Exhibit 10.1

 

STOCK PURCHASE AGREEMENT

 

STOCK PURCHASE AGREEMENT, dated as of December 16, 2015 (this “Agreement”),
between NRL Investment Group, LLC, a Washington limited liability company (the
“Buyer”), Atossa Genetics Inc., a Delaware corporation (the “Seller”), and the
National Reference Laboratory for Breast Health, Inc., a Delaware corporation
(the “Company”).

 

RECITALS

 

A.           The Seller owns 100% of the 100 issued and outstanding shares of
common stock, par value $0.001 per share (the “Common Stock”) and 100% of the 24
issued and outstanding shares of preferred stock, par value $0.001 (the
“Preferred Stock” and together with the Common Stock, the “Shares”), of the
Company.

 

B.           The Seller wishes to sell to the Buyer, and the Buyer wishes to
purchase from the Seller, all of the Shares pursuant to the terms of this
Agreement.

 

AGREEMENT

 

In consideration of the foregoing and the mutual covenants and agreements herein
contained, and intending to be legally bound hereby, the parties agree as
follows:

 

Article I.           
PURCHASE AND SALE

 

Section 1.01           Purchase and Sale of the Shares. Upon the terms and
subject to the conditions of this Agreement, at the Closing, the Seller shall
sell and deliver 100% of the Common Stock, consisting of 100 Shares, to the
Buyer for an aggregate purchase price of $50,000 plus the right to receive the
earn-out payments (the “Earn-out Payments”) pursuant to Section 1.03 (the
“Common Stock Purchase Price”). The remaining 24 Shares of Preferred Stock of
the Company held by Seller may be sold to the Buyer at the Seller’s election
under Section 1.03 of this Agreement.

 

Section 1.02           Closing and Payment of Purchase Price for Common Stock.
The sale and purchase of the Common Stock shall take place at a closing (the
“Closing”) to be held at the offices of the Seller, on December 15, 2015, at
1:00 p.m. Pacific Time (the “Closing Date”).

 

(a)           At the Closing the Seller shall deliver to the Buyer (i) a
certificate representing the Common Stock, duly endorsed, (ii) a duly executed
copy of this Agreement, (iii) evidence that all officers and directors of the
Company have resigned, and (iv) a true and correct copy of its Amended and
Restated Certificate of Incorporation duly filed with the Delaware Secretary of
State in substantially the form set forth on Appendix 1.

 

(b)           At the Closing the Buyer shall deliver to the Seller (i) $50,000
in immediately available funds wired to an account specified in writing by the
Seller, and (ii) a duly executed copy of this Agreement.

 

 

 

 

Section 1.03           Earn-out.

 

(a)           Earn-Out Payment. The Earn-out Payments payable by Buyer to the
Seller in respect of each calendar month commencing with December 2016 (each
such month an “Earn-out Period”) shall be an amount equal to 6% multiplied by
the amount of Total Gross Sales for each such Earn-out Period. “Total Gross
Sales” means total gross revenues of the Company calculated in accordance with
U.S. Generally Accepted Accounting Principles from the direct or indirect
marketing, sale or promotion of any products or services by the Company, without
set-off or deduction for any purpose including refunds, rebates, allowance,
commissions, etc., plus any amounts received from the sale, license or transfer
of equipment, receivables, inventory supplies or other assets of the Company.

 

(b)           Earn-out Cap. Earn-out Payments shall be paid to the Seller until
such time as the total amount received by the Seller for all Earn-out Payments
equals $10,000,000 (the “Earn-out Cap”), at which point no further Earn-out
Payments shall be due.

 

(c)           Payment. Buyer will make Earn-Out Payments to Seller under this
Section 1.03 on a monthly basis beginning with the month ending December 31,
2016. Earn-Out Payments due with respect to an Earn-Out Period shall be paid to
the Seller by wire transfer within thirty days following the end of that
Earn-Out Period. Each Earn-Out Payment will be accompanied by a report setting
forth (i) Total Gross Sales with respect to the applicable Earn-Out Period, (ii)
the calculation of the Earn-out Payment, (iii) a statement as the revenue
recognition policy of the Company, and (iv) a detailed list of each test
processed by the Company and each payor with information about claims paid,
denied and pending and the revenue recognition rate for each payor (the
“Earn-out Report”). Each Earn-out Report shall be certified by the CFO and CEO
of the Company as being true and correct, free of omissions, in accordance with
GAAP and in accordance with this Agreement.

 

(d)           Financial Records; Audits; Disagreements.

 

(i)           The Buyer and Company will keep complete and accurate financial
records in sufficient detail to permit the Buyer confirm the accuracy and
completeness of all Earn-out Reports and all Earn-Out Payments, and such records
will be available for inspection for three (3) years following the end of an
Earn-Out Period to which they pertain. Seller will have the right, at its own
expense to have an independent, certified public accountant, selected by it to
perform a review of the financial records of the Buyer as applicable to each
Earn-Out Payment. The report of such accountant (the “CPA Report”) will be made
available to the Seller and Buyer promptly upon its completion.

 

(ii)           If within twenty days after receipt of the CPA Report, Seller or
Buyer fail to notify the other in writing of any disagreement or difference of
opinion relating to the Earn-Out Report (the “Notice of Disagreement”), the
parties shall be deemed to have accepted the Earn-Out Report which shall become
final and binding on the parties.

 

(iii)           If either Buyer or Seller deliver a Notice of Disagreement in
relation to any Earn-out Report, the Seller and Buyer shall negotiate in good
faith to seek to reach agreement on the items and amounts identified in such
Notice of Disagreement, and, if agreement in writing is reached between Seller
and Buyer on all such items and amounts, then any relevant Earn-out Payments
shall be adjusted in accordance with such agreement. If Buyer and Seller do not
reach agreement as to the disagreement or difference of opinion set out in a
Notice of Disagreement, in each case within twenty days of the delivery of any
Notice of Disagreement, either Buyer or Seller may, by notice to the other,
require that the issues identified in the Notice of Disagreement be referred to
the “Reporting Accountants” which means any of KPMG, Deloitte,
PriceWaterhouseCoopers or Ernst & Young, reasonably acceptable to Seller and
Buyer. Where a dispute is referred to the Reporting Accountants under this
Section, the Reporting Accountants shall be engaged by the Seller and Buyer:

 

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1)           to make a final determination within 30 days of the date on which
the foregoing disputed matters are submitted to it and for this purpose shall
submit a written report to the parties;

 

2)           to give Buyer and Seller reasonable opportunity to make written
representations and require that each of them supply the other with a copy of
any written representations at the same time as they are made;

 

3)           to permit each of Buyer Parent and Seller Parent to be present
while oral submissions (if any) are being made by the other;

 

4)           to act as experts (and not as arbitrators) in making their
determination and their determination of any matter falling within their
jurisdiction shall be final and binding on each of the Seller, Buyer and
Company;

 

5)           direct how their charges and expenses shall be borne as they shall
direct at the time they make any determination; and

 

6)           otherwise on such terms as shall be agreed between Seller, Buyer
and the Reporting Accountants.

