Exhibit 10.1

 

EXCHANGE AGREEMENT

 

This Exchange Agreement (the “Agreement”) is entered into as of the 17 day of
September, 2018, by and between Precipio, Inc., a Delaware corporation, with
offices located at 4 Science Park, 3rd Floor, New Haven, CT 06511 (the
“Company”) and the holders listed on the signature pages hereto (each "Holder",
and collectively “Holders”), with reference to the following facts:

 

A. The Company owed to certain of its creditors (“Creditors”) amounts in the
original aggregate sum of $2,701,127 which the Company had agreed to pay to
those Creditors in such amounts as set out in certain debt settlement
agreements, dated October 31, 2017 made between the Creditors and the Company as
further detailed in Annex A to this Agreement (the “DSA”). The Holder and one or
more of the Creditors have entered, on various dates, into an agreement or
agreements pursuant to which the DSA in the aggregate original principal amount
of $2,701,127 has been assigned to the Holders.

 

B. The Company and the Holder desires to effect an exchange (each, an “Exchange”
or the “Transaction”) of the DSA for a new convertible promissory note, in the
form of Annex B hereto (one to be issued per creditor, each an “Exchange Note”).
The Exchange Notes and this Agreement and such other documents and certificates
related thereto are collectively referred to herein as the “Exchange Documents”.

 

C. The Exchange is being made in reliance upon the exemption from registration
provided by Section 3(a)(9) of the Securities Act of 1933, as amended (the “1933
Act”).

 

D. Capitalized terms used but not otherwise defined herein shall have the
meanings set forth in the Securities Purchase Agreement.

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants hereinafter contained, the parties hereto agree as follows:

 

1. Exchange. On or after the date hereof, pursuant to Section 3(a)(9) of the
1933 Act, the Holder hereby agrees to convey, assign and transfer one or more of
Existing Notes to the Company in exchange for which the Company agrees
immediately upon presentment to issue an Exchange Note to the Holder and cause
to be delivered to the Holder (or its designee) the Exchange Note at the address
for delivery set forth on the signature page hereto. The Company agrees that the
Holder may present one or more of the Existing Notes to the Company for Exchange
and that the Existing Notes may be presented individually or two or more
together and that there may be up to seven Exchanges under this Agreement. All
obligations of the Company to the Holders are secured by the assets of the
Company pursuant to the security agreements currently in place between the
Company and the Creditors and the Company acknowledges that the Holders are
third party beneficiaries of those security agreements and are deemed to be
secured parties thereunder.

 

2. Ratifications. Except as otherwise expressly provided herein, (i) each of the
Exchange Agreement, and each other Exchange Document, is, and shall continue to
be, in full force and effect and is hereby ratified and confirmed in all
respects.

 

3. Representations and Warranties:

 

Except as set forth in the disclosure schedules, which disclosure schedules
shall be deemed a part hereof and shall qualify any representation or otherwise
made herein, the Company represents and warrants to the Holder that as of the
date hereof:

 

  

 

 

3.1 Organization and Qualification. Each of the Company and each of its
subsidiaries are entities duly organized and validly existing and in good
standing under the laws of the jurisdiction in which they are formed, and have
the requisite power and authority to own their properties and to carry on their
business as now being conducted and as presently proposed to be conducted. Each
of the Company and each of its subsidiaries is duly qualified as a foreign
entity to do business and is in good standing in every jurisdiction in which its
ownership of property or the nature of the business conducted by it makes such
qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not reasonably be expected to have a
Material Adverse Effect (as defined below). As used in this Agreement, “Material
Adverse Effect” means any material adverse effect on (i) the business,
properties, assets, liabilities, operations (including results thereof),
condition (financial or otherwise) or prospects of the Company or any
subsidiary, individually or taken as a whole, (ii) the transactions contemplated
hereby or in any of the other Exchange Documents or (iii) the authority or
ability of the Company or any of its subsidiaries to perform any of their
respective obligations under any of the Exchange Documents. Other than the
Persons (as defined below) listed in all filings by the Company with the SEC
under the 1933 Act or the Securities Exchange Act of 1934, as amended (the “1934
Act”), the Company has no subsidiaries. “Subsidiaries” means any Person in which
the Company, directly or indirectly, (I) owns any of the outstanding capital
stock or holds any equity or similar interest of such Person or (II) controls or
operates all or any part of the business, operations or administration of such
Person, and each of the foregoing, is individually referred to herein as a
“subsidiary.” For purposes of this Agreement, (x) “Person” means an individual,
a limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization, any other entity and any Governmental
Entity (as defined below) or any department or agency thereof and
(y) “Governmental Entity” means any nation, state, county, city, town, village,
district, or other political jurisdiction of any nature, federal, state, local,
municipal, foreign, or other government, governmental or quasi-governmental
authority of any nature (including any governmental agency, branch, department,
official, or entity and any court or other tribunal), multi-national
organization or body; or body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature or instrumentality of any of the foregoing,
including any entity or enterprise owned or controlled by a government or a
public international organization or any of the foregoing.

