Document:

ex10-21.htm

THE EXCHANGE CONTEMPLATED HEREIN IS INTENDED TO COMPORT WITH THE REQUIREMENTS OF SECTION 3(a)(9) OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

EXCHANGE AGREEMENT

 

This EXCHANGE AGREEMENT (this “Agreement”) is entered into October 27, 2011, by and between ●, an Illinois limited liability company (“SGI”), and Kedem Pharmaceuticals Inc. (formerly known as Global Health Ventures Inc.), a Nevada corporation (the “Company”).

 

A. Pursuant to that certain Securities Purchase Agreement dated March 19, 2010 (the “Purchase Agreement”) between SGI and the Company, SGI acquired that certain Four Million Two Hundred Thousand Dollar ($4,200,000) debenture (the “Debenture”) issued by the Company to SGI.

B. SGI and the Company desire to exchange the Debenture (the “Note Exchange”) for a new secured convertible promissory note having a principal balance of Two Million Five Hundred Seven Thousand Forty-Two Dollars and Sixty-Two Cents ($2,507,042.62), which reflects the sum of all accrued and unpaid interest, penalties, fees, and adjustments owed under the Debenture as of the date hereof minus Twenty-Five Thousand Dollars ($25,000), and substantially in the form attached hereto as
Exhibit A (the “Note”) in consideration of the termination of the Debenture.

C. Pursuant to the terms and conditions hereof, SGI and the Company agree to exchange the Debenture for the Note, which Note will be secured by all of the assets of the Company as set forth in that certain Security Agreement of even date herewith (the “Security Agreement”) and is convertible into shares (the “Conversion Shares”) of common stock of the Company, par value $0.0001 per share (the “Common
Stock”).

 

NOW, THEREFORE, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties and covenants herein contained, the parties hereto agree as follows:

 

1. Issuance of Note. Contemporaneously with the execution and delivery of this Agreement, the Note Exchange shall occur whereby SGI shall surrender the Debenture and the Company shall issue the Note. SGI and the Company also agree that upon surrender, the Debenture shall be cancelled and the amount owed by the Company to SGI in consideration for the Note Exchange shall hereafter be evidenced by the Note.

2. Closing Date; Deliveries. The closing of the transaction contemplated hereby (the “Closing”) shall take place simultaneously with the execution of each of this Agreement, that certain Forbearance Agreement of even date herewith (the “Forbearance Agreement”), the Note, the Security Agreement, and that certain Judgment by Confession of even date herewith executed by the parties and in conjunction with delivery of
the Debenture (or such other date as is mutually agreed to by the Company and SGI) (the “Closing Date”). On the Closing Date, prior to or contemporaneously with the execution and delivery of this Agreement:

(a) SGI shall deliver the Debenture to the Company for cancellation; and

(b) the Company shall issue the Note to SGI.

3. Holding Period, Tacking and Legal Opinion. The Company represents, warrants and agrees that for the purposes of Rule 144 (“Rule 144”) promulgated under the Securities Act of 1933, as amended (the “Securities Act”), the holding period of the Note (including the corresponding Conversion Shares) will include the holding period of the Debenture from March 19, 2010, which date is the date that the Debenture was issued.
The Company agrees not to take a position contrary to this Section 3 and further acknowledges that the Debenture has not been amended or altered since such date. In addition, the Company covenants that it has not and will not take any action that would otherwise invalidate the availability of the exemption provided by Section 3(a)(9) of the Securities Act for the transaction described herein. The Company agrees to take all action necessary to issue the Note (and any Conversion Shares) without restriction and not containing any restrictive legend without the need for any action by SGI. In furtherance thereof, prior to the Closing and any subsequent Closing between the Company and SGI or upon submission by SGI of a Conversion Notice (as defined in the Note), the Company shall use its best efforts to cause counsel to the Company to provide to SGI an opinion in a form satisfactory to SGI in
its sole discretion providing that: (i) the Conversion Shares issuable to SGI upon conversion of the Note may be resold pursuant to Rule 144 without volume or manner-of-sale restrictions; and (ii) the transaction contemplated hereby and all other documents associated with this transaction comport with the requirements of Section 3(a)(9) of the Securities Act. In the alternative, SGI may, in its sole discretion, cause counsel of its own choosing to provide the opinion described in the foregoing sentence at the reasonable expense of the Company. The Company is not currently subject to Rule 144(i). The Note is being issued in substitution of and in exchange for and not in satisfaction of the Debenture. The Note shall not constitute a novation or satisfaction and accord of the Debenture. Without limiting any of the terms,
conditions or covenants contained in this Agreement or other documents, if at any time it is determined that any Conversion Shares are not freely tradable without restriction or limitation pursuant to Rule 144, then the Company shall promptly register the resale of all Conversion Shares under the Securities Act by filing a registration statement with the United States Securities and Exchange Commission (the “SEC”) as soon as practicable (but in no event later than 30 days from the date of this Agreement) and using its best efforts to cause such registration statement to be declared effective as soon as practicable. The Company acknowledges and understands that the representations and agreements of the Company in this Section 3 are a material inducement to SGI’s
decision to consummate the transaction contemplated herein.

  

1

  

 

4. SGI’s Representations and Warranties. SGI represents and warrants to the Company that:

(a) Investment Purpose. SGI is acquiring the Note and the Conversion Shares (collectively, the “Securities”) for its own account for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted under the Securities Act; provided, however, that by making the representations herein, SGI reserves the right to dispose of the Securities at any time in accordance with or pursuant to an effective registration statement covering
such Securities or an available exemption under the Securities Act.

(b) Accredited Investor Status. SGI is an “Accredited Investor” as that term is defined in Rule 501(a)(3) of Regulation D promulgated under the Securities Act.

(c) Transfer or Resale. SGI understands that: (i) the Securities have not been and are not being registered under the Securities Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) SGI shall have delivered to the Company an opinion of counsel, in a generally acceptable form, to the effect that any Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration requirements, or (C) SGI provides the Company with reasonable assurances that such Securities can be sold, assigned or transferred pursuant
to Rule 144 in each case following the applicable holding period set forth therein (which assurance may be provided in the form of the opinion to be drafted by the Company’s counsel pursuant to Section 3); (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which SGI (or the Person (defined below) through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the Securities Act) may require compliance with some other exemption under the Securities Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other Person is under any obligation to register the Securities under the
Securities Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder.

(d) Authorization, Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of SGI and is a valid and binding obligation of SGI enforceable against it in accordance with its terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.

(e) Brokers. There are no brokerage commissions, finder’s fees or similar fees or commissions payable by SGI in connection with the transaction contemplated hereby based on any agreement, arrangement or understanding with SGI or any action taken by SGI.

5. Representations, Warranties, Covenants of the Company. In addition to the representations and warranties set forth in the Forbearance Agreement and the Security Agreement, which are incorporated herein, the Company hereby makes the representations and warranties set forth below to SGI (in addition to those set forth elsewhere herein):

(a) Organization and Qualification. The Company has been duly organized, validly exists, and is in good standing under the laws of the State of Nevada. The Company has full corporate power and authority to enter into this Agreement and this Agreement has been duly and validly authorized, executed and delivered by the Company and is a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating
to, or affecting generally, the enforcement of applicable creditors’ rights and remedies. The Company’s Board of Directors has duly adopted a resolution, incorporated into a Secretary Certificate attached hereto as Exhibit B, authorizing this Agreement and ratifying its terms.

