Exhibit 10.1 to AVAX Technologies, Inc. Form 8-K dated April 7, 2005





Exhibit 10.1 



SECURITIES PURCHASE
AGREEMENT 



AVAX Technologies, Inc.

2000 Hamilton Street

Suite 204

Philadelphia, PA 19130 



Ladies & Gentlemen: 



        The
undersigned (the “Investor”), hereby confirms its agreement with you as follows: 



	1.  	  	This
Securities Purchase Agreement (the “Agreement”) is made effective
               as of March 4, 2005, between AVAX Technologies, Inc., a Delaware
corporation                (the “Company”), and the Investor.  






	2.  	  	The
Company has authorized, subject to adjustment by the Company’s Board of
               Directors, the issuance and sale of shares of common stock of the Company,
               $0.004 par value per share (the “Common Stock”), and warrants to
               purchase shares of Common Stock (the “Warrant”), with an
exercise                price of $0.41 and $0.48 per share for the Series 2005A Warrants
and the Series                2005B Warrants, respectively, pursuant to the forms of
Warrants delivered                simultaneously with this Agreement, to certain
investors in a private placement                (the “Offering”). For every
6.6667 shares of Common Stock purchased by                the Investor in this Offering,
such Investor shall be entitled to receive one                Series 2005A Warrant and
one Series 2005B Warrant to purchase one share of                Common Stock. The
purchase price for the Common Stock and the associated                Warrants will be
$0.34 (“Price Per Share”) for each share of Common                Stock. The
purchase price is allocated as follows: $0.31 per share of Common                Stock,
$0.01 per Series 2005A Warrant and $0.02 per Series 2005B Warrant
               purchased.  






	3.  	  	The
Company and the Investor agree that the Investor will purchase from the
               Company and the Company will issue and sell to the Investor the number of
shares                of Common Stock set forth on the signature page for a Price Per
Share of $0.34                per share of Common Stock, or an aggregate purchase price
set forth on the                signature page, pursuant to the Terms and Conditions for
Purchase of Common                Stock and Warrants attached hereto as Annex I and
incorporated herein by                reference as if fully set forth herein. Unless
otherwise requested by the                Investor, certificates representing the Common
Stock and Warrants purchased by                the Investor will be registered in the
Investor’s name and address as set                forth below.  






	4.  	  	To
subscribe for shares of Common Stock and Warrants, each Investor must fully
               and completely answer each of the following questions:  






	  	A.  	  	In
the past three years, has Investor or any person affiliated with Investor had
                    any position, office or other material relationship with the AVAX
Technologies,                     Inc. or any of its affiliates?



                  YES  ____                    NO  ____
  












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	  	  	If YES,
please describe that position, office or other material relationship:  






	  	







	  	







	  	B.  	  	Does
Investor or any group of which Investor is a member or to which it is
                    related, beneficially own (including the right to acquire or vote)
any                     securities of the AVAX Technologies, Inc.?



                  YES  ____                    NO  ____  






	  	
If
YES, please list the number and type of securities of AVAX Technologies, Inc. owned by
Investor or any members of that group:  







	  	







	  	C.  	  	Is
Investor directly or indirectly affiliated or associated with any member of
                    the U.S. National Association of Securities Dealers?



                  YES  ____                    NO  ____    






	  	
If
YES, please list the NASD members with which Investor is affiliated or associated:  







	  	







	  	D.  	  	Name
or natural person or persons (not companies or entities) who are the
                    ultimate controlling persons of Investor. The ultimate controlling
person or                     persons, if any, are the natural person or persons who have
the controlling                     stock or voting position, if any, in Investor or the
ultimate parent entity of                     Investor. If the stock of Investor or
Investor’s ultimate parent                     corporation is publicly traded on any
U.S., European, Japanese or other stock                     exchange or market, then
Investor may not have an ultimate controlling natural                     person. In that
case, please list the name of the ultimate parent entity whose                     stock
is publicly traded on any market or stock exchange.  






	  	
Natural
Person(s) who Controls Investor:    _______________________________________ 






	  	
Parent
entity of Investor whose stock is publicly traded:     ________________________________ 






	  	
(If
the answer is none for either question, write “none.” “None” is not
an acceptable answer to both questions without further information being provided to AVAX
Technologies to explain those answers.)  






[SIGNATURE PAGES TO
SECURITIES PURCHASE AGREEMENT] 






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        Please
confirm that the foregoing correctly sets forth the agreement between us by signing in the
space provided below for that purpose. 




___________________________________________________________________________

“INVESTOR”



By: ________________________________________________________________________

                                                              (Signature)



Print Name: __________________________________________________________________



Title: _______________________________________________________________________



Address: ____________________________________________________________________




 ___________________________________________________________________________



Tax ID No.:__________________________________________________________________



Contact Name: _______________________________________________________________

Telephone:  __________________________________________________________________

Facsimile:   __________________________________________________________________



Name in which shares should be registered (if different):________________________________________________



U.S. Dollar Amount Invested: $______________________________________________



Number of shares of Common Stock:__________________________________________

Number of Series 2005A Warrants: ___________________________________________

Number of Series 2005B Warrants:___________________________________________





Date:_________________________, 2005





AGREED AND ACCEPTED:



AVAX Technologies, Inc.



______________________________________________________________

By: Richard P. Rainey

Title: President



Date: ________________, 2005 






[SIGNATURE PAGES TO
SECURITIES PURCHASE AGREEMENT] 






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        If
Investor is a Registered Representative with a NASD member firm, have the following
acknowledgment signed by the appropriate party: 



The undersigned NASD member firm
acknowledges receipt of the notice required by Article 3, Sections 28(a) and (b) of the
Rules of Fair Practice. 












	  	
By:_______________________________________________________

      Name of NASD Member Firm 








	  	
By:_______________________________________________________

      Authorized Officer




















[SIGNATURE PAGES TO
SECURITIES PURCHASE AGREEMENT] 






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ANNEX I 



TERMS AND CONDITIONS
FOR PURCHASE OF COMMON STOCK AND WARRANTS 



         1.       
          Authorization and Sale of the Common Stock and Warrants. Subject to the
          terms and conditions of this Agreement, the Company has authorized the sale of
          up to 26,470,588 shares of Common Stock, and the issuance of Series 2005A
          Warrants to purchase up to 3,970,588 shares of Common Stock and Series 2005B
          Warrants to purchase up to 3,970,588 shares of Common Stock. The Company
          reserves the right to increase or decrease these numbers. 



         2.       
          Agreement to Sell and Purchase the Common Stock and Warrants; Subscription
          Date. 



                2.1      
At the Closing (as defined in Section 3), the Company will sell to the Investor,
and the Investor will purchase from the Company, upon the terms and conditions hereinafter
set forth, the number of shares of Common Stock and Warrants set forth on the signature
page hereto at the purchase price set forth on such signature page. 



                2.2      
The Company is entering into this same form of Securities Purchase Agreement with certain
other investors (the “Other Investors”) effective as of the date hereof (the
“Subscription Date”) and expects to complete sales of Common Stock and Warrants
to them. (The Investor and the Other Investors are hereinafter sometimes collectively
referred to as the “Investors,” and this Agreement and the Securities Purchase
Agreements executed by the Other Investors are hereinafter sometimes collectively referred
to as the “Agreements.”) 