 

3.2 Authorization and Binding Obligation. The Company has the requisite power
and authority to enter into and perform its obligations under this Agreement and
each of the other agreements entered into by the parties hereto in connection
with the transactions contemplated by the Exchange Documents and to consummate
the Transaction in accordance with the terms hereof. The execution and delivery
of the Exchange Documents by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby, including, without limitation,
the issuance of the Exchange Note and the reservation for issuance and issuance
of shares available upon conversion of the Exchange Note has been duly
authorized by the Company’s Board of Directors and no further filing, consent,
or authorization is required by the Company, its Board of Directors or its
stockholders. This Agreement and the other Exchange Documents have been duly
executed and delivered by the Company, and constitute the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies and except as rights to indemnification and to contribution may be
limited by federal or state securities laws.

 

3.3 No Conflict. The execution, delivery and performance of the Exchange
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby will not (i) in a violation of the Certificate
of Incorporation (as defined below) or any other organizational documents of the
Company or any of its subsidiaries, any capital stock of the Company or any of
its subsidiaries or Bylaws (as defined below) of the Company or any of its
subsidiaries, (ii) conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party, or (iii) result in a violation of any law, rule,
regulation, order, judgment or decree (including foreign, federal and state
securities laws and regulations and the rules and regulations of the [OTCQB]
(the “Principal Market”) and including all applicable federal laws, rules and
regulations) applicable to the Company or any of its subsidiaries or by which
any property or asset of the Company or any of its subsidiaries is bound or
affected except, in the case of clause (ii) or (iii) above, to the extent such
violations that would not reasonably be expected to have a Material Adverse
Effect.

 

  

 

 

3.4 No Consents. Neither the Company nor any subsidiary is required to obtain
any consent from, authorization or order of, or make any filing or registration
with (other than the filing with the Securities and Exchange Commission (the
“SEC”) of a Form D with the SEC, any other filings as may be required by any
state securities agencies, filing of UCC financing statements and approval by
the Principal Market of a listing of additional shares application in respect of
the Exchange Shares as required by Section 7 hereof), any court, governmental
agency or any regulatory or self-regulatory agency or any other Person in order
for it to execute, deliver or perform any of its respective obligations under or
contemplated by the Exchange Documents, in each case, in accordance with the
terms hereof or thereof. All consents, authorizations, orders, filings and
registrations which the Company or any subsidiary is required to obtain pursuant
to the preceding sentence have been obtained or effected on or prior to the date
hereof, and neither the Company nor any of its subsidiaries are aware of any
facts or circumstances which might prevent the Company or any of its
subsidiaries from obtaining or effecting any of the registration, application or
filings contemplated by the Exchange Documents. Except as disclosed in the SEC
Documents, the Company is not in violation of the requirements of the Principal
Market and has no knowledge of any facts or circumstances which would reasonably
lead to delisting or suspension of the Common Stock in the foreseeable future.

 

3.5 Securities Law Exemptions. Assuming the accuracy of the representations and
warranties of the Holder contained herein, the offer and issuance by the Company
of the Exchange Note is exempt from registration under the 1933 Act pursuant to
the exemption provided by Section 4(a)(2) and Rule 144(d)(iii)(2) thereof.

 

3.6 Status of DSA; Issuance of Exchange Note. Upon conversion of the Exchange
Note, as applicable, the shares issued in conversion thereof, when issued, will
be validly issued, fully paid and nonassessable and free from all liens with
respect to the issue thereof, with the Holder being entitled to all rights
accorded to a holder of Common Stock. By virtue of Rule 3(a)(9) under the 1933
Act, each of the Exchange Note will have a Rule 144 holding period that will be
deemed to have commenced as of October 31, 2017_, the date of the original
execution and delivery of the DSA to the Creditors. The Company represents and
warrants that no amendment to the DSA with any creditor involved the payment of
any consideration whatsoever (whether in cash, in kind or as a result of any
reduction in a conversion price or exercise price of any equity or debt
instrument of the Company issued to a creditor, or otherwise) with the DSA or
any amendment to the DSA.

