Document:

ex10-2.htm

Exhibit 10.2

 

 

REGISTRATION RIGHTS AGREEMENT

 

 

This  Registration  Rights  Agreement  (this  “Agreement”)  is  made  and  entered  into effective as  of  _____________, 2013, (the  “Effective Date”)  between PUBCO, a Delaware corporation (the “Company”), and the persons  who  have executed the signature page(s) hereto (each, a “Purchaser” and collectively, the “Purchasers”).

 

RECITALS:

 

WHEREAS, the Company has entered into a Merger Agreement with AV Therapeutics, Inc., a Delaware corporation (“AVT”), and a wholly-owned subsidiaries of the Company, pursuant to which AVT became a wholly-owned subsidiary of the Company (the “Acquisition”);

WHEREAS, simultaneously with the Acquisition and to provide the capital required by the Company for working capital and other purposes, the Company has offered in compliance with Rule 506 of Regulation D of the Securities Act (as defined herein), to investors in a private placement transaction (the “PPO”), shares of its common stock (the “Investor Shares”);

WHEREAS, the initial closing of the PPO and the closing of the Acquisition have taken place on the Effective Date; and

WHEREAS, in connection with the Acquisition and the PPO, the Company agrees to provide certain registration rights related to the Investor Shares, on the terms set forth herein;

NOW, THEREFORE, in consideration of the mutual promises, representations, warranties, covenants, and conditions set forth herein, the parties mutually agree as follows:

1.          Certain Definitions.  As used in this Agreement, the following terms shall have the following respective meanings:

“Approved Market” means the Over-the-Counter Bulletin Board, the OTC Markets, the Nasdaq Stock Market, the New York Stock Exchange or the NYSE MKT.

  

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“Blackout Period” means, with respect to a registration, a period, in each case commencing on the day immediately after the Company notifies the Purchasers that they are required, because of the occurrence of an event of the kind described in Section 4(f) hereof, to suspend offers and sales of Registrable Securities during which the Company, in the good faith judgment of its Board of Directors, determines (because of the existence of, or in anticipation of, any acquisition, financing activity, or other transaction involving the Company, or the unavailability for reasons beyond the Company’s control of any required financial statements, disclosure of information which is in its best interest not to publicly disclose, or any other event or condition of similar significance to the Company) that the registration and distribution of the Registrable Securities to be covered by such Registration Statement, if any, would be seriously detrimental to the Company and its stockholders and ending on the earlier of (1) the date upon which the material non-public information commencing the Blackout Period is disclosed to the public or ceases to be material and (2) such time as the Company notifies the selling Holders that the Company will no longer delay such filing of the Registration Statement, recommence taking steps to make such Registration Statement effective, or allow sales pursuant to such Registration Statement to resume.

 

 “Business Day” means any day of the year, other than a Saturday, Sunday, or other day on which the Commission is required or authorized to close.

“Commission” means the U. S. Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.

“Common Stock” means the common stock, par value $0.0001 per share, of the Company and any and all shares of capital stock or other equity securities of: (i) the Company which are added to or exchanged or substituted for the Common Stock by reason of the declaration of any stock  dividend  or  stock  split,  the  issuance  of  any  distribution  or  the  reclassification, readjustment, recapitalization or other such modification of the capital structure of the Company; and (ii) any other corporation, now or hereafter organized under the laws of any state or other governmental  authority,  with  which  the  Company  is  merged,  which  results  from  any consolidation or reorganization to which the Company is a party, or to which is sold all or substantially all of the shares or assets of the Company, if immediately after such merger, consolidation, reorganization or sale, the Company or the stockholders of the Company own equity securities having in the aggregate more than 50% of the total voting power of such other corporation.

“Effective Date” has the meaning given it in the preamble to this Agreement.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder.

  

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“Family Member” means (a) with respect to any individual, such individual’s spouse, any descendants (whether natural or adopted), any trust all of the beneficial interests of which are owned by any of such individuals or by any of such individuals together with any organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, the estate of any such individual, and any corporation, association, partnership or limited liability company all of the equity interests of which are owned by those above described individuals, trusts or organizations and (b) with respect to any trust, the owners of the beneficial interests of such trust.

“Holder” means each Purchaser or any of such Purchaser’s respective successors and Permitted Assignees who acquire rights in accordance with this Agreement with respect to any Registrable Securities directly or indirectly from a Purchaser or from any Permitted Assignee.

“Initial Registration Statement” means the initial Registration Statement filed pursuant to this Agreement.

“Investor Shares” has the meaning given it in the recitals of this Agreement.

 

“Majority Holders” means at any time Holders representing a majority of the Investor Shares.

“Permitted Assignee” means (a) with respect to a partnership, its partners or former partners in accordance with their partnership interests, (b) with respect to a corporation, its stockholders in accordance with their interest in the corporation, (c) with respect to a limited liability company, its members or former members in accordance with their interest in the limited liability company, (d) with respect to an individual party, any Family Member of such party, (e) an entity that is controlled by, controls, or is under common control with a transferor, or (f) a party to this Agreement.

 

The terms “register,” “registered,” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement.

“Registrable Securities” means the Investor Shares but excluding (i) any Registrable Securities that have been publicly sold without registration under the Securities Act either pursuant to Rule 144 of the Securities Act or otherwise, or that are eligible to be sold without restriction under Rule 144 of the Securities Act; or (ii) any Registrable Securities sold by a person in a transaction pursuant to a registration statement filed under the Securities Act.

 

“Registration Default Date” means the date that is (i) 90 days after the Registration Filing Date (if the Registration Statement is not reviewed by the Commission), or (ii) 120 days after the Registration Filing Date (if the Registration Statement is reviewed by the Commission).

“Registration Default Period” means the period following the Registration Filing Date or the Registration Default Date, as applicable, during which any Registration Event occurs and is continuing.

“Registration Event” means the occurrence of any of the following events:

 

(a)        the Company fails to file with the Commission the Registration Statement on or before the Registration Filing Date;

 

  

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(b)        the Registration Statement is not declared effective by the Commission on or before the Registration Default Date;

(c)        after the SEC Effective Date, sales cannot be made pursuant to the Registration Statement for any reason (including without limitation by reason of a stop order, or the Company’s failure to update the Registration Statement) except as excused pursuant to Section 3(e); or

(d)        the Common Stock generally or the Registrable Securities specifically are not listed or included for quotation on an Approved Market, or trading of the Common Stock is suspended or halted on the Approved Market, which at the time constitutes the principal market for the Common Stock, for more than two full, consecutive Trading Days; provided, however, a Registration Event shall not be deemed to occur if all or substantially all trading in equity securities (including the Common Stock) is suspended or halted on the Approved Market for any length of time.

“Registration Filing Date” means the date that is 90 days after the later to occur of (i) the date on which the entire Offering has been subscribed for and accepted by the Company (the “Final Closing Date”) or (ii) the Termination Date of the Offering.

“Registration Statement” means the registration statement that the Company is required to file pursuant to this Agreement to register the Registrable Securities.

“Rule 144” means Rule 144 promulgated by the Commission under the Securities Act.

 

“Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same purpose and effect as such Rule.

“Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute promulgated in replacement thereof, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.

“SEC Effective Date” means the date the Registration Statement is declared effective by the Commission.

  

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“Trading Day” means (a) if the Common Stock is listed or quoted on an Approved Market, then any day during which securities are generally eligible for trading on the Approved Market, or (b) if the Common Stock is not then listed or quoted and traded on an Approved Market, then any business day.

2.           Registration.

 

(a)        Registration on Form S-1.  Not later than the Registration Filing Date, the Company shall file with the Commission a Registration Statement on Form S-1, or other applicable form, relating to the resale by the Holders of all of the Registrable Securities, and the Company shall use its commercially reasonably efforts to cause such Registration Statement to be declared effective prior to the Registration Default Date. For the avoidance of doubt, the Registration Statement may include such other securities as determined by the Company.