         3.       
          Delivery of the Securities at Closing. The completion of the purchase and
          sale of the Common Stock and Warrants (the “Closing”) shall occur (the
          “Closing Date”) on the third business day after the Subscription Date
          (or upon such earlier date as the Company and the Investors shall agree), at the
          offices of the Company’s counsel. At the Closing, each Investor will wire
          transfer to the Company (in accordance with the wire transfer instructions
          attached hereto as Exhibit A) the full amount of the purchase price for
          the Common Stock and Warrants being purchased hereunder as set forth on the
          signature page hereto and the Company shall deliver to the Investor the
          certificates representing such shares of Common Stock and the Warrants set forth
          on the signature page hereto, each such certificate to be registered in the name
          of the Investor or, if so indicated on the signature page hereto, in the name of
          a nominee designated by the Investor. The Company’s obligation to issue the
          Common Stock and Warrants to the Investor shall be subject to the following
          conditions, any one or more of which may be waived by the Company: (a) receipt
          of a wire transfer of funds (in accordance with the wire transfer instructions
          attached hereto as Exhibit A) in the full amount of the purchase price
          for the Common Stock and Warrants being purchased hereunder as set forth on the
          signature page hereto; (b) completion of the purchases and sales under the
          Agreements with the Other Investors such that a minimum of $2,000,000 aggregate
          Purchase Price of shares of Common Stock and Warrants are sold pursuant to the
          Agreements; and (c) the accuracy of the representations and warranties made by
          the Investors and the fulfillment of those undertakings of the Investors to be
          fulfilled prior to the Closing. The Investor’s obligation to purchase the
          Common Stock and Warrants shall be subject to the following conditions, any one
          or more of which may be waived by the Investor: (a) receipt by the Investor or
          its authorized agent of one or more certificates representing the number of
          shares of Common Stock and Warrants set forth on the signature page hereto; (b)
          receipt by the Investor of an opinion letter, dated as of the Closing Date, from
          Gilmore & Bell, P.C., counsel to the Company, in form reasonably
          satisfactory to the Investor; (c) the accuracy of the representations and
          warranties when made by the Company and as if made by the Company at the Closing
          and the fulfillment of those undertakings of the Company to be fulfilled prior
          to the Closing; (d) on the Closing Date, no legal action, suit or proceeding
          shall be pending or threatened which seeks to 







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restrain or prohibit the
          transactions contemplated by the Agreements; (e) the Company shall have
          delivered to the Investors its certificate, dated the Closing Date, duly
          executed by its Chief Executive Officer to the effect set forth in clause (c)
          above; (f) the receipt by the Investors of a certificate, dated the Closing
          Date, of the Secretary or Assistant Secretary of the Company certifying as to
          (i) the accuracy of the certificate of incorporation and bylaws of the Company
          as in effect on the Closing Date (which shall be attached to such certificate
as           an exhibit), (ii) the accuracy of all resolutions of the board of directors
(and           committees thereof) of the Company relating to the Agreements and the
          transactions contemplated thereby (which shall be attached to such certificate
          as an exhibit) and (iii) the incumbency and signatures of all officers of the
          Company executing the Agreements and any other agreement or document
          contemplated thereby.  



         4.       
          Representations, Warranties and Covenants of the Company. Except as
          otherwise described in the Company’s SEC Documents (as defined in
          Section 4.4) or in the Confidential Private Placement Memorandum dated
          January 21, 2005, as supplemented or amended and including all exhibits attached
          thereto and incorporated by reference therein (the “Memorandum”),
          which qualify the following representations, warranties and covenants in their
          entirety, the Company hereby represents and warrants to, and covenants with, the
          Investor, as follows: 



                4.1      
Organization. Each of the Company and its Subsidiaries is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its organization. Each
of the Company and its Subsidiaries (as defined in Rule 405 under the Securities Act of
1933, as amended (the “Securities Act”)) has full power and authority to own,
operate and occupy its properties and to conduct its business as presently conducted and
is registered or qualified to do business and in good standing in each jurisdiction in
which it owns or leases property or transacts business and where the failure to be so
qualified would have a material adverse effect upon the financial condition or business,
operations or assets of the Company and its Subsidiaries, considered as one enterprise,
and no proceeding has been instituted in any such jurisdiction, revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and authority or
qualification, other than the winding down or dissolution of certain Subsidiaries no
actively longer used in the operation of the Company’s business. 



                4.2      
Due Authorization. The Company has all requisite power and authority to execute,
deliver and perform its obligations under the Agreements, and the Agreements have been
duly authorized and validly executed and delivered by the Company and constitute legal,
valid and binding agreements of the Company enforceable against the Company in accordance
with their terms, except as rights to indemnity and contribution may be limited by state
or federal securities laws or the public policy underlying such laws, except as
enforceability may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors’ and contracting parties’ rights
generally and except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in equity or at
law). 



                4.3      
Non-Contravention. The execution and delivery of the Agreements, the issuance and
sale of the Common Stock and Warrants to be sold by the Company under the Agreements, the
fulfillment of the terms of the Agreements and the consummation of the transactions
contemplated thereby will not (A) conflict with or constitute a violation of, or default
(with or without the giving of notice or the passage of time or both) under, (i) any
material bond, debenture, note or other evidence of indebtedness, or under any material
lease, indenture, mortgage, deed of trust, loan agreement, joint venture or other
agreement or instrument to which the Company or any Subsidiary is a party or by which it
or any of its Subsidiaries or their respective properties are bound, (ii) the charter,
by-laws or other organizational documents of the Company or any Subsidiary, or (iii) any
law, administrative regulation, ordinance or order of any court or governmental agency,
arbitration panel or authority applicable to the Company or any Subsidiary or their
respective properties, except where such conflict, violation or default 






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would not have a material adverse
effect on the financial condition or results of operations of the Company and
Subsidiaries taken as one enterprise, (B) result in the creation or imposition of any
lien, encumbrance, claim, security interest or restriction whatsoever upon any of the
material properties or assets of the Company or any Subsidiary or an acceleration of
indebtedness pursuant to any obligation, agreement or condition contained in any material
bond, debenture, note or any other evidence of indebtedness or any material indenture,
mortgage, deed of trust or any other agreement or instrument to which the Company or any
Subsidiary is a party or by which any of them is bound or to which any of the property or
assets of the Company or any Subsidiary is subject. No consent, approval, authorization
or other order of, or registration, qualification or filing with, any regulatory body,
administrative agency, self-regulatory organization, stock exchange or market, or other
governmental body in the United States is required for the execution and delivery of the
Agreements and the valid issuance and sale of the Common Stock and Warrants to be sold
pursuant to the Agreements, other than such as have been made or obtained, and except for
any securities filings required to be made under federal or state securities laws.  



                4.4      
Reporting Status. The Company has filed in a timely manner all documents that the
Company was required to file under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), during the 12 months preceding the date of this Agreement. The
following documents complied in all material respects with the Securities and Exchange
Commission’s (“SEC”) requirements as of their respective filing dates, and
the information contained therein as of the date thereof did not contain an untrue
statement of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein in light of the circumstances under
where they were made not misleading, except to the extent that information contained in
any such document has been revised or superseded by a later filed SEC Document (as defined
below): 



     	(i) 	  	
          the Company’s Annual Report on Form 10-KSB for the year ended
          December 31, 2003, including the exhibits thereto (the “Form
          10-KSB”); 



          



     	(ii) 	  	
          the prospectus dated November 22, 2004, forming a part of the Company’s
          registration statement on Form SB-2 filed with the SEC on November 8, 2004; and 



          



     	(iii) 	  	
          all other documents, including the exhibits thereto, filed by the Company with
          the SEC since December 31, 2003, pursuant to the reporting requirements of
          the Exchange Act (together with the Form 10-KSB, the “SEC Documents”). 



          



Investor acknowledges that the
prospectus dated November 22, 2004, is provided for information purposes only, and no
offer or sale of any securities, including without limitation the securities subject to
that prospectus, is made or deemed to be made by virtue of delivery of that prospectus to
Investor. 