 

(e)           Covenant of Buyer and Company. Buyer and the Company undertake to
Seller that during each of the Earn-out Periods the Buyer and Company shall use
their best efforts to maximize the amount of Total Gross Sales.

 

(f)           Acceleration Event. If prior to the payment to Seller of all
Earn-out Payments, the Buyer disposes (by sale, license, transfer or otherwise)
of more than 25% of its capital stock in the Company or the Company undergoes a
“deemed liquidation event” as defined in its Amended and Restated Certificate of
Incorporation (each an “Acceleration Event”), then Buyer and the Company shall
concurrently with the consummation of such Acceleration Event pay to Seller an
amount equal to the Earn-out Cap minus Earn-out Payments previously received by
Seller. To the extent that the amounts received in the Acceleration Event
include non-cash consideration, Buyer and Seller shall negotiate in good faith
to determine the value of such consideration.

 

Section 1.04           

 

Sales of Preferred Stock. The Preferred Stock may be sold to Buyer at the option
of the Seller upon 20 days advance written notice to Buyer on or after December
15, 2019 for the greater of $4,000,000 plus the Accretion Amount, or the Fair
Market Value.

 

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“Accretion Amount” shall be an amount equal to 6% per annum (pro rated for any
partial year) for each Preferred Purchase Price from the date of this Agreement
until the Subsequent Closing Date for each such Preferred Purchase Price.

 

“Fair Market Value” shall mean the fair market value of the Preferred Stock held
by Seller as mutually agreed by the Seller and Buyer and if the Seller and Buyer
cannot agree on such amount then the Fair Market Value shall be determined by
the written appraisal of a third party independent appraiser selected and paid
for by the Seller.

 

Article II.           
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

Except as set forth in the Disclosure Schedules attached hereto (collectively,
the “Disclosure Schedules”), the Company hereby represents and warrants to the
Buyer as of the date of this Agreement (unless a date is otherwise stated) as
follows:

 

Section 2.01           Organization and Qualification. The Company is (a) a
corporation duly organized, validly existing and in good standing under the laws
of Delaware, and has all necessary corporate power and authority to own, lease
and operate its properties and to carry on its business as it is now being
conducted and (b) duly qualified as a foreign corporation to do business, and is
in good standing, in each jurisdiction where the character of the properties
owned, leased or operated by it or the nature of its business makes such
qualification necessary, except, in each case, for any such failures that would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. “Material Adverse Effect” means a material adverse effect
whether individually or in the aggregate on the business, operations, financial
condition or assets of the Company taken as a whole; provided, however, that the
term “Material Adverse Effect” shall not include any effect attributable to
general economic changes or general changes in the industry in which the Company
is engaged.

 

Section 2.02           Authority. The Company has the corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution,
delivery and performance by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action. This Agreement has been
duly executed and delivered by the Company and, assuming due execution and
delivery by each of the other parties hereto, constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’
rights generally and by general principles of equity (regardless of whether
considered in a proceeding in equity or at law).

 

No Conflict; Required Filings and Consents. The execution, delivery and
performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby do not and will not: conflict with or violate
the certificate of incorporation or bylaws of the Company; conflict with or
violate any Law applicable to the Company or by which any property or asset of
the Company is bound or affected; or conflict with, result in any breach of,
constitute a default (or an event that, with notice or lapse of time or both,
would become a default) under, or require any consent pursuant to, any material
contract to which the Company is a party; (d) except for any such conflicts,
violations, breaches, defaults or other occurrences that would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect or
prevent, materially delay or materially impede the performance by the Company of
its obligations under this Agreement or the consummation of the transactions
contemplated hereby, or that arise as a result of any facts or circumstances
relating to the Buyer or any of its affiliates.

 

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Section 2.04           Capitalization. The Company has 100 shares of Common
Stock authorized, all of which are issued and outstanding and held by Seller,
and 24 shares of Preferred Stock authorized, all of which are issued and
outstanding and held by Seller. All of the Company’s issued and outstanding
capital stock are validly issued, fully paid and nonassessable. The Common Stock
constitutes 80.6% of all of the issued and outstanding capital stock of the
Company and the Preferred Stock constitutes 19.4% of all issued and outstanding
capital stock of the Company. There are no outstanding obligations, options,
warrants, convertible securities, stock appreciation rights, profit interests or
other rights, agreements, arrangements or commitments of any kind relating to
the capital stock of the Company or obligating the Company to issue or sell any
shares of capital stock of, or any other interest in, the Company. There are no
outstanding contractual obligations of the Company to repurchase, redeem or
otherwise acquire any shares of capital stock of the Company or to provide funds
to, or make any investment in, any other person. There are no agreements or
understandings in effect with respect to the voting or transfer of any of the
capital stock of the Company.

 

Section 2.05           Equity Interests. The Company has no subsidiaries and
does not directly or indirectly own any equity, partnership, membership or
similar interest in, or any interest convertible into, exercisable for the
purchase of or exchangeable for any equity, partnership, membership or similar
interest in any Person.

 

Section 2.06           Financial Statements. Copies of the unaudited balance
sheet of the Company as of September 30, 2015 and December 31, 2014, and the
related unaudited statements of income of the Company (the “Financial
Statements”) for the nine months and year then ended have been provided to
Buyer. Each of the Financial Statements (a) fairly presents, in all material
respects, the financial position and results of operations of the Company as of
the respective dates thereof and for the respective periods indicated therein,
(b) have been prepared based on the books and records of the Company and Seller,
(c) to the knowledge of the Company have been prepared in accordance with U.S.
Generally Accepted Accounting Principles consistently applied except for the
omission of notes and period-end adjustments and except that the Financial
Statements reflect intercompany transactions between the Seller and the Company
based on the reasonable judgment of the Seller and Company, and (d) have been
derived from the books and records of the Seller and the unaudited consolidated
financial statements of the Seller as of September 30, 2015 and audited
consolidated financial statements as of December 31, 2014.

 

Section 2.07           Compliance with Law; Permits. To the knowledge of the
Company, the Company is in compliance with all laws, rules and regulations
applicable to it, except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The Company is in
possession of all permits, licenses, franchises, approvals, certificates,
consents, waivers, concessions, exemptions, orders, registrations, notices or
other authorizations of any governmental authority necessary for the Company to
own, lease and operate its properties and to carry on its business as currently
conducted (the “Permits”), except where the failure to have, or the suspension
or cancellation of, any of the Permits would not reasonably be expected to have
a Material Adverse Effect.

 

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Section 2.08           Litigation. As of the date hereof, there is no Action by
or against the Company pending, or to the knowledge of the Company, threatened
in writing.

 

Section 2.09           Employees and Benefit Plans. All persons performing
services as employees to the Company have been employed by the Seller. True and
correct information about the identification of such persons and compensation of
such persons has been provided to Buyer. The Company has no employees and no
benefit plans.

