.
4.4 Certain Securities Law Restrictions
Anything herein to the contrary notwithstanding, and in view of the fact that federal and state securities laws may impose certain restrictions on the method by which a sale of any securities constituting all or part of the Collateral may be effected after and during the continuance of an Event of Default, the Pledgor agrees that, if an Event of Default shall exist hereunder, the Lender may, from time to time, attempt to sell all or any part of any such securities by means of a private placement, restricting the bidders and prospective purchasers to those who will represent or agree as to their investment intent or method of resale or both in a manner reasonably required by the Lender to assure compliance with applicable securities laws. In so doing, the Lender may solicit offers to buy such securities or any part thereof, for cash, from a limited number of investors deemed by the Lender to be responsible parties who might be interested in purchasing such securities. If the Lender solicits such offers from not fewer than three (3) such investors, then the acceptance by the Lender of the highest offer obtained therefrom shall be deemed to be a commercially reasonable method of disposition of such securities.
4.5 Lender Appointed Attorney-in-Fact
The Pledgor hereby appoints the Lender as the Pledgor’s attorney-in-fact, with full authority to act in the place and stead of the Pledgor and in the name of the Pledgor or otherwise at any time after an Event of Default shall exist, to take any action and to execute any instrument which the Lender may deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation:
(a) to ask, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral,
(b) to receive, endorse and collect all instruments made payable to the Pledgor representing any payment or Distribution in respect of the Collateral or any part thereof and to give full discharge for the same, and
(c) to file any claims or take any action or institute any proceedings that the Lender may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Lender with respect to any of the Collateral.
The Pledgor agree that the Lender shall not have any liability for any acts of commission or omission, or for any error of judgment or mistake of fact or law, with respect to the exercise of the powers of attorney granted under this Section 4.5, unless such liability shall be due to the willful misconduct or gross negligence of the Lender. The powers of attorney granted under this Section 4.5 are coupled with and interest and shall be irrevocable for so long as any of the Obligations shall not have been fully and finally paid.
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4.6 Performance by the Lender for the Pledgor
If any Pledgor shall fail to do any act or thing that it has covenanted to do hereunder, or any representation or warranty of the Pledgor shall be breached, the Lender, may at its option, but shall not be required to, do the same or cause it to be done, or remedy any such breach, and charge the Pledgor therefor, and the Pledgor agrees to promptly reimburse the Lender therefor, with interest at an interest rate per annum that is then borne by the Pledgor pursuant to the terms of the Note. The Pledgor shall pay all sums so paid or incurred by the Lender in respect of any of the foregoing and all costs and expenses (including attorneys’ fees, legal expenses and court costs) that the Lender may incur in asserting, enforcing, defending or protecting the Security Interest herein granted on, or rights and interest in, the Collateral, or any of their rights or remedies under this Agreement or in respect of any of the transactions to be had hereunder and, until paid by the Pledgor with interest at the rate aforesaid, such sums shall be secured by all of the Collateral and the proceeds from the sale thereof.
5. Effect of Sale, etc.
5.1 Title. Any sale or sales pursuant to the provisions of this Agreement, whether under any right or power granted hereby or pursuant to any legal proceedings, shall operate to divest the Pledgor of all right, title, interest, claim and demand whatsoever, either at law or in equity, of, in and to the Collateral, or any part thereof, so sold, and any property so sold shall be free and clear of any and all rights of redemption by, through or under the Pledgor.
5.2 Application of Proceeds. The receipt by the Lender, or by any party authorized under any judicial proceedings to make any such sale, of the proceeds of any such sale shall be a sufficient discharge to any purchaser of the Collateral, or of any part thereof, sold as aforesaid; and no such purchaser shall be bound to see to the application of such proceeds, or be bound to inquire as to the authorization, necessity or propriety of any such sale. In the event that, at any such sale, the Lender is the successful purchaser, it shall be entitled, for the purpose of making settlement or payment, to credit against the purchase price of such sale all or any portion of the Obligations.
5.3 Restoration of Rights and Remedies
If the Lender shall have instituted any proceeding to enforce any right or remedy hereunder, and such proceeding shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Lender, then and in every such case, the Lender shall, subject to any determination in any such proceeding, be restored severally and respectively to its former position hereunder, and thereafter all rights and remedies of the Lender shall continue as though no such proceeding had been instituted.
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5.4 Application of Proceeds
The proceeds of any exercise of rights with respect to the Collateral, or any part thereof, and the proceeds and the avails of any remedy under this Agreement shall be paid to the Lender and applied by the Lender in accordance with the Note.
5.5 Waivers by Pledgor
(a) Acceptance . The Pledgor hereby waive notice of acceptance of this Agreement. The Pledgor further waives presentment and demand for payment of any of the Obligations, protest and notice of dishonor or default with respect to any of the Obligations, and all notices to which the Pledgor might otherwise be entitled, except as otherwise expressly provided in this Agreement.
(b) Waiver of Valuations, etc. The Pledgor (to the extent that it may lawfully do so) covenants that it shall not at any time insist upon or plead, or in any manner claim or take the benefit or advantage of, any stay, valuation, appraisal, redemption or extension law now or at any time hereafter in force that, but for this waiver, might be applicable to any sale made hereunder or under any judgment, order or decree based on this Agreement, and the Pledgor (to the extent that it may lawfully do so) hereby expressly waives and relinquishes all benefit and advantage of any and all such laws and hereby covenants that it will not hinder, delay or impede the execution of any power in this Agreement or therein granted and delegated to the Lender, but that it will suffer and permit the execution of every such power as though no such law or laws had been made or enacted.
(c) Dealings with Pledgor and Others . The Pledgor does hereby waive: notice of the extension of credit from time to time by Lender to Pledgor and the creation, existence or acquisition of any Obligations hereby secured, including, without limitation, notice of the amount of any indebtedness of Pledgor to Lender from time to time (subject, however, to Pledgor’s right to make inquiry of Lender to ascertain the amount of such indebtedness at any reasonable time); notice of adverse change in Pledgor’s financial condition or of any other fact which might increase such Pledgor’s risk hereunder; notice of presentment for payment, demand, protest and notice thereof as to any instrument executed by Pledgor in favor of Lender; to the extent permitted under applicable law, notice of default; and all other notices and demands to which the Pledgor might otherwise be entitled (except for any notices expressly required under the Agreement). The Pledgor further waives any statutory or other rights to require Lender to institute suit against Pledgor or any other obligor or guarantor in respect of the Obligations or to exhaust its rights and remedies against Pledgor or any other such obligor or guarantor. The Pledgor accepts the full range of risk encompassed within a contract of continuing guaranty, including the possibility that the Pledgor will incur indebtedness after its financial condition (including its ability to pay debts when they fall due) has deteriorated. Pledgor waives the benefit of any applicable law having a contrary effect. The Pledgor further waives any defense arising by reason of any disability or other defense of Pledgor or by reason of the cessation from any cause whatsoever of the liability of Pledgor (except for payment in full of the Obligations), and any other legal or equitable suretyship defense. Without limiting the foregoing, no Pledgor shall not be relieved of its obligations hereunder by virtue of any time or indulgences granted by Lender to Pledgor. The Pledgor hereby irrevocably appoints Pledgor as the Pledgor’s agent such that any agreement made between Lender and Pledgor with respect to any waiver, release or amendment of the terms of the Note and any other Loan Documents, shall be deemed to have been agreed and consented to by the Pledgors and the execution of any document by Pledgor evidencing any such agreement shall be deemed to have been executed by Pledgor as principal and as authorized agent of the Pledgors. Until all of the Obligations shall have been satisfied in full, the Pledgors shall have no right of subrogation, reimbursement or indemnity whatsoever and no right of recourse to or with respect to any assets or property of Pledgor or to any collateral for the Obligations. Nothing shall discharge or satisfy the obligations secured hereby except the full payment of the Obligations. As between the Pledgors and Lender and at the option of Lender, such Obligations shall forthwith become due and payable if there shall be filed against any one or more of Pledgor or the Pledgors a petition under any bankruptcy, insolvency, reorganization or arrangement or similar laws for appointment of a receiver or trustee, if any one or more of Pledgor or the Pledgors makes an assignment for the benefit of creditors, or if an Event of Default shall exist. It is the intent of the parties that this Agreement shall remain in full force and effect notwithstanding any act or thing that might otherwise operate as a legal or equitable discharge of a surety.
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6. MISCELLANEOUS
6.1 No Waiver
No failure on the part of the Lender to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy by the Lender preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law. The Lender shall not be deemed to have waived any rights hereunder or under any other agreement or instrument unless such waiver shall be in writing and signed by the Lender and the Pledgor.
6.2 Lender’s Fees and Expenses
The Pledgor will upon demand pay to the Lender the amount of any and all reasonable expenses, including the fees and expenses of its counsel and of any experts or agents that the Lender may incur in connection with (i) the custody or preservation or, or the sale of, collection from, or other realization upon, any of the Collateral, (ii) the exercise or enforcement of any of the rights of the Lender hereunder, or (iii) the failure by the Pledgor to perform or observe any of the provisions hereof. In addition, the Pledgor will indemnify and hold the Lender harmless from and against any and all liability incurred by the Lender hereunder or in connection herewith, unless such liability shall be due to the willful misconduct or gross negligence of the Lender. Any such amounts payable as provided hereunder or thereunder shall be secured hereby.
6.3 Benefits of this Agreement
All warranties, representations and covenants made by the Pledgor herein or in any certificate or other document or instrument delivered by it shall be considered to have been relied upon by the Lender and shall survive the delivery to the Lender of the Collateral regardless of any investigation made by the Lender. All statements in any such certificate or other instrument shall constitute warranties and representations by the Pledgor hereunder. This Agreement shall be binding upon the Pledgor and their respective heirs and assigns, and shall inure to the benefit of and be enforceable by the Lender and its successors and assigns.
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6.4 Obligations Absolute; Recourse; No Marshaling
(a) This Agreement is an absolute, unconditional, continuing and irrevocable obligation of the Pledgor and shall remain in full force and effect without respect to future changes in conditions, including change of law or any invalidity or irregularity with respect to the issuance of any obligations of Pledgor to Lender or with respect to the execution and delivery of any agreement between Pledgor and Lender. The Pledgor further agrees that to the extent Pledgor makes a payment or payments to Lender, which payment or payments or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required, for any of the foregoing reasons or for any other reason, to be repaid or paid over to a trustee, receiver or any other party under any bankruptcy, insolvency or similar law, then, to the extent of such payment or repayment, the Obligations or part thereof intended to be satisfied shall be revived and continued in full force and effect as if said payment had not been made.
(b) Lender shall have the right to seek recourse against the Collateral to the full extent provided for herein, which rights shall be absolute and shall not in any way be impaired, deferred or otherwise diminished by reason of any inability of Lender to claim the full amount of the Obligations from Pledgor under any applicable law. No election to proceed in one form of action or proceeding, or against any party, or on any obligation, shall constitute a waiver of Lender’s right to proceed in any other form of action or proceeding or against other parties unless Lender has expressly waived such right in writing. Specifically, but without limiting the generality of the foregoing, no action or proceeding by Lender against Pledgor, any guarantor of the Obligations or any other party, under any document or instrument evidencing or securing the Obligations shall serve to diminish the liability of the Pledgor hereunder, except to the extent Lender fully and unconditionally realizes full indefeasible payment of the Obligations by such action or proceeding, notwithstanding the effect of any such action or proceeding upon the Pledgor’s right of subrogation, reimbursement or contribution against Pledgor or any other party.
(c) The Pledgor consents and agrees that Lender shall be under no obligation to marshal any assets in favor of the Pledgor, or against or in payment of any or all of the Obligations.
6.5 Actions by Lender
The Pledgor consents and agrees that, without notice to Pledgor and without affecting or impairing the obligations of Pledgor hereunder, Lender may, by action or inaction: compromise, settle, extend the time for payment of the Obligations with Pledgor or any party liable therefor; release Pledgor or any party from its liability for the Obligations; release all or any part of the security for the Obligations; modify any instruments or agreements relating to the Obligations (except this Agreement); extend the time for making any deposit or granting a security interest in property securing the Obligations; or refuse or fail to enforce its rights under any agreement or instrument evidencing or securing the Obligations.
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6.6 Notices
All notices or demands by either party to the other relating to this Agreement shall be in writing and sent in accordance with the Loan Documents; provided that notices or demands to Pledgor shall be sent to Pledgor at the address for the Pledgor.
6.7 Severability
In case any one or more of the provisions contained in this Agreement shall be invalid, illegal or unenforceable, the remaining provisions contained herein shall not in any way be affected or impaired.
6.8 Counterparts
This Agreement may be executed in one or more counterparts and shall be effective when at least one counterpart shall have been executed by each party hereto, and each set of counterparts that, collectively, show execution by each party hereto shall constitute one duplicate original.
6.9 Amendments
No provision of this Agreement shall be waived, amended, modified or supplemented except by a written instrument executed by the Pledgor and the Lender.
6.10 Termination
Pledgor acknowledge that this Agreement and the Security Interest shall terminate when all the Obligations have been fully and finally paid, at which time the Lender shall deliver to the Pledgor all certificates, if any, evidencing the Collateral then held by it and such other documents as the Pledgor shall reasonably request to evidence such termination (all at the expense of the Pledgor).
(the rest of the page left intentionally blank)
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IN WITNESS WHEREOF , the Pledgor has executed and delivered this Pledge and Security Agreement as of the date first above written.
AVANT DIAGNOSTICS, INC. | ||
By: | ||
Name: | ||
Title: |
- 12 -
Exhibit A
Pledgor’s Assets
- 13 -
Exhibit 10.3
SATISFACTION OF NOTE
This SATISFACTION OF NOTE (this “Satisfaction”) is made effective as of July 7th , 2017 (the “Execution Date”) by and among Avant Diagnostics, Inc., a Nevada corporation (the “Company”) and Black Mountain Equity Partners, LLC (the “Investor”).
RECITALS
WHEREAS, the Company and the Investor entered into certain Convertible Promissory Note dated November 11, 2016 (the “Existing Note”), in the aggregate principal amount of $25,000 and having an initial maturity date of May 11, 2017;
WHEREAS, the Company acknowledges that the Existing Note is currently in default (collectively, the “Default”);
WHEREAS, as a result of the Default, the Company is issuing 62,500 common shares of the Company to Investor in satisfaction of any outstanding accrued and unpaid interest, and penalties, and any other contract obligations in the Existing Note triggered by the Default;
NOW, THEREFORE, in consideration of the mutual covenants contained in this Satisfaction, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and the Investor agree as follows:
ARTICLE I
THE SATISFACTION
1.1 Payment . The Company shall pay $25,000 in cash to Investor (the “Cash Payment”) on or before August 1, 2017.
1.2 Satisfaction Shares . Subject to the terms hereof, Investor hereby irrevocably waives the penalties, interest, defaults and breaches that have resulted from the Default on or prior to the Execution Date. As consideration for this waiver, the Company shall issue to the Investor 62,500 shares of the Company common stock (the “Satisfaction Shares”).
1.3 No Default . As of the Execution Date, Investor agrees that the Existing Note is not in default.
1.4 Satisfaction and Release. Upon the receipt of the Cash Payment and the Satisfaction Shares, Investor and its subsidiaries and affiliates, as well as the officers, directors, shareholders, partners, associates, employees and affiliates of Investor and its subsidiaries and affiliates, hereby
a) acknowledge the satisfaction of the Existing Note and its obligations; and
b) release the Company and its subsidiaries and affiliates, as well as the officers, directors, shareholders, partners, associates, employees and affiliates thereof for any amounts that might otherwise be due, owe or claimed related to the Existing Note, including but not limited to fees for professional services rendered, expenses, and other charges, fees and penalties,.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Investor Representations and Warranties . The Investor hereby represents and warrants to the Company as follows on the Execution Date:
(a) Organization; Authority . The Investor, if not a natural person, is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. The Investor has the requisite power and authority to enter into and to consummate the transactions contemplated by this Satisfaction and otherwise to carry out its obligations hereunder. This Satisfaction has been duly executed by the Investor, and when delivered by the Investor in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Investor, enforceable against it in accordance with its terms.
(b) Ownership of the Existing Note . The Investor is the sole owner of the Existing Note, free and clear of any and all liens, claims and encumbrances of any kind. The Investor has not assigned any rights in the Existing Notes to any party.
(c) Investment Intent . The Investor is acquiring the Satisfaction Shares as principal for its own account for investment purposes only and not with a view to or for distributing or reselling such Satisfaction Shares or any part thereof, except pursuant to sales that are exempt from the registration requirements of the Securities Act and/or sales registered under the Securities Act. The Investor does not have any agreement or understanding, directly or indirectly, with any person or entity to distribute the Satisfaction Shares. Notwithstanding anything in this Section 2.1(c) to the contrary, by making the representations herein, the Investor does not agree to hold the Satisfaction Shares for any minimum or other specific term and reserves the right to dispose of the Satisfaction Shares at any time in accordance with or pursuant to a registration statement or an exemption from the registration requirements under the Securities Act.
(d) Investor Status . At the time the Investor was offered the Satisfaction Shares, it was, and at the date hereof it is, an “accredited investor” as defined in Rule 501(a) of Regulation D under the Securities Act. The Investor is not a broker-dealer.
(e) General Solicitation . The Investor is not acquiring the Satisfaction Shares as a result of or subsequent to any advertisement, article, notice or other communication regarding the Satisfaction Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.
(f) Reliance . The Investor understands and acknowledges that (i) the Satisfaction Shares are being offered and sold to it without registration under the Securities Act in a transaction that is exempt from the registration provisions of the Securities Act, and (ii) the availability of such exemption depends in part on, and the Company will rely upon the accuracy and truthfulness of, the foregoing representations, and the Investor hereby consents to such reliance.
(g) Brokers and Finders . The Investor has no knowledge of any person who will be entitled to or make a claim for payment of any finder fee or other compensation as a result of the consummation of the transactions contemplated by this Satisfaction.
(h) Experience . Investor has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Satisfaction Shares, and has so evaluated the merits and risks of such investment. Investor is able to bear the economic risk of an investment in the Satisfaction Shares and, at the present time, is able to afford a complete loss of such investment.
(i) Access to Information . Such Investor acknowledges that it has had the opportunity to review this Satisfaction (including all exhibits and schedules thereto) and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the Satisfaction Shares; (ii) access to information about the Company and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment.
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2.2 Company Representations and Warranties . The Company hereby makes the following representations and warranties to each Investor on the Execution Date and on the Closing Date:
(a) Organization and Qualification . The Company is a corporation incorporated, validly existing and in good standing under the laws of the State of Nevada, with the requisite corporate power and authority to own and use its properties and assets and to carry on its business as currently conducted. The Company is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction where the nature of the business it conducts makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of the Satisfaction, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under the Satisfaction (any of (i), (ii) or (iii), a ” Material Adverse Effect”) .
(b) Authorization; Enforcement . The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Satisfaction and to issue the Satisfaction Shares. The execution, delivery and performance of this Satisfaction and any other agreements and the consummation of the transactions contemplated hereby and thereby have been duly authorized by the Company’s Board of Directors, and no further consent or authorization of the Company, its Board of Directors (including any committee thereof) or any class of the Company’s stockholders is required. This Satisfaction has been duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligations of the Company enforceable against the Company, in accordance with their terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
(c) Issuance of the Satisfaction Shares . The Satisfaction Shares are duly authorized and, when issued and paid for in accordance with this Satisfaction, will be duly and validly issued, fully paid and nonassessable.
(d) No Conflicts . The execution, delivery and performance of this Satisfaction and the consummation by the Company of the transactions contemplated hereby and thereby will not, (i) result in a violation of the articles of incorporation of the Company, as amended (the ” Certificate of Incorporation “) or the bylaws of the Company (the “Bylaws”) or (ii) result in a violation of any law, rule, regulation, order, judgment or decree (including United States federal and state securities laws and regulations and rules or regulations of any self-regulatory organizations to which either the Company or its securities are subject) applicable to the Company or by which any property or asset of the Company is bound or affected. The Company is not in violation of its Certificate of Incorporation, Bylaws or other organizational documents.
(e) Absence of Certain Changes . The Company has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant to any bankruptcy or receivership law nor does the Company have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings with respect to the Company.
(f) Certain Fees . No fees or commissions will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Satisfaction.
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ARTICLE III
OTHER COVENANTS
3.1 Securities Laws . The Investor acknowledges that the Satisfaction Shares have not been registered under the Securities Act and may only be disposed of pursuant to an available exemption from or in a transaction not subject to the registration requirements of the Securities Act.
3.2 Restrictive Legend . The Investor agrees to the imprinting of the following legend on the Satisfaction Shares:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
ARTICLE IV
MISCELLANEOUS
4.1 Fees and Expenses . Except as set forth in this Section 4.1, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Satisfaction. The Company shall pay all stamp and other taxes and duties levied in connection with the issuance of the Satisfaction Shares.
4.2 Entire Agreement; Amendments. This Satisfaction, dated as of the Execution Date, contains the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.
4.3 Notices . Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email at the email address specified in this Section prior to 6:00 p.m. (Eastern time) on a business day, against electronic confirmation thereof, (ii) the business day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email at the email address specified in this Satisfaction later than 6:00 p.m. (Eastern time) on any date, against electronic confirmation thereof, (iii) the business day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows:
If to the Company:
With copies to (which shall
not constitute notice):
|
Avant
Diagnostics, Inc.
Email:
Sheppard, Mullin, Richter & Hampton LLP 30 Rockefeller Plaza, 39 th Floor New York, NY 10112
Facsimile No.: (917) 438-6137
Email: scohen@sheppardmullin.com Attn: Stephen A. Cohen
|
If to the Investors: | At the address of the Investor set forth on the signature page to this Satisfaction. |
or such other address as may be designated in writing hereafter, in the same manner, by such person or entity.
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4.4 Amendments; Waivers . No provision of this Satisfaction may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and by the Investor. No waiver of any default with respect to any provision, condition or requirement of this Satisfaction shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter.
4.5 Headings . The headings herein are for convenience only, do not constitute a part of this Satisfaction and shall not be deemed to limit or affect any of the provisions hereof.
4.6 Successors and Assigns . This Satisfaction shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Investor may not assign this Satisfaction or any rights or obligations hereunder without the prior written consent of the Company.
4.7 No Third-Party Beneficiaries . This Satisfaction is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other person or entity.
4.8 Governing Law . This Satisfaction shall be governed by and construed and enforced in accordance with the internal laws of the State of Nevada, without regard to the principles of conflicts of law thereof. The Company and the Investor irrevocably consent to the jurisdiction of the United States federal courts and state courts located in the State of Nevada in any suit or proceeding based on or arising under this Satisfaction and irrevocably agree that all claims in respect of such suit or proceeding may be determined in such courts.
4.9 Survival . The representations and warranties contained herein shall survive until the expiration of the first anniversary following the Closing. The agreements and covenants contained herein shall survive the Closing and the delivery of the Satisfaction Shares until the expiration of the applicable statute of limitations (if any) therefor.
4.10 Execution . This Satisfaction may be executed in one or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that all parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or a scanned copy via electronic mail, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile or scanned signature page were an original thereof.
4.11 Severability . In case any one or more of the provisions of this Satisfaction shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Satisfaction shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision which shall be a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Satisfaction.
4.12 Further Assurances . The parties hereto agree that each shall execute and deliver any and all further agreements, instruments, certificates and other documents, and shall take any and all action, as any of the parties hereto may reasonably deem necessary or desirable in order to carry out the intent of the parties to this Satisfaction. then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
4.13 Attorneys’ Fees. If either party shall commence an action or proceeding to enforce any provisions relating to the obligations to close the transactions contemplated by this Satisfaction prior to the Closing, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
4.14 Construction. The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise this Satisfaction and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Satisfaction or any amendments hereto.
[signature page follows]
5 |
IN WITNESS WHEREOF, the parties hereto have caused this Satisfaction to be duly executed by their respective authorized signatories as of the date first indicated above.
COMPANY: | ||
AVANT DIAGNOSTICS, INC. | ||
By: | ||
Name: | ||
Title: | CEO & President |
[additional signature page follows]
[Company Signature Page to Satisfaction]
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INVESTOR:
BLACK MOUNTAIN EQUITY PARTNERS LLC
By: | /s/ Rick Randall | |
Name: | Rick Randall | |
Title: | CEO |
Email Address of Authorized Signatory: rrandall@bmepaz.com
Facsimile Number of Authorized Signatory: 480-385-5799
Address for Notice to Investor: | Black Mountain Equity Partners LLC |
9096 E. Bahia Drive, suite 103 | |
Scottsdale, AZ 85260 |
[Investor Signature Page to Satisfaction]
7
Exhibit 10.4
EXCHANGE AGREEMENT
This EXCHANGE AGREEMENT (this “ Agreement ”) is made effective as of July 14, 2017 (the “ Execution Date ”) by and among Avant Diagnostics, Inc., a Nevada corporation (the “ Company ”) and Coastal Investment Partners LLC (the “ Investor ”).
RECITALS
WHEREAS, the Company and the Investor entered into certain Securities Purchase Agreement dated July 6, 2016 (the “ Purchase Agreement ”), pursuant to which the Company issued to the Investor a convertible promissory note (the “ Existing Note ”), in the aggregate principal amount of $225,000 and having an initial maturity date of January 5, 2017, in accordance with the terms of the Purchase Agreement;
WHEREAS, the Company acknowledges that the Existing Note is currently in default (collectively, the “ Default ”);
WHEREAS, the Company desires, and the Investor agrees, that the Investor exchange (the “ Exchange ”) the Existing Note for a new convertible promissory note (the “ New Note ”), in the form attached hereto as Exhibit A . The New Note shall have a principal balance of $442,325.00 (three hundred forty thousand two five hundred fifty dollars) (which amount is original principal of the Existing Note plus interest, and penalties minus $40,000, which reflects a prepayment of $50,000 with a 25% prepayment penalty), a maturity date of July 14, 2019, accrue interest at a rate of eight (8%) per annum, a fixed conversion price equal to $0.06 per share, and other terms as provided in this Agreement and the New Note. The shares of Common Stock in the New Note shall be referred to as the “ Conversion Shares ”;
WHEREAS, each of the Convertible Note and the Conversion Shares, is intended to qualify as an exempted security under Section 3(a)(9) of the Securities Act of 1933, as amended (the “ Securities Act ”).
NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and the Investor agree as follows:
ARTICLE I
THE EXCHANGE
1.1 Closing . Subject to the terms and conditions set forth in this Agreement, the Company and the Investor shall exchange the Existing Note at the Note Outstanding Balance in consideration for the issuance of the New Note with a total principal balance of $340,250.00. The closing of the Exchange and issuance of the Convertible Note (the “ Closing ”) shall take place at the offices of the Company, on the date hereof or such other date as the parties shall agree (the “ Closing Date ”).
1.2 Exchange .
(a) Investor Obligations . At the Closing, the Investor shall deliver or promptly cause to be delivered to the Company (i) the Existing Note, and (ii) an executed copy of this Agreement.
(b) Company Obligations . At the Closing, the Company shall deliver or promptly cause to be delivered to the Investor (i) the New Note, and (ii) an executed copy of this Agreement.
(c) Existing Note . Effective as of the Closing Date, the Existing Note shall be deemed automatically canceled and of no further force or effect and shall thereafter represent only the right to receive the New Note.
1.3 Pledge Agreement . The Company shall grant a security interest in all of its assets (“Collateral”) to Holder to secure Company’s repayment of the Note. The security interest shall be memorialized in the Pledge Agreement and shall be in such form as attached hereto as Exhibit B.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Investor Representations and Warranties . The Investor hereby represents and warrants to the Company as follows on the Execution Date and the Closing Date:
(a) Organization; Authority . The Investor, if not a natural person, is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. The Investor has the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. This Agreement has been duly executed by the Investor, and when delivered by the Investor in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Investor, enforceable against it in accordance with its terms.
(b) Ownership of the Existing Note . The Investor is the sole owner of the Existing Note, free and clear of any and all liens, claims and encumbrances of any kind. The Investor has not assigned any rights in the Existing Notes to any party.
(c) Investment Intent . The Investor is acquiring the New Note as principal for its own account for investment purposes only and not with a view to or for distributing or reselling such New Note or any part thereof, except pursuant to sales that are exempt from the registration requirements of the Securities Act and/or sales registered under the Securities Act. The Investor does not have any agreement or understanding, directly or indirectly, with any person or entity to distribute the New Note. Notwithstanding anything in this Section 2.1(c) to the contrary, by making the representations herein, the Investor does not agree to hold the New Note for any minimum or other specific term and reserves the right to dispose of the New Note at any time in accordance with or pursuant to a registration statement or an exemption from the registration requirements under the Securities Act.
(d) Investor Status . At the time the Investor was offered the New Note, it was, at the date hereof it is, and on the date it converts the New Note, it will be, an “accredited investor” as defined in Rule 501(a) of Regulation D under the Securities Act. The Investor is not a broker-dealer.
(e) General Solicitation . The Investor is not acquiring the New Note as a result of or subsequent to any advertisement, article, notice or other communication regarding the New Note published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.
(f) Reliance . The Investor understands and acknowledges that (i) the New Note is being offered and sold to it without registration under the Securities Act in a transaction that is exempt from the registration provisions of the Securities Act, and (ii) the availability of such exemption depends in part on, and the Company will rely upon the accuracy and truthfulness of, the foregoing representations, and the Investor hereby consents to such reliance.
(g) Brokers and Finders . The Investor has no knowledge of any person who will be entitled to or make a claim for payment of any finder fee or other compensation as a result of the consummation of the transactions contemplated by this Agreement.
(h) Experience . Investor has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the New Note, and has so evaluated the merits and risks of such investment. Investor is able to bear the economic risk of an investment in the New Note and, at the present time, is able to afford a complete loss of such investment..
(i) Access to Information . Such Investor acknowledges that it has had the opportunity to review this Agreement (including all exhibits and schedules thereto) and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the New Note; (ii) access to information about the Company and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment.
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2.2 Company Representations and Warranties . The Company hereby makes the following representations and warranties to each Investor on the Execution Date and on the Closing Date:
(a) Organization and Qualification . The Company is a corporation incorporated, validly existing and in good standing under the laws of the State of Nevada, with the requisite corporate power and authority to own and use its properties and assets and to carry on its business as currently conducted. The Company is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction where the nature of the business it conducts makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of the New Note, or this Agreement, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under the New Note, or this Agreement (any of (i), (ii) or (iii), a ” Material Adverse Effect ”).
(b) Authorization; Enforcement . The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and to issue the New Note and the Conversion Shares, upon conversion of the Convertible Note in accordance with the terms of the New Note, and otherwise to carry out its obligations hereunder and thereunder. The execution, delivery and performance of this Agreement and any other agreements and the consummation of the transactions contemplated hereby and thereby have been duly authorized by the Company’s Board of Directors, and no further consent or authorization of the Company, its Board of Directors (including any committee thereof) or any class of the Company’s stockholders is required. This Agreement, the New Note have been duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligations of the Company enforceable against the Company, in accordance with their terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
(c) Issuance of the New Note . The New Note is duly authorized and, when issued and paid for in accordance with this Agreement, will be duly and validly issued, fully paid and nonassessable. The Conversion Shares, when issued in accordance with the terms of the New Note, will be validly issued, fully paid and nonassessable, free and clear of all liens imposed by the Company other than restrictions on transfer provided for in the New Note or under applicable securities laws.
(d) No Conflicts . The execution, delivery and performance of this Agreement, and the New Note and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for issuance, as applicable, of the Conversion Shares will not, (i) result in a violation of the articles of incorporation of the Company, as amended (the ” Certificate of Incorporation “) or the bylaws of the Company (the “ Bylaws ”) or (ii) result in a violation of any law, rule, regulation, order, judgment or decree (including United States federal and state securities laws and regulations and rules or regulations of any self-regulatory organizations to which either the Company or its securities are subject) applicable to the Company or by which any property or asset of the Company is bound or affected. The Company is not in violation of its Certificate of Incorporation, Bylaws or other organizational documents.
(e) Absence of Certain Changes . The Company has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant to any bankruptcy or receivership law nor does the Company have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings with respect to the Company.
(f) Certain Fees . No fees or commissions will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement.
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ARTICLE III
OTHER COVENANTS
3.1 Securities Laws . The Investor acknowledges that the New Note, and the Conversion Shares, have not been registered under the Securities Act and may only be disposed of pursuant to an available exemption from or in a transaction not subject to the registration requirements of the Securities Act.
3.2 Restrictive Legend . The Investor agrees to the imprinting of the following legend on the Convertible Note and Conversion Shares:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
3.3 Reservation of Shares . The Company shall at all times have authorized and reserved for the purpose of issuance a sufficient number of Conversion Shares.
ARTICLE IV
MISCELLANEOUS
4.1 Fees and Expenses . Except as set forth in this Section 4.1, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all stamp and other taxes and duties levied in connection with the issuance of the New Note.
4.2 Entire Agreement; Amendments . This Agreement together with the exhibits and schedules hereto, dated as of the Execution Date, contains the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.
4.3 Notices . Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email at the email address specified in this Section prior to 6:00 p.m. (Eastern time) on a business day, against electronic confirmation thereof, (ii) the business day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email at the email address specified in this Agreement later than 6:00 p.m. (Eastern time) on any date, against electronic confirmation thereof, (iii) the business day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows:
If to the Company: | Avant Diagnostics, Inc. | |
217 Perry Parkway,
Suite 8
Gaithersburg, MD 20877 Facsimile No.: Email: Attn: Executive Director |
or such other address as may be designated in writing hereafter, in the same manner, by such person or entity.
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4.4 Amendments; Waivers . No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and by the Investor. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter.
4.5 Headings . The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.
4.6 Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Investor may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Company.
4.7 No Third-Party Beneficiaries . This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other person or entity.
4.8 Governing Law . This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Nevada, without regard to the principles of conflicts of law thereof. The Company and the Investor irrevocably consent to the jurisdiction of the United States federal courts and state courts located in the State of Nevada in any suit or proceeding based on or arising under this Agreement and irrevocably agree that all claims in respect of such suit or proceeding may be determined in such courts.
4.9 Survival . The representations and warranties contained herein shall survive until the expiration of the first anniversary following the Closing. The agreements and covenants contained herein shall survive the Closing and the delivery of the New Note until the expiration of the applicable statute of limitations (if any) therefor.
4.10 Execution . This Agreement may be executed in one or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that all parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or a scanned copy via electronic mail, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile or scanned signature page were an original thereof.
4.11 Severability . In case any one or more of the provisions of this Agreement shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision which shall be a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.
4.12 Further Assurances . The parties hereto agree that each shall execute and deliver any and all further agreements, instruments, certificates and other documents, and shall take any and all action, as any of the parties hereto may reasonably deem necessary or desirable in order to carry out the intent of the parties to this Agreement.
4.13 Attorneys’ Fees . If either party shall commence an action or proceeding to enforce any provisions relating to the obligations to close the transactions contemplated by this Agreement prior to the Closing, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
4.14 Construction . The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise this Agreement and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments hereto.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Exchange Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
COMPANY: | ||
AVANT DIAGNOSTICS, INC. | ||
By: | ||
Name: | ||
Title: |
[additional signature page follows]
[Company Signature Page to Exchange Agreement]
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INVESTOR: | ||
COASTAL INVESTMENT PARTNERS, LLC | ||
By: | ||
Name: | ||
Title: |
Email Address of Authorized Signatory: ____________________________
Facsimile Number of Authorized Signatory: ________________________
Address for Notice to Investor:
[Investor Signature Page to Exchange Agreement]
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Exhibit A
[Form of New Note]
8
Exhibit 10.5
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (as the same may be amended, restated or otherwise modified from time to time, this “ Agreement ”) , dated as of July 14, 2017, by and between AVANT DIAGNOSTICS, INC., a Nevada corporation, (the “ Pledgor ” ), and Coastal Investment Partners, LLC (the “ Lender ” ).
PRELIMINARY STATEMENTS:
WHEREAS , Lender has agreed to exchange their existing outstanding indebtedness in Pledgor for a new note (the “ Exchange Note ”) pursuant to the terms of an exchange agreement entered into on the date hereof (the “ Loan ” ), in reliance on Pledgor’s agreement to enter into this Agreement as security for Pledgor’s payment(s) and performance(s) (hereinafter, Pledgor’s “ Obligations ” ) due to Lender pursuant to the Exchange Note, dated as of the date hereof, in the principal amount of Four Hundred Forty Two Thousand Three Hundred Twenty Four Dollars ($442,324.00) issued by Pledgor, as maker, in favor of Lender, as payee; and
WHEREAS , the Exchange Note and all other agreements, documents or instruments executed or delivered by Pledgor in connection with the Loan (including but not limited to (i) that certain Exchange Agreement, dated as of July 14, 2017, entered into by and between the Lender and the Pledgor, and (ii) that certain Binding Side Letter, dated as of June 30, 2017, entered into by and between the Lender and Pledger) are hereinafter collectively referred to as the “ Loan Documents ” ; and
WHEREAS , Lender’s agreement to execute the Loan is conditioned upon, among other things, the Pledgor entering into this Agreement and pledging a first priority security interest to Lender in the Company’s Equipment Assets (as defined herein) and a second prior security interest in the Company’s Intellectual Property Assets (as defined herein), all which are currently owned by Pledgor.