(b) Authorization, Enforcement, Compliance with Other Instruments. (i) The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement, the Note, and each of the other agreements entered into by the parties hereto in connection with the transaction contemplated by this Agreement (collectively, the “Transaction Documents”) and to issue the Securities in accordance with the terms hereof, (ii) the execution and delivery of the Transaction Documents by the Company and the consummation by it of the transaction contemplated hereby
and thereby, including, without limitation, the issuance of the Securities and the reservation for issuance and the issuance of the Conversion Shares, have been duly authorized by the Company’s Board of Directors and no further consent or authorization is required by the Company, its Board of Directors or its stockholders, (iii) the Transaction Documents have been duly executed and delivered by the Company, (iv) the Transaction Documents constitute valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of creditors’ rights and remedies, and (v) the Company’s signatory has full corporate or other
requisite authority to execute the Transaction Documents and to bind the Company.

  

2

  

 

(c) Issuance of Securities. The issuance of the Note is duly authorized and the Note is free and clear of all taxes, liens, claims, pledges, mortgages, restrictions, obligations, security interests and encumbrances of any kind, nature and description. Upon conversion in accordance with the terms of the Note, the Conversion Shares, when issued, will be validly issued, fully paid and non-assessable, free from all taxes, liens, claims, pledges, mortgages, restrictions, obligations, security interests and encumbrances of any kind, nature and description.

(d) No Conflicts. The execution and delivery by the Company of, and the performance by the Company of its obligations under this Agreement in accordance with the terms of this Agreement will not contravene any provision of applicable law or the charter documents of the Company or any agreement or other instrument binding upon the Company, or any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Company, and no consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement in accordance with the terms of this Agreement.

(e) SEC Documents: Financial Statements. None of the Company’s filings with the SEC (collectively, the “SEC Documents”) contained, at the time they were filed, any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading. Since March 19, 2010, the Company has filed all reports, schedules, forms, statements and other documents required to be
filed by the Company with the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Document prior to the expiration of any such extension, except for certain current reports on Form 8-K, full details of which have been disclosed to SGI. As of their respective dates, the financial statements of the Company included in the Company’s SEC Documents, as amended, complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles, consistently applied,
during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). No other information provided by or on behalf of the Company to SGI which is not included in the Company’s SEC Documents, including, without limitation, information referred to in this Agreement, contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstance
under which they are or were made, not misleading.

(f) Brokers. The Company has taken no action which would give rise to any claim by any Person for a brokerage commission, placement agent or finder’s fees or similar payments by SGI relating to this Agreement or the transaction contemplated hereby. Except for such fees arising as a result of any agreement or arrangement entered into by SGI without the knowledge of the Company (a “Buyer’s Fee”), SGI shall have no obligation with respect to such fees or with
respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section 5(f) that may be due in connection with the transaction contemplated hereby. The Company shall indemnify and hold harmless each of SGI, its employees, officers, directors, stockholders, managers, agents, and partners, and their respective affiliates, from and against all claims, losses, damages, costs (including the costs of preparation and attorneys’ fees) and expenses suffered in respect of any such claimed or existing fees (other than a Buyer’s Fee, if any).

(g) Note. The Note has not been sold, transferred, assigned, exchanged, pledged, hypothecated or encumbered in any way, whether by the Company or by any other Person. The Company makes this representation and warranty after due inquiry. After due inquiry, the Company and all subsequent transferees have complied at all times in all respects with all securities and other applicable laws in relation with the issuance, holding and transfers of the Note.

(h)  No Affiliate. SGI is not and has never been an affiliate of the Company, as that term is defined in the Securities Act.

(i) Shares Exempt. Subject to the performance by SGI of its obligations under this Agreement and the accuracy of the representations and warranties of SGI, the offering and sale of the Conversion Shares will be exempt from the registration requirements of the Securities Act.

(j) Absence of Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending against or affecting the Company, the Common Stock or any of the Company’s subsidiaries, wherein an unfavorable decision, ruling or finding would have a material adverse effect on the Company or its operations.

(k) No Additional Consideration. There has been no additional or new consideration received by the Company for the Note. The delivery, surrender, and cancelation of the Debenture, as described herein and in the Forbearance Agreement, constitutes the sole consideration for this Agreement and the resulting exchange of the Debenture for the Note.

(l) Recitals. All of the information, facts and representations set forth in the Recitals section of this Agreement are in all respects true and accurate as of the date hereof and are incorporated as representations and warranties of the Company as if set forth in this Section 5.

 

  

3

  

 

(m) Reporting Status. With a view to making available to SGI or its assignees the benefits of Rule 144 or any similar rule or regulation of the SEC that may at any time permit SGI or its assignees to sell securities of the Company to the public without registration, and as a material inducement to SGI’s purchase of the Securities, the Company represents, warrants and covenants to the following:

(i)  The Company’s Common Stock is registered under Section 12(g) of the Exchange Act.

(ii) The Company is not and for at least the last 12 months prior to the date hereof has not been a “shell company,” as defined in paragraph (i)(1)(i) of Rule 144 or Rule 12(b)(­2) of the Exchange Act.

(iii) So long as SGI beneficially owns the Note and for at least twenty (20) trading days thereafter, the Company shall file all reports required to be filed with the SEC pursuant to Sections 13 or 15(d) of the Exchange Act, shall take all reasonable action under its control to ensure that adequate current public information with respect to the Company, as required in accordance with Rule 144(c)(2), is publicly available, and shall not terminate its status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would permit such termination.

(iv) From the date hereof until the date that is six (6) months after all the Conversion Shares either have been sold by SGI, or may permanently be sold by SGI without any restrictions pursuant to Rule 144 (the “Registration Period”), the Company shall  timely make all filings required to be made by it under the Securities Act, the Exchange Act, Rule 144 or any United States state securities laws and regulations thereof applicable to the Company or by the rules and regulations of the principal trading market and such reports shall
conform to the requirement of the applicable laws, regulations and government agencies, and, unless such filing is publicly available on the SEC’s EDGAR system (via the SEC’s web site at no additional charge), the Company shall provide a copy thereof to SGI promptly after such filing. Additionally, within four (4) business days following the date of this Agreement, the Company shall file a current report on Form 8-K describing the terms of the transaction contemplated by the Transaction Documents in the form required by the Exchange Act and approved by SGI and attaching the material transaction documents as exhibits to such filing. The Company further agrees to redact all confidential information from such Form 8-K.

(v) The Company shall furnish to SGI so long as SGI owns any Securities, promptly upon request, (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to permit SGI to sell such securities pursuant to Rule 144 without registration.

(n) Issuer Status. During the Registration Period the Company shall not terminate its status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would otherwise permit such termination.