 

3.7 SEC Documents; Financial Statements. During the two (2) years prior to the
date hereof, the Company has timely filed all reports, schedules, forms, proxy
statements, statements and other documents required to be filed by it with the
SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing
filed prior to the date hereof, including without limitation, Current Reports on
Form 8-K filed by the Company with the SEC whether required to be filed or not
(but excluding Item 7.01 thereunder), and all exhibits and appendices included
therein (other than Exhibits 99.1 to Form 8-K) and financial statements, notes
and schedules thereto and documents incorporated by reference therein being
hereinafter referred to as the “SEC Documents”). The Company has delivered or
has made available to the Holder or its representatives true, correct and
complete copies of each of the SEC Documents not available on the EDGAR system.
As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the 1934 Act and the rules and regulations of
the SEC promulgated thereunder applicable to the SEC Documents, and none of the
SEC Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. As of
their respective dates, the financial statements of the Company included in the
SEC Documents complied in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto as in effect as of the time of filing. Such financial statements have
been prepared in accordance with generally accepted accounting principles
(“GAAP”), consistently applied, during the periods involved (except (i) as may
be otherwise indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments which will not be material, either individually or in the
aggregate). No other information provided by or on behalf of the Company to the
Holder which is not included in the SEC Documents (including, without
limitation, information in the disclosure schedules to this Agreement) contains
any untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein not misleading, in the light
of the circumstance under which they are or were made. The Company is not
currently contemplating to amend or restate any of the financial statements
(including, without limitation, any notes or any letter of the independent
accountants of the Company with respect thereto) included in the SEC Documents
(the “Financial Statements”), nor is the Company currently aware of facts or
circumstances which would require the Company to amend or restate any of the
Financial Statements, in each case, in order for any of the Financials
Statements to be in compliance with GAAP and the rules and regulations of the
SEC. The Company has not been informed by its independent accountants that they
recommend that the Company amend or restate any of the Financial Statements or
that there is any need for the Company to amend or restate any of the Financial
Statements.

 

  

 

 

3.8 Absence of Certain Changes. Except as set forth in the SEC Documents, since
the date of the Company’s most recent audited financial statements contained in
a Form 10-Q, there has been no material adverse change and no material adverse
development in the business, assets, liabilities, properties, operations
(including results thereof), condition (financial or otherwise) or prospects of
the Company or any of its subsidiaries. Since the date of the Company’s most
recent audited financial statements contained in a Form 10-Q, neither the
Company nor any of its subsidiaries has (i) declared or paid any dividends,
(ii) sold any assets, individually or in the aggregate, outside of the ordinary
course of business or (iii) except as disclosed in the SEC Documents, made any
capital expenditures, individually or in the aggregate, outside of the ordinary
course of business. Neither the Company nor any of its subsidiaries has taken
any steps to seek protection pursuant to any law or statute relating to
bankruptcy, insolvency, reorganization, receivership, liquidation or winding up,
nor does the Company or any subsidiary have any knowledge or reason to believe
that any of their respective creditors intend to initiate involuntary bankruptcy
proceedings or any actual knowledge of any fact which would reasonably lead a
creditor to do so. The Company and its subsidiaries, individually and on a
consolidated basis, are not as of the date hereof, and after giving effect to
the transactions contemplated hereby to occur on the date hereof, will not be
Insolvent.

 

3.9 No Undisclosed Events, Liabilities, Developments or Circumstances. Except as
set forth in the SEC Documents, no event, liability, development or circumstance
has occurred or exists, or is reasonably expected to exist or occur with respect
to the Company, any of its subsidiaries or any of their respective businesses,
properties, liabilities, prospects, operations (including results thereof) or
condition (financial or otherwise), that (i) would be required to be disclosed
by the Company under applicable securities laws on a registration statement on
Form S-1 filed with the SEC relating to an issuance and sale by the Company of
its Common Stock and which has not been publicly announced, (ii) would
reasonably expected to have a material adverse effect on the Holder’s investment
hereunder or (iii) would reasonably be expected to have a Material Adverse
Effect.