WHEREAS , Lender acknowledges and agrees that (i) the pledge of the Intellectual Property Assets, and the Lender’s secured position therein, will be a junior priority position, subject to the senior priority position granted to Infusion 51a, LP (the “ Senior Lender ”), pursuant to the terms of that certain pledge agreement, dated June 19, 2017, entered into by and between the Pledgor and the Senior Lender (the “ Senior Lien ”) and (ii) the pledge of the Intellectual Property Assets, and the Lender’s secured position therein, will be a silent pledge under which Lender may not affirmatively enforce any of its rights under this Agreement in case of an Event of Default (such understanding, hereinafter referred to as the “ No-Action Pledge ”). The No-Action Pledge secures a junior position in the Lender’s rights in the Intellectual Property Assets in the event a third party makes a claim on the Intellectual Property Assets.
NOW THEREFORE , to secure the Obligations of the Pledgor, and in consideration of the Lender making the Loan to the Pledgor, the Pledgor hereby agrees for the benefit of the Lender as follows:
1. | INTERPRETATION OF THIS AGREEMENT |
1.1 | Terms defined |
All capitalized terms used herein but not defined herein shall have the respective meanings set forth in the Loan Documents. As used herein, the following terms shall have the respective meanings set forth below:
(a) “ Collateral ” shall mean all of Pledgor’s Equipment Assets, and Pledgor’s Intellectual Property Assets, all rights and privileges related thereto, and all books and records relating thereto and all rights in and to any insurance proceeds of the foregoing.
(b) “ Equipment Assets ” shall mean all equipment owned by Pledgor, as set forth on Exhibit A annexed hereto.
(c) “ Intellectual Property Assets ” shall mean all of Pledgor’s intellectual property rights as set forth on Exhibit B annexed hereto.
(d) “ Lender ” shall have the meaning set forth in the introductory paragraph hereof.
(d) “ Loan Documents ” shall have the meaning set forth in the preliminary statement above.
(e) “ Obligations ” shall mean all of the obligations of Pledgor under the Loan Documents, and this Agreement.
(f) “ Pledgor ” shall have the meaning set forth in the introductory paragraph hereof.
(g) “ Security Interest ” shall have the meaning set forth in Section 2.1 hereof.
(h) “ Uniform Commercial Code , ” or “ UCC” shall mean the Uniform Commercial Code as in effect from time to time in the State of Nevada.
1.2 | Directly or Indirectly |
Where any provision herein refers to action to be taken by any party, or provides that such party is prohibited from taking any action, such provision shall be applicable whether such action is taken directly or indirectly by such party.
1.3 | Section Headings and Construction |
(a) Section Headings. The titles of the sections of this Agreement appear as a matter of convenience only, do not constitute a part hereof and shall not affect the construction hereof. The words “herein,” “hereunder” and “hereto” refer to this Agreement as a whole and not to any particular section or other subdivision. References to sections are, unless otherwise specified, references to sections of this Agreement.
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(b) Construction. Each covenant contained herein shall be construed (absent an express contrary provision herein) as being independent of each other covenant contained herein, and compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with one or more other covenants.
1.4 | Governing Law |
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEVADA, AND THE FEDERAL LAWS OF THE UNITED STATES OF AMERICA IN FORCE THEREIN, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
2. | GRANT OF SECURITY INTEREST |
2.1 | Grant of Security Interest |
As security for the payment or performance, as the case may be, of the Obligations, the Pledgor does hereby pledge and grant a security interest (the “ Security Interest ” ) to the Lender in all of the Collateral.
2.2 | Perfection of Security Interest in Collateral |
(a) Contemporaneously with the execution of this Agreement, the Pledgor (i) shall deliver, or cause to be delivered, to the Lender, all instruments evidencing the Collateral (ii) authorizes the Lender to file one or more financing statements under the Uniform Commercial Code, with respect to the Security Interest, with the proper filing and recording agencies in any jurisdiction deemed proper by it, (iii) shall register the pledge of the Collateral hereunder in its books and records, and/or (iv) take such other action as the Lender may direct in order to perfect the Security Interest.
(b) Delivery of Other Collateral . If the Pledgor shall become entitled to receive or shall receive any certificate or other instrument, option or rights, or other similar property in respect of the Collateral, whether as an addition to, in substitution of, or in exchange for such Collateral, or otherwise, the Pledgors agree:
(i) to accept the same as the agent of the Lender;
(ii) to hold the same in trust on behalf of and for the benefit of the Lender; and
(iii) to deliver the same to the Lender, or to such other party as the Lender may direct, on or before the close of business on the second business day following the receipt thereof by the Pledgor, in the exact form received, with the endorsement in blank of the Pledgor when necessary and with appropriate undated powers of attorney duly executed in blank (with signatures properly guaranteed), when necessary, to be held by the Lender, or such other party as directed by the Lender, subject to the terms of this Agreement, as additional Collateral.
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2.3 | Further Assurances |
The Pledgor agrees, at its expense, to cooperate with the Lender and to execute and deliver, or cause to be executed and delivered, all such powers, proxies, instruments and documents, and take all such actions, as the Lender may from time to time reasonably request, for the better assuring and preserving of the perfection of the Security Interest herein granted to the Lender and the rights and remedies created hereby.
3. | REPRESENTATIONS, WARRANTIES AND COVENANTS |
3.1 | Representations, Warranties and Covenants of Pledgor |
The Pledgor represents, warrants and covenants that:
(a) Right to Grant Security Interest . The Pledgor has the right to pledge and grant the Security Interest in the Collateral, free of any encumbrances other than the lien created hereby;
(b) Governmental Authorities . The Pledgor’s execution and delivery of this Agreement and the pledging of the Collateral hereunder does not require the consent, approval or authorization of, or filing, registration or qualification with, any governmental authority having jurisdiction thereover (other than filing of UCC financing statements);
(c) Authority to Pledge . The Pledgor has rights in and good and full title to the Collateral and has full right, power and authority to pledge the Collateral as set forth herein and to execute, deliver and perform its obligations in accordance with the terms of this Agreement, without the consent or approval of any other party (other than the consent of Senior Lender and Pledgor, in accordance with Section 3.1(e) , below);
(d) Validity of Security Interest . Once the Security Interest in the Collateral hereunder is effective, by virtue of the execution and delivery of this Agreement and the filing of the UCC financing statements in connection therewith, the Lender’s Security Interest in the Collateral will be valid, legal and perfected; and
(e) Absence of Other Liens . Subject to the Senior Lien and the rights of the Senior Lender, the Pledgor is the legal and equitable owner of the Collateral free and clear of any pledge, security interest, lien, charge or other encumbrance of any nature whatsoever, and the Pledgor will make no further sale, assignment, pledge, mortgage, hypothecation or transfer of the Collateral.
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4. | EVENTS OF DEFAULT; REMEDIES |
4.1 | Events of Default |
The occurrence, of any of the following shall constitute An “ Event of Default ” under this Agreement:
(a) Covenants : Pledgor shall fail to comply with any of the provisions hereof, and such failure continues for more than ten (10) days after the date on which the Pledgor received written notice of such failure from the Lender, or otherwise should reasonably have known of such failure; or
(b) Warranties or Representations : Any warranty, representation or other written statement by or on behalf of any Pledgor contained herein or in any certificate, instrument or other statement furnished in compliance herewith or with the Loan Documents shall have been false or misleading in any material respect when made, or at anytime for so long as any of the Loan Documents remain in force; or
(c) Collateral : All or any part(s) of the Collateral shall be attached or levied upon or seized in any legal proceeding, or held by virtue of any lien or distress, in any case for a period in excess of twenty (20) days; or
(d) Events of Default Under Loan Documents : Any “Event of Default” exists under, and as defined in, the Loan Documents.
4.2 | Remedies |
At any time during the continuance of an Event of Default, the Lender may take any or all of the following actions with respect to the Collateral:
(a) The Lender may exercise all of the rights and remedies of a secured party under the Uniform Commercial Code and other applicable law and all of the rights and remedies conferred hereby, it being expressly understood that no such remedy is intended to be exclusive of any other remedy or remedies, but each and every remedy shall be cumulative and shall be in addition to every other remedy given herein or now or hereafter existing at law or in equity or by statute, and may be exercised from time to time as often as may be deemed expedient by the Lender.
(b) The Lender shall have the right, subject to the mandatory requirements of applicable law, to sell or otherwise dispose of all or any part of the Collateral, at public or private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery as the Lender shall deem appropriate. Each purchaser at any such sale shall hold the Collateral sold absolutely free from any claim or right on the part of the Pledgor, and the Pledgor hereby waives (to the extent permitted by law) all rights of redemption, stay and appraisal that the Pledgor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.
(c) No-Action Pledge . The Lender may not exercise any rights under this Section 4.2 as it relates to the Intellectual Property Assets. Under the No-Action Pledge the Lender may not affirmatively enforce any of its rights under this Agreement in the Event of Default. The No-Action Pledge shall simply secure a junior position in the Lender’s rights in the Intellectual Property Assets in the event a third party shall make a claim on the Intellectual Property Assets.
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4.3 | Method of Sale and Conduct of Remedies |
(a) The Pledgor and the Lender agree that ten (10) days’ notice to Pledgor of any public or private sale or other disposition of the Collateral or any portion thereof shall be reasonable notice thereof, and such sale shall be at such locations as the Lender shall designate in such notice and during ordinary business hours, and any other requirement of notice, demand or advertisement for sale, to the extent permitted by law, is hereby waived by the Pledgor. The Lender shall have the right to bid on Collateral at any public sale.
(b) The Lender shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. The Lender may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned.
(c) In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Lender until the sale price is paid by the purchaser or purchasers thereof, but the Lender shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice.
4.4 | Certain Securities Law Restrictions |
Anything herein to the contrary notwithstanding, and in view of the fact that federal and state securities laws may impose certain restrictions on the method by which a sale of any securities constituting all or part of the Collateral may be effected after and during the continuance of an Event of Default, the Pledgor agrees that, if an Event of Default shall exist hereunder, the Lender may, from time to time, attempt to sell all or any part of any such securities by means of a private placement, restricting the bidders and prospective purchasers to those who will represent or agree as to their investment intent or method of resale or both in a manner reasonably required by the Lender to assure compliance with applicable securities laws. In so doing, the Lender may solicit offers to buy such securities or any part thereof, for cash, from a limited number of investors deemed by the Lender to be responsible parties who might be interested in purchasing such securities. If the Lender solicits such offers from not fewer than three (3) such investors, then the acceptance by the Lender of the highest offer obtained therefrom shall be deemed to be a commercially reasonable method of disposition of such securities.
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4.5 | Lender Appointed Attorney-in-Fact |
The Pledgor hereby appoints the Lender as the Pledgor’s attorney-in-fact, with full authority to act in the place and stead of the Pledgor and in the name of the Pledgor or otherwise at any time after an Event of Default shall exist, to take any action and to execute any instrument which the Lender may deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation:
(a) to ask, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral,
(b) to receive, endorse and collect all instruments made payable to the Pledgor representing any payment or distribution in respect of the Collateral or any part thereof and to give full discharge for the same, and
(c) to file any claims or take any action or institute any proceedings that the Lender may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Lender with respect to any of the Collateral.
The Pledgor agree that the Lender shall not have any liability for any acts of commission or omission, or for any error of judgment or mistake of fact or law, with respect to the exercise of the powers of attorney granted under this Section 4.5 , unless such liability shall be due to the willful misconduct or gross negligence of the Lender. The powers of attorney granted under this Section 4.5 are coupled with and interest and shall be irrevocable for so long as any of the Obligations shall not have been fully and finally paid.
4.6 | Performance by the Lender for the Pledgor |
If any Pledgor shall fail to do any act or thing that it has covenanted to do hereunder, or any representation or warranty of the Pledgor shall be breached, the Lender, may at its option, but shall not be required to, do the same or cause it to be done, or remedy any such breach, and charge the Pledgor therefor, and the Pledgor agrees to promptly reimburse the Lender therefor, with interest at an interest rate per annum that is then borne by the Pledgor pursuant to the terms of the Exchange Note. The Pledgor shall pay all sums so paid or incurred by the Lender in respect of any of the foregoing and all costs and expenses (including attorneys’ fees, legal expenses and court costs) that the Lender may incur in asserting, enforcing, defending or protecting the Security Interest herein granted on, or rights and interest in, the Collateral, or any of their rights or remedies under this Agreement or in respect of any of the transactions to be had hereunder and, until paid by the Pledgor with interest at the rate aforesaid, such sums shall be secured by all of the Collateral and the proceeds from the sale thereof.
5. | EFFECT OF SALE, ETC. |
5.1 Title. Any sale or sales pursuant to the provisions of this Agreement, whether under any right or power granted hereby or pursuant to any legal proceedings, shall operate to divest the Pledgor of all right, title, interest, claim and demand whatsoever, either at law or in equity, of, in and to the Collateral, or any part thereof, so sold, and any property so sold shall be free and clear of any and all rights of redemption by, through or under the Pledgor.
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5.2 Application of Proceeds. The receipt by the Lender, or by any party authorized under any judicial proceedings to make any such sale, of the proceeds of any such sale shall be a sufficient discharge to any purchaser of the Collateral, or of any part thereof, sold as aforesaid; and no such purchaser shall be bound to see to the application of such proceeds, or be bound to inquire as to the authorization, necessity or propriety of any such sale. In the event that, at any such sale, the Lender is the successful purchaser, it shall be entitled, for the purpose of making settlement or payment, to credit against the purchase price of such sale all or any portion of the Obligations.
5.3 | Restoration of Rights and Remedies |
If the Lender shall have instituted any proceeding to enforce any right or remedy hereunder, and such proceeding shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Lender, then and in every such case, the Lender shall, subject to any determination in any such proceeding, be restored severally and respectively to its former position hereunder, and thereafter all rights and remedies of the Lender shall continue as though no such proceeding had been instituted.
5.4 | Application of Proceeds |
The proceeds of any exercise of rights with respect to the Collateral, or any part thereof, and the proceeds and the avails of any remedy under this Agreement shall be paid to the Lender and applied by the Lender in accordance with the Note.
5.5 | Waivers by Pledgor |
(a) Acceptance . The Pledgor hereby waives notice of acceptance of this Agreement. The Pledgor further waives presentment and demand for payment of any of the Obligations, protest and notice of dishonor or default with respect to any of the Obligations, and all notices to which the Pledgor might otherwise be entitled, except as otherwise expressly provided in this Agreement.
(b) Waiver of Valuations, etc. The Pledgor (to the extent that it may lawfully do so) covenants that it shall not at any time insist upon or plead, or in any manner claim or take the benefit or advantage of, any stay, valuation, appraisal, redemption or extension law now or at any time hereafter in force that, but for this waiver, might be applicable to any sale made hereunder or under any judgment, order or decree based on this Agreement, and the Pledgor (to the extent that it may lawfully do so) hereby expressly waives and relinquishes all benefit and advantage of any and all such laws and hereby covenants that it will not hinder, delay or impede the execution of any power in this Agreement or therein granted and delegated to the Lender, but that it will suffer and permit the execution of every such power as though no such law or laws had been made or enacted.
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(c) Dealings with Pledgor and Others . The Pledgor does hereby waive: notice of the extension of credit from time to time by Lender to Pledgor and the creation, existence or acquisition of any Obligations hereby secured, including, without limitation, notice of the amount of any indebtedness of Pledgor to Lender from time to time (subject, however, to Pledgor’s right to make inquiry of Lender to ascertain the amount of such indebtedness at any reasonable time); notice of adverse change in Pledgor’s financial condition or of any other fact which might increase such Pledgor’s risk hereunder; notice of presentment for payment, demand, protest and notice thereof as to any instrument executed by Pledgor in favor of Lender; to the extent permitted under applicable law, notice of default; and all other notices and demands to which the Pledgor might otherwise be entitled (except for any notices expressly required under the Agreement). The Pledgor further waives any statutory or other rights to require Lender to institute suit against Pledgor or any other obligor or guarantor in respect of the Obligations or to exhaust its rights and remedies against Pledgor or any other such obligor or guarantor. The Pledgor accepts the full range of risk encompassed within a contract of continuing guaranty, including the possibility that the Pledgor will incur indebtedness after its financial condition (including its ability to pay debts when they fall due) has deteriorated. Pledgor waives the benefit of any applicable law having a contrary effect. The Pledgor further waives any defense arising by reason of any disability or other defense of Pledgor or by reason of the cessation from any cause whatsoever of the liability of Pledgor (except for payment in full of the Obligations), and any other legal or equitable suretyship defense. Without limiting the foregoing, no Pledgor shall be relieved of its obligations hereunder by virtue of any time or indulgences granted by Lender to Pledgor. The Pledgor hereby irrevocably appoints Pledgor as the Pledgor’s agent such that any agreement made between Lender and Pledgor with respect to any waiver, release or amendment of the terms of the Note and any other Loan Documents, shall be deemed to have been agreed and consented to by the Pledgors and the execution of any document by Pledgor evidencing any such agreement shall be deemed to have been executed by Pledgor as principal and as authorized agent of the Pledgors. Until all of the Obligations shall have been satisfied in full, the Pledgors shall have no right of subrogation, reimbursement or indemnity whatsoever and no right of recourse to or with respect to any assets or property of Pledgor or to any collateral for the Obligations. Nothing shall discharge or satisfy the obligations secured hereby except the full payment of the Obligations. As between the Pledgors and Lender and at the option of Lender, such Obligations shall forthwith become due and payable if there shall be filed against any one or more of Pledgor or the Pledgors a petition under any bankruptcy, insolvency, reorganization or arrangement or similar laws for appointment of a receiver or trustee, if any one or more of Pledgor or the Pledgors makes an assignment for the benefit of creditors, or if an Event of Default shall exist. It is the intent of the parties that this Agreement shall remain in full force and effect notwithstanding any act or thing that might otherwise operate as a legal or equitable discharge of a surety.
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6. | MISCELLANEOUS |
6.1 | No Waiver |
No failure on the part of the Lender to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy by the Lender preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law. The Lender shall not be deemed to have waived any rights hereunder or under any other agreement or instrument unless such waiver shall be in writing and signed by the Lender and the Pledgor.
6.2 | Lender’s Fees and Expenses |
The Pledgor will upon demand pay to the Lender the amount of any and all reasonable expenses, including the fees and expenses of its counsel and of any experts or agents that the Lender may incur in connection with (i) the custody or preservation or, or the sale of, collection from, or other realization upon, any of the Collateral, (ii) the exercise or enforcement of any of the rights of the Lender hereunder, or (iii) the failure by the Pledgor to perform or observe any of the provisions hereof. In addition, the Pledgor will indemnify and hold the Lender harmless from and against any and all liability incurred by the Lender hereunder or in connection herewith, unless such liability shall be due to the willful misconduct or gross negligence of the Lender. Any such amounts payable as provided hereunder or thereunder shall be secured hereby.
6.3 | Benefits of this Agreement |
All warranties, representations and covenants made by the Pledgor herein or in any certificate or other document or instrument delivered by it shall be considered to have been relied upon by the Lender and shall survive the delivery to the Lender of the Collateral regardless of any investigation made by the Lender. All statements in any such certificate or other instrument shall constitute warranties and representations by the Pledgor hereunder. This Agreement shall be binding upon the Pledgor and their respective heirs and assigns, and shall inure to the benefit of and be enforceable by the Lender and its successors and assigns.
6.4 | Obligations Absolute; Recourse; No Marshaling |
(a) This Agreement is an absolute, unconditional, continuing and irrevocable obligation of the Pledgor and shall remain in full force and effect without respect to future changes in conditions, including change of law or any invalidity or irregularity with respect to the issuance of any obligations of Pledgor to Lender or with respect to the execution and delivery of any agreement between Pledgor and Lender. The Pledgor further agrees that to the extent Pledgor makes a payment or payments to Lender, which payment or payments or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required, for any of the foregoing reasons or for any other reason, to be repaid or paid over to a trustee, receiver or any other party under any bankruptcy, insolvency or similar law, then, to the extent of such payment or repayment, the Obligations or part thereof intended to be satisfied shall be revived and continued in full force and effect as if said payment had not been made.
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(b) Lender shall have the right to seek recourse against the Collateral to the full extent provided for herein, which rights shall be absolute and shall not in any way be impaired, deferred or otherwise diminished by reason of any inability of Lender to claim the full amount of the Obligations from Pledgor under any applicable law. No election to proceed in one form of action or proceeding, or against any party, or on any obligation, shall constitute a waiver of Lender’s right to proceed in any other form of action or proceeding or against other parties unless Lender has expressly waived such right in writing. Specifically, but without limiting the generality of the foregoing, no action or proceeding by Lender against Pledgor, any guarantor of the Obligations or any other party, under any document or instrument evidencing or securing the Obligations shall serve to diminish the liability of the Pledgor hereunder, except to the extent Lender fully and unconditionally realizes full indefeasible payment of the Obligations by such action or proceeding, notwithstanding the effect of any such action or proceeding upon the Pledgor’s right of subrogation, reimbursement or contribution against Pledgor or any other party.
(c) The Pledgor consents and agrees that Lender shall be under no obligation to marshal any assets in favor of the Pledgor, or against or in payment of any or all of the Obligations.
6.5 | Actions by Lender |
The Pledgor consents and agrees that, without notice to Pledgor and without affecting or impairing the obligations of Pledgor hereunder, Lender may, by action or inaction: compromise, settle, extend the time for payment of the Obligations with Pledgor or any party liable therefor; release Pledgor or any party from its liability for the Obligations; release all or any part of the security for the Obligations; modify any instruments or agreements relating to the Obligations (except this Agreement); extend the time for making any deposit or granting a security interest in property securing the Obligations; or refuse or fail to enforce its rights under any agreement or instrument evidencing or securing the Obligations.
6.6 | Notices |
All notices or demands by either party to the other relating to this Agreement shall be in writing and sent in accordance with the Loan Documents; provided that notices or demands to Pledgor shall be sent to Pledgor at the address for the Pledgor.
6.7 | Severability |
In case any one or more of the provisions contained in this Agreement shall be invalid, illegal or unenforceable, the remaining provisions contained herein shall not in any way be affected or impaired.
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6.8 | Counterparts |
This Agreement may be executed in one or more counterparts and shall be effective when at least one counterpart shall have been executed by each party hereto, and each set of counterparts that, collectively, show execution by each party hereto shall constitute one duplicate original.
6.9 | Amendments |
No provision of this Agreement shall be waived, amended, modified or supplemented except by a written instrument executed by the Pledgor and the Lender.
6.10 | Termination |
Pledgor acknowledge that this Agreement and the Security Interest shall terminate when all the Obligations have been fully and finally paid, at which time the Lender shall deliver to the Pledgor all certificates, if any, evidencing the Collateral then held by it and such other documents as the Pledgor shall reasonably request to evidence such termination (all at the expense of the Pledgor).
(the rest of the page left intentionally blank)
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IN WITNESS WHEREOF , the Pledgor has executed and delivered this Pledge and Security Agreement as of the date first above written.
AVANT DIAGNOSTICS, INC. | ||
By: | /s/ Gerald Commissiong | |
Name: | Gerald Commissiong | |
Title: | Executive Director |
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Exhibit A
Pledgor’s Equipment Assets
14 |
Exhibit B
Pledgor’s Intellectual Property Assets
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Exhibit 10.6
Binding Side Letter on Exchange Note with Coastal Investment Partners, LLC
dated July 14, 2017
Avant Diagnostics, Inc. (“AVDX” or the “Company”) hereby proposes the following binding terms (the “Side Letter”) as agreed with Coastal Investment Partners, LLC (“Coastal”) in connection with the execution of the Exchange Agreement for settlement of all claims, payments, and damages related to the existing convertible notes (the “2016 Note”) held by Coastal prior to this date:
General: | The Company and Coastal (collectively may be referred to herein as the “Parties”) agree that certain obligations of the Parties contained in the Exchange Agreement and Convertible Promissory Note shall be deferred. |
Deferral: | The Parties shall execute the Exchange Note and its ancillary documents as of July 14, 2017, but that the exchange of the 2016 Note for the Exchange Notes shall be deferred until the Company files the following periodic financial reports with the Securities Exchange Commission (the “SEC”): a) Report on Form 10-Q for the period ended June 30, 2016, December 31, 2016, March 31, 2017, and June 30, 2017, and b) Report on Form 10-K for the period ended September 30, 2016 (the “Outstanding Filings”). The Company shall have ninety (90) days from the execution of this Side Letter to file the Outstanding Filings with the SEC (the “Filing Period”). |
Commitment Shares: | Per the 2016 Note, the Company agrees to issue 750,000 shares of the Company’s common stock to Coastal related to an appropriate adjustment due to the Company’s subsequent financing transaction with International Infusion LP and Infusion51a LP in November 2016. |
Reversion: | If the Outstanding Filings are not filed with the SEC prior to the end of the Filing Period the obligations of the Parties under the Exchange Agreement and Convertible Promissory Note shall cease and the 2016 Note shall exist with interest accruing from the date of this Side Letter |
Covenants: |
a) Should further amendments or modifications occur to this Side Letter, the Exchange Agreement, and/or the Convertible Promissory Note, those same amendments and/or modifications will be offered or applied to the Exchange Agreement and Convertible Promissory Note held by Infusion 51a, LP, International Infusion, LP, and Infusion related affiliates.
b) During the Filing Period, Coastal agrees that the Company’s obligations to Coastal under the 2016 Notes, the Exchange Agreement, and/or the Convertible Promissory Note are current and not in default in any regard. Coastal agrees to cooperate, as necessary, with the Company in its efforts to file its periodic financial reports with the SEC, including communicating the status of the Company obligations to Coastal with the Company’s accountants and auditors. |
AVANT DIAGNOSTICS, INC
By: _______________________ Date: _____________________
Gerald E. Commissiong
Director
ACCEPTED AND AGREED:
COASTAL INVESTMENT PARTNERS, LLC
By: _______________________ Date: _____________________
Exhibit 10.7
EXCHANGE AGREEMENT
This EXCHANGE AGREEMENT (this “ Agreement ”) is made effective as of July 28, 2017 (the “ Execution Date ”) by and among Avant Diagnostics, Inc., a Nevada corporation (the “ Company ”) and ____________ (the “ Investor ”).
RECITALS
WHEREAS, the Company and the Investor entered into certain Convertible Promissory Note dated October 28, 2016 (the “ Existing Note ”), in the aggregate principal amount of $20,000 and having an initial maturity date of April 28, 2017;
WHEREAS, the Company acknowledges that the Existing Note is currently in default (collectively, the “ Default ”);
WHEREAS, as a result of the Default, the Company is selling 396,695 common shares of the Company to Investor for $0.00001 per share in satisfaction of any outstanding accrued and unpaid interest, and penalties, and any other contract obligations in the Existing Note triggered by the Default (the “ Satisfaction Shares ”);
WHEREAS, pursuant to a Binding Letter of Intent, executed between the Parties on July 28, 2017 (the “Binding LOI”), the Company desires, and the Investor agrees, that the Investor exchange (the “ Exchange ”) the Existing Note for a new convertible promissory note (the “ Exchange Note ”), in the form attached hereto as Exhibit A . The Exchange Note shall have a principal balance of $25,600.00 (twenty five thousand six hundred dollars)(which amount is the $20,000 actual amount of the purchase price hereof plus a 28% original issue discount), a maturity date of July 28, 2019, accrue interest at a rate of ten (10%) per annum, a fixed conversion price equal to $0.06 per share, and other terms as provided in this Agreement and the Exchange Note. The shares of Common Stock in the Exchange Note shall be referred to as the “ Conversion Shares ”;
WHEREAS, each of the Exchange Note and the Conversion Shares, is intended to qualify as an exempted security under Section 3(a)(9) of the Securities Act of 1933, as amended (the “ Securities Act ”).
NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and the Investor agree as follows:
ARTICLE I
THE EXCHANGE
1.1 Waiver of Existing Defaults; Satisfaction Shares . Subject to the terms hereof, Investor hereby irrevocably waive the penalties, interest, defaults and breaches that have resulted from the Default on or prior to the Execution Date. This waiver does not include any default occurring after the Execution Date should the Closing not occur. As consideration for this waiver, the Company hereby sells, transfers, conveys and assigns to the Investor 396,695 common shares at $0.00001, or $3.97 (“ Satisfaction Shares ”). Investor shall pay the $3.97 promptly upon execution of this Agreement.
1.2 Closing . Subject to the terms and conditions set forth in this Agreement, the Company and the Investor shall exchange the Existing Note at the Note Outstanding Balance in consideration for the issuance of the Exchange Note with a total principal balance of $25,600.00. The closing of the Exchange and issuance of the Convertible Note (the “ Closing ”) shall take place at the offices of the Company, on the date hereof or such other date as the parties shall agree (the “ Closing Date ”).
1.3 Exchange .
(a) Escrow . Effective as of the Execution Date, executed copies of this Agreement and the Binding LOI, the Existing Note and the Exchange Note, with irrevocable transfer agent instructions, executed by the Company shall be delivered to Austin Legal Group, APC (the “ Escrow Agent ”) for possession pursuant to the Binding LOI, and upon successful completion of the conditions contained in the Binding LOI, the Escrow Agent shall promptly release the Exchange Note to Investor, and the Parties shall agree that the Existing Note is replaced by the Exchange Note and the Existing Note shall be cancelled and of no further force or effect. Should the Company not satisfy the conditions contained in the Binding LOI within 120 days from the Effective date of this Agreement, the exchange of the Existing Note for the Exchange Note shall be cancelled, the Exchange Note shall be of no force or effect and the Existing Note shall be treated as though it was never cancelled and as having been in default since the Execution Date of this Agreement.
(b) Investor Obligations . At the Closing, the Investor shall deliver or promptly cause to be delivered to the Escrow Agent (i) the Existing Note, and (ii) an executed copy of this Agreement and (iii) the Binding LOI (as defined below).
(c) Company Obligations . At the Closing, the Company shall deliver or promptly cause to be delivered to the Escrow Agent and the Investor (i) the Exchange Note, including properly executed irrevocable transfer agent instructions as detailed in the Exchange Note, and (ii) an executed copy of this Agreement and Binding LOI.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Investor Representations and Warranties . The Investor hereby represents and warrants to the Company as follows on the Execution Date and the Closing Date:
(a) Organization; Authority . The Investor, if not a natural person, is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. The Investor has the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. This Agreement has been duly executed by the Investor, and when delivered by the Investor in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Investor, enforceable against it in accordance with its terms.
(b) Ownership of the Existing Note . The Investor is the sole owner of the Existing Note, free and clear of any and all liens, claims and encumbrances of any kind. The Investor has not assigned any rights in the Existing Notes to any party.
(c) Investment Intent . The Investor is acquiring the Exchange Note as principal for its own account for investment purposes only and not with a view to or for distributing or reselling such Exchange Note or any part thereof, except pursuant to sales that are exempt from the registration requirements of the Securities Act and/or sales registered under the Securities Act. The Investor does not have any agreement or understanding, directly or indirectly, with any person or entity to distribute the Exchange Note. Notwithstanding anything in this Section 2.1(c) to the contrary, by making the representations herein, the Investor does not agree to hold the Exchange Note for any minimum or other specific term and reserves the right to dispose of the Exchange Note at any time in accordance with or pursuant to a registration statement or an exemption from the registration requirements under the Securities Act.
(d) Investor Status . At the time the Investor was offered the Exchange Note, it was, and at the date hereof it is, an “accredited investor” as defined in Rule 501(a) of Regulation D under the Securities Act. The Investor is not a broker-dealer.
(e) General Solicitation . The Investor is not acquiring the Exchange Note as a result of or subsequent to any advertisement, article, notice or other communication regarding the Exchange Note published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.
(f) Reliance . The Investor understands and acknowledges that (i) the Exchange Note is being offered and sold to it without registration under the Securities Act in a transaction that is exempt from the registration provisions of the Securities Act, and (ii) the availability of such exemption depends in part on, and the Company will rely upon the accuracy and truthfulness of, the foregoing representations, and the Investor hereby consents to such reliance.
(g) Brokers and Finders . The Investor has no knowledge of any person who will be entitled to or make a claim for payment of any finder fee or other compensation as a result of the consummation of the transactions contemplated by this Agreement.
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(h) Experience . Investor has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Exchange Note, and has so evaluated the merits and risks of such investment. Investor is able to bear the economic risk of an investment in the Exchange Note and, at the present time, is able to afford a complete loss of such investment..
(i) Access to Information . Such Investor acknowledges that it has had the opportunity to review this Agreement (including all exhibits and schedules thereto) and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the Exchange Note; (ii) access to information about the Company and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment.
2.2 Company Representations and Warranties . The Company hereby makes the following representations and warranties to each Investor on the Execution Date and on the Closing Date:
(a) Organization and Qualification . The Company is a corporation incorporated, validly existing and in good standing under the laws of the State of Nevada, with the requisite corporate power and authority to own and use its properties and assets and to carry on its business as currently conducted. The Company is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction where the nature of the business it conducts makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of the Exchange Note, or this Agreement, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under the Exchange Note, or this Agreement (any of (i), (ii) or (iii), a “ Material Adverse Effect ”).
(b) Authorization; Enforcement . The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and to issue the Exchange Note and the Conversion Shares, upon conversion of the Convertible Note in accordance with the terms of the Exchange Note, and otherwise to carry out its obligations hereunder and thereunder. The execution, delivery and performance of this Agreement and any other agreements and the consummation of the transactions contemplated hereby and thereby have been duly authorized by the Company’s Board of Directors, and no further consent or authorization of the Company, its Board of Directors (including any committee thereof) or any class of the Company’s stockholders is required. This Agreement, the Exchange Note have been duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligations of the Company enforceable against the Company, in accordance with their terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
(c) Issuance of the Exchange Note . The Exchange Note is duly authorized and, when issued and paid for in accordance with this Agreement, will be duly and validly issued, fully paid and nonassessable. The Conversion Shares, when issued in accordance with the terms of the Exchange Note, will be validly issued, fully paid and nonassessable, free and clear of all liens imposed by the Company other than restrictions on transfer provided for in the Exchange Note or under applicable securities laws.
(d) No Conflicts . The execution, delivery and performance of this Agreement, and the Exchange Note and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for issuance, as applicable, of the Conversion Shares will not, (i) result in a violation of the articles of incorporation of the Company, as amended (the “ Certificate of Incorporation ”) or the bylaws of the Company (the “ Bylaws ”) or (ii) result in a violation of any law, rule, regulation, order, judgment or decree (including United States federal and state securities laws and regulations and rules or regulations of any self-regulatory organizations to which either the Company or its securities are subject) applicable to the Company or by which any property or asset of the Company is bound or affected. The Company is not in violation of its Certificate of Incorporation, Bylaws or other organizational documents.
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(e) Absence of Certain Changes . The Company has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant to any bankruptcy or receivership law nor does the Company have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings with respect to the Company.
(f) Certain Fees . No fees or commissions will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement.
(g) SEC Filings . The Company will use its best efforts to become current in all delinquent filings with the SEC, including XBRL data and posting all required filings and XBRL data on its website, within 120 days from the Effective Date of this Agreement.
ARTICLE III
OTHER COVENANTS
3.1 Securities Matters . The Investor acknowledges that the Exchange Note, the Satisfaction Shares, and the Conversion Shares, have not been registered under the Securities Act and may only be disposed of pursuant to an available exemption from or in a transaction not subject to the registration requirements of the Securities Act. The Company agrees not to interfere with Investor’s attempts to remove the restrictive legend from or sell any security in the Company so long as done pursuant to a valid opinion of attorney that such securities are eligible to have the legend removed and/or be sold. To that end, the Company further agrees after the Company becomes current pursuant to the Binding LOI, it will remain current in all of its required filings with the SEC and website postings so long as Investor holds any security in the Company and shall not deregister its common shares with the SEC.
3.2 Restrictive Legend . The Investor agrees to the imprinting of the following legend on the Convertible Note, Satisfaction Shares, and Conversion Shares, so long as is required under Section 3.1:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
3.3 Reservation of Shares . The Company shall at all times have authorized and reserved for the purpose of issuance a sufficient number of Satisfaction Shares and Conversion Shares.