(o) Reservation of Shares. The Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, such number of shares of Common Stock as shall be necessary to effect the full conversion of the Note, but never less than Five Million (5,000,000) shares (the “Share Reserve”). If at any time the Share Reserve is insufficient to effect the full conversion of the Note, the Company shall immediately increase the Share Reserve accordingly. If the Company does not have sufficient authorized and unissued shares of Common Stock available to
increase the Share Reserve, the Company shall call and hold a special meeting of the shareholders within thirty (30) days of such occurrence, for the sole purpose of increasing such number of authorized shares. The Company’s management shall recommend to the Company’s shareholders to vote in favor of increasing the number of authorized shares of Common Stock. Management shall also vote all of its shares in favor of increasing the number of authorized shares of Common Stock. The Company shall use its best efforts to cause such additional shares of Common Stock to be authorized so as to comply with the requirements of this Section 5(o). As of the date hereof, the Company has sufficient authorized and unissued shares to carry out its obligations under this Agreement.

(p) Listings or Quotation. The Common Stock shall be listed or quoted for trading on any of (i) NYSE Amex, (ii) the New York Stock Exchange, (iii) the Nasdaq Global Market, (iv) the Nasdaq Capital Market, (v) the OTC Bulletin Board or (vi) the OTCQX or OTCQB. The Company shall promptly secure the listing of all of the Conversion Shares upon each national securities exchange and automated quotation system, if any, upon which the Common Stock is then listed or eligible for quotation (subject to official notice of issuance) and shall maintain such listing of all securities from time to time issuable under the terms of this Agreement. The Company will comply in
all material respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the principal trading market and/or the Financial Industry Regulatory Authority, Inc. or any successor thereto, as the case may be, applicable to it at least through the date which is sixty (60) days after the date on which the Note has been converted or has been paid in full.

(q) Full Disclosure. The Company shall make full disclosure of all material terms of this Agreement and the Note and, if and when SGI effects conversions pursuant to the terms of the Note, the Common Stock the Company issues to satisfy such conversions.

  

4

  

 

(r) Acknowledgement of Obligations. The Company hereby acknowledges, confirms and agrees that the obligations of the Company to SGI under the Note and the Forbearance Agreement are unconditionally owing by the Company to SGI without offset, defense or counterclaim of any kind, nature or description whatsoever.

(s) Binding Effect of Documents. The Company hereby acknowledges, confirms and agrees that: (i) each of the Transaction Documents and agreements entered into in connection with the Debenture (including, without limitation, the Securities Purchase Agreement) and the Note to which it is a party has been duly executed and delivered to SGI by the Company, and each is in full force and effect as of the date hereof, (ii) the agreements and obligations of the Company contained in such documents and in this Agreement constitute legal, valid and binding obligations of the Company, enforceable against
it in accordance with their respective terms, and the Company has no valid defense to the enforcement of such obligations, and (iii) SGI is and shall be entitled to the rights, remedies and benefits provided for in such documents and applicable law, without setoff, defense or counterclaim of any kind, nature or descriptions whatsoever.

(t) Corporate Existence. So long as any obligations remain outstanding under the Note, the Company shall not directly or indirectly consummate any merger, reorganization, restructuring, reverse stock split consolidation, sale of all or substantially all of the Company’s assets or any similar transaction or related transaction (each such transaction, an “Organizational Change”) unless, prior to the consummation of an Organizational Change, the Company obtains the written consent of SGI, such consent not to be unreasonably withheld. In any such case, the Company will make
appropriate provision with respect to SGI’s rights and interests to insure that the provisions of this Section 5(t) will thereafter be applicable to the Note.

(u) DWAC Eligibility. For so long as any portion of any of the Note remains outstanding and until all Conversion Shares are delivered to SGI, the Company shall use its best efforts to obtain and maintain DWAC eligibility.

(v) Future Financing Arrangement. The Company will not, during the six (6) months following the date hereof, or until such time as the Note is fully satisfied, enter into any transaction or financing arrangement whereby it will issue, or may become obligated to issue, any additional Common Stock, whether directly or pursuant to conversions or exchanges of other securities of the Company (a “Future Financing Arrangement”), without first offering to SGI a right of first refusal on such Future Financing Arrangement;
provided, however, that if the Company is in breach of any of its obligations under this Agreement, then SGI shall have the right, in its sole and absolute discretion, to disallow any Future Financing Arrangement, notwithstanding the right of first refusal.

	
6.  

	
Releases and Waivers.

 

(a) Upon the full conversion or full repayment of the Note and delivery of the Common Stock to SGI as set forth in the Note, SGI releases and forever discharges the Company of and from any and all manner of actions, suits, debts, sums of money, contracts, agreements, claims and demands at law or in equity, that SGI had, or may have arising from the Note.

 

(b) The Company hereby affirms that the obligations under the Note and as set forth herein are valid and binding obligations of the Company, and hereby waives, to the fullest extent allowable under law, any and all defenses that may be available to a debtor under applicable state and federal law including, without limiting the foregoing, any and all defenses available to a debtor or maker under the provisions of the Uniform Commercial Code pertaining to negotiable instruments.

	
7.  

	
Miscellaneous.

(a) Governing Law; Venue. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Illinois without regard to the principles of conflict of laws. Each party hereto submits to the jurisdiction of any state or federal court sitting in Cook County, Illinois in any proceeding arising out of or relating to this Agreement and agrees that all claims in respect of the proceeding may be heard and determined in any such court and hereby expressly submits to the personal jurisdiction and venue of such court for the purposes hereof and expressly waives any claim of improper venue and any claim that such courts are an inconvenient
forum. Each party hereto hereby irrevocably consents to the service of process of any of the aforementioned courts in any such proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to its address as set forth herein, such service to become effective ten (10) days after such mailing.

(b) Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The parties hereto confirm that any electronic copy of another party’s executed counterpart of this Agreement (or its signature page thereof) will be deemed to be an executed original thereof.

(c) Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

  

5

  

 

(d) Severability. If any part of this Agreement is construed to be in violation of any law, such part shall be modified to achieve the objective of the parties to the fullest extent permitted and the balance of this Agreement shall remain in full force and effect.

(e) Entire Agreement, Amendments. This Agreement, together with the Note and the other Transaction Documents, supersedes all other prior oral or written agreements between SGI, the Company, their affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor SGI makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived
or amended other than by an instrument in writing signed by both SGI and the Company.

(f) Notices. Any notices, consents, waivers, or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered (i) upon receipt, when delivered personally; (ii) upon confirmation of receipt, when sent by facsimile; (iii) three (3) days after being sent by U.S. or Canadian certified mail, as the case may be, return receipt requested, or (iv) one (1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses for such communications shall be:

If to the Company, to:                  Kedem Pharmaceuticals Inc.

Attn: Hassan Salari

885 West Georgia Street, Suite 1500

Vancouver, British Columbia, Canada V6C 3E8

Facsimile: (604) 324-4845

With a copy, which shall not constitute notice, to:

●

If to SGI, to:                               ●

With a copy, which shall not constitute notice, to:

●

Each party shall provide five (5) days’ prior written notice to the other party of any change in address or facsimile number.