 

  

 

 

3.10 Conduct of Business; Regulatory Permits. Neither the Company nor any of its
subsidiaries is in violation of any term of or in default under its Certificate
of Incorporation, any certificate of designation, preferences or rights of any
other outstanding series of preferred stock of the Company or any of its
subsidiaries or Bylaws or their organizational charter, certificate of
formation, memorandum of association, articles of association, Certificate of
Incorporation or bylaws, respectively. Except as set forth in the SEC Documents,
neither the Company nor any of its subsidiaries is in violation of any judgment,
decree or order or any statute, ordinance, rule or regulation applicable to the
Company or any of its subsidiaries, and neither the Company nor any of its
subsidiaries will conduct its business in violation of any of the foregoing,
except in all cases for possible violations which could not, individually or in
the aggregate, have a Material Adverse Effect. Except as set forth in the SEC
Documents, without limiting the generality of the foregoing, the Company is not
in violation of any of the rules, regulations or requirements of the Principal
Market and has no knowledge of any facts or circumstances that could reasonably
lead to delisting or suspension of the Common Stock by the Principal Market in
the foreseeable future. During the two years prior to the date hereof, (i) the
Common Stock has been listed or designated for quotation on the Principal
Market, (ii) trading in the Common Stock has not been suspended by the SEC or
the Principal Market and (iii) the Company has received no communication,
written or oral, from the SEC or the Principal Market regarding the suspension
or delisting of the Common Stock from the Principal Market. The Company and each
of its subsidiaries possess all certificates, authorizations and permits issued
by the appropriate regulatory authorities necessary to conduct their respective
businesses, except where the failure to possess such certificates,
authorizations or permits would not have, individually or in the aggregate, a
Material Adverse Effect, and neither the Company nor any such subsidiary has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit. There is no agreement,
commitment, judgment, injunction, order or decree binding upon the Company or
any of its subsidiaries or to which the Company or any of its subsidiaries is a
party which has or would reasonably be expected to have the effect of
prohibiting or materially impairing any business practice of the Company or any
of its subsidiaries, any acquisition of property by the Company or any of its
subsidiaries or the conduct of business by the Company or any of its
subsidiaries as currently conducted other than such effects, individually or in
the aggregate, which have not had and would not reasonably be expected to have a
Material Adverse Effect on the Company or any of its subsidiaries.

 

3.11 Transactions With Affiliates. Except as set forth in the SEC Documents, no
current or former employee, partner, director, officer or stockholder (direct or
indirect) of the Company or its subsidiaries, or any associate, or, to the
knowledge of the Company, any affiliate of any thereof, or any relative with a
relationship no more remote than first cousin of any of the foregoing, is
presently, or has ever been, (i) a party to any transaction with the Company or
its subsidiaries (including any contract, agreement or other arrangement
providing for the furnishing of services by, or rental of real or personal
property from, or otherwise requiring payments to, any such director, officer or
stockholder or such associate or affiliate or relative subsidiaries (other than
for ordinary course services as employees, consultants, officers or directors of
the Company or any of its subsidiaries)) or (ii) the direct or indirect owner of
an interest in any corporation, firm, association or business organization which
is a competitor, supplier or customer of the Company or its subsidiaries (except
for a passive investment (direct or indirect) in less than 5% of the common
stock of a company whose securities are traded on or quoted through an eligible
market , nor does any such Person receive income from any source other than the
Company or its subsidiaries which relates to the business of the Company or its
subsidiaries or should properly accrue to the Company or its subsidiaries. No
employee, officer, stockholder or director of the Company or any of its
subsidiaries or member of his or her immediate family is indebted to the Company
or its subsidiaries, as the case may be, nor is the Company or any of its
subsidiaries indebted (or committed to make loans or extend or guarantee credit)
to any of them, other than (i) for payment of salary for services rendered,
(ii) reimbursement for reasonable expenses incurred on behalf of the Company,
and (iii) for other standard employee benefits made generally available to all
employees or executives (including stock option agreements outstanding under any
stock option plan approved by the Board of Directors of the Company).

 

  

 

 

3.12 Equity Capitalization.

 

(a) Authorized and Outstanding Capital Stock. As of the date hereof, the
authorized capital stock of the Company is set forth in the Company’s Quarterly
Report on Form 10-Q for the quarter ended June 30, 2018

 

(b) Valid Issuance; Available Shares; Affiliates. All of such outstanding shares
are duly authorized and have been, or upon issuance will be, validly issued and
are fully paid and nonassessable. Schedule 3.13 sets forth the number of shares
of Common Stock that are (A) reserved for issuance pursuant to Convertible
Securities (other than the Rights) and (B) that are, as of the date hereof,
owned by Persons who are “affiliates” (as defined in Rule 405 of the 1933 Act
and calculated based on the assumption that only officers, directors and holders
of at least 10% of the Company’s issued and outstanding Common Stock are
“affiliates” without conceding that any such Persons are “affiliates” for
purposes of federal securities laws) of the Company or any of its subsidiaries.