ARTICLE IV
MISCELLANEOUS
4.1 Fees and Expenses . Except as set forth in this Section 4.1, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all stamp and other taxes and duties levied in connection with the issuance of the Exchange Note.
4.2 Entire Agreement; Amendments . This Agreement together with the exhibits and schedules hereto, dated as of the Execution Date, and the binding letter of intent, dated July 18, 2017 (the “Binding LOI”), collectively, contain the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.
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4.3 Notices . Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email at the email address specified in this Section prior to 6:00 p.m. (Eastern time) on a business day, against electronic confirmation thereof, (ii) the business day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email at the email address specified in this Agreement later than 6:00 p.m. (Eastern time) on any date, against electronic confirmation thereof, (iii) the business day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows:
If to the Company: |
Avant Diagnostics, Inc. 217 Perry Parkway Suite 8 Gaithersburg, MD 20877 |
Email: Attn: Gerald Commissiong, Executive Director |
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With copies to (which shall not constitute notice): |
Sheppard, Mullin, Richter & Hampton LLP 30 Rockefeller Plaza, 39 th Floor Exchange York, NY 10112 Facsimile No.: (917) 438-6137 Email: scohen@sheppardmullin.com Attn: Stephen A. Cohen |
If to the Investors: | At the address of the Investor set forth on the signature page to this Agreement. |
or such other address as may be designated in writing hereafter, in the same manner, by such person or entity.
4.4 Amendments; Waivers . No provision of this Agreement may be waived or amended except in a written instrument signed by the Company and by the Investor. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter.
4.5 Headings . The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.
4.6 Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Investor may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Company.
4.7 No Third-Party Beneficiaries . This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other person or entity.
4.8 Governing Law . This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Nevada, without regard to the principles of conflicts of law thereof. The Company and the Investor irrevocably consent to the jurisdiction of the United States federal courts and state courts located in the State of Nevada in any suit or proceeding based on or arising under this Agreement and irrevocably agree that all claims in respect of such suit or proceeding may be determined in such courts.
4.9 Survival . The representations and warranties contained herein shall survive until the expiration of the first anniversary following the Closing. The agreements and covenants contained herein shall survive the Closing and the delivery of the Exchange Note until the expiration of the applicable statute of limitations (if any) therefor.
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4.10 Execution . This Agreement may be executed in one or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that all parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or a scanned copy via electronic mail, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile or scanned signature page were an original thereof.
4.11 Severability . In case any one or more of the provisions of this Agreement shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision which shall be a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.
4.12 Further Assurances . The parties hereto agree that each shall execute and deliver any and all further agreements, instruments, certificates and other documents, and shall take any and all action, as any of the parties hereto may reasonably deem necessary or desirable in order to carry out the intent of the parties to this Agreement.
4.13 Attorneys’ Fees . If either party shall commence an action or proceeding to enforce any provisions relating to the obligations to close the transactions contemplated by this Agreement prior to the Closing, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
4.14 Construction . The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise this Agreement and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments hereto.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Exchange Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
COMPANY: | ||
AVANT DIAGNOSTICS, INC. | ||
By: | ||
Name: | ||
Title: |
[additional signature page follows]
[Company Signature Page to Exchange Agreement]
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INVESTOR:
[NAME]
By: |
Name:
Title:
Email Address of Authorized Signatory: ____________________________
Facsimile Number of Authorized Signatory: ________________________
Address for Notice to Investor:
[Investor Signature Page to Exchange Agreement]
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Exhibit A
[Form of Exchange Note]
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Exhibit 10.8
Binding Letter of Intent on Exchange Note with Investor Financial Group, Inc.
dated July 28, 2017
Avant Diagnostics, Inc. (“AVDX” or the “Company”) hereby proposes the following binding terms (the “Binding LOI”) as agreed with ___________________(“Investor”) in connection with the execution of the Exchange Agreement for the exchange of existing convertible notes (the “2016 Note”) held by Investor prior to this date:
General: | The Company and Investor (collectively may be referred to herein as the “Parties”) agree that the obligations of the Parties contained in the 2016 Note Exchange Agreement (“Exchange Agreement”) and Convertible Promissory Exchange Note (“Exchange Note”) executed by the Parties in conjunction herewith, excepting the Company’s obligation to issue Investor shares as expressed in the Exchange Agreement and below, shall be deferred until satisfaction of the conditions described herein. Upon satisfaction of such conditions, the 2016 Note shall be exchanged for the Exchange Note, attached as Exhibit A, which is subject to the Exchange Agreement attached as Exhibit B. If the conditions are not met within 120 days from the date of the Exchange Agreement, the exchange of the 2016 Note for the Exchange Note shall be cancelled, the Exchange Note shall be of no force or effect and the Existing Note shall be treated as though it was never cancelled and as having been in default since the Execution Date of the Exchange Agreement; however, Investor shall be entitled to keep all shares issued to it pursuant to this Binding LOI and the Exchange Agreement. |
Deferral: |
The Parties shall execute the Exchange Agreement, this Binding LOI and Exchange Note (the “Exchange Agreements”) as of July 28, 2017; however, the Exchange Agreements executed by Investor and the 2016 Note will be held by Austin Legal Group, APC (“ALG”) as set forth below. The Exchange Agreements and 2016 Note will be held by ALG for up to 120 days, during which time the Company shall file the following periodic financial reports with the Securities Exchange Commission (the “SEC”): a) Report on Form 10-Q for the period ended June 30, 2016, December 31, 2016, March 31, 2017, and June 30, 2017, and b) Report on Form 10-K for the period ended September 30, 2016 (the “Outstanding Filings”). The Company shall have one hundred twenty (120) days from the execution of this Binding LOI to file the Outstanding Filings with the SEC (the “Filing Period”). Upon the filing of the Outstanding Filings with the SEC, ALG shall promptly release the Exchange Agreements to the Company. All Parties agree that the 2016 Note shall not be in default, and shall not accrue interest or penalties under the 2016 Note during the Filing Period.
|
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Waiver of Interest and Penalties; Commitment Shares: | Per the Exchange Agreement, Investor shall waive all accrued interest and penalties related to the 2016 Note up to the execution date of the Exchange Agreement. For this waiver, the Company shall sell 396,695 shares of the Company’s common stock to Investor at $0.00001 (or $3.97)(the “Commitment Shares”) pursuant to the Exchange Agreement, which shares shall be kept by Investor whether or not the Company meets its conditions or the exchange contemplated hereby is consummated. |
Reversion: | If the Outstanding Filings are not filed with the SEC prior to the end of the Filing Period the obligations of the Parties under the Exchange Agreements shall cease and the 2016 Note shall exist and be in default beginning on the date of the Exchange Agreement, with default interest accruing from the date of the Exchange Agreement. |
Legal Fees: | The Company agrees to pay $2,500 for the legal fees incurred by Investor and The Brewer Group in reviewing this Binding LOI and the Exchange Agreements. |
Covenants: |
a) Should further amendments or modifications occur to this Binding LOI or the Exchange Agreements, those same amendments and/or modifications will be offered or applied to the Exchange Agreement and Convertible Promissory Note held by Infusion 51a, LP, International Infusion, LP, and Infusion related affiliates.
b) During the Filing Period, Investor agrees that the Company’s obligations to Investor under the 2016 Note, the Exchange Agreements, and/or this Binding LOI are current and not in default in any regard. Investor agrees to cooperate, as necessary, with the Company in its efforts to file its periodic financial reports with the SEC, including communicating the status of the Company obligations to Investor with the Company’s accountants and auditors. |
AVANT DIAGNOSTICS, INC.
By: | Date: |
Gerald E. Commissiong
Executive Director
ACCEPTED AND AGREED:
INVESTOR |
By: | Date: |
Name:
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Exhibit A
Exchange Note
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Exhibit B
Exchange Agreement
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Exhibit 10.9
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the “ Agreement ”), dated as of August 8, 2017, is by and between Avant Diagnostics, Inc., a Nevada corporation with offices located at 217 Perry Parkway Suite 8, Gaitherburg, MD 20977 (the “ Company ”), and Xpress Group International Limited, a Hong Kong Limited company located at Unit B, 17th Floor, Greatmany Centre, 109-111 Queen’s Road East, Wan Chai, Hong Kong (the “ Buyer ”).
RECITALS
A. The Company and the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “ 1933 Act ”), and Rule 506(b) of Regulation D (“ Regulation D ”) as promulgated by the United States Securities and Exchange Commission (the “ SEC ”) under the 1933 Act.
B. The Company has authorized a new series of senior secured convertible notes of the Company substantially in the form attached hereto as Exhibit A (the “ Notes ”), which Notes shall be convertible into shares of Common Stock (as defined below) of the Company (such shares issuable pursuant to the terms of the Notes upon conversion or otherwise, collectively, the “ Note Conversion Shares ”), in accordance with the terms of the Notes.
C. Pursuant to the purchase of the Notes, the Company will issue to the Buyer: (i) certain warrants substantially in the form attached hereto as Exhibit B (the “ Warrants ”), which Warrants shall be exercisable into shares of Common Stock (as defined below) of the Company (such shares issuable pursuant to the terms of the Notes upon conversion or otherwise, collectively, the “ Warran t Conversion Shares ”), in accordance with the terms of the Warrants; and (ii) certain Purchase Rights substantially in the form attached hereto as Exhibit C (the “ Purchase Rights ”), which Purchase Rights shall be exercisable into shares of Common Stock (as defined herein) of the Company (such shares issuable pursuant to the terms of the Purchase Rights upon conversion or otherwise, collectively, the “ Purchase Rights Conversion Shares ”), in accordance with the terms of the Purchase Rights .
D. The Buyer wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, Notes in the aggregate amount of $75,000.00.
E. The Notes, the Note Conversion Shares, the Purchase Rights and the Warrant Conversion Shares are collectively referred to herein as the “ Securities .”
F. The Notes will rank senior to all outstanding and future indebtedness of the Company, and its Subsidiaries (as defined below) and the Notes will be secured by a first priority perfected security interest in the Company’s intellectual property and a second perfected security in the Company’s equipment (the “Collateral”). This security and the Collateral will be evidenced by a Pledge Agreement in the form attached as Exhibit D.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Buyer hereby agree as follows:
1. PURCHASE AND SALE OF NOTES.
(a) Purchase of Notes . Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall issue and sell to the Buyer, and the Buyer agrees to purchase from the Company a Note in the original principal amount of $75,000.00.
(b) Form of Payment . The Buyer shall pay $75,000 to the Company for the Note to be issued and sold to the Buyer, by wire transfer of immediately available funds. and the Company shall deliver to the Buyer a Note in the principal amount of $75,000.
(c) Bonus Equity. Upon delivery of the purchase price for the Notes at the , the Company shall issue to the Buyer one share of the Company’s common stock for every $0.50 of purchased Note.
(d) Board Representation. The Holder shall be entitled to appoint two (2) members of the Board of Directors upon the execution of the Notes. While the Note is due and payable, should any of the Holder’s appointees resign, be removed, or otherwise cause a vacancy, the Holder will be able to re-appoint another person to serve on the Company’s Board of Directors to fill that vacancy.
(e) No Variable Rate Transactions. While the Note is due and payable, the Company shall not enter into any variable rate transactions. “Variable Rate Transaction” means a transaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive, additional shares of Common Stock either (A) at a conversion price, exercise price or exchange rate or other price that is based upon, and/or varies with, the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock or (ii) enters into any agreement, including, but not limited to, an equity line of credit, whereby the Company may sell securities at a future determined price. The Warrant and Purchase Right shall be exempt from this provision.
(f) Optional Redemption. Following the six (6) month anniversary of the Closing Date, the Holder shall have the option to call on the Company for the redemption of the Note from the Holder, provided that the Company has raised sufficient funds to repay this Note. In the event of such optional redemption, the Holder shall be paid in the full principal amount and all other accrued and unpaid interest to the date of redemption.
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(g) Piggyback Registration Rights. The Company shall include on the next registration statement the Company files with SEC (or on the subsequent registration statement if such registration statement is withdrawn) all shares issuable upon conversion of the Note and all shares issuable upon exercise of the Warrant and Purchase Rights, and the bonus equity shares granted (the “Registrable Securities”). Failure to do so will result in liquidated damages of 25% of the outstanding principal balance of the Note, but not less than $100,000, being immediately due and payable to the Purchaser at its election in the form of cash payment provided however if the reason for such non-registration of all or any portion of the Registrable Securities is the result of either (i) in the case of an underwritten offering, the managing underwriter as set forth below or (ii) SEC Guidance (as defined below) under Rule 415 or similar rule which limits the number of Registrable Securities which may be included in a registration statement with respect to Buyer, no liquidated damages will be due and payable in to Buyer as set forth above. Subject to the terms of this Agreement, the Company shall use its commercially reasonable efforts to keep such registration statement continuously effective under the 1933 Act until the first to occur of: (A) the date that is one (1) year from the date the registration statement is declared effective by the SEC (the “ Cut-Off Date ”) and (B) the date that all Registrable Securities covered by such registration statement (i) have been sold, thereunder or pursuant to Rule 144, or (ii) may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144 (the “ Effectiveness Period ”). Notwithstanding the registration obligations set forth in this Section, if the SEC informs the Company that all of the Registrable Securities cannot, as a result of the application of Rule 415, be registered for resale on a single registration statement, the Company agrees to promptly inform Buyer and use its commercially reasonable efforts to file amendments to any registration statement as required by the SEC, covering the maximum number of Registrable Securities permitted to be registered by the SEC, on Form S-1 or such other form available to register for resale the Registrable Securities as a secondary offering; provided , however , that prior to filing such amendment, the Company shall be obligated to use diligent efforts to advocate with the SEC for the registration of all of the Registrable Securities in accordance with any (i) any publicly-available written or oral guidance of the SEC staff, or any comments, requirements or requests of the SEC staff and (ii) the Securities Act (collectively, “SEC Guidance”), including without limitation, Compliance and Disclosure Interpretation 612.09. Notwithstanding any other provision of this Agreement and subject to the payment of liquidated damages set forth above, if the SEC or any SEC Guidance sets forth a limitation on the number of Registrable Securities permitted to be registered on a particular registration statement (and notwithstanding that the Company used diligent efforts to advocate with the Commission for the registration of all or a greater portion of Registrable Securities), unless otherwise directed in writing by a Holder as to its Registrable Securities, the number of Registrable Securities to be registered on such Registration Statement will be reduced as follows: (i) First, the Company shall reduce or eliminate any securities to be included by any person other than Buyer; (ii) Second, subject to written approval by Buyer, the Company shall reduce the Registrable Securities. In the event of a cutback hereunder, the Company shall give the Buyer at least five (5) Business Days prior written notice. In the event the Company amends the any registration statement in accordance with the foregoing, the Company will use its commercially reasonable efforts to file with the SEC, as promptly as allowed by the SEC or SEC Guidance provided to the Company or to registrants of securities in general, one or more registration statements on Form S-1 or such other form available to register for resale those Registrable Securities that were not registered on any prior registration statement filed with the SEC. In addition, if any rights granted pursuant to this Section involves the inclusion of securities in connection with an underwritten offering, and the managing underwriter (or, in the case of an offering that is not underwritten, an investment banker) shall advise the Company that, in its opinion, the number of securities requested and otherwise proposed to be included on such registration statement exceeds the number which can be sold in such offering without adversely affecting the marketability of the offering, the Company will include in such Registration to the extent of the number which the Company is so advised can be sold in such offering, first , the securities the Company proposes to sell for its own account on such registration statement and second , the Registrable Securities of the Buyer requesting to be included on such registration statement.
(h) Pledge Agreement. The Company shall grant a security interest in all of its assets (“Collateral”) to Holder to secure Company’s repayment of the Note. The Collateral and the security interest shall be memorialized in the Pledge Agreement and shall be in such form as attached hereto as Exhibit D.
(i) Future Financing. While the Note is due and payable, any future financing by Company, whether in debt or equity, shall require prior written consent of Buyer.
2. ISSUANCE OF THE WARRANTS AND PURCHASE RIGHTS.
(a) Issuance of the Warrants . Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall issue to the Buyer, at any closing Warrants to purchase common shares of the Company at $0.06 (six cents) per share. The amount of the warrants shall equal 200% (two hundred percent) of the principal of the issued Note and warrants shall be exercisable for a period of five (5) years from the respective closing date and shall be in such form as attached hereto as Exhibit B.
(b) Issuance of the Purchase Rights . Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall issue, at any closing, to the Buyer Purchase Rights to purchase common shares of the Company at $0.06 (six cents) per share. The amount of the Purchase Rights shall equal 800% (eight hundred percent) of the principal of the issued Note and the Purchase Rights shall be exercisable for a period of five (5) years from the respective closing date and shall be in such form as attached hereto as Exhibit C. The shares issued in connection with Purchase Rights cannot be sold into the market for a period of eighteen (18) months from the respective closing date.
3. BUYER’S REPRESENTATIONS AND WARRANTIES.
The Buyer represents and warrants to the Company with respect to only itself that, as of the date hereof and as of the Closing Date:
(a) Organization; Authority . The Buyer is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents (as defined below) to which it is a party and otherwise to carry out its obligations hereunder and thereunder.
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(b) No Public Sale or Distribution . The Buyer (i) is acquiring its Note, Warrant and Purchase Rights and (ii) upon conversion and/or exercise of its Note, Warrant and/or Purchase Rights will acquire the Note Conversion Shares, the Warrant Conversion Shares and/or the Purchase Rights Conversion Shares, issuable upon conversion and/or exercise thereof, respectively, in each case, for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof in violation of applicable securities laws, except pursuant to sales registered or exempted under the 1933 Act; provided, however, by making the representations herein, the Buyer does not agree, or make any representation or warranty, to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption from registration under the 1933 Act. The Buyer does not presently have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities in violation of applicable securities laws. For purposes of this Agreement, “ Person ” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and any Governmental Entity or any department or agency thereof
(c) Accredited Investor Status . At the time the Buyer was offered the Securities, it was, and as of the date hereof it is, and as of the date of each applicable closing and on each date on which it converts the Notes or exercises any Warrants or Purchase Rights, it will be an “accredited investor” as that term is defined in Rule 501(a) of Regulation D promulgated under the 1933 Act.
(d) Reliance on Exemptions . The Buyer understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and the Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of the Buyer to acquire the Securities.
(e) Information . The Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities that have been requested by the Buyer. The Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other due diligence investigations conducted by the Buyer or its advisors, if any, or its representatives shall modify, amend or affect the Buyer’s right to rely on the Company’s representations and warranties contained herein. The Buyer understands that its investment in the Securities involves a high degree of risk. The Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities.
(f) No Governmental Review . The Buyer understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.
(g) Transfer or Resale . The Buyer understands that: (i) the Securities have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) the Buyer shall have delivered to the Company (if requested by the Company) an opinion of counsel, in a form reasonably acceptable to the Company, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) the Buyer provides the Company with reasonable assurance that such Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act (or a successor rule thereto) (collectively, “ Rule 144 ”); (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144, and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the Person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC promulgated thereunder; and (iii) except as otherwise set forth herein, neither the Company nor any other Person is under any obligation to register the Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder. Notwithstanding the foregoing, the Securities may be pledged in connection with a bona fide margin account or other loan or financing arrangement secured by the Securities and such pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and if the Buyer effects a pledge of Securities, the Buyer will not be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document (as defined in Section 3(b)), including, without limitation, this Section 2(g).
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(h) Validity; Enforcement . This Agreement has been duly and validly authorized, executed and delivered on behalf of the Buyer and shall constitute the legal, valid and binding obligations of the Buyer enforceable against the Buyer in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
(i) No Conflicts . The execution, delivery and performance by the Buyer of this Agreement and the consummation by the Buyer of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational documents of the Buyer, or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Buyer is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to the Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Buyer to perform its obligations hereunder.
(j) Experience of the Buyer . The Buyer, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. The Buyer is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.
(k) General Solicitation . Such Buyer is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Buyer that, as of the date hereof and as of the Closing Date:
(a) Organization and Qualification . The Company is duly organized and validly existing and in good standing under the laws of the jurisdiction in which it is formed, and has the requisite power and authority to carry on its business as now being conducted and as presently proposed to be conducted. The Company is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect (as defined below). As used in this Agreement, “ Material Adverse Effect ” means any material adverse effect on (i) the business, properties, assets, liabilities, operations (including results thereof), condition (financial or otherwise) or prospects of the Company or any Subsidiary, individually or taken as a whole, (ii) the transactions contemplated hereby or in any of the other Transaction Documents or any other agreements or instruments to be entered into in connection herewith or therewith or (iii) the authority or ability of the Company or any of its Subsidiaries to perform any of their respective obligations under any of the Transaction Documents (as defined below). “ Subsidiaries ” means any Person in which the Company, directly or indirectly, controls or operates all or any part of the business, operations or administration of such Person, and each of the foregoing, is individually referred to herein as a “ Subsidiary .”
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(b) Authorization; Enforcement; Validity . The Company has the requisite power and authority to enter into and perform its obligations under this Agreement and the other Transaction Documents and to issue the Securities in accordance with the terms hereof and thereof. The execution and delivery of this Agreement and the other Transaction Documents by the Company, and the consummation by the Company of the transactions contemplated hereby and thereby have been duly authorized by the Company’s board of directors or other governing body, as applicable, and (other than the potential filing with the SEC of a Form D and any other filings as may be required by any state securities agencies) no further filing, consent or authorization is required by the Company, its Subsidiaries, their respective boards of directors or their stockholders or other governing body. This Agreement has been, and the other Transaction Documents to which it is a party will be prior to the Closing, duly executed and delivered by the Company, and each constitutes the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with its respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities law and public policy, and the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. “ Transaction Documents ” means, collectively, this Agreement, the Notes, the Warrants, the Purchase Rights, any Pledge documents creating a security interest in the assets of the Company, and each of the other agreements and instruments entered into or delivered by any of the parties hereto in connection with the transactions contemplated hereby and thereby, as may be amended from time to time.
(c) Issuance of Securities . The issuance of the Notes are duly authorized and upon issuance in accordance with the terms of the Transaction Documents shall be validly issued, fully paid and non-assessable and free from all preemptive or similar rights, mortgages, defects, claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances, security interests and other encumbrances (collectively “ Liens ”) with respect to the issuance thereof. Upon issuance or conversion in accordance with the Notes, Warrants, or Purchase Rights, the Note Conversion Shares, Warrant Conversion Shares, and/or Purchase Right Conversion Shares, respectively, when issued and payment is made, if required, will be validly issued, fully paid and non-assessable and free from all preemptive or similar rights or Liens with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. Subject to the accuracy of the representations and warranties of the Buyer in this Agreement, the offer and issuance by the Company of the Securities is exempt from registration under the 1933 Act.
(d) No Conflicts . Except as otherwise set forth on Schedule 4(d), the execution, delivery and performance of the Transaction Documents by the Company and its Subsidiaries and the consummation by the Company of the transactions contemplated hereby and thereby will not (i) result in a violation of the Articles of Incorporation (as defined below) (including, without limitation, any certificate of designation contained therein), By-Laws (as defined below), certificate of formation, memorandum of association, articles of association, bylaws or other organizational documents of the Company , or any capital stock or other securities of the Company, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) in any respect under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including, without limitation, foreign, federal and state securities laws and regulations and including all applicable foreign, federal and state laws, rules and regulations) applicable to the Company or by which any property or asset of the Company is bound or affected other than, in the case of clause (ii) above, such conflicts, defaults or rights that could not reasonably be expected to have a Material Adverse Effect.
(e) Consents . The Company is not required to obtain any consent from, authorization or order of, or make any filing or registration with (other than the potential filing with the SEC of any periodic report under the Company’s reporting obligations or a Form D and any other filings as may be required by any federal or state securities agencies or the filing of any registration statement pursuant to which the Buyer shall have any registration rights as contemplated by this Agreement), any Governmental Entity (as defined below) or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its respective obligations under or contemplated by the Transaction Documents, in each case, in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been or will be obtained or effected on or prior to the date of this Agreement, and the Company is not aware of any facts or circumstances which might prevent the Company from obtaining or effecting any of the registration, application or filings contemplated by the Transaction Documents. “ Governmental Entity ” means any nation, state, county, city, town, village, district, or other political jurisdiction of any nature, federal, state, local, municipal, foreign, or other government, governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal), multi-national organization or body; or body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature or instrumentality of any of the foregoing, including any entity or enterprise owned or controlled by a government or a public international organization or any of the foregoing.
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(f) No Integrated Offering . None of the Company, its Subsidiaries or any of their affiliates, nor any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of any of the Securities under the 1933 Act, whether through integration with prior offerings or otherwise, or cause this offering of the Securities to require approval of stockholders of the Company for purposes of the 1933 Act or under any applicable stockholder approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are listed or designated for quotation. None of the Company, its Subsidiaries, their affiliates nor any Person acting on their behalf will take any action or steps that would require registration of any of the Securities under the 1933 Act or cause the offering of any of the Securities to be integrated with other offerings of securities of the Company.
(g) No Undisclosed Events, Liabilities, Developments or Circumstances . Except as otherwise set forth on Schedule 4(g), no event, liability, development or circumstance has occurred or exists, or is reasonably expected to exist or occur with respect to the Company, any of its Subsidiaries or any of their respective businesses, properties, liabilities, prospects, operations (including results thereof) or condition (financial or otherwise), that (i) would be required to be disclosed by the Company under applicable securities laws on a registration statement on Form S-1 filed with the SEC relating to an issuance and sale by the Company of its Common Stock and which has not been publicly announced, (ii) could have a material adverse effect on the Buyer’s investment hereunder or (iii) could have a Material Adverse Effect.
(h) Conduct of Business; Regulatory Permits . Neither the Company nor any of its Subsidiaries is in violation of any term of or in default under its Articles of Incorporation, any certificate of designation, preferences or rights of any other outstanding series of preferred stock of the Company or any of its Subsidiaries or Bylaws or their organizational charter, certificate of formation, memorandum of association, articles of association, Articles of Incorporation or Articles of Incorporation or bylaws, respectively. Except as otherwise set forth on Schedule 4(h), neither the Company nor any of its Subsidiaries is in violation of any judgment, decree or order or any statute, ordinance, rule or regulation applicable to the Company or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct its business in violation of any of the foregoing, except in all cases for possible violations which could not, individually or in the aggregate, have a Material Adverse Effect.
(i) Transfer Taxes . On a closing date, all stock transfer or other taxes (other than income or similar taxes) which are required to be paid in connection with the issuance, sale and transfer of the Securities to be sold to the Buyer hereunder will be, or will have been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.
(j) Illegal or Unauthorized Payments; Political Contributions . Neither the Company nor any of its Subsidiaries nor, to the best of the Company’s knowledge (after reasonable inquiry of its officers and directors), any of the officers, directors, employees, agents or other representatives of the Company or any of its Subsidiaries or any other business entity or enterprise with which the Company or any Subsidiary is or has been affiliated or associated, has, directly or indirectly, made or authorized any payment, contribution or gift of money, property, or services, whether or not in contravention of applicable law, (i) as a kickback or bribe to any Person or (ii) to any political organization, or the holder of or any aspirant to any elective or appointive public office except for personal political contributions not involving the direct or indirect use of funds of the Company or any of its Subsidiaries.
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(k) Money Laundering . The Company and its Subsidiaries are in material compliance with, and have not previously violated, the USA Patriot Act of 2001 and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations, including, without limitation, the laws, regulations and Executive Orders and sanctions programs administered by the U.S. Office of Foreign Assets Control, including, but not limited, to (i) Executive Order 13224 of September 23, 2001 entitled, “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001)); and (ii) any regulations contained in 31 CFR, Subtitle B, Chapter V.
(l) No Disqualification Events . With respect to Securities to be offered and sold hereunder in reliance on Rule 506(b) under the 1933 Act (“ Regulation D Securities ”), none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company participating in the offering contemplated hereby, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the 1933 Act) connected with the Company in any capacity at the time of sale (each, an “ Issuer Covered Person ” and, together, “ Issuer Covered Persons ”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a “ Disqualification Event ”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure obligations under Rule 506(e), and has furnished to the Buyers a copy of any disclosures provided thereunder.
(m) Other Covered Persons . The Company is not aware of any Person that has been or will be paid (directly or indirectly) remuneration for solicitation of Buyer or potential purchasers in connection with the sale of any Securities.
(n) Shell Company Status . The Company was an issuer identified in, or subject to, Rule 144(i).
5. COVENANTS.
(a) Reasonable Best Efforts . The Buyer shall use its reasonable best efforts to timely satisfy each of the covenants hereunder and conditions to be satisfied by it as provided in Section 6 of this Agreement. The Company shall use its reasonable best efforts to timely satisfy each of the covenants hereunder and conditions to be satisfied by it as provided in Section 7 of this Agreement.
(b) Regulatory Filings. The Company shall make all necessary filings with respect to the Securities as required under securities laws. The Company shall, on or before the date of this Agreement, take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to, qualify the Securities for sale to the Buyer at the Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Buyer on or prior to the date of this Agreement. Without limiting any other obligation of the Company under this Agreement, the Company shall timely make all filings and reports relating to the offer and sale of the Securities required under all applicable securities laws (including, without limitation, all applicable federal securities laws and all applicable “Blue Sky” laws), and the Company shall comply with all applicable foreign, federal, state and local laws, statutes, rules, regulations and the like relating to the offering and sale of the Securities to the Buyer.
(c) Reporting Status . Subsequent to the closings, the Company shall use its best efforts to timely file all reports required to be filed with the SEC pursuant to the 1934 Act.
(d) Use of Proceeds . The Company will use the proceeds from the sale of the Securities for general corporate purposes.
(e) Fees . The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, transfer agent fees, DTC (if applicable) fees or broker’s commissions (other than for Persons engaged by the Buyer) relating to or arising out of the transactions contemplated hereby. Except as otherwise set forth in the Transaction Documents, each party to this Agreement shall bear its own expenses in connection with the sale of the Securities to the Buyer.
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(f) Pledge of Securities . Notwithstanding anything to the contrary contained in this Agreement, the Company acknowledges and agrees that the Securities may be pledged by the Investor in connection with a bona fide margin agreement or other loan or financing arrangement that is secured by the Securities. The pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and the Investor effecting a pledge of Securities will not be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document.
(g) Conduct of Business . The business of the Company and its Subsidiaries shall not be conducted in violation of any law, ordinance or regulation of any Governmental Entity, except where such violations would not reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect.
(h) Conversion and/or Exercise Procedures . The form of Conversion Notice (as defined in the Notes) included in the Notes and the Exercise Notice (as defined in the Warrants and Purchase Rights) included in each of the Warrants and Purchase Rights, respectively, set forth the totality of the procedures required of the Buyer in order to convert the Notes and/or exercise the Warrants and/or Purchase Rights, respectively. The Company shall honor conversions of the Notes and/or exercise of the Warrants and/or Purchase Rights, respectively, and shall deliver the Note Conversion Shares, the Warrant Conversion Shares and/or the Purchase Rights Conversion Shares, respectively, in accordance with the terms, conditions and time periods set forth in the Notes, the Warrants and the Purchase Rights, respectively.
(i) Regulation M . The Company will not take any action prohibited by Regulation M under the 1934 Act, in connection with the distribution of the Securities contemplated hereby.
(j) General Solicitation . None of the Company, any of its affiliates (as defined in Rule 501(b) under the 1933 Act) or any person acting on behalf of the Company or such affiliate will solicit any offer to buy or offer or sell the Securities by means of any form of general solicitation or general advertising within the meaning of Regulation D, including: (i) any advertisement, article, notice or other communication published in any newspaper, magazine or similar medium or broadcast over television or radio; and (ii) any seminar or meeting whose attendees have been invited by any general solicitation or general advertising.
(k) No Short Sales . So long as any Securities remain outstanding, the Buyer (or its successors or assigns) (the “ Restricted Persons ”) shall not, directly or indirectly, engage in any “Short Sales” of the Common Stock (other than any sale marked “short exempt” or any sale of shares deemed to be held “long” hereunder). For purposes hereof, “ Short Sales ” shall mean “short sales” as defined in Rule 200 promulgated under Regulation SHO under the 1934 Act (other than any sale marked “short exempt” or any sale of shares deemed to be held “long” hereunder). Notwithstanding the foregoing, no “Short Sale” or “short” position shall be deemed to exist, as a result of any failure by the Company (or its agents) to deliver Note Conversion Shares upon conversion of the Notes, Warrant Conversion Shares and/or Purchase Right Conversion Shares upon the exercise of the Warrants and/or Purchase Rights, as applicable, or to timely remove any legend from any such securities, to the Restricted Person converting such Notes, exercising such Warrants and/or Purchase Rights or removing legends from any shares of Common Stock issuable upon conversion and/or exercise, as applicable. For purposes of determining whether the Restricted Person is deemed to have a “long” position in the Common Stock, at any given time of determination, the Restricted Person shall be deemed to hold “long” all Common Stock that is either (i) then owned by the Restricted Person, if any, or (ii) issuable to the Restricted Person as Note Conversion Shares, Warrant Conversion Shares, and/or Purchase Right Conversion Shares, as applicable, pursuant to the terms of the Notes, Warrants and/or Purchase Rights, respectively then held by the Restricted Person, if any, pursuant to a valid Conversion Notice and/or Exercise Notice delivered to the Company on or prior to the applicable time of determination. Notwithstanding the foregoing, nothing contained herein shall (without implication that the contrary would otherwise be true) prohibit any Restricted Person from selling “long” (as defined under Rule 200 promulgated under Regulation SHO under the 1934 Act) the Securities or any other Common Stock then owned by the Restricted Person.
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5. REGISTER; TRANSFER AGENT INSTRUCTIONS; LEGEND.
(a) Register . The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice to the holder of Securities), a register for the Notes, Warrants and Purchase Rights in which the Company shall record the name and address of the Person in whose name the Notes, Warrants and Purchase Rights have been issued (including the name and address of each transferee), the principal amount of the Notes and the number of shares represented by the Warrants and Purchase Rights, respectively, held by the Person and the number of Note Conversion Shares issuable pursuant to the terms of the Notes and number of Warrant Conversion Shares and Purchase Right Conversion Shares issuable pursuant to the terms of the Warrants and/or the Purchase Rights, as applicable, held by the Person. The Company shall keep the register open and available at all times during business hours for inspection of the Buyer or its legal representatives.
(b) Legends . The Buyer understands that the Securities have been issued (or will be issued in the case of the Note Conversion Shares, Warrant Conversion Shares, or Purchase Right Conversion Shares) pursuant to an exemption from registration or qualification under the 1933 Act and applicable state securities laws, and except as set forth below, the Securities shall bear any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):
NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
(c) Removal of Legends . Certificates evidencing Securities shall not be required to contain the legend set forth in Section 5(c) above or any other legend (i) while a registration statement covering the resale of such Securities is effective under the 1933 Act (a “ Registration Statement ”), (ii) following any sale of such Securities pursuant to Rule 144 (assuming the transferor is not an affiliate of the Company), (iii) if such Securities are eligible to be sold, assigned or transferred under Rule 144 (provided that the Buyer provides the Company with reasonable assurances that such Securities are eligible for sale, assignment or transfer under Rule 144 which shall not include an opinion of the Buyer’s counsel), (iv) in connection with a sale, assignment or other transfer (other than under Rule 144), provided that the Buyer provides the Company with an opinion of counsel to the Buyer, in a generally acceptable form, to the effect that such sale, assignment or transfer of the Securities may be made without registration under the applicable requirements of the 1933 Act or (v) if such legend is not required under applicable requirements of the 1933 Act (including, without limitation, controlling judicial interpretations and pronouncements issued by the SEC). If a legend is not required pursuant to the foregoing, the Company shall no later than three (3) Business Days (or such earlier date as required pursuant to the 1934 Act or other applicable law, rule or regulation for the settlement of a trade initiated on the date the Buyer delivers such legended certificate representing such Securities to the Company) following the delivery by the Buyer to the Company or the transfer agent (with notice to the Company) of a legended certificate representing such Securities (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer, if applicable), together with any other deliveries from the Buyer as may be required above in this Section 5(d), as directed by the Buyer, either: (A) provided that the Company’s transfer agent is participating in the DTC Fast Automated Securities Transfer Program and such securities are DTC eligible and such Securities are Note Conversion Shares, Warrant Conversion Shares, or Purchase Right Conversion Shares, credit the aggregate number of shares of Common Stock to which the Buyer shall be entitled to the Buyer’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system or (B) if the Company’s transfer agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver (via reputable overnight courier) to the Buyer, a certificate representing such Securities that is free from all restrictive and other legends, registered in the name of the Buyer or its designee (the date by which such credit is so required to be made to the balance account of the Buyer’s or the Buyer’s designee with DTC or such certificate is required to be delivered to the Buyer pursuant to the foregoing is referred to herein as the “ Required Delivery Date ”, and the date such shares of Common Stock are actually delivered without restrictive legend to the Buyer or the Buyer’s designee with DTC, as applicable, the “ Share Delivery Date ”). The Company shall be responsible for any transfer agent fees or DTC fees with respect to any issuance of Securities or the removal of any legends with respect to any Securities in accordance herewith.