(b)        Occurrence of Registration Event.  If a Registration Event occurs, then the Company will make payments to each Holder of Registrable Securities (a “Qualified Purchaser”), as liquidated damages for the amount of damages to the Qualified Purchaser by reason thereof, at a rate equal to 1.0% of the purchase price paid for the Registrable Securities then held by each Qualified Purchaser for each full period of 30 days of the Registration Default Period (which shall be pro rated for any period less than 30 days); provided, however, if a Registration Event occurs (or is continuing) on a date more than one-year after the Company filed a Current Report on Form 8-K relating to the Acquisition and the PPO and providing Form 10 information with respect thereto, liquidated damages shall be paid only with respect to that portion of the Qualified Purchaser’s Registrable Securities that cannot then be immediately resold in reliance on Rule 144.   Notwithstanding the foregoing, the maximum amount of liquidated damages per annum that the Company will be required to pay to any Qualified Purchaser pursuant to this Section 2(b) shall be an amount equal to 10% of the proceeds received by the Company for such Holder’s Registrable Securities. Each such payment shall be due and payable within five days after the end of each full 30-day period of the Registration Default Period until the termination of the Registration Default Period.  Payments of liquidated damages in accordance with this Section 2(b) shall constitute the Qualified Purchaser’s exclusive remedy for any Registration Event.

(c)        Notwithstanding  the   provisions  of   Section  2(b)   above,  (a)   if   the Commission does not declare the Registration Statement effective on or before the Registration Default Date, or (b) if the Commission allows the Registration Statement to be declared effective at any time before or after the Registration Default Date, subject to the withdrawal of certain Registrable Securities from the Registration Statement, and the reason for (a) or (b) is the Commission’s determination that (x) the offering of any of the Registrable Securities constitutes a primary offering of securities by the Company, (y) Rule 415 may not be relied upon for the registration of the resale of any or all of the Registrable Securities, and/or (z) a Holder of any Registrable Securities must be named as an underwriter, the Holders understand and agree that in the case of (b) the Company may reduce, on a pro rata basis, the total number of Registrable Securities to be registered on behalf of each such Holder, and, in the case of (a) or (b), that a Holder shall not be entitled to any liquidated damages with respect to the Registrable Securities not registered for the reason set forth in (a), or so reduced on a pro rata basis as set forth in (b). In any such pro rata reduction, the number of Registrable Securities to be registered on such Registration Statement will be reduced by a certain number of the Investor Shares (applied, in the case that some Investor Shares may be registered, to the Holders on a pro rata basis based on the total number of unregistered Investor Shares held by such Holders). Any Registrable Securities not included in the Initial Registration Statement shall be included in a subsequent Registration Statement the Company will file no later than six months after the prior Registration Statement (or such other period as permitted under the Securities Act and applicable Commission rules and regulations). The Holders acknowledge and agree the provisions of this paragraph may apply to more than one Registration Statement.

 

  

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3.          Registration Procedures for Registrable Securities.  The Company will keep each Holder reasonably advised as to the filing and effectiveness of the Registration Statement. At its expense with respect to the Registration Statement, the Company will:

(a)       prepare and file with the Commission with respect to the Registrable Securities, a Registration Statement on Form S-1, or any other form for which the Company then qualifies or which counsel for the Company deems appropriate and which form shall be available for the sale of the Registrable Securities in accordance with the intended methods of distribution thereof, and use its commercially reasonable efforts to cause such Registration Statement to become effective and remain effective until the earlier to occur of (i) the date 18 months after the Final Closing Date, or (ii) the date all of the Registrable Securities included in the Registration Statement have been sold by the Holders of such securities or may be sold under Rule 144 (the “Effectiveness Period”).  For the avoidance of doubt, following the Effectiveness Period, the Company shall be entitled to withdraw such Registration Statement.

(b)       if the Registration Statement is subject to review by the Commission, promptly respond to all comments and diligently pursue resolution of any comments to the satisfaction of the Commission; 

 

(c)        prepare and file with the Commission such amendments and supplements to such Registration Statement as may be necessary to keep such Registration Statement effective during the Effectiveness Period;

 

(d)        furnish, without charge, to each Holder of Registrable Securities covered by such Registration Statement (i) a reasonable number of copies of such Registration Statement (including any exhibits thereto other than exhibits incorporated by reference), each amendment and supplement thereto as such Holder may reasonably request, (ii) such number of copies of the prospectus included in such Registration Statement (including each preliminary prospectus and any other prospectus filed under Rule 424 of the Securities Act) as such Holders may reasonably request, in conformity with the requirements of the Securities Act, and (iii) such other documents as such Holder may require to consummate the disposition of the Registrable Securities owned by such Holder, but only during the Effectiveness Period;

(e)        use  its  commercially  reasonable  efforts  to  register  or  qualify  such registration under such other applicable securities laws of such jurisdictions as any Holder of Registrable Securities covered by such Registration Statement reasonably requests and as may be necessary for the marketability of the Registrable Securities (such request to be made by the time the applicable Registration Statement is deemed effective by the Commission) and do any and all other acts and things necessary to enable such Holder to consummate the disposition in such jurisdictions of the Registrable Securities owned by such Holder; provided, that the Company shall not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph, (ii) subject itself to taxation in any such jurisdiction, or (iii) consent to general service of process in any such jurisdiction.

 

  

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(f)         notify each Holder of Registrable Securities, the disposition of  which requires delivery of a prospectus relating thereto under the Securities Act, of the happening of any event (as promptly as practicable after becoming aware of such event), which comes to the Company’s attention, that will after the occurrence of such event cause the prospectus included in such Registration Statement, if not amended or supplemented, to contain an untrue statement of a material fact or an omission to state a material fact required to be stated therein or necessary to  make the  statements therein not  misleading and  the  Company shall  promptly thereafter prepare and furnish to such Holder a supplement or amendment to such prospectus (or prepare and file appropriate reports under the Exchange Act) so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, unless suspension of the use of such prospectus otherwise is authorized herein or in the event of a Blackout Period, in which case no supplement or amendment need be furnished (or Exchange Act filing made) until the termination of such suspension or Blackout Period;

(g)       comply, and continue to comply during the Effectiveness Period, in all material respects with the Securities Act and the Exchange Act and with all applicable rules and regulations of the Commission with respect to the disposition of all securities covered by such Registration Statement;

(h)        as promptly as practicable after becoming aware of such event, notify each Holder of Registrable Securities being offered or sold pursuant to the Registration Statement of the issuance by the Commission of any stop order or other suspension of effectiveness of the Registration Statement;

(i)         use  its  commercially  reasonable  efforts  to  cause  all  the  Registrable Securities covered by the Registration Statement to be quoted on the OTC Bulletin Board or such other Approved Market on which securities of the same class or series issued by the Company are then listed or traded;

(j)         provide a transfer agent and registrar, which may be a single entity, for the Common Stock at all times;

(k)        If requested by the Holders, cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to the Registration Statement, which certificates shall be free, to the extent permitted by applicable law, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holders may request;

(l)         during the Effectiveness Period, refrain from bidding for or purchasing any Common Stock or any right to purchase Common Stock or attempting to induce any person to purchase any such security or right if such bid, purchase or attempt would in any way limit the right of the Holders to sell Registrable Securities by reason of the limitations set forth in Regulation M of the Exchange Act; and

 

(m)       take all other reasonable actions necessary to expedite and facilitate the disposition by the Holders of the Registrable Securities pursuant to the Registration Statement.

 

  

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4.          Suspension of Offers and Sales.   Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(f) hereof or of the commencement of a Blackout Period, such Holder shall discontinue the disposition of Registrable Securities included in the Registration Statement until such Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 3(f) hereof or notice of the end of the Blackout Period, and, if so directed by the Company, such Holder shall deliver to the Company (at the Company’s expense) all copies (including, without limitation, any and all drafts), other than permanent file copies, then in such Holder’s possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice.

