UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 25, 2018
| 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.) |
1050 30 th Street NW Suite 107
Washington, D.C. 20007
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (708) 710-9200
217 Perry Parkway, Suite 8
Gaithersburg, MD 20877
(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. ☐
Explanatory Note
We are filing this Amendment No. 1 to our Current Report on Form 8-K (the “Amendment”) as originally filed with the Securities and Exchange Commission (the “SEC”) on May 25, 2018 (the “Original Filing”) to amend and restate the filing its entirety and to (i) add disclosure regarding the purchase of shares by person appointed as officers and directors in connection with the private placement and the entry into a consulting agreement with an entity controlled by a person appointed as an officer and director at the time of the initial closing of the private placement and (ii) file Exhibit 10.9. Except as described above, no other information in the Original Filing has been updated and this Amendment continues to speak as of the date of the Original Filing. Other events occurring after the filing of the Original Filing, or other disclosure necessary to reflect subsequent events will be addressed in other reports filed with or furnished to the SEC subsequent to the date of the filing of the Original Filing.
Item 1.01 Entry into a Material Definitive Agreement
May 2018 Private Placement
On May 25, 2018 (the “Effective Date”), Avant Diagnostics, Inc. (the “Company”) entered into securities purchase agreements (collectively, the “Purchase Agreement”) with accredited investors (the “Investors”) pursuant to which the Company sold an aggregate of six hundred and fifty thousand (650,000) shares of its series A convertible preferred stock for aggregate gross proceeds of $650,000 (the “Series A Preferred Stock”). In addition, existing debtholders of the Company exchanged an aggregate of $516,155 (currently due and payable under existing indebtedness) for an aggregate of 516,155 shares of Series A Preferred Stock pursuant to exchange agreements described below. The terms of the Series A Preferred Stock are set forth under Item 3.02 below.
For a period of one year from the date of final closing of the offering, Investors holding at least a majority of the Series A Preferred Stock outstanding from time to time shall have the right to cause the Company to sell for cash to such Investors on a pro rata basis up to an aggregate of $1,000,000 of common stock in one or more transactions at a 10% discount to the average closing price of the common stock (as reported for consolidated transactions with respect to securities listed on the principal national securities exchange on which the Common Stock is listed or admitted to trading or, if the Common Stock is not listed or admitted to trading on any national securities exchange, then in the over-the-counter market, as reported on any tier maintained by the OTC Markets Group, Inc.) for the thirty (30) consecutive trading days immediately prior to (and including) the Friday preceding the date of such purchase or purchases.
At any time on or after the Effective Date and until the Company’s 2019 annual meeting of stockholders, the Investors, jointly and severally, shall have the exclusive right, voting separately as a class, to elect up to six (6) directors (each director, an “Investor Director”). A Preferred Director so elected shall serve for a term of one year and until his successor is elected and qualified. An Investor Director may, during his or her term of office, be removed at any time, with or without cause, by and only by the affirmative vote, at a special meeting of holders of Series A Preferred Stock called for such purpose. Any vacancy created by such removal may also be filled at such meeting or by such consent for the remainder of such initial one year term. At any time on or after the Effective Date and until the Company’s 2019 annual meeting of stockholders, Infusion 51a, LP (“Infusion”) shall have the right to elect up to three (3) directors (each director, an “Infusion Director”). An Infusion Director so initially elected shall serve for a term of one year and until his successor is elected and qualified. Any vacancy in the position of an Infusion Director may be filled only by the affirmative vote of Infusion. An Infusion Director may, during his or her term of office, be removed at any time, with or without cause. Any vacancy created by such removal may also be filled by Infusion for the remainder of such initial one year term.
As soon as practicable after the final closing of the offering, the Company shall use commercially reasonable efforts to take all necessary actions and to obtain such approvals of the Company’s stockholders as may be required to increase the Company’s authorized shares of Common Stock such that the Company can issue all of the shares of Common Stock issuable upon completion of the restructuring and undertake a reverse stock split at such ratio where the number of shares of Common Stock outstanding after consummation of such reverse stock split shall be approximately 15,000,000 shares (the “Reverse Split”) before the exchange of the Series A Preferred Stock into shares of common stock (the “Stockholder Approval”). Until the consummation of the Reverse Split (as defined herein), the Investors appointed AVDX Investors Group LLC (the “Investor Representative”) as its attorney-in-fact for the purpose of carrying out the Stockholder Approval.
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On the Effective Date, the Company entered into a Consulting Agreement (the “Agreement”) with Investor Representative. Under the Agreement, the Investor Representative shall perform such consulting and advisory services, within Investor Representative’s area of expertise, as the Company or any of its subsidiaries may reasonably require from time to time. During the six-month term of the Agreement, Jeff Busch shall perform the services on behalf of Investor Representative (“Designated Person”). The Agreement has an initial term of six months from the date of execution and shall automatically renew on a monthly basis unless either party gives notice of non-renewal to the other party at least fifteen days prior to the date of the Agreement, provided this agreement shall not extend beyond 12 months from the date of the Agreement. Pursuant to the Agreement, the Company shall pay Investor Representative an annual amount of $160,000, payable either in cash or Series A Preferred Stock (or Common Stock upon filing of the Charter Amendment and consummation of the Reverse Split) during the term of the Agreement (the “Base Compensation”). The Company shall promptly reimburse Investor Representative for all travel, meals, entertainment and other ordinary and necessary expenses incurred by Investor Representative in the performance of its duties to the Company. Investor Representative’s and Designated Person’s position with the Company may be terminated at any time, with or without cause or good reason, upon at least 30 days prior written notice. During the term of the Agreement and for a period of twelve months thereafter, Investor Representative and Designated Person will be subject to non-competition and non-solicitation provisions, subject to standard exceptions. Investors will also provide Investor Representative an irrevocable proxy to vote their shares on all corporate matters until completion of the Reverse Split.
From the Effective Date until the consummation of the Reverse Split, upon any issuance by the Company of common stock or Common Stock Equivalents (as defined in the Series A Certificate of Designations (as defined below)) for cash consideration, indebtedness or a combination of units thereof (a “Subsequent Financing”), each Qualifying Purchaser (as defined below) shall have the right to participate in up to an amount of the Subsequent Financing equal to 50% of the Subsequent Financing on the same terms, conditions and price provided for in the Subsequent Financing. For purposes herein, “Qualifying Purchaser” means an Investor with a subscription amount of at least $150,000.
Beginning on the six month anniversary of the final closing of the offering, on or prior to the sixtieth (60th) calendar day after the date of receipt of written demand from Investors holding at least 51% of Registrable Securities (as defined in the Purchase Agreement), the Company shall prepare and file with the Securities and Exchange Commission (the “SEC”) a registration statement covering the resale of all of the Registrable Securities that are not then registered on an effective registration statement.
In connection with the offering, we agreed to pay our placement agent, a registered broker-dealer, or the Placement Agent, (i) a cash commission of 8% of the gross proceeds raised from investors in the offering, and to issue to the Placement Agent warrants to purchase a number of shares of common stock equal to 4% of the gross proceeds divided by the respective offering price, with a term of seven years from the date of issuance.
The securities sold in the offering were not registered under the Securities Act of 1933, as amended (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 Investors are “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 3.1 and Exhibit 10.1 and incorporated herein by reference. Readers should review such agreements for a complete understanding of the terms and conditions associated with this transaction.