 

Section 2.10           Insurance. The Seller has maintained insurance covering
the operations of the Seller and the Company. Copies of all current material
insurance policies in force with respect to the Company have been made available
to the Buyer.

 

Real Property. Section 2.12           The Company does not own any real
property. The Seller leases property at 1616 Eastlake Ave. East, Suite 360,
Seattle, Washington, which is occupied by the Company and pursuant to which the
Seller has a valid leasehold estate in such leased property (the “Lab
Facility”). A true and correct copy of the lease agreement for the Lab Facility
has been provided to Buyer. The Seller shall comply with the terms of the lease
agreement and make the Lab Facility available to the Company through February
15, 2016.

 

Section 2.13           Intellectual Property. All right, title, and interest in
any and all intellectual property of the Seller, including, without limitation,
patents, patent applications, trade secrets, trademarks, trade names, service
marks, service names, domain names, copyrights, know-how (individually and
collectively, “Intellectual Property”) shall remain the exclusive property of
the Seller. Nothing in this Agreement shall be construed as granting or
conferring rights or license, by implication or otherwise, in any such
Intellectual Property other than those expressly granted herein. For clarity,
all Intellectual Property assigned to the Company shall remain the exclusive
property of the Company.

 

Taxes. Section 2.15           The Seller’s U.S. Federal Income Tax returns have
been prepared on a consolidated basis with the Company and have been timely
filed (taking into account any extension of time to file granted or obtained),
and such returns have been duly and accurately prepared in all material
respects. All Taxes shown to be payable on such returns have been paid or will
be timely paid and all other material taxes required to be paid have been timely
paid, except for taxes being contested in good faith by appropriate proceedings.
No deficiency for any material amount of tax has been asserted or assessed by a
governmental authority in writing against the Company that has not been
satisfied by payment, settled or withdrawn. There are no tax liens on the assets
of the Company.

 

Environmental Matters. Except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, to the knowledge of
the Company, (i) as of the date of this Agreement, the Company is in compliance
with all applicable Environmental Laws and have obtained and are in compliance
with all Environmental Permits and (ii) there are no written claims alleging
violation of or liability pursuant to any Environmental Law pending or
threatened against the Company. (b) The representations and warranties contained
in this Section 2.14 are the only representations and warranties being made with
respect to compliance with or liability under Environmental Laws or with respect
to any environmental, health or safety matter, including natural resources,
related to the Company. For purposes of this Agreement: “Environmental Laws”
means any Laws of any governmental authority in effect as of the date hereof
relating to protection of the environment and “Environmental Permits” means all
Permits under any Environmental Law.

 

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Lab Contracts. Exhibit C of the Disclosure Schedules (Appendix 2) lists each of
the material written contracts and agreements to which the Company is currently
a party (the “Lab Contracts”). A true and correct copy of each Lab Contract has
been made available to Buyer.Section 2.18           

 

Section 2.19           Lab Assets and Lab Liabilities. Exhibit A of the
Disclosure Schedules (Appendix 2) lists each of the material assets of the
Company. Exhibit B of the Disclosure Schedules (Appendix 2) lists the material
accrued liabilities and material accounts payable of the Company (together with
all obligations of the Company under the Lab Contract, the “Lab Liabilities”).
The material fixed assets of the Company are free and clear of any liens, claims
or encumbrances. The assets of the Company also include all pharmacogenomic test
specimens processed by the lab and related genetic data and patient reports.

 

Section 2.20           Accounts Receivable. All accounts receivable of the
Seller as of December 1, 2015 are assigned to the Company (the “Lab AR”). The
Company shall have all rights to pursue and collect the Lab AR and all such
collections shall be for the account of the Company. Any such Lab AR remitted to
the Seller after December 1, 2015 shall be paid to the Company. The Company has
collected approximately $10,000 in Lab AR which is held in a bank account of the
Company as of the Closing.

 

Section 2.21           Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder’s or other fee or commission in connection
with the transactions contemplated hereby based upon arrangements made by or on
behalf of the Company.

 

Section 2.22           Exclusivity of Representations and Warranties. Neither
the Company, Seller nor any of their respective affiliates are making any
representation or warranty on behalf of the Company of any kind or nature
whatsoever, oral or written, express or implied (including, but not limited to,
any relating to financial condition, results of operations, assets or
liabilities of the Company), except as expressly set forth in this Article II,
and the Company and Seller hereby disclaim any such other representations or
warranties.

 

Article III.

REPRESENTATIONS AND WARRANTIES OF THE BUYER

 

The Buyer hereby represents and warrants to the Seller as follows:

 

Section 3.01           Organization. The Buyer is a limited liability company
duly organized, validly existing and in good standing under the laws of
Delaware.

 

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Section 3.02           Authority. The Buyer has full corporate power and
authority to execute, deliver and perform its obligations under this Agreement.
This Agreement has been duly executed and delivered by the Buyer and is legal,
valid, binding and enforceable upon and against the Buyer.

 

Section 3.03           Required Filings and Consents. The execution, delivery
and performance by the Buyer of this Agreement and the consummation by the Buyer
of the transactions contemplated hereby do not and will not require any consent
or approval of, registration or filing with, or notice to any governmental
authority.

 

Section 3.04           Brokers. No broker, finder or agent will have any claim
against the Seller for any fees or commissions in connection with the
transactions contemplated by this Agreement based on arrangements made by or on
behalf of the Buyer.

 

Article IV.

REPRESENTATIONS AND WARRANTIES OF THE SELLER

 

The Seller hereby represents and warrants to the Buyer as follows:

 

Section 4.01           Organization. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of Delaware.

 

Section 4.02           Authority. The Seller has full corporate power and
authority to execute, deliver and perform its obligations under this Agreement.
This Agreement has been duly executed and delivered by the Seller and is legal,
valid, binding and enforceable upon and against the Seller.

 

Section 4.03           Shares. The Seller owns all right, title and interest in
and to the Shares. The Shares are not encumbered by any lien, claim or
encumbrance and are freely transferable to Buyer, subject to restrictions
imposed by the U.S. Federal Securities Laws and State Securities Law.

 

Section 4.04           Required Filings and Consents. The execution, delivery
and performance by the Seller of this Agreement and the consummation by the
Seller of the transactions contemplated hereby do not and will not require any
consent or approval of, registration or filing with, or notice to any
governmental authority.

 

Section 4.05           Brokers. No broker, finder or agent will have any claim
against the Buyer for any fees or commissions in connection with the
transactions contemplated by this Agreement based on arrangements made by or on
behalf of the Seller.

 

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Article V.           

COVENANTS

 

Section 5.01           Board Observer Rights. At all times that Seller owns
shares of the Company’s Preferred Stock, it shall have the right to appoint a
person (the “Observer”) to attend all meetings of the Board of Directors of the
Company (the “Board”), participate in all deliberations of the Board and receive
copies of all materials, including notices of meetings, provided to the Board at
the same time provided to the Board; provided that: (a) Observer shall have no
voting rights with respect to actions taken or elected not to be taken by the
Board; and (b) the Company may withhold any information and exclude Observer
from any meeting or portion thereof if access to such information or attendance
at such meeting: (i) could adversely affect the attorney-client privilege
between the Company and its counsel, or (ii) could result in disclosure of trade
secrets or represent a conflict of interest.