5.          Registration Expenses.  The Company shall pay all expenses in connection with any registration obligation provided herein, including, without limitation, all registration, filing, stock exchange fees, printing expenses, all fees and expenses of complying with applicable securities  laws,  and  the  fees  and  disbursements  of  counsel  for  the  Company  and  of  its independent accountants; provided, that, in any registration, each party shall pay for its own underwriting discounts and commissions and transfer taxes. Except as provided in this Section and Section 8, the Company shall not be responsible for the expenses of any attorney or other advisor employed by a Holder.

6.          Assignment of Rights.  No Holder may assign its rights under this Agreement to any party without the prior written consent of the Company; provided, however, that any Holder may assign its rights under this Agreement without such consent to a Permitted Assignee as long as (a) such transfer or assignment is effected in accordance with applicable securities laws; (b) such transferee or assignee agrees in writing to become subject to the terms of this Agreement; and (c) such Holder notifies the Company in writing of such transfer or assignment, stating the name and address of the transferee or assignee and identifying the Registrable Securities with respect to which such rights are being transferred or assigned.

7.          Information by Holder.   A Holder with Registrable Securities included in any registration shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as shall be required in order to comply with any applicable law or regulation in connection with the registration of such Holder’s Registrable Securities or any qualification or compliance with respect to such Holder’s Registrable Securities and referred to in this Agreement.  A form of Selling Stockholder Questionnaire is attached as Exhibit A hereto for such purposes.

8.           Indemnification.

(a)        In the event of the offer and sale of Registrable Securities under the Securities Act, the Company shall, and hereby does, indemnify and hold harmless, to the fullest extent permitted by law, each Holder, its directors, officers, partners, each other person who participates as an underwriter in the offering or sale of such securities, and each other person, if any, who controls or is under common control with such Holder or any such underwriter within the  meaning  of  Section  15  of  the  Securities  Act,  against  any  losses,  claims,  damages  or liabilities, joint or several, and expenses to which the Holder or any such director, officer, partner or underwriter or controlling person may become subject under the Securities Act, the Exchange Act, or any other federal or state law, insofar as such losses, claims, damages, liabilities or expenses (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement of any material fact contained in any registration statement prepared and filed by the Company under which Registrable Securities were registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, or any omission to state therein a material fact required to be stated or necessary to make the statements therein in light of the circumstances in which they were made not misleading, or any violation or alleged violation of the Securities Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law in connection with this Agreement; and the Company shall reimburse the Holder, and each such director, officer,  partner,  underwriter  and  controlling  person  for  any  legal  or  any  other  expenses reasonably incurred by them in connection with investigating, defending or settling any such loss, claim, damage, liability, action or proceeding; provided, that such indemnity agreement found in this Section 8(a) shall in no event exceed the net proceeds from the PPO, as applicable, received by the Company; and provided further, that the Company shall not be liable in any such case (i) to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon an untrue statement in or omission from such registration statement, any such preliminary prospectus, final prospectus, summary prospectus, amendment or supplement in reliance upon and in conformity with written information furnished to the Company by the Holder specifically for use in the preparation thereof or (ii) if the person asserting any such loss, claim, damage, liability (or action or proceeding in respect thereof) who purchased the Registrable Securities that are the subject thereof did not receive a copy of an amended preliminary prospectus or the final prospectus (or the final prospectus as amended or supplemented) at or prior to the written confirmation of the sale of such Registrable Securities to such person because of the failure of such Holder or underwriter to so provide such amended preliminary or final prospectus and the untrue statement or omission of a material fact made in such preliminary prospectus was corrected in the amended preliminary or final prospectus (or the final prospectus as amended or supplemented). Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Holders, or any such director, officer, partner, underwriter or controlling person and shall survive the transfer of such shares by the Holder.

 

  

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(b)       As a condition to including Registrable Securities in any registration statement filed pursuant to this Agreement, each Holder agrees to be bound by the terms of this Section 8 and to indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors and officers, and each other person, if any, who controls the Company within the meaning of Section 15 of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which the Company or any such director or officer or controlling person may become subject under the Securities Act, the Exchange Act, or any other federal or state law, to the extent arising out of or based solely upon: (x) such Holder’s failure to comply with the prospectus delivery requirements of the Securities Act or (y) any untrue or alleged untrue statement of a material fact contained in any registration statement, any prospectus, or any form of prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading (i) to the extent, but only to the extent, that such untrue statement or omission is contained in any information so furnished in writing by such Holder to the Company specifically for inclusion in the registration statement or such prospectus or (ii) to the extent that (1) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in the Registration Statement, such prospectus or such form of prospectus or in any amendment or supplement thereto or (2) in the case of an occurrence of an event of the type specified in Section 3(f) hereof, the use by such Holder of an outdated or defective prospectus after the Company has notified such Holder in writing that the prospectus is outdated or defective and prior to the receipt by such Holder of the advice contemplated in Section 3(f).  In no event shall the liability of any selling Holder hereunder be greater in amount than the dollar amount of the net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation.

 

  

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(c)      Promptly after receipt by an indemnified party of notice of the commencement of any action or proceeding involving a claim referred to in this Section (including any governmental action), such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the indemnifying party of the commencement of such action; provided, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations under this Section, except to the extent that the indemnifying party is actually prejudiced by such failure to give notice.  In case any such action is brought against an indemnified party, unless in the reasonable judgment of counsel to such indemnified party a conflict of interest between such indemnified and indemnifying parties may exist or the indemnified party may have defenses not available to the indemnifying party in respect of such claim, the indemnifying party shall be entitled to participate in and to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified  party  for  any  legal  or  other  expenses  subsequently  incurred  by  the  latter  in connection with the defense thereof, unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties arises in respect of such claim after the assumption of the defenses thereof or the indemnifying party fails to defend such claim in a diligent manner, other than reasonable costs of investigation.  Neither an indemnified nor an indemnifying party shall be liable for any settlement of any action or proceeding effected without its consent.  No indemnifying party shall, without the consent of the indemnified party, consent to entry of any judgment or enter into any settlement, which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation.  Notwithstanding anything to the contrary set forth herein, and without limiting any of the rights set forth above, in any event any party shall have the right to retain, at its own expense, counsel with respect to the defense of a claim.

 

(d)        If an indemnifying party does or is not permitted to assume the defense of an action pursuant to Sections 8(c) or in the case of the expense reimbursement obligation set forth in Sections 8(a) and (b), the indemnification required by Sections 8(a) and 8(b) shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills received or expenses, losses, damages, or liabilities are incurred.

(e)        If the indemnification provided for in Section 8(a) or 8(b) is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to herein, the indemnifying party, in lieu of indemnifying such  indemnified party hereunder, shall (i)  contribute to  the  amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage or expense as is appropriate to reflect the proportionate relative fault of the indemnifying party on the one hand and the indemnified party on the other (determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission relates to information supplied by the indemnifying party or the indemnified party and the parties’ relative intent, knowledge, access to information and opporunity to correct or prevent such untrue statement or omission), or (ii) if the allocation provided by clause (i) above is not permitted by applicable law or provides a lesser sum to the indemnified party than the amount hereinafter calculated, not only the proportionate relative fault of the indemnifying party and the indemnified party, but also the relative benefits received by the indemnifying party on the one hand and the indemnified party on the other, as well as any other relevant equitable considerations. No indemnified party guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any indemnifying party who was not guilty of such fraudulent misrepresentation.

 

  

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(f)         Other Indemnification.   Indemnification similar to that specified in this Section (with appropriate modifications) shall be given by the Company and each Holder of Registrable Securities with respect to any required registration or other qualification of securities under any federal or state law or regulation or governmental authority other than the Securities Act.