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2017 Investors Exchange Agreement
On the Effective Date, the Company entered into an exchange agreement (collectively, the “2017 Investors Exchange Agreement”) with the investors who purchased convertible promissory notes between June 2017 and October 2017 (the “2017 Notes”) for an aggregate principal amount of $545,000 (the “2017 Investors”). Pursuant to the terms of the 2017 Investors Exchange Agreement, the Company agreed to exchange (i) the principal amount due under the 2017 Notes (ii) warrants to purchase 18,166,667 shares of common stock and (iii) purchase rights to purchase shares of common stock for an aggregate of 72,666,667 shares of common stock, in exchange for an aggregate approximately 22,290,800 shares of series B convertible preferred stock having an aggregate value of $545,000 (the “Series B Preferred Stock”). The 2017 Investors have agreed to waive the defaults and breaches that have resulted on or prior to the Effective Date as well as any penalties, interest or other amounts that may have accrued under the 2017 Notes after March 31, 2018. The terms of the Series B Preferred Stock are set forth under Item 3.02 below. In addition, each 2017 Investor entered into a termination agreement with the Company (collectively, the “2017 Investors Termination Agreement”) pursuant to which as of the Effective Date, (i) the securities purchase agreements and pledge agreements entered into with the 2017 Investors (the “2017 Investors Prior Agreements”) were terminated in their entirety and shall have no further force or effect, (ii) the security interests granted by the pledge agreements were terminated and shall have no further force or effect and (iii) neither party shall have any further rights or obligations under the Prior Agreements. The 2017 Investors also authorized the Company or his/her/its representatives to take all actions as they determine in their sole discretion to discharge and release any and all security interests, pledges, liens, and other encumbrances held by such 2017 Investor on the Company’s assets.
In connection with the 2017 Investors Exchange Agreement, the 2017 Investors have agreed to a lock-up agreement with respect to any shares of common stock it may receive beginning on May 25, 2018 and ending on the nine (9) month anniversary of the date the Company’s laboratory is open for business (the “Lockup Period”). For the first one hundred and eighty (180) days after termination of the Lockup Period, the 2017 Investors shall be subject to a daily liquidation limit for any sales of common stock equal to two and a half percent (2.5%) of the average trading volume of the Company’s common stock for the prior five (5) trading days, but excluding the date of sale (the “Leakout Limitation”). For any sale proposed by the 2017 Investors in excess of the Leakout Limitation, the Company will have (a) a right of first refusal for a period of 15 business days after receipt of written notice of such sale from the 2017 Investor, to purchase such shares of common stock subject to the Leakout Limitation at a price equal to the average closing price per share of the Company’s common stock for the prior five (5) trading days prior to such notice, and (b) if not purchased by the Company, the Company will have approval rights of the counter party proposed by a 2017 Investor for the sale of any such securities, such approval in the Company’s sole and absolute discretion.
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 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 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 3.2, Exhibit 10.2 and Exhibit 10.3 and incorporated herein by reference. Readers should review such agreements for a complete understanding of the terms and conditions associated with this transaction.
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2016 Investors Exchange Agreement
On the Effective Date, the Company entered into an exchange agreement (collectively, the “2016 Investors Exchange Agreement”) with the investors who purchased convertible promissory notes between November 2016 and January 2017 (the “2016 Notes”) for an aggregate principal amount of $786,500 (the “2016 Investors”). Pursuant to the terms of the 2016 Investors Exchange Agreement, the Company agreed to exchange (i) the principal amount due under the 2016 Notes in exchange for an aggregate of (i) 323,323 shares of Series A Preferred Stock having an aggregate value of $323,323 and (ii) approximately 3,324,065 shares of series B convertible preferred stock having an aggregate value of approximately $498,610 (the “Series B Preferred Stock”) and (iii) exchange for the issuance of new promissory note due twenty-four (24) months from the Effective Date in the aggregate principal amount of $47,259 (the “New 2016 Investor Note”). The New 2016 Investor Note shall bear interest at 12% per annum and has mandatory payments of $2,000 every 30 days until paid in full starting June 25, 2018. In connection with the 2016 Investors Exchange Agreement, the 2016 Investors have agreed to waive the defaults and breaches that have resulted on or prior to the Effective Date as well as any penalties, interest or other amounts that may have accrued under the 2016 Notes after March 31, 2018. The terms of the Series B Preferred Stock are set forth under Item 3.02 below.
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 2016 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 3.1, Exhibit 3.2, Exhibit 4.1 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.
Coastal Exchange Agreement
On the Effective Date, the Company entered into an exchange Agreement (the “Coastal Exchange Agreement”) with Coastal Investment Partners, LLC (“Coastal”). Pursuant to the terms of the Coastal Exchange Agreement, the Company agreed to exchange the principal amount due under the convertible promissory note dated July 6, 2016 plus accrued but unpaid interest and default and other amounts due and payable under such notes, which was $305,664 as of the Effective Date (the “Coastal Notes”) in exchange for (i) 192,832 shares of Series A Preferred Stock having an aggregate value of $192,832 and (ii) the issuance of new convertible promissory notes due eighteen (18) months from the Effective Date in the aggregate principal amount of $192,832 (the “New Coastal Note”). The New Coastal Note shall bear interest at 8% per annum and is convertible into shares of the Company’s common stock at $0.015 per share, subject to adjustment. Coastal has contractually agreed to restrict their ability to convert the New Coastal Note such that the number of shares of the Company common stock held by them and their affiliates after such conversion does not exceed 9.99% of the Company’s then issued and outstanding shares of common stock. In connection with the Coastal Exchange Agreement, Coastal agreed to waive the defaults and breaches that have resulted on or prior to the Effective Date as well as any penalties, interest or other amounts that may have accrued under the Coastal Notes after March 31, 2018. In addition, Coastal entered into a termination agreement with the Company pursuant to which as of the Effective Date, (i) the securities purchase agreements and pledge agreements entered into with Coastal (the “Coastal Prior Agreements”) were terminated in their entirety and shall have no further force or effect, (ii) the security interests granted by the pledge agreement were terminated and shall have no further force or effect and (iii) neither party shall have any further rights or obligations under the Coastal Prior Agreements. Coastal also authorized the Company or its representatives to take all actions as they determine in their sole discretion to discharge and release any and all security interests, pledges, liens, and other encumbrances held by it on the Company’s assets.
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. Coastal 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.
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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 3.1, Exhibit 4.2, Exhibit 10.4 and Exhibit 10.5 and incorporated herein by reference. Readers should review such agreements for a complete understanding of the terms and conditions associated with this transaction.
Black Mountain Exchange Agreement
On the Effective Date, the Company entered into an exchange agreement (the “Black Mountain Exchange Agreement”) with Black Mountain Equity Partners LLC (“Black Mountain”). Pursuant to the terms of the Black Mountain Exchange Agreement, the Company agreed to exchange the principal amount due under the convertible promissory note dated November 11, 2016 (the “Black Mountain Note”) in exchange for the issuance of new promissory note due twelve (12) months from the Effective Date in the aggregate principal amount of $20,000 (which includes a prepayment amount of $5,000 made on the Effective Date) (the “New Black Mountain Note”). The New Black Mountain Note shall bear interest at 12% per annum and has mandatory payments of $5,000 every 90 days until paid in full. In connection with the Black Mountain Exchange Agreement, Black Mountain agreed to waive the defaults and breaches that have resulted on or prior to the Effective Date as well as any penalties, interest or other amounts that may have accrued under the Black Mountain Note after March 31, 2018.