 

Section 5.02           Co-Sale Rights. Seller shall have the right, but not the
obligation, to participate in any sales of the stock of the Company (or any
other securities of the Company) by the Buyer on the same terms and conditions
offered to the Buyer. If any prospective transferee or purchaser of the Shares
refuses to purchase the shares of stock held by Seller or if the parties cannot
negotiate in good faith a purchase and sale agreement reasonably satisfactory to
the Seller, the Buyer may not sell any shares unless and until, such transferee
or purchaser purchases all shares of the Company held by Seller. The Buyer shall
not be a party to any agreement effecting the transfer, sale or disposition of
the stock of the Company (or any other securities of the Company) unless the
Seller is allowed to fully participate, including by disposing of all shares
that the Seller holds in the Company, in such transaction and the consideration
received pursuant to such transaction is allocated among the parties thereto in
the manner specified in the Company’s certificate of incorporation in effect
immediately prior to such transaction.

 

Section 5.03           Insurance. The Buyer shall at all times cause the Company
to maintain general commercial, product liability, employer liability and
professional errors and omissions insurance in the amounts and with the
deductibles that are typical in the Company’s industry and provide copies of
binder of such insurance to the Seller upon written request of the Seller. Such
insurance shall at a minimum satisfy all requirements required by the landlord
of the Lab Facility.

 

Section 5.04           Employee Matters. Buyer may establish employee benefit
plans for Company employees in the types and amounts at its sole discretion;
provided, however, that for each employee of the Seller that is terminated by
Seller at the request of Buyer and that is employed by the Buyer or Company in
connection with the transactions contemplated by this Agreement the Buyer or
Company shall match any accrued vacation and accrued paid time off as of the
date of this Agreement for each such employee. Seller shall make the services of
one accountant and one regulatory employee identified by the Buyer available to
the Buyer and Company up to January 31, 2016. Seller shall continue the
compensation and benefits for employees providing service to the Company through
December 31, 2015. However, all such employees are at-will and may choose to
terminate his/or employment relationship with the Seller at any time.

 

Compliance with Lab Contracts; Discharge of Liabilities (a) . The Buyer will
cause the Company to comply with all Lab Contracts and discharge when due all
Lab Liabilities.

 

Section 5.07           Compliance with Law; Permits. Buyer will cause the
Company to comply with all laws, rules and regulations applicable to it and
maintain all necessary Permits.

 

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Section 5.08           Trademarks; Tradenames; Domain Names. As soon as
practicable after the Closing and in any case within 30 days of the Closing, the
Buyer and Company shall eliminate the use of all of the Seller’s trademarks,
tradenames, service marks and service names in any of their forms or spellings,
on all advertising, stationery, business cards, checks, purchase orders and
acknowledgments, customer agreements and other contracts and business-related
documents.

 

Section 5.09           Stock Administration. The Buyer shall retain the services
of a third-party stock administrator reasonably acceptable to the Seller to
maintain and manage the stock records of the Company.

 

Section 5.10           Lab Facility. The Buyer and Company will comply with all
terms and conditions of the lease related to the Lab Facility and shall vacate
the Lab Facility on February 15, 2016; provided, however, that if requested by
the Buyer, the Seller shall seek consent from the landlord of the Lab Facility
to enter into a sublease between Seller and Buyer and/or the Company so that the
Company may continue to occupy the Lab Facility on substantially the same terms
as the existing lease or month-to-month if approved by the landlord.

 

Section 5.11           Medicare Adjustment. Medicare has over paid for certain
tests performed by the Company prior to the date hereof with a balance due of
approximately $100,000 (the “Medicare Overage”). The Seller will reimburse the
Buyer to the extent such Medicare Overage is deducted from tests performed by
the Company and billed to Medicare after the date hereof.

 

Section 5.12           Net Operating Losses. If the federal tax net operating
losses associated with the operations of the Company are not available to the
Seller and if they can be transferred to the Company, then the Seller and Buyer
shall cooperate in good faith to enter into a written agreement for the transfer
of such NOLs to the Company on or before March 31, 2016.

 

Article VI.           
INDEMNIFICATION; RELATED MATTERS

 

Section 6.01           Buyer Indemnification of Seller. Subject to the
limitations set forth in this Article VI, from and after the Closing, Buyer
shall indemnify and hold harmless the Seller and its officers, managers,
directors, employees, stockholders, members, agents, representatives,
successors, permitted assigns and heirs (collectively, the “Seller Indemnified
Parties”) from and against any and all actual claims, liabilities, losses,
damages, taxes, costs and expenses (including, without limitation, reasonable
attorneys’, accountants’, investigators’ and experts’ fees and expenses,
sustained or incurred in connection with the defense or investigation of any
claim) (collectively, “Damages”) which a Seller Indemnified Party suffers,
sustains or becomes subject to as the result of or in connection with: 

 

(a)           a breach of any representation or warranty made by Buyer contained
in this Agreement;

 

(b)           a breach of any covenant or agreement by Buyer contained in this
Agreement;

 

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(c)           the assertion of a Third Party Claim arising out of operations of
the Company after the date hereof; or

 

(d)           the assertion against any Company Indemnified Party of any Lab
Liability. 

 

Section 6.02           Seller Indemnification of Buyer. Subject to the
limitations set forth in this Article VI, from and after the Closing, the Seller
shall indemnify and hold harmless the Buyer, and its officers, managers,
directors, employees, stockholders, members, agents, representatives,
successors, permitted assigns and heirs (collectively, the “Buyer Indemnified
Parties”) from and against any and all actual Damages which a Buyer Indemnified
Party suffers, sustains or becomes subject to as the result of or in connection
with:

 

(a)           a breach of any representation or warranty made by the Company
contained in this Agreement; or

 

(b)           a breach of any covenant or agreement by the Company contained in
this Agreement.

 

Section 6.03           Limitations on Indemnity. The indemnification provided
for in Section 6.1 is subject to the following limitations:

 

(a)           Buyer shall have no indemnification obligations in respect of
claims made pursuant to Section 6.01 unless the Seller Indemnified Party gives
written notice of the claim to Buyer in accordance with the procedures set forth
in this Agreement.

 

(b)           Buyer shall have no indemnification obligation in respect of
claims made pursuant to Section 6.01 unless and until the aggregate amount of
all Damages incurred by all Seller Indemnified Parties exceeds $25,000 (the
“Threshold”), at which time all Damages in excess of the Threshold shall be
recoverable (except as limited by the other provisions of this Agreement).

 

Section 6.04           The indemnification provided for in Section 6.02 is
subject to the following limitations:

 

(a)           The Seller shall have no indemnification obligations in respect of
claims made pursuant to Section 6.02 unless the Buyer Indemnified Party gives
written notice of the claim to the Seller in accordance with the procedures set
forth in this Agreement.