9.           Rule 144.  With a view to making available to the Holders the benefits of Rule 144 and any other rule or regulation of the Commission that may at any time permit the Holders to sell the Registrable Securities to the public without registration, the Company agrees, until the earlier of such time as Holders no longer own any Registrable Securities: (i) to make and keep public information available as those terms are understood in Rule 144, (ii) to file with the Commission in a timely manner all reports and other documents required to be filed by an issuer of securities registered under the Securities Act or the Exchange Act (excluding any filings required under Section 14 of the Exchange Act), (iii) to furnish in writing upon such Holder’s request a written statement by the Company that it has complied with the reporting requirements of Rule 144 and of the Securities Act and the Exchange Act, and to furnish to such Holder a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed by the Company as may be reasonably requested in availing such Holder  of  any  rule  or  regulation  of  the  Commission  permitting  the  selling  of  any  such Registrable   Securities   without   registration   and   (iv) to  undertake   any   additional   actions commercially reasonably necessary to maintain the availability of the use of Rule 144.

10.        Independent Nature of Each Purchaser’s Obligations and Rights.  The obligations of each Purchaser under this Agreement are several and not joint with the obligations of any other Purchaser, and each Purchaser shall not be responsible in any way for the performance of the obligations of any other Purchaser under this Agreement. Nothing contained herein and no action taken by any Purchaser pursuant hereto, shall be deemed to constitute such Purchasers as a partnership, an association, a joint venture, or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this Agreement. Each Purchaser shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose.

 

  

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11.           Miscellaneous.

(a)        Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the United States of America and the State of New York, both substantive and remedial, without regard to New York conflicts of law principles. Any judicial proceeding brought against any of the parties to this Agreement or any dispute arising out of this Agreement or any matter related hereto shall be brought in the courts of the State of New York, New York County, or in the United States District Court for the Southern District of New York and, by its execution and delivery of this Agreement, each party to this Agreement accepts the jurisdiction of such courts. The foregoing consent to jurisdiction shall not be deemed to confer rights on any person other than the parties to this Agreement.

(b)        Remedies. Subject to Section 2(b) of this Agreement, in the event of a breach by the Company or by a Holder of any of their respective obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, shall be entitled to specific performance of its rights under this Agreement.  Subject to Section 2(b) of this Agreement, the Company and each Holder agree that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall not assert or shall waive the defense that a remedy at law would be adequate.

(c)        Successors  and  Assigns.     Except as otherwise provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, Permitted Assignees, executors and administrators of the parties hereto.

(d)        No Inconsistent Agreements. The Company has not entered, as of the date hereof, and shall not enter, on or after the date of this Agreement, into any agreement with respect to its securities that would have the effect of impairing the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof.

(e)       Entire Agreement.   This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subjects hereof.

(f)         Notices, etc. All notices or other communications which are required or permitted under this Agreement shall be in writing and sufficient if delivered by hand, by facsimile transmission, by registered or certified mail, postage pre-paid, by electronic mail, or by courier or overnight carrier, to the persons at the addresses set forth below (or at such other address as may be provided hereunder), and shall be deemed to have been delivered as of the date so delivered:

If to the Company to:

 

AV Therapeutics, Inc.

20 East 68th St., Suite 204

New York, NY 10065

Attention: Robert Pollock, President and COO

Email: rspollock@avtherapeutics.com

 

  

12

  

 

with copy to:

 

Sichenzia Ross Friedman Ference LLP

61 Broadway, 32nd Floor

New York, NY 10006

Attention: Darrin Ocasio, Esq. Facsimile: (212) 930-9725

 

If to the Purchasers:

 

To each Purchaser at the address set forth on the signature page hereto

 

or at such other address as any party shall have furnished to the other parties in writing.

(g)        Delays or Omissions.  No delay or omission to exercise any right, power or remedy accruing to any Holder, upon any breach or default of the Company under this Agreement, shall impair any such right, power or remedy of such Holder nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of any similar breach or default thereunder occurring; nor shall any waiver of any single breach or default be deemed a

  

13

  

 

waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any Holder of any breach or default under this Agreement, or any waiver on the part of any Holder of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, or by law or otherwise afforded to any holder, shall be cumulative and not alternative.

(h)        Counterparts.    This Agreement  may  be  executed  in  any  number  of counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument.  In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof.

(i)         Severability. In the case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

(j)         Amendments. The provisions of this Agreement may be amended at any time and from time to time, and particular provisions of this Agreement may be waived, with and only with an agreement or consent in writing signed by the Company and the Majority Holders. The Purchasers acknowledge that by the operation of this Section, the Majority Holders may have the right and power to diminish or eliminate all rights of all of the Purchasers under this Agreement.

 

[SIGNATURE PAGES FOLLOW]

 

  

14

  

 

 

This Registration Rights Agreement is hereby executed as of the date first above written.

 

 

	 	 	  
	 	COMPANY:	  
	 	 	 
	 	
[PUBCO]

	  
	 	  	  
	 	  	  
	 	  	  
	 	
By:                                                            

	
 

	 	Name: [_________]	 
	 	
Title:   [_________]

	 

 

THE PURCHASER’S SIGNATURE TO THE SUBSCRIPTION AGREEMENT DATED OF EVEN DATE HEREWITH SHALL CONSTITUTE THE PURCHASER’S SIGNATURE TO THIS REGISTRATION RIGHTS AGREEMENT.

  

15

  

 

Exhibit A

 

 

Selling Stockholder Questionnaire

 

 

 

 

  

16

  

 

AV THERAPEUTICS, INC.

SELLING STOCKHOLDERS’ QUESTIONNAIRE

 

The following information is requested from you in connection with the preparation and filing by AV Therapeutics, Inc. (the “Company”) of a Registration Statement on Form S-1 or other appropriate form (the “Registration Statement”) with the Securities and Exchange Commission (the “SEC”) covering the sale of shares of the Company’s common stock, (the “Registrable Securities”) by certain stockholders of the Company.

We would appreciate your answering all of the questions included in this questionnaire, even though your answers may be in the negative, so that the Company will have a record of your responses for use in connection with the preparation of the Registration Statement.  It is requested  that  you  give  careful  attention  to  each  question  and  that  you  complete  this questionnaire personally.

 

In order to assist you in completing this questionnaire, certain terms used herein are defined in the appendix which is attached to this questionnaire.  Each of such defined terms has been bolded and italicized for identification.  The term “person,” as used in this questionnaire, means any natural person, company, government or political subdivision, agency or instrumentality of a government.

After you have completed the following questionnaire, please send the completed questionnaire by facsimile, (212) 930-9725, e-mail, dmanno@srff.com, or overnight courier as soon as possible to the attention of David Manno, Esq. at Sichenzia Ross Friedman Ference LLP, 61 Broadway, 32nd Floor, New York, NY 10006.

 

*********************

 

GENERAL INFORMATION

 

1.         Please provide your full name and address or the full name and address of the entity on whose behalf you are completing this questionnaire.  The address may be a business, mailing or residence address.

 

Name:                                                                                                                                                                                        

 

Address:                                                                                                                                                                                       

 

2.           Name the Control Person of your organization:                                                                                                                               

 

 

3.           (a) Are you a broker-dealer registered pursuant to Section 15 of the Exchange Act?

...  Yes.

...  No.

  

1

  

 

(b) If your response to Item 3(a) above is no, are you an "affiliate" of a broker-dealer registered pursuant to Section 15 of the Exchange Act?

...  Yes.

...  No.

 

 

For the purposes of this Item 3(b), an "affiliate" of a registered broker-dealer shall include any company that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such broker-dealer, and does not include any individuals employed by such broker-dealer or its affiliates.

 

 

(c) Full legal name of person through which you hold the Registrable Securities—(i.e. name of your broker, if applicable, through which your Registered Securities are held):

 

Name of broker:                                                                                                                    

 

 

Contact person:                                                                                                                                                                                                                

 

 

Telephone No.:                                                                                                                                                                                                               

 

 

SECURITIES HOLDINGS

Please fill in all blanks in the following questions related to your beneficial ownership of the Company’s common stock.  Generally, the term “beneficial ownership” refers to any direct or indirect interest in the securities which entitles you to any of the rights or benefits of ownership, even though you may not be the holder of record of the securities.  For example, securities held in “street name” over which you exercise voting or investment power would be considered beneficially owned by you.  Other examples of indirect ownership include ownership by a partnership in which you are a partner or by an estate or trust of which you or any member of your immediate family is a beneficiary.  Ownership of securities held in the names of your spouse, minor children or other relatives who live in the same household may be attributed to you.