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. Black Mountain 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 4.3 and Exhibit 10.6 and incorporated herein by reference. Readers should review such agreements for a complete understanding of the terms and conditions associated with this transaction.
Item 3.02 Unregistered Sales of Equity Securities.
Item 3.03 Material Modification to Rights of Security Holders
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year
Series A Preferred Stock
On May 25, 2018, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of the Series A Preferred Stock with the Secretary of State of the State of Nevada (the “Series A Certificate of Designation”). The following is only a summary of the Series A Certificate of Designation and is qualified in its entirety by reference to the full text of the Series A Certificate of Designation which is filed as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated by reference herein.
Designation, Amount and Par Value . The number of shares of Series A Preferred Stock designated shall be up to 4,000,000. Each share of Preferred Stock shall have a par value of $0.001 per share and a stated value equal to $1.00 (the “Stated Value”).
Dividends . Except as otherwise required by law, no dividend shall be declared or paid on the Preferred Stock.
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Voting Rights . Except as otherwise expressly required by law, the holder of Series A Preferred Stock shall be entitled to vote on all matters submitted to shareholders of the Company and shall have the number of votes equal all other outstanding shares of capital stock of the Company outstanding at the record date for the determination of shareholders entitled to vote on such matter or, if no such record date is established, at the date such vote is taken or any written consent of shareholders is solicited, such that the holders of outstanding shares of Series A Preferred Stock shall always constitute 50.1% of the voting power of the Company. The holders of Series A Preferred Stock shall have no right to vote as a separate class on any matter submitted to vote by the stockholders of the Company (and written actions of stockholders in lieu of meetings) for their action or consideration, including, without limitation, on any proposed amendment which would adversely alter or change any preference or any relative or other right given to the Series A Preferred Stock. As long as any shares of Series A Preferred Stock are outstanding, the Company shall not, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series A Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Series A Preferred Stock or alter or amend this Certificate of Designation, (b) amend its articles of incorporation or other charter documents in any manner that adversely affects any rights of the holder, (c) increase the number of authorized shares of Series A Preferred Stock, (d) consummate a Fundamental Transaction (as defined in the Series A Certificate of Designations) or (e) enter into any agreement with respect to any of the foregoing.
Liquidation . In the event of any merger, sale (of substantially all of the Company’s stock or assets) or liquidation of the Company, whether voluntary or involuntary (a “Liquidation Event”), before any payment or distribution of the assets of the Company (whether capital or surplus) shall be made to or set apart for the holders of common stock, the holders of Series A Preferred Stock shall be entitled to receive in preference to the holders of Common Stock an amount per share equal to the sum of 100% of the Stated Value with respect to each share of Series A Preferred Stock.
No Redemption; No Preemptive Rights . The shares of Preferred Stock are not redeemable by the Company. The shares of Preferred Stock are not entitled to any preemptive or subscription rights in respect of any securities of the Company.
Fundamental Transaction . If, at any time while this Preferred Stock is outstanding, the Company enters into a Fundamental Transaction, then, 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 the Series A Certificate of Designation 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 the Series A Preferred Stock, deliver to the holder in exchange for the Series A Preferred Stock a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to the Series A Preferred Stock, and which is reasonably satisfactory in form and substance to the holder.
Exchange for Common Stock . Upon a consummation of a reverse stock split of the Company’s common stock on or after the Effective Date, such that after consummation of such reverse stock split there are approximately 15,000,000 shares of the Company’s common stock outstanding (the “Reverse Split”), the holders shall take all necessary steps with the Company to exchange all outstanding shares of Series A Preferred Stock into shares of the Company’s common stock at a rate of to be agreed upon by the parties after the Effective Date.
Series B Preferred Stock
On May 25, 2018, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of the Series B Preferred Stock with the Secretary of State of the State of Nevada (the “Series B Certificate of Designation”). The following is only a summary of the Series B Certificate of Designation and is qualified in its entirety by reference to the full text of the Series B Certificate of Designation which is filed as Exhibit 3.2 to this Current Report on Form 8-K and is incorporated by reference herein.
Designation, Amount and Par Value . The number of shares of Series B Preferred Stock designated shall be up to 27,000,000. Each share of Series B Preferred Stock shall have a par value of $0.001 per share and a stated value equal to the total number of shares of Series B Preferred Stock issued to the Holder divided by their Owed Amount (as defined in the Series B Certificate of Designation) (the “Stated Value”).
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Dividends . Except as otherwise required by law, no dividend shall be declared or paid on the Preferred Stock.
Voting Rights . Except as otherwise expressly required by law, each holder of Series B Preferred Stock shall be entitled to vote on all matters submitted to shareholders of the Corporation and shall be entitled to vote on an as-converted basis for each share of Series B Preferred Stock owned at the record date for the determination of shareholders entitled to vote on such matter or, if no such record date is established, at the date such vote is taken or any written consent of shareholders is solicited. Except as otherwise required by law, the holders of shares of Series B Preferred Stock shall vote together with the holders of common stock on all matters and shall not vote as a separate class. Except as expressly provided herein or as required by law so long as any shares of Series B Preferred Stock remain outstanding, the Corporation shall not, without the vote or written consent of the holders of at least a majority of the then outstanding shares of the Series B Preferred Stock, take any action which would adversely and materially affect any of the preferences, limitations or relative rights of the Series B Preferred Stock.
Liquidation . Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, the Holders shall be entitled to receive out of the assets, whether capital or surplus, of the Company an amount equal to the Stated Value, plus any accrued and unpaid dividends thereon and any other fees or liquidated damages then due and owing thereon under the Series B Certificate of Designation for each share of Series B Preferred Stock.
No Redemption; No Preemptive Rights . The shares of Series B Preferred Stock are not redeemable by the Company. The shares of Series B Preferred Stock are not entitled to any preemptive or subscription rights in respect of any securities of the Company.
Conversion . Upon filing an amendment to the Company’s articles of incorporation to increase the number of shares of authorized common stock so that there is an adequate amount of shares of authorized common stock for issuance upon conversion of the Series B Preferred Stock (the “Amendment”), the shares of Series B Preferred Stock will be automatically converted into common stock and such conversion will require no action on behalf of the Company or the holder of the Series B Preferred Stock. Each share of Series B Preferred Stock shall convert into ten (10) shares of common stock of the Company, subject to adjustment.
Fundamental Transaction . If, at any time while the Series B Preferred Stock is outstanding, the Company enters into a Fundamental Transaction (as defined in the Series B Certificate of Designation, then, the Corporation shall cause any Successor Entity to assume in writing all of the obligations of the Company under the Series B Certificate of Designation 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 Series B Preferred Stock, deliver to the Holder in exchange for the Series B Preferred Stock a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to the Series B Preferred Stock, and which is reasonably satisfactory in form and substance to the Holder.
Item 5.01 Changes in Control of Registrant.
On the Effective Date, the Company sold an aggregate of 650,000 shares of Series A Preferred Stock to the Investors for cash consideration of $650,000 from personal funds of the Investors and the exchange of an aggregate amount owed under existing indebtedness, which was equal to $516,155 (the “Transaction”). Following consummation of the Transaction, the holders of Series A Preferred Stock holds 50.1% of the outstanding voting power of the Company. The Transaction has resulted in a change in control of the Company.