 

(c) Existing Securities; Obligations. Except as disclosed in the SEC Documents:
(A) none of the Company’s or any subsidiary’s shares, interests or capital stock
is subject to preemptive rights or any other similar rights or liens suffered or
permitted by the Company or any subsidiary; (B) there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, or
exercisable or exchangeable for, any shares, interests or capital stock of the
Company or any of its subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its subsidiaries is or may become
bound to issue additional shares, interests or capital stock of the Company or
any of its subsidiaries or options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities or
rights convertible into, or exercisable or exchangeable for, any shares,
interests or capital stock of the Company or any of its subsidiaries; (C) there
are no agreements or arrangements under which the Company or any of its
subsidiaries is obligated to register the sale of any of their securities under
the 1933 Act; (D) there are no outstanding securities or instruments of the
Company or any of its subsidiaries which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or
arrangements by which the Company or any of its subsidiaries is or may become
bound to redeem a security of the Company or any of its subsidiaries; (E) there
are no securities or instruments containing anti-dilution or similar provisions
that will be triggered by the issuance of the Exchange Note; and (F) neither the
Company nor any subsidiary has any stock appreciation rights or “phantom stock”
plans or agreements or any similar plan or agreement.

 

(d) Organizational Documents. The Company has furnished to the Holder true,
correct and complete copies of the Company’s Certificate of Incorporation, as
amended and as in effect on the date hereof (the “Certificate of
Incorporation”), and the Company’s bylaws, as amended and as in effect on the
date hereof (the “Bylaws”), and the terms of all DSA and the material rights of
the holders thereof in respect thereto.

 

  

 

 

3.13 Indebtedness and Other Contracts. Neither the Company nor any of its
subsidiaries, (i) except as disclosed in the SEC Documents, has any outstanding
debt securities, notes, credit agreements, credit facilities or other
agreements, documents or instruments evidencing Indebtedness of the Company or
any of its subsidiaries or by which the Company or any of its subsidiaries is or
may become bound, (ii) is a party to any contract, agreement or instrument,
except as disclosed in the SEC Documents, the violation of which, or default
under which, by the other party(ies) to such contract, agreement or instrument
could reasonably be expected to result in a Material Adverse Effect, (iii) has
any financing statements securing obligations in any amounts filed in connection
with the Company or any of its subsidiaries, except as disclosed in the SEC
Documents; (iv) except as waived by the Holder under Section 2(b) of this
Agreement, is in violation of any term of, or in default under, any contract,
agreement or instrument relating to any Indebtedness, except where such
violations and defaults would not result, individually or in the aggregate, in a
Material Adverse Effect, or (v) is a party to any contract, agreement or
instrument relating to any Indebtedness, the performance of which, in the
judgment of the Company’s officers, has or is expected to have a Material
Adverse Effect. Neither the Company nor any of its subsidiaries have any
liabilities or obligations required to be disclosed in the SEC Documents which
are not so disclosed in the SEC Documents, other than those incurred in the
ordinary course of the Company’s or its subsidiaries’ respective businesses and
which, individually or in the aggregate, do not or could not have a Material
Adverse Effect.

 

3.14 Litigation There is no action, suit, arbitration, proceeding, inquiry or
investigation before or by the Principal Market, any court, public board, other
Governmental Entity, self-regulatory organization or body pending or, to the
knowledge of the Company, threatened against or affecting the Company or any of
its subsidiaries, the Common Stock or any of the Company’s or its subsidiaries’
officers or directors that would reasonably be expected to have a Material
Adverse Effect on the Company or its subsidiaries, whether of a civil or
criminal nature or otherwise, in their capacities as such, except as disclosed
in the SEC Documents. No director, officer or employee of the Company or any of
its subsidiaries has willfully violated 18 U.S.C. §1519 or engaged in spoliation
in reasonable anticipation of litigation. Without limitation of the foregoing,
there has not been, and to the knowledge of the Company, there is not pending or
contemplated, any investigation by the SEC involving the Company, any of its
subsidiaries or any current or former director or officer of the Company or any
of its subsidiaries. The SEC has not issued any stop order or other order
suspending the effectiveness of any registration statement filed by the Company
under the 1933 Act or the 1934 Act. Neither the Company nor any of its
subsidiaries is subject to any order, writ, judgment, injunction, decree,
determination or award of any Governmental Entity.