                4.5      
Capitalization. As of the date hereof, the authorized capital stock of the Company
consists of 150,000,000 shares of Common Stock and 5,000,000 shares of preferred stock,
par value $0.004 per share, of the Company (the “Preferred Stock”). As of
January 21, 2005, there were approximately (i) 37,202,343 shares of Common Stock issued
and outstanding, (ii) 3,834,283 shares of Common Stock reserved for issuance under the
Company’s stock option plans, including 2,408,889 shares issuable upon exercise of
outstanding stock options issued by the Company to current or former employees,
consultants and directors of the Company and its Subsidiaries, (iii) 232,786 shares
issuable upon exercise of outstanding stock options issued by the Company to current or
former employees, consultants and directors of the Company and its Subsidiaries and (iii)
11,913,397 shares issuable upon exercise of warrants to acquire shares of Common Stock.
All outstanding shares of Common Stock are duly authorized, validly issued, fully paid and
nonassessable, free from any liens or any other encumbrances created by the Company with
respect to the issuance and delivery thereof and not subject 







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to preemptive rights. Other than as
disclosed in the SEC Documents or the Memorandum, there are no outstanding rights,
options, warrants, preemptive rights, rights of first refusal agreements, commitments or
similar rights for the purchase or acquisition from the Company of any securities of the
Company. The Common Stock and Warrants to be sold pursuant to the Agreements have been
duly authorized, and when issued and paid for in accordance with the terms of the
Agreements will be duly and validly issued, fully paid and nonassessable, free and clear
of all pledges, liens, encumbrances and other restrictions (other than those arising
under federal or state securities laws as a result of the private placement of the Common
Stock and Warrants to the Investors). Other than with respect to the conversion rights
for the outstanding bridge notes described in the Memorandum, no preemptive right,
co-sale right, right of first refusal or other similar right exists with respect to the
Common Stock and Warrants or the issuance and sale thereof. No further approval or
authorization of any stockholder, the Board of Directors of the Company or others is
required for the issuance and sale of the Common Stock and Warrants. Except as set forth
in the SEC Documents and the registration rights of the holders of the bridge notes
described in the SEC Documents and the Memorandum, no holder of any of the securities of
the Company has any rights (“demand,” “piggyback” or otherwise) to
have such securities registered by reason of the intention to file, filing or
effectiveness of a Registration Statement (as defined in Section 7.1 hereof). The
Company has agreed to include the shares of Common Stock issuable to the holders of the
bridge notes in the Registration Statement.  



                4.6      
Legal Proceedings. There is no material legal or governmental proceeding pending
or, to the knowledge of the Company, threatened to which the Company or any Subsidiary or
any officer or director of the Company or any Subsidiary in their capacity as such officer
or director is or may be a party or of which the business or property of the Company or
any Subsidiary is subject that is not disclosed in the SEC Documents. There is no action,
suit, proceeding, inquiry or investigation before or by any court, public board or body
(including, without limitation, the SEC) pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries wherein an
unfavorable decision, ruling or fording could adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform its obligations
under the Agreements. 



                4.7      
No Violations. Neither the Company nor any Subsidiary is in violation of its
charter, bylaws, or other organizational document, or in violation of any law,
administrative regulation, ordinance or order of any court or governmental agency,
arbitration panel or authority applicable to the Company or any Subsidiary, including the
rules, regulations and policies of the SEC and the Food and Drug Administration of the
U.S. Department of Health and Human Services (the “FDA”) and which violation,
individually or in the aggregate, would be reasonably likely to have a material adverse
effect on the business, operations, assets or financial condition of the Company and its
Subsidiaries, considered as one enterprise, or is in default (and there exists no
condition which, with or without the passage of time or giving of notice or both, would
constitute a default) in any material respect in the performance of any bond, debenture,
note or any other evidence of indebtedness in any indenture, mortgage, deed of trust or
any other material agreement or instrument to which the Company or any Subsidiary is a
party or by which the Company or any Subsidiary is bound or by which the properties of the
Company or any Subsidiary are bound, which would be reasonably likely to have a material
adverse effect upon the business, operations, assets or financial condition of the Company
and its Subsidiaries, considered as one enterprise. 



                4.8      
Governmental Permits, Etc. With the exception of the matters which are dealt with
separately in Section 4.1, 4.4, 4.13 and 4.14, each the Company and it
Subsidiaries has all necessary franchises, licenses, certificates and other authorizations
from any foreign, federal, state or local government or governmental agency, department,
or body that are currently necessary for the operation of the business of the Company and
its Subsidiaries as currently conducted, except where the failure to currently possess
could not reasonably be expected to have a material adverse effect upon the business,
operations, assets or financial condition of the Company and its Subsidiaries, considered
as one enterprise. 






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                4.9      
Intellectual Property. Each of the Company and its Subsidiaries owns or possesses
sufficient rights to use all patents, patent rights, trademarks, copyrights, licenses,
inventions, trade secrets, trade names and know-how (collectively, “Intellectual
Property”) that are necessary for the conduct of its business as now conducted, and
as proposed to be conducted in the SEC Documents, except where the failure to currently
own or possess could not reasonably be expected to have a material adverse effect on the
financial condition or business of the Company and its Subsidiaries considered as one
enterprise. Except as set forth in the SEC Documents, (i) neither the Company nor any of
its Subsidiaries has received any notice of, or has any knowledge of, any infringement of
asserted rights of a third party with respect to any Intellectual Property that,
individually or in the aggregate, would have a material adverse effect on the financial
condition or business, operations or assets of the Company and its Subsidiaries considered
as one enterprise and (ii) neither the Company nor any of its Subsidiaries has received
any notice of any infringement rights by a third party with respect to any Intellectual
Property that, individually or in the aggregate, would have a material adverse effect upon
the business, operations, assets or financial condition of the Company and its
Subsidiaries, considered as one enterprise. 



                4.10      
Environmental Matters. The Company and its Subsidiaries (i) are in compliance in
all material respects with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental
Laws”), (ii) have received all material permits, licenses or other approvals required
of them under applicable Environmental Laws to conduct their respective businesses, and
(iii) are in compliance with all terms and conditions of any permit, license or approval,
except where such noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the terms and conditions of
such permits, licenses or approvals would not, singly or in the aggregate, have a material
adverse effect on the Company and its Subsidiaries taken as a whole. 



                4.11      
Financial Statements. The financial statements of the Company and the related notes
thereto included in the SEC Documents present fairly in all material respects, in
accordance with generally accepted accounting principles, the financial position of the
Company and its Subsidiaries as of the dates indicated, and the results of its operations
and cash flows for the periods therein specified. Such consolidated financial statements
(including the related notes) have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods therein
specified, except as set forth in the SEC Documents and subject, in the case of unaudited
financial statements, to normal year-end audit adjustments. 



                4.12      
No Material Adverse Change. Except as disclosed in the SEC Documents, since
December 31, 2003, there has not been (i) any material adverse change in the
financial condition or earnings of the Company and its Subsidiaries considered as one
enterprise nor has any material adverse event occurred to the Company or its Subsidiaries,
(ii) any material adverse event affecting the Company or any of its Subsidiaries, (iii)
any obligation, direct or contingent, that is material to the Company and its Subsidiaries
considered as one enterprise, incurred by the Company, except obligations incurred in the
ordinary course of business, (iv) any dividend or distribution of any kind declared, paid
or made on the capital stock of the Company or any of its Subsidiaries, or (v) any loss or
damage (whether or not insured) to the physical property of the Company which has been
sustained which has a material adverse effect on the condition (financial or otherwise),
earnings, operations or business of the Company and its Subsidiaries considered as one
enterprise. Except as disclosed in the SEC Documents, neither the Company nor any of its
Subsidiaries has (i) sold, assigned, transferred, abandoned, mortgaged, pledged or
subjected to lien any of its material properties, tangible or intangible, or rights under
any material contract, permit, license, franchise or other agreement or (ii) waived or
cancelled any material indebtedness or other obligations owed to the Company or any such
Subsidiary. 






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                4.13      
No Manipulation of Stock. The Company has not taken and will not, in violation of
applicable law, take, any action designed to or that might reasonably be expected to cause
or result in stabilization or manipulation of the price of the Common Stock to facilitate
the sale or resale of the Common Stock and the Common Stock issuable upon exercise of the
Warrants. 



                4.14      
Insurance. The Company maintains and will continue to maintain insurance against
loss or damage by fire or other casualty and such other insurance, including, but not
limited to, product liability insurance, in such amounts and covering such risks as is
reasonably adequate consistent with industry practice for the conduct of its business and
the value of its properties, all of which insurance is in full force and effect. 