(g) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. This Agreement or any of the severable rights and obligations inuring to the benefit of or to be performed by SGI hereunder may be assigned by SGI to a third party, including its financing sources, in whole or in part.

(h) No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and nothing in this Agreement, express or implied, is intended to confer upon any other person any rights, remedies, obligations or liabilities of any nature whatsoever.

(i) Attorneys’ Fees. If any action at law or in equity is brought by a party to enforce or interpret the terms of this Agreement, the Prevailing Party (as defined hereafter) shall be entitled to reasonable attorneys’ fees, costs and disbursements, in addition to any other relief to which such party may be entitled. “Prevailing Party” shall mean the party in any litigation or enforcement action that prevails in the highest number of final rulings, counts or judgments adjudicated by a court of competent jurisdiction.

 

  

6

  

 

(j) Further Assurances. Each party shall do and perform or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transaction contemplated hereby.

(k) Ownership Limitation. If at any time after the Closing, SGI shall or would receive shares of the Common Stock in payment of interest or principal under the Note or upon conversion of the Note, so that SGI would, together with other shares of Common Stock held by it or its affiliates, own or beneficially own by virtue of such action or receipt of additional shares of Common Stock a number of shares exceeding 9.99% of the number of shares of the Common Stock outstanding on such date (the “9.99% Cap”), the Company shall not be obligated and shall not issue to SGI shares of the
Common Stock which would exceed the 9.99% Cap, but only until such time as the 9.99% Cap would no longer be exceeded by any such receipt of shares of Common Stock by SGI. The foregoing limitations are enforceable, unconditional, and non-waivable.

(l) Specific Performance. The Company and SGI acknowledge and agree that irreparable damage would occur in the event that any provision of this Agreement or any of the other Transaction Documents were not performed in accordance with its specific terms or were otherwise breached. It is accordingly agreed that the parties (including any subsequent holder of the Note) shall be entitled to an injunction or injunctions, without (except as specified below) the necessity to post a bond, to prevent or cure breaches of the provisions of this Agreement or such other Transaction Document and to enforce specifically the terms and provisions
hereof or thereof, this being in addition to any other remedy to which any of them may be entitled by law or equity; provided, however, that the Company, upon receipt of a Conversion Notice, may not fail or refuse to deliver the stock certificates and the related legal opinions, if any, or if there is a claim for a breach by the Company of any other provision of this Agreement or any of the other Transaction Documents, the Company shall not raise as a legal defense any claim that SGI or anyone associated or affiliated with SGI or its assigns has violated any provision hereof or of any other Transaction Document or has engaged in any violation of law or any other claim or defense, unless the Company has first posted a bond for one hundred fifty percent (150%) of the principal balance of the Note
and, if relevant, then obtained a court order specifically directing it not to deliver such stock certificates to SGI. The proceeds of such bond shall be payable to SGI or any other holder of the Note to the extent that SGI or such other holder obtains judgment or its defense is recognized. Such bond shall remain in effect until the completion of the relevant proceeding and, if SGI or the applicable holder appeals therefrom, until all such appeals are exhausted. This provision is deemed incorporated by reference into each of the Transaction Documents as if set forth therein in full.

 

  

7

  

 

[Remainder of page intentionally left blank; signature page to follow]

 

  

8

  

IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Agreement on the date first written above.

Exhibits                                                                      

Exhibit A – Note

Exhibit B – Secretary’s Certificate

	  	 	
SGI:

	  	 	  
	  	 	
●

	  	 	  
	 	By:	

●, Manager

	  	 	  
	  	By: 	
_________________________________                                                 

	  	 	
●, President

	  	 	  
	  	 	  
	  	 	
THE COMPANY:

	  	 	  
	  	 	
KEDEM PHARMACEUTICALS INC.

	  	 	  
	  	By:	
__________________________________      

	  	 	
Hassan Salari, Chief Executive Officer

 

[Signature Page to Exchange Agreement]

 

  

9

  

 

EXHIBIT A

NOTE

 

  

10

  

 

EXHIBIT B

SECRETARY’S CERTIFICATE

 

11ex10-22.htm

THIS  CONVERTIBLE PROMISSORY NOTE IS ISSUED IN EXCHANGE FOR THE DEBENTURE ORIGINALLY ISSUED ON MARCH 19, 2010_BY GLOBAL HEALTH VENTURES INC., WHICH LATER MERGED WITH KEDEM PHARMACEUTICALS INC., BY THE BORROWER (AS DEFINED BELOW) TO  THE LENDER (AS DEFINED BELOW) WITHOUT ANY ADDITIONAL CONSIDERATION. FOR PURPOSES OF RULE 144, THIS NOTE SHALL BE DEEMED TO HAVE BEEN ISSUED ON MARCH 19, 2010.

 

NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

COMPANY NOTE

	
$2,507,042.62

	
October 27, 2011

KEDEM PHARMACEUTICALS INC.

 

Secured Convertible Promissory Note

 

FOR VALUE RECEIVED, Kedem Pharmaceuticals Inc. (formerly known as Global Health Ventures Inc.), a Nevada corporation (the “Borrower”), hereby promises to pay to the order of ●, an Illinois limited liability company, or its successors or assigns (the “Lender,” and together with the Borrower, the “Parties”), the principal sum of
$2,507,042.62 (the “Principal Balance”) together with all accrued and unpaid interest thereon, fees incurred, adjustments, or other amounts owing hereunder, all as set forth below in this Secured Convertible Promissory Note (this “Note”). This Note is issued pursuant to that certain Exchange Agreement of even date herewith, entered into by and between the Borrower and the Lender (the “Exchange Agreement”). Defined terms used herein but not otherwise defined shall have the meanings ascribed thereto in the Exchange Agreement.

 

1. Principal and Interest Payments. Interest on the Outstanding Balance (as defined below) of this Note shall accrue interest at the rate of twelve percent (12%) per annum. Interest shall accrue on the basis of a 360 day year for the actual number of days elapsed. The Borrower shall pay to the Lender all outstanding amounts due hereunder on or before September 18, 2014 (the “Maturity Date”). All payments owing hereunder shall be in lawful money of the United States of America delivered to
the Lender at the address furnished to the Borrower for that purpose. All payments shall be applied first to (a) costs of collection, if any, then to (b) fees and penalties, if any, then to (c) accrued and unpaid interest, and thereafter to (d) principal. For purposes hereof, the term “Outstanding Balance” means the sum of the outstanding Principal Balance and any accrued but unpaid interest, collection and enforcement costs, adjustments, and any other fees or penalties incurred under this Note.

 

2. Conversion.

 

(a) Optional Conversion. At any time or from time to time after the date of this Note and prior to payment in full of the entire Outstanding Balance, the Lender shall have the right, at the Lender’s option, to convert the Outstanding Balance, in whole or in part (the “Conversion Amount”), into shares of common stock, par value $0.001 per share (the
“Common Stock”) of the Borrower. The number of shares of Common Stock to be issued upon a conversion hereunder shall be determined by dividing (a) the Conversion Amount by (b) the Conversion Price (as defined below).

