Exhibit 10.2

 

EXCHANGE AGREEMENT

 

This EXCHANGE AGREEMENT (this “Agreement”) is made effective as of May 25, 2018
(the “Execution Date”) by and among Avant Diagnostics, Inc., a Nevada
corporation (the “Company”) and _______________ (the “Investor”).

 

RECITALS

 

WHEREAS, the Company has previously issued to the Investor (i) certain
Convertible Promissory Notes dated _________________, for an aggregate principal
amount of $__________ (collectively, the “2016 Notes”), (ii) certain Convertible
Promissory Note dated ______________, for an aggregate principal amount of
$_________ (collectively, the “2017 Notes” and together with the 2016 Notes, the
“Existing Notes”), and (iii) warrants to purchase an aggregate of __________
shares of common stock which were issued in connection with the 2017 Notes (the
“Existing Warrants”) and (iii) common stock purchase rights, for the purchase of
an aggregate of _____________ shares of common stock (the “Existing Purchase
Rights” and together with the Existing Notes and the Existing Warrants, the
“Existing Securities”);

 

WHEREAS, the Company acknowledges that the Existing Notes are currently in
default (collectively, the “Default”);

 

WHEREAS, as of March 31, 2018, the aggregate principal amount plus all interest,
penalties and other amounts which are due and payable on the 2016 Notes and 2017
Notes is $_______ and $________ respectively (collectively, the “Owed Amount”);

 

WHEREAS, the Company desires, and the Investor agrees, that the Investor
exchange (the “Exchange”) the Existing Securities (which have an outstanding
balance equal to the Owed Amount) for (i) a promissory note in the aggregate
principal amount of $47,259 (the “New Note”) (ii) _____ shares of series A
convertible preferred stock having an aggregate value of $_____ and such rights
and preferences in a certificate of designation as attached hereto as Exhibit A
(the “Series A Preferred Stock”) and (ii) ______ shares of series B convertible
preferred stock having an aggregate value of $_____ and such rights and
preferences in a certificate of designation as attached hereto as Exhibit B (the
“Series B Preferred Stock” and together with the New Note and the Series A
Preferred Stock, the “New Securities”);

 

WHEREAS, each of the New Securities, 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. Subject to the terms hereof, Investor hereby
irrevocably waives the defaults and breaches that have resulted from the Default
on or prior to the Execution Date as well as any penalties, interest or other
amounts that may have accrued under the Existing Notes after March 31, 2018.
This waiver does not include any default or breach occurring after the Execution
Date should the Closing not occur.

 

1.2  Closing. Subject to the terms and conditions set forth in this Agreement,
the Company and the Investor shall exchange the Existing Securities in
consideration for the issuance of the New Securities. The closing of the
Exchange and issuance of the New Securities (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)   Investor Obligations. At the Closing, the Investor shall deliver or
promptly cause to be delivered to the Company (i) the Existing Notes, (ii) the
Existing Warrants, (iii) the Existing Purchase Rights and (iv) an executed copy
of this Agreement.

 

 -1- 

 

 

(b)   Company Obligations. At the Closing, the Company shall deliver or promptly
cause to be delivered to the Investor (i) a certificate representing the Series
A Preferred Stock, (ii) a certificate representing the Series B Preferred Stock,
(iii) the New Note and (iv) an executed copy of this Agreement.

 

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 Securities. The Investor is the sole owner of
the Existing Securities, free and clear of any and all liens, claims and
encumbrances of any kind. The Investor has not assigned any rights in the
Existing Securities to any party.

  

(c)   Investment Intent. The Investor is acquiring the New Securities as
principal for its own account for investment purposes only and not with a view
to or for distributing or reselling such New Securities 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 Securities. 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 Securities for any minimum
or other specific term and reserves the right to dispose of the New Securities
at any time in accordance with or pursuant to a registration statement or an
exemption from the registration requirements under the Securities Act, subject
to the lock-up restrictions set forth herein.

 

(d)   Investor Status. At the time the Investor was offered the New Securities,
it was, and at the date hereof it is, and on the date of issuance of any
Conversion Shares (as defined herein), 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 Securities as
a result of or subsequent to any advertisement, article, notice or other
communication regarding the New 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.

 

(f)   Reliance. The Investor understands and acknowledges that (i) the New
Securities 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 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 Securities, 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 Securities 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 Securities; (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- 

 

 