 

3.15 Disclosure. The Company confirms that neither it nor any other Person
acting on its behalf has provided the Holder or its agents or counsel with any
information that constitutes or would reasonably be expected to constitute
material, non-public information concerning the Company or any of its
subsidiaries, other than the existence of the transactions contemplated by this
Agreement and the other Exchange Documents. The Company understands and confirms
that the Holder will rely on the foregoing representations in effecting
transactions in securities of the Company. All disclosure provided to the Holder
regarding the Company and its subsidiaries, their businesses and the
transactions contemplated hereby, including the schedules to this Agreement,
furnished by or on behalf of the Company or any of its subsidiaries is true and
correct and does not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
Each press release issued by the Company or any of its subsidiaries during the
twelve (12) months preceding the date of this Agreement did not at the time of
release contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they are made,
not misleading. No event or circumstance has occurred or information exists with
respect to the Company or any of its subsidiaries or its or their business,
properties, liabilities, prospects, operations (including results thereof) or
conditions (financial or otherwise), which, under applicable law, rule or
regulation, requires public disclosure at or before the date hereof or
announcement by the Company but which has not been so publicly announced or
disclosed.

 

  

 

 

4. Holder’s Representations and Warranties. As a material inducement to the
Company to enter into this Agreement and consummate the Exchange, the Holder
represents, warrants and covenants with and to the Company as follows:

 

4.1 Reliance on Exemptions. The Holder understands that the Exchange Note is
being offered and exchanged in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying in part upon the truth and accuracy of, and the
Holder’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Holder set forth herein and in the
Exchange Documents in order to determine the availability of such exemptions and
the eligibility of the Holder to acquire the Exchange Note.

 

4.2 No Governmental Review. The Holder understands that no United States federal
or state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the Exchange Note or the fairness or
suitability of the investment in the Exchange Note nor have such authorities
passed upon or endorsed the merits of the offering of the Exchange Note.

 

4.3 Validity; Enforcement. This Agreement and the Exchange Documents to which
the Holder is a party have been duly and validly authorized, executed and
delivered on behalf of the Holder and shall constitute the legal, valid and
binding obligations of the Holder enforceable against the Holder in accordance
with their respective terms, except as such enforceability may be limited by
general principles of equity or to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies.

 

4.4 No Conflicts. The execution, delivery and performance by the Holder of this
Agreement and the Exchange Documents to which the Holder is a party, and the
consummation by the Holder of the transactions contemplated hereby and thereby
will not (i) result in a violation of the organizational documents of the Holder
or (ii) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Holder is a party, or
(iii) result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws) applicable to the Holder,
except in the case of clauses (ii) and (iii) above, for such conflicts,
defaults, rights or violations which would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
ability of the Holder to perform its obligations hereunder.

 

4.5 Investment Risk; Sophistication. The Holder is acquiring the Exchange Note
hereunder in the ordinary course of its business. The Holder has such knowledge,
sophistication, and experience in business and financial matters so as to be
capable of evaluation of the merits and risks of the prospective investment in
the Exchange Note, and has so evaluated the merits and risk of such investment.
The Holder is an “accredited investor” as defined in Regulation D under the 1933
Act.

 

4.6 Ownership of Existing Note. The Holder owns the Existing Note free and clear
of any Liens (other than the obligations pursuant to this Agreement, the
Exchange Documents (as defined in the Securities Purchase Agreement) and
applicable securities laws).

 

4.7 Exemption; No Consideration. The Holder acknowledges and agrees that the
Exchange is being made in reliance upon the exemption from registration provided
by Rule 3(a)(9) of the 1933 Act and the securities of the Company being issued
to the Holder in the Exchange will be issued exclusively in the Exchange for the
surrender and cancellation of the DSA and no other consideration has or will be
paid to the Company for the Exchange Note to effect the Exchange hereunder.