Except as described herein, there were no arrangements or understandings among the Investors and their associates with respect to the election of directors or other matters.
As required to be disclosed by Regulation S-K Item 403(c), there are no arrangements, known to the Company, including any pledge by any person of securities of the Company or any of its parents, the operation of which may at a subsequent date result in a change in control of the Company.
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Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Dr. Mick Ruxin, M.D. Appointment, President, CEO and Director
On the Effective Date, the Company appointed Dr. Mick Ruxin as the Company’s President and Chief Executive Officer, effective immediately. In addition, the board of directors appointed Dr. Ruxin as a director of the Company, effective ten (10) days following the date on which the Company files a Schedule 14F-1 (the “Schedule 14F-1”) with the SEC and the mailing of same to the holders of record of the Company. Dr. Ruxin 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. Ruxin and any other person pursuant to which Dr. Ruxin was selected as an executive officer. There are no transactions in which Dr. Ruxin has an interest requiring disclosure under Item 404(a) of Regulation S-K.
On May 25, 2018, the Company entered into an employment agreement (the “Ruxin Agreement”) with Dr. Ruxin under which he will serve as Chief Executive Officer of the Company. The term of the Ruxin Agreement was effective as of May 25, 2018, continues until May 25, 2023 and automatically renews for successive one year periods at the end of each term until either party delivers written notice of their intent not to renew at least 60 days prior to the expiration of the then effective term. Under the terms of the Ruxin Agreement, Dr. Ruxin will receive an annual salary of $250,000. He is eligible to receive a cash bonus of up to 100% of his base salary. The bonus shall be earned upon the Company’s achievement of performance targets for a fiscal year to be mutually agreed upon by Dr. Ruxin and the board or a committee thereof. Additionally, following the adoption by the Company of an equity compensation plan and subject to approval of the board or a committee thereof, Dr. Ruxin shall receive (i) a one-time restricted stock unit award having a fair value of approximately $100,000 and which shall vest over a five year period following the date of grant and (ii) an option to purchase ten percent (10%) of the outstanding shares of the Company (calculated on the date of grant), which shall vest over a five-year period following the date of grant and expire on the tenth anniversary of the date of grant. Dr. Ruxin is entitled to participate in any and all benefit plans, from time to time, in effect for senior management, along with vacation, sick and holiday pay in accordance with the Company’s policies established and in effect from time to time.
Dr. Ruxin is an “at-will” employee and his employment may be terminated by the Company at any time, with or without cause. In the event Dr. Ruxin’s termination of employment is the result of termination by the Company without Cause (as defined in the Ruxin Agreement) with Good Reason (as defined in the Ruxin Agreement) or as a result of a non-renewal of the term of employment under the Ruxin Agreement, Dr. Ruxin shall be entitled to receive the sum of (I) the Severance Multiple (as defined below), multiplied by his base salary immediately prior to such termination and (II) a pro-rata portion of his bonus for the year in which such termination occurs equal to (a) his bonus for the most recently completed calendar year (if any), multiplied by (b) a fraction, the numerator of which is the number of days that have elapsed from the beginning of such calendar year through the date of termination and the denominator of which is the total number of days in such calendar year. “Severance Multiple” shall mean 2.0; provided, however , that if the date of termination occurs on or at any time during the twelve (12)-month period following a Change in Control (as defined in the Ruxin Agreement), the Severance Multiple shall mean 3.0. In addition, the Company shall accelerate the vesting of any outstanding, unvested equity awards granted to Dr. Ruxin prior to the date of termination and he shall be entitled to reimbursement of any COBRA payment made during the 18 month period following the date of termination.
The Ruxin Agreement also contains covenants (a) restricting the executive from engaging in any activity competitive with our business during the term of the employment agreement and in the event of termination, for a period of one year thereafter, (b) prohibiting the executive from disclosing confidential information regarding us, and (c) soliciting our employees, customers and prospective customers during the term of the employment agreement and for a period of one year thereafter.
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Dr. Ruxin has been a strategic advisor to the Company since December 2017. Previously, Dr. Ruxin was the Chairman, CEO and Founder of Global Med Technologies, Inc. (GLOB). He grew GLOB from a foundational concept to an international medical software company, specializing in FDA approved software, with specific diagnostic capabilities, and serving over 30 countries on 4 continents. Under his leadership, GLOB had its initial financing, its public offering and subsequent follow-on financings. Dr. Ruxin also founded PeopleMed, Inc., a validation and chronic disease management software subsidiary of GLOB. In addition, he conceived and executed the acquisition and financing of Inlog, a French software company serving the EU, becoming the Directeur General and responsible for European Operations—and eDonor, a US based regulated software company serving domestic and international blood donor centers. Prior to Dr. Ruxin engineering the sale of GLOB to a NYSE company, Haemonetics Corp. (HAE), he led his team to national prominence by being awarded the #1 position in quality of product and customer service against billion dollar software companies, rated by an industry-respected, independent software rating service. After GLOB’s acquisition by Haemonetics, Dr. Ruxin was asked to stay with the company through the transition. Dr. Ruxin was on the Executive Management Team (EMT) at Haemonetics for approximately 6 months after the merger. The EMT was responsible for diagnostic strategies and identified domestic and international software opportunities for the Company. Before founding Global Med Technologies, Dr. Ruxin founded and was President and CEO of DataMed International, Inc. (DMI), a private, international drugs of abuse management company (from 1989-1997). DMI’s clients included FedEx, International Multi-Foods, Los Alamos National Laboratories, Chevron, ConAgra, Nestles and AT&T, among over 500 other companies. Dr. Ruxin was one of the first 10 certified Medical Review Officers in the country, and he participated in writing the Federal legislation for drugs of abuse testing. Dr. Ruxin received his M.D. degree from the University of Southern California and his B.A degree in Philosophy from the University of Pittsburgh.
Jeffrey Busch Appointment
On the Effective Date, the Company appointed Jeff Busch as a director and chairman of the board of directors, effective immediately. Mr. Busch 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. Mr. Busch is the managing member of the Investor Representative and Mr. Busch purchased shares of Series A Preferred Stock on the Effective Date. In addition, on the Effective Date, Mr. Busch purchased 180,000 shares of our Series A Preferred Stock for aggregate gross proceeds of $180,000. Under the Purchase Agreement, the Investors have the right to appoint up to six (6) directors to the Company’s board of directors. The Investors nominated Mr. Busch to be a director of the Company pursuant to its rights under the Purchase Agreement. Except as set forth above, there are no transactions in which Mr. Busch has an interest requiring disclosure under Item 404(a) of Regulation S-K.