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(d) Failure to Timely Deliver; Buy-In . If the Company fails to, for any reason or for no reason, to issue and deliver (or cause to be delivered) to the Buyer (or its designee) by the Required Delivery Date, either (I) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program or the Company’s securities are not DTC eligible, a certificate for the number of Note Conversion Shares, Warrant Conversion Shares, or Purchase Right Conversion Shares to which the Buyer is entitled and register such Note Conversion Shares, Warrant Conversion Shares, or Purchase Right Conversion Shares on the Company’s share register or, (II) if the Transfer Agent is participating in the DTC Fast Automated Securities Transfer Program, to credit the balance account of the Buyer or the Buyer’s designee with DTC for such number of Note Conversion Shares, Warrant Shares, or Purchase Right Shares submitted for legend removal by the Buyer pursuant to Section 5(d) above (the event described in the immediately foregoing clause (I) above, a “ Delivery Failure ”),then, in addition to all other remedies available to the Buyer, the Company shall pay in cash to the Buyer on each day after the Share Delivery Date and during such Delivery Failure an amount equal to 2% of the product of (A) the sum of the number of shares of Common Stock not issued to the Buyer on or prior to the Required Delivery Date and to which the Buyer is entitled, and (B) any trading price of the Common Stock selected by the Buyer in writing as in effect at any time during the period beginning on the date of the delivery by the Buyer to the Company of the applicable Note Conversion Shares, Warrant Conversion Shares, or Purchase Right Conversion Shares and ending on the applicable Share Delivery Date. In addition to the foregoing, if on or prior to the Required Delivery Date either (I) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, the Company shall fail to issue and deliver a certificate to the Buyer and register such shares of Common Stock on the Company’s share register or, if the Transfer Agent is participating in the DTC Fast Automated Securities Transfer Program, credit the balance account of the Buyer or the Buyer’s designee with DTC for the number of shares of Common Stock to which the Buyer submitted for legend removal by the Buyer pursuant to Section 5(d) above (ii) below or (II) a Delivery Failure occurs, and if on or after such Trading Day the Buyer purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Buyer of shares of Common Stock submitted for legend removal by the Buyer pursuant to Section 5(d) above that the Buyer anticipated receiving from the Company (a “ Buy-In ”), then the Company shall, within three (3) Business Days after the Buyer’s request and in the Buyer’s discretion, either (i) pay cash to the Buyer in an amount equal to the Buyer’s total purchase price (including brokerage commissions and other out-of-pocket expenses, if any, for the shares of Common Stock so purchased) (the “ Buy-In Price ”), at which point the Company’s obligation to so deliver such certificate or credit the Buyer’s balance account shall terminate and such shares shall be cancelled, or (ii) promptly honor its obligation to so deliver to the Buyer a certificate or certificates or credit the balance account of the Buyer or the Buyer’s designee with DTC representing such number of shares of Common Stock that would have been so delivered if the Company timely complied with its obligations hereunder and pay cash to the Buyer in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Note Conversion Shares, Warrant Shares, or Purchase Right Shares that the Company was required to deliver to the Buyer by the Required Delivery Date multiplied by (B) the lowest Closing Sale Price (as defined in the Notes) of the Common Stock on any Trading Day during the period commencing on the date of the delivery by the Buyer to the Company of the applicable Note Conversion Shares, Warrant Shares, or Purchase Right Shares and ending on the date of such delivery and payment under this clause (ii). Nothing shall limit the Buyer’s right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock (or to electronically deliver such shares of Common Stock) as required pursuant to the terms hereof. Notwithstanding anything herein to the contrary, with respect to any given Delivery Failure, this Section 5(e) shall not apply to the Buyer to the extent the Company has already paid such amounts in full to the Buyer with respect to such Delivery Failure, as applicable, pursuant to the analogous sections of the Note held by the Buyer.
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6. CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.
(a) The obligation of the Company hereunder to issue and sell the Notes to the Buyer at any Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing the Buyer with prior written notice thereof:
(i) The Buyer shall have executed each of the other Transaction Documents to which it is a party and delivered the same to the Company.
(ii) The Buyer shall have delivered to the Company the Purchase Price for the Note being purchased by the Buyer at the Closing by wire transfer of immediately available.
(iii) The representations and warranties of the Buyer shall be true and correct in all material respects as of the date when made and as of the Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date), and the Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Buyer at or prior to the Closing Date.
7. CONDITIONS TO THE BUYER’S OBLIGATION TO PURCHASE.
(a) The obligation of the Buyer hereunder to purchase its Note at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Buyer’s sole benefit and may be waived by the Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:
(i) The Company shall have duly executed and delivered to the Buyer each of the Transaction Documents to which it is a party and the Company shall have duly executed and delivered to the Buyer a Note being purchased by the Buyer at any Closing pursuant to this Agreement.
(ii) Since the date of execution of this Agreement, no event or series of events shall have occurred that reasonably would have or result in a Material Adverse Effect.
(iii) The Buyer shall have received the Pledge and Security Agreement, duly executed by the Company.
(iv) Any and all issued and outstanding shares of the Company’s Preferred Stock, maintained by the Company in book entry, as the Company’s Series B Preferred Stock is represented to be, or in any other form,, shall be subject to a standstill agreement entered into by the Preferred Shareholder(s) whereby the Preferred Stock shall not be voted, exercised, sold or otherwise transferred prior to a cumulative total of $400,000 being invested in the Company from the Buyer or other investors The Company’s Preferred Stock will be cancelled concurrent with a cumulative total of $400,000 being invested in the Company from the Buyer or other investors.
(v) Concurrent with the execution of this Agreement, Mr. Gregg Linn shall have resigned as the Company’s Chief Executive Officer, and entered into a customary separation agreement that is satisfactory to Buyer, and shall have agreed to deliver, and relinquish and/or transfer power over, all corporate records, documents and other corporate information, including bank accounts, to the newly appointed Board of Directors.
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(vi) Concurrent with the execution of this Agreement, Mr. Joseph Roth and Mr. Randall Letcavage shall have resigned from the Company’s Board of Directors and as officers of the Company and shall have executed a release of the Company in a form that shall be acceptable to Buyer.
(vii) John Hartwell and Corinne Ramos shall have agreed to dismiss the lawsuit against the Company and Gregg Linn.
(viii) Concurrent with the execution of this Agreement, Mr. Gregg Linn’s resignation letter from the board of directors shall be executed and held in escrow, to be dated and released concurrent with aggregate closing (s) of Notes totaling an aggregate of $400,000 from Buyer or other investors, which aggregate closing(s) of Notes shall occur within sixty (60) days of the closing of Notes by Infusion 51a, LP, which occurred on June 19, 2017.
(xi) Amarantus BioScience Holdings, Inc. (“Amarantus”) shall have entered into a revised contingent settlement agreement with certain investors in a form acceptable to Buyer to allow for Amarantus’ collateral release.
(xii) There shall be a settlement of the following convertible notes currently in default:
a. $605k Infusion
b. $225k Coastal
c. $40k Cottone/Brewer
d. $25k Rick Randle
(xiii) There shall be a settlement, on terms acceptable to Buyer, of $750,000 in Amarantus’ contingent Accounts Payable assumption from its merger agreement with the Company.
(xiii) The Company shall have entered into lock-up agreements related to the following, on terms acceptable to Buyer:
a. International Infusion and its affiliates.
b. Company shareholders 30M+ shares.
c. The issuance and lock-up of consulting shares previously approved by the Board of Directors.
(xiv) The following legal matters shall have been resolved to the satisfaction of Buyer:
a. The EGS lawsuit.
b. The Memory Dx lawsuit (which shall require a revised settlement because of the Company has not engaged in a merger).
(xv) The confirmation of the Company’s Accounts Payable outstanding and negotiated settlement terms with major creditors on terms acceptable to Buyer.
(xvi) The confirmation by Company that no resigning officer or director has engaged in impropriety as shall be acceptable to Buyer.
(xvii) An Officer of the Company shall have certified to Buyer, in such form as shall be acceptable to Buyer, that conditions (iii) through (xvi), above, have been fulfilled.
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8. MISCELLANEOUS.
(a) Governing Law; Jurisdiction; Jury Trial . All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of Nevada, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Nevada or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Nevada. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.
(b) Counterparts . This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.
(c) Headings; Gender . The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision in which they are found.
(d) Severability; Maximum Payment Amounts . If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s). Notwithstanding anything to the contrary contained in this Agreement or any other Transaction Document (and without implication that the following is required or applicable), it is the intention of the parties that in no event shall amounts and value paid by the Company and/or any of its Subsidiaries (as the case may be), or payable to or received by the Buyers, under the Transaction Documents (including without limitation, any amounts that would be characterized as “interest” under applicable law) exceed amounts permitted under any applicable law. Accordingly, if any obligation to pay, payment made to the Buyer, or collection by the Buyer pursuant the Transaction Documents is finally judicially determined to be contrary to any such applicable law, such obligation to pay, payment or collection shall be deemed to have been made by mutual mistake of the Buyer, the Company and its Subsidiaries and such amount shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by the applicable law. Such adjustment shall be effected, to the extent necessary, by reducing or refunding, at the option of the Buyer, the amount of interest or any other amounts which would constitute unlawful amounts required to be paid or actually paid to the Buyer under the Transaction Documents. For greater certainty, to the extent that any interest, charges, fees, expenses or other amounts required to be paid to or received by the Buyer under any of the Transaction Documents or related thereto are held to be within the meaning of “interest” or another applicable term to otherwise be violative of applicable law, such amounts shall be pro-rated over the period of time to which they relate.
(e) Entire Agreement; Amendments . This Agreement, the other Transaction Documents and the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein supersede all other prior oral or written agreements between the Buyer, the Company, its Subsidiaries, their affiliates and Persons acting on their behalf, including, without limitation, any transactions by the Buyer with respect to Common Stock or the Securities, and the other matters contained herein and therein, and this Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein contain the entire understanding of the parties solely with respect to the matters covered herein and therein; For clarification purposes, the Recitals are part of this Agreement. No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the Buyer.
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(f) Notices . Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party) or electronic mail; or (iii) one (1) Business Day after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed to the party to receive the same. The addresses, facsimile numbers and e-mail addresses for such communications shall be:
If to the Company:
Avant Diagnostics, Inc.
217 Perry Parkway
Suite 8
Gaithersburg, MD 20877
Attention: Gerald Commissiong, Executive Director
With a copy (for informational purposes only) to:
Sheppard, Mullin, Richter & Hampton LLP
30 Rockefeller Plaza, 39 th Floor
New York, New York 10112
Telephone: (212) 653-8700
Facsimile: (917) 438-6137
Attn: Stephen A. Cohen, Esq.
E-Mail: scohen@sheppardmullin.com
If to the Buyer, to its address, e-mail address and facsimile number set forth on the Schedule of Buyers, with copies to the Buyer’s representatives as set forth on the Schedule of Buyers, or to such other address, e-mail address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine or e-mail containing the time, date, recipient facsimile number and, with respect to each facsimile transmission, an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.
(g) Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers of any of the Notes. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Buyer. The Buyer may assign some or all of its rights hereunder in connection with any transfer of any of its Securities without the consent of the Company, in which event such assignee shall be deemed to be a buyer hereunder with respect to such assigned rights.
(h) No Third Party Beneficiaries . This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.
(i) Survival . The representations, warranties, agreements and covenants shall survive any closing. The Buyer shall be responsible only for its own representations, warranties, agreements and covenants hereunder.
(j) Further Assurances . Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
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(k) Construction . The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. No specific representation or warranty shall limit the generality or applicability of a more general representation or warranty. Each and every reference to share prices, shares of Common Stock and any other numbers in this Agreement that relate to the Common Stock shall be automatically adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions that occur with respect to the Common Stock after the date of this Agreement. It is expressly understood and agreed that for all purposes of this Agreement, and without implication that the contrary would otherwise be true, neither transactions nor purchases nor sales shall include the location and/or reservation of borrowable shares of Common Stock.
(l) Remedies . The Buyer and in the event of assignment by the Buyer of its rights and obligations hereunder, each holder of Securities, shall have all rights and remedies set forth in the Transaction Documents and all rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which such holders have under any law. Any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law.
(m) Withdrawal Right . Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction Documents, whenever the Buyer exercises a right, election, demand or option under a Transaction Document and the Company or any Subsidiary does not timely perform its related obligations within the periods therein provided, then the Buyer may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company or such Subsidiary (as the case may be), any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.
(n) Saturdays, Sundays, Holidays, etc . If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.
[ signature pages follow ]
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IN WITNESS WHEREOF, the Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first written above.
COMPANY: | ||
AVANT DIAGNOSTICS, INC. | ||
By: | ||
Name: Philippe Goix | ||
Title: CEO |
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IN WITNESS WHEREOF, the Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first written above.
BUYER: | ||
Xpress Group International Limited | ||
By: | ||
Name: | ||
Title: |
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EXHIBIT A
sENIOR sECURED cONVERTIBLE pROMISSORY NOTE
19
eXHIBIT B
WARRANTS
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EXHIBIT C
PURCHASE RIGHTS
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EXHIBIT D
pLEDGE AGREEMENT
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Schedule 4(d)
In connection with certain convertible promissory notes issued by the Company between May 2016 and the date of this Agreement, the Company is required to obtain the consent of certain noteholders in connection with their investment and certain convertible notes issued by the Company are in default as of the date hereof The Company is currently working with these investors to waive all prior defaults and obtain the proper consents in connection with the transactions contemplated by this Agreement.
Schedule 4(g)
The Company is currently in default under certain promissory notes issued to various investors between May 2016 and the date of this Agreement. The Company is working with the investors to waive all prior defaults.
The Company is currently in default under the license agreement for its Memory DX product and the Company has a default judgment entered against it in excess of $2,000,000. The Company is working with the licensor to waive all prior defaults.
The Company has been sued by employees of Theranostics for past due salary. The Company is working with the former employees to waive all prior defaults.
The Company has been sued by its former legal counsel for past due fees for services rendered. The Company is working with the former counsel to settle all disputes.
The Company is currently in default under its lease agreement for its Gettysburg, MD facility.
Schedule 4(h)
The Company is currently in default under its obligations for its CLIA license in the State of Maryland.
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Exhibit 10.10
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT ( as the same may be amended, restated or otherwise modified from time to time, this “ Agreement ”) , dated as of August8, 2017, by and between AVANT DIAGNOSTICS, INC., a Nevada corporation, (the “ Pledgor ” ), and Xpress Group International Limited, a Hong Kong Limited company located at Unit B, 17th Floor, Greatmany Centre, 109-111 Queen’s Road East, Wan Chai, Hong Kong (the “ Lender ”) .
PRELIMINARY STATEMENTS:
WHEREAS , Lender has agreed to purchase Seventy Five Thousand Dollars ($75,000.00) of Senior Secured Convertible Notes (the “ Loan ” ) to Pledgor, a Nevada corporation having an office and an address for purposes of notices and legal process at 217 Perry Parkway Suite 8, Gaithersburg, MD 20877, partially in reliance on Pledgor’s agreement to enter into this Agreement as further security for Pledgor’s payment and performance (hereinafter, Pledgor’s “ Obligations ” ) under that certain Senior Secured Convertible Promissory Note (the “ Note ” ) of even date herewith in the principal amount of $75,000.00 given by Pledgor, as maker, in favor of Lender, as payee; and
WHEREAS , the Note and all other agreements, documents or instruments executed or delivered by Pledgor others in connection with the Loan (including but not limited to the Securities Purchase Agreement, dated August 8, 2017) are hereinafter collectively referred to as the “ Loan Documents ” ; and
WHEREAS , Lender’s agreement to make the Loan is conditioned upon, among other things, the Pledgor entering into this Agreement and pledging a security interest to Lender in and to all of the respective Assets Pledgor owns.
WHEREAS , Lender’s agreement to make the Loan is conditioned upon, among other things, the Pledgor entering into this Agreement and pledging a first priority security interest to Lender in the Company’s Intellectual Property Assets (as defined herein) and a second prior security interest in the Company’s Equipment Assets (as defined herein), all as currently owned by Pledgor.
WHEREAS , Lender acknowledges and agrees that (i) the pledge of the Equipment Assets will be a junior priority position, subject to the senior priority position granted to Coastal Investment Partners, LLC (the “Senior Lender”), pursuant to the terms of that certain pledge agreement, dated June 26, 2017 (the “Senior Lien”) and (ii) the pledge of the Intellectual Property Assets will be a senior priority position, pari passu, with Infusion 51a, LP.
NOW THEREFORE , to secure the Obligations of the Pledgor, and in consideration of the Lender making the Loan to the Pledgor, the Pledgor hereby agrees for the benefit of the Lender as follows:
1. INTERPRETATION OF THIS AGREEMENT
1.1 Terms defined
All capitalized terms used herein but not defined herein shall have the respective meanings set forth in the Loan Documents from Pledgor to Lender of even date herewith which secures the Loan. As used herein, the following terms shall have the respective meanings set forth below:
(a) “ Collateral ” shall mean all of Pledgor’s Equipment Assets, and Pledgor’s Intellectual Property Assets, all rights and privileges related thereto, and all books and records relating thereto and all rights in and to any insurance proceeds of the foregoing.
(b) “Equipment Assets” shall mean all of Pledgor’s equipment as set forth on Exhibit A annexed hereto.
(c) “Intellectual Property Assets” shall mean all of Pledgor’s intellectual property rights as set forth on Exhibit B annexed hereto.
(d) “ Lender ” shall have the meaning set forth in the introductory paragraph hereof.
(e) “ Loan Documents ” shall have the meaning set forth in the preliminary statement above.
(f) Obligations ” shall mean all of the obligations of Pledgor under the Loan Documents, and all obligations of Pledgor pursuant to this Agreement.
(g) “ Pledgor ” shall have the meaning set forth in the introductory paragraph hereof.
(h) “ Security Interest ” shall have the meaning set forth in Section 2.1 hereof.
(i) “ Uniform Commercial Code ” shall mean the Uniform Commercial Code as in effect from time to time in the State of Nevada.
1.2 Directly or Indirectly
Where any provision herein refers to action to be taken by any party, or provides that such party is prohibited from taking any action, such provision shall be applicable whether such action is taken directly or indirectly by such party.
1.3 Section Headings and Construction
(a) Section Headings. The titles of the sections of this Agreement appear as a matter of convenience only, do not constitute a part hereof and shall not affect the construction hereof. The words “herein,” “hereunder” and “hereto” refer to this Agreement as a whole and not to any particular section or other subdivision. References to sections are, unless otherwise specified, references to sections of this Agreement.
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(b) Construction. Each covenant contained herein shall be construed (absent an express contrary provision herein) as being independent of each other covenant contained herein, and compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with one or more other covenants.
1.4 Governing Law
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEVADA, AND THE FEDERAL LAWS OF THE UNITED STATES OF AMERICA IN FORCE THEREIN, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
2. GRANT OF SECURITY INTEREST
2.1 Grant of Security Interest
As security for the payment or performance, as the case may be, of the Obligations, the Pledgor does hereby pledge and grant a security interest (the “ Security Interest ” ) to the Lender in all of the Collateral.
2.2 Perfection of Security Interest in Collateral
(a) Contemporaneously with the execution of this Agreement, the Pledgor (i) shall deliver, or cause to be delivered, to the Lender, all instruments evidencing the Collateral (ii) authorizes the Lender to file one or more financing statements under the Uniform Commercial Code, with respect to the Security Interest, with the proper filing and recording agencies in any jurisdiction deemed proper by it, (iii) shall register the pledge of the Collateral hereunder in its books and records, and/or (iv) take such other action as the Lender may direct in order to perfect the Security Interest.
(b) Delivery of Other Collateral . If the Pledgor shall become entitled to receive or shall receive any certificate or other instrument, option or rights or other similar property in respect of the Collateral, whether as an addition to, in substitution of, or in exchange for, such Collateral or otherwise, the Pledgors agree:
(i) to accept the same as the agent of the Lender;
(ii) to hold the same in trust on behalf of and for the benefit of the Lender; and
(iii) to deliver the same to the Lender, or to such other party as the Lender may direct, on or before the close of business on the second business day following the receipt thereof by the Pledgor, in the exact form received, with the endorsement in blank of the Pledgor when necessary and with appropriate undated powers of attorney duly executed in blank (with signatures properly guaranteed), when necessary, to be held by the Lender, or such other party as directed by the Lender, subject to the terms of this Agreement, as additional Collateral.
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2.3 Further Assurances
The Pledgor agrees, at its expense, to cooperate with the Lender and to execute and deliver, or cause to be executed and delivered, all such powers, proxies, instruments and documents, and take all such actions, as the Lender may from time to time reasonably request, for the better assuring and preserving of the perfection of the Security Interest herein granted to the Lender and the rights and remedies created hereby.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS
3.1 Representations, Warranties and Covenants of Pledgor
The Pledgor represents, warrants and covenants that:
(a) Right to Grant Security Interest . The Pledgor has the right to pledge and grant a security interest in the Collateral free of any encumbrances other than the lien created hereby;
(b) Governmental Authorities . The Pledgor’s execution and delivery of this Agreement and the pledging of the Collateral hereunder does not require the consent, approval or authorization of, or filing, registration or qualification with, any governmental authority having jurisdiction thereover (other than filing of UCC financing statements);
(c) Authority to Pledge . The Pledgor has rights in and good title to the Collateral and has full right, power and authority to pledge the Collateral pursuant hereto and to execute, deliver and perform his obligations in accordance with the terms of this Agreement, without the consent or approval of any other party (other than the consent of Pledgor, which consent is set forth below);
(d) Validity of Security Interest . Once the pledge of the Collateral hereunder is effective by virtue of the execution and delivery of this Agreement and the filing of the UCC financing statements in connection therewith, the Lender will have a valid, legal and perfected first and prior security interest in all of the Collateral, and no party, other than the Lender shall have priority in such security interest; and
(e) Absence of Other Liens . The Pledgor is the legal and equitable owner of the Collateral free and clear of any pledge, security interest, lien, charge or other encumbrance of any nature whatsoever, and the Pledgor will make no further sale, assignment, pledge, mortgage, hypothecation or transfer of the Collateral.
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4. EVENTS OF DEFAULT; REMEDIES
4.1 Events of Default
An “ Event of Default ” shall exist if any of the following occurs and is continuing:
(a) Covenants : Any Pledgor shall fail to comply with any of the provisions hereof, and such failure continues for more than ten (10) days after the date on which the Pledgor shall have received written notice of such failure from the Lender; or
(b) Warranties or Representations : Any warranty, representation or other written statement by or on behalf of any Pledgor contained herein or in any certificate, instrument or other statement furnished in compliance herewith or with the Loan Documents shall have been false or misleading in any material respect when made; or
(c) Collateral : All or any part of the Collateral shall be attached or levied upon or seized in any legal proceeding, or held by virtue of any lien or distress, in any case for a period in excess of twenty (20) days; or
(d) Events of Default Under Loan Documents : Any “Event of Default” exists under and as defined in the Loan Documents.
4.2 Remedies
At any time during the continuance of an Event of Default, the Lender may take any or all of the following actions with respect to the Collateral:
(a) The Lender may exercise all of the rights and remedies of a secured party under the Uniform Commercial Code and other applicable law and all of the rights and remedies conferred hereby, it being expressly understood that no such remedy is intended to be exclusive of any other remedy or remedies, but each and every remedy shall be cumulative and shall be in addition to every other remedy given herein or now or hereafter existing at law or in equity or by statute, and may be exercised from time to time as often as may be deemed expedient by the Lender.
(b) The Lender shall have the right, subject to the mandatory requirements of applicable law, to sell or otherwise dispose of all or any part of the Collateral, at public or private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery as the Lender shall deem appropriate. Each purchaser at any such sale shall hold the Collateral sold absolutely free from any claim or right on the part of the Pledgor, and the Pledgor hereby waives (to the extent permitted by law) all rights of redemption, stay and appraisal that the Pledgor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.
4.3 Method of Sale and Conduct of Remedies
(a) The Pledgor and the Lender agree that ten (10) days’ notice to any Pledgor of any or private sale or other disposition of the Collateral or any portion thereof shall be reasonable notice thereof, and such sale shall be at such locations as the Lender shall designate in such notice and during ordinary business hours, and any other requirement of notice, demand or advertisement for sale, to the extent permitted by law, is hereby waived by the Pledgor. The Lender shall have the right to bid at any public sale.
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(b) The Lender shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. The Lender may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned.
(c) In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Lender until the sale price is paid by the purchaser or purchasers thereof, but the Lender shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice.
4.4 Certain Securities Law Restrictions
Anything herein to the contrary notwithstanding, and in view of the fact that federal and state securities laws may impose certain restrictions on the method by which a sale of any securities constituting all or part of the Collateral may be effected after and during the continuance of an Event of Default, the Pledgor agrees that, if an Event of Default shall exist hereunder, the Lender may, from time to time, attempt to sell all or any part of any such securities by means of a private placement, restricting the bidders and prospective purchasers to those who will represent or agree as to their investment intent or method of resale or both in a manner reasonably required by the Lender to assure compliance with applicable securities laws. In so doing, the Lender may solicit offers to buy such securities or any part thereof, for cash, from a limited number of investors deemed by the Lender to be responsible parties who might be interested in purchasing such securities. If the Lender solicits such offers from not fewer than three (3) such investors, then the acceptance by the Lender of the highest offer obtained therefrom shall be deemed to be a commercially reasonable method of disposition of such securities.
4.5 Lender Appointed Attorney-in-Fact
The Pledgor hereby appoints the Lender as the Pledgor’s attorney-in-fact, with full authority to act in the place and stead of the Pledgor and in the name of the Pledgor or otherwise at any time after an Event of Default shall exist, to take any action and to execute any instrument which the Lender may deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation:
(a) to ask, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral,
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(b) to receive, endorse and collect all instruments made payable to the Pledgor representing any payment or Distribution in respect of the Collateral or any part thereof and to give full discharge for the same, and
(c) to file any claims or take any action or institute any proceedings that the Lender may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Lender with respect to any of the Collateral.
The Pledgor agree that the Lender shall not have any liability for any acts of commission or omission, or for any error of judgment or mistake of fact or law, with respect to the exercise of the powers of attorney granted under this Section 4.5, unless such liability shall be due to the willful misconduct or gross negligence of the Lender. The powers of attorney granted under this Section 4.5 are coupled with and interest and shall be irrevocable for so long as any of the Obligations shall not have been fully and finally paid.
4.6 Performance by the Lender for the Pledgor
If any Pledgor shall fail to do any act or thing that it has covenanted to do hereunder, or any representation or warranty of the Pledgor shall be breached, the Lender, may at its option, but shall not be required to, do the same or cause it to be done, or remedy any such breach, and charge the Pledgor therefor, and the Pledgor agrees to promptly reimburse the Lender therefor, with interest at an interest rate per annum that is then borne by the Pledgor pursuant to the terms of the Note. The Pledgor shall pay all sums so paid or incurred by the Lender in respect of any of the foregoing and all costs and expenses (including attorneys’ fees, legal expenses and court costs) that the Lender may incur in asserting, enforcing, defending or protecting the Security Interest herein granted on, or rights and interest in, the Collateral, or any of their rights or remedies under this Agreement or in respect of any of the transactions to be had hereunder and, until paid by the Pledgor with interest at the rate aforesaid, such sums shall be secured by all of the Collateral and the proceeds from the sale thereof.
5. Effect of Sale, etc.
5.1 Title. Any sale or sales pursuant to the provisions of this Agreement, whether under any right or power granted hereby or pursuant to any legal proceedings, shall operate to divest the Pledgor of all right, title, interest, claim and demand whatsoever, either at law or in equity, of, in and to the Collateral, or any part thereof, so sold, and any property so sold shall be free and clear of any and all rights of redemption by, through or under the Pledgor.
5.2 Application of Proceeds. The receipt by the Lender, or by any party authorized under any judicial proceedings to make any such sale, of the proceeds of any such sale shall be a sufficient discharge to any purchaser of the Collateral, or of any part thereof, sold as aforesaid; and no such purchaser shall be bound to see to the application of such proceeds, or be bound to inquire as to the authorization, necessity or propriety of any such sale. In the event that, at any such sale, the Lender is the successful purchaser, it shall be entitled, for the purpose of making settlement or payment, to credit against the purchase price of such sale all or any portion of the Obligations.
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5.3 Restoration of Rights and Remedies
If the Lender shall have instituted any proceeding to enforce any right or remedy hereunder, and such proceeding shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Lender, then and in every such case, the Lender shall, subject to any determination in any such proceeding, be restored severally and respectively to its former position hereunder, and thereafter all rights and remedies of the Lender shall continue as though no such proceeding had been instituted.
5.4 Application of Proceeds
The proceeds of any exercise of rights with respect to the Collateral, or any part thereof, and the proceeds and the avails of any remedy under this Agreement shall be paid to the Lender and applied by the Lender in accordance with the Note.
5.5 Waivers by Pledgor
(a) Acceptance . The Pledgor hereby waive notice of acceptance of this Agreement. The Pledgor further waives presentment and demand for payment of any of the Obligations, protest and notice of dishonor or default with respect to any of the Obligations, and all notices to which the Pledgor might otherwise be entitled, except as otherwise expressly provided in this Agreement.
(b) Waiver of Valuations, etc. The Pledgor (to the extent that it may lawfully do so) covenants that it shall not at any time insist upon or plead, or in any manner claim or take the benefit or advantage of, any stay, valuation, appraisal, redemption or extension law now or at any time hereafter in force that, but for this waiver, might be applicable to any sale made hereunder or under any judgment, order or decree based on this Agreement, and the Pledgor (to the extent that it may lawfully do so) hereby expressly waives and relinquishes all benefit and advantage of any and all such laws and hereby covenants that it will not hinder, delay or impede the execution of any power in this Agreement or therein granted and delegated to the Lender, but that it will suffer and permit the execution of every such power as though no such law or laws had been made or enacted.
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(c) Dealings with Pledgor and Others . The Pledgor does hereby waive: notice of the extension of credit from time to time by Lender to Pledgor and the creation, existence or acquisition of any Obligations hereby secured, including, without limitation, notice of the amount of any indebtedness of Pledgor to Lender from time to time (subject, however, to Pledgor’s right to make inquiry of Lender to ascertain the amount of such indebtedness at any reasonable time); notice of adverse change in Pledgor’s financial condition or of any other fact which might increase such Pledgor’s risk hereunder; notice of presentment for payment, demand, protest and notice thereof as to any instrument executed by Pledgor in favor of Lender; to the extent permitted under applicable law, notice of default; and all other notices and demands to which the Pledgor might otherwise be entitled (except for any notices expressly required under the Agreement). The Pledgor further waives any statutory or other rights to require Lender to institute suit against Pledgor or any other obligor or guarantor in respect of the Obligations or to exhaust its rights and remedies against Pledgor or any other such obligor or guarantor. The Pledgor accepts the full range of risk encompassed within a contract of continuing guaranty, including the possibility that the Pledgor will incur indebtedness after its financial condition (including its ability to pay debts when they fall due) has deteriorated. Pledgor waives the benefit of any applicable law having a contrary effect. The Pledgor further waives any defense arising by reason of any disability or other defense of Pledgor or by reason of the cessation from any cause whatsoever of the liability of Pledgor (except for payment in full of the Obligations), and any other legal or equitable suretyship defense. Without limiting the foregoing, no Pledgor shall not be relieved of its obligations hereunder by virtue of any time or indulgences granted by Lender to Pledgor. The Pledgor hereby irrevocably appoints Pledgor as the Pledgor’s agent such that any agreement made between Lender and Pledgor with respect to any waiver, release or amendment of the terms of the Note and any other Loan Documents, shall be deemed to have been agreed and consented to by the Pledgors and the execution of any document by Pledgor evidencing any such agreement shall be deemed to have been executed by Pledgor as principal and as authorized agent of the Pledgors. Until all of the Obligations shall have been satisfied in full, the Pledgors shall have no right of subrogation, reimbursement or indemnity whatsoever and no right of recourse to or with respect to any assets or property of Pledgor or to any collateral for the Obligations. Nothing shall discharge or satisfy the obligations secured hereby except the full payment of the Obligations. As between the Pledgors and Lender and at the option of Lender, such Obligations shall forthwith become due and payable if there shall be filed against any one or more of Pledgor or the Pledgors a petition under any bankruptcy, insolvency, reorganization or arrangement or similar laws for appointment of a receiver or trustee, if any one or more of Pledgor or the Pledgors makes an assignment for the benefit of creditors, or if an Event of Default shall exist. It is the intent of the parties that this Agreement shall remain in full force and effect notwithstanding any act or thing that might otherwise operate as a legal or equitable discharge of a surety.
6. MISCELLANEOUS
6.1 No Waiver
No failure on the part of the Lender to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy by the Lender preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law. The Lender shall not be deemed to have waived any rights hereunder or under any other agreement or instrument unless such waiver shall be in writing and signed by the Lender and the Pledgor.
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6.2 Lender’s Fees and Expenses
The Pledgor will upon demand pay to the Lender the amount of any and all reasonable expenses, including the fees and expenses of its counsel and of any experts or agents that the Lender may incur in connection with (i) the custody or preservation or, or the sale of, collection from, or other realization upon, any of the Collateral, (ii) the exercise or enforcement of any of the rights of the Lender hereunder, or (iii) the failure by the Pledgor to perform or observe any of the provisions hereof. In addition, the Pledgor will indemnify and hold the Lender harmless from and against any and all liability incurred by the Lender hereunder or in connection herewith, unless such liability shall be due to the willful misconduct or gross negligence of the Lender. Any such amounts payable as provided hereunder or thereunder shall be secured hereby.
6.3 Benefits of this Agreement
All warranties, representations and covenants made by the Pledgor herein or in any certificate or other document or instrument delivered by it shall be considered to have been relied upon by the Lender and shall survive the delivery to the Lender of the Collateral regardless of any investigation made by the Lender. All statements in any such certificate or other instrument shall constitute warranties and representations by the Pledgor hereunder. This Agreement shall be binding upon the Pledgor and their respective heirs and assigns, and shall inure to the benefit of and be enforceable by the Lender and its successors and assigns.
6.4 Obligations Absolute; Recourse; No Marshaling
(a) This Agreement is an absolute, unconditional, continuing and irrevocable obligation of the Pledgor and shall remain in full force and effect without respect to future changes in conditions, including change of law or any invalidity or irregularity with respect to the issuance of any obligations of Pledgor to Lender or with respect to the execution and delivery of any agreement between Pledgor and Lender. The Pledgor further agrees that to the extent Pledgor makes a payment or payments to Lender, which payment or payments or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required, for any of the foregoing reasons or for any other reason, to be repaid or paid over to a trustee, receiver or any other party under any bankruptcy, insolvency or similar law, then, to the extent of such payment or repayment, the Obligations or part thereof intended to be satisfied shall be revived and continued in full force and effect as if said payment had not been made.
(b) Lender shall have the right to seek recourse against the Collateral to the full extent provided for herein, which rights shall be absolute and shall not in any way be impaired, deferred or otherwise diminished by reason of any inability of Lender to claim the full amount of the Obligations from Pledgor under any applicable law. No election to proceed in one form of action or proceeding, or against any party, or on any obligation, shall constitute a waiver of Lender’s right to proceed in any other form of action or proceeding or against other parties unless Lender has expressly waived such right in writing. Specifically, but without limiting the generality of the foregoing, no action or proceeding by Lender against Pledgor, any guarantor of the Obligations or any other party, under any document or instrument evidencing or securing the Obligations shall serve to diminish the liability of the Pledgor hereunder, except to the extent Lender fully and unconditionally realizes full indefeasible payment of the Obligations by such action or proceeding, notwithstanding the effect of any such action or proceeding upon the Pledgor’s right of subrogation, reimbursement or contribution against Pledgor or any other party.
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(c) The Pledgor consents and agrees that Lender shall be under no obligation to marshal any assets in favor of the Pledgor, or against or in payment of any or all of the Obligations.