                4.15      
Tax Matters. The Company has filed all material federal, state and local income and
franchise and other tax returns required to be filed and has paid or accrued all taxes due
in accordance therewith, and no tax deficiency has been determined adversely to the
Company which has had (nor does the Company have any knowledge of any tax deficiency
which, if determined adversely to the Company, might have) a material adverse effect on
the condition (financial or otherwise), earnings, operations or business of the Company
and its Subsidiaries considered as one enterprise. 



                4.16      
Investment Company. The Company is not an “investment company” within the
meaning of such term under the Investment Company Act of 1940 and the rules and
regulations of the SEC thereunder and will not become an investment company upon the
receipt and application of the net proceeds of this offering. 



                4.17      
No Registration. Assuming the accuracy of the representations and warranties made
by, and compliance with the covenants of, the Investors in Section 5 hereof, no
registration of the Common Stock and Warrants under the Securities Act of 1933, as amended
(the “Securities Act”), is required in connection with the offer and sale of the
Common Stock and Warrants by the Company to the Investors as contemplated by the
Agreements. 



                4.18      
Form D. The Company agrees to file one or more Forms D with respect to the Common
Stock and Warrants on a timely basis as required under Regulation D under the Securities
Act to claim the exemption provided by Rule 506 of Regulation D and to, upon request,
provide a copy thereof to the Investors and their counsel. 



                4.19      
Certain Future Financings and Related Actions. 



                        (a)      The
Company will not sell, offer to sell, solicit offers to buy or otherwise
          negotiate in respect of any “security” (as defined in the Securities
          Act) that is or could be integrated with the sale of the Common Stock and
          Warrants in a manner that would require the registration of the Common Stock
and           Warrants under the Securities Act.  



                        (b)      The
Company shall not offer, sell, contract to sell or issue (or engage any           person
to assist the Company in taking any such action) any equity securities or
          securities convertible into, exchangeable for or otherwise entitling the holder
          to acquire, any Common Stock at a price below the market price of the Common
          Stock during the period from the date of this Agreement to the effective date
of           the Registration Statement; provided, however, that nothing in this Section
          4.19(b) shall prohibit the Company from issuing securities (v) to
employees,           directors, officers, advisors or consultants of the Company; (w)
upon exercise           of conversion, exchange, purchase or similar rights issued,
granted or given  







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by           the Company and
outstanding as of the date of this Agreement; (x) pursuant to a           public offering
underwritten on a firm commitment basis registered under the           Securities Act;
(y) for the purpose of funding the acquisition of securities or           assets of any
entity in a single transaction or a series of related           transactions; or (z)
pursuant to a strategic partnership or alliance agreement,           loan agreement,
equipment lease or similar commercial agreement (including           licensing and
similar arrangements).  



                4.20      
Use of Proceeds. The Company will use the net proceeds from the sale of the Common
Stock and Warrants for continued research and development of the Company’s AC Vaccine
program and small molecule compounds, as well as working capital and other general
corporate purposes. 



         5.       
          Representations, Warranties and Covenants of the Investor. The Investor
          hereby represents and warrants to, and covenants with, the Company as follows: 



                5.1      
(i) The Investor is an “accredited investor” as defined in Regulation D under
the Securities Act and the Investor has the knowledge, sophistication and experience
necessary to make, and is qualified to make decisions with respect to, investments in
shares presenting an investment decision like that involved in the purchase of the Common
Stock and Warrants, including investments in securities issued by the Company and
investments in comparable companies, and has requested, received, reviewed and considered
all information it deemed relevant in making an informed decision to purchase the Common
Stock and Warrants, including without limitation, the Memorandum and the Company’s
Annual Report on Form 10-KSB for the fiscal year ended December 31, 2003, and the
prospectus dated November 22, 2004, all delivered to the Investor; (ii) the Investor is
acquiring the number of shares of Common Stock and Warrants set forth on the signature
pages hereto for its own account for investment only and with no present intention of
distributing any of the shares of Common Stock, Warrants and shares of Common Stock
issuable upon exercise of the Warrants, in violation of the Securities Act or any
arrangement or understanding with any other persons regarding the distribution of the
shares of Common Stock, Warrants and the shares of Common Stock issuable upon exercise of
the Warrants; (iii) the Investor’s answers to each of the questions on the signature
pages to this Agreement are true, correct and complete as of the date of this Agreement,
(iv) the Investor will not, directly or indirectly, offer, sell, pledge, transfer or
otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take
a pledge of) any of the Common Stock, Warrants and shares of Common Stock issuable upon
exercise of the Warrants except in compliance with the Securities Act, applicable state
securities laws and the respective rules and regulations promulgated thereunder; (v) the
Investor has filled in all requested information on the signature page hereto for use in
preparation of the Registration Statement and the answers thereto are true and correct as
of the date hereof and will be true and correct as of the Closing Date; (vi) the Investor
will notify the Company promptly of any change in any of such information until such time
as the Investor has sold all of its Common Stock, Warrants and shares of Common Stock
issued upon exercise of the Warrants or until the Company is no longer required to keep
the Registration Statement effective; and (vii) the Investor has, in connection with its
decision to purchase the number of shares of Common Stock and Warrants set forth on the
signature page hereto, relied only upon the SEC Documents, other publicly available
information and the representations and warranties of the Company contained herein. The
Investor understands that its acquisition of the Common Stock and Warrants has not been
registered under the Securities Act or registered or qualified under any state securities
laws in reliance on specific exemptions therefrom, which exemptions may depend upon, among
other things, the truth and accuracy of, and the Investor’s compliance with, the
representations, warranties, agreements and covenants of the Investor set forth in this
Agreement and the bona fide nature of the Investor’s investment intent as expressed
herein. 



                5.2      
The Investor acknowledges that the Company has represented that no action has been or will
be taken in any jurisdiction outside the United States by the Company that would permit an
offering of the Common Stock and Warrants, or possession or distribution of offering
materials in 






7  











connection with the issuance of the
Common Stock and Warrants, in any jurisdiction outside the United States where action for
that purpose is required. If the Investor is located or domiciled outside the United
States it agrees to comply with all applicable laws and regulations in each foreign
jurisdiction in which it purchases, offers, sells or delivers the shares of Common Stock
and Warrants or has in its possession or distributes any offering material, in all cases
at its own expense.  



                5.3      
The Investor hereby covenants with the Company not to make any sale of the Common Stock
and Warrants without complying with the provisions of this Agreement, including Section
7.2 hereof, provided that the Company complies with its obligations under Section
7.1, without effectively causing the prospectus delivery requirement under the
Securities Act to be satisfied, if applicable, and the Investor acknowledges that the
certificates evidencing the Common Stock and Warrants will be imprinted with a legend that
prohibits their transfer except in accordance therewith. The Investor acknowledges that
there may occasionally be times when the Company, based on the advice of its counsel,
determines that, subject to the limitations of Section 7.2, it must suspend the use
of the Prospectus forming a part of the Registration Statement until such time as an
amendment to the Registration Statement has been filed by the Company and declared
effective by the SEC or until the Company has amended or supplemented such Prospectus. 



                5.4      
The Investor further represents and warrants to, and covenants with, the Company that (i)
the Investor has full right, power, authority and capacity to enter into this Agreement
and to consummate the transactions contemplated hereby and has taken all necessary action
to authorize the execution, delivery and performance of this Agreement and (ii) this
Agreement constitutes a valid and binding obligation of the Investor enforceable against
the Investor in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ and contracting parties’ rights generally and except as
enforceability may be subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and except as the
indemnification and contribution agreements of the Investors herein may be legally
unenforceable. 