On May 25, 2018, the Company entered into an employment agreement (the “Busch Agreement”) with Mr. Busch under which he will serve as Executive Chairman of the Company. The term of the Busch Agreement was effective as of May 25, 2018, continues until May 25, 2023 and automatically renews for successive one year periods at the end of each term until either party delivers written notice of their intent not to renew at least 60 days prior to the expiration of the then effective term. Under the terms of the Busch Agreement, Mr. Busch will receive an annual salary of $30,000, which amount shall be automatically increased to $120,000 on the first anniversary of the date of the Busch Agreement. He is eligible to receive a discretionary cash bonus at the option of the board based on their evaluation of his performance of duties and responsibility. Additionally, following the adoption by the Company of an equity compensation plan and subject to approval of the board or a committee thereof, Mr. Busch shall receive (i) a one-time restricted stock unit award having a fair value of approximately $100,000 and which shall vest over a five year period following the date of grant and (ii) an option to purchase ten percent (10%) of the outstanding shares of the Company (calculated on the date of grant), which shall vest over a five-year period following the date of grant and expire on the tenth anniversary of the date of grant. Mr. Busch is entitled to participate in any and all benefit plans, from time to time, in effect for senior management, along with vacation, sick and holiday pay in accordance with the Company’s policies established and in effect from time to time.
Mr. Busch is an “at-will” employee and his employment may be terminated by the Company at any time, with or without cause. In the event Mr. Busch’s termination of employment is the result of termination by the Company without Cause (as defined in the Busch Agreement) with Good Reason (as defined in the Busch Agreement) or as a result of a non-renewal of the term of employment under the Busch Agreement, Mr. Busch shall be entitled to receive the sum of (I) the Severance Multiple (as defined below), multiplied by his base salary immediately prior to such termination and (II) a pro-rata portion of his bonus for the year in which such termination occurs equal to (a) his bonus for the most recently completed calendar year (if any), multiplied by (b) a fraction, the numerator of which is the number of days that have elapsed from the beginning of such calendar year through the date of termination and the denominator of which is the total number of days in such calendar year. “Severance Multiple” shall mean 2.0; provided, however , that if the date of termination occurs on or at any time during the twelve (12)-month period following a Change in Control (as defined in the Busch Agreement), the Severance Multiple shall mean 3.0. In addition, the Company shall accelerate the vesting of any outstanding, unvested equity awards granted to Mr. Busch prior to the date of termination and he shall be entitled to reimbursement of any COBRA payment made during the 18 month period following the date of termination.
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The Busch Agreement also contains covenants (a) restricting the executive from engaging in any activity competitive with our business during the term of the employment agreement and in the event of termination, for a period of one year thereafter, (b) prohibiting the executive from disclosing confidential information regarding us, and (c) soliciting our employees, customers and prospective customers during the term of the employment agreement and for a period of one year thereafter.
Mr. Busch is the current Chairman and CEO of Global Medical REIT, a NYSE listed (NYSE:GMRE) and publicly traded company which acquires licensed medical facilities. Mr. Busch has been a Presidential Appointee, entrepreneur and active investor in various asset classes, including medical and pharmaceutical since 1985. Mr. Busch has had a distinguished career in public service, which included serving as a Chief of Staff to a United States Congressman and serving in senior positions in two U.S. Presidential Administrations. Mr. Busch oversaw hundreds of millions of dollars in economic development programs. Mr. Busch represented the United States before the United Nations in Geneva, Switzerland. Mr. Busch has served as a top advisor to several publicly traded medical companies and has worked in the medical, blood supply and management field. Mr. Busch also served as President of Safe Blood International Foundation, where he oversaw the establishment of medical facilities in 35 developing nations, including China, funded by the U.S. Center for Disease Control, USAID, Chinese government and corporate and private entities. Mr. Busch is a graduate of the New York University Stern School of Business, holds a Master of Public Administration specializing in health care from New York University, and a Doctor of Jurisprudence from Emory University.
John Brugmann Appointment
On the Effective Date, the Company appointed John Brugmann as a director, effective immediately. Mr. Brugmann 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. Mr. Brugmann has participated in private placements in the Company since November 2016. Under the Purchase Agreement, Infusion has the right to appoint up to three (3) directors to the Company’s board of directors. Infusion nominated Mr. Brugmann to be a director of the Company pursuant to its rights under the Purchase Agreement. Except as set forth above, there are no transactions in which Mr. Brugmann has an interest requiring disclosure under Item 404(a) of Regulation S-K.
Mr. Brugmann brings with him over 30 years’ experience in the financial industry. During his 27 years at UBS Financial, he focused on international and offshore clients and played key roles in large commercial real estate financing, public offerings and portfolio management for endowments, pension and Union funds. Mr. Brugmann served as President of the board of Trustees for New York Military Academy, and Chairman of the Finance Committee for The Helen Hayes Theatre (Nyack, NY), and was voted the “Business Man of the Year” for Rockland County, NY.
The foregoing information regarding the employment agreements is a summary of the agreements 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 10.7 and Exhibit 10.8 and incorporated herein by reference. Readers should review such agreements for a complete understanding of the terms and conditions associated with such agreements.
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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: June 12, 2018 | By: | /s/ Scott VanderMeer |
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Scott VanderMeer Interim Chief Financial Officer |
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Exhibit 10.9
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this “ Agreement ”) is made as of May 25, 2018, between ADVX INVESTORS GROUP LLC., a Delaware Limited Liability Company (the “ Consultant” ), Jeffrey Busch (the “ Designated Person ”) and AVANT DIAGNOSTICS, INC., a Nevada corporation (the “ Company ”).
RECITALS
WHEREAS, Consultant has expertise in the area of the Company’s business and is willing to provide consulting services to the Company; and
WHEREAS, the Company desires to retain the Consultant, and the Consultant agrees to be retained by the Company, upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, the parties hereto, each intending to be legally bound hereby, agree as follows:
1. Terms and Conditions of Engagement .
a. Engagement . The Consultant shall perform such consulting and advisory services as the Company or any of its subsidiaries may reasonably require from time to time, including but not limited to acquisitions, business development, management and sales services, and related services pertaining to the Company’s business. During the term of this Agreement, Designated Person shall perform the services on behalf of Consultant; Designated Person shall devote such time, attention and energy to the business and affairs of the Company as shall be necessary to perform the services specified herein. Consultant and Designated Person shall report to and follow the instructions of the full Board of Directors of the Company.
b. Contractor Relationship . The parties acknowledge and agree that the Consultant is an independent contractor to the Company, not an employee of the Company. The Consultant is not an agent of the Company and shall have no right to bind the Company. The Consultant shall not be treated for any purposes as an employee of the Company. The Company will report all payments to be made hereunder on Form 1099 as payments to the Consultant for independent contracting services, and will not report any payments on Form W-2 to the Consultant, unless the Company is lawfully required to do so upon the advice of its auditors or tax advisors. The Consultant and Designated Person each agree to indemnify the Company with respect to all income taxes and payroll taxes, including all penalties and interest assessed against the Company, if any, with respect to the Consultant’s payments under this Agreement. This is a personal services contract for the services of the Designated Person to perform the services on behalf of Company, as agent of Consultant. The Consultant cannot satisfy the terms and conditions of this Agreement by making anyone else available to perform the services other than the Designated Person. The Company shall have no right to control the manner or means by which Consultant performs services hereunder; however, the Consultant shall devote sufficient business time and efforts to the performance of services for the Company to complete the services within the time frames for completion established by the Company. The Consultant shall use its best efforts in such endeavors. The Consultant shall also perform its services with a level of care, skill, and diligence that a prudent professional acting in a like capacity and familiar with such matters would use.