 

(b)           The Company shall have no indemnification obligation in respect of
claims made pursuant to Section 6.02 unless and until the aggregate amount of
all Damages incurred by all Buyer Indemnified Parties exceeds the Threshold, at
which time all Damages in excess of the Threshold shall be recoverable (except
as limited by the other provisions of this Agreement).

 

(c)           The Seller shall have no indemnification obligation in respect of
claims made pursuant to Section 6.02 to the extent that the aggregate amount of
Damages incurred by the Buyer Indemnified Party exceeds the proceeds actually
received by the Seller for the sale of Shares to the Buyer.

 

11 

 

 

Section 6.05           Procedures.

 

(a)           Buyer Indemnification of the Seller. With respect to
indemnification claims that may be asserted under Section 6.01:

 

(i)           If a Seller Indemnified Party wishes to seek indemnification under
this Article VI, the Seller Indemnified Party shall give written notice thereof
to the Buyer provided, that in the case of any action or lawsuit brought or
asserted by a third party (a “Third Party Claim”) that would entitle the Seller
Indemnified Party to indemnity hereunder, the Seller shall promptly notify the
Buyer of the same in writing; provided further, that the failure to so notify
the Buyer promptly shall not relieve the Buyer of its indemnification obligation
hereunder except to the extent that the Buyer has been materially prejudiced
thereby.

 

(ii)           Any request for indemnification made by a Seller Indemnified
Party shall be in writing, shall specify in reasonable detail the basis for such
claim, the facts pertaining thereto and, if known and quantifiable, the amount
thereof.

 

(iii)            In the case of any Third Party Claim, if within 30 Business
Days after receiving the notice described in Section 6.04(a)(i) above the Buyer
gives written notice to the Seller stating (i) that the Buyer disputes and
intends to defend against such claim and (ii) that the Buyer will be solely
responsible for all costs, expenses and liabilities incurred in connection with
or otherwise relating to such claim, then counsel for the defense shall be
selected by the Buyer (subject to the consent of the Seller, which consent shall
not be unreasonably withheld), whereupon the Buyer shall not be required to make
any payment to the Seller Indemnified Party for the costs of its defense counsel
in respect of such Third Party Claim as long as the Buyer is conducting a good
faith and diligent defense; provided, that the Seller Indemnified Party shall at
all times have the right to fully participate in such defense at its own expense
directly or through counsel. If the Buyer assumes the defense in accordance with
the preceding sentence, it shall have the right, with the consent of the Seller,
which consent shall not be unreasonably withheld, to settle the portion of such
Third Party Claim that is subject to indemnification; provided, that the
settlement (i) does not involve the imposition of an injunction or other
equitable relief on the Seller Indemnified Party, and (ii) expressly and
unconditionally releases the Seller Indemnified Party from all Liabilities with
respect to such Third Party Claim (and all other claims arising out of the same
or similar facts and circumstances), with prejudice. The Buyer shall keep the
Seller apprised of the status of any Third Party Claim for which it has assumed
the defense, shall furnish the Seller with all documents and information that
such Seller Indemnified Party reasonably requests, and shall consult with the
Seller prior to acting on major matters, including settlement discussions.
Notwithstanding any of the foregoing, the Buyer shall not have the right to
assume control of the defense, and shall pay the reasonable fees and expenses of
counsel retained by the Seller Indemnified Party, if the Third Party Claim which
the Buyer seeks to assume control of: (1) seeks non-monetary relief;
(2) involves criminal or quasi-criminal allegations; (3) is one in which Buyer
and the Seller Indemnified Party are both named in the complaint, and joint
representation by the same counsel would be inappropriate under applicable
standards of ethical conduct; or (4) involves a claim for which an adverse
determination would have a material and adverse effect on the Seller Indemnified
Party’s reputation or future business prospects. If notice of intent to dispute
and defend is not given by the Buyer within the time period referenced above, or
if such diligent good faith defense is not being or ceases to be conducted, then
the Seller Indemnified Party may undertake the defense of (with counsel selected
by such Seller Indemnified Party), and shall have the right to compromise or
settle, such Third Party Claim (exercising reasonable business judgment) in its
discretion. If such Third Party Claim is one that, by its nature, cannot be
defended solely by the Buyer, then the Seller Indemnified Party shall make
available all information and assistance that the Buyer shall reasonably
request, and shall cooperate with the Buyer in such defense.

 

12 

 

 

(b)           Seller Indemnification of Buyer. With respect to indemnification
claims that may be asserted under Section 6.02:

 

(i)           If a Buyer Indemnified Party wishes to seek indemnification under
this Section 6.2, the Buyer Indemnified Party shall give written notice thereof
to the Seller provided, that in the case of any Third Party Claim that would
entitle the Buyer Indemnified Party to indemnity hereunder, the Buyer
Indemnified Party shall promptly notify the Seller of the same in
writing; provided further, that the failure to so notify the Seller promptly
shall not relieve the Seller of its indemnification obligation hereunder except
to the extent that the Seller has been materially prejudiced thereby.

 

(ii)           Any request for indemnification made by a Buyer Indemnified Party
shall be in writing, shall specify in reasonable detail the basis for such
claim, the facts pertaining thereto and, if known and quantifiable, the amount
thereof.

 

(iii)           In the case of any Third Party Claim, if within 30 Business Days
after receiving the notice described in Section 6.04(b)(i) above the Seller
gives written notice to the Buyer Indemnified Party stating (i) that the Seller
disputes and intends to defend against such claim and (ii) that the Seller will
be solely responsible for all costs, expenses and liabilities incurred in
connection with or otherwise relating to such claim, then counsel for the
defense shall be selected by the Seller (subject to the consent of the Buyer
Indemnified Party, which consent shall not be unreasonably withheld), whereupon
the Seller shall not be required to make any payment to the Buyer Indemnified
Party for the costs of its defense counsel in respect of such Third Party Claim
as long as the Seller is conducting a good faith and diligent defense; provided,
that the Buyer Indemnified Party shall at all times have the right to fully
participate in such defense at its own expense directly or through counsel. If
the Seller assumes the defense in accordance with the preceding sentence, it
shall have the right, with the consent of the Buyer Indemnified Party, which
consent shall not be unreasonably withheld, to settle the portion of such Third
Party Claim that is subject to indemnification; provided, that the settlement
(i) does not involve the imposition of an injunction or other equitable relief
on the Buyer Indemnified Party, and (ii) expressly and unconditionally releases
the Buyer Indemnified Party from all Liabilities with respect to such Third
Party Claim (and all other claims arising out of the same or similar facts and
circumstances), with prejudice. The Seller shall keep the Buyer Indemnified
Party apprised of the status of any Third Party Claim for which it has assumed
the defense, shall furnish the Buyer Indemnified Party with all documents and
information that Seller reasonably requests, and shall consult with the Buyer
Indemnified Party prior to acting on major matters, including settlement
discussions. Notwithstanding any of the foregoing, the Seller shall not have the
right to assume control of the defense, and shall pay the reasonable fees and
expenses of counsel retained by the Buyer Indemnified Party, if the Third Party
Claim which the Seller seeks to assume control of: (1) seeks non-monetary
relief; (2) involves criminal or quasi-criminal allegations; (3) is one in which
Buyer Indemnified Party and the Seller are both named in the complaint, and
joint representation by the same counsel would be inappropriate under applicable
standards of ethical conduct; or (4) involves a claim for which an adverse
determination would have a material and adverse effect on the Buyer Indemnified
Party’s reputation or future business prospects. If notice of intent to dispute
and defend is not given by the Seller within the time period referenced above,
or if such diligent good faith defense is not being or ceases to be conducted,
then the Buyer Indemnified Party may undertake the defense of (with counsel
selected by such Buyer Indemnified Party), and shall have the right to
compromise or settle, such Third Party Claim (exercising reasonable business
judgment) in its discretion. If such Third Party Claim is one that, by its
nature, cannot be defended solely by the Seller, then the Buyer Indemnified
Party shall make available all information and assistance that the Seller shall
reasonably request, and shall cooperate with the Seller in such defense.