If you have any reason to believe that any interest in securities of the Company which you may have, however remote, is a beneficial interest, please describe such interest.  For purposes of responding to this questionnaire, it is preferable to err on the side of inclusion rather than  exclusion.    Where  the  SEC’s  interpretation  of  beneficial  ownership  would  require disclosure of your interest or possible interest in certain securities of the Company, and you believe that you do not actually possess the attributes of beneficial ownership, an appropriate response is to disclose the interest and at the same time disclaim beneficial ownership of the securities.

  

2

  

 

Please indicate the amount of common stock of the Company or any of its subsidiaries which you beneficially owned as of the date hereof.

For each holding:

	
  

	
•

	
State the nature of the holding (i.e., held in your own name, jointly, as a trustee or beneficiary of a trust, as a custodian, as an executor, in discretionary accounts, by your spouse or minor children, by a partnership of which you are a partner, etc.), and

 

	
  

	
•

	
State whether you are the beneficial owner by reason of (i) sole voting power, (ii) shared voting power, (iii) sole investment power, (iv) shared investment power, (v) the right to acquire stock within 60 days of the end of the calendar year, and/or (vi) the right to acquire stock with the purpose of changing or influencing control.

 

	
  

	
•

	
Indicate in the Remarks column whether you have sole or shared voting or investment power with respect to any such securities, and in what capacity (i.e., individual, general partner, trustee) you have such power or powers.

 

	
  

	
•

	
If you wish to disclaim beneficial ownership of any shares listed, so indicate by writing the word “Disclaim” in the Remarks column below; you understand that such shares will be shown separately from your beneficial holdings and an appropriate disclaimer set forth.

 

	
  

	
•

	
If any of the shares listed are subject to any claim, encumbrance, pledge or lien, so indicate in the Remarks column.

 

1.           Your Interest in the Registrable Securities.

(a)           State the number of such Registrable Securities beneficially owned by you.

                                                                                                                                    

 

(b)           Other than as set forth in your response to Item 1(a) above, do you beneficially own any other securities of the Company?

...  Yes.

...  No.

 

  

3

  

 

(c)           If your answer to Item 1(b) above is yes, state the type, the aggregate amount and CUSIP No. (if applicable) of such other securities of the Company beneficially owned by you:

 

Type:                                                                                                                     

  

 

Aggregate amount:                                                                                                                

 

 

CUSIP No.:                                                                                                                                                                                                                             

 

 

(d)       Did you acquire the securities listed in Item 1(a) above in the ordinary course of business?

...  Yes.

...  No.

 

(e)       At the time of your purchase of the securities listed in Item 1(a) above, did you have any agreements or understandings, directly or indirectly, with any person to distribute the securities?

 

...  Yes.

...  No.

 

(f)        If your response to Item 1(e) above is yes, please describe such agreements or understandings:

 

                                                                                                               

 

                                                                                                               

 

                                                                                                                  

 

2.           Nature of Your Beneficial Ownership.

(a)           Does someone other than yourself have Control over the securities listed in Item 1(a) above?

 

...  Yes.

 

...  No.

(b)       If your response to Item 2(a) above is yes, name your controlling shareholder(s) or other person who has the ability to exercise control over you (the "Controlling Entity"). If the Controlling Entity is not a natural person and is not a publicly held entity, name each shareholder

 

  

4

  

 

of such Controlling Entity. If any of these named shareholders are not natural persons or publicly held entities, please provide the same information. This process should be repeated until you reach natural persons or a publicly held entity.

 

	
  

	
(A)(i)

	
Full legal name of Controlling Entity(ies) or natural person(s) with who have sole or shared voting or dispositive power over the Registrable Securities:

Business address (including street address) (or residence if no business address), telephone number and facsimile number of such person(s):

Address:                                                                                                

 

Telephone:                                                                                             

 

 

Fax:                                                                                                                  

 

 

Name of shareholder:;  

 

                                                                                                                  

 

                                                                                                                  

                                                                                                                  

 

(B)(i)            Full legal name of Controlling Entity(ies):

                                                                                                                                       

                                                                                                                                                                                                        

 

Business address (including street address) (or residence if no business address), telephone number and facsimile number of such person(s):

Address:                                                                                                   

 

 

Telephone:                                                                                                

 

Fax:                                                                                                                            

 

Name of shareholders:                                                                                                                

 

If you need more space for this response, please attach additional sheets of paper. Please be sure to indicate your name and the number of the item being responded to on each such additional sheet of paper, and to sign each such additional sheet of paper before attaching it to this Questionnaire. Please note that you may be asked to answer additional questions depending on your responses to the following questions.

 

  

5

  

 

3.           5% Stockholders

 

To the best of my knowledge, all persons (including myself and my associates and including corporations, partnerships, trusts, associations and other such groups) who beneficially own more than 5% of any class of the Company’s stock are described below:

	
Name of

Beneficial

Owner

	
Class of Shares

Beneficially

Owned

	
Holder of Voting

or Investment

Power

 

  

6

  

 

4.           No Adverse Interest

All  interests  I  or  my  associates  have  or  will  have  that  are  adverse  to  the  Company interests in any pending or contemplated legal proceeding or government investigation to which the Company is or will be a party (or to which its property may be subject) are described below:

 

 

  

7

  

 

5.           Voting Arrangement

 

All voting trusts or similar agreements or arrangements of which I have knowledge under which more than 5% of the Company’s outstanding common stock, on an as converted basis, is held or to be held are described below:

 

	 	Voting Rights and Other Powers
	
Names and Addresses of Voting Trustees

	
Under Trust, Agreement or Arrangement

 

  

8

  

 

6.           Change  in Control

 

All arrangements of  which  I have  knowledge, including any  pledge  by  any  person  of securities of the Company, the operations of which may at a subsequent date result in a change  in control of the Company,  are described below:

 

  

9

  

 

TRANSACTIONS WITH THE COMPANY

1.         Information regarding all material interests of yours or your associates in any actual or proposed transaction during the last three fiscal years to which the Company was or is to be a party and that are identified under “Securities Holdings” above) is provided below. Further, no such transaction need be described if:

 

(a)       the amount involved (including all periodic installments in the case of any lease or other agreement provided for periodic payments or installments and including the value of all transactions In a series of similar transactions) does not exceed $60,000;

(b)       the rates or charges involved in the transaction are fixed by law or governmental authority or determined by competitive bids;

(c)       the services involved are as a bank depositary of funds, transfer agent, registrar, trustee under a trust indenture or other similar service;

(d)       my interest arises solely from my ownership of securities of the Company and I received no extra or special benefit not shared on a pro rata basis by all other holders of securities in the same class;

(e)       my interest in the corporation that is a party to the transaction is solely as a director; or

(f)        my interest arose solely as an officer and/or director of the Company (e.g., my compensation arrangement with the Company).

 

Description:

 

  

10

  

 

AFFILIATION WITH ACCOUNTANTS OR ATTORNEYS

 

Described below is any interest, affiliation or connection  you have with any law firm or accounting  firm that has been retained by the Company  during the last three fiscal years or is proposed to be retained by the Company:

  

11

  

 

CONTRACTS WITH THE COMPANY

Described below are all contracts with the Company or in which the Company has a beneficial interest, or to which the Company has succeeded by assumption or assignment, to which you or any of your associates is a party, which are to be performed in whole or in part at or after the date of the proposed filing of the Registration Statement, or which were made not more than two years prior thereto:

 

  

12

  

FINRA-RELATED QUESTIONS

 

1.         Are  you  (i)  a  “member”  of  the  Financial  Industries  Regulatory  Authority,  Inc. (“FINRA”), (ii) an “affiliate” of a member of the FINRA, (iii) a “person associated with a member” or “associated person of a member” of the FINRA or (iv) associated with an “underwriter or related person” with respect to the proposed public offering of the Company’s securities?