 

(i) Conversion Price. For purposes of this Note, the “Conversion Price” is defined as 70% (the “Conversion Factor”) of the average of the three lowest closing bid prices for the Common Stock (the “Closing Bid Price”) during the twenty (20) Trading Days (as defined below) immediately preceding the
Conversion Date (as defined below).

 

(ii) Trading Data. The trading data used to compute the Closing Bid Price shall be as reported by Bloomberg, LP (“Bloomberg”), or if such information is not then being reported by Bloomberg, then as reported by such other data information source as may be selected by the Lender. “Trading Day” means any day during which the primary market on which the
Common Stock is principally traded at the relevant time is open for business.

 

  

1

  

 

(b) Conversion Mechanics. In order to convert this Note into Common Stock, the Lender shall give written notice to the Borrower at its principal corporate office or the notice address provided in the Exchange Agreement (which notice, notwithstanding anything herein to the contrary, may be given via facsimile, email, or other means in the discretion of the Lender) pursuant to the forms attached hereto as Exhibit A (the
“Conversion Notice”) and Exhibit A-1 (the “Conversion Worksheet”) of the election to convert the same pursuant to this Section 2(b) (the date on which a Conversion Notice is given, a “Conversion Date”). Such Conversion Notice shall state the Conversion Amount, the number of shares of Common Stock to which the Lender is entitled pursuant to the Conversion Notice (the “Conversion Shares”), and the account into which the shares of Common Stock are to be
deposited (the “Lender Account”). The Borrower shall immediately, but in no event later than three (3) Trading Days after receipt of a Conversion Notice (the “Required Delivery Date”), deliver the Conversion Shares to the Lender Account. Notwithstanding anything to the contrary herein, all such deliveries of Conversion Shares shall be electronic, via DWAC, provided the Borrower is DWAC eligible. In the event the Borrower fails to deliver the Conversion Shares on or before the Required Delivery Date, in addition to all other remedies available to the Lender hereunder or under any
other Transaction Documents and at law or in equity, a penalty equal to 1.5% of the Conversion Amount shall be added to the balance of this Note per day until such Conversion Shares are received by the Lender (the “Actual Delivery Date”). The conversion shall be deemed to have been made immediately prior to the close of business on the date of the Conversion Notice, and the person or entity entitled to receive the shares of Common Stock upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock as of such date.

 

(c) No Fractional Shares. Conversion calculations pursuant to Section 2(a) shall be rounded up to the nearest whole share, and no fractional shares shall be issuable by the Borrower upon conversion of this Note or any portion thereof. All shares issuable upon conversion of this Note or any portion thereof shall be aggregated for purposes of determining whether such conversion would result in the issuance of a fractional share.

 

(d) No Impairment. The Borrower will not, by amendment of its Articles of Incorporation or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Borrower, but will at all times in good faith assist in the carrying out of all the provisions of this Section 2 and in the taking of all such action as may be necessary or appropriate in order to protect
the conversion rights of the Lender against impairment.

 

3. Prepayment by the Borrower. The Borrower may from time to time prepay the Outstanding Balance or any portion thereof without premium or penalty. Any such prepayments shall be applied to the Outstanding Balance in the manner set forth in Section 1.

 

4. Certain Adjustments. The number and class of securities into which this Note may be converted under Section 2 shall be subject to adjustment in accordance with the following provisions:

 

(a) Capital Adjustments. If the Borrower shall at any time prior to the full payment of this Note subdivide the Common Stock, by split-up or stock split, or otherwise, or combine the Common Stock, or issue additional shares of Common Stock as a dividend, the number of Conversion Shares issuable on the conversion of this Note shall forthwith be automatically increased proportionately in the case of a subdivision, split or stock dividend, or proportionately decreased in the case of a combination. Any adjustment under this Section shall become effective
automatically at the close of business on the date the subdivision or combination becomes effective, or as of the record date of such dividend, or in the event that no record date is fixed, upon the making of such dividend.

 

(b) Subsequent Equity Sales. If the Borrower or any subsidiary thereof, as applicable, at any time while this Note remains outstanding and unconverted, shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition of) any Common Stock, preferred shares convertible into Common Stock, or debt, warrants, options or other instruments or securities convertible into or exercisable for shares of Common Stock
(together herein referred to as “Equity Securities”), at an effective price per share less than the then-applicable Conversion Price (such lower price, the “Base Share Price” and such issuance collectively, a “Dilutive Issuance”) (if the holder of the Common Stock or Equity Securities so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options, or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is
less than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion Price on such date of the Dilutive Issuance), then the Conversion Price shall be reduced and only reduced to equal the Base Share Price. Such adjustment shall be made whenever such Common Stock or Equity Securities are issued. The Borrower shall notify the Lender, in writing, no later than the first trading day following the issuance of any Common Stock or Equity Securities subject to this Section 4(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price, or other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification, whether
or not the Borrower provides a Dilutive Issuance Notice pursuant to this Section, upon the occurrence of any Dilutive Issuance, after the date of such Dilutive Issuance the Lender is entitled to receive the Conversion Shares at a Conversion Price equal to the Base Share Price regardless of whether the Lender accurately refers to the Base Share Price in the Conversion Notice.

 

  

2

  

 

(c) Notice of Adjustment. When any adjustment is required to be made in the number or kind of shares issuable upon conversion of this Note, or in the Conversion Price, pursuant to the terms hereof, the Borrower shall promptly notify the Lender of such event and of the number of Conversion Shares.

 

(d) Exceptions to Adjustment. Notwithstanding the provisions of this Section 4, no adjustment to the Conversion Price shall be effected as a result of an Excepted Issuance. “Excepted Issuances” shall mean, collectively, (i) the Borrower’s issuance of securities in connection with strategic license agreements and other partnering arrangements so long as such issuances are not for the purpose of raising capital and in which holders of such
securities or debt are not at any time granted registration rights, (ii) the Borrower’s issuance of Common Stock or the issuances or grants of options to purchase Common Stock to employees, directors, and consultants, pursuant to plans or agreements which are constituted or in effect on the date of the initial issuance of this Note.

 

(e) No Change Necessary. The form of this Note need not be changed because of any adjustment in the number and class of securities issuable upon its conversion.

 

5. Further Adjustments. In case at any time or, from time to time, the Borrower shall take any action that affects the class of securities into which this Note may be converted under Section 2, other than an action described herein, then, unless such action will not have a material adverse effect upon the rights of the Lender, the number and class of securities into which this Note is convertible shall be adjusted in such a manner and at such time as shall be equitable under the circumstances.

 

6. Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment pursuant to Section 4 or Section 5, the Borrower at its sole expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to the Lender, within five (5) days, a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Borrower shall, upon the written request at any time of the Lender, furnish or cause to be furnished to the Lender a like certificate
setting forth (a) such adjustments and readjustments, and (b) the number and class of securities and the amount, if any, of other property which at the time would be received upon the conversion of this Note under Section 2.