 

  

 

 

5. Disclosure of Transaction. The Company shall, on or before 8:30 a.m., New
York City Time, on or prior to the first business day after the date of this
Agreement, file a Current Report on Form 8-K describing the terms of the
transactions contemplated hereby in the form required by the 1934 Act and
attaching the Exchange Documents, to the extent they are required to be filed
under the 1934 Act, that have not previously been filed with the SEC by the
Company (including, without limitation, this Agreement) as exhibits to such
filing (including all attachments, the “8-K Filing”). From and after the filing
of the 8-K Filing, the Company shall have disclosed all material, non-public
information (if any) provided up to such time to the Holder by the Company or
any of its subsidiaries or any of their respective officers, directors,
employees or agents. In addition, effective upon the filing of the 8-K Filing,
the Company acknowledges and agrees that any and all confidentiality or similar
obligations under any agreement with respect to the transactions contemplated by
the Exchange Documents or as otherwise disclosed in the 8-K Filing, whether
written or oral, between the Company, any of its subsidiaries or any of their
respective officers, directors, affiliates, employees or agents, on the one
hand, and any of the Holder or any of their affiliates, on the other hand, shall
terminate. Neither the Company, its subsidiaries nor the Holder shall issue any
press releases or any other public statements with respect to the transactions
contemplated hereby; provided, however, the Company shall be entitled, without
the prior approval of the Holder, to make a press release or other public
disclosure with respect to such transactions (i) in substantial conformity with
the 8-K Filing and contemporaneously therewith or (ii) as is required by
applicable law and regulations (provided that in the case of clause (i) the
Holder shall be consulted by the Company in connection with any such press
release or other public disclosure prior to its release). Without the prior
written consent of the Holder (which may be granted or withheld in the Holder’s
sole discretion), except as required by applicable law, the Company shall not
(and shall cause each of its subsidiaries and affiliates to not) disclose the
name of the Holder in any filing, announcement, release or otherwise.

 

6. No Integration. None of the Company, its subsidiaries, any of their
affiliates, or any Person acting on their behalf shall, directly or indirectly,
make any offers or sales of any security (as defined in the 1933 Act) or solicit
any offers to buy any security or take any other actions, under circumstances
that would require registration of any of the Exchange Note under the 1933 Act
or cause this offering of the Exchange Note to be integrated with such offering
or any prior offerings by the Company for purposes of Regulation D under the
1933 Act.

 

7. Listing. Neither the Company nor any of its subsidiaries shall take any
action which would be reasonably expected to result in the delisting or
suspension of the Common Stock on the Principal Market. The Company confirms it
has shareholder approval to issue all shares upon conversion of the Exchange
Notes in full compliance with Nasdaq Rules. The Company shall pay all fees and
expenses in connection with satisfying its obligations under this Section 7.

 

8. Holding Period. or the purposes of Rule 144, the Company acknowledges that
the holding period of  the Exchange Common Shares may be tacked onto the holding
period of the Existing Note and the Company agrees not to take a position
contrary to this Section 8. The Company acknowledges and agrees that (assuming
the Holder is not an affiliate of the Company) (i) upon issuance of any shares
upon conversion of the Exchange Note, such shares are, as of the date hereof,
eligible to be resold pursuant to Rule 144, (ii) the Company is not aware of any
event reasonably likely to occur that would reasonably be expected to result in
any such shares becoming ineligible to be resold by the Holder pursuant to Rule
144 and (iii) in connection with any resale of any such shares pursuant to Rule
144, the Holder shall be required to provide reasonable assurances that such
shares are eligible for resale, assignment or transfer under Rule 144, which
shall include an opinion of Holder’s counsel to this effect to the transfer
agent, if such opinion is required by the transfer agent. The Company shall be
responsible for any transfer agent fees or DTC fees or legal fees of the
Company’s counsel with respect to the removal of legends, if any, or issuance of
any such shares in accordance herewith.

 

  

 

 

9. Blue Sky. The Company shall make all filings and reports relating to the
Exchange required under applicable securities or “Blue Sky” laws of the states
of the United States following the date hereof, if any.

 

10. Miscellaneous Provisions. 

 

10.1 Successors and Assigns. Except as otherwise provided herein, the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the parties hereto and the respective successors and assigns of the parties.
Nothing in this Agreement, express or implied, is intended to confer upon any
party, other than the parties hereto or their respective successors and assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.

 

10.2 Governing Law; Jurisdiction; Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state or federal courts
sitting in The City of New York, Borough of Manhattan, for the adjudication of
any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT
OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

10.3 Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.