 

Yes              No                     

 

For the sole purpose of this Question: (i) the FINRA defines a “member” as being either any broker or dealer admitted to membership in the FINRA or any officer or partner of such a member or the executive representative of such member or the substitute for such representative; (ii) the term “affiliate” means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is in common control with the person specified. Persons who have acted or are acting on behalf or for the benefit of a person include, but are not necessarily  limited  to,  directors,  officers,  employees,  agents,  consultants  and  sales representatives; (iii) the FINRA defines a “person associated with a member” or “associated person of a member” as being every sole proprietor, partner, officer, director or branch manager of any member, or any natural person occupying a similar status or performing similar functions, or any natural person engaged in the investment banking or securities business who is directly or indirectly controlling or controlled by such member (for example, any employee), whether or not any such person is registered or exempt from registration with the FINRA; and (iv) the term “underwriter or related person” includes, with respect to a proposed offering, underwriters, underwriters’ counsel, financial consultants and advisers, finders, members of the selling or distribution group, and any and all other persons associated with or related to any such persons.

 

If yes, kindly describe such relationship (whether direct or indirect) and please respond to Questions (2) and (3) below; if no, please proceed to Question (4).

2.         Please set forth information as to all purchases and acquisitions (including contracts for purchase or acquisition) of securities of the Company by you, regardless of the time acquired or the source from which derived:

	
Seller or

	
Amount and

	
Price or Other

	  
	
Prospective Seller

	
Nature of Securities

	
Consideration

	
Date

 

3.         In connection with your direct or indirect affiliation or association with a “member” of the FINRA as set forth above in Question (1), please furnish the identity of such FINRA member and any information, if known, as to whether such FINRA member intends to participate in any capacity in this proposed initial public offering, including the details of such participation:

  

13

  

 

4.         Please describe any underwriting compensation and arrangement or any dealings known to you between any “underwriter or related person”, “member” of the FINRA, “affiliate” of a member of the FINRA, “person associated with a member”, or “associated person of a member” of the FINRA on the one hand and the Company or controlling shareholder thereof on the other hand, other than information relating to the proposed initial public offering of the Company:

 

5.         Please set out below any information, if known, as to whether any “member” of the FINRA, any “underwriter or related person”, “affiliate” or a member of the FINRA, “person associated with a member” or “associated person of a member” of the FINRA may receive any portion of the net offering:

 

 

 

For subscribers answering “Yes” to Item 1 above:

 

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

 

                                                                                                

Name of FINRA Member Firm

 

 

By:                                                                                                  Date:                                       

                Authorized Officer

  

14

  

 

The undersigned (including its donees or pledgees) intends to distribute the Registrable Securities listed above pursuant to the Registration Statement only as follows (if at all): Such Registrable  Securities  may  be  sold  from  time  to  time  directly  by  the  undersigned  or, alternatively, through underwriters, broker-dealers or agents. If the Registrable Securities are sold through underwriters, broker-dealers or agents, the Selling Holder will be responsible for underwriting discounts or commissions or agents' commissions. Such Registrable Securities may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale or at negotiated prices. Such sales may be effected in transactions (which may involve block transactions) (i) on any national securities exchange or quotation service on which the Registrable Securities may be listed or quoted at the time of sale, (ii) in the over-the-counter market, or (iii) in transactions otherwise than on such exchanges or services or in the over-the-counter market.

I understand that material misstatements or the omission of material facts in the Registration Statement may give rise to civil and criminal liabilities to the Company, to each officer and director of the Company signing the Registration Statement and other persons signing the Registration Statement. I will notify you and the Company of any misstatement of a material fact in the Registration Statement or any amendment thereto, and of the omission of any material fact necessary to make the statements contained therein not misleading, as soon as practicable after a copy of the Registration Statement or any such amendment has been provided to me.

 

I confirm that the foregoing statements are correct, to the best of my knowledge and belief. 

 

Dated:                                             

 

                   Very truly yours,

 

 

                                                                                                         

                    (Signature)

                                   

                                                                                                                      

                                           (Typed or Printed Name)

 

  

15

  

 

DEFINITIONS

 

The term “arrangement” means any plan, contract, authorization or understanding whether or not set forth in a formal document.

The term “associate” as used throughout this questionnaire, means (a) any corporation or organization (other than the Company) of which I am an officer, director or partner or of which I am, directly or indirectly, the beneficial owner of 5% or more of any class of equity securities, (b) any trust or other estate in which I have a substantial beneficial interest or as to which I serve as trustee or in a similar capacity, (c) my spouse, (d) any relative of my spouse or any relative of mine who has the same home as me or who is a director or officer or key executive of the Company, (e) any partner, syndicate member or person with whom I have agreed to act in concert with respect to the acquisition, holding, voting or disposition of shares of the Company’s securities.

The term “beneficially owned” when used in connection with the ownership of securities, means (a) any interest in a security which entitles me to any of the rights or benefits of ownership even though I may not be the owner of record or (b) securities owned by me directly or indirectly, including those held by me for my own benefit (regardless of how registered) and securities held by  others  for  my  benefit  (regardless  of  how  registered),  such  as  by  custodians,  brokers, nominees, pledgees, etc., and including securities held by an estate or trust in which I have an interest as legatee or beneficiary, securities owned by a partnership of which I am a partner, securities held by a personal holding company of which I am a stockholder, etc., and securities held in the name of my spouse, minor children and any relative (sharing the same home).  A “beneficial owner” of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has or shares:

 

(a)       voting power which includes the power to vote, or to direct the voting of, such security;

and/or

(b)       investment power which includes the power to dispose, or to direct the disposition, of such security.

The term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract or otherwise.

The term “immediate family” means any relationship by blood, marriage or adoption, not more remote than first cousin.

The term “material,” when used in this questionnaire to qualify a requirement for the furnishing of information as to any subject, limits the information required to those matters as to which an average prudent investor ought reasonably to be informed before purchasing the Common Stock of the Company.

 

  

16ex10-3.htm

Exhibit 10.3

CONSULTING AGREEMENT

AGREEMENT, dated as of July 1, 2013 by and between AV Therapeutics, Inc., a Delaware corporation (“AVT”), and ABRAHAM MITTELMAN (the “Consultant”).

RECITALS

Consultant and AVT desire to confirm the terms under which Consultant will render services for AVT.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto agree as follows:

1. Engagement.

AVT hereby engages Consultant to serve as a “Chief Executive Officer.”  In such capacity Consultant shall have the responsibility and authority with respect to AVT’s scientific development activities and management activities, subject to the general policies and directions of the Board of Managers of AVT.

During the Term (as defined below) at each meeting of the Members of AVT at which members are to be elected to the Board or at such time as Members may act by written consent to elect members to the Board, AVT shall nominate Consultant to serve as the Chairman member of its Board.

AVT acknowledges that Consultant currently serves as an Associate Professor of Medicine at the New York College of Medicine.  Consultant shall devote such time to the Company’s affairs as shall be necessary to properly perform his duties, subject in all events to his obligation to New York Medical College.

2. Term.

The term of the Consultant’s engagement under this Agreement shall commence on July 1, 2013 and continue for four (4) years with automatic one (1) year renewals unless notified in writing by either party sixty (60) days prior to the end of the term that that they do not want to continue Agreement.

3. Compensation.

3.1 Consulting Fee.  AVT shall pay Consultant a fee (“Consulting Fee”) of $72,000 per annum, to be paid in shares of AVT, Inc. stock, at current prices, in equal increments not less frequently than monthly with a five (5) percent annual increase.  Any increase over the five (5) percent in compensation will be negotiated sixty days before the anniversary date and amended to this Agreement.

 

  

1

  

3.2 Out-of-Pocket Expenses.  AVI shall promptly pay to Consultant the reasonable expenses incurred by him in the performance of his duties hereunder, including, without limitation, those incurred in connection with business related travel or entertainment, or, if such expenses are paid directly by Consultant, shall promptly reimburse him for such expenses, provided that the Consultant properly accounts therefore in accordance with AVT’s policy.