6.5 Actions by Lender
The Pledgor consents and agrees that, without notice to Pledgor and without affecting or impairing the obligations of Pledgor hereunder, Lender may, by action or inaction: compromise, settle, extend the time for payment of the Obligations with Pledgor or any party liable therefor; release Pledgor or any party from its liability for the Obligations; release all or any part of the security for the Obligations; modify any instruments or agreements relating to the Obligations (except this Agreement); extend the time for making any deposit or granting a security interest in property securing the Obligations; or refuse or fail to enforce its rights under any agreement or instrument evidencing or securing the Obligations.
6.6 Notices
All notices or demands by either party to the other relating to this Agreement shall be in writing and sent in accordance with the Loan Documents; provided that notices or demands to Pledgor shall be sent to Pledgor at the address for the Pledgor.
6.7 Severability
In case any one or more of the provisions contained in this Agreement shall be invalid, illegal or unenforceable, the remaining provisions contained herein shall not in any way be affected or impaired.
6.8 Counterparts
This Agreement may be executed in one or more counterparts and shall be effective when at least one counterpart shall have been executed by each party hereto, and each set of counterparts that, collectively, show execution by each party hereto shall constitute one duplicate original.
6.9 Amendments
No provision of this Agreement shall be waived, amended, modified or supplemented except by a written instrument executed by the Pledgor and the Lender.
6.10 Termination
Pledgor acknowledge that this Agreement and the Security Interest shall terminate when all the Obligations have been fully and finally paid, at which time the Lender shall deliver to the Pledgor all certificates, if any, evidencing the Collateral then held by it and such other documents as the Pledgor shall reasonably request to evidence such termination (all at the expense of the Pledgor).
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IN WITNESS WHEREOF , the Pledgor has executed and delivered this Pledge and Security Agreement as of the date first above written.
AVANT DIAGNOSTICS, INC. | ||
By: | ||
Name: Philippe Goix | ||
Title: CEO |
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Exhibit A
Pledgor’s Equipment Assets
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Exhibit B
Pledgor’s Equipment Assets
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Exhibit 10.11
August 25, 2017
Avant Diagnostics, Inc.
Preferred Share Exchange
Binding Terms
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This term sheet expresses the terms and conditions by which Infusion 51a, LP (“Infusion”) and Xpress Group International Limited (“Xpress”) (Infusion, Xpress and other permitted third parties may be collectively referred to as the “Group”) wish to exchange certain securities of Avant Diagnostics, Inc. (“Avant”) into a newly created Avant preferred share structure.
Summary: |
The Group may exchange, at their discretion, the Senior Secured Convertible Notes (the “June 2017 Notes”) investment it made into Avant in June and August 2017 for a preferred share structure (Series A Preferred Shares, or “Series A”). Upon the investment of $750,000 by the Group, in whole or in part, the Series A is convertible into common shares that would result in the ownership of 49.99% of the then outstanding common shares of Avant by the holders of the Series A.
The June 2017 Notes shall be amended to include an alternative conversion feature that describes the ability of the Group to exchange their Senior Secured Notes, Purchase Rights and Warrants into Preferred Shares at any time. |
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2. As of August 23, 2017 the Ownership Ratio is 53.33% as $400,000 of the $750,000 has been invested.
3. Any future investments into the June 2017 Notes and conversion into the Series A will result in the issuance of the Series A shares at the Ownership Ratio.
4. Any conversion by Infusion of its Series A will reduce the Ownership Ratio by the percentage of Series A converted.
5. Any future issuance of common shares, or in derivatives that convert into common that are a part of the Common, will still be subject to the Ownership Ratio.
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Total Series A Preferred Shares | 4999 Series A preferred shares |
Preferred Share Conversion Rate | Each Series A preferred shares is convertible into 0.01% of the outstanding Common at the time of conversion. In the event multiple conversions are made by the Group, each share of Series A may be convertible into different amounts of common stock of Avant. |
Preferred Share Voting Rights | The Series A will vote together with the common stock and not as a separate class except as specifically provided herein or as otherwise required by law. Each Series A share shall have a voting right equivalent to the amount of common shares it can convert into. |
Use of Proceeds |
1. Get the company current 2. Move the lab from Maryland to Dallas 3. Setup up lab to produce revenue 4. General corporate purposes |
Commitment to increase authorized shares: | Prior to December 31, 2017, Avant commits to increase the number of authorized common shares of Avant to permit a full conversion of the Series A, but not less than 2 billion common shares. |
Terms of Conversion | Upon a written conversion request, Avant shall process and complete the conversion within 3 business days. |
Board of Director Nominations |
As long as Infusion owns enough Preferred Shares that would result in Infusion’s right to convert into 10% ownership of Avant’s common shares, it shall have the right to place six directors on the Board of Directors of Avant, including the right to replace any vacancies of those directors.
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As long as Xpress owns enough Preferred Shares that would result in Xpress’ right to convert into 10% ownership of Avant’s common shares, it shall have the right to place two directors on the Board of Directors of Avant, including the right to replace any vacancies of those directors.
The Board shall not be increased beyond 9 members without the prior written consent of the Holder of the majority of the Preferred Shares. |
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Right of First Refusal |
The Preferred Shares shall contain a right of first refusal which shall allow the Group, or either member of the Group to invest into Avant under the same terms of any bona fide investment offer made to Avant, up to the maximum amount of their investment. In the event that the Group declines to exercise its Right of First Refusal, the Group may exercise its Most-Favored Nation rights described below. |
Most Favored Nation |
As long as the Group owns the Preferred Shares, if Avant engages in any future financing transactions with a third-party investor, Avant will provide the Group with written notice (the “ MFN Notice ”) thereof promptly but in no event less than 10 days prior to closing any financing transactions. Included with the MFN Notice shall be a copy of all documentation relating to such financing transaction and shall include, upon written request of the Group, any additional information related to such subsequent investment as may be reasonably requested by the Group. In the event the Group determines that the terms of the subsequent investment are preferable to the terms of the Preferred Shares issued to the Group, the Group will notify Avant in writing. Promptly after receipt of such written notice from the Group, Avant agrees to amend or replace the Preferred Shares, and, to be identical to the instruments evidencing the subsequent investment.
The Group may exercise its Most Favored Nation clause in relation to either or both of its 2017 Notes or Preferred Shares, in all or in part. Should the Group exercise its Most Favored Nation clause, the Group’s investment that is being converted pursuant to the Most Favored Nation clause with Avant will be multiplied by two. |
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Restricted Shares/Piggyback Registration Rights |
The securities to be issued hereby will be “restricted securities” and be subject to restrictions on transfer, including restrictions imposed by state and federal securities laws.
Avant shall include on the next registration statement Avant files with the SEC (or on the subsequent registration statement if such registration statement is withdrawn) all shares issuable upon conversion of any or all Preferred Shares that the Group, in its sole discretion, may direct Avant to include, and any restricted common shares granted that the Group then owns. |
Restrictions on Future Issuances to Third Parties |
Avant shall not, directly or indirectly, without the prior written consent of the holders of a majority of the Preferred Share then outstanding, issue any securities, debt or equity (other than as contemplated in this term sheet). |
Security on AVDX Intellectual Property |
The Group shall maintain its senior position on the secured intellectual property by virtue of the June 2017 Notes; The Event of Default under the Security and Pledge Agreement will be amended to include “failure to achieve an increase in authorized common shares underlying the Series A prior to December 31, 2017”.
The Group shall vote to approve an increase in authorized common shares. |
No Variable Rate Transactions. | While the Preferred Shares are outstanding, Avant shall not enter into any variable rate transactions. “Variable Rate Transaction” means a transaction in which Avant (i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive, additional shares of Common Stock either (A) at a conversion price, exercise price or exchange rate or other price that is based upon, and/or varies with, the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of Avant or the market for the Common Stock or (ii) enters into any agreement, including, but not limited to, an equity line of credit, whereby Avant may sell securities at a future determined price. The Warrant and Purchase Right shall be exempt from this provision. |
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Liquidation Preference |
In the event of any liquidation or winding up of Avant, the holders of Preferred Share shall be entitled to receive in preference to the holders of the Common Stock a per share amount equal to the greater of: (i) the amount exchanged and or paid and invested by the Group for the Preferred Share plus any declared but unpaid dividends or (ii) the amount such holder would have received had the shares of Preferred Stock been converted into Common Stock immediately prior to the liquidation or winding up (the “ Liquidation Preference ”) |
Restriction on Issuance |
There will be a restriction on issuing common or preferred shares to any party if the issuance would result in that party owning in excess of 49.99% of the voting securities of Avant. |
Senior Secured Note |
June 2017 Notes will be amended to include a requirement that Avant provide seven days written notice of prepayment.
The June 2017 Notes will also be amended to permit its holder the option whether to accept any payments of principal, whether prepayment or not, or deny and affirmatively delay payment of any amounts due. |
Fees and Expenses | Avant agrees to pay the Group’s legal fees and expenses related to work performed for Avant, including this transaction. |
The purpose of this Term Sheet is to express the mutual intent of the parties hereto to proceed in good faith and as expeditiously as possible towards consummation of the transaction on such terms and conditions summarized herein. Therefore, it is intended as a basis for guidance to legal counsel for the preparation of definitive documentation in support of the proposed transaction; however, it is intended to be a legally binding obligation.
Agreed and Accepted:
Infusion 51a, LP | Xpress Group International Limited | |
/s/ Scott VanderMeer 8/25/2017 | /s/ Chan Heng Fai | |
Avant Diagnostics, Inc. | ||
/s/ Philippe Goix 8/25/2017 |
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Exhibit 10.12
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of September 5 th , 2017, is by and between Avant Diagnostics, Inc., a Nevada corporation with offices located at 217 Perry Parkway, Suite 8, Gaithersburg, MD, 20877 (the “Company”), and Anand Gokel (the “Buyer”).
RECITALS
A. The Company and the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506(b) of Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the 1933 Act.
B. The Company has authorized a new series of senior secured convertible notes of the Company substantially in the form attached hereto as Exhibit A (the “Notes”), which Notes shall be convertible into shares of the Company’s Common Stock (as defined below) or shares of series A convertible preferred stock, par value $0.001 per shares (the “Preferred Stock”) of the Company (such shares issuable pursuant to the terms of the Notes upon conversion or otherwise, collectively, the “Note Conversion Shares”), in accordance with the terms of the Notes. The Preferred Stock shall have such rights, preferences and designations as set forth in the certificate of designations to be filed with the Nevada Secretary of State after the Closing Date.
C. Pursuant to the purchase of the Notes, the Company will issue to the Buyer: (i) certain warrants substantially in the form attached hereto as Exhibit B (the “Warrants”), which Warrants shall be exercisable into shares of Common Stock (as defined below) of the Company (such shares issuable pursuant to the terms of the Notes upon conversion or otherwise, collectively, the “Warrant Conversion Shares”), in accordance with the terms of the Warrants; and (ii) certain Purchase Rights substantially in the form attached hereto as Exhibit C (the “Purchase Rights”), which Purchase Rights shall be exercisable into shares of Common Stock (as defined herein) of the Company (such shares issuable pursuant to the terms of the Purchase Rights upon conversion or otherwise, collectively, the “Purchase Rights Conversion Shares”), in accordance with the terms of the Purchase Rights.
D. The Buyer wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, Notes in the aggregate amount of $75,000.00.
E. The Notes, the Note Conversion Shares, the Warrants, the Warrant Conversion Shares, the Purchase Rights and the Purchase Rights Conversion Shares are collectively referred to herein as the “Securities.”
F. The Notes will rank senior to all outstanding and future indebtedness of the Company, and its Subsidiaries (as defined below) and the Notes will be secured by a first priority perfected security interest in the Collateral. This security will be evidenced by a Pledge Agreement in the form attached as Exhibit D.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Buyer hereby agree as follows:
1. PURCHASE AND SALE OF NOTES.
(a) Purchase of Notes . Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall issue and sell to the Buyer, and the Buyer agrees to purchase from the Company on the First Closing a Note in the original principal amount of $75,000.
(b) First Closing . The date of the Closing (the “Closing Date”) shall be September 5 th , 2017 on which (or such other date as is mutually agreed to by the Company and the Buyer). As may be used herein “Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to remain closed.
(c) Form of Payment . On the Closing Date, the Buyer shall pay $75,000 to the Company for the Note to be issued and sold to the Buyer, by wire transfer of immediately available funds. and the Company shall deliver to the Buyer a Note in the principal amount of $75,000.
(d) Bonus Equity . Upon delivery of the purchase price for the Notes on the Closing Date, the Company shall issue to the Buyer one share of the Company’s common stock for every $0.50 of purchased Note.
(e) No Variable Rate Transactions . While the Note is due and payable, the Company shall not enter into any variable rate transactions. “Variable Rate Transaction” means a transaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive, additional shares of Common Stock either (A) at a conversion price, exercise price or exchange rate or other price that is based upon, and/or varies with, the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock or (ii) enters into any agreement, including, but not limited to, an equity line of credit, whereby the Company may sell securities at a future determined price.
(f) Optional Redemption . Following the six (6) month anniversary of the Closing Date, the Holder shall have the option to call on the Company for the redemption of the Note from the Holder, provided that the Company has raised sufficient funds to repay this Note. In the event of such optional redemption, the Holder shall be paid in the full principal amount and all other accrued and unpaid interest to the date of redemption.
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(g) Piggyback Registration Rights . The Company shall include on the next registration statement the Company files with SEC (or on the subsequent registration statement if such registration statement is withdrawn) all shares of Common Stock issuable upon conversion of the Note and all shares issuable upon exercise of the Warrant and Purchase Rights, and the bonus equity shares granted (the “Registrable Securities”). Failure to do so will result in liquidated damages of 25% of the outstanding principal balance of the Note, but not less than $100,000, being immediately due and payable to the Purchaser at its election in the form of cash payment provided however if the reason for such non-registration of all or any portion of the Registrable Securities is the result of either (i) in the case of an underwritten offering, the managing underwriter as set forth below or (ii) SEC Guidance (as defined below) under Rule 415 or similar rule which limits the number of Registrable Securities which may be included in a registration statement with respect to Buyer, no liquidated damages will be due and payable in to Buyer as set forth above. Subject to the terms of this Agreement, the Company shall use its commercially reasonable efforts to keep such registration statement continuously effective under the 1933 Act until the first to occur of (A) the date that is one (1) year from the date the registration statement is declared effective by the SEC (the “Cut-Off Date”) and (B) the date that all Registrable Securities covered by such registration statement (i) have been sold, thereunder or pursuant to Rule 144, or (ii) may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144 (the “Effectiveness Period”). Notwithstanding the registration obligations set forth in this Section, if the SEC informs the Company that all of the Registrable Securities cannot, as a result of the application of Rule 415, be registered for resale on a single registration statement, the Company agrees to promptly inform Buyer and use its commercially reasonable efforts to file amendments to any registration statement as required by the SEC, covering the maximum number of Registrable Securities permitted to be registered by the SEC, on Form 5-1 or such other form available to register for resale the Registrable Securities as a secondary offering; provided , however, that prior to filing such amendment, the Company shall be obligated to use diligent efforts to advocate with the SEC for the registration of all of the Registrable Securities in accordance with any (i) any publicly-available written or oral guidance of the SEC staff, or any comments, requirements or requests of the SEC staff and (ii) the Securities Act (collectively, “SEC Guidance”), including without limitation, Compliance and Disclosure Interpretation 612.09. Notwithstanding any other provision of this Agreement and subject to the payment of liquidated damages set forth above, if the SEC or any SEC Guidance sets forth a limitation on the number of Registrable Securities permitted to be registered on a particular registration statement (and notwithstanding that the Company used diligent efforts to advocate with the Commission for the registration of all or a greater portion of Registrable Securities), unless otherwise directed in writing by a Holder as to its Registrable Securities, the number of Registrable Securities to be registered on such Registration Statement will be reduced as follows: (i) First, the Company shall reduce or eliminate any securities to be included by any person other than Buyer; (ii) Second, subject to written approval by Buyer, the Company shall reduce the Registrable Securities. In the event of a cutback hereunder, the Company shall give the Buyer at least five (5) Business Days prior written notice. In the event the Company amends the any registration statement in accordance with the foregoing, the Company will use its commercially reasonable efforts to file with the SEC, as promptly as allowed by the SEC or SEC Guidance provided to the Company or to registrants of securities in general, one or more registration statements on Form 5-1 or such other form available to register for resale those Registrable Securities that were not registered on any prior registration statement filed with the SEC. In addition, if any rights granted pursuant to this Section involves the inclusion of securities in connection with an underwritten offering, and the managing underwriter (or, in the case of an offering that is not underwritten, an investment banker) shall advise the Company that, in its opinion, the number of securities requested and otherwise proposed to be included on such registration statement exceeds the number which can be sold in such offering without adversely affecting the marketability of the offering, the Company will include in such Registration to the extent of the number which the Company is so advised can be sold in such offering, first, the securities the Company proposes to sell for its own account on such registration statement and second, the Registrable Securities of the Buyer requesting to be included on such registration statement.
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(j) Pledge Agreement . The Company shall grant a security interest in all of its assets (“Collateral”) to Holder to secure Company’s repayment of the Note. The security interest shall be memorialized in the Pledge Agreement and shall be in such form as attached hereto as Exhibit D.
(k) Future Financing . While the Note is due and payable, any future fmancing by Company, whether in debt or equity, shall require prior written consent of holders of a majority of the Notes.
2. ISSUANCE OF THE WARRANTS AND PURCHASE RIGHTS.
(a) Issuance of the Warrants . Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall issue to the Buyer, at any closing Warrants to purchase common shares of the Company at $0.06 (six cents) per share. The amount of the warrants shall equal 200% (two hundred percent) of the principal of the issued Note and warrants shall be exercisable for a period of three (3) years from the respective closing date and shall be in such form as attached hereto as Exhibit B.
(b) Issuance of the Purchase Rights . Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall issue, at any closing, to the Buyer Purchase Rights to purchase common shares of the Company at $0.06 (six cents) per share. The amount of the Purchase Rights shall equal 800% (eight hundred percent) of the principal of the issued Note and the Purchase Rights shall be exercisable for a period of thirty-six (36) months from the respective closing date and shall be in such form as attached hereto as Exhibit C. The shares issued in connection with Purchase Rights cannot be sold into the market for a period of eighteen (18) months from the respective closing date.
3. BUYER’S REPRESENTATIONS AND WARRANTIES.
The Buyer represents and warrants to the Company with respect to only itself that, as of the date hereof and as of the Closing Date:
(a) Organization; Authority . The Buyer is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents (as defined below) to which it is a party and otherwise to carry out its obligations hereunder and thereunder.
(b) No Public Sale or Distribution . The Buyer (i) is acquiring its Note, Warrant and Purchase Rights and (ii) upon conversion and/or exercise of its Note, Warrant and/or Purchase Rights will acquire the Note Conversion Shares, the Warrant Conversion Shares and/or the Purchase Rights Conversion Shares, issuable upon conversion and/or exercise thereof, respectively, in each case, for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof in violation of applicable securities laws, except pursuant to sales registered or exempted under the 1933 Act; provided, however, by making the representations herein, the Buyer does not agree, or make any representation or warranty, to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption from registration under the 1933 Act. The Buyer does not presently have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities in violation of applicable securities laws. For purposes of this Agreement, “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and any Governmental Entity or any department or agency thereof
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(c) Accredited Investor Status . At the time the Buyer was offered the Securities, it was, and as of the date hereof it is, and as of the Closing Date and on each date on which it converts the Notes or exercises any Warrants or Purchase Rights, it will be an “accredited investor” as that term is defined in Rule 501(a) of Regulation D promulgated under the 1933 Act.
(d) Reliance on Exemptions . The Buyer understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and the Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of the Buyer to acquire the Securities.
(e) Information. The Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities that have been requested by the Buyer. The Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other due diligence investigations conducted by the Buyer or its advisors, if any, or its representatives shall modify, amend or affect the Buyer’s right to rely on the Company’s representations and warranties contained herein. The Buyer understands that its investment in the Securities involves a high degree of risk. The Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities.
(f) No Governmental Review . The Buyer understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.
(g) Transfer or Resale . The Buyer understands that: (i) the Securities have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) the Buyer shall have delivered to the Company (if requested by the Company) an opinion of counsel, in a form reasonably acceptable to the Company, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) the Buyer provides the Company with reasonable assurance that such Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act (or a successor rule thereto) (collectively, “Rule 144”); (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144, and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the Person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC promulgated thereunder; and (iii) except as otherwise set forth herein, neither the Company nor any other Person is under any obligation to register the Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder. Notwithstanding the foregoing, the Securities may be pledged in connection with a bona fide margin account or other loan or financing arrangement secured by the Securities and such pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and if the Buyer effects a pledge of Securities, the Buyer will not be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document (as defined in Section 3(b)), including, without limitation, this Section 2(g).
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(h) Validity; Enforcement . This Agreement has been duly and validly authorized, executed and delivered on behalf of the Buyer and shall constitute the legal, valid and binding obligations of the Buyer enforceable against the Buyer in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
(i) No Conflicts . The execution, delivery and performance by the Buyer of this Agreement and the consummation by the Buyer of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational documents of the Buyer, or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Buyer is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to the Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Buyer to perform its obligations hereunder.
(j) Experience of the Buyer . The Buyer, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. The Buyer is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.
(k) General Solicitation . Such Buyer is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Buyer that, as of the date hereof and as of the Closing Date:
(a) Organization and Qualification . The Company is duly organized and validly existing and in good standing under the laws of the jurisdiction in which it is formed, and has the requisite power and authority to carry on its business as now being conducted and as presently proposed to be conducted. The Company is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect (as defined below). As used in this Agreement, “Material Adverse Effect” means any material adverse effect on (i) the business, properties, assets, liabilities, operations (including results thereof), condition (financial or otherwise) or prospects of the Company or any Subsidiary, individually or taken as a whole, (ii) the transactions contemplated hereby or in any of the other Transaction Documents or any other agreements or instruments to be entered into in connection herewith or therewith or (iii) the authority or ability of the Company or any of its Subsidiaries to perform any of their respective obligations under any of the Transaction Documents (as defined below). “Subsidiaries” means any Person in which the Company, directly or indirectly, controls or operates all or any part of the business, operations or administration of such Person, and each of the foregoing, is individually referred to herein as a “Subsidiary.”
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(b) Authorization; Enforcement; Validity . The Company has the requisite power and authority to enter into and perform its obligations under this Agreement and the other Transaction Documents and to issue the Securities in accordance with the terms hereof and thereof. The execution and delivery of this Agreement and the other Transaction Documents by the Company, and the consummation by the Company of the transactions contemplated hereby and thereby have been duly authorized by the Company’s board of directors or other governing body, as applicable, and (other than the potential filing with the SEC of a Form D and any other filings as may be required by any state securities agencies) no further filing, consent or authorization is required by the Company, its Subsidiaries, their respective boards of directors or their stockholders or other governing body. This Agreement has been, and the other Transaction Documents to which it is a party will be prior to the Closing, duly executed and delivered by the Company, and each constitutes the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with its respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities law and public policy, and the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. “Transaction Documents” means, collectively, this Agreement, the Notes, the Warrants, the Purchase Rights, any Pledge documents creating a security interest in the assets of the Company, and each of the other agreements and instruments entered into or delivered by any of the parties hereto in connection with the transactions contemplated hereby and thereby, as may be amended from time to time.
(c) Issuance of Securities . The issuance of the Notes are duly authorized and upon issuance in accordance with the terms of the Transaction Documents shall be validly issued, fully paid and non-assessable and free from all preemptive or similar rights, mortgages, defects, claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances, security interests and other encumbrances (collectively “Liens”) with respect to the issuance thereof. Upon issuance or conversion in accordance with the Notes, Warrants, or Purchase Rights, the Note Conversion Shares, Warrant Conversion Shares, and/or Purchase Right Conversion Shares, respectively, when issued and payment is made, if required, will be validly issued, fully paid and non-assessable and free from all preemptive or similar rights or Liens with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. Subject to the accuracy of the representations and warranties of the Buyer in this Agreement, the offer and issuance by the Company of the Securities is exempt from registration under the 1933 Act.
(d) No Conflicts . Except as otherwise set forth on Schedule 4(d), the execution, delivery and performance of the Transaction Documents by the Company and its Subsidiaries and the consummation by the Company of the transactions contemplated hereby and thereby will not (i) result in a violation of the Articles of Incorporation (as defined below) (including, without limitation, any certificate of designation contained therein), By-Laws (as defined below), certificate of formation, memorandum of association, articles of association, bylaws or other organizational documents of the Company , or any capital stock or other securities of the Company, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) in any respect under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including, without limitation, foreign, federal and state securities laws and regulations and including all applicable foreign, federal and state laws, rules and regulations) applicable to the Company or by which any property or asset of the Company is bound or affected other than, in the case of clause (ii) above, such conflicts, defaults or rights that could not reasonably be expected to have a Material Adverse Effect.
(e) Consents . The Company is not required to obtain any consent from, authorization or order of, or make any filing or registration with (other than the potential filing with the SEC of any periodic report under the Company’s reporting obligations or a Form D and any other filings as may be required by any federal or state securities agencies or the filing of any registration statement pursuant to which the Buyer shall have any registration rights as contemplated by this Agreement), any Governmental Entity (as defined below) or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its respective obligations under or contemplated by the Transaction Documents, in each case, in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been or will be obtained or effected on or prior to the First Closing Date, and the Company is not aware of any facts or circumstances which might prevent the Company from obtaining or effecting any of the registration, application or filings contemplated by the Transaction Documents. “Governmental Entity” means any nation, state, county, city, town, village, district, or other political jurisdiction of any nature, federal, state, local, municipal, foreign, or other government, governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal), multinational organization or body; or body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature or instrumentality of any of the foregoing, including any entity or enterprise owned or controlled by a government or a public international organization or any of the foregoing.
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(f) No Integrated Offering . None of the Company, its Subsidiaries or any of their affiliates, nor any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of any of the Securities under the 1933 Act, whether through integration with prior offerings or otherwise, or cause this offering of the Securities to require approval of stockholders of the Company for purposes of the 1933 Act or under any applicable stockholder approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are listed or designated for quotation. None of the Company, its Subsidiaries, their affiliates nor any Person acting on their behalf will take any action or steps that would require registration of any of the Securities under the 1933 Act or cause the offering of any of the Securities to be integrated with other offerings of securities of the Company.
(g) No Undisclosed Events, Liabilities, Developments or Circumstances . Except as otherwise set forth on Schedule 4(g), no event, liability, development or circumstance has occurred or exists, or is reasonably expected to exist or occur with respect to the Company, any of its Subsidiaries or any of their respective businesses, properties, liabilities, prospects, operations (including results thereof) or condition (financial or otherwise), that (i) would be required to be disclosed by the Company under applicable securities laws on a registration statement on Form 5-1 filed with the SEC relating to an issuance and sale by the Company of its Common Stock and which has not been publicly announced, (ii) could have a material adverse effect on the Buyer’s investment hereunder or (iii) could have a Material Adverse Effect.
(h) Conduct of Business; Regulatory Permits . Neither the Company nor any of its Subsidiaries is in violation of any term of or in default under its Articles of Incorporation, any certificate of designation, preferences or rights of any other outstanding series of preferred stock of the Company or any of its Subsidiaries or Bylaws or their organizational charter, certificate of formation, memorandum of association, articles of association, Articles of Incorporation or Articles of Incorporation or bylaws, respectively. Except as otherwise set forth on Schedule 4(h), neither the Company nor any of its Subsidiaries is in violation of any judgment, decree or order or any statute, ordinance, rule or regulation applicable to the Company or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct its business in violation of any of the foregoing, except in all cases for possible violations which could not, individually or in the aggregate, have a Material Adverse Effect.
(i) Transfer Taxes . On a closing date, all stock transfer or other taxes (other than income or similar taxes) which are required to be paid in connection with the issuance, sale and transfer of the Securities to be sold to the Buyer hereunder will be, or will have been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.
(j) Illegal or Unauthorized Payments; Political Contributions . Neither the Company nor any of its Subsidiaries nor, to the best of the Company’s knowledge (after reasonable inquiry of its officers and directors), any of the officers, directors, employees, agents or other representatives of the Company or any of its Subsidiaries or any other business entity or enterprise with which the Company or any Subsidiary is or has been affiliated or associated, has, directly or indirectly, made or authorized any payment, contribution or gift of money, property, or services, whether or not in contravention of applicable law, (i) as a kickback or bribe to any Person or (ii) to any political organization, or the holder of or any aspirant to any elective or appointive public office except for personal political contributions not involving the direct or indirect use of funds of the Company or any of its Subsidiaries.
(k) Money Laundering . The Company and its Subsidiaries are in material compliance with, and have not previously violated, the USA Patriot Act of 2001 and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations, including, without limitation, the laws, regulations and Executive Orders and sanctions programs administered by the U.S. Office of Foreign Assets Control, including, but not limited, to (i) Executive Order 13224 of September 23, 2001 entitled, “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001)); and (ii) any regulations contained in 31 CFR, Subtitle B, Chapter V.
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(1) No Disqualification Events . With respect to Securities to be offered and sold hereunder in reliance on Rule 506(b) under the 1933 Act (“Regulation D Securities”), none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company participating in the offering contemplated hereby, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the 1933 Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person” and, together, “Issuer Covered Persons”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure obligations under Rule 506(e), and has furnished to the Buyers a copy of any disclosures provided thereunder.
(m) Other Covered Persons . The Company is not aware of any Person that has been or will be paid (directly or indirectly) remuneration for solicitation of Buyer or potential purchasers in connection with the sale of any Securities.
(n) Shell Company Status . The Company was an issuer identified in, or subject to, Rule 144(i).
5. COVENANTS.
(a) Reasonable Best Efforts . The Buyer shall use its reasonable best efforts to timely satisfy each of the covenants hereunder and conditions to be satisfied by it as provided in Section 6 of this Agreement. The Company shall use its reasonable best efforts to timely satisfy each of the covenants hereunder and conditions to be satisfied by it as provided in Section 7 of this Agreement.
(b) Regulatory Filings . The Company shall make all necessary filings with respect to the Securities as required under securities laws. The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to, qualify the Securities for sale to the Buyer at the Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Buyer on or prior to the Closing Date. Without limiting any other obligation of the Company under this Agreement, the Company shall timely make all filings and reports relating to the offer and sale of the Securities required under all applicable securities laws (including, without limitation, all applicable federal securities laws and all applicable “Blue Sky” laws), and the Company shall comply with all applicable foreign, federal, state and local laws, statutes, rules, regulations and the like relating to the offering and sale of the Securities to the Buyer.
(c) Reporting Status . Subsequent to the closings, the Company shall use its best efforts to timely file all reports required to be filed with the SEC pursuant to the 1934 Act.
(d) Use of Proceeds . The Company will use the proceeds from the sale of the Securities for general corporate purposes.
(e) Fees . The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, transfer agent fees, DTC (if applicable) fees or broker’s commissions (other than for Persons engaged by the Buyer) relating to or arising out of the transactions contemplated hereby. Except as otherwise set forth in the Transaction Documents, each party to this Agreement shall bear its own expenses in connection with the sale of the Securities to the Buyer.
(f) Pledge of Securities . Notwithstanding anything to the contrary contained in this Agreement, the Company acknowledges and agrees that the Securities may be pledged by the Investor in connection with a bona fide margin agreement or other loan or financing arrangement that is secured by the Securities. The pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and the Investor effecting a pledge of Securities will not be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document.
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(g) Conduct of Business . The business of the Company and its Subsidiaries shall not be conducted in violation of any law, ordinance or regulation of any Governmental Entity, except where such violations would not reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect.
(h) Conversion and/or Exercise Procedures . The form of Conversion Notice (as defined in the Notes) included in the Notes and the Exercise Notice (as defined in the Warrants and Purchase Rights) included in each of the Warrants and Purchase Rights, respectively, set forth the totality of the procedures required of the Buyer in order to convert the Notes and/or exercise the Warrants and/or Purchase Rights, respectively. The Company shall honor conversions of the Notes and/or exercise of the Warrants and/or Purchase Rights, respectively, and shall deliver the Note Conversion Shares, the Warrant Conversion Shares and/or the Purchase Rights Conversion Shares, respectively, in accordance with the terms, conditions and time periods set forth in the Notes, the Warrants and the Purchase Rights, respectively.
(i) Regulation M . The Company will not take any action prohibited by Regulation M under the 1934 Act, in connection with the distribution of the Securities contemplated hereby.
(j) General Solicitation . None of the Company, any of its affiliates (as defmed in Rule 501(b) under the 1933 Act) or any person acting on behalf of the Company or such affiliate will solicit any offer to buy or offer or sell the Securities by means of any form of general solicitation or general advertising within the meaning of Regulation D, including: (i) any advertisement, article, notice or other communication published in any newspaper, magazine or similar medium or broadcast over television or radio; and (ii) any seminar or meeting whose attendees have been invited by any general solicitation or general advertising.
(k) No Short Sales . So long as any Securities remain outstanding, the Buyer (or its successors or assigns) (the “Restricted Persons”) shall not, directly or indirectly, engage in any “Short Sales” of the Common Stock (other than any sale marked “short exempt” or any sale of shares deemed to be held “long” hereunder). For purposes hereof, “Short Sales” shall mean “short sales” as defined in Rule 200 promulgated under Regulation SHO under the 1934 Act (other than any sale marked “short exempt” or any sale of shares deemed to be held “long” hereunder). Notwithstanding the foregoing, no “Short Sale” or “short” position shall be deemed to exist, as a result of any failure by the Company (or its agents) to deliver Note Conversion Shares upon conversion of the Notes, Warrant Conversion Shares and/or Purchase Right Conversion Shares upon the exercise of the Warrants and/or Purchase Rights, as applicable, or to timely remove any legend from any such securities, to the Restricted Person converting such Notes, exercising such Warrants and/or Purchase Rights or removing legends from any shares of Common Stock issuable upon conversion and/or exercise, as applicable. For purposes of determining whether the Restricted Person is deemed to have a “long” position in the Common Stock, at any given time of determination, the Restricted Person shall be deemed to hold “long” all Common Stock that is either (i) then owned by the Restricted Person, if any, or (ii) issuable to the Restricted Person as Note Conversion Shares, Warrant Conversion Shares, and/or Purchase Right Conversion Shares, as applicable, pursuant to the terms of the Notes, Warrants and/or Purchase Rights, respectively then held by the Restricted Person, if any, pursuant to a valid Conversion Notice and/or Exercise Notice delivered to the Company on or prior to the applicable time of determination. Notwithstanding the foregoing, nothing contained herein shall (without implication that the contrary would otherwise be true) prohibit any Restricted Person from selling “long” (as defmed under Rule 200 promulgated under Regulation SHO under the 1934 Act) the Securities or any other Common Stock then owned by the Restricted Person.
5. REGISTER; TRANSFER AGENT INSTRUCTIONS; LEGEND.
(a) Register . The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice to the holder of Securities), a register for the Notes, Warrants and Purchase Rights in which the Company shall record the name and address of the Person in whose name the Notes, Warrants and Purchase Rights have been issued (including the name and address of each transferee), the principal amount of the Notes and the number of shares represented by the Warrants and Purchase Rights, respectively, held by the Person and the number of Note Conversion Shares issuable pursuant to the terms of the Notes and number of Warrant Conversion Shares and Purchase Right Conversion Shares issuable pursuant to the terms of the Warrants and/or the Purchase Rights, as applicable, held by the Person. The Company shall keep the register open and available at all times during business hours for inspection of the Buyer or its legal representatives.