                5.5      
Investor will not, prior to the effectiveness of the Registration Statement, directly or
indirectly, sell, offer to sell, solicit offers to buy, dispose of, loan, pledge or grant
any right with respect to (collectively, a “Disposition”), the Common Stock of
the Company in violation of the Securities Act, nor will Investor engage in any hedging or
other transaction which is designed to or could reasonably be expected to lead to or
result in a Disposition of Common Stock of the Company by the Investor or any other person
or entity in violation of the Securities Act. Such prohibited hedging or other
transactions would include without limitation effecting any short sale or having in effect
any short position (whether or not such sale or position is against the box and regardless
of when such position was entered into) or any purchase, sale or grant of any right
(including without limitation any put or call option) with respect to the Common Stock of
the Company or with respect to any security (other than a broad-based market basket or
index) that includes, relates to or derives any significant part of its value from the
Common Stock of the Company. The Investor acknowledges that the Common Stock, Warrants and
shares of Common Stock issuable upon exercise of the Warrants shall bear a restrictive
legend to the effect that the Common Stock, Warrants and Common Stock issuable upon
exercise of the Warrants have not been registered under the Securities Act of 1933, as
amended and such securities may not be sold or transferred in the absence of an effective
registration statement or pursuant to an exemption from registration. 



                5.6      
The Investor understands that nothing in this Agreement or any other materials presented
to the Investor in connection with the purchase and sale of the Common Stock and Warrants
constitutes legal, tax or investment advice. The Investor has consulted such legal, tax
and investment advisors as it, in its sole discretion, has deemed necessary or appropriate
in connection with its purchase of the Common Stock and Warrants. 






8  












                5.7      
The Investor shall hold in strict confidence all information concerning this Agreement and
the Offering of the Common Stock and Warrants until the earlier of such time as the
Company has made a public announcement concerning this Agreement or the Offering of the
Common Stock and Warrants. 



                5.8      
If the Investor is an individual, the Investor certifies that he or she is not nor to his
or her knowledge has been designated, a “suspected terrorist” as defined in
Executive Order 13224. If the Investor is a corporation, trust, partnership, limited
liability company or other organization, the Investor certifies that, to the best of its
knowledge, the Investor has not been designated, and is not owned or controlled by, a
“suspected terrorist” as defined in Executive Order 13224. The Investor hereby
acknowledges that the Company seeks to comply with all applicable laws covering money
laundering and related activities. In furtherance of those efforts, the Investor hereby
represents, warrants and agrees that: (a) none of the cash or property that the Investor
will pay or will contribute to the Company has been or shall be derived from, or related
to, any activity that is deemed criminal under United States law; and (b) no contribution
or payment by the Investor to the Company, to the extent that they are within the
Investor’s control, shall cause the Company to be in violation of the United States
Bank Secrecy Act, the United States Money Laundering Control Act of 1986 or the United
States International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001.
The Investor shall promptly notify the Company if any of these representations ceases to
be true and accurate regarding the Investor. The Investor agrees to provide the Company
any additional information regarding the Investor that the Company deems necessary or
convenient to ensure compliance with all applicable laws concerning money laundering and
similar activities. The Investor understands and agrees that if at any time it is
discovered that any of the foregoing representations are incorrect, or if otherwise
required by applicable law or regulation related to money laundering similar activities,
the Company may undertake appropriate actions to ensure compliance with applicable law or
regulation, including but not limited to segregation and/or redemption of the
Investor’s investment in the Company. The Investor further understands that the
Company may release confidential information about the Investor and, if applicable, any
underlying beneficial owners, to proper authorities if the Company, in its sole
discretion, determines that it is in the best interest of the Company in light of relevant
rules and regulations under the laws set forth in subsection (b) above. 



         6.       
          Survival of Representations, Warranties and Agreements. Notwithstanding
          any investigation made by any party to this Agreement, all covenants,
          agreements, representations and warranties made by the Company and the Investor
          herein shall survive the execution of this Agreement, the delivery to the
          Investor of the Common Stock and Warrants being purchased and the payment
          therefor for a period of one (1) year from the Closing Date. 



         7.       
          Registration; Compliance with the Securities Act. 



                7.1      
     Registration Procedures and Expenses.  The Company shall: 



                        (a)      subject
to receipt of necessary information from the Investors, use its best           efforts to
prepare and file with the SEC, within 90 days after the Closing Date,           a
registration statement (the “Registration Statement”) on Form SB-2           or
any other available form to enable the resale of the Registrable Shares (as
          defined below) by the Investors on a delayed or continuous basis under Rule 415
          of the Securities Act. The Registration Statement may include shares of common
          stock other than those held by the Investor and the Other Investors, provided
          that the inclusion of those shares would not affect the plan of distribution
          included in the Registration Statement. “Registrable Shares” means
(a)           all shares of Common Stock purchased in the Offering, (b) all shares of
Common           Stock underlying the Warrants, (c) Penalty Shares (as defined below), if
any,           and (d) any shares of capital stock issued or  







9  












issuable, from time to time, upon
          any reclassification, share combination, share subdivision, stock split, share
          dividend, merger, consolidation or similar transaction or event or otherwise as
          a distribution on, in exchange for or with respect to any of the foregoing, in
          each case held at the relevant time by an Investor;  



                        (b)      use
its best efforts, subject to receipt of necessary information from the
          Investors, to cause the Registration Statement to become effective within 150
          days after the Closing Date;  



                        (c)      use
its best efforts to prepare and file with the SEC such amendments and
          supplements to the Registration Statement and the Prospectus used in connection
          therewith and take all such other actions as may be necessary to keep the
          Registration Statement current and effective for a period (the           “Registration
Period”) not exceeding, with respect to each           Investor’s Registrable
Shares, the earlier of (i) the second anniversary of           the Closing Date, (ii) the
date on which the Investor may sell all the shares of           Common Stock, Warrants
and shares of Common Stock issuable upon exercise of the           Warrants then held by
the Investor without restriction by the volume limitations           of Rule 144(e) of
the Securities Act, and (iii) such time as all Registrable           Shares held by such
Investor have been sold (A) pursuant to a registration           statement, (B) to or
through a broker or dealer or underwriter in a public           distribution or a public
securities transaction, and/or (C) in a transaction           exempt from the
registration and prospectus delivery requirements of the           Securities Act under
Section 4(1) thereof so that all transfer           restrictions and restrictive
legends with respect thereto, if any, are removed           upon the consummation of such
sale;  



                        (d)      promptly
furnish to the Investor with respect to the Registrable Shares           registered under
the Registration Statement such number of copies of the           Registration Statement,
Prospectuses and Preliminary Prospectuses in conformity           with the requirements
of the Securities Act and such other documents as the           Investor may reasonably
request, in order to facilitate the public sale or other           disposition of all or
any of the Registrable Shares by the Investor;  



                        (e)      promptly
take such action as may be necessary to qualify, or obtain, an           exemption for
the Registrable Shares under such of the state securities laws of           United States
jurisdictions as shall be necessary to qualify, or obtain an           exemption for, the
sale of the Registrable Shares in states specified in writing           by the Investor;
provided, however, that the Company shall not be required to           qualify to do
business or consent to service of process in any jurisdiction in           which it is
not now so qualified or has not so consented;  



                        (f)      bear
all expenses in connection with the procedures in paragraph (a) through (c)           of
this Section 7.1 and the registration of the Registrable Shares           pursuant
to the Registration Statement, regardless of whether a Registration           Statement
becomes effective, including without limitation: (i) all registration           and
filing fees and expenses; (ii) fees and expenses of compliance with federal
          securities and state “blue sky” or securities laws; (iii) expenses of
          printing (including printing certificates for the Registrable Shares and
          Prospectuses), messenger and delivery services and telephone; (iv) all
          application and filing fees in connection with listing the Registrable Shares
on           a national securities exchange or automated quotation system pursuant to the
          requirements hereof; and (v) all fees and disbursements of counsel of the
          Company and independent certified public accountants of the Company; provided,
          however, that each Investor shall be responsible for paying the underwriting
          commissions or brokerage fees, and taxes of any kind (including, without
          limitation, transfer taxes) applicable to any disposition, sale or transfer of
          such Investor’s Registrable Shares and any fees and expenses of counsel or
          other advisors to the Investor or Other Investors. The Company shall, in any
          event, bear its internal expenses (including, without limitation, all salaries
          and expenses of its officers and employees performing legal or accounting
          duties), the expense of any annual audit, rating agency fees and the fees and
          expenses of any person, including special experts, retained by the Company;  