4. Termination.

This Agreement shall terminate immediately upon the Consultant’s death and may be terminated as follows:

4.1.  For Cause.  AVT shall have the right to terminate this Agreement for “Cause.”  A termination for “Cause” is a termination evidenced by a resolution adopted by a vote of a majority of the members of the entire Board of AVT finding that Consultant has:

4.1.1. repeatedly breached, failed, refused or neglected to comply with any of the material terms of this Agreement, other than as a result of a disability; or

 

4.1.2.  repeatedly failed, refused or neglected to perform his material duties under this Agreement, for reasons other than disability; or

4.1.3.  willfully or intentionally failed to carry out, in any material respect, the instructions of the Board; or

4.1.4.  been convicted of any felony in a court of law; or

has had imposed on him any sanction by any governmental authority which would preclude AVT from qualifying for or participating in any federal, state or other grant program which would otherwise be available to AVT.  It will be provided, however, that (A) in the case of clauses (i), (ii) and (iii) above, the Consultant shall receive thirty (30) days’ advance written notice that the Board intends to meet to consider terminating this Agreement and specifying the actions constituting Cause, the Consultant shall have the opportunity to cure the conduct constituting Cause during such thirty (30) day period and/or the Consultant shall be given a reasonable opportunity to be heard by the

Board on the issue prior to the Board’s vote on the matter and (B) any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for AVT  shall be conclusively presumed to be done, or omitted to be done, by Consultant in good faith and in the best interests of AVT.

4.2.  Upon Disability.  AVT shall have the right to terminate this Agreement as a result of Consultant’s “Disability.”  For purposes of this Agreement, a termination for “Disability” shall occur:

 

  

2

  

4.2.1. upon the thirtieth (30th) day after the Board has provided a written termination notice to Consultant supported by a written statement from a reputable independent physician mutually selected by the parties to the effect that Consultant has become so incapacitated as to be unable to resume his services on behalf of AVT within 120 days due to physical or mental illness or injury; or

4.2.2. upon rendering of a written termination notice by AVT after Consultant has been unable to substantially perform his duties hereunder for 90 consecutive days or for 100 days in any 360 day period due to any physical or mental illness or injury.

If the Board determines, in good faith, that the Disability of the Consultant has occurred, it may give to the Consultant written notice of its intention to terminate this Agreement.  In such event, this Agreement shall terminate effective on the 30th day after receipt of such notice by Consultant; provided that, within the 30 days after such receipt, the Consultant shall not have returned to full-time performance of his duties and indicated an ability to continue to perform such duties on a full-time basis.  For purposes of this Section, the Consultant agrees to make himself available and to cooperate in any reasonable examination by a reputable independent physician mutually selected by the parties.

5. Payments Upon Termination.

5.1. Death or Disability.  In the event of the termination of this Agreement as a result of Consultant’s death or Disability, AVT shall:

5.1.1. pay to Consultant or his estate, as the case may be, the Consulting Fee through the date of his death or Disability (pro rated for any partial month);

 

5.1.2. reimburse the Consultant, or his estate, as the case may be, for any expenses pursuant to Section 3 (the amounts payable pursuant to the foregoing clauses 3.1 and 3.2 are hereafter referred to as the “Accrued Obligations”).

                               5.2 By AVT for Cause or by the Consultant Voluntarily.  In the event this Agreement is terminated by AVT for Cause, or by the Consultant voluntarily, AVT shall pay to Consultant the Accrued Obligations, and the Consultant shall have no further entitlement to any other compensation or benefits from AVT, except as set forth herein.

5.3 By AVT Without Cause; Consultant with Good Reason.  If this Agreement is terminated by AVT without cause or by Consultant for “Good Reason,” AVT shall immediately upon receipt of a release from Consultant of AVT and its officers, Board members, employees and agents from any claims Consultant may have solely by reason of the termination of this Agreement pay to Consultant the Accrued Obligations plus an amount equal to one year’s Consulting Fee at the rate then in effect.

 

  

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For purposes of this Agreement “Good Reason” shall mean:

(i)             Removal from or failure to appoint Consultant to the Board;

(ii)            Reduction in the Consulting Fee payable hereunder;

(iii)           The continuous breach, failure or refusal of AVT to comply with any material provision of this Agreement;

provided, Consultant shall give AVT thirty (30) days notice that he intends to terminate this Agreement and AVT shall fail to remedy such breach within such thirty (30) days.

6. Covenant Regarding Inventions.

6.1. Transfer of Rights.  In consideration of AVT’s engagement of Consultant pursuant to this Agreement, Consultant hereby transfers to AVT all intellectual property rights and proprietary information related to the focus of the research or the Licensed Rights (as such terms are defined below) which the Consultant may now own or acquire during the Term (herein, “Consultant’s Intellectual Property”).  The Consultant shall from time to time execute and deliver such additional instruments of transfer as may be requested by AVT to confirm such transfer to AVT.

For the purpose of this Agreement, “Focus of Research” shall mean the scientific re-education of the immune system to counteract disease entities (“vaccines”) and the “Licensed Rights” shall mean all intellectual property rights licensed by AVT from New York Medical College (“NYMC”) pursuant to the Patent, Know-How and Technology License dated June 24, 2008, as the same may be amended from time to time.

6.2. AVT shall have the exclusive rights to all copyrights, trademarks, patents and other proprietary rights relating to the Consultant’s Intellectual

 Property.  All opportunities relating to the Consultant’s Intellectual Property involving third parties shall belong to and be carried out for the account of AVT.  Any developments relating to AVT’s products or technology or the Consultant’s Intellectual Property, including without limitation, inventions, in which the Consultant has participated shall be considered works-for-hire for AVT, and AVT shall have the exclusive rights thereto; and the Consultant shall sign and deliver to AVT any instruments necessary to effect the assignment of such rights to AVT and for AVT to obtain proprietary rights in connection therewith.

                                The obligations set forth in this Section 6 shall continue beyond the conclusion of the Term with respect to inventions, discoveries, improvements and patentable or copyrightable works initiated, conceived or made by the Consultant during the Term and shall be binding upon the Consultant’s assigns, executors, administrators and other legal representatives.

 

  

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7. Protection of Confidential Information.

7.1. As an inducement to AVT to enter into and perform its obligations under this Agreement, Consultant acknowledges that he has been and will be provided with information about confidential affairs of AVT, including proprietary information about intellectual property rights and technical and business information related to Vaccines and the Licensed Rights (as defined in Section 6 above), including without limitation, chemical compositions, formulae, processing methods, specifications, documentation, designs, trade secrets, technology, know-how, research and development, inventions, patents and copyrights (and any renewals, reissues, extensions, divisions, continuations and continuations in part thereof and registrations, applications, patents of addition and inventors certificates) and other proprietary rights relating to Vaccines and the Licensed Rights, owned or controlled by, granted to or applied for or on behalf of AVT (whether or not patentable or copyrightable), all of which are highly confidential and proprietary.  The Consultant further acknowledges that the services to be performed by him under this Agreement are of a special unique, unusual, extraordinary and intellectual character and that the nature of the relationship of the Consultant with AVT is such that the Consultant is capable of competing with AVT.  In recognition of the foregoing, the Consultant covenants and agrees during the Term and thereafter he will:

7.1.1. keep secret all confidential matters of AVT and not disclose them to anyone outside of AVT, either during or after the Term, except with AVTs” prior written consent;

7.1.2 not make use of any of such confidential matters for his own purposes or the benefit of anyone other than AVT, provided that the restrictions contained in clauses above of this Section shall not apply to information that (A) is required to be disclosed by law or requested by any government, regulatory or self-

regulatory agency or body; or (B) is or becomes generally available to the public other than as a result of the Consultant’s breach of this Section; and

7.1.3. deliver promptly to AVT on termination of this Agreement, or at any time AVT may so request, all confidential memoranda, notes, records, reports and other confidential documents (and all copies thereof) relating to the business of AVT, that he may then possess or have under his control, except that he may retain personal notes, notebooks, journals and diaries provided that such materials do not contain confidential information.