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(b) Legends . The Buyer understands that the Securities have been issued (or will be issued in the case of the Note Conversion Shares, Warrant Conversion Shares, or Purchase Right Conversion Shares) pursuant to an exemption from registration or qualification under the 1933 Act and applicable state securities laws, and except as set forth below, the Securities shall bear any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):
[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
(c) Removal of Legends . Certificates evidencing Securities shall not be required to contain the legend set forth in Section 5(c) above or any other legend (i) while a registration statement covering the resale of such Securities is effective under the 1933 Act (a “Registration Statement”), (ii) following any sale of such Securities pursuant to Rule 144 (assuming the transferor is not an affiliate of the Company), (iii) if such Securities are eligible to be sold, assigned or transferred under Rule 144 (provided that the Buyer provides the Company with reasonable assurances that such Securities are eligible for sale, assignment or transfer under Rule 144 which shall not include an opinion of the Buyer’s counsel), (iv) in connection with a sale, assignment or other transfer (other than under Rule 144), provided that the Buyer provides the Company with an opinion of counsel to the Buyer, in a generally acceptable form, to the effect that such sale, assignment or transfer of the Securities may be made without registration under the applicable requirements of the 1933 Act or (v) if such legend is not required under applicable requirements of the 1933 Act (including, without limitation, controlling judicial interpretations and pronouncements issued by the SEC). If a legend is not required pursuant to the foregoing, the Company shall no later than three (3) Business Days (or such earlier date as required pursuant to the 1934 Act or other applicable law, rule or regulation for the settlement of a trade initiated on the date the Buyer delivers such legended certificate representing such Securities to the Company) following the delivery by the Buyer to the Company or the transfer agent (with notice to the Company) of a legended certificate representing such Securities (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer, if applicable), together with any other deliveries from the Buyer as may be required above in this Section 5(d), as directed by the Buyer, either: (A) provided that the Company’s transfer agent is participating in the DTC Fast Automated Securities Transfer Program and such securities are DTC eligible and such Securities are Note Conversion Shares, Warrant Conversion Shares, or Purchase Right Conversion Shares, credit the aggregate number of shares of Common Stock to which the Buyer shall be entitled to the Buyer’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system or (B) if the Company’s transfer agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver (via reputable overnight courier) to the Buyer, a certificate representing such Securities that is free from all restrictive and other legends, registered in the name of the Buyer or its designee (the date by which such credit is so required to be made to the balance account of the Buyer’s or the Buyer’s designee with DTC or such certificate is required to be delivered to the Buyer pursuant to the foregoing is referred to herein as the “Required Delivery Date”, and the date such shares of Common Stock are actually delivered without restrictive legend to the Buyer or the Buyer’s designee with DTC, as applicable, the “Share Delivery Date”). The Company shall be responsible for any transfer agent fees or DTC fees with respect to any issuance of Securities or the removal of any legends with respect to any Securities in accordance herewith.
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(d) Failure to Timely Deliver; Buy-In . If the Company fails to, for any reason or for no reason, to issue and deliver (or cause to be delivered) to the Buyer (or its designee) by the Required Delivery Date, either (I) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program or the Company’s securities are not DTC eligible, a certificate for the number of Note Conversion Shares, Warrant Conversion Shares, or Purchase Right Conversion Shares to which the Buyer is entitled and register such Note Conversion Shares, Warrant Conversion Shares, or Purchase Right Conversion Shares on the Company’s share register or, (II) if the Transfer Agent is participating in the DTC Fast Automated Securities Transfer Program, to credit the balance account of the Buyer or the Buyer’s designee with DTC for such number of Note Conversion Shares, Warrant Shares, or Purchase Right Shares submitted for legend removal by the Buyer pursuant to Section 5(d) above (the event described in the immediately foregoing clause (I) above, a “ Delivery Failure ”),then, in addition to all other remedies available to the Buyer, the Company shall pay in cash to the Buyer on each day after the Share Delivery Date and during such Delivery Failure an amount equal to 2% of the product of (A) the sum of the number of shares of Common Stock not issued to the Buyer on or prior to the Required Delivery Date and to which the Buyer is entitled, and (B) any trading price of the Common Stock selected by the Buyer in writing as in effect at any time during the period beginning on the date of the delivery by the Buyer to the Company of the applicable Note Conversion Shares, Warrant Conversion Shares, or Purchase Right Conversion Shares and ending on the applicable Share Delivery Date. In addition to the foregoing, if on or prior to the Required Delivery Date either (I) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, the Company shall fail to issue and deliver a certificate to the Buyer and register such shares of Common Stock on the Company’s share register or, if the Transfer Agent is participating in the DTC Fast Automated Securities Transfer Program, credit the balance account of the Buyer or the Buyer’s designee with DTC for the number of shares of Common Stock to which the Buyer submitted for legend removal by the Buyer pursuant to Section 5(d) above (ii) below or (II) a Delivery Failure occurs, and if on or after such Trading Day the Buyer purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Buyer of shares of Common Stock submitted for legend removal by the Buyer pursuant to Section 5(d) above that the Buyer anticipated receiving from the Company (a “Buy-In”), then the Company shall, within three (3) Business Days after the Buyer’s request and in the Buyer’s discretion, either (i) pay cash to the Buyer in an amount equal to the Buyer’s total purchase price (including brokerage commissions and other out-of-pocket expenses, if any, for the shares of Common Stock so purchased) (the “Buy-In Price”), at which point the Company’s obligation to so deliver such certificate or credit the Buyer’s balance account shall terminate and such shares shall be cancelled, or (ii) promptly honor its obligation to so deliver to the Buyer a certificate or certificates or credit the balance account of the Buyer or the Buyer’s designee with DTC representing such number of shares of Common Stock that would have been so delivered if the Company timely complied with its obligations hereunder and pay cash to the Buyer in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Note Conversion Shares, Warrant Shares, or Purchase Right Shares that the Company was required to deliver to the Buyer by the Required Delivery Date multiplied by (B) the lowest Closing Sale Price (as defined in the Notes) of the Common Stock on any Trading Day during the period commencing on the date of the delivery by the Buyer to the Company of the applicable Note Conversion Shares, Warrant Shares, or Purchase Right Shares and ending on the date of such delivery and payment under this clause (ii). Nothing shall limit the Buyer’s right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock (or to electronically deliver such shares of Common Stock) as required pursuant to the terms hereof. Notwithstanding anything herein to the contrary, with respect to any given Delivery Failure, this Section 5(e) shall not apply to the Buyer to the extent the Company has already paid such amounts in full to the Buyer with respect to such Delivery Failure, as applicable, pursuant to the analogous sections of the Note held by the Buyer.
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6. CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.
(a) The obligation of the Company hereunder to issue and sell the Notes to the Buyer at any Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing the Buyer with prior written notice thereof:
(i) The Buyer shall have executed each of the other Transaction Documents to which it is a party and delivered the same to the Company.
(ii) The Buyer shall have delivered to the Company the Purchase Price for the Note being purchased by the Buyer at the Closing by wire transfer of immediately available.
(iii) The representations and warranties of the Buyer shall be true and correct in all material respects as of the date when made and as of the Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date), and the Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Buyer at or prior to the Closing Date.
7. CONDITIONS TO THE BUYER’S OBLIGATION TO PURCHASE.
(a) The obligation of the Buyer hereunder to purchase its Note at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Buyer’s sole benefit and may be waived by the Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:
(i) The Company shall have duly executed and delivered to the Buyer each of the Transaction Documents to which it is a party and the Company shall have duly executed and delivered to the Buyer a Note being purchased by the Buyer at any Closing pursuant to this Agreement; and
(ii) Since the date of execution of this Agreement, no event or series of events shall have occurred that reasonably would have or result in a Material Adverse Effect.
8. MISCELLANEOUS.
(a) Governing Law; Jurisdiction; Jury Trial . All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of Nevada, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Nevada or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Nevada. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.
(b) Counterparts . This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.
(c) Headings; Gender . The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof’ and words of like import refer to this entire Agreement instead of just the provision in which they are found.
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(d) Severability; Maximum Payment Amounts . If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s). Notwithstanding anything to the contrary contained in this Agreement or any other Transaction Document (and without implication that the following is required or applicable), it is the intention of the parties that in no event shall amounts and value paid by the Company and/or any of its Subsidiaries (as the case may be), or payable to or received by the Buyers, under the Transaction Documents (including without limitation, any amounts that would be characterized as “interest” under applicable law) exceed amounts permitted under any applicable law. Accordingly, if any obligation to pay, payment made to the Buyer, or collection by the Buyer pursuant the Transaction Documents is finally judicially determined to be contrary to any such applicable law, such obligation to pay, payment or collection shall be deemed to have been made by mutual mistake of the Buyer, the Company and its Subsidiaries and such amount shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by the applicable law. Such adjustment shall be effected, to the extent necessary, by reducing or refunding, at the option of the Buyer, the amount of interest or any other amounts which would constitute unlawful amounts required to be paid or actually paid to the Buyer under the Transaction Documents. For greater certainty, to the extent that any interest, charges, fees, expenses or other amounts required to be paid to or received by the Buyer under any of the Transaction Documents or related thereto are held to be within the meaning of “interest” or another applicable term to otherwise be violative of applicable law, such amounts shall be pro-rated over the period of time to which they relate.
(e) Entire Agreement; Amendments . This Agreement, the other Transaction Documents and the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein supersede all other prior oral or written agreements between the Buyer, the Company, its Subsidiaries, their affiliates and Persons acting on their behalf, including, without limitation, any transactions by the Buyer with respect to Common Stock or the Securities, and the other matters contained herein and therein, and this Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein contain the entire understanding of the parties solely with respect to the matters covered herein and therein; For clarification purposes, the Recitals are part of this Agreement. No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the Buyer.
(f) Notices . Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party) or electronic mail; or (iii) one (1) Business Day after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed to the party to receive the same. The addresses, facsimile numbers and e-mail addresses for such communications shall be:
If to the Company:
Avant Diagnostics, Inc.
217 Perry Parkway
Suite 8
Gaithersburg, MD 20977
Attention: Philippe Goix, Chief Executive Officer
With a copy (for informational purposes only) to:
Sheppard, Mullin, Richter & Hampton LLP
30 Rockefeller Plaza, 39 th Floor
New York, New York 10112
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Telephone: (212) 653-8700
Facsimile: (917) 438-6137
Attn: Stephen A. Cohen, Esq.
E-Mail: scohen@sheppardmullin.com
If to the Buyer, to its address, e-mail address and facsimile number set forth on the Schedule of Buyers, with copies to the Buyer’s representatives as set forth on the Schedule of Buyers, or to such other address, e-mail address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine or e-mail containing the time, date, recipient facsimile number and, with respect to each facsimile transmission, an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.
(g) Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers of any of the Notes. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Buyer. The Buyer may assign some or all of its rights hereunder in connection with any transfer of any of its Securities without the consent of the Company, in which event such assignee shall be deemed to be a buyer hereunder with respect to such assigned rights.
(h) No Third Party Beneficiaries . This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.
(i) Survival . The representations, warranties, agreements and covenants shall survive any closing. The Buyer shall be responsible only for its own representations, warranties, agreements and covenants hereunder.
(j) Further Assurances . Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
(k) Construction . The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. No specific representation or warranty shall limit the generality or applicability of a more general representation or warranty. Each and every reference to share prices, shares of Common Stock and any other numbers in this Agreement that relate to the Common Stock shall be automatically adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions that occur with respect to the Common Stock after the date of this Agreement. It is expressly understood and agreed that for all purposes of this Agreement, and without implication that the contrary would otherwise be true, neither transactions nor purchases nor sales shall include the location and/or reservation of borrowable shares of Common Stock.
(1) Remedies . The Buyer and in the event of assignment by the Buyer of its rights and obligations hereunder, each holder of Securities, shall have all rights and remedies set forth in the Transaction Documents and all rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which such holders have under any law. Any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law.
(m) Withdrawal Right . Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction Documents, whenever the Buyer exercises a right, election, demand or option under a Transaction Document and the Company or any Subsidiary does not timely perform its related obligations within the periods therein provided, then the Buyer may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company or such Subsidiary (as the case may be), any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.
(n) Saturdays, Sundays, Holidays, etc . If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.
[signature pages follow]
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IN WITNESS WHEREOF, the Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first written above.
COMPANY: | ||
AVANT DIAGNOSTICS, INC. | ||
By: | /s/ Philippe Goix | |
Name: Philippe Goix | ||
Title: Chief Executive Officer |
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IN WITNESS WHEREOF, the Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first written above.
BUYER: | ||
By | /s/ Anand Gokel | |
Name: Anand Gokel | ||
Title: Individual |
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EXHIBIT A
SENIOR SECURED CONVERTIBLE PROMISSORY NOTE
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EXHIBIT B
WARRANTS
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EXHIBIT C
PURCHASE RIGHTS
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EXHIBIT D
PLEDGE AGREEMENT
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AVANT DIAGNOSTICS, INC. DISCLOSURE SCHEDULE
This disclosure schedule (this “Disclosure Schedule”) delivered by Avant Diagnostics, Inc., a Nevada corporation (the “Company”) has been prepared in connection with the Securities Purchase Agreement (the “Agreement”) dated as of September 1, 2017 by and among the Company and each buyer identified on the signatures pages thereto. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Agreement.
This Disclosure Schedule sets forth items the disclosure of which are necessary or appropriate either in response to an express disclosure requirement contained in a provision of the Agreement or as an exception to one or more of the Company’s representations or warranties contained in Article 4 of the Agreement. Any information set forth in one section of this Disclosure Schedule will be deemed to apply to all other sections or subsections of the Agreement to the extent that such disclosure is applicable to such other section(s) or subsection(s) on its face without additional investigation.
Headings inserted in the sections or subsections of this Disclosure Schedule are for convenience of reference only and shall not have the effect of amending or changing the express terms of the sections or subsections as set forth in the Agreement.
The mere inclusion of any item in any section or subsection of this Disclosure Schedule as an exception to any representation or warranty or otherwise shall not be deemed to constitute an admission by the Company including that such item was required to be disclosed, or to otherwise imply (i) that any such item has had or would reasonably be expected to have a Material Adverse Effect or otherwise represent an exception or material fact, event or circumstance for the purposes of the Agreement, (ii) that such item is or was material under federal or state securities laws, (iii) that such item is or was outside the Company’s course of business, or (iv) that such item meets or exceeds a monetary or other threshold specified for disclosure in the Agreement. Notwithstanding the foregoing, no disclosure included in any section of this Disclosure Schedule will contravene or vary the text of the representations and warranties set forth in the Agreement. Nothing this Disclosure Schedule shall constitute an admission of any liability or obligation of the Company or any other party to any third party or shall confer or give to any third party any remedy, claim, liability, reimbursement, cause of action, or other right.
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Schedule 4(d)
In connection with certain convertible promissory notes issued by the Company between May 2016 and the date of this Agreement, the Company is required to obtain the consent of certain noteholders in connection with their investment. The Company is currently working with these investors to obtain the proper consents in connection with the transactions contemplated by this Agreement.
Schedule 4(g)
See a description of all subsequent events included in the Form 10-Q for the quarter ended June 30, 2016, as filed with the Securities and Exchange Commission in September 2017.
The Company has been sued by its former legal counsels for past due fees for services rendered. The Company is working with the former counsels to settle all disputes.
The Company is currently in default under its lease agreement for its Gaithersburg, MD facility. Schedule 4(h)
The Company is currently in default under its obligations for its CLIA license in the State of Maryland.
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Exhibit 10.13
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (as the same may be amended, restated or otherwise modified from time to time, this “ Agreement ”), dated as of September 5th, 2017, by and between AVANT DIAGNOSTICS, INC., a Nevada corporation, (the “ Pledgor ”), and Anand Gokel (the “ Lender ”).
PRELIMINARY STATEMENTS:
WHEREAS, as of the date set forth above, the Lender has agreed to purchase Seventy-five Thousand Dollars ($75,000) of Senior Secured Convertible Notes of Pledgor (collectively, the “Loan”), partially in reliance on Pledgor’s agreement to enter into this Agreement as further security for Pledgor’s payment and performance (hereinafter, Pledgor’s “ Obligations ”) under the Loan by Pledgor, as maker, in favor of Lender, as payee; and
WHEREAS, the Note and all other agreements, documents or instruments executed or delivered by Pledgor others in connection with the Loan (including but not limited to the Securities Purchase Agreement, dated September 5, 2017) are hereinafter collectively referred to as the “ Loan Documents ”; and
WHEREAS, Lender’s agreement to make the Loan is conditioned upon, among other things, the Pledgor entering into this Agreement and pledging a security interest to Lender in and to all of the respective Assets Pledgor owns.
NOW THEREFORE, to secure the Obligations of the Pledgor, and in consideration of the Lender making the Loan to the Pledgor, the Pledgor hereby agrees for the benefit of the Lender as follows:
1. INTERPRETATION OF THIS AGREEMENT
1.1 Terms defined
All capitalized terms used herein but not defined herein shall have the respective meanings set forth in the Loan Documents from Pledgor to Lender of even date herewith which secures the Loan. As used herein, the following terms shall have the respective meanings set forth below:
(a) “ Collateral ” shall mean all of Pledgor’s Assets, all rights and privileges related thereto, and all books and records relating thereto and all rights in and to any insurance proceeds of the foregoing, and which are listed on Exhibit A.
(b) “ Lender ” shall have the meaning set forth in the introductory paragraph hereof.
(d) “ Loan Documents ” shall have the meaning set forth in the preliminary statement above.
(e) “ Obligations ” shall mean all of the obligations of Pledgor under the Loan Documents, and all obligations of Pledgor pursuant to this Agreement.
(f) “ Pledgor ” shall have the meaning set forth in the introductory paragraph hereof.
(g) “ Security Interest ” shall have the meaning set forth in Section 2.1 hereof.
(h) “ Uniform Commercial Code ” shall mean the Uniform Commercial Code as in effect from time to time in the State of Nevada.
1.2 Directly or Indirectly
Where any provision herein refers to action to be taken by any party, or provides that such party is prohibited from taking any action, such provision shall be applicable whether such action is taken directly or indirectly by such party.
1.3 Section Headings and Construction
(a) Section Headings. The titles of the sections of this Agreement appear as a matter of convenience only, do not constitute a part hereof and shall not affect the construction hereof. The words “herein,” “hereunder” and “hereto” refer to this Agreement as a whole and not to any particular section or other subdivision. References to sections are, unless otherwise specified, references to sections of this Agreement.
(b) Construction. Each covenant contained herein shall be construed (absent an express contrary provision herein) as being independent of each other covenant contained herein, and compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with one or more other covenants.
1.4 Governing Law
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEVADA, AND THE FEDERAL LAWS OF THE UNITED STATES OF AMERICA IN FORCE THEREIN, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
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2. GRANT OF SECURITY INTEREST
2.1 Grant of Security Interest
As security for the payment or performance, as the case may be, of the Obligations, the Pledgor does hereby pledge and grant a security interest (the “ Security Interest”) to the Lender in all of the Collateral.
2.2 Perfection of Security Interest in Collateral
(a) Contemporaneously with the execution of this Agreement, the Pledgor (i) shall deliver, or cause to be delivered, to the Lender, all instruments evidencing the Collateral (ii) authorizes the Lender to file one or more financing statements under the Uniform Commercial Code, with respect to the Security Interest, with the proper filing and recording agencies in any jurisdiction deemed proper by it, (iii) shall register the pledge of the Collateral hereunder in its books and records, and/or (iv) take such other action as the Lender may direct in order to perfect the Security Interest.
(b) Delivery of Other Collateral. If the Pledgor shall become entitled to receive or shall receive any certificate or other instrument, option or rights or other similar property in respect of the Collateral, whether as an addition to, in substitution of, or in exchange for, such Collateral or otherwise, the Pledgors agree:
(i) to accept the same as the agent of the Lender;
(ii) to hold the same in trust on behalf of and for the benefit of the Lender; and
(iii) to deliver the same to the Lender, or to such other party as the Lender may direct, on or before the close of business on the second business day following the receipt thereof by the Pledgor, in the exact form received, with the endorsement in blank of the Pledgor when necessary and with appropriate undated powers of attorney duly executed in blank (with signatures properly guaranteed), when necessary, to be held by the Lender, or such other party as directed by the Lender, subject to the terms of this Agreement, as additional Collateral.
2.3 Further Assurances
The Pledgor agrees, at its expense, to cooperate with the Lender and to execute and deliver, or cause to be executed and delivered, all such powers, proxies, instruments and documents, and take all such actions, as the Lender may from time to time reasonably request, for the better assuring and preserving of the perfection of the Security Interest herein granted to the Lender and the rights and remedies created hereby.
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3. REPRESENTATIONS, WARRANTIES AND COVENANTS
3.1 Representations, Warranties and Covenants of Pledgor
The Pledgor represents, warrants and covenants that:
(a) Right to Grant Security Interest. The Pledgor has the right to pledge and grant a security interest in the Collateral free of any encumbrances other than the lien created hereby;
(b) Governmental Authorities. The Pledgor’s execution and delivery of this Agreement and the pledging of the Collateral hereunder does not require the consent, approval or authorization of, or filing, registration or qualification with, any governmental authority having jurisdiction thereover (other than filing of UCC financing statements);
(c) Authority to Pledge. The Pledgor has rights in and good title to the Collateral and has full right, power and authority to pledge the Collateral pursuant hereto and to execute, deliver and perform his obligations in accordance with the terms of this Agreement, without the consent or approval of any other party (other than the consent of Pledgor, which consent is set forth below);
(d) Validity of Security Interest. Once the pledge of the Collateral hereunder is effective by virtue of the execution and delivery of this Agreement and the filing of the UCC financing statements in connection therewith, the Lender will have a valid, legal and perfected first and prior security interest in all of the Collateral, and no party, other than the Lender shall have priority in such security interest; and
(e) Absence of Other Liens. The Pledgor is the legal and equitable owner of the Collateral free and clear of any pledge, security interest, lien, charge or other encumbrance of any nature whatsoever, and the Pledgor will make no further sale, assignment, pledge, mortgage, hypothecation or transfer of the Collateral.
4. EVENTS OF DEFAULT; REMEDIES
4.1 Events of Default
An “ Event of Default” shall exist if any of the following occurs and is continuing:
(a) Covenants: Any Pledgor shall fail to comply with any of the provisions hereof, and such failure continues for more than ten (10) days after the date on which the Pledgor shall have received written notice of such failure from the Lender; or
(b) Warranties or Representations: Any warranty, representation or other written statement by or on behalf of any Pledgor contained herein or in any certificate, instrument or other statement furnished in compliance herewith or with the Loan Documents shall have been false or misleading in any material respect when made; or
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(c) Collateral: All or any part of the Collateral shall be attached or levied upon or seized in any legal proceeding, or held by virtue of any lien or distress, in any case for a period in excess of twenty (20) days; or
(d) Events of Default Under Loan Documents: Any “Event of Default” exists under and as defined in the Loan Documents.
4.2 Remedies
At any time during the continuance of an Event of Default, the Lender may take any or all of the following actions with respect to the Collateral:
(a) The Lender may exercise all of the rights and remedies of a secured party under the Uniform Commercial Code and other applicable law and all of the rights and remedies conferred hereby, it being expressly understood that no such remedy is intended to be exclusive of any other remedy or remedies, but each and every remedy shall be cumulative and shall be in addition to every other remedy given herein or now or hereafter existing at law or in equity or by statute, and may be exercised from time to time as often as may be deemed expedient by the Lender.
(b) The Lender shall have the right, subject to the mandatory requirements of applicable law, to sell or otherwise dispose of all or any part of the Collateral, at public or private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery as the Lender shall deem appropriate. Each purchaser at any such sale shall hold the Collateral sold absolutely free from any claim or right on the part of the Pledgor, and the Pledgor hereby waives (to the extent permitted by law) all rights of redemption, stay and appraisal that the Pledgor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.
4.3 Method of Sale and Conduct of Remedies
(a) The Pledgor and the Lender agree that ten (10) days’ notice to any Pledgor of any or private sale or other disposition of the Collateral or any portion thereof shall be reasonable notice thereof, and such sale shall be at such locations as the Lender shall designate in such notice and during ordinary business hours, and any other requirement of notice, demand or advertisement for sale, to the extent permitted by law, is hereby waived by the Pledgor. The Lender shall have the right to bid at any public sale.
(b) The Lender shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. The Lender may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned.
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(c) In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Lender until the sale price is paid by the purchaser or purchasers thereof, but the Lender shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice.
4.4 Certain Securities Law Restrictions
Anything herein to the contrary notwithstanding, and in view of the fact that federal and state securities laws may impose certain restrictions on the method by which a sale of any securities constituting all or part of the Collateral may be effected after and during the continuance of an Event of Default, the Pledgor agrees that, if an Event of Default shall exist hereunder, the Lender may, from time to time, attempt to sell all or any part of any such securities by means of a private placement, restricting the bidders and prospective purchasers to those who will represent or agree as to their investment intent or method of resale or both in a manner reasonably required by the Lender to assure compliance with applicable securities laws. In so doing, the Lender may solicit offers to buy such securities or any part thereof, for cash, from a limited number of investors deemed by the Lender to be responsible parties who might be interested in purchasing such securities. If the Lender solicits such offers from not fewer than three (3) such investors, then the acceptance by the Lender of the highest offer obtained therefrom shall be deemed to be a commercially reasonable method of disposition of such securities.
4.5 Lender Appointed Attorney-in-Fact
The Pledgor hereby appoints the Lender as the Pledgor’s attorney-in-fact, with full authority to act in the place and stead of the Pledgor and in the name of the Pledgor or otherwise at any time after an Event of Default shall exist, to take any action and to execute any instrument which the Lender may deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation:
(a) to ask, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral,
(b) to receive, endorse and collect all instruments made payable to the Pledgor representing any payment or Distribution in respect of the Collateral or any part thereof and to give full discharge for the same, and
(c) to file any claims or take any action or institute any proceedings that the Lender may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Lender with respect to any of the Collateral.
The Pledgor agree that the Lender shall not have any liability for any acts of commission or omission, or for any error of judgment or mistake of fact or law, with respect to the exercise of the powers of attorney granted under this Section 4.5, unless such liability shall be due to the willful misconduct or gross negligence of the Lender. The powers of attorney granted under this Section 4.5 are coupled with and interest and shall be irrevocable for so long as any of the Obligations shall not have been fully and finally paid.
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4.6 Performance by the Lender for the Pledgor
If any Pledgor shall fail to do any act or thing that it has covenanted to do hereunder, or any representation or warranty of the Pledgor shall be breached, the Lender, may at its option, but shall not be required to, do the same or cause it to be done, or remedy any such breach, and charge the Pledgor therefor, and the Pledgor agrees to promptly reimburse the Lender therefor, with interest at an interest rate per annum that is then borne by the Pledgor pursuant to the terms of the Note. The Pledgor shall pay all sums so paid or incurred by the Lender in respect of any of the foregoing and all costs and expenses (including attorneys’ fees, legal expenses and court costs) that the Lender may incur in asserting, enforcing, defending or protecting the Security Interest herein granted on, or rights and interest in, the Collateral, or any of their rights or remedies under this Agreement or in respect of any of the transactions to be had hereunder and, until paid by the Pledgor with interest at the rate aforesaid, such sums shall be secured by all of the Collateral and the proceeds from the sale thereof.
5. Effect of Sale, etc.
5.1 Title. Any sale or sales pursuant to the provisions of this Agreement, whether under any right or power granted hereby or pursuant to any legal proceedings, shall operate to divest the Pledgor of all right, title, interest, claim and demand whatsoever, either at law or in equity, of, in and to the Collateral, or any part thereof, so sold, and any property so sold shall be free and clear of any and all rights of redemption by, through or under the Pledgor.
5.2 Application of Proceeds. The receipt by the Lender, or by any party authorized under any judicial proceedings to make any such sale, of the proceeds of any such sale shall be a sufficient discharge to any purchaser of the Collateral, or of any part thereof, sold as aforesaid; and no such purchaser shall be bound to see to the application of such proceeds, or be bound to inquire as to the authorization, necessity or propriety of any such sale. In the event that, at any such sale, the Lender is the successful purchaser, it shall be entitled, for the purpose of making settlement or payment, to credit against the purchase price of such sale all or any portion of the Obligations.
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5.3 Restoration of Rights and Remedies
If the Lender shall have instituted any proceeding to enforce any right or remedy hereunder, and such proceeding shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Lender, then and in every such case, the Lender shall, subject to any determination in any such proceeding, be restored severally and respectively to its former position hereunder, and thereafter all rights and remedies of the Lender shall continue as though no such proceeding had been instituted.
5.4 Application of Proceeds
The proceeds of any exercise of rights with respect to the Collateral, or any part thereof, and the proceeds and the avails of any remedy under this Agreement shall be paid to the Lender and applied by the Lender in accordance with the Note.
5.5 Waivers by Pledgor
(a) Acceptance. The Pledgor hereby waive notice of acceptance of this Agreement. The Pledgor further waives presentment and demand for payment of any of the Obligations, protest and notice of dishonor or default with respect to any of the Obligations, and all notices to which the Pledgor might otherwise be entitled, except as otherwise expressly provided in this Agreement.
(b) Waiver of Valuations, etc. The Pledgor (to the extent that it may lawfully do so) covenants that it shall not at any time insist upon or plead, or in any manner claim or take the benefit or advantage of, any stay, valuation, appraisal, redemption or extension law now or at any time hereafter in force that, but for this waiver, might be applicable to any sale made hereunder or under any judgment, order or decree based on this Agreement, and the Pledgor (to the extent that it may lawfully do so) hereby expressly waives and relinquishes all benefit and advantage of any and all such laws and hereby covenants that it will not hinder, delay or impede the execution of any power in this Agreement or therein granted and delegated to the Lender, but that it will suffer and permit the execution of every such power as though no such law or laws had been made or enacted.
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(c) Dealings with Pledgor and Others. The Pledgor does hereby waive: notice of the extension of credit from time to time by Lender to Pledgor and the creation, existence or acquisition of any Obligations hereby secured, including, without limitation, notice of the amount of any indebtedness of Pledgor to Lender from time to time (subject, however, to Pledgor’s right to make inquiry of Lender to ascertain the amount of such indebtedness at any reasonable time); notice of adverse change in Pledgor’s financial condition or of any other fact which might increase such Pledgor’s risk hereunder; notice of presentment for payment, demand, protest and notice thereof as to any instrument executed by Pledgor in favor of Lender; to the extent permitted under applicable law, notice of default; and all other notices and demands to which the Pledgor might otherwise be entitled (except for any notices expressly required under the Agreement). The Pledgor further waives any statutory or other rights to require Lender to institute suit against Pledgor or any other obligor or guarantor in respect of the Obligations or to exhaust its rights and remedies against Pledgor or any other such obligor or guarantor. The Pledgor accepts the full range of risk encompassed within a contract of continuing guaranty, including the possibility that the Pledgor will incur indebtedness after its financial condition (including its ability to pay debts when they fall due) has deteriorated. Pledgor waives the benefit of any applicable law having a contrary effect. The Pledgor further waives any defense arising by reason of any disability or other defense of Pledgor or by reason of the cessation from any cause whatsoever of the liability of Pledgor (except for payment in full of the Obligations), and any other legal or equitable suretyship defense. Without limiting the foregoing, no Pledgor shall not be relieved of its obligations hereunder by virtue of any time or indulgences granted by Lender to Pledgor. The Pledgor hereby irrevocably appoints Pledgor as the Pledgor’s agent such that any agreement made between Lender and Pledgor with respect to any waiver, release or amendment of the terms of the Note and any other Loan Documents, shall be deemed to have been agreed and consented to by the Pledgors and the execution of any document by Pledgor evidencing any such agreement shall be deemed to have been executed by Pledgor as principal and as authorized agent of the Pledgors. Until all of the Obligations shall have been satisfied in full, the Pledgors shall have no right of subrogation, reimbursement or indemnity whatsoever and no right of recourse to or with respect to any assets or property of Pledgor or to any collateral for the Obligations. Nothing shall discharge or satisfy the obligations secured hereby except the full payment of the Obligations. As between the Pledgors and Lender and at the option of Lender, such Obligations shall forthwith become due and payable if there shall be filed against any one or more of Pledgor or the Pledgors a petition under any bankruptcy, insolvency, reorganization or arrangement or similar laws for appointment of a receiver or trustee, if any one or more of Pledgor or the Pledgors makes an assignment for the benefit of creditors, or if an Event of Default shall exist. It is the intent of the parties that this Agreement shall remain in full force and effect notwithstanding any act or thing that might otherwise operate as a legal or equitable discharge of a surety.
6. MISCELLANEOUS
6.1 No Waiver
No failure on the part of the Lender to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy by the Lender preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law. The Lender shall not be deemed to have waived any rights hereunder or under any other agreement or instrument unless such waiver shall be in writing and signed by the Lender and the Pledgor.
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6.2 Lender’s Fees and Expenses
The Pledgor will upon demand pay to the Lender the amount of any and all reasonable expenses, including the fees and expenses of its counsel and of any experts or agents that the Lender may incur in connection with (i) the custody or preservation or, or the sale of, collection from, or other realization upon, any of the Collateral, (ii) the exercise or enforcement of any of the rights of the Lender hereunder, or (iii) the failure by the Pledgor to perform or observe any of the provisions hereof. In addition, the Pledgor will indemnify and hold the Lender harmless from and against any and all liability incurred by the Lender hereunder or in connection herewith, unless such liability shall be due to the willful misconduct or gross negligence of the Lender. Any such amounts payable as provided hereunder or thereunder shall be secured hereby.
6.3 Benefits of this Agreement
All warranties, representations and covenants made by the Pledgor herein or in any certificate or other document or instrument delivered by it shall be considered to have been relied upon by the Lender and shall survive the delivery to the Lender of the Collateral regardless of any investigation made by the Lender. All statements in any such certificate or other instrument shall constitute warranties and representations by the Pledgor hereunder. This Agreement shall be binding upon the Pledgor and their respective heirs and assigns, and shall inure to the benefit of and be enforceable by the Lender and its successors and assigns.
6.4 Obligations Absolute; Recourse; No Marshaling
(a) This Agreement is an absolute, unconditional, continuing and irrevocable obligation of the Pledgor and shall remain in full force and effect without respect to future changes in conditions, including change of law or any invalidity or irregularity with respect to the issuance of any obligations of Pledgor to Lender or with respect to the execution and delivery of any agreement between Pledgor and Lender. The Pledgor further agrees that to the extent Pledgor makes a payment or payments to Lender, which payment or payments or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required, for any of the foregoing reasons or for any other reason, to be repaid or paid over to a trustee, receiver or any other party under any bankruptcy, insolvency or similar law, then, to the extent of such payment or repayment, the Obligations or part thereof intended to be satisfied shall be revived and continued in full force and effect as if said payment had not been made.
(b) Lender shall have the right to seek recourse against the Collateral to the full extent provided for herein, which rights shall be absolute and shall not in any way be impaired, deferred or otherwise diminished by reason of any inability of Lender to claim the full amount of the Obligations from Pledgor under any applicable law. No election to proceed in one form of action or proceeding, or against any party, or on any obligation, shall constitute a waiver of Lender’s right to proceed in any other form of action or proceeding or against other parties unless Lender has expressly waived such right in writing. Specifically, but without limiting the generality of the foregoing, no action or proceeding by Lender against Pledgor, any guarantor of the Obligations or any other party, under any document or instrument evidencing or securing the Obligations shall serve to diminish the liability of the Pledgor hereunder, except to the extent Lender fully and unconditionally realizes full indefeasible payment of the Obligations by such action or proceeding, notwithstanding the effect of any such action or proceeding upon the Pledgor’s right of subrogation, reimbursement or contribution against Pledgor or any other party.
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(c) The Pledgor consents and agrees that Lender shall be under no obligation to marshal any assets in favor of the Pledgor, or against or in payment of any or all of the Obligations.
6.5 Actions by Lender
The Pledgor consents and agrees that, without notice to Pledgor and without affecting or impairing the obligations of Pledgor hereunder, Lender may, by action or inaction: compromise, settle, extend the time for payment of the Obligations with Pledgor or any party liable therefor; release Pledgor or any party from its liability for the Obligations; release all or any part of the security for the Obligations; modify any instruments or agreements relating to the Obligations (except this Agreement); extend the time for making any deposit or granting a security interest in property securing the Obligations; or refuse or fail to enforce its rights under any agreement or instrument evidencing or securing the Obligations.
6.6 Notices
All notices or demands by either party to the other relating to this Agreement shall be in writing and sent in accordance with the Loan Documents; provided that notices or demands to Pledgor shall be sent to Pledgor at the address for the Pledgor.
6.7 Severability
In case any one or more of the provisions contained in this Agreement shall be invalid, illegal or unenforceable, the remaining provisions contained herein shall not in any way be affected or impaired.
6.8 Counterparts
This Agreement may be executed in one or more counterparts and shall be effective when at least one counterpart shall have been executed by each party hereto, and each set of counterparts that, collectively, show execution by each party hereto shall constitute one duplicate original.
6.9 Amendments
No provision of this Agreement shall be waived, amended, modified or supplemented except by a written instrument executed by the Pledgor and the Lender.
6.10 Termination
Pledgor acknowledge that this Agreement and the Security Interest shall terminate when all the Obligations have been fully and finally paid, at which time the Lender shall deliver to the Pledgor all certificates, if any, evidencing the Collateral then held by it and such other documents as the Pledgor shall reasonably request to evidence such termination (all at the expense of the Pledgor).
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IN WITNESS WHEREOF, the Pledgor has executed and delivered this Pledge and Security Agreement as of the date first above written.