 

10.4 Notices. Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon delivery, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party) or by electronic mail; or (iii) one Business Day after deposit
with an overnight courier service, in each case properly addressed to the party
to receive the same. The addresses, facsimile numbers and e-mail addresses for
such communications shall be as set forth in the Securities Purchase Agreement
or to such other address, facsimile number and/or e-mail address and/or to the
attention of such other Person as the recipient party has specified by written
notice given to each other party five (5) days prior to the effectiveness of
such change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender’s facsimile machine or e-mail containing
the time, date, recipient facsimile number and an image of the first page of
such transmission or (C) provided by an overnight courier service shall be
rebuttable evidence of personal service, receipt by facsimile or receipt from an
overnight courier service in accordance with clause (i), (ii) or (iii) above,
respectively.

 

  

 

 

10.5 Finder’s Fees  Each party represents that it neither is nor will be
obligated for any finders’ fee or commission in connection with this
transaction. The Company shall indemnify and hold harmless the Holder from any
liability for any commission or compensation in the nature of a finders’ fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.

 

10.6 Amendments and Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Holder.

 

10.7 Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from this
Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its terms
so long as this Agreement as so modified continues to express, without material
change, the original intentions of the parties as to the subject matter hereof
and the prohibited nature, invalidity or unenforceability of the provision(s) in
question does not substantially impair the respective expectations or reciprocal
obligations of the parties or the practical realization of the benefits that
would otherwise be conferred upon the parties. The parties will endeavor in good
faith negotiations to replace the prohibited, invalid or unenforceable
provision(s) with a valid provision(s), the effect of which comes as close as
possible to that of the prohibited, invalid or unenforceable provision(s).

 

10.8 Entire Agreement. This Agreement together with the other Exchange
Documents, represents the entire agreement and understandings between the
parties concerning the Exchange and the other matters described herein and
therein and supersedes and replaces any and all prior agreements and
understandings solely with respect to the subject matter hereof and thereof.
Except as expressly set forth herein, nothing herein shall amend, modify or
waive any term or condition of the other Exchange Documents.

 

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

 

10.10 Interpretation. Unless the context of this Agreement clearly requires
otherwise, (a) references to the plural include the singular, the singular the
plural, the part the whole, (b) references to any gender include all genders,
(c) “including” has the inclusive meaning frequently identified with the phrase
“but not limited to” and (d) references to “hereunder” or “herein” relate to
this Agreement.

 

10.11 No Third Party Beneficiaries. This Agreement is intended for the benefit
of the parties hereto and their respective permitted successors and assigns, and
is not for the benefit of, nor may any provision hereof be enforced by, any
other Person.

 

10.12 Survival. The representations, warranties and covenants of the Company and
the Holder contained herein shall survive the closing and delivery of the
Exchange Note.

 

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

 

  

 

 

10.14 No Strict Construction. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.

 

10.15 Fees. Each of the Parties shall bear their own costs and expenses incurred
by it in connection with preparing and delivering this Agreement and the Note
Exchange (including, without limitation, all reasonable, documented legal fees
and disbursements in connection therewith, and due diligence in connection with
the transactions contemplated thereby), except that the Company agrees no later
than the time of execution of this Agreement to reimburse Jolie Kahn, Esq.
(counsel to the Holder) for legal fees in this matter in an amount not to exceed
$6,000.

 

[The remainder of the page is intentionally left blank]

 

  

 

 

IN WITNESS WHEREOF, the Holder and the Company have executed this Agreement as
of the date set forth on the first page of this Agreement.

  

  COMPANY:       PRECIPIO, INC.         By: s// Ilan Danieli     Name:    
Title:

 

  

 

 

IN WITNESS WHEREOF, Holders and the Company have executed this Agreement as of
the date set forth on the first page of this Agreement.

 

  Holder: Osher Capital Partners LLC         s// Osher Capital Partners LLC    
    By:       Name:     Title: Holder Delivery Instructions:    

 

  

 

  

IN WITNESS WHEREOF, Holders and the Company have executed this Agreement as of
the date set forth on the first page of this Agreement.

 

 

Holder: Alpha Capital Anstalt

     

Alpha Capital Anstalt

              By:

S// Alpha Capital Anstalt

    Name: Holder Delivery Instructions:   Title:

 

  

 

  

IN WITNESS WHEREOF, Holders and the Company have executed this Agreement as of
the date set forth on the first page of this Agreement.

 

  Holder: M2B Funding Corp             By: S// M2B Funding Corp     Name:    
Title: Holder Delivery Instructions:    

 

  

 

  

ANNEX A

 

DEBT SETTLEMENT AGREEMENT AMOUNTS

 

  

 

  

ANNEX B

 

FORM OF EXCHANGE NOTE