10  












                        (g)      advise
the Investors, within two business days by e-mail, fax or other type of
          communication, and, if requested by such person, confirm such advice in
writing:           (i) after it shall receive notice or obtain knowledge of the issuance
of any           stop order by the SEC delaying or suspending the effectiveness of the
          Registration Statement or of the initiation or threat of any proceeding for
that           purpose, or any other order issued by any state securities commission or
other           regulatory authority suspending the qualification or exemption from
          qualification of such Registrable Shares under state securities or “blue
          sky” laws; and it will promptly use its best efforts to prevent the
          issuance of any stop order or other order or to obtain its withdrawal at the
          earliest possible moment if such stop order or other order should be issued;
          (ii) when the Prospectus or any Prospectus Supplement or post-effective
          amendment has been filed, and, with respect to the Registration Statement or
any           post-effective amendment thereto, when the same has become effective; and
(iii)           after the Company shall receive notice or obtain knowledge of the
existence of           any fact or the happening of any event that makes any statement of
a material           fact made in the Registration Statement, the Prospectus, any
amendment or           supplement thereto, or any document incorporated by reference
therein untrue, or           that requires the making of any additions to or changes in
the Registration           Statement or the Prospectus in order to make the statements
therein not           misleading;  



                        (h)      otherwise
use its best efforts to comply with all applicable rules and           regulations of the
SEC which could affect the sale of the Registrable Shares;  



                        (i)      use
its best efforts to cause all Registrable Shares to be listed on each
          securities exchange or market, if any, on which equity securities issued by the
          Company are then listed;  



                        (j)      use
its best efforts to take all other steps necessary to effect the           registration
of the Registrable Shares contemplated hereby and to enable the           Investors to
sell the Registrable Shares under Rule 144; and  



                        (k)      The
Company further agrees that, if the Registration Statement has not (i) been
          filed with the SEC within 90 days after the Closing Date or (ii) been declared
          effective by the SEC within 150 days after the Closing Date (each such event
          referred to in clauses (i) and (ii), a “Registration Default”), for
          all or part of each 30-day period (a “Penalty Period”) during which
          the Registration Default remains uncured, the Company shall issue or pay, as
          applicable, to each Investor 1% for each Penalty Period of the aggregate
          purchase price paid by the Investor for its Common Stock and Warrants, payable
          in validly issued, fully paid and nonassessable shares of Common Stock (valued
          at the average of the closing price of the Common Stock for the three trading
          days ending on the last trading day of such Penalty Period) (the “Penalty
          Shares”) or cash, or a combination thereof, at the option of the Company;
          provided, however, that the maximum aggregate payment of cash, or issuance of
          Penalty Shares to each Investor, as the case may be, in respect of a
          Registration Default shall not exceed 5% of the aggregate purchase price paid
by           such Investor for its Common Stock and Warrants and provided further, that
if           the issuance of Penalty Shares by the Company would result in the Company
being           required to obtain the approval of the Company’s stockholders, then
the           Company shall pay cash rather than issue such Penalty Shares to the extent
          needed to avoid such stockholder approval. The Company shall deliver said
shares           or cash payment to the Investor by the fifth business day after the end
of each           such Penalty Period. Notwithstanding anything to the contrary in Section
7.3 or any other provision of this Agreement, the issuance of the Penalty
          Shares or cash as provided in this Section 7.1(k) shall be the
          Investor’s sole and exclusive remedy in the event of any Registration
          Default; provided, however, that if the foregoing remedy is deemed
unenforceable           by a court of competent jurisdiction then the Investor shall have
all other           remedies available at law or in equity.  






11  












                7.2      Transfer; Suspension. 



                        (a)      The
Investor agrees that it will not effect any Disposition of the Common Stock           or
shares of Common Stock issuable upon exercise of the Warrants or its right to
          purchase the Common Stock or shares of Common Stock issuable upon exercise of
          the Warrants that would constitute a sale within the meaning of the Securities
          Act except as contemplated in the Registration Statement referred to in Section
7.1 and as described below or otherwise in accordance with the           Securities
Act, and that it will promptly notify the Company of any changes in           the
information set forth in the Registration Statement regarding the Investor           or
its plan of distribution.  



                        (b)      Except
in the event that paragraph (c) below applies, the Company shall, at all           times
during the Registration Period, promptly (i) prepare and file from time to           time
with the SEC a post-effective amendment to the Registration Statement or a
          supplement to the related Prospectus or a supplement or amendment to any
          document incorporated therein by reference or file any other required document
          so that such Registration Statement will not contain an untrue statement of a
          material fact or omit to state a material fact required to be stated therein or
          necessary to make the statements therein not misleading, and so that, as
          thereafter delivered to purchasers of the Registrable Shares being sold
          thereunder, such Prospectus will not contain an untrue statement of a material
          fact or omit to state a material fact required to be stated therein or
necessary           to make the statements therein, in light of the circumstances under
which they           were made, not misleading; (ii) provide the Investor copies of any
documents           filed pursuant to Section 7.2(b)(i); and (iii) inform each
Investor that           the Company has complied with its obligations in Section
7.2(b)(i) (or           that, if the Company has filed a post-effective amendment to
the Registration           Statement which has not yet been declared effective, the
Company will notify the           Investor to that effect, will use its best efforts to
secure the effectiveness           of such post-effective amendment as promptly as
possible and will promptly           notify the Investor pursuant to Section 7.2(b)(i) hereof
when the           amendment has become effective).  



                        (c)      Subject
to paragraph (d) below, in the event (i) of any request by the SEC or           any other
federal or state governmental authority during the period of           effectiveness of
the Registration Statement for amendments or supplements to a           Registration
Statement or related Prospectus or for additional information; (ii)           of the
issuance by the SEC or any other federal or state governmental authority           of any
stop order suspending the effectiveness of a Registration Statement or           the
initiation of any proceedings for that purpose; (iii) of the receipt by the
          Company of any notification with respect to the suspension of the qualification
          or exemption from qualification of any of the Registrable Shares for sale in
any           jurisdiction or the initiation or threatening of any proceeding for such
          purpose; or (iv) of any event or circumstance which necessitates the making of
          any changes in the Registration Statement or Prospectus, or any document
          incorporated or deemed to be incorporated therein by reference, so that, in the
          case of the Registration Statement, it will not contain any untrue statement of
          a material fact or any omission to state a material fact required to be stated
          therein or necessary to make the statements therein not misleading, and that in
          the case of the Prospectus, it will not contain any untrue statement of a
          material fact or any omission to state a material fact required to be stated
          therein or necessary to make the statements therein, in the light of the
          circumstances under which they were made, not misleading; then the Company
shall           deliver a certificate in writing to the Investor (the “Suspension
          Notice”) to the effect of the foregoing and, upon receipt of such
          Suspension Notice, the Investor will refrain from selling any Registrable
Shares           pursuant to the Registration Statement (a “Suspension”) until
the           Investor’s receipt of copies of a supplemented or amended Prospectus
          prepared and filed by the Company, or until it is advised in writing by the
          Company that the current Prospectus may be used, and has received copies of any
          additional or supplemental filings that are incorporated or deemed incorporated
          by reference in any such Prospectus. In the event of any Suspension, the
Company           will use its best efforts to cause the use of the Prospectus so
suspended to be           resumed as soon as reasonably practicable after the delivery of
a Suspension           Notice to the Investor. In addition to and without limiting any
other remedies           (including, without limitation, at law or at equity) available
to the Investor,           the Investor shall be entitled to specific performance in the
event that the           Company fails to comply with the provisions of this Section
7.2(c).  