2. Compensation .
a. Base Compensation . The Company shall pay the Consultant base compensation starting at a monthly rate of Thirteen Thousand Three Hundred and Thirty-Three Dollars and Thirty-Three cents ($13,333.33) (the “ Base Compensation ”). The Base Compensation shall be paid in accordance with the normal payment practices for consultants of the Company as in effect from time to time, but in no event less often than monthly. The Base Compensation shall be payable in either cash or shares of the Company’s common stock (the “ Common Stock ”), at the sole discretion of the Company. To the extent the Company does not have a sufficient number of authorized shares of Common Stock available to issue to Consultant, the Company may issue the Consultant shares of the Company’s series A preferred stock, which has such rights, designations and preferences as set forth in Exhibit A annexed hereto (the “ Preferred Stock ” and together with the shares of Common Stock, the “ Shares ”). Any Shares to be issued by the Company in satisfaction of the Base Compensation shall be made on a monthly basis, with the exact number of Shares to be issued to be determined based upon the average of the closing price of the Company’s Common Stock on the five (5) trading days immediately preceding the date such payment shall be made..
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b. Business Expenses . The Company shall promptly reimburse the Consultant for all travel, meals, entertainment and other ordinary and necessary business expenses incurred by the Consultant in the performance of his duties to the Company; provided , that such expenses are incurred and accounted for in accordance with the policies and procedures established by the Company.
3. Term . The term of this Agreement (the “ Term ”) shall begin on the date of execution (the “ Commencement Date ”), and shall continue for six months unless terminated sooner in accordance with Section 4. Thereafter, this Agreement shall automatically renew on a month-to-month basis unless either party gives notice of non-renewal to the other at least fifteen (15) days prior to an anniversary of the Commencement Date. Notwithstanding the foregoing, the term of this Agreement shall not extend beyond the twelve (12) month anniversary of the Commencement Date.
4. Termination . Consultant or the Company may terminate this Agreement at any time and the Company may terminate the Designated Person at any time, with or without cause or good reason, by giving thirty (30) days prior written notice to the other party. The obligations set forth in Sections 5, 6, 7, 9 and 10 shall survive any termination or expiration of this Agreement. Upon termination, of this Agreement, Consultant and Designated Person shall promptly deliver to the Company all documents and other materials of any nature pertaining to the Company, together with all documents and other items containing or pertaining to any Confidential Information (as defined below) and Company Work Product (as defined below).
5. Confidential Information .
a. At all times, both during the term of this Agreement and thereafter, Consultant and Designated Person shall hold in strictest confidence and shall not disclose, lecture upon or publish any of the Company’s Confidential Information (defined below), except to the extent such disclosure, use or publication is expressly authorized in writing by an officer of the Company or as required by applicable law or regulation or the order of a court or other governmental body having jurisdiction over such matter. Consultant and Designated Person shall use such Confidential Information only as may be required in direct connection with Consultant’s performing the requested Services for the Company.
b. The term “Confidential Information” shall mean trade secrets, confidential knowledge, data and any other proprietary information that the Company owns, licenses or has obtained from third parties to whom the Company owes a duty of confidentiality with respect to such information. By way of illustration but not limitation, “Confidential Information” includes: (i) inventions, trade secrets, ideas, data, programs, works of authorship, know-how, improvements, processes, discoveries, designs, techniques and other sensitive information the Company receives from its customers or other third parties; (ii) technical information relating to the Company’s existing and future products, including, where appropriate and without limitation, financial techniques and procedures, financial production, software, firmware, information, patent disclosures, patent applications, development or experimental work, formulae, engineering or test data, product specifications, structures, models, techniques, processes and apparatus relating to the same disclosed by the Company to Consultant or obtained by Consultant through observation or examination of information or developments; (iii) confidential marketing information (including without limitation marketing strategies, customer names and requirements and products and services, prices, margins and costs); (iv) confidential future product plans; (v) confidential financial information provided to Consultant by the Company; (vi) personnel information (including without limitation employee compensation); and (vii) other confidential business information of the Company or any third party. Notwithstanding the foregoing, nothing received by Consultant shall be considered to be Confidential Information if (x) it has been published or is otherwise readily available to the public other than by a breach of this Agreement, (y) it has been rightfully received by Consultant from a third party without any confidentiality limitations, or (z) it was known by the Consultant, as evidenced by his or her records, prior to its disclosure by the Company.
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6. Intellectual Property Rights .
a. Consultant and Designated Person agree that any and all inventions, trade secrets, ideas, data, programs, works of authorship, know-how, improvements, processes, discoveries, designs, techniques, and related information (collectively, “ Inventions ”), whether or not patentable or copyrightable, that the Consultant or Designated Person conceive or perfect: (1) as part of performing services for the Company under this Agreement or (2) using the Company’s Confidential Information (collectively, the “ Company Work Product ”) shall be the sole and exclusive property of the Company. Consultant and Designated Person each hereby assign and agree to assign to the Company his, her or its entire right, title and interest, including all intellectual-property rights, in and to such Company Work Product.
b. Consultant and Designated Person agree to execute, when requested, any documents deemed reasonably necessary by the Company to carry out the purposes of this Agreement. Consultant and Designated Person further agree to assist the Company in every proper way to obtain, and from time to time enforce, United States and foreign patent and other intellectual property rights relating to Company Work Product including executing, verifying and delivering such documents and performing such other acts as the Company may reasonably request from time to time in applying for, obtaining, perfecting, sustaining, defending, and enforcing such rights and the assignment thereof. Designated Person’s and Consultant’s obligation to assist the Company as described herein shall continue beyond the termination of this Agreement, provided that the Company shall compensate Consultant and Designated Person at a reasonable rate after termination of this Agreement for time Consultant actually spends performing the obligations described herein.
c. If the Company is unable, after reasonable effort, to secure Designated Person’s and Consultant’s signature on any document needed to apply for, obtain, perfect, sustain, defend, or enforce any patents or other intellectual property rights relating to Company Work Product, Consultant hereby designates and appoints the Company and its duly authorized officers and agents as his or her agent and attorney in fact, with full power of substitution, to execute, verify and file applications and to do all other lawfully permitted acts necessary to apply for, obtain, perfect, sustain, defend, or enforce such rights with the same legal force and effect as if executed by Consultant and Designated Person. Such power of attorney shall be deemed coupled with an interest.
d. Consultant and Designated Person each agree to submit to the Company any proposed publication that contains any discussion relating to the Company, Confidential Information, Inventions, Company Work Product or work performed by Consultant and/or Designated Person for the Company hereunder. Consultant and Designated Person further agree that no such publication shall be made without the prior written consent of the Company.
7. Non-Competition; Non-Solicitation .
a. During the Term and continuing until the twelve month anniversary date after the termination of the Consultant’s position under this Agreement (the “ Restricted Period ”), the Consultant and Designated Person shall not, without the prior written consent of the Company, directly or indirectly, render services of a business, professional or commercial nature (whether for compensation or otherwise) or lend money to any person or entity competitive with the business engaged in by the Company or any of its subsidiaries within twelve (12) months prior to such termination of the position, or serve as an officer, director, employee, partner, member, owner, consultant or independent contractor in any entity which is competitive with the business engaged in by the Company or any of its subsidiaries within twelve (12) months prior to such termination of his position. Notwithstanding the foregoing, nothing shall prevent the Consultant or Designated Person from (a) owning publicly traded securities issued by any such competitive entity, provided that the ownership thereof by the Consultant or Designated Person does not constitute more than 2% of all of such entity’s publicly traded outstanding securities or (b) being employed by or otherwise involved with a subsidiary or division, which is not competitive with the business of the Company or any of its subsidiaries, of a company that is otherwise competitive with the business of the Company or any of its subsidiaries. The Consultant and Designated Person acknowledge that the restrictions contained in this Section 7 of this Agreement are fair and reasonable to protect the legitimate interests of the Company, are not unreasonably burdensome to the Consultant or Designated Person, and are supported by adequate consideration.