 

13 

 

 

Section 6.06           Exclusive Remedy; Fraud. From and after the Closing, the
indemnification provided pursuant to this Article VI shall be the sole and
exclusive remedy for any Damages resulting from or arising out of any breach or
claim in connection with this Agreement, regardless of the cause of
action; provided, however, that neither the foregoing nor anything else
contained in this Agreement shall limit a Party’s remedies in the case of fraud
or in respect of the pursuit of equitable remedies, including injunctive relief
and specific performance.

 

Section 6.07           Survival. All representations, warranties, covenants and
agreements set forth in this Agreement, the Disclosure Schedules or in any
certificate or instrument delivered in connection herewith shall survive the
Closing for the applicable statute of limitations

 

Article VII.           
GENERAL PROVISIONS

 

Section 7.01           Fees and Expenses. Except as otherwise provided herein,
all fees and expenses incurred in connection with or related to this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such fees or expenses, whether or not such transactions are consummated.

 

Section 7.02           Amendment and Modification. This Agreement may not be
amended, modified or supplemented in any manner, whether by course of conduct or
otherwise, except by an instrument in writing specifically designated as an
amendment hereto, signed on behalf of each party.

 

Section 7.03           Waiver. No failure or delay of either party in exercising
any right or remedy hereunder shall operate as a waiver thereof. Any such waiver
by a party shall be valid only if set forth in writing by such party.

 

Section 7.04           Notices. All notices and other communications hereunder
shall be in writing and shall be deemed duly given if delivered personally or
sent by facsimile, e-mail, overnight courier or registered or certified mail,
postage prepaid, to the address set forth on the signature pages hereto opposite
the party to receive such notice, or to such other address as may be designated
in writing by such party.

 

14 

 

 

Section 7.05           Entire Agreement. This Agreement constitutes the entire
agreement, and supersedes all prior written agreements, arrangements and
understandings and all prior and contemporaneous oral agreements, arrangements
and understandings between the parties with respect to the subject matter of
this Agreement. No party to this Agreement shall have any legal obligation to
enter into the transactions contemplated hereby unless and until this Agreement
shall have been executed and delivered by each of the parties.

 

Section 7.06           Third-Party Beneficiaries. Nothing in this Agreement
shall confer upon any person other than the parties and their respective
successors and permitted assigns any right of any nature.

 

Section 7.07           Governing Law. This Agreement and all disputes or
controversies arising out of or relating to this Agreement or the transactions
contemplated hereby shall be governed by, and construed in accordance with, the
internal laws of the State of Washington, without regard to the laws of any
other jurisdiction that might be applied because of the conflicts of laws
principles of the State of Washington.

 

Section 7.08           Assignment; Successors. This Agreement may not be
assigned by either party without the prior written consent of the other party,
except that the Buyer may assign this Agreement to any of its Affiliates.
Subject to the preceding sentence, this Agreement will be binding upon the
parties and their respective successors and assigns.

 

Section 7.09           Severability. If any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable Law, such invalidity, illegality or
unenforceability shall not affect any other provision hereof.

 

Section 7.10           Cooperation. The parties shall cooperate in good faith to
effectuate the transactions contemplated by this Agreement.

 

Section 7.11           Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same instrument and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party.

 

[The remainder of this page is intentionally left blank.]

 

15 

 

 

IN WITNESS WHEREOF, the Buyer and the Seller have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.

 

NRL INVESTMENT GROUP, LLC

 

 

By: /s/ Bharat Patel

Name: Bharat Patel

Title: Managing Member

Address for Notices:

 

711 Court A, Suite 200

Tacoma, WA 98402
Facsimile: _______________________________           
E-mail: bharatji@gmail.com

       

ATOSSA GENETICS INC.

 

 

By: /s/ Steven C. Quay

Name: Steven C. Quay, Ph.D., M.D.

Title: CEO and President

Address for Notices:

 

2300 Eastlake Ave. East, Suite 200

Seattle, WA 98110
Facsimile: _______________________________           
E-mail: steven.quay@atossagenetics.com

 

 

NATIONAL REFERENCE LABORATORY FOR BREAST HEALTH, INC.

 

 

By: /s/ Steven C. Quay

Name: Steven C. Quay, Ph.D., M.D.

Title: CEO and President

Address for Notices:

 

1616 Eastlake Ave. East, Suite 360

Seattle, WA 98110
Facsimile: _______________________________           
E-mail: steven.quay@atossagenetics.com

 

 

16 

 

 

APPENDIX 1

 

FORM OF AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

 

NATIONAL REFERENCE LABORATORY FOR BREAST HEALTH, INC.

(Pursuant to Sections 242 and 245 of the General Corporation Law of the State of
Delaware)

 

National Reference Laboratory for Breast Health, Inc., a corporation organized
and existing under and by virtue of the provisions of the General Corporation
Law of the State of Delaware (the “DGCL”)

 

DOES HEREBY CERTIFY:

 

A.           The name of this corporation is National Reference Laboratory for
Breast Health, Inc., and that this corporation was originally incorporated
pursuant to the DGCL on November 28, 2011.

 

B.           That the Board of Directors duly adopted resolutions proposing to
amend and restate the Certificate of Incorporation of this corporation,
declaring said amendment and restatement to be advisable and in the best
interests of this corporation and its stockholders, and authorizing the
appropriate officers of this corporation to solicit the consent of the
stockholders therefor, which resolution setting forth the proposed amendment and
restatement is as follows:

 

RESOLVED, that the Certificate of Incorporation of this corporation be amended
and restated in its entirety to read as follows:

 

1.           The name of this corporation is National Reference Laboratory for
Breast Health, Inc., and that this corporation was originally incorporated
pursuant to the DGCL on November 28, 2011.