12  












                        (d)      Notwithstanding
the foregoing paragraphs of this Section 7.2, the           Investor shall not be
prohibited from selling Registrable Shares under the           Registration Statement as
a result of Suspensions on more than two occasions           (for two separate suspension
events) of not more than 30 days each in any           twelve-month period.  



                        (e)      Provided
that a Suspension is not then in effect, the Investor may sell           Registrable
Shares under the Registration Statement, provided that it arranges           for delivery
of a current Prospectus to the transferee of such Registrable           Shares. Upon
receipt of a request therefor, the Company has agreed to provide,           at its own
expense, an adequate number of current Prospectuses (including           documents
incorporated by reference therein) to the Investor and to supply           copies to any
other parties requiring such Prospectuses.  



                        (f)      In
the event of a sale of Registrable Shares by the Investor under the
          Registration Statement, the Investor must also deliver to the Company’s
          transfer agent, with a copy to the Company, a Certificate of Subsequent Sale
          substantially in the form attached hereto as Exhibit B, so that the
          Registrable Shares may be properly transferred.  



                7.3      
     Indemnification.  For the purpose of this Section 7.3: 



                (i)      the
term “Selling Stockholder” shall include the Investor and any
          affiliate of such Investor;  



                (ii)      the
term “Registration Statement” shall include any final Prospectus,
          exhibit, supplement or amendment included in or relating to the Registration
          Statement referred to in Section 7.1; and  



                (iii)      the
term “untrue statement” shall include any untrue statement or           alleged
untrue statement, or any omission or alleged omission to state in the
          Registration Statement or Prospectus a material fact required to be stated
          therein or necessary to make the statements therein, in the light of the
          circumstances under which they were made, not misleading.  



                        (a)      The
Company agrees to indemnify and hold harmless each Selling Stockholder from           and
against any losses, claims, damages, liabilities or expenses to which such
          Selling Stockholder may become subject (under the Securities Act or otherwise)
          insofar as such losses, claims, damages, liabilities or expenses (or actions or
          proceedings in respect thereof) arise out of, or are based upon (i) any untrue
          statement of a material fact contained in the Registration Statement or
          Prospectus, (ii) any failure by the Company to fulfill any undertaking included
          in the Registration Statement, or (iii) any breach of any representation,
          warranty or covenant made by the Company in this Agreement, and the Company
will           promptly reimburse such Selling Stockholder for any reasonable legal or
other           expenses incurred in investigating, defending or preparing to defend,
settling,           compromising or paying any such action, proceeding or claim, provided,          however,
that the Company shall not be liable in any such case to the extent           that such
loss, claim, damage, liability or expense arises solely out of, or is           based
solely upon, an untrue statement made in such Registration Statement in
          reliance upon and in conformity with written information furnished to the
          Company by such Selling Stockholder specifically for use in preparation of the
          Registration Statement or the failure of such Selling Stockholder to comply
with           its covenants and agreements contained in Sections 5.3 or 7.2          hereof
respecting sale of the Common Stock and Warrants or any statement or           omission
in any Prospectus that is corrected in any subsequent Prospectus that           was
delivered to the Investor at least three business days prior to the           pertinent
sale or sales by the Investor.  







13  











Notwithstanding the foregoing, the
          Company shall not be liable to any Selling Stockholder for any consequential
          damages, including lost profits, solely with respect to losses, claims,
damages,           liabilities or expenses to which such Selling Stockholder may become
subject           arising out of, or based upon, any breach of any representation,
warranty or           covenant made by the Company in this Agreement.  



                        (b)      The
Investor agrees (severally and not jointly with any Other Investor) to
          indemnify and hold harmless the Company (and each person, if any, who controls
          the Company within the meaning of Section 15 of the Securities Act, each
officer           of the Company who signs the Registration Statement and each director
of the           Company) from and against any losses, claims, damages, liabilities or
expenses           to which the Company (or any such officer, director or controlling
person) may           become subject (under the Securities Act or otherwise), insofar as
such losses,           claims, damages, liabilities or expenses (or actions or
proceedings in respect           thereof) arise solely out of, or are based solely upon,
(i) any failure to           comply with, or breach of, the representations, covenants
and agreements           contained in Section 5 or 7.2 hereof respecting
sale of the Common           Stock and Warrants, or (ii) any untrue statement of a
material fact contained in           the Registration Statement if such untrue statement
was made in reliance upon           and in conformity with written information furnished
by the Investor           specifically for use in preparation of the Registration
Statement (provided,           however, that no Investor shall be liable in any
such case for any untrue           statement in any Registration Statement or Prospectus
if such statement has been           corrected in writing by such Investor and delivered
to the Company at least           three business days prior to the pertinent sale or
sales by the Investor), and           the Investor will reimburse the Company (or such
officer, director or           controlling person), as the case may be, for any legal or
other expenses           reasonably incurred in investigating, defending or preparing to
defend,           settling, compromising or paying any such action, proceeding or claim.
          Notwithstanding the foregoing, (x) the Investor’s aggregate liability
          pursuant to this subsection (b) and subsection (d) shall be limited to the net
          amount received by the Investor from the sale of the Registrable Shares and (y)
          the Investor shall not be liable to the Company for any consequential damages,
          including lost profits, solely with respect to losses, claims, damages,
          liabilities or expenses to which the Company (or any officer, director or
          controlling person as set forth above) may become subject (under the Securities
          Act or otherwise), arising out of, or based upon, any failure to comply with
the           covenants and agreements contained in Section 5.3 or 7.2 hereof
          respecting sale of the Registrable Shares.  



                        (c)      Promptly
after receipt by any indemnified person of a notice of a claim or the           beginning
of any action in respect of which indemnity is to be sought against an
          indemnifying person pursuant to this Section 7.3, such indemnified
person           shall notify the indemnifying person in writing of such claim or of the
          commencement of such action, but the omission to so notify the indemnifying
          party will not relieve it from any liability which it may have to any
          indemnified party under this Section 7.3 (except to the extent that such
          omission materially and adversely affects the indemnifying party’s ability
          to defend such action) or from any liability otherwise than under this Section
7.3. Subject to the provisions hereinafter stated, in case any           such action
shall be brought against an indemnified person, the indemnifying           person shall
be entitled to participate therein, and, to the extent that it           shall elect by
written notice delivered to the indemnified party promptly after           receiving the
aforesaid notice from such indemnified party, shall be entitled to           assume the
defense thereof, with counsel reasonably satisfactory to such           indemnified
person. After notice from the indemnifying person to such           indemnified person of
its election to assume the defense thereof, such           indemnifying person shall not
be liable to such indemnified person for any legal           expenses subsequently
incurred by such indemnified person in connection with the           defense thereof, provided
further, however, that if there exists or shall           exist a conflict of
interest that would make it inappropriate, in the opinion of           counsel to the
indemnified person, for the same counsel to represent both the           indemnified
person and such indemnifying person or any affiliate or associate           thereof, the
indemnified person shall be entitled to retain its own counsel at           the expense
of such indemnifying person; provided, however, that           no
indemnifying person shall be responsible for the fees and expenses of more           than
one separate counsel (together with appropriate local counsel) for all
          indemnified parties. In no event shall any indemnifying person be liable in
          respect of any amounts paid  






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in settlement of any action unless
the indemnifying           person shall have approved the terms of such settlement; provided that such consent shall not be unreasonably withheld. No indemnifying
person shall,           without the prior written consent of the indemnified person,
effect any           settlement of any pending or threatened proceeding in respect of
which any           indemnified person is or could have been a party and indemnification
could have           been sought hereunder by such indemnified person, unless such
settlement           includes an unconditional release of such indemnified person from
all liability           on claims that are the subject matter of such proceeding.  