AVANT DIAGNOSTICS, INC. | ||
By: | /s/ Philippe Goix | |
Name: | Philippe Goix | |
Title: | Chief Executive Officer |
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Exhibit A
Pledgor’s Assets
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Exhibit 10.14
June 19, 2017
Dear Philippe Goix, PhD, MBA,
We are pleased to extend to you an offer of employment with Avant Diagnostics, Inc. (AVDX). (the “Company”) as set forth below. This written agreement supersedes and replaces any prior agreements, representations or understandings, whether written, oral or implied, between you and the Company. The Company initially wishes to hire you as Chief Executive Officer (CEO) upon funding of an initial total $500,000 investment to be made by Infusion 51a LP together with Asia America Alliance Limited (Asia America) . This employment agreement will be for the purposes of preparing the current Theralink business inside Avant for commercialization, as well as assisting Dominick & Dickerman, the investment bank the Company intends to retain for the raising of capital, to raise an additional $2,000,000 investment. Upon closing that additional $2,000,000 capital raise, you will be tasked with adding the Precision Health Care Solutions medical technology business model to the Avant platform. Any references in this Agreement to “you”, the “CEO”, or the “Executive” refer to you.
1. Title and Duties . You are being offered a full-time, exempt position as the Company’s Chief Executive Officer (CEO) , located at the Company’s offices in Gaithersburg, MD. Your duties include, but are not limited to setting and leading the Company’s strategic plan of record and annual operating plans. As the Company’s Chief Executive Officer you will lead the development and execution of strategic business, product, operations, sales, marketing and business development activities. Your responsibilities will include leadership of Company resources resulting in successful attainment of revenue objectives set by the Company.
You will lead Company activities for the purpose of evaluating and implementing best business practices intended to further the goals of the Company. As the most senior constructive and productive leader in the Company, you will be expected to lead by example by setting high standards of excellence and integrity in all your endeavors, including leadership, planning, and communication, in all your internal and external relationships with colleagues, partners, vendors and other third parties.
In addition, the CEO’s duties will be to work with shareholders Asia America and International Infusion (and their respective affiliates) to identify and nominate key industry experts to serve on the Company’s board of directors, and implement appropriate corporate governance policies for the Company.
2. Commencement of Employment . The commencement date of your employment will be on the date the Company closes on the first contemplated $250,000 investment led by Infusion 51a, estimated to close on or around June 20, 2017, provided that you sign, date and return this offer letter indicating your acceptance.
3. Compensation and Benefits . As compensation for your services, you will be paid an annual salary of $120,000.00 upon execution of this agreement, paid at the rate of $10,000 per month. You will also be entitled to a $15,000 signing bonus, and reimbursement for accrued travel expenses incurred during the CEO recruitment process, approximately $4,500 for which receipts have been submitted. Upon the Company raising at least an additional $1,750,000.00 (through [a] an additional $250,000 as contemplated in the existing term sheet with Infusion and Asia America and [b] at least an additional $1.5 million funds to advance the Company’s business goals), your salary will increase to $240,000 annually that will be paid at the rate of $20,000.00 per month. Upon the Company listing its common shares on the NASDAQ or NYSE and an additional capital raise of $5M beyond the above mentioned $1,750,000.00, your salary will increase to $360,000 per year, paid at the rate of $30,000 per month. All forms of compensation paid to you by the Company are subject to reduction to reflect applicable withholding and payroll taxes and other deductions as required by law. In addition, you will be eligible for the following:
a. Paid Time Off . You will be eligible to accrue paid time off according to the Company’s paid time off policy that will be updated upon the Company’s Board of Directors’ first meeting immediately following your appointment.
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b. D&O Insurance . As officer of the Company you will be provided with D&O insurance benefits.
b. Health Care Benefits . You will be eligible to participate in the Company’s group benefit plans effective as of the date such plans are agreed to by the Company’s Board of Directors. Currently, the Company does not offer a healthcare benefit plan.
4. Performance Bonus.
a. Upon the Company raising an additional $1.5 million, which does not include the Company’s $500,000 financing round with Asia America and International Infusion or its affiliates (“Infusion”), you will be awarded a cash bonus equal to the following table:
Closing Date of $1.5 Million Raised | Cash Bonus Awarded | ||||
Within 3 months of the execution of this Agreement | $ | 50,000 | |||
Within 5 months of the execution of this Agreement | $ | 40,000 | |||
Within 7 months of the execution of this Agreement | $ | 30,000 |
b. Subject to the agreed upon specific milestones, including but not limited to profit targets, to be approved in the future by the Compensation Committee of the Company’s Board of Directors, you will be eligible to receive a performance bonus of up to 30% of your base salary.
5. Equity Compensation . Subject to further approval of the Company’s Board of Directors, you will be granted an option to purchase up to 22 million shares of the Company’s Common Stock, subject to mutually agreed upon time milestones and success-based milestones, as described below. The exercise price per share will be equal to the fair market value per share on the date the option is granted. The options will be granted at the closing of the initial $500,000 investment into the Company by Infusion and Asia America. The options will be subject to the terms and conditions applicable to options granted under the Company’s to-be-created Equity Incentive Plan (the “Plan”), as described in the Plan and the applicable Stock Option Agreement:
● | Time Milestones (up to 10 million options) : You will vest in 2.5 million of the option shares after 12 months of continuous service, and the 7.5 million vest in equal quarterly installments over the following 12 quarters of continuous service, as described in the applicable Stock Option Agreement; |
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● | Success Milestones (up to 12 million options) : In addition, an additional 12M options will vest based upon mutually agreed upon corporate milestones including fund raising and NASDAQ or NYSE listing. Eligibility for equity compensation and/or participation in any stock option plan shall not be construed as any assurance of continuing employment for any particular period of time. This will be along the following terms: |
a) | 2,000,000 options upon raise of $1.5 million funding within 90 days of execution of this agreement; |
b) | 10,000,000 options upon listing on the NASDAQ or NYSE; |
c) | Upon listing to the NYSE or NASDAQ, your total compensation will be reviewed by the Compensation Committee of the Board of Directors; |
d) | Upon accomplishment of the $1.5 million fundraising, the Compensation Committee of the Board of Directors will meet, no sooner than six months from the date of this agreement, and establish specific milestones, including but not limited to operational and profit targets and benchmarks which will be utilized in granting additional equity option grants to CEO. |
6. Severance Terms . Severance term conditions, including any acceleration of equity compensation will be negotiated with the Company’s Compensation Committee of the Board of Directors upon successful achievement of the Company’s common stock listing on NASDAQ or NYSE.
7. Termination of Employment . Employment with the Company is for no specific period of time. Your employment with the Company will be “at will,” meaning that either you or the Company may terminate your employment at any time and for any reason, with or without cause. Any contrary representations that may have been made to you are superseded by this offer. Although your job duties, title, compensation and benefits, as well as the Company’s personnel policies and procedures, may change from time to time, the “at will” nature of your employment may only be changed in an express written agreement signed by you and the Board of Directors of the Company.
Either party may terminate the employment agreement. The Company may terminate the Executive’s employment for any reason or for no reason and with or without Cause (as defined herein below).
a) | Termination by the Company for Cause. The Company may terminate the Executive’s employment at any time for Cause. “ Cause ” means one or more of the following events: (i) the Executive’s commission of a felony or other crime, in each case involving moral turpitude; (ii) the Chief Executive Officer’s commission of any other act or omission involving fraud or intentional deceit with respect to the Company or any of its affiliates or any of their directors, stockholders, partners or members; (iii) any act or omission by the Chief Executive Officer involving dishonesty that causes material injury to the Company or any of its affiliates or any of their directors, stockholders, partners or members; (iv) willful misconduct by the Chief Executive Officer with respect to the Company or any of its subsidiaries; (v) any breach of a fiduciary duty owed by the Chief Executive Officer to the Company or its stockholders or the Chief Executive Officer’s contractual breach of this Agreement or any other agreement referred to herein (including the Proprietary Information and Inventions Agreement), provided that if such breach is reasonably curable, failure to cure such breach within ten (10) business days following the delivery written notice from the Company describing such breach; or (vi) the Chief Executive Officer’s continuing failure to perform assigned duties after receiving written notification of the failure from the Company and a period of at least ten (10) business days following the delivery written notice to cure such failure. |
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b) | If the Company terminates the Executive’s employment for Cause, the Executive shall have no right to receive any unvested equity compensation under Section 5 or benefit hereunder on and after the effective date of the termination of employment, except that the Executive shall be entitled to receive the Executive’s Annual Salary through the date of termination and any other benefits that are earned and accrued under this Agreement prior to the date of termination, and the Executive shall be entitled to receive reimbursement of expenses incurred prior to the date of termination that are reimbursable under this Agreement. |
8. Employee Inventions Assignment and Confidentiality Agreement . As an employee of the Company, you will have access to certain confidential information of the Company and you may, during the course of your employment, develop certain information or inventions that will be the property of the Company. As a condition of your employment, you are required to sign and return the attached Employee Inventions Assignment and Confidentiality Agreement (“EIAC Agreement”). Your execution of this offer letter shall be deemed to be your agreement to and acceptance of the attached EIAC Agreement even if for any reason you do not sign such EIAC Agreement. We wish to impress upon you that we do not want you to, and we hereby direct that you not, bring with you any confidential or proprietary material of any former employer, or violate any other obligations you may have to any former employer.
9. Indemnification. The Executive shall be entitled to indemnification in all instances in which the Executive is acting within the scope of his authority to the fullest extent permitted by applicable law and not prohibited by the Company’s, GMR or AHR’s charter and bylaws or operating agreement, as applicable, from and against any damages or liabilities, including reasonable attorney’s fees; provided, however, that the Executive shall not be entitled to indemnification for damages or liabilities which result from or arise out of the Executive’s willful misconduct or gross negligence.
10. Existing Agreements . Executive represents to the Company that the Executive is not subject or a party to any employment or consulting agreement, non-competition covenant or other agreement, covenant or understanding which might prohibit the Executive from executing this Agreement or limit the Executive’s ability to fulfill the Executive’s responsibilities hereunder.
11. Survival. The rights and obligations of the parties under this Agreement, which by their nature would continue beyond the termination or expiration of this Agreement, shall survive the termination or expiration of this Agreement. The Company’s obligations hereunder shall not be terminated by reason of any liquidation, dissolution, bankruptcy, cessation of business, or similar event relating to the Company. This Agreement shall not be terminated by any merger or consolidation or other reorganization of the Company. In the event any such merger, consolidation or reorganization shall be accomplished by transfer of stock or by transfer of assets or otherwise, the provisions of this Agreement shall be binding upon and inure to the benefit of the surviving or resulting corporation or person.
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12. Arbitration. Any disputes arising under or in connection with this Agreement shall be resolved by binding arbitration, to be held in Maryland in accordance with the Commercial Arbitration Rules, as amended from time to time, of the American Arbitration Association (the “AAA”). The Company and the Executive will each select an arbitrator, and a third arbitrator will be selected jointly by the arbitrators selected by the Company and the Executive within 15 days after demand for arbitration is made by a Party. If the arbitrators selected by the Company and the Executive are unable to agree on a third arbitrator within that period, then either the Company or the Executive may request that the AAA select the third arbitrator. The arbitrators will possess substantive legal experience in the principle issues in dispute and will be independent of the Company and the Executive. To the extent permitted by applicable law and not prohibited by the Company’s certificate of incorporation and bylaws, the Company will pay all expenses (including the reasonable expenses of the Executive, including his reasonable legal fees, if the Executive is the prevailing party in such arbitration) incurred in connection with arbitration and the fees and expenses of the arbitrators and will advance such expenses from time to time as required. Except as may otherwise be agreed in writing by the parties or as ordered by the arbitrators upon substantial justification shown, the hearing for the dispute will be held within 60 days of submission of the dispute to arbitration. The arbitrators will render their final award within 30 days following conclusion of the hearing and any required post-hearing briefing or other proceedings ordered by the arbitrators. The arbitrators will state the factual and legal basis for the award. The decision of the arbitrators will be final and binding and not subject to judicial review and final judgment may be entered upon such an award in any court of competent jurisdiction, but entry of such judgment will not be required to make such award effective.
Attorneys’ Fees. If litigation shall be brought to enforce or interpret any provision contained herein, the Company, to the extent permitted by applicable law and not prohibited by the Company’s articles of incorporation and bylaws, shall indemnify the Executive for the Executive’s reasonable attorneys’ fees and disbursements incurred in such litigation if the Executive is the prevailing party in such litigation.
13. Governing Law . This agreement shall be governed by and construed exclusively in accordance with the laws of the state of Maryland without regard to principles of conflicts of law.
14. Outside Employment and Competitive Activities . During the period of your full-time employment, you are required to devote your full-time, best efforts to the interests of the Company. You agree that you will not, without the prior written consent of the Company, engage in, or encourage or assist others to engage in, any other employment or activity that: (i) would divert from the Company any business opportunity in which the Company can reasonably be expected to have an interest; (ii) would directly compete with, or involve preparation to compete with, the current or future business of the Company; or (iii) would otherwise conflict with the Company’s interests or could cause a disruption of its operations or prospects. Violations of this paragraph include, but are not limited to, the direct or indirect, ownership, management, operation, control, employment by, or participation in the ownership, management, operation, or control of any business that is in any way involved with research, development, consulting, and sale of commercial products relating to the global life sciences, biotechnology, medical device and pharmaceutical industries. Excepted from this provision is ownership of not more than 10% of the outstanding shares of a publicly traded corporation.
15. Legal Right to Work . As required by law, your employment by the Company is contingent on you providing timely documentation as proof of you possessing a legal right to work in the United States.
16. Background Check . You agree that the Company may undertake a verification of your criminal, education, driving and/or employment background. This offer can be rescinded based upon data received in the verification.
17. Entire Agreement . This offer letter, once accepted, constitutes the entire agreement between you and the Company with respect to the subject matter hereof and supersedes all prior offers, negotiations and agreements, if any, whether written or oral, relating to such subject matter. You acknowledge that neither the Company nor its agents have made any promise, representation or warranty whatsoever, either express or implied, written or oral, which is not contained in this agreement for the purpose of inducing you to execute the agreement, and you acknowledge that you have executed this agreement in reliance only upon such promises, representations and warranties as are contained herein.
18. Acceptance . You may indicate your acceptance and agreement with the terms of this offer letter by signing, dating and returning the original of this offer letter, and the enclosed EIAC Agreement.
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IN WITNESS WHEREOF, the parties hereto have signed their names to this Employment Agreement as of the day and year set forth below.
COMPANY: | ||
AVANT
DIAGNOSTICS, INC,
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Date: ____________, 2017 | By: | |
Name: | ||
Title: |
EXECUTIVE: | ||
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Date: ____________, 2017 | By: | |
Name: | Phillippe Goix |
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Exhibit 10.15
SEPARATION AND RELEASE AGREEMENT
This Separation and Release Agreement (the “ Agreement ”) is by and between Gregg Linn (“ Executive ”) and Avant Diagnostics, Inc., a Nevada corporation (the “ Company ”).
WHEREAS, Executive’s status as an employee and director of the Company will end effective on June 2, 2017 (the “ Termination Date ”); and
WHEREAS, Executive and the Company desire to assure a smooth and effective transition of Executive’s duties and to wind-up their employment relationship amicably; and
WHEREAS, the payments and benefits being made available to Executive pursuant to this Agreement are intended to satisfy all outstanding obligations under that certain Executive Employment Agreement dated October 1, 2014, between Executive and the Company (the “ Employment Agreement ”).
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, Executive and the Company, intending to be legally bound, hereby agree as follows:
1. Termination Date . Executive acknowledges that his status as an employee director and officer of the Company will end on the Termination Date. Executive understands that this Agreement is only effective if it is executed on or before June 2, 2017. Executive has seven (7) days after Executive signs this Agreement to revoke it. This Agreement will become effective on the eighth (8th) day after Executive signed this Agreement, so long as it has not been revoked by Executive before that date (the “ Effective Date ”).
2. Separation Payments and Benefits . Without admission of any liability, fact or claim, the Company hereby agrees, subject to Executive’s timely execution and non-revocation hereof and Executive’s compliance with Executive’s obligations pursuant to this Agreement and the Surviving Provisions, to provide Executive the severance payments and benefits set forth below:
(a) Severance Payments .
i. The Company shall pay Executive a lump sum cash payment of $30,000 on the Effective Date by wire transfer to such account as mutually agreed upon between the parties.
ii. On the Effective Date, the Company shall reimburse Executive for expenses paid on behalf of the Company in the amount of $5,378.41 in accordance with the following schedule: (i) $2,500 on the Effective Date and (ii) $2,878.41 to be paid out of the proceeds of first closing of the next financing of the Company’s equity and/or debt securities to be consummated after the completion of the Financing (as defined below), by wire transfer to such account as mutually agreed upon between the parties.
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iii. Upon the earlier of: (i) the Company reporting its first net profit on a quarterly basis equal to or exceeding $1,000,000 (as determined in accordance with Generally Accepted Accounting Principles), (ii) the Company’s commencement of trading any of its securities on a national securities exchange or (iii) the Company receiving in excess of $2,500,000 in aggregate gross proceeds from the sale of its securities on or after the Termination Date (including any securities issued in the Financing as well as the exercise of any derivative securities for cash on or after the Termination Date) (each of (i), (ii) or (iii), a “ Triggering Event ”), the Company shall pay Executive a lump sum cash payment of $180,000 within three (3) business days of the date such Triggering Event occurs.
(b) Benefits Coverage . If Executive is enrolled in the Company’s group medical, vision and/or dental plans on the Termination Date, Executive may elect to continue Executive’s participation and that of Executive’s eligible dependents in those plans for a period of time under COBRA. Executive may make such an election whether or not Executive accepts this Agreement. If Executive timely elects to continue Executive’s participation and/or that of Executive’s eligible dependents in such plans, Executive shall pay the full premium cost himself. To the extent any such group plan can be transferred to another entity controlled by Executive, the parties will work in good faith to honor any requested transfer of such plan at the request of Executive.
(c) Equity Awards . On the Termination Date, the Company shall issue Executive 15,000,000 restricted shares of the Company’s common stock (“Equity Issue”) in accordance with the terms of that certain restricted stock award agreement, a copy of which is attached hereto as Exhibit A. The shares of the Company’s common stock issuable to Executive in accordance with this Section shall vest quarterly over three (3) years from the Termination Date.
(d) Lockup Agreement . Executive acknowledges and agrees that the lock-up agreement, dated May 11, 2016, a copy of which is attached hereto as Exhibit B (the “ Lock-Up Agreement ”) is enforceable against Executive in accordance with its terms and any shares of the Company’s common stock currently held by Executive including the Equity Issue shall be subject to the provisions of such Lock-Up Agreement on or after the Termination Date.
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(e) Piggyback Registration Rights . Within one (1) year of the Termination Date, t he Company shall use its commercially reasonable efforts to include on the next registration statement the Company files with SEC for a primary offering (excluding any securities to be included on Form S-4 or S-8) of its equity securities (or on the subsequent registration statement if such registration statement is withdrawn) such number of shares of the Company’s common stock held by the Executive and/or his assigns equal to eight percent (8%) of the aggregate value of the securities to be included on such registration statement (the “ Registrable Securities ”). Subject to the terms of this Agreement, the Company shall use its commercially reasonable efforts to keep such registration statement continuously effective under the Securities Act of 1933 (the “ Securities Act ”), until the first to occur of: (A) the date that is one (1) year from the date the registration statement is declared effective by the Securities and Exchange Commission (the “ SEC ”) and (B) the date that all Registrable Securities covered by such registration statement (i) have been sold, thereunder or pursuant to Rule 144, or (ii) may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144 (the “ Effectiveness Period ”). Notwithstanding the registration obligations set forth in this Section, if the SEC informs the Company that all of the Registrable Securities cannot, as a result of the application of Rule 415 promulgated under the Securities Act, be registered for resale on a single registration statement, the Company agrees to promptly inform Executive and use its commercially reasonable efforts to file amendments to any registration statement as required by the SEC, covering the maximum number of Registrable Securities permitted to be registered by the SEC, on Form S-1 or such other form available to register for resale the Registrable Securities; provided , however , that prior to filing such amendment, the Company shall be obligated to use diligent efforts to advocate with the SEC for the registration of all of the Registrable Securities in accordance with any (i) any publicly-available written or oral guidance of the SEC staff, or any comments, requirements or requests of the SEC staff and (ii) the Securities Act (collectively, “ SEC Guidance ”), including without limitation, Compliance and Disclosure Interpretation 612.09. Notwithstanding any other provision of this Agreement, if the SEC or any SEC Guidance sets forth a limitation on the number of Registrable Securities permitted to be registered on a particular registration statement (and notwithstanding that the Company used diligent efforts to advocate with the Commission for the registration of all or a greater portion of Registrable Securities), unless otherwise directed in writing by Executive as to its Registrable Securities, the number of Registrable Securities to be registered on such Registration Statement will be reduced to such amount as allowed under SEC Guidance. In the event of a cutback hereunder, the Company shall give the Executive at least five (5) business days prior written notice. In the event the Company amends the registration statement in accordance with the foregoing, the Company will use its commercially reasonable efforts to file with the SEC, as promptly as allowed by the SEC or SEC Guidance provided to the Company or to registrants of securities in general, one or more registration statements on Form S-1 or such other form available to register for resale those Registrable Securities that were not registered on any prior registration statement filed with the SEC. In addition, if any rights granted pursuant to this Section involves the inclusion of securities in connection with an underwritten offering, and the managing underwriter (or, in the case of an offering that is not underwritten, an investment banker) shall advise the Company that, in its opinion, the number of securities requested and otherwise proposed to be included on such registration statement exceeds the number which can be sold in such offering without adversely affecting the marketability of the offering, the Company will include in such Registration to the extent of the number which the Company is so advised can be sold in such offering, first , the securities the Company proposes to sell for its own account on such registration statement and second , the Registrable Securities of the Executive requesting to be included on such registration statement.
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(f) Voting Standstill for the Series B Preferred Stock . Executive acknowledges and agrees that he is the sole holder of all shares of the Company’s preferred stock that is outstanding as of the Termination Date (the “ Preferred Shares ”). Beginning on the Termination Date through the date the Company sells its equity and/or debt securities for aggregate gross proceeds equal to at least $400,000 (the “ Financing ”), which Financing shall occur on or prior to the 60 th calendar day after the Termination Date, Executive will not, directly or indirectly, without the prior written consent of Infusion 51a, LP (“ Infusion ”), vote, or otherwise exercise and rights associated with, the Preferred Shares. In addition, Executive agrees not to sell, transfer, assign, offer, pledge, directly or indirectly, any of Preferred Shares. Executive further represents that there is no other class or series of Preferred Stock issued by the Company. Executive acknowledges and agrees that appropriate remedy at law for a breach or threatened breach of any of the this voting restriction would be inadequate and, in recognition of this fact, in the event of a breach or threatened breach by Executive it is agreed that, in addition to its remedy at law, the Company or Infusion shall be entitled, without posting any bond, to equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available. Upon the consummation of the Financing, Executive acknowledges and agrees that all Preferred Shares shall be cancelled and forfeited and shall have no further force and effect.
(g) Theranostics Litigation . Executive is aware that prior to the Termination Date, he was named as a party to that certain litigation entitled, John G. Hartwell et al v. Avant Diagnostics, Inc., et. al., Case No. 432180-V (the “Litigation”), filed in the Circuit Court for Montgomery County, Maryland (the “Court”). Executive understands and agrees that after the Termination Date, the Company shall take commercially reasonable efforts to settle the Litigation with the appropriate parties and have such Litigation dismissed from the Court as soon as reasonable practicable. To the plaintiffs re-commence the Litigation in Court, the Company agrees and acknowledges that it will indemnify Executive to the fullest extent permitted by law and pursuant to the Surviving Provisions (as defined below) in connection with the Litigation.
(h) Taxes . Executive understands and agrees that all payments under this Agreement, except for any expense reimbursement, will be subject to appropriate tax withholding and other deductions, as and to the extent required by law.
(i) Sole Separation Benefit . Executive agrees that the payments and benefits provided by this Agreement are not required under the Company’s normal policies and procedures and are provided solely in connection with this Agreement. Executive further acknowledges and agrees that the payments and benefits referenced in this Agreement constitute adequate and valuable consideration, in and of themselves, for the promises contained in this Agreement.
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(j) Continued Obligations . Executive acknowledges and agrees that Executive shall continue to be subject to, and abide by, Section 6.01 (Competition/Solicitation) and Section 6.02 (Confidential Information) of the Employment Agreement (collectively, the “ Surviving Provisions ”), which shall continue to apply and remain in full force and effect. The Executive further acknowledges and agrees that in order to comply with the Surviving Provisions, from and after the Termination Date, Executive may not at any time nor in any venue speak about, present or author any materials with respect to the Company or its products without the Company’s advance written consent, whether at medical, clinical, investor or analyst presentations or otherwise, except upon request and at the direction of the Company, other than (i) to his legal counsel or tax or financial advisors, (ii) as required by law or legal process, (iii) to the limited extent necessary to defend himself against any claims (x) brought by the Company or (y) in relation to his work for the Company, (iv) statements made by Executive regarding the Company and/or its products that do not breach the Surviving Provisions or Section 6(b) hereof, or (v) statements made by Executive regarding (a) Executive's former position, titles, achievements, duties or responsibilities with the Company or any of its subsidiaries, or (b) Executive's role at the Company and/or role with respect to any Company products on which Executive worked, provided that (x) in the case of clauses (a) and (b), such statements do not breach any of the Surviving Provisions or Section 6(b) of this Agreement, and (y) in the case of clause (b), such statements contain only information about the Company or any of its products that is in the public domain or generally known within the industry. (the foregoing clauses (i) through and including (v), the “ Exceptions ”)). In addition, the Executive agrees that, if asked about the Company or its products by a third party having no involvement in Executive’s performance of his obligations under Section 6(c), Executive will state that he is not an employee of the Company and, unless permitted by one of the Exceptions (i) – (iii) or (v), will defer the question to the Company for response. If the Company believes that Executive has breached any provision of this Agreement or the Surviving Provisions, then it shall provide Executive with written notice of such alleged breach within 30 days after it has knowledge of the occurrence thereof and shall provide Executive with 30 days to cure such alleged breach (any breach so cured shall not be deemed a breach of this Agreement or any of the Surviving Provisions). If the Executive breaches this Agreement or any of the Surviving Provisions, and fails to cure said breach, the Company shall have no further obligation to provide any payments pursuant to this Agreement, and all unvested stock shall be forfeited.
3. Full Payment; Termination of Employment Agreement . Other than as set forth in Section 2 above, Executive shall not be entitled to any other payments including but not limited to bonuses, reimbursements, commissions, or other cash or non-cash awards, penalties, interest or attorneys’ fees, and Executive expressly represents that Executive has been compensated for all monies owed to Executive from Executive’s employment with the Company. On the Termination Date, all provisions of the Employment Agreement, other than the Surviving Provisions and Section 9.02 of the Employment Agreement, shall terminate and Executive shall have no further rights thereunder.
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4. General Release . As a material inducement for the Company to enter into this Agreement, and in exchange for the performance of the Company’s obligations under this Agreement provided for herein, Executive knowingly and voluntarily waives and releases all rights and claims, known and unknown, which Executive may have against the Company or any of its respective subsidiaries, affiliates or successors, or any of their current or former officers, directors, managers, employees, shareholders, agents, insurance carriers, auditors, accountants, attorneys or representatives (collectively, the “ Releasees ”), including any and all charges, complaints, claims, liabilities, obligations, promises, agreements, contracts, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses of any kind. This includes, but is not limited to, any claim to any equity-based or similar type of award or incentive with respect to the Releasees, including any claim for benefits under any stock option or other equity-based incentive plan of the Releasees (or any related agreement, arrangement or understanding with any Releasee); any claim to accelerated vesting or post-termination or severance benefits or payments that are or may become payable under any plan, arrangement, policy and agreement between Executive and the Company, including, without limitation, the Employment Agreement, each stock option agreement entered into between Executive and the Company and any agreement or policy with the Company under which Executive benefits, and any claims for employment discrimination, harassment, wrongful termination, constructive termination, violation of public policy, breach of any express or implied contract, breach of any implied covenant, fraud, intentional or negligent misrepresentation, emotional distress, defamation, or any other claims, actual or potential, which in any way arise from or are related to Executive’s relationship with the Company, including, without limitation, relating to Executive’s compensation, the termination of the employment relationship, or any other conduct of the Company occurring prior to the execution of this Agreement. This also includes a release of any claims under any federal, state or local laws or regulations, including, but not limited to Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000, et seq.; Americans with Disabilities Act, as amended, 42 U.S.C. § 12101 et seq.; the Rehabilitation Act of 1973, as amended, 29 U.S.C. § 701 et seq.; Age Discrimination in Employment Act, as amended, 29 U.S.C. § 621, et seq.; Civil Rights Act of 1866, and Civil Rights Act of 1991; 42 U.S.C. § 1981, et seq.; Equal Pay Act, as amended, 29 U.S.C. § 206(d); regulations of the Office of Federal Contract Compliance, 41 C.F.R. Section 60, et seq.; The Family and Medical Leave Act, as amended, 29 U.S.C. § 2601 et seq.; the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 201 et seq.; the Executive Retirement Income Security Act, as amended, 29 U.S.C. § 1001 et seq.; the Worker Adjustment and Retraining Notification Act, as amended, 29 U.S.C. § 2101 et seq.; the Federal False Claims Act, as amended, 31 U.S.C. §§ 3729 et seq.; the Dodd-Frank Wall Street Reform and Consumer Protection Act; the Arizona Constitution, the Arizona Civil Rights Act, the Arizona Employment Protection Act, Arizona’s wage and hour statutes, ; and any other federal, state or local laws of similar effect. Notwithstanding the generality of the foregoing, Executive does not release any claims which Executive may have to the following (collectively, the “ Unreleased Claims ”): (i) claims for unemployment compensation or any state disability insurance benefits pursuant to the terms of applicable state law, (ii) Executive’s right to continued participation in certain of the Company’s group benefit plans pursuant to the terms and conditions of COBRA, (iii) Executive’s right to any payments and benefits under this Agreement (including, without limitation, any of the payments and benefits set forth in Section 2), (iv) Executive’s right to vested benefits under the benefit plans of any Releasee, (v) Executive’s right to indemnification pursuant to Section 9.02 of the Employment Agreement and (vi) Executive’s right to bring to the attention of the Equal Employment Opportunity Commission claims of discrimination; provided, however, that Executive does release Executive’s right to secure any damages for alleged discriminatory treatment. The matters that are the subject of the releases referred to in this Section 4 (and, for the avoidance of doubt, excluding any Unreleased Claims) shall be referred to collectively as the “ Released Matters .”
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5. Acknowledgements Related to ADEA . Executive understands and acknowledges that:
(a) This Agreement constitutes a voluntary waiver of any and all rights and claims Executive has against the Releases, or any of them, as of the date Executive executes this Agreement, for claims arising under the Age Discrimination in Employment Act, 29 U.S.C. 621, et seq.
(b) Executive has waived rights or claims pursuant to this Agreement and in exchange for consideration, the value of which exceeds payment or remuneration to which Executive was already entitled.
(c) Executive is hereby advised to consult with an attorney of Executive’s choosing concerning this Agreement prior to executing it.
(d) Executive has been afforded a period of twenty-one (21) days to consider the terms of this Agreement, as required by the Older Workers Benefits Protection Act, and in the event Executive should decide to execute this Agreement in fewer than twenty-one (21) days, Executive has done so with the express understanding that Executive has been given and declined the opportunity to consider this Agreement for a full twenty-one (21) days, and waives the balance of the twenty-one (21) day period.
(e) Executive may revoke this Agreement at any time during the seven (7) days following the date of execution of this Agreement, and this Agreement shall not become effective or enforceable until such revocation period has expired. Executive understands that if Executive does not sign this Agreement or Executive signs and subsequently revokes this Agreement before it becomes effective, Executive shall not be entitled to any of the payments or benefits provided in Section 2 of this Agreement.
6. Transition; Non-Disparagement; Cooperation; Transfer of Company Property . Executive further agrees that:
(a) Transition . Both parties agree that it shall not make any internal or external communication addressing Executive’s separation without the other parties consent and agrees that if Company determines to develop and issue any internal or external communication regarding Executive’s separation, Executive may collaborate with Company regarding said communication.
(b) Non-Disparagement . Executive agrees that Executive shall not at any time disparage or encourage or induce others to disparage the Company, any of its subsidiaries, or any of their respective past and present, officers, directors, employees, products or services (the “ Company Parties ”). The Company agrees that it shall (i) instruct its present directors and officers not to disparage or encourage or induce others to disparage the Executive or his reputation (together, the “ Executive Parties ”) at any time during which they are employed by, or providing services to, the Company, and (ii) not cause or direct any of its past or present employees or independent contractors to disparage or encourage or induce others to disparage any of the Executive Parties. For purposes of this Section 6(b), the term “disparage” includes, without limitation, comments or statements to the press, to the Company’s or any subsidiaries’ employees or to any individual or entity with whom the Executive, the Company or any subsidiary thereof has a business relationship (including, without limitation, any vendor, supplier, customer or distributor), or any public statement, that in each case is intended to, or can be reasonably expected to, damage any of the Company Parties or the Executive Parties, as applicable. Notwithstanding the foregoing, nothing in this Section 6(b) shall prevent any person from making any truthful statement to the extent, but only to the extent (A) necessary with respect to any litigation, arbitration or mediation in the forum in which such litigation, arbitration or mediation properly takes place, or (B) required by law, legal process or by any court, arbitrator, mediator or administrative or legislative body (including any committee thereof) with apparent jurisdiction over such person.
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(c) Cooperation . Commencing on the date hereof and continuing during the eighteen (18) month period after the Termination Date (the “ Cooperation Period ”), Executive agrees to reasonably cooperate with the Company in its efforts to prosecute or defend itself against any claim, suit, demand or cause of action (not brought by the Company against Executive or by Executive against the Company) about which Executive has knowledge. Notwithstanding the immediately preceding sentence, following the Termination Date, (a) the Company shall provide Executive with advance written notice of such required cooperation within a reasonable period of time prior to the date on which such cooperation will be required, (b) such cooperation shall not create a conflict with any of Executive’s obligations or duties to his then current employer, (c) such cooperation shall be provided at times and locations, and in a manner, that are mutually agreed between the Company and Executive, (d) the Executive shall report to, and take direction from, only the Company’s Chief Executive Officer in providing the cooperation described above and (e) the Company shall reimburse Executive (in compliance with Code Section 409A) for all reasonable expenses incurred by him in complying with this Section 6(c), subject to appropriate itemization and substantiation of such expenses.
(d) Return of Company Property. Executive represents that on or before the Termination Date, Executive will return to the Company all written Confidential Information (as defined in the Employment Agreement) in Executive’s possession (including, but not limited to, Company-provided credit cards, building or office access cards, keys, computer or other business equipment, manuals, files, documents, records, software, employee database and other data), and that Executive will not retain any copies, compilations, extracts, excerpts, abstracts, summaries or other notes of any such manuals, files, documents, records, software, customer or employee database or other data files, memoranda, records, and other documents, and any other physical or personal property which are the property of the Company and which Executive had in Executive’s possession, custody or control, including any computers, cellular phones, tablets, PDAs or similar business equipment; and provided, further, that if Executive has inadvertently retained non-material Confidential Information or property of the Company (“ Covered Information ”), it shall not be a breach of this Agreement or any of the Surviving Provisions if (i) promptly after becoming aware of his possession of such Covered Information Executive returns it to the Company, (ii) Executive has not disclosed such Covered Information in violation of the Surviving Provisions, and (iii) no loss or damage that is more than de minimis has been caused to the Company as a result of Executive’s retention of such Covered Information. Notwithstanding this Section 6(d), the Company may provide Executive with Confidential Information and Company property in connection with his obligations under Section 6(c) hereof and Executive acknowledges and agrees that he shall return all such Confidential Information and Company property within ten (10) days after the end of Executive’s obligations under Section 6(c) hereof or such earlier date as is requested reasonably in advance in writing by the Company (with the same procedures to apply regarding the inadvertent retention of Covered Information as set forth in the immediately preceding sentence).
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7. Executive Representations . Executive warrants and represents that (a) Executive has not filed or authorized the filing of any complaints, charges or lawsuits against the Company with any governmental agency or court regarding any claims released in this Agreement, and that if, unbeknownst to Executive, such a complaint, charge or lawsuit has been filed on Executive’s behalf, Executive will immediately cause it to be withdrawn and dismissed, (b) Executive has reported all hours worked as of the date of this Agreement and has been paid all compensation, wages, bonuses, commissions, and/or benefits to which Executive may be entitled and no other compensation, wages, bonuses, commissions and/or benefits are due to Executive, except as provided in this Agreement, (c) Executive has no known workplace injuries or occupational diseases and has been provided and/or has not been denied any leave requested under the Family and Medical Leave Act or any state law counterpart, (d) the execution, delivery and performance of this Agreement by Executive does not and will not conflict with, breach, violate or cause a default under any agreement, contract or instrument to which Executive is a party or any judgment, order or decree to which Executive is subject, (e) Executive is executing this Agreement voluntarily and without any duress or undue influence on the part or behalf of the Company, with full understanding of the terms and consequences, (f) upon the execution and delivery of this Agreement by the Company and Executive, this Agreement will be a valid and binding obligation of Executive, enforceable in accordance with its terms and (g) the Executive agrees and acknowledges that in executing this Agreement he does not rely and has not relied on any representation or statement by any of the Company Parties with regard to the subject matter, basis or effect of this Agreement.