 

2.           The registered office of this corporation in the State of Delaware
is located at 2711 Centerville Road, Suite 400, City of Wilmington 19808, County
of New Castle. The name of its registered agent at such address is Corporation
Service Company.

 

3.           The purpose of this corporation is to engage in any lawful act or
activity for which corporations may be organized wider the General Corporation
Law of the State of Delaware.

 

4.           Upon the filing of this Amended and Restated Certificate of
Incorporation (this “Certificate of Incorporation”), the capitalization of this
Corporation shall consist of: one hundred (100) shares of common stock, par
value $0.001 (the “Common Stock”), and 24 shares of Preferred Stock, par value
$0.001 (the “Preferred Stock”).

 

5.           Except as otherwise provided in the provisions establishing a class
of stock, the number of authorized shares of any class or series of stock may be
increased or decreased (but not below the number of shares thereof then
outstanding) by the affirmative vote of the holders of a majority of the voting
power of the corporation entitled to vote irrespective of the provisions of
Section 242(b)(2) of the DGCL.

 

17 

 

 

6.           The business and affairs of this corporation shall be managed by or
under the direction of the Board of Directors. The size of the Board of
Directors shall be set at three. The election of directors need not be by
written ballot unless the by-laws of this corporation, as in effect from time to
time (the “By-laws”) shall so require.

 

7.           No dividends, whether in cash, in property or in shares of the
capital stock of the Corporation, shall be declared or set aside for any class
or series of shares of capital stock of the Corporation unless and until the
Board of Directors of the Corporation shall have declared and the Corporation
shall have paid in full a dividend in like amount and kind on the then
outstanding shares of Preferred Stock (determined based upon the number of
shares of Common Stock (including fractions of a share) into which each share of
Preferred Stock held by each holder thereof could be converted pursuant to the
provisions hereof).

 

8.           Except as otherwise required by law or as set forth herein, the
holder of each share of Common Stock issued and outstanding shall have one vote
for each share of Common Stock held by such holder, and the holder of each share
of Preferred Stock shall be entitled to the number of votes equal to the number
of shares of Common Stock into which such share could be converted at the record
date for determination of the stockholders entitled to vote on such matters, or,
if no such record date is established, at the date such vote is taken or any
written consent of stockholders is solicited. Holders of Common Stock and
Preferred Stock shall be entitled to notice of any stockholders' meeting in
accordance with the Bylaws of the Corporation.

 

9.           The holders of Preferred Stock have conversion rights as follows:

 

(a) Each share of Preferred Stock shall be convertible, at the option of the
holder thereof, at any time after the date of issuance of such share at the
office of the Corporation or any transfer agent for the Preferred Stock, into
such number of fully paid and nonassessable shares of Common Stock as is
determined by dividing 1.00 by the Preferred Conversion Price in effect at the
time of conversion. The Preferred Conversion Price shall initially be 1.00 per
share of Common Stock. The Preferred Conversion Price shall be subject to
adjustment as hereinafter provided. Such conversion rights shall be exercised by
the holder thereof giving written notice that the holder elects to convert a
stated number of shares of Preferred Stock into Common Stock. Promptly after the
receipt of the written notice of conversion and surrender of the certificate or
certificates for the share or shares of Preferred Stock to be converted, the
Corporation shall issue and deliver to the holder a certificate or certificates,
registered in such name or names as such holder may direct, for the number of
whole shares of Common Stock issuable upon the conversion of such share or
shares of Preferred Stock. Such conversion shall be deemed to have been effected
and the Preferred Conversion Price shall be determined as of the close of
business on the date on which such written notice shall have been received by
the Corporation and the certificate or certificates for such share or shares
shall have been surrendered and the person or persons in whose name or names any
certificate or certificates for shares of Common Stock shall be issuable upon
such conversion shall be deemed to have become the holder or holders of record
of the shares represented thereby.

 

18 

 

 

(b) No fractional shares of Common Stock shall be issued upon conversion of
Preferred Stock into Common Stock and no payment or adjustment shall be made
upon any conversion on account of any cash dividends on the Common Stock issued
upon such conversion, the record date for which dividends is prior to the date
such conversion is deemed to be effective as provided in Subsection 9(a). If any
fractional share of Common Stock would, except for the provisions of the first
sentence of this Subsection 9(b), be delivered upon such conversion, the
Corporation, in lieu of delivering such fractional share, shall pay to the
holder surrendering the Preferred Stock for conversion an amount in cash equal
to the Preferred Conversion Price of such fractional share.

 

(c) The Corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock solely for the purpose of
effecting the conversion of the shares of the Preferred Stock such number of its
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of the Preferred Stock.

 

(d) Shares of Preferred Stock which are converted into shares of Common Stock as
provided herein shall not be reissued.

 

(e) Adjustments to Conversion Price.

 

(i) If and whenever the Corporation shall issue or sell capital stock or
Convertible Securities then upon such issuance or sale, the Preferred Conversion
Price shall be reduced to an amount equal to the Preferred Conversion Price then
in effect multiplied by a fraction, the numerator of which is the total number
of shares of capital stock and Convertible Securities outstanding immediately
prior to such issuance or sale divided by the total number of shares of capital
stock and Convertible Securities outstanding immediately after such issuance or
sale. "Convertible Securities" shall mean any evidences of indebtedness,
options, warrants, shares or other securities directly or indirectly convertible
into or exchangeable for Common Stock.

 

(ii) In case the Corporation shall at any time subdivide (by any stock split,
stock dividend otherwise) its outstanding shares of Common Stock into a greater
number of shares, Preferred Conversion Price in effect immediately prior to such
subdivision shall be proportionately reduced, and, conversely, in case the
outstanding shares of Common Stock shall be combined into a smaller number of
shares, Preferred Conversion Price in effect immediately prior to such
combination shall be proportionately increased.

 

(iii) If any capital reorganization or reclassification of the capital stock of
the Corporation shall be effected in such a way that holders of Common Stock
shall be entitled to receive stock, securities or assets with respect to or in
exchange for Common Stock, then, as a condition of such reorganization or
reclassification, lawful and adequate provisions shall be made whereby each
holder of shares of Preferred Stock shall thereupon have the right to receive,
upon the basis and upon the terms and conditions specified herein and in lieu of
the shares of Common Stock immediately theretofore receivable upon the
conversion of such shares of Preferred Stock, such shares of stock, securities
or assets as may be issued or payable with respect to or in exchange for a
number of outstanding shares of such Common Stock equal to the number of shares
of such Common Stock receivable upon such conversion had such reorganization or
reclassification not taken place, and in any such case appropriate provisions
shall be made with respect to the rights and interests of such holder to the end
that the provisions hereof (including without limitation provisions for
adjustments of the Preferred Conversion Price) shall thereafter be applicable,
as nearly as may be, in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise of such conversion rights.

 

19 

 

 

(iv) Upon any adjustment of the Preferred Conversion Price, the Corporation
shall give written notice thereof, by first class mail, postage prepaid or
facsimile, addressed to each holder of shares of Preferred Stock at the address
of such holder as shown on the books of the Corporation, which notice shall
state the Preferred Conversion Price (as applicable) resulting from such
adjustment, setting forth in reasonable detail the calculation upon which such
adjustment is based.