                        (d)      If
the indemnification provided for in this Section 7.3 is unavailable to
          or insufficient to hold harmless an indemnified party under subsection (a) or
          (b) above in respect of any losses, claims, damages, liabilities or expenses
(or           actions or proceedings in respect thereof) referred to therein, then each
          indemnifying party shall contribute to the amount paid or payable by such
          indemnified party as a result of such losses, claims, damages, liabilities or
          expenses (or actions in respect thereof) in such proportion as is appropriate
to           reflect the relative fault of the Company on the one hand and the Investor
on           the other in connection with the statements or omissions or other matters
which           resulted in such losses, claims, damages, liabilities or expenses (or
actions in           respect thereof), as well as any other relevant equitable
considerations. The           relative fault shall be determined by reference to, among
other things, in the           case of an untrue statement, whether the untrue statement
relates to information           supplied by the Company on the one hand or an Investor
on the other and the           parties’ relative intent, knowledge, access to
information and opportunity           to correct or prevent such untrue statement. The
Company and the Investor each           agree that it would not be just and equitable if
contribution pursuant to this           subsection (d) were determined by pro rata
allocation (even if the Investor and           its affiliates were treated as one entity
for such purpose) or by any other           method of allocation which does not take into
account the equitable           considerations referred to above in this subsection (d).
The amount paid or           payable by an indemnified party as a result of the losses,
claims, damages or           liabilities (or actions in respect thereof) referred to
above in this subsection           (d) shall be deemed to include any legal or other
expenses reasonably incurred           by such indemnified party in connection with
investigating or defending any such           action or claim. Notwithstanding the
provisions of this subsection (d), the           Investor shall not be required to
contribute any amount in excess of the net           amount received by the Investor from
the sale of the Registrable Shares. No           person guilty of fraudulent
misrepresentation (within the meaning of Section           11(f) of the Securities Act)
shall be entitled to contribution from any person           who was not guilty of such
fraudulent misrepresentation. The Investor’s           obligations in this
subsection to contribute are several in proportion to their           sales of
Registrable Shares to which such loss relates and not joint.  



                        (e)      The
parties to this Agreement hereby acknowledge that they are sophisticated
          business persons who were represented by counsel during the negotiations
          regarding the provisions hereof including, without limitation, the provisions
of           this Section 7.3, and are fully informed regarding said provisions.  



                7.4      
     Rule 144.  For a period of two years  following  the date  hereof,  the  Company
 agrees with each holder of Registrable Shares to: 



                        (a)      comply
with the requirements of Rule 144(c) under the Securities Act with           respect to
current public information about the Company;  



                        (b)      use
its best efforts to file with the SEC in a timely manner all reports and           other
documents required of the Company under the Securities Act and the           Exchange Act
(at any time it is subject to such reporting requirements); and  






15  












                        (c)      furnish
to any holder of Registrable Shares upon request (i) a written statement           by the
Company as to its compliance with the requirements of said Rule 144(c)           and the
reporting requirements of the Securities Act and the Exchange Act (at           any time
it is subject to such reporting requirements), (ii) a copy of the most           recent
annual or quarterly report of the Company, and (iii) such other           publicly-filed
reports and documents of the Company as such holder may           reasonably request to
avail itself of any similar rule or regulation of the SEC           allowing it to sell
any such securities without registration.  



                7.5      
Termination of Conditions and Obligations. The conditions precedent imposed by
Section 5 or this Section 7 upon Dispositions of the Registrable Shares by
the Investor shall cease and terminate as to any particular number of the Registrable
Shares and the restrictive legend shall be removed when such Registrable Shares shall have
been effectively registered under the Securities Act and sold or otherwise disposed of in
accordance with the intended method of disposition set forth in the Registration Statement
covering such Registrable Shares or at such time as an opinion of counsel reasonably
satisfactory to the Company shall have been rendered to the effect that such conditions
are not necessary in order to comply with the Securities Act (provided that such opinion
shall not be required if the Company shall be furnished with written documentation
reasonably satisfactory to it that such Registrable Shares are being transferred in a
customary transaction exempt from registration under Rule 144 under the Securities Act). 



         8.       
          Notices. All notices, requests, consents and other communications
          hereunder shall be in writing, shall be mailed (A) if within domestic United
          States by first-class registered or certified airmail, or nationally recognized
          overnight express courier, postage prepaid, or by facsimile, or (B) if delivered
          from outside the United States, by International Federal Express or facsimile,
          and shall be deemed given (i) if delivered by first-class registered or
          certified mail domestic, three business days after so mailed, (ii) if delivered
          by nationally recognized overnight carrier, one business day after so mailed,
          (iii) if delivered by International Federal Express, two business days after so
          mailed, and (iv) if delivered by facsimile, upon electric confirmation of
          receipt and shall be delivered as addressed as follows: 



                        (a)      if
to the Company, to:  



	  	
AVAX Technologies, Inc.

                                    2000 Hamilton Street

                                    Suite 204

                                    Philadelphia, PA  19130

                                    Phone:  (215) 241-9670

                                    Fax:    (215) 241-9684

                                    Attention:  Richard P. Rainey, President 






                                   with
a copy to:  



	  	
Gilmore
& Bell, P.C.

2405 Grand Boulevard, Suite 1100

Kansas City, Missouri 64108-2521

Phone: (816) 221-1000

Fax: (816) 221-1018

Attention: Richard M. Wright, Jr.  






                        (b)      if
to the Investor, at its address on the signature page hereto, or at such           other
address or addresses as may have been furnished to the Company in writing.  



         9.       
          Changes. This Agreement may not be modified or amended except pursuant to
          an instrument in writing signed by the Company and the Investor. 






16  












         10.       
          Headings. The headings of the various sections of this Agreement have
          been inserted for convenience of reference only and shall not be deemed to be
          part of this Agreement. 



         11.       
          Severability. In case any provision contained in this Agreement should be
          invalid, illegal or unenforceable in any respect, the validity, legality and
          enforceability of the remaining provisions contained herein shall not in any way
          be affected or impaired thereby. 



         12.       
          Governing Law. This Agreement shall be governed by, and construed in
          accordance with, the internal laws of the State of New York, without giving
          effect to the principles of conflicts of law. 



         13.       
          Entire Agreement. This Agreement constitutes the entire agreement between
          the parties hereto pertaining to the subject matter hereof, and any and all
          other written or oral agreements relating to such subject matter are expressly
          cancelled. 



         14.       
          Finders Fees. Except for placement fees payable to Privateq Advisors AG
          by the Company, neither the Company nor the Investor nor any affiliate thereof
          has incurred any obligation which will result in the obligation of the other
          party to pay any finder’s fee or commission in connection with this
          transaction. 



         15.       
          Counterparts. This Agreement may be executed in two or more counterparts,
          each of which shall constitute an original, but all of which, when taken
          together, shall constitute but one instrument, and shall become effective when
          one or more counterparts have been signed by each party hereto and delivered to
          the other parties. 



         16.       
          Successors and Assigns. This Agreement shall inure to the benefit of and
          be binding upon the successors and permitted assigns of the Company and the
          Investors, including without limitation and without the need for an express
          assignment, affiliates of the Investors. With respect to transfers that are not
          made pursuant to the Registration Statement, the rights and obligations of an
          Investor under this Agreement shall be automatically assigned by such Investor
          to any transferee of all or any portion of such Investor’s Registrable
          Shares who is a Permitted Transferee (as defined below); provided, however, that
          within two business days prior to the transfer, (i) the Company is provided
          notice of the transfer including the name and address of the transferee and the
          number of Registrable Shares transferred; and (ii) that such transferee agrees
          in writing to be bound by the terms of this Agreement. (For purposes of this
          Agreement, a “Permitted Transferee” shall mean any Person who is an
          “accredited investor,” as that term is defined in Rule 501 (a) of
          Regulation D under the Securities Act. Upon any transfer permitted by this
          Section 17, the Company shall be obligated to such transferee to perform
          all of its covenants under this Agreement as if such transferee were an
          Investor. 



         17.       
          Expenses. Each of the Company and the Investors shall bear its own
          expenses in connection with the preparation and negotiation of the Agreement. 






17