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b. During the Restricted Period, Designated Person shall not, directly or indirectly, for himself or on behalf of any other person or entity, employ, engage or retain any person who at any time during the then immediately preceding 12 month period shall have been an employee of the Company or any of its subsidiaries (other than any such person whose employment was terminated by the Company prior to such employment, engagement or retention), or contact any supplier, customer or employee of the Company or any of its subsidiaries for the purpose of soliciting or diverting any such supplier, customer or employee from its business relationship with the Company or any of its subsidiaries or otherwise intentionally interfering with the business relationship of the Company or any of its subsidiaries with any of the foregoing
8. Additional Activities . Each of Consultant and Designated Person hereby represent and warrant that it is not currently engaged in, and shall not during the term of this Agreement become engaged in, any business activity that involves the development, production, marketing or selling of products, processes or techniques, or the use of technologies, that are substantially similar to, or competitive with, products, processes, techniques or technologies of the Company.
9. Indemnification .
a. If the Consultant or Designated Person is made a party to or threatened to be made a party to any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “ Proceeding ”), by reason of the fact that the Consultant or Designated Person is or was serving at the request of the Company, or in connection with his service hereunder, as a director, officer, member, partner, employee, fiduciary, trustee, consultant, representative or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, the Consultant and Designated Person shall be indemnified and held harmless by the Company to the fullest extent permitted by the Company’s certificate of incorporation, by-laws, or applicable law, as the case may be, on the same basis as all other senior Consultants, against all Expenses (as defined below) incurred or suffered by the Consultant or Designated Person in connection therewith, and such indemnification shall continue as to the Consultant and Designated Person even if the Consultant ceases to be a consultant, representative or agent of the Company, and shall inure to the benefit of Designated Person’s heirs, executors and administrators. The term “ Expenses ” shall include reasonable fees, costs, and expenses, losses, judgments, damages, liabilities, fines, penalties, excise taxes, settlements, reasonable attorneys’ fees and expenses, reasonable accountants’ and other professionals’ fees and expenses, and reasonable disbursements and costs of attachment or similar bonds, investigations, and any reasonable expenses of establishing a right to indemnification under this Agreement. Without limiting the foregoing reference to the Company’s Certificate of Incorporation, By-Laws or applicable law, the right of the Consultant to indemnification is subject to the Consultant’s or Designated Person’s actions, which form the basis for the Proceeding having been taken in good faith and in a manner the Consultant or Designated Person reasonably believed to be in or not opposed to the best interest of the Company and, with respect to any criminal action or proceeding, the Consultant or Designated Person had no reasonable cause to believe that his conduct was unlawful.
b. The Company shall, within seven (7) days of presentation of invoices or other appropriate documentation, pay all Expenses incurred in connection with any Proceeding relating to the Consultant’s or Designated Person’s services of the Company or any other indemnifiable matter; provided that if it is determined in accordance with the Company’s Certificate of Incorporation, bylaws, this Agreement and/or applicable law that the Consultant is not entitled to reimbursement for all or any part of such Expenses, the Company shall not be obligated to pay the Expenses, or if paid, the Consultant shall reimburse the Company therefor.
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c. Notwithstanding any other provisions of this Agreement to the contrary, the obligations of the Company under this Section 7 shall continue during the Term and, after the Consultant ceases to be a Consultant to the Company, during any period which the Consultant or Designated Person may be liable for acts or omissions as a Consultant to the Company or its subsidiaries or affiliates or any other potentially indemnifiable matter (but no less than three (3) years after the date of such cessation) on the same basis as all other consultants of the Company.
d. The right to indemnification and the payment of Expenses incurred in defending a Proceeding in advance of its final disposition conferred in this Section 7 shall not be exclusive of any other right which the Consultant or Designated Person may have or hereafter may acquire under any statute, provision of the certificate of incorporation or by-laws of the Company, agreement, vote of stockholders or disinterested directors or otherwise.
10. Non-Disparagement . At any time during the Term and thereafter, the Company and/or its subsidiaries or affiliates (collectively, the “ Company Parties ”), on the one hand, and the Consultant and Designated Person, on the other hand, shall not make or authorize any person to make or allow any statement or take any action, public or private, which would disparage or criticize the other party, including, for example, their character and/or services; provided, however , that nothing contained in this Section 10 shall preclude any Company Party or the Consultant from making any truthful statement in good faith which is required by any applicable law or regulation or the order of a court or other governmental body.
11. Investment Representations .
a. Consultant Bears Economic Risk . The Consultant must bear the economic risk of this investment indefinitely unless the Shares are registered pursuant to the Securities Act of 1933, as amended (the “ Securities Act ” ), or an exemption from registration is available. The Consultant also understands that there is no assurance that any exemption from registration under the Securities Act of 1933 will be available and that, even if available, such exemption may not allow the Consultant to transfer all or any portion of the shares of the common stock of the Company to be received by the Consultant pursuant to this Agreement under the circumstances, in the amounts or at the times the Consultant might propose.
b. Acquisition for Own Account. The Consultant is acquiring the Shares of the Company to be received by the Consultant pursuant to this Agreement for its own account for investment only, and not with a view towards distribution.
c. The Consultant Can Protect His Interest. The Consultant represents that by reason of his business or financial experience, the Consultant has the capacity to protect his own interests in connection with the transactions contemplated by this Agreement. Further, the Consultant is aware of no publication of any advertisement in connection with the transactions contemplated by this Agreement.
d. Company Information. The Consultant has had an opportunity to discuss the Company’s business, management and financial affairs with directors, officers and management of the Company and has had the opportunity to review the Company’s operations and facilities. The Consultant has also had the opportunity to ask questions of and receive answers from the Company and its management regarding the terms and conditions of this investment.
e. Transfer Restrictions. The Consultant will not sell or otherwise transfer the Shares without registration under the Securities Act or unless an exemption from registration is available.
f. Rule 144. The Consultant acknowledges and agrees that the Shares to be received by the Consultant pursuant to this Agreement must be held indefinitely unless it is subsequently registered under the Securities Act or an exemption from such registration is available. The Consultant is aware that the Shares and any shares of Company common stock issued to the Consultant upon exercise of the Options are “restricted securities,” as such term is defined in Rule 144 promulgated under the Securities Act. The Consultant has been advised or is aware of the provisions of Rule 144 promulgated under the Securities Act as in effect from time to time, which permits limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions, including, among other things: the availability of certain current public information about the Company, the resale occurring following the required holding period under Rule 144 and the number of shares being sold during any three-month period not exceeding specified limitations.
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g. No Representations or Warranties. No representations or warranties have been made to the Consultant by the Company or any officer, director, employee, agent, affiliate or subsidiary of the Company other than those contained herein, and in accepting shares of common stock of the Company, the Consultant is not relying on any representations other than those contained herein.
h. Legend. The Consultant understands and acknowledges that any shares of common stock of the Company to be received by the Consultant pursuant to this Agreement shall bear a legend substantially as follows until such time as (a) such securities shall have been registered under the Securities Act, or (b) in the opinion of counsel for the Company such securities may be sold without registration under the Securities Act as well as any applicable state securities laws:
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR ANY STATE SECURITIES LAW AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD OR TRANSFERRED UNLESS REGISTERED AND QUALIFIED UNDER THE SECURITIES ACT AND, IF APPLICABLE, STATE SECURITIES LAWS, OR IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.”