(j)  [Lock-Up Agreement for New Securities. Each Conversion Share received in
connection with the conversion of the New Securities shall be subject to a
lock-up beginning on the date hereof and ending on the nine (9) month
anniversary of the date the Company’s laboratory is open for business (the
"Lockup Period"). During the Lockup Period, the Investor may not, directly or
indirectly, (i) offer, sell, offer to sell, contract to sell, hedge, pledge,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase or sell (or announce any
offer, sale, offer of sale, contract of sale, hedge, pledge, sale of any option
or contract to purchase, purchase of any option or contract of sale, grant of
any option, right or warrant to purchase or other sale or disposition), or
otherwise transfer or dispose of (or enter into any transaction or device that
is designed to, or could be expected to, result in the disposition by any person
at any time in the future), any Common Stock acquired pursuant to this
Agreement, or hereafter acquired or (ii) enter into any swap or other agreement
or any transaction that transfers, in whole or in part, directly or indirectly,
the economic consequence of ownership of any Common Stock, whether or not any
such swap or transaction described in clause (i) or (ii) above is to be settled
by delivery of any Common Stock. For the first one hundred and eighty (180) days
after termination of the Lockup Period, the Holder 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 Investor 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 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 Investor for the sale of any such securities, such approval in
the Company’s sole and absolute discretion. For purposes of clarity, any
proposed sale below the Leakout Limitation shall not require any consent or
approval of the Company. The terms of this provision shall convey to any
subsequent holder of the Common Stock issued pursuant to the New Securities.
Investor agrees that it shall not transfer or dispose of any shares of Common
Stock (other than pursuant to this Agreement) unless and until the proposed
transferee(s) has agreed in writing to be bound by this Section with respect to
the shares of Common Stock acquired by such transferee. No transfer in violation
of the preceding sentence shall be of any force or effect, and no such transfer
shall be made or recorded on the books of Company. Investor acknowledges that
its covenants in this Section are a material inducement for Company to enter
into this Agreement and to consummate this transaction.]

 

(k)  Investor understands that the Company is not current in its reporting
obligations with the SEC and that the Company was previously was a “shell
company” as defined in Rule 12b-2 under the Exchange Act. Pursuant to Rule
144(i), securities issued by a current or former shell company that otherwise
meet the holding period and other requirements of Rule 144 nevertheless cannot
be sold in reliance on Rule 144 until one year after the Company (a) is no
longer a shell company; and (b) has filed current “Form 10 information“ (as
defined in Rule 144(i)) with the SEC reflecting that it is no longer a shell
company, and provided that at the time of a proposed sale pursuant to Rule 144,
the Company is subject to the reporting requirements of Section 13 or 15(d) of
the Exchange Act and has filed all reports and other materials required to be
filed by Section 13 or 15(d) of the Exchange Act, as applicable, during the
preceding 12 months (or for such shorter period that the issuer was required to
file such reports and materials), other than Form 8-K reports. As a result, the
restrictive legends on certificates for the New Securities and the Conversion
Shares, cannot be removed after the expiration of any lock-up restriction except
in connection with an actual sale meeting the foregoing requirements or pursuant
to an effective registration statement.

 

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 Securities, 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 Securities, or this Agreement (any of (i), (ii) or (iii), a “
Material Adverse Effect ”).

 

 -3- 

 

 

(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 Securities and the shares of common stock
issuable upon conversion of the Series A Preferred Stock and the Series B
Preferred Stock (collectively, the Conversion Shares”) in accordance with the
terms of the respective New Securities, 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 and the New Securities 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 Securities. The Series A Preferred Stock 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 Series B Preferred
Stock 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
Securities, 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 Securities or under applicable securities laws.

 

(d)   No Conflicts. The execution, delivery and performance of this Agreement,
and the New Securities 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 “Articles 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 Articles 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 (other than legal and accounting
fees) 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.

 

ARTICLE III

OTHER COVENANTS

 

3.1   Securities Laws. The Investor acknowledges that the New Securities 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 a legend,
substantially in the form below, on the New Securities 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.

 

 -4- 

 

 

ARTICLE IV

MISCELLANEOUS

 

4.1   Fees and Expenses. The Company has agreed to pay certain legal fees of
Investor’s counsel in the aggregate principal amount of $20,244.50. Except as
set forth in the preceding sentence, 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 Securities.

 

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.     1050 30th Street NW Suite 107  
  Washington, DC 20007     Attention: Scott VanderMeer, Interim CFO     Email:
scott@avantdiagnostics.com         With copies to (which shall     not
constitute notice): Sheppard, Mullin, Richter & Hampton LLP     30 Rockefeller
Plaza, 39th Floor     New York, NY 10112     Facsimile No.: (917) 438-6137    
Email: scohen@sheppardmullin.com     Attn: Stephen A. Cohen

 

  If to the Investor:  At the physical and electronic address of the Investor
set forth on the signature page to this Agreement.

 

or such other physical and electronic 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, 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.

 

 -5- 

 

  

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 New York, 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 New York 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 the closing of the transactions contemplated by this Agreement. The
agreements and covenants contained herein shall survive the Closing and the
delivery of the New Securities 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]

 

 -6- 

 

 

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]

 

 -7- 

 

  

INVESTOR:

 

___________________

 

By:        Name:     Title:    

 

Email Address of Authorized Signatory: ____________________________

 

Facsimile Number of Authorized Signatory: ________________________

 

Address for Notice to Investor:

 

[Investor Signature Page to Exchange Agreement]

 

 -8- 

 

 

Exhibit A

 

[Form of Certificate of Designation of the Rights and Preferences of the Series
A Preferred Stock]

 

 -9- 

 

 

Exhibit B

 

[Form of Certificate of Designation of the Rights and Preferences of the Series
B Preferred Stock]

 

 -10-