8. Governing Law . This Agreement shall be construed and enforced in accordance with, and the rights of the parties hereunder shall be governed by, the laws of New York, without regard to any principles of conflicts of laws.
9. Section 409A . It is intended that each installment of the payments provided hereunder constitute separate “payments” for purposes of Treasury Regulation Section 1.409A-2(b)(2)(i). It is further intended that payments hereunder satisfy, to the greatest extent possible, the exemption from the application of Code Section 409A provided under Treasury Regulation Section 1.409A-1(b)(4) (as a “short-term deferral”). To the extent that any provision of this Agreement is ambiguous as to its compliance with Code Section 409A, the provision will be read in such a manner so that all payments hereunder comply with Code Section 409A. To the extent any expense reimbursement or the provision of any in-kind benefit under this Agreement is determined to be subject to Code Section 409A, the amount of any such expenses eligible for reimbursement, or the provision of any in-kind benefit, in one calendar year shall not affect the expenses eligible for reimbursement, or the amount of in-kind benefits to be provided, in any other calendar year (except for any lifetime or other aggregate limitation applicable to medical expenses), in no event shall any expenses be reimbursed after the last day of the calendar year immediately following the calendar year in which Executive incurred such expenses, and in no event shall any right to reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit.
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10. Non-Admission of Liability . This Agreement and the fact that it was offered are not and shall not in any way be construed as admissions by the Company that it violated any federal, state or local law, statute or regulation, or that it acted wrongfully with respect to the Executive or to any other person or entity in any manner. The Company specifically disclaims any liability to or wrongful acts against the Executive or any other person or entity.
11. Non-Admissibility . Neither this Agreement nor anything in this Agreement shall be construed to be or shall be admissible in any proceeding as evidence of or an admission by the Company or the Executive of any violation of any state, federal or local laws or regulations or any rules, regulations, criteria or standards of any regulatory body. This Agreement may be introduced, however, in any proceeding to enforce the Agreement.
12. Miscellaneous . This Agreement, together with the Surviving Provisions and Section 9.02 of the Employment Agreement, is the entire agreement between the parties with regard to the subject matter hereof. Executive and the Company acknowledge that there are no other agreements, written, oral or implied regarding such subject matter, and that neither the Company nor Executive may rely on any prior negotiations, discussions, representations or agreements regarding the subject matter hereof. Whenever possible, each provision of this Agreement shall be interpreted in a manner as to be effective and valid under applicable law, but if any provision shall be held to be prohibited or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating or affecting the remainder of such provision or any of the remaining provisions of this Agreement. The Company represents that the Board of Directors of the Company has duly and validly authorized this Agreement. This Agreement may be modified only in writing, and such writing must be signed by both Executive and the Company and recited that it is intended to modify this Agreement.
13. Notice : All notices, requests, demands and other communications hereunder to either party shall be in writing and shall be delivered, either by hand, by facsimile, by overnight courier or by certified mail, return receipt requested, duly addressed as indicated below or to such changed address as the party may subsequently designate:
To the Company:
Avant Diagnostics, Inc.
8561 East Anderson Drive
Suite 104
Scottsdale, AZ 85225
Attention: Chief Executive Officer
with a copy to (which shall not constitute notice):
Sheppard, Mullin, Richter & Hampton LLP
30 Rockefeller Plaza
New York, New York 10112
Attn: Stephen A. Cohen, Esq.
Email: scohen@sheppardmullin.com
To the Executive:
Gregg Linn
10994 East Beck Lane
Scottsdale, AZ 85225
Email:
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14. Binding Effect : This Agreement shall be binding upon the Parties and upon their dependents, heirs, representatives, executors, administrators, successors and assigns, and shall inure to the benefit of the Parties and their respective dependents, heirs, representatives, executors, administrators, successors and assigns.
15. No Presumption . This Agreement shall be construed and interpreted as if all of its language were prepared jointly by the Executive and the Company. No language in this Agreement shall be construed against a party on the ground that such party drafted or proposed that language.
16. Execution of Counterparts . This Agreement may be executed in counterparts, but shall be construed as if signed in one document. Facsimile or electronically transmitted signatures shall be given the same force and effect as original signatures with the Parties to provide original signatures as soon as practicable.
17. Further Actions. The Company and Executive agree that in case at any time after the Termination Date any further action is necessary or desirable to carry out the purposes of this Agreement, including any documents requested by any underwriter or placement agent in connection with any offering of the Company’s equity and/or debt securities, each of the parties hereto will take such further action (including without limitation, the execution and delivery of such further instruments and documents) as any other party hereto may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
(signature page follows)
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed and delivered as of the dates indicated below.
EXECUTIVE | |
/s/ Gregg Linn | |
Gregg Linn |
|
Date: June __, 2017 | |
COMPANY | |
/s/ Gerald Commissiong | |
Name: Gerald Commissiong | |
Title: Executive Director | |
Date: June 7, 2017 |
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Exhibit 10.16
AVANT DIAGNOSTICS INC.
RESTRICTED STOCK GRANT AGREEMENT
THIS RESTRICTED STOCK GRANT AGREEMENT (this “ Agreement ”) is made as of June 2, 2017 (the “ Issue Date ”), by and between Avant Diagnostics Inc., a Nevada corporation (the “ Company ”) and Gregg Linn (“ Recipient ”).
1. Grant of Shares .
1.1 Grant . Recipient hereby acknowledges receipt of, and the Company hereby grants to Recipient, 15,000,000 shares of the Company’s Common Stock (the “ Shares ”).
1.2 Consideration . The Shares granted in accordance with Section 1.1 above are being issued to Recipient in consideration for services rendered as an officer and director of the Company through the date of this Agreement. The Company hereby acknowledges receipt of adequate consideration for the Shares.
1.3 Delivery of Certificates . As soon as practicable after the Issue Date, the Company shall deliver a certificate evidencing the Shares to Recipient. The Recipient acknowledges that the Company shall place a stop order on the Shares with the Company’s transfer agent until any applicable portion of the Shares have vested in accordance with Section 2 below.
2. Vesting . The Shares will become vested over a three (3) year period beginning from the date of this Agreement as follows: One Million Two Hundred and Fifty Thousand Shares (1,250,000) Shares will vest quarterly on each of January 1, April 1, July 1 and October 1 of each year, beginning with the quarter ended June 30, 2017, until all of the Shares have become fully vested.
3. Securities Law Compliance .
3.1 No Additional Interest or Further Obligations . Recipient hereby represents and warrants that upon execution and delivery of this Agreement by the parties, he will not be entitled to any additional interest in the Company or its business, assets or properties other than the Shares issuable to Recipient hereunder.
3.2 Investment Representations . In connection with the acquisition of the Shares, Recipient represents to the Company the following:
(a) Investment . Recipient is acquiring the Shares to be issued to Recipient for investment for Recipient’s own account and not with the view to, or for resale in connection with, any distribution, assignment or resale within the meaning of the Securities Act of 1933, as amended (the “ Securities Act ”), to others and no other person has a direct or indirect beneficial interest, in whole or in part, in such Shares. Recipient understands that the Shares to be issued to Recipient have not been and will not be registered under the Securities Act or under the laws of any other state of the United States in reliance upon specific exemptions therefrom which depend upon, among other things, the bona fide nature of the investment intent as expressed herein and in any other representations, warranties or information provided by Recipient to the Company under this Agreement.
(b) Restrictions on Transfer . Recipient acknowledges that the Shares to be issued to Recipient must be held indefinitely unless subsequently registered and qualified under the Securities Act or unless an exemption from registration and qualification is otherwise available. In addition, Recipient understands that the certificate representing the Shares will be imprinted with a legend which prohibits the transfer of such Shares unless they are sold in a transaction in compliance with the Securities Act or are registered and qualified or such registration and qualification are not required in the opinion of counsel acceptable to the Company.
(c) Rule 144 . Recipient is familiar with the provisions of Rules 144 and 701, under the Securities Act, which, in substance, permit limited public resale of “restricted securities” acquired, directly or indirectly, from the issuer thereof (or from an affiliate of such issuer), in a non-public offering subject to the satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the time of issuance of the securities, such issuance will be exempt from registration under the Securities Act.
(d) Relationship to the Company; Experience . Recipient has a preexisting business relationship with the Company and by reason of Recipient’s business or financial experience, has the capacity to protect Recipient’s own interests in connection with Recipient’s acquisition of the Shares to be issued to Recipient hereunder. Recipient has such knowledge and experience in financial, tax and business matters to enable Recipient to utilize the information made available to Recipient and/or them in connection with the acquisition of the Shares to evaluate the merits and risks of the prospective investment and to make an informed investment decision with respect thereto.
(e) Not Registered Under Securities Act . Recipient understands that the grant of the Shares has not been registered under the Securities Act in reliance upon exemption therefrom. Recipient was not granted, offered or sold the Shares, directly or indirectly, by means of any form of general solicitation or general advertisement, including the following: (i) any advertisement, article, notice or other communication published in any newspaper, magazine or similar medium or broadcast over television or radio; or (ii) any seminar or meeting whose attendees had been invited by general solicitation or general advertising.
(f) Access to Data . Recipient acknowledges that during the course of this transaction and before deciding to acquire the Shares, Recipient has been provided with financial and other written information about the Company. Recipient has been given the opportunity by the Company to obtain any information and ask questions concerning the Company, the Shares, and Recipient’s investment that Recipient felt necessary; and to the extent Recipient availed himself of that opportunity, Recipient has received satisfactory information and answers.
(g) No Legal Advice from Company or its Legal Counsel . Except for any statements or representations of the Company made in this Agreement and the other agreements entered into between the parties hereto, Recipient is relying on its own review of this Agreement and the other agreements entered into between the parties and not on any statements or representations of the Company or any of its representatives or agents or legal counsel for legal, tax or investment advice with respect to this investment, the transactions contemplated by this Agreement or the securities laws of any jurisdiction.
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(h) Risks . Recipient acknowledges and understands that (i) an investment in the Company constitutes a high risk, (ii) the Shares are highly speculative, and (iii) there can be no assurance as to what investment return, if any, there may be. Recipient is aware that the Company may issue additional securities in the future which could result in the dilution of Recipient’s ownership interest in the Company.
(i) Valid Agreement . This Agreement when executed and delivered by Recipient shall constitute a valid and legally binding obligation of Recipient which is enforceable in accordance with its terms.
(j) Legend . Recipient acknowledges and agrees that the Shares shall bear restricted legends, in the form and substance as set forth in Section 3.3 hereof, prohibiting the offer, sale, pledge or transfer of the securities, except (i) pursuant to an effective registration statement filed under the Securities Act, (ii) in accordance with the applicable provisions of Regulation S, promulgated under the Securities Act, (iii) pursuant to an exemption from registration provided by Rule 144 under the Securities Act (if available), and (iv) pursuant to any other exemption from the registration requirements of the Securities Act.
3.3 Restrictive Legends . In order to reflect the restrictions on the disposition of the Shares, the stock certificates for the Shares will be endorsed with restrictive legends, including the following legends:
(a) “THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ ACT ”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION OTHERWISE COMPLIES WITH THE ACT.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A VESTING SCHEDULE AS SET FORTH IN A RESTRICTED STOCK GRANT AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH VESTING SCHEDULE IS BINDING ON TRANSFEREES OF THESE SHARES.”
(b) If required by the authorities of any state in connection with the issuance of the Shares, the legend or legends required by such state authorities shall also be endorsed on all such certificates.
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4. General Provisions .
4.1 Notices . Any notice given in connection with this Agreement shall be given in writing and shall be deemed effective upon personal delivery, upon deposit with a nationally recognized courier service, or upon deposit in the United States mail, registered or certified, postage prepaid and addressed to the party entitled to such notice at the address indicated below such party’s signature line on this Agreement or at such other address as such party may designate by ten (10) days advance written notice under this Section to all other parties to this Agreement.
4.2 No Waiver . The failure of the Company (or its assignees) in any instance to exercise any right hereunder shall not constitute a waiver of any other rights that may subsequently arise under the provisions of this Agreement or any other agreement between the Company and Recipient. No waiver of any breach or condition of this Agreement shall be deemed to be a waiver of any other or subsequent breach or condition, whether of like or different nature.
4.3 Adjustment for Stock Split . All references to the number of Shares in this Agreement shall be adjusted to reflect any stock split, stock dividend or other change in the Shares which may be made after the date of this Agreement.
5. Miscellaneous Provisions .
5.1 Recipient Undertaking . Recipient hereby agrees to take whatever additional action and execute whatever additional documents the Company may in its judgment deem necessary or advisable in order to carry out the obligations or restrictions imposed on Recipient under this Agreement.
5.2 No Other Interest . Recipient confirms that except for the shares of Common Stock of the Company granted to Recipient pursuant to this Agreement, Recipient does not have the right to purchase or otherwise receive any Common Stock of the Company. Any prior agreements with respect thereto are hereby rendered null and void.
5.3 Entire Agreement . This Agreement constitutes the entire agreement between the parties hereto with regard to the subject matter hereof.
5.4 Governing Law . This Agreement shall be governed by, and construed in accordance with, the laws of the State of Nevada, as such laws are applied to contracts entered into and performed in such State.
5.5 Severability . Should any provision of this Agreement be found to be illegal or unenforceable, the other provisions shall nevertheless remain effective and shall remain enforceable to the greatest extent permitted by law.
5.6 Counterparts . This Agreement may be executed in counterparts, including by facsimile or PDF via electronic mail, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.
5.7 Successors and Assigns . The provisions of this Agreement shall inure to the benefit of, and be binding upon, the Company and its successors and assigns and Recipient and Recipient’s legal representatives, heirs, legatees, distributees, assigns and transferees by operation of law, whether or not any such person shall have become a party to this Agreement and have agreed in writing to join herein and be bound by the terms and conditions hereof.
[ Signature Page Follows ]
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IN WITNESS WHEREOF , the parties have executed this Restricted Stock Grant Agreement as of the date first set forth above.
COMPANY: | ||
AVANT DIAGNOSTICS INC. | ||
By: | /s/ Gerald Commissiong | |
Name: | Gerald Commissiong | |
Title: | Executive Director | |
Address: | 8561 East Anderson Drive, Suite 104 | |
Scottsdale, AZ 85225 | ||
RECIPIENT: | ||
/s/ Gregg Linn | ||
Gregg Linn | ||
Address: | 10994 East Beck Lane | |
Scottsdale, AZ 85225 |
-Signature Page-
Exhibit 10.17
SECOND AMENDED AND RESTATED
CONFIDENTIAL SETTLEMENT AGREEMENT
This Second Amended and Restated Confidential Settlement Agreement (“Agreement”) is made and entered into on September 19, 2017 (the “Settlement Effective Date”) by and between the undersigned parties, Memory DX, LLC (“Plaintiff”), Amarantus Bioscience Holdings, Inc. (the “Company”) and Avant Diagnostics, Inc. (“Avant”). Plaintiff, Avant and the Company are referred to individually as “Party” and collectively as “Parties” in this Agreement.
RECITALS
A. On or about September 16, 2016, Plaintiff filed a lawsuit against the Company, Amarantus Bioscience, Inc., Amarantus Diagnostics, Inc., Avant Diagnostics, Inc., Avant Diagnostics Acquisition Corporation, et al (collectively the “Defendants”) in the Superior Court of the State of Arizona, County of Maricopa (Case Number CV2016-015026) (the “Action”). On or about November 4, 2016, Plaintiff filed an Application for Entry of Default with the Superior Count of the State of Arizona, County of Maricopa. On or about December 14, 2016, a default judgment (the “Default Judgment”) was rendered in Case Number CV2016-015026 and was entered in Superior Court of the State of Arizona, County of Maricopa against the Defendants.
B. On or about February 15, 2017, the Parties entered into a Confidential Settlement Agreement (the “First Agreement”) to fully and finally satisfy the Default Judgment.
C. On or about May 25, 2017, the Parties amended and restated the First Agreement (the “Second Agreement”) to fully and finally satisfy the Default Judgment.
D. The Defendants now wish to amend and restate the Second Agreement to fully and finally satisfy the Default Judgement and the Plaintiff has agreed to accept certain consideration in order to fully and finally satisfy their obligations under the Default Judgment. This Agreement memorializes the Parties’ agreement regarding their settlement and supersedes the replaces in its entirety the Second Agreement.
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NOW, THEREFORE , in consideration of the terms, conditions, and promises set forth herein, the sufficiency of which is hereby acknowledged by both Parties, and incorporating the Recitals set forth above, the Parties agree to amended and restate the Second Agreement as follows:
1. Consideration by Defendants.
1.1. In consideration for fully satisfying the Default Judgment, Avant will pay Plaintiff an aggregate of $250,000 (the “Cash Consideration”) as follows: (i) a payment of $35,000 which has been paid and received by Plaintiff on or prior to the date hereof, (ii) $3,500 will be paid upon execution of this Agreement, (iii) $2,000 will be payable on the last calendar day of each month for October and November 2017, (iv) $5,000 will be payable on the last calendar day of each month for December 2017 and each of January and February 2018 and (v) $10,000 will be payable on the last calendar day of each month beginning in the month of March 2018 through the last month in which the Settlement Sum is paid in full. Notwithstanding the foregoing in this subsection, upon the sale by Avant of its equity securities in a single offering for aggregate gross proceeds of at least $7,500,000 (the “Qualified Offering”) after the date of the Agreement, Avant will pay any remaining amount of the Cash Consideration then outstanding upon the final closing of such Qualified Offering. The Company will have ten (10) calendar days to deliver the final payment of the balance owed after the closing of the Qualified Offering.
1.2. The Plaintiff acknowledges that Avant has issued to Plaintiff 5,000,000 restricted shares of common stock (the “Initial Shares”) of Avant on or prior to the date of this Agreement as partial consideration for the Default Judgment but Plaintiff has disputed that the issuance complied with the Agreement. Defendants agree to reissue the Initial Shares to reflect a correct issue date of May 10, 2017. In addition, Avant will issue to Plaintiff an additional 5,000,000 restricted shares of common stock reflecting an issue date of September 15, 2017 (the “Additional Shares”). Together with the issuance of the corrected Initial Shares, and the Cash Consideration, the issuance of the Additional Shares constitutes the remaining consideration (collectively, the “Settlement Sum”) for the removal of the Default Judgment. Plaintiff agrees that the Additional Shares certificate may be held by counsel for Defendants in trust until receipt of proof of the removal of the Default Judgment.
1.3. Upon payment by the Company of the Settlement Sum, Plaintiff shall assign the License Agreement between Plaintiff and University of Leipzig dated May 22, 2013, as amended, to Avant, as well as also assign the Asset Purchase Agreement between Plaintiff and Company to Avant.
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1.4. For a period of two years from the date of this Agreement, if the Company shall determine to file with the Securities and Exchange Commission (the “SEC”), a registration statement relating to an offering for its own account or the account of others under the Securities Act or 1933, as amended (the “Securities Act”) of any of its equity securities (other than on Form S-4 or Form S-8 or their then equivalents relating to equity securities issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans), the Company shall send to the Plaintiff written notice of such determination and, if within ten (10) days after the date of such notice, the Plaintiff shall so request in writing, the Company shall include in such registration statement all or any part of Shares that Plaintiff requests to be registered. Subject to the terms of this Agreement, the Company shall use its commercially reasonable efforts to keep such registration statement continuously effective under the Securities Act, until the first to occur of: (A) the date that is one (1) year from the date the registration statement is declared effective by the SEC and (B) the date that all Shares covered by such registration statement (i) have been sold, thereunder or pursuant to Rule 144, or (ii) may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144 (the “Effectiveness Period”). Notwithstanding the registration obligations set forth in this Section, if the SEC informs the Company that all of the Shares cannot, as a result of the application of Rule 415 promulgated under the Securities Act, be registered for resale on a single registration statement, the Company agrees to promptly inform Plaintiff and use its commercially reasonable efforts to file amendments to any registration statement as required by the SEC, covering the maximum number of Shares permitted to be registered by the SEC, on Form S-1 or such other form available to register for resale the Shares; provided , however , that prior to filing such amendment, the Company shall be obligated to use diligent efforts to advocate with the SEC for the registration of all of the Shares in accordance with any (i) any publicly-available written or oral guidance of the SEC staff, or any comments, requirements or requests of the SEC staff and (ii) the Securities Act (collectively, “SEC Guidance”), including without limitation, Compliance and Disclosure Interpretation 612.09. Notwithstanding any other provision of this Agreement, if the SEC or any SEC Guidance sets forth a limitation on the number of Shares permitted to be registered on a particular registration statement (and notwithstanding that the Company used diligent efforts to advocate with the Commission for the registration of all or a greater portion of Shares), unless otherwise directed in writing by Executive as to its Shares, the number of Shares to be registered on such Registration Statement will be reduced to such amount as allowed under SEC Guidance. In the event of a cutback hereunder, the Company shall give the Executive at least five (5) business days prior written notice. In the event the Company amends the registration statement in accordance with the foregoing, the Company will use its commercially reasonable efforts to file with the SEC, as promptly as allowed by the SEC or SEC Guidance provided to the Company or to registrants of securities in general, one or more registration statements on Form S-1 or such other form available to register for resale those Shares that were not registered on any prior registration statement filed with the SEC. In addition, if any rights granted pursuant to this Section involves the inclusion of securities in connection with an underwritten offering, and the managing underwriter (or, in the case of an offering that is not underwritten, an investment banker) shall advise the Company that, in its opinion, the number of securities requested and otherwise proposed to be included on such registration statement exceeds the number which can be sold in such offering without adversely affecting the marketability of the offering, the Company will include in such Registration to the extent of the number which the Company is so advised can be sold in such offering, first , the securities the Company proposes to sell for its own account on such registration statement and second , the Shares of the Plaintiff requesting to be included on such registration statement and all other securities requested to be included in such registration statement on a pro rata basis.
2. Entire Consideration. Plaintiff agrees that the Settlement Sum shall constitute the entire consideration due to it and, when paid and performed, is in full and complete satisfaction of the Default Judgment, and that Plaintiff will not seek any further compensation for any other claimed damages, costs, or attorneys’ fees in connection with the matters encompassed in this Agreement.
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3. Removal of Default Judgment. Within three (3) business days of the issuance of the Additional Shares, Plaintiff shall take all necessary action to withdraw the recorded Default Judgment. The Default Judgment shall be set aside without prejudice and shall provide written evidence of such to the Defendants. Upon a default by Defendants of its obligations to timely pay the Settlement Sum, in accordance with the requirements and deadlines as set forth above, after written notice and five (5) business days to cure said default, Plaintiff will be entitled to reinstate the Default Judgment. Defendants agree to promptly execute such documents as are necessary to permit the reinstatement of the Default Judgment, including a stipulation to reinstate the Default Judgment or other documents reasonably required to effectuate the terms of this Agreement.
4. Mutual Releases . Effective upon the Settlement Effective Date, and in consideration of the terms and conditions of this Settlement Agreement, the Company, on the one hand, and Plaintiff on the other hand, generally, fully and completely release and forever discharge each other and all of their officers, employees, stockholders, affiliated entities, agents, representatives, attorneys, and their respective successors, heirs and assigns, from any and all claims, demands, obligations, causes of action, damages, and liabilities of every kind and nature, in law, equity, or otherwise, known or unknown, suspected or unsuspected, disclosed or undisclosed, contingent or matured, which any of the Parties now has or had in connection with any actions, omissions or conduct of any type occurring prior to the Settlement Effective Date, including but not limited to the matters underlying the Default Judgment, whether based on tort, contract, indemnification, contribution, subrogation or any other theory of recovery and whether for compensatory or punitive damages, whether known or unknown; provided, however, that nothing shall release the rights or claims of the Parties under this Settlement Agreement.
5. Successors . This Agreement shall be binding upon the Parties, and their heirs, representatives, executors, administrators, successors, insurers, and assigns, and shall inure to the benefit of each of the Plaintiff and the Company, and to their respective representatives, administrators, successors, and subsequent assignees.
6. No Attorneys’ Fees and Costs . The Parties agree that except as otherwise stated herein, they shall bear their own respective costs and fees, including but not limited to attorneys’ fees.
7. Ownership of Claims and Event of Breach . Plaintiff represents that it has not transferred or assigned, or purported to transfer or assign, to any person or entity, any judgment or claim described in this Agreement. In the event Defendants fail to make payment of any portion of the Cash Consideration within seven (7) calendar days of when any payment is due, Plaintiffs retain the right to reinstate the Default Judgement and Plaintiff shall have the right to file suit for breach of this Agreement and/or injunctive relief and, if successful, be entitled to recovery of all reasonable attorneys’ fees and costs incurred in the action. In the event, Plaintiff breaches Section 3 of this Agreement, Plaintiff will immediately pay the Company any portion of the Settlement Sum received by Plaintiff and Defendants have the right to file suit for breach of this Agreement and demand damages and/or injunctive relief and, if successful, be entitled to recovery of all reasonable attorneys’ fees and costs incurred in the action.
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8. Governing Law . This Agreement shall be governed by and interpreted under the laws of the State of Arizona applicable to contracts made and to be performed entirely within such State.
9. Entire Agreement. This Agreement sets forth the entire agreement between the Parties and fully supersedes any and all prior agreements and understandings between the Parties pertaining to the subject matter of this Agreement. The Parties agree that no change to or modification of this Settlement Agreement shall be valid or binding unless it is in writing and signed by the Parties.
10. Construing Provisions. The language of all parts in this Agreement shall be construed as a whole, according to its fair meaning, and not strictly for or against either Party. Should any provision in this Agreement be declared or determined to be illegal or invalid, the validity of the remaining parts, terms, or provisions shall not be affected and the illegal or invalid part, term, or provision shall be deemed not to be part of this Agreement, and all remaining provisions shall remain valid and enforceable. Plaintiff further agrees that in the event any provision of this Agreement is held to be illegal or unenforceable, Plaintiff will fully cooperate with the Company to effectuate its purpose to conform the provision(s) to law.
11. 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. Furthermore, signatures delivered via facsimile transmission shall have the same force and effect as the originals thereof.
12. Severability. The various provisions of this Agreement are severable. Should any provision of this Agreement be declared or be determined by any court of competent jurisdiction to be illegal, invalid, or unenforceable, the legality, validity, and enforceability of the remaining parts, terms, or provisions shall not be affected thereby, and said offending term or provision shall be deemed severed (i.e. deemed not a part of this Agreement).
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Having read the foregoing, having fully understood and agreed to the terms and provisions of this Agreement, the Parties voluntarily and of their own free will execute this Agreement.
Date: September 19, 2017 | /s/ William Gartner |
Memory DX, LLC | |
By: William Gartner | |
Title: Managing Partner | |
Date: September 19, 2017 | /s/ Gerald Commissiong |
Amarantus BioScience Holdings, Inc. | |
By: Gerald Commissiong | |
Title: CEO | |
Date: September 19, 2017 | /s/ Philippe Goix |
Avant Diagnostics, Inc. | |
By: Philippe Goix | |
Title: CEO |
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Exhibit 10.18
CONFIDENTIAL SETTLEMENT AGREEMENT
This Confidential Settlement Agreement (“Agreement”) is made and entered into on June 8, 2017 (the “Settlement Effective Date”) by and between the undersigned parties, John G. Hartwell (“Hartwell”), Corrine Ramos (“Ramos”), and collectively with Hartwell, the “Plaintiff’), Avant Diagnostics, Inc. (“Avant”), Avant Diagnostics Acquisition Corporation (“Avant Acquisition”) and Gregg Linn (“Linn”), and collectively with Avant and Avant Acquisition, the “Defendants”). Each Plaintiff and Defendant are referred to individually as “Party” and collectively as “Parties” in this Agreement.
RECITALS
A. On or about April 24, 2017, Plaintiff filed a lawsuit against the Defendants in the Circuit Court for Montgomery County, State of Maryland (Case Number 432180-V) (the “Action”).
B. The Parties wish to avoid the expense and uncertainty of further litigation and have decided to resolve, settle, and compromise the claims, differences, disagreements, and disputes between them, subject to and expressly conditioned on the terms and conditions set forth herein.
C. The terms and provisions of this Agreement have been negotiated at arm’s length and have been agreed to by the Parties in good faith.
NOW, THEREFORE, in consideration of the terms, conditions, and promises set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged by both Parties, and incorporating the Recitals set forth above, the Parties agree as follows:
1. Consideration by Defendants. Avant shall pay to Hartwell and Ramos an aggregate of $80,505.96 and $73,195.34 respectively, amounts which include all attorney’s fees and costs though the Settlement Effective Date in the amount of $4,600.00 (each the “Settlement Amount” with the “Base Settlement Amount” being $78,205.96 and $70,895.34 respectively) in accordance with the following payment schedule:
(i) 20% of the Base Settlement Amount plus the $4,600.00 of attorneys’ fees and costs upon the closing of the Company’s private placement of its equity and/or debt securities which result in aggregate gross proceeds of $500,000 (the “First Payment”);
(ii) 30% of the Base Settlement Amount upon the earlier of the closing of the Company’s private placement of its equity and/or debt securities which result in aggregate gross proceeds to the Company of at least $2,000,000 or 120 days from the date of the First Payment, (the “Second Payment”); and
(iii) the remaining 50% of the Base Settlement Amount shall be payable in five (5) equal monthly installments beginning on the 1 st day of the month following the date the Second Payment is made, and continuing on the l st day of each successive month until all payments are made (the “Final Payments”), provided , however , if Avant shall undertake to raise any additional capital through the sale of its equity and/or debt securities after the date the Second Payment is made, Avant will pay any Final Payments that shall remain outstanding upon the final closing of such offering.
2. Entire Consideration. Plaintiffs each represent and acknowledge that the consideration contained in this Agreement shall constitute the entire consideration provided to Plaintiffs (and/or their counsel) and, except as provided for in Paragraph 7, Plaintiffs will not seek any further compensation for any claim, damage, cost, or attorney’s fees in connection with the matters encompassed in this Agreement. Plaintiffs each represent and acknowledge that the consideration contained in this Agreement constitutes a lull satisfaction and accord of any claims Plaintiffs has or may have against the Defendants. Plaintiffs each acknowledge the Settlement Amount constitutes ample consideration, the sufficiency of which is hereby acknowledged, for Defendant’s promises in this Agreement.
3. Dismissal of Action. Within two (2) business days of receipt of the First Payment (if by money order) or of confirmation by the bank that the monies have cleared (if by check or direct deposit), the Parties agree to cause to be filed the necessary stipulation(s) or paperwork terminating the Action without prejudice and without costs to any Party. Within two (2) business days of receipt of the Second Payment (if by money order) or of confirmation by the bank that the monies have cleared (if by check or direct deposit), the Parties agree to cause to be filed the necessary stipulation(s) or paperwork terminating the Action with prejudice as to Gregg Linn only.
4. No Admission. It is understood and agreed that this Agreement shall not be construed as an admission by any party of any liability or the violation of any law, statute. ordinance, contract, regulation or legal or moral duty whatsoever. The parties specifically disclaim any liability to each other for any violation of any law, statute, ordinance, contract or duty
5. Successors. This Agreement shall be binding upon the Parties, and their heirs, representatives, executors, administrators, successors, insurers, and assigns, and shall inure to the benefit of each of the Plaintiff and the Company, and to their respective representatives, administrators, successors, and subsequent assignees.
6. No Attorneys’ Fees and Costs. The Parties agree that except as otherwise stated herein, they shall bear their own respective costs and fees, including but not limited to attorneys’ fees.
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7. Ownership of Claims and Event of Breach.
a. Plaintiffs represent that he/she have not transferred or assigned, or purported to transfer or assign, to any person or entity, any claim described in this Agreement.
b. In the event, Plaintiffs breach Section 3 of this Agreement, Defendants have the right to file suit for breach of this Agreement and demand damages and/or injunctive relief and, if successful, be entitled to recovery of all reasonable attorneys’ fees and costs incurred in the action.
In the event Defendants breach Section 1 of this Agreement, Plaintiffs retain the right to refile the Action as to all Defendants who have not been previously dismissed with prejudice. In such an event: (i) Defendants consent to jurisdiction of the suit in the Circuit Court of Montgomery County MD; (ii) Defendants consent that service will be deemed effective on the Defendants 3 business days after the later of the date the complaint and summons for each defendant is emailed to Gerald Commissiong at geraldrivamarantus.com and the date the complaint and summons for each defendant is mailed by first class mail to Gerald Commissiong, Executive Director of Avant Diagnostics, Inc., 217 Perry Parkway, Suite 8, Gaithersburg, MD 20877; and (iii) Defendants consent to waiving their normal statutory period for a response to the complaint and agree to filing such a response within 21 days of the effective date of service as defined in (ii) above.
8. Governing Law. This Agreement shall be governed by and interpreted under the laws of the State of Maryland applicable to contracts made and to be performed entirely within such State.
9. Notices. All notices and other communications hereunder shall be in writing and shall be deemed given (i) when delivered personally or on the first business day after delivery by a documented overnight courier or (ii) upon return of the receipt after being mailed by registered or certified mail (return receipt requested) to the Parties hereto at the addresses provided for them on the signature page hereto (or at such other address for a Party as shall be specified by like notice)
10. Entire Agreement. This Agreement sets forth the entire agreement between the Parties and fully supersedes any and all prior agreements and understandings between the Parties pertaining to the subject matter of this Agreement. The Parties agree that no change to or modification of this Settlement Agreement shall be valid or binding unless it is in writing and signed by the Parties.
11. Construing Provisions. The language of all parts in this Agreement shall be construed as a whole, according to its fair meaning, and not strictly for or against either Party. Should any provision in this Agreement be declared or determined to be illegal or invalid, the validity of the remaining parts, terms, or provisions shall not be affected and the illegal or invalid part, term, or provision shall be deemed not to be part of this Agreement, and all remaining provisions shall remain valid and enforceable. Plaintiffs further agree that in the event any provision of this Agreement is held to be illegal or unenforceable, Plaintiffs will fully cooperate with the Company to effectuate its purpose to conform the provision(s) to law.
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12. Counterparts. This Agreement may be executed and delivered in counterpart signature pages executed and delivered via facsimile transmission or via email with scan or email attachment, and any such counterpart executed and delivered via facsimile transmission or via email with scan or email attachment will be deemed an original for all intents and purposes.
13. Severability. The various provisions of this Agreement are severable. Should any provision of this Agreement be declared or be determined by any court of competent jurisdiction to be illegal, invalid, or unenforceable, the legality, validity, and enforceability of the remaining parts, terms, or provisions shall not be affected thereby, and said offending term or provision shall be deemed severed (i.e. deemed not a part of this Agreement).
14. Due Authorization. Each person executing this Agreement represents and warrants that he or she has the authority to execute this Agreement and to bind the Party on whose behalf such execution is made.
15. Further Assurances. Each Party hereto shall execute such documents and other papers and take such further actions as may be reasonably required or desirable to carry out the provisions hereof and the transactions contemplated hereby.
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IN WITNESS WHEREOF, having read the foregoing, having fully understood and agreed to the terms and provisions of this Agreement, the Parties voluntarily and of their own free will execute this Agreement.
PLAINTIFFS
/s/ John G. Hartwell | |
John G. Hartwell | |
Date: June 8, 2017 | |
Address: 6 Rolling Knoll Ct, Gaithersburg, MD 20877 | |
/s/ Corrine Ramos | |
Corrine Ramos | |
Date: 06/08/2017 | |
Address: 182 rue Diderot Vincennes, 94300 FRANCE |
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DEFENDANTS
AVANT DIAGNOSTICS, INC.
By: | /s/ Gerald Commissiong | |
Name: | Gerald Commissiong | |
Title: | Exec Director | |
Date: | 6/8/2017 | |
Address: | 217 Perry PKWY Suite 8, Gaithersburg MD 20877 |
AVANT DIAGNOSTICS ACQUISITION CORPORATION
By: | /s/ Gerald Commissiong | |
Name: | Gerald Commissiong | |
Title: | Exec Director | |
Date: | 6/8/2017 | |
Address: | 217 Perry PKWY Suite 8, Gaithersburg MD 20877 | |
/s/ Gregg Linn | ||
Gregg Linn | ||
Date: | 6/8/2017 | |
Address: | 10994 E. Beck Lane Scottsdale, AZ 85225 |
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