12. Notice . All notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed certified or registered mail, return receipt requested, postage prepaid, and, if to the Consultant and Designated Person, addressed to them at ____________________, and, if to the Company, addressed to it at 1050 30 th Street NW, Suite 107, Washington, D.C. 20007, Attention: Chief Executive Officer, or to such other address as either party may have furnished to the other in accordance herewith, except that notice of change of address shall be effective only upon receipt.
13. Applicable Law; Venue . This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without reference to rules relating to conflict of law. Each of the Consultant and the Company unconditionally and irrevocably consents to the exclusive jurisdiction and venue of the Supreme Court of the State of New York, New York County and the United States District Court for the Southern District of New York as the sole venue for any suit, action or proceeding arising out of or relating to this Agreement, and each of the Consultant and the Company hereby unconditionally and irrevocably waives any objection to venue in any such court or to assert that any such court is an inconvenient forum, and agrees that service of any summons, complaint, notice or other process relating to such suit, action or other proceeding may be effected in the manner provided in Section 12 hereof. Each of the Consultant and the Company hereby unconditionally and irrevocably waives the right to a trial by jury in any such action, suit or other proceeding.
14. Successors; Binding Agreement . This Agreement shall be binding upon any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, and the Company shall require any such successor to expressly assume and agree in writing to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place, or, in the event the Company remains in existence, the Company shall continue to retain the Consultant under the terms hereof. The Company cannot assign, or delegate its duties under, this Agreement except (i) pursuant to the immediately preceding sentence, or (ii) to a subsidiary of the Company, provided that such subsidiary expressly assumes and agrees in writing to perform this Agreement and, in such case, the Company’s liability to make and provide payments and benefits hereunder shall nevertheless not be discharged thereby. As used in this Agreement, the “ Company ” shall mean the Company and any successor to its business and/or assets, which assumes or is obligated to perform this Agreement by contract, operation of law or otherwise. This Agreement shall inure to the benefit of and be enforceable by the Consultant and his personal or legal representatives, executors, estate, trustee, administrators, successors, heirs, distributees, devisees and legatees. The Consultant may not assign this Agreement or any rights hereunder, or delegate his duties under this Agreement, without the prior written consent of the Company; however , in the event of the death of the Designated Person, all rights to receive payments hereunder shall become rights of the Designated Person’s devisee, legatee or other designee or the Designated Person’s estate.
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15. Non-Exclusivity of Rights . Nothing in this Agreement shall limit or otherwise affect such rights as the Consultant may have under any other contract or agreement entered into after the Commencement Date with the Company.
16. Entire Agreement; Modification . This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and undertakings, both written and oral. No provision of this Agreement may be waived, modified, amended or discharged unless such waiver, modification, amendment or discharge is agreed to in writing and signed by the Consultant and such officer of the Company as may be specifically designated by the Company. No waiver by either party to this Agreement at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.
17. Company’s Representations . The Company represents and warrants that it is free to enter into this Agreement and to perform each of the terms and covenants of it. The Company represents and warrants that it is not restricted or prohibited, contractually or otherwise, from entering into and performing this Agreement, and that its execution and performance of this Agreement is not a violation or breach of, and does not conflict with, any other agreement between the Company and any other person or entity. The Company represents and warrants that this Agreement is a legal, valid and binding agreement of the Company, enforceable in accordance with its terms.
18. Consultant’s Representations . The Consultant represents and warrants that it is free to enter into this Agreement and to perform each of the terms and covenants of it. The Consultant and Designated Person represents and warrants that they are not restricted or prohibited, contractually or otherwise, from entering into and performing this Agreement, and that his execution and performance of this Agreement is not a violation or breach of, and does not conflict with, any other agreement between the Consultant and any other person or entity. The Consultant represents and warrants that this Agreement is a legal, valid and binding agreement of the Consultant, enforceable in accordance with its terms.
19. Counterparts . This Agreement may be executed in multiple counterparts, and/or by the execution of counterpart signature pages that may be attached to one or more counterparts of this Agreement, and all so executed shall constitute one agreement binding on all of the parties hereto, notwithstanding that all of the parties hereto are not signatories to the original or the same counterpart. In addition, any counterpart signature page may be executed by any party hereto wheresoever such party is located, and may be delivered by telephone facsimile transmission or by any other means of electronic transmission (including by e-mail of PDF copies), and any such facsimile or electronically transmitted signature page(s) may be attached to one or more counterparts of this Agreement, and such facsimile or electronically transmitted signature(s) shall have the same force and effect, and be as binding, as if original signatures had been executed and delivered in person.
20. Severability . The Company and the Consultant agree that the agreements and provisions contained in this Agreement are severable and divisible, that each such agreement and provision does not depend upon any other provision or agreement for its enforceability, and that each such agreement and provision set forth herein constitutes an enforceable obligation between the parties hereto. Consequently, the parties hereto agree that neither the invalidity nor the unenforceability of any provision of this Agreement shall affect the other provisions, and this Agreement shall remain in full force and effect and be construed in all respects as if such invalid or unenforceable provision were omitted.
21. Headings; Construction . The inclusion of headings in this Agreement is for convenience of reference only and shall not affect the construction or interpretation hereof. The words “Section” and “clause” herein shall refer to provisions of this Agreement, unless expressly indicated otherwise. The words “include,” “includes” and “including” herein shall be deemed to be followed by “without limitation” whether or not they are in fact followed by such words or words of similar import, unless the context otherwise requires. The construction of this Agreement shall not take into consideration the party who drafted or whose representative drafted any portion of this Agreement, and no canon of construction shall be applied that resolves ambiguities against the drafter of a document. Each party acknowledges that: (a) it has read this Agreement; (b) it has been represented in the preparation, negotiation and execution of this Agreement by legal counsel of its own choice; and (c) it understands the terms and consequences of this Agreement and is fully aware of the legal and binding effect of this Agreement
22. Specific Performance . The Consultant acknowledges that any breach or threatened breach of its covenants contained in this Agreement could cause the Company material and irreparable damage, the exact amount of which will be difficult to ascertain and that the remedies at law for any such breach or threatened breach will be inadequate. Accordingly, the Consultant agrees that the Company shall, in addition to all other available rights and remedies (including, but not limited to, seeking such damages), be entitled to specific performance and injunctive relief in respect of any breach or threatened breach by the Consultant of any covenants contained in this Agreement, without being required to post bond or other security and without having to prove the inadequacy of the available remedies at law or irreparable harm.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have hereunto executed this Agreement as of the day and year first written above.
| AVANT DIAGNOSTICS, INC. | ||
| By: | /s/ Scott VanderMeer | |
| Name: | Scott VanderMeer | |
| Title: | Interim CFO | |
| ADVX INVESTOR GROUP LLC: | ||
| By: | /s/ Jeffrey Busch | |
| Name: | Jeffrey Busch | |
| Title: | President | |
| By: | /s/ Jeffrey Busch | |
| Name: | Jeffrey Busch | |
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