8. Limitation of Sections 6 and 7.

AVT acknowledges that Consultant is currently affiliated with NYMC and that his employment agreement with NYMC provides that intellectual property developed by Consultant in the course of providing services to NYMC is the property of and must be disclosed to NYMC.  AVT agrees that the obligation contained in Section 6 of Consultant to assign to AVT certain intellectual property and the restriction on the disclosure of information by Consultant contained in Section 7 are subject and subordinate to any obligation which Consultant may have to NYMC.  Further, if Consultant’s affiliation with NYMC shall for any reason end and Consultant’s new employer shall reasonably require as a condition to employing Consultant that he grant to it rights inconsistent with and superior to those contained in Sections 6 and 7, Consultant shall be free to do so, provided, such prospective employer is not a for profit commercial enterprise substantially engaged in the development, manufacture and sale of pharmaceutical products directly competitive with those being developed by AVT.

 

  

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9. Restriction on Competition;

As an inducement to AVT to enter into and perform its obligations under this Agreement, the Consultant covenants and agrees that, during the Term Consultant will not directly or indirectly, as an employee, consultant, manager, agent, contractor, stockholder, officer, owner, partner, licensor, licensee or otherwise, engage in the development, manufacture or sale of vaccine or any of the Licensed Rights.

10. Specific Remedies.

It is understood by the Consultant and AVT that the covenants contained in this Section 10 and Sections 6, 7 and 9 are essential elements of this Agreement and that, but for the agreement of the Consultant to comply with such covenants, AVT would not have agreed to enter into this Agreement.  If the Consultant commits a breach of any of the provisions of Sections 6, 7 or 9 hereof, such breach shall be deemed to be grounds for termination for Cause.  In addition, the Consultant acknowledges that AVT may have no adequate remedy at law if he violates any of the terms thereof.  The Consultant therefore understands and agrees that AVT shall have without prejudice as to any other remedies:

 

                                10.1. the right upon application to any court of proper jurisdiction and without posting of any bond or other security whatsoever, to a temporary restraining order, preliminary injunction, injunction, specific performance or other equitable relief, it being acknowledged and agreed that any such breach will cause irreparable injury to AVT and that money damages will not provide an adequate remedy to AVT; and

10.2. the right to apply to any court of proper jurisdiction, to require the Consultant to account for and pay over all compensation, profits, monies, accruals, increments and other benefits (collectively the “Benefits”) derived or received by the Consultant as a result of any transaction constituting a breach of any of the provisions of Sections 6, 7, or 9, and, if a court so orders, the Consultant hereby agrees to account for and pay over such Benefits to AVT.  Each of the rights enumerated in Sections 6, 7, or 9 hereof and the remedies enumerated in Section 10 hereof shall be independent of the others and shall be in addition to and not in lieu of any other rights and remedies available to AVT at law or in equity.

  

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11. Acknowledgments of Consultant and AVT.

11.1. Consultant represents that (i) he has the right to enter into this Agreement and this Agreement constitutes the valid and binding obligation of him enforceable in accordance with its terms and (ii) the execution and delivery of this Agreement by him, and the performance of his obligations hereunder are not in violation of, and do not conflict with or constitute a default under any agreement by which he is bound or any order, decree or judgment to which he is subject.

11.2. AVT represents that (i) it has all requisite corporate power and authority to enter into and perform its obligations under this Agreement, (ii) the execution and delivery of this Agreement by AVT and the performance by AVT of the transactions contemplated herein have been duly and validly authorized by all necessary corporate action and (iii) this Agreement is a legal, valid and binding obligation of AVT..

12. Notices.

Any notice or other communications required or permitted hereunder shall be in writing and shall be deemed effective (a) upon personal delivery, if delivered by hand and followed by notice by mail or facsimile transmission, (b) three (3) days after the date of deposit in the mails, if mailed by certified or registered mail (return receipt requested), or (c) on the next business day, if mailed by an overnight mail service to the parties or sent by facsimile transmission,

 

if to AVT:

AV Therapeutics, Inc.

20 East 68th Street

New York, New York 10065

Facsimile No. 212-288-2763

Attention: Chief Executive Officer

 

With a copy to (which shall not be considered to be notice):

 

Sichenzia Ross Friedman Ference LLP

61 Broadway

New York, New York 10006

docasio@srff.com

Attention: Darrin Ocasio, Esq.

 

 if to the Consultant:

 

Abraham Mittelman

38 Graham Road

Scarsdale, NY 10583

 

  

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or at such other address or telecopy number (or other similar number) as either party may from time to time specify to the other.  Any notice, consent or other communication required or permitted to be given hereunder shall have been deemed to be given on the date of mailing, personal delivery or telecopy or other similar means (provided the appropriate answer back is received) thereof and shall be conclusively presumed to have been received on the second business day following the date of mailing or, in the case of personal delivery or telecopy or other similar means, the day of delivery thereof, except that a change of address shall not be effective until actually received.

13. Miscellaneous.

13.1. Successors; Binding Effect; Third Party Beneficiaries.  In the event of a future disposition by AVT (whether direct or indirect, by sale of assets or stock, merger, consolidation or otherwise) of all or substantially all of its business and/or assets, AVT will require any successor, by agreement in form and substance reasonably satisfactory to the Consultant or by operation of law, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that AVT would be required to perform if no such disposition had taken place.  As used in this Agreement, “AV THERAPEUTICS” shall mean AVT as herein before defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

This Agreement is personal to the Consultant and, without the prior written consent of AVT, shall not be assignable by the Consultant otherwise than by will or the laws of descent and distribution with respect to the Consultant’s rights, if any, to be paid or receive benefits hereunder.  This Agreement shall inure to the benefit of and be enforceable by the Consultant’s legal representatives.  Except for the foregoing, this

Agreement shall not create any rights in favor of any party other than the parties hereto or their respective successors and assigns.

            13.2   Law Governing; Jurisdiction.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York (without giving effect to the principles of conflicts of law).  Each of AVT and the Consultant agrees that the federal or state courts located in the City of New York, State of New York shall have exclusive jurisdiction in connection with any dispute arising out of this Agreement.  Any litigation proceeding under this Agreement shall be confidential in nature to the fullest extent permitted by applicable law.

13.3. Severability.  If any provision of this Agreement, or any part of any of them, is hereafter construed or adjudicated to be invalid or unenforceable, the same shall not affect the remainder of the covenants or rights or remedies which shall be given full effect without regard to the invalid portions.  If any of the covenants set forth herein is held to be invalid or unenforceable because of the duration of such provision or the area covered thereby, the parties agree that the court making such determination shall have the power to reduce the duration and/or area of such provision and in its reduced form said provision shall then be enforceable.

13.4. Headings.  The headings of this Agreement are for convenience of reference only and shall not affect in any manner any of the terms and conditions hereof.

 

  

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13.5. Acts and Documents.  The parties agree to do, sign and execute all acts, deeds, documents and corporate proceedings necessary or desirable to give full force and effect to this Agreement.

 

13.6. Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same agreement.

13.7. Modifications and Waivers.  No term, provision or condition of this Agreement may be modified or discharged unless such modification or discharge is authorized by the Board and is agreed to in writing and signed by the Consultant.  No waiver by either party hereto of any breach by the other party hereto of any term, provision or condition of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

13.8 Entire Agreement.  This Agreement constitutes the entire agreement between the parties with respect to the subject matter herein and supersedes all prior agreements, negotiations and discussions between the parties hereto, there being no

extraneous agreements.  This Agreement may be amended only in writing executed by the parties hereto affected by such amendment.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first set forth above.

CONSULTANT

/s/ Abraham Mittelman

Abraham Mittelman

AV THERAPEUTICS, INC.

By: /s/ Jan Geliebter

Name: Jan Geliebter, PhD

Title: Secretary

 

  

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