Item 1.01. Entry into a Material Definitive Agreement
Effective
June 17, 2009, Advaxis, Inc. (the “Company”) entered into a Note Purchase
Agreement (the “Note Purchase Agreement”) with certain accredited and/or
sophisticated investors as set forth on Schedule A to the Note
Purchase Agreement (collectively, the “Investors”), pursuant to which it
completed a private placement (the “Offering”) whereby the Investors acquired
senior convertible promissory notes of the Company (the “Notes”) in the
aggregate principal face amount of $1,131,352.94, for an aggregate net purchase
price of $961,650. The Notes were issued with an original issue
discount of 15%. Each Investor paid $0.85 for each $1.00 of principal
amount of Notes purchased at the Closing. The Notes are convertible
into shares of the Company’s common stock, $0.001 par value (the “Common
Stock”), all as more particularly described below and in the form of Note
attached hereto as Exhibit 4.1. For every dollar invested, each
Investor received warrants to purchase 2 ½ shares of Common Stock (the
“Warrants”) at an exercise price of $0.20 per share, subject to adjustments upon
the occurrence of certain events as more particularly described below and in the
form of Warrant attached hereto as Exhibit 4.2.
The Notes
mature on December 31, 2009 (the “Maturity Date”), if not retired
sooner. The Notes may be prepaid at anytime by the Company without
penalty. The Warrants are exercisable at any time on or before the
fifth anniversary of the issue date of the Warrants. The Warrants may
be exercised on a cashless basis under certain circumstances.
In the
event the Company consummates an equity financing from and after August 1, 2009
and prior to the second business day immediately preceding the Maturity Date, in
which it sells shares of its preferred stock, $0.001 par value, or Common Stock
(“Qualified Stock”) with aggregate gross proceeds of not less than $2,000,000 (a
“Qualified Equity Financing”), then prior to the Maturity Date, then the
Investors shall have the option to convert all or a portion of the Notes into
the same securities sold in the Qualified Equity Financing, at an effective per
share conversion price equal to 90% of the per share purchase price of the
Qualified Stock in the Qualified Equity Financing.
In the
event the Company does not consummate a Qualified Equity Financing from and
after August 1, 2009 and prior to the second business day immediately preceding
the Maturity Date, then the Investors shall have the option to convert all or a
portion of the Note into shares of Common Stock, at an effective per share
conversion price equal to 50% of the volume-weighted average price per share of
the Common Stock over the five (5) consecutive trading days immediately
preceding the third business day prior to the Maturity Date.
To the
extent an Investor does not elect to convert its Notes as described above, the
principal amount of the Notes not so converted shall be payable in cash on the
Maturity Date.
The Note
may be converted by the Investors, in whole or in part. The Notes and
Warrants include a limitation on conversion or exercise, which provides that at
no time will an Investor be entitled to convert any portion of the Notes or
exercise any number of Warrants, that would result in the beneficial ownership
by the Investor and its affiliates of more than 9.99% of the outstanding shares
of Common Stock on such date.
In
connection with the Offering, the Company entered into a Security Agreement,
dated as of June 17, 2009 (the “Security Agreement”) with the Investors, in the
form attached hereto as Exhibit 10.2. The Security Agreement grants
the Investors a security interest in all of the Company’s tangible and
intangible assets, as further described on Exhibit A to the Security
Agreement.
In
connection with the Offering, the Company also entered into a Subordination
Agreement, dated as of June 17, 2009 (the “Subordination Agreement”) with the
Investors and Mr. Thomas A. Moore, the Company’s chief executive officer, in the
form attached hereto as Exhibit 10.3. Pursuant to the Subordination
Agreement, Mr. Moore subordinated certain rights to payments under the Moore
Note (as defined below) to the right of payment in full in cash of all amounts
owed to the Investors pursuant to the Notes; provided, however, that principal
and interest of the Moore Note may be repaid prior to the full payment of the
Investors as described below.