 

7. Security. This Note is secured by a Security Agreement of even date herewith (the “Security Agreement”) executed by the Borrower in favor of the Lender encumbering all of the assets of the Borrower, as more specifically set forth in the Security Agreement, all the terms and conditions of which are hereby incorporated into and made a part of this
Note.

 

8. Change of Control. In the event of (a) any transaction or series of related transactions (including any reorganization, merger or consolidation) that results in the transfer of 50% or more of the outstanding voting power of the Borrower, or (b) a sale of all or substantially all of the assets of the Borrower to another person or entity, this Note shall be automatically due and payable in cash. The Borrower will give the Lender not less than ten (10) business days prior written notice of the occurrence of any events referred to in this Section 8.

 

9. Representations and Warranties of the Borrower. In addition to the representations and warranties set forth in that certain Forbearance Agreement of even date herewith (the “Forbearance Agreement”), the Exchange Agreement, and the Security Agreement, which are incorporated herein, the Borrower hereby represents and warrants to the Lender that:

 

(a) The Borrower understands and acknowledges that the number of Conversion Shares issuable upon conversion of this Note will increase in certain circumstances. The Borrower further acknowledges that its obligation to issue Conversion Shares upon conversion of this Note in accordance with its terms is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other stockholders of the Borrower;

 

(b) The Borrower’s Common Stock is registered under Section 12(g) of the Securities Exchange Act of 1934 (the “Exchange Act”);

 

(c) The Borrower is not and for at least the last 12 months prior to the date hereof has not been a “shell company,” as defined in paragraph (i)(1)(i) of Rule 144 or Rule 12(b)(­2) of the Exchange Act;

 

(d) The Borrower is subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act and has filed all required reports under Section 13 or Section 15(d) of the Exchange Act during the 12 months prior to the date hereof (or for such shorter period that the Borrower was required to file such reports); and

 

(e) The issuance of this Note has been duly authorized by the Borrower. Upon conversion in accordance with the terms of this Note, the Conversion Shares, when issued, will be validly issued, fully paid and non-assessable, free from all taxes, liens, claims, pledges, mortgages, restrictions, obligations, security interests and encumbrances of any kind, nature and description. The Borrower has reserved from its duly authorized capital stock the appropriate number of shares of Common Stock for issuance upon conversion of this Note as required by the terms of this Note.

 

  

3

  

 

10. Affirmative and Negative Covenants. In addition to the covenants set forth in the Forbearance Agreement, Exchange Agreement, and the Security Agreement, the Borrower covenants and agrees, while any portion of this Note remains outstanding and unconverted, as follows:

 

(a) The Borrower shall do all things necessary to preserve and keep in full force and effect its corporate existence including, without limitation, maintain all licenses or similar qualifications required by it to engage in its business in all jurisdictions in which it is at the time so engaged; and continue to engage in business of the same general type as conducted as of the date hereof; and continue to conduct its business substantially as now conducted or as otherwise permitted hereunder;

 

(b) The Borrower shall pay and discharge promptly when due all taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or in respect of its property before the same shall become delinquent or in default, which, if unpaid, might reasonably be expected to give rise to liens or charges upon such properties or any part thereof, unless, in each case, the validity or amount thereof is being contested in good faith by appropriate proceedings and the Borrower has maintained adequate reserves with respect thereto in accordance with United States GAAP;

 

(c) The Borrower shall comply in all material respects with all federal, state and local laws and regulations, orders, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations and requirements (collectively, “Requirements”) of all governmental bodies, departments, commissions, boards, insurers, courts, authorities, officials or officers which are applicable to the Borrower or any of its properties, except where the failure to so comply would not have a material adverse effect on the Borrower or any of its
properties; provided, however, that nothing provided herein shall prevent the Borrower from contesting the validity or the application of any Requirements;

 

(d) The Borrower shall keep proper records and books of account with respect to its business activities, in which proper entries, reflecting all of their financial transactions, are made in accordance with United States GAAP;

 

(e) From the date hereof until the date that is six (6) months after the date that all the Conversion Shares either have been sold by the Lender, or may permanently be sold by the Lender without any restrictions pursuant to Rule 144 (the “Registration Period”), the Borrower shall file with the Securities and Exchange Commission (the “SEC”) in a timely manner all required reports under Sections 13 or 15(d) of the Exchange Act and such reports shall conform to
the requirement of the Exchange Act and the SEC for filing thereunder;

 

(f) The Borrower shall furnish to the Lender, so long as the Lender owns any Common Stock, promptly upon request, (i) a written statement by the Borrower that it has complied with the reporting requirements of Rule 144, (ii) a copy of the most recent annual or quarterly report of the Borrower and such other reports and documents so filed by the Borrower, and (iii) such other information as may be reasonably requested to permit the Lender to sell such securities pursuant to Rule 144 without registration;

 

(g) During the Registration Period, the Borrower shall not terminate its status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would otherwise permit such termination;

 

(h) On the date hereof and at all times prior to the repayment in full of this Note, the Borrower shall reserve the number of shares required by the Share Reserve for the purpose of, among other things, the conversion of this Note. The Borrower represents that it has sufficient authorized and unissued shares of Common Stock available to create the Share Reserve after considering all other commitments that may require the issuance of Common Stock. The Borrower shall take all action reasonably necessary to at all times have authorized, and reserved for the purpose of issuance, such number of shares of Common Stock as shall be
necessary to effect the full conversion of the Note. If at any time the Share Reserve is insufficient to effect the full conversion of the Note, the Borrower shall increase the Share Reserve accordingly. If the Borrower does not have sufficient authorized and unissued shares of Common Stock available to increase the Share Reserve, the Borrower shall call and hold a special meeting of the stockholders within thirty (30) days of such occurrence, for the sole purpose of increasing such number of authorized shares. The Borrower’s management shall recommend to the stockholders to vote in favor of increasing the number of authorized shares of Common Stock. Management shall also vote all of its shares in favor of increasing the number of authorized shares of Common Stock. The Borrower shall use its best efforts to cause such additional shares of Common Stock to be authorized so as to
comply with the requirements of this Section 10(h);

 

(i) The Common Stock shall be listed or quoted for trading on any of (i) NYSE Amex, (ii) the New York Stock Exchange, (iii) the Nasdaq Global Market, (iv) the Nasdaq Capital Market, (v) the OTC Bulletin Board, or (vi) the OTCQX or OTCQB (each, a “Primary Market”). The Borrower shall promptly secure the listing of all of its securities issuable under the terms of the Transaction Documents upon each national securities exchange and automated quotation system, if any, upon which the Common Stock is then listed (subject to official notice of
issuance) and shall maintain such listing of all securities from time to time issuable under the terms of the Transaction Documents;

 

(j) The Borrower shall notify the Lender in writing, promptly upon learning thereof, of any litigation or administrative proceeding commenced or threatened against the Borrower involving a claim in excess of $100,000.00;

 

(k) The Borrower shall use the proceeds from this Note for working capital and general corporate purposes only; and

 

(l) The Borrower shall notify the Lender in writing, promptly upon the occurrence of any Event of Default.

