Exhibit 10.1 to AVAX Technologies, Inc. Form 8-K dated June 2, 2004





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 May 10,
2004, 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 $0.35 and $0.39 per
share for the Series 2004A Warrants and the Series 2004B Warrants, respectively,
pursuant to the forms of Warrants delivered simultaneously with this Agreement,
to certain investors in a private placement (the “Offering”). For
every 6.667 shares of Common Stock purchased by the Investor in this Offering,
such Investor shall be entitled to receive one Series 2004A Warrant and one
Series 2004B Warrant to purchase one share of Common Stock. The purchase price
for the Common Stock and the associated Warrants will be $0.30 (“Price Per
Share”) for each share of Common Stock. The purchase price is allocated as
follows: $0.27 per share of Common Stock, $0.01 per Series 2004A Warrant and
$0.02 per Series 2004B 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 $0.30 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.  	  	The Investor
represents that, except as set forth below, (a) it has had no position, office
or other material relationship within the past three years with the Company or
its affiliates, (b) neither it, nor any group of which it is a member or to
which it is related, beneficially owns (including the right to acquire or vote)
any securities of the Company and (c) it has no direct or indirect affiliation
or association with any NASD member. Exceptions: 











(If no exceptions, write
“none.” If left blank, response will be deemed to be
“none.”) 







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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:   
	 	

	   		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 2004A Warrants:   ____________.

Number of Series 2004B Warrants:   __________ 




Date: May ___, 2004 



        If
Purchaser 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	 





	AGREED AND ACCEPTED:

AVAX Technologies, Inc.  
	



	By: 	 	Richard P. Rainey 	 	 	 
	Title: 	 	President 	 	 	 
	
Date: 	 	
May 17, 2004 	 	 	 








[SIGNATURE PAGE 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 40,000,000 shares of Common Stock, and the issuance of Series 2004A
Warrants to purchase up to 6,000,000 shares of Common Stock and Series 2004B
Warrants to purchase up to 6,000,000 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 April 12, 2004, 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”); and 







	(ii) 	  	
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”). 







              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
April 12, 2004, there were approximately (i) 19,210,846 shares of
Common Stock issued and outstanding, (ii) 3,760,904 shares of Common Stock
reserved for issuance under the Company’s stock option plans, including
1,7440,889 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) 513,430 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) 9,673,582 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 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 




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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. 



              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 




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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. 



              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.





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              4.14     S-3
Status.     The Company meets the requirements for
filing Form S-3 for the registration of the resale of the Common Stock and the
Common Stock issuable upon exercise of the Warrants by the Investors and will
use its best efforts to maintain S-3 status with the SEC during the Registration
Period (as defined in Section 7.1(c)). 



              4.15     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. 



              4.16     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. 



              4.17     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. 



              4.18     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. 



              4.19     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. 



              4.20     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 4.23(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 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 




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transactions; or (z) pursuant
to a strategic partnership or alliance agreement, loan agreement, equipment lease or
similar commercial agreement (including licensing and similar arrangements).  



              4.21     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, delivered to the Investor; (ii) the Investor is acquiring the number
of shares of Common Stock and Warrants set forth on the signature page 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 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; (iv) 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; (v) 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 (vi) 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 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. 




-7- 










              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. 



              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. 




-8- 











              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 30 days after the Closing Date, a
registration statement (the “Registration Statement”) on Form S-3 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 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; 




-9- 











                        (b)   use
its best efforts, subject to receipt of necessary information from the
Investors, to cause the Registration Statement to become effective within 120
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; 



                        (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 




-10- 











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 30 days after the Closing Date or (ii) been
declared effective by the SEC within 120 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. 



              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 




-11- 











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).




                        (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 




-12- 











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.
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. 




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                        (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 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 




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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 



                        (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. 




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              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. 



        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. 





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        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 commissions payable to Rodman & Renshaw or 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. 












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