 

  

4

  

 

11. Event of Default. Upon each occurrence of any of the following events, each an “Event of Default”, the Lender may, in its sole and exclusive discretion, accelerate the maturity of this Note and demand immediate payment in full, whereupon the Outstanding Balance of the Note and all obligations of Borrower to Lender hereunder, together with accrued interest thereon and accrued charges and costs, if any, shall become immediately due and payable without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived; provided, however, that this remedy shall not preclude the Lender from exchanging this Note for shares of Common Stock pursuant to Section 2 hereof and exercising all legally available rights and privileges. Notwithstanding the forgoing, upon the occurrence or existence of any Event of Default described in Section 11(g), immediately and without notice, all outstanding obligations payable by the Borrower hereunder shall automatically become immediately due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the other Transaction Documents to the contrary notwithstanding.

 

If an Event of Default occurs, then such Event of Default shall constitute a continuing default which will permit the Lender to exercise its rights under this Section at any time.

 

           An “Event of Default” shall be when any of the following occur:

 

(a) The Borrower defaults in the payment of principal or interest on this Note or any other amount due or otherwise owed to Lender; or

 

(b) Any material default, material misrepresentation, or material breach of a covenant, representation or warranty or other agreement under the Transaction Documents; or

 

(c) Any transfer, conveyance, or assignment of substantial Borrower assets or substantial assets of any of its subsidiaries, in each case not in the ordinary course of business, except for a merger in which the Borrower is the surviving corporation or in which the surviving corporation assumes the Borrower’s obligations under the Transaction Documents; or

 

(d) Any money judgment, writ or warrant of attachment, or similar process against the Borrower or any of its properties or other assets, or defaults on obligations, in amount in excess of $100,000 unless such are being contested by the Borrower; or

 

(e) The Borrower (a) fails to cause its transfer agent to issue shares of Common Stock upon written notice of the Lender’s request to receive repayment of this Note in shares of Common Stock pursuant to the terms herein within five (5) business days of receipt of a Conversion Notice; or (b) upon written request of the Lender, fails to remove any restrictive legend on any certificate or fails to cause its transfer agent to remove such legend where such removal is lawful within five (5) business days of receipt of a written demand therefore; or

 

(f) Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Borrower; or

 

(g) The entry of a decree or order by a court having jurisdiction adjudging the Borrower a bankrupt or insolvent, or approving a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Borrower, under federal bankruptcy law, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other similar law; or the commencement against the Borrower of a proceeding under federal bankruptcy law or any applicable federal or state bankruptcy, insolvency or similar law and the continuance of any such proceedings unstayed and in effect for a period of ninety (90)
days or more; or the commencement by the Borrower of a voluntary case under federal bankruptcy law, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency, or other similar law, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under federal bankruptcy law or any other applicable federal or state law, or the consent by it to the filing of such petition or to the appointment of a receiver, liquidator, assignee, trustee, sequestrator or similar official of the Borrower or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the
Borrower in furtherance of any such action; or

 

(h) The Borrower fails to continuously maintain its status as a reporting company under the federal securities laws; or

 

(i) Provided the Borrower qualifies as such, the Borrower fails to become a DWAC eligible issuer prior to or on February 1, 2012 and to maintain its status as a DWAC eligible issuer at all times thereafter; or

 

(j) The Borrower fails to timely file all reports required to be filed by the Borrower with the SEC pursuant to Section 12, 13 or 15(d) of the Exchange Act, or otherwise required by the Exchange Act, except for current reports on Form 8-K the late filing of which will not have a material adverse effect on the Borrower (the Borrower can cure any late filing by filing a timely notice of late filing and filing such report, provided, however, that any such late filing shall not prevent the Lender from listing or selling its shares under Rule 144).

 

(k) Notwithstanding anything to the contrary contained in this Note or the other Transaction Documents, a breach or default by the Borrower of any covenant or other term or condition contained in (i) the Note, (ii) any of the other Transaction Documents, or (iii) any Other Agreements (defined below); shall, at the option of the Lender, be considered a default under the Note, in which event the Lender shall be entitled (but in no event required) to apply all rights and remedies of the Lender under the terms of this Agreement and the Note. “Other Agreements” means, collectively, all existing and future agreements and
instruments between, among or by: (1) the Borrower (or a subsidiary), and, or for the benefit of, (2) the Lender and any affiliate of the Lender, including, without limitation, promissory notes, purchase agreements, contracts or other agreements or undertakings; provided, however, the term “Other Agreements” shall not include the Loan Documents. The intent of this provision is that all existing and future loan transactions will be cross-defaulted with each other loan transaction and with all other existing and future debt of Borrower to the Lender.

 

  

5

  

 

12. Lender’s Rights Upon Default. Upon the occurrence of any Event of Default pursuant to this Note, the Lender may, at its sole and exclusive option, do any or all of the following, either concurrently or separately: (a) accelerate the maturity of this Note and demand immediate payment in full, whereupon the outstanding principal amount of the Note and all obligations of Borrower to Lender hereunder, together with adjustments, accrued interest thereon, and accrued charges and costs, including costs incurred by the Lender with respect to the collection of this Note
(including reasonable legal fees), if any, shall become immediately due and payable without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived; (b) offset, recoup or exercise any other legal remedy to offset any liabilities due by the Lender, including but not limited to any offset of this Note against the investor notes previously delivered by the Lender to the Borrower (the “Investor Notes”), as provided under Section 3 of the Investor Notes issued by the Lender to the Company on March 19, 2010; and (c) exercise all legally available rights and privileges. If an Event of Default occurs hereunder, the Borrower will be responsible for all costs incurred by the Lender in collection of this Note, including reasonable legal fees, which costs will
constitute part of the obligations of the Borrower hereunder.

 

13. Ownership Limitation. Notwithstanding the provisions of this Note, if at any time after the date hereof, the Lender shall or would receive shares of Common Stock in payment of interest or principal under this Note or upon conversion of this Note, so that the Lender would, together with other shares of Common Stock held by it or its affiliates, own or beneficially own by virtue of such action or receipt of additional shares of Common Stock a number of shares exceeding 9.99% of the number of shares of Common Stock outstanding on such date (the
“9.99% Cap”), the Borrower shall not be obligated and shall not issue to the Lender shares of Common Stock which would exceed the 9.99% Cap, but only until such time as the 9.99% Cap would no longer be exceeded by any such receipt of shares of Common Stock by the Borrower. The foregoing limitations are enforceable, unconditional and non-waivable and shall apply to all affiliates and assigns of the Lender.

 

14. No Rights or Liabilities as Stockholder. This Note does not by itself entitle the Lender to any voting rights or other rights as a stockholder of the Borrower. In the absence of conversion of this Note, no provisions of this Note, and no enumeration herein of the rights or privileges of the Lender, shall cause the Lender to be a stockholder of the Borrower for any purpose.

 

15. Unconditional Obligation. No provision of this Note shall alter or impair the obligation of the Borrower, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place, and rate, and in the currency or where contemplated herein in shares of Common Stock, as applicable, as herein prescribed. This Note, together with interest accrued and accruing thereon, and fees, costs, expenses, and other charges now or hereafter payable by Borrower to Lender under the Transaction Documents, are unconditionally
owing by Borrower to Lender, without offset, defense, or counterclaim of any kind, nature, or description whatsoever. This Note is a direct obligation of the Borrower.

 

16. Confession of Judgment. Upon the occurrence of an Event of Default, in addition to any other rights or remedies the Lender may have under the Transaction Documents or applicable law, the Lender shall have the right, but not the obligation, to cause the Judgment by Confession attached to the Forbearance Agreement to be entered into a court of competent jurisdiction.

 

17. Binding Effect. This Note shall be binding on the Parties and their respective heirs, successors, and assigns; provided, however, that the Borrower shall not assign its rights hereunder in whole or in part without the express written consent of the Lender.

 

18. Governing Law; Venue. The terms of this Note shall be construed in accordance with the laws of the State of Illinois as applied to contracts entered into by Illinois residents within the State of Illinois which contracts are to be performed entirely within the State of Illinois. With respect to any disputes arising out of or related to this Note, the Parties consent to the exclusive personal jurisdiction of, and venue in, the state courts located in Cook County, State of Illinois (or in the event of federal jurisdiction, any United States District Court for the District of
Illinois), and hereby waive, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens, to the bringing of any such proceeding in such jurisdiction or to any claim that such venue of the suit, action or proceeding is improper.

 

19. Severability. If any part of this Note is construed to be in violation of any law, such part shall be modified to achieve the objective of the Parties to the fullest extent permitted by law and the balance of this Note shall remain in full force and effect.

 

20. Attorneys’ Fees. If any action at law or in equity is necessary to enforce this Note or to collect payment under this Note, the Lender shall be entitled to recover reasonable attorneys’ fees directly related to such enforcement or collection actions.

 

  

6

  

 

21.  Amendments and Waivers; Remedies. No failure or delay on the part of a Party hereto in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided for herein are cumulative and are not exclusive of any remedies that may be available to a Party hereto at law, in equity or otherwise. Any amendment, supplement or
modification of or to any provision of this Note, any waiver of any provision of this Note, and any consent to any departure by either Party from the terms of any provision of this Note, shall be effective (i) only if it is made or given in writing and signed by the Borrower and the Lender and (ii) only in the specific instance and for the specific purpose for which made or given.

 

22. Notices. All notices, requests, demands, claims and other communications hereunder shall be in writing. Any notice, request, demand, claim or other communication hereunder shall be deemed duly given if it is sent by registered or certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient, as set forth in the Exchange Agreement. Any Party may send any notice, request, demand, claim or other communication hereunder to the intended recipient at the address set forth in the Exchange Agreement using any other means (including personal
delivery, expedited courier, messenger service, facsimile, ordinary mail, or electronic mail), but no such notice, request, demand, claim or other communication shall be deemed to have been duly given unless and until it actually is received by the intended recipient or receipt is confirmed electronically or by return mail. Any Party may change the address to which notices, requests, demands, claims and other communications hereunder are to be delivered by giving the other Party notice in any manner herein set forth.

 

23.  Entire Agreement. This Note, together with the Forbearance Agreement, the Exchange Agreement, the Security Agreement and the other Transaction Documents, contains the complete understanding and agreement of the Borrower and the Lender and supersedes all prior representations, warranties, agreements, arrangements, understandings, and negotiations with respect to the subject matter thereof. THIS NOTE, TOGETHER WITH THE FORBEARANCE AGREEMENT, THE EXCHANGE AGREEMENT, THE SECURITY AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY ALLEGED PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

  

7

  

[Remainder of page intentionally left blank]

 

  

8

  

 

IN WITNESS WHEREOF, the Borrower has executed this Note as of the date set forth above.

Exhibits

Exhibit A – Conversion Notice

Exhibit A-1 – Conversion Worksheet

THE BORROWER:

KEDEM PHARMACEUTICALS INC.

 

By: __________________________________

       Hassan Salari, Chief Executive Officer

 

 

ACKNOWLEDGED, ACCEPTED AND AGREED:

 

●

By: ●, Manager

By: __________________________                                                               

       ●, President

 

[Signature page to Secured Convertible Promissory Note]

 

  

9

  

EXHIBIT A

●

Date: _______________________                                           

Kedem Pharmaceuticals Inc.

885 West Georgia Street, Suite 1500

Vancouver, British Columbia, Canada V6C 3E8

Sent via email to ________________ or facsimile to ________________

CONVERSION NOTICE

The above-captioned Lender hereby gives notice to Kedem Pharmaceuticals Inc., a Nevada corporation (the “Company”), pursuant to that certain Secured Convertible Promissory Note made by the Company in favor of the Lender on October 24, 2011, as the same may be amended from time to time, (the “Note”), that the Lender elects to convert the portion of the Note balance set forth below into fully paid and non-assessable shares of common stock of the Company as of the date of conversion specified below. Such
conversion shall be based on the conversion price set forth below. In the event of a conflict between this Conversion Notice and the Note, the Note shall govern, or, in the alternative, at the election of the Lender in its sole discretion, the Lender may provide a new form of Conversion Notice to conform to the Note.

	
A.  

	
Date of conversion:  ____________

	
B.  

	
Conversion #:  ____________

	
C.  

	
Conversion Amount:  ____________

	
D.  

	
Average of Three Lowest Closing Bid Prices:  ___________ (of the last 20 Trading Days per Exhibit A-1)

	
E.  

	
Conversion Factor:  ___________ (70%)

	
F.  

	
Conversion Price:  _______________ (D multiplied by E)

	
G.  

	
Conversion Shares:  _______________ (C divided by F)

	
H.  

	
Remaining Note Balance:  ____________

	
I.  

	
Required Delivery Date:  __________ (three days after delivery of the Conversion Notice)

Please transfer the Conversion Shares electronically (via DWAC) to the following account:

 

	
Broker: ________________________________

	Address:	
_______________________________

	
DTC#: _________________________________

	 	_______________________________  
	
Account #: _____________________________

	 	_______________________________  
	
Account Name: _________________________

	 	  

 

Sincerely,

●

 

By: ●, Manager

 

By: ____________________________                                                                 

       ●, President

 

  

10

  

 

EXHIBIT A-1

CONVERSION WORKSHEET

 

	  	
Trading Day

	
Closing Bid Price

	
Lowest (Yes or No)

	
1.

	  	  	  
	
2.

	  	  	  
	
3.

	  	  	  
	
4.

	  	  	  
	
5.

	  	  	  
	
6.

	  	  	  
	
7.

	  	  	  
	
8.

	  	  	  
	
9.

	  	  	  
	
10.

	  	  	  
	
11.

	  	  	  
	
12.

	  	  	  
	
13.

	  	  	  
	
14.

	  	  	  
	
15.

	  	  	  
	
16.

	  	  	  
	
17.

	  	  	  
	
18.

	  	  	  
	
19.

	  	  	  
	
20.

	  	  	  

11

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00195-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00195-of-00352.parquet"}]]