 

10.           This corporation shall not, either directly or indirectly by
amendment, merger, consolidation or otherwise, do any of the following without
(in addition to any other vote required by law or the Certificate of
Incorporation) the written consent or affirmative vote of the holders of a
majority of the then outstanding shares of Preferred Stock, given in writing or
by vote at a meeting, consenting or voting (as the case may be) separately as a
class, and any such act or transaction entered into without such consent or vote
shall be null and void ab initio, and of no force or effect.

 

a.liquidate, dissolve or wind-up the business and affairs of the corporation,
effect any merger or consolidation or any other Deemed Liquidation Event (as
defined below), or consent to any of the foregoing;

 

b.amend, alter or repeal any provision of the Certificate of Incorporation or
Bylaws of the corporation;

 

c.create, or authorize the creation of, or issue or obligate itself to issue
shares of, any additional class or series of capital stock, or increase the
authorized number of shares of Common Stock or increase the authorized number of
shares of any additional class or series of capital stock;

 

d.reclassify, alter or amend any existing security of the corporation;

 

e.purchase or redeem (or permit any subsidiary to purchase or redeem) or pay or
declare any dividend or make any distribution on, any shares of capital stock of
the corporation; or

 

f.increase or decrease the authorized number of directors constituting the Board
of Directors.

 

20 

 

 

Each of the following events shall be considered a “Deemed Liquidation Event”
unless the holders of at least 100% of the outstanding shares of Preferred Stock
elect otherwise by written notice sent to the corporation at least five (5) days
prior to the effective date of a merger or consolidation in which the
corporation is a constituent party or a subsidiary of the corporation is a
constituent party and the corporation issues shares of its capital stock
pursuant to such merger or consolidation, except any such merger or
consolidation involving the corporation or a subsidiary in which the shares of
capital stock of the corporation outstanding immediately prior to such merger or
consolidation continue to represent, or are converted into or exchanged for
shares of capital stock that represent, immediately following such merger or
consolidation, at least a majority, by voting power, of the capital stock of (1)
the surviving or resulting corporation; or (2) if the surviving or resulting
corporation is a wholly owned subsidiary of another corporation immediately
following such merger or consolidation, the parent corporation of such surviving
or resulting corporation; or the sale, lease, transfer, exclusive license or
other disposition, in a single transaction or series of related transactions, by
the corporation or any subsidiary of the corporation of all or substantially all
the assets of the corporation and its subsidiaries taken as a whole or the sale
or disposition (whether by merger, consolidation or otherwise) of one or more
subsidiaries of the corporation if substantially all of the assets of the
corporation and its subsidiaries taken as a whole are held by such subsidiary or
subsidiaries, except where such sale, lease, transfer, exclusive license or
other disposition is to a wholly owned subsidiary of the corporation.

 

11.           In furtherance and not in limitation of the power conferred upon
the Board of Directors by law, the Board of Directors shall have power to make,
adopt, alter, amend and repeal from time to time the By-laws of this
corporation, subject to the right of the stockholders entitled to vote with
respect thereto to alter and repeal by-laws made by the Board of Directors.

 

12.           A director of this corporation shall not be liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent that exculpation from liability is not
permitted under the DGCL as in effect at the time such liability is determined.
No amendment or repeal of this Paragraph 9 shall apply to or have any effect on
the liability or alleged liability of any director of the corporation for or
with respect to any acts or omissions of such director occurring prior to such
amendment or repeal.

 

13.           This Corporation shall, to the maximum extent permitted from time
to time under the law of the State of Delaware, indemnify any person who is or
was a party or is threatened to be made a party to any threatened, pending or
completed action, suit, proceeding or claim, whether civil, criminal,
administrative or investigative, (i) by reason of the fact that such person is
or was a director or is or was serving at the request of the corporation as a
director of another corporation, partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans or (ii) in
such person’s capacity as an officer, employee or agent of the corporation or in
such person’s capacity as an officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, that such person is or was serving at the
request of the corporation (each such person described in the foregoing clauses
(i) and (ii), a “Covered Person”), against expenses (including attorney’s fees
and expenses), judgments, fines, penalties and amounts paid in settlement
incurred (and not otherwise recovered) in connection with the investigation,
preparation to defend or defense of such action, suit, proceeding or claim;
provided, however, that the foregoing shall not require this corporation to
indemnify any person in connection with any action, suit, proceeding, claim or
counterclaim initiated by or on behalf of such person other than an action
authorized by the Board of Directors. Such indemnification shall not be
exclusive of other indemnification rights arising under any by-law, agreement,
vote of directors or stockholders or otherwise and shall inure to the benefit of
the heirs and legal representatives of such person. Any person seeking
indemnification under this paragraph 10 shall be deemed to have met the standard
of conduct required for such indemnification unless the contrary shall be
established. Any repeal or modification of the foregoing provisions of this
paragraph 10 shall not adversely affect any right or protection of a Covered
Person with respect to any acts or omissions of such Covered Person occurring
prior to such repeal or modification.

 

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(a)           The Corporation shall pay on a current and as-incurred basis
expenses incurred by any Covered Person in defending or otherwise participating
in any action, suit, proceeding or claim in advance of the final disposition of
such action, suit, proceeding or claim, including appeals, upon presentation of
(i) an unsecured written undertaking to repay such amounts if it is ultimately
determined that the person is not entitled to indemnification hereunder and (ii)
adequate documentation reflecting such expenses.

 

(b)           It is the intent that with respect to all advancement and
indemnification obligations under this paragraph 13, the corporation shall be
the primary source of advancement, reimbursement and indemnification relative to
any direct or indirect shareholder of the corporation (or any affiliate of such
shareholder, other than the corporation or any of its direct or indirect
subsidiaries). The Corporation shall have no right to seek contribution,
indemnity or other reimbursement for any of its obligations under this paragraph
10 from any such direct or indirect shareholder of the Corporation (or any
affiliate of such shareholder, other than the corporation or any of its direct
or indirect subsidiaries).

 

(c)           This Corporation shall have the power to purchase and maintain, at
its expense, insurance on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, limited liability company, joint venture, trust or
other enterprise, against any expense, liability or loss asserted against such
person and incurred by such person in any such capacity, or arising out of such
person’s status as such, whether or not the corporation would have the power to
indemnify such person against such expense, liability or loss under the DGCL or
the terms of this Certificate of Incorporation.

 

14.           To the maximum extent permitted from time to time under the law of
the State of Delaware, this Corporation renounces any interest or expectancy of
the corporation in, or in being offered an opportunity to participate in,
business opportunities that are from time to time presented to its officers,
directors or stockholders, other than those officers, directors or stockholders
who are employees of the corporation. No amendment or repeal of this paragraph
shall apply to or have any effect on the liability or alleged liability of any
officer, director or stockholder of the Corporation for or with respect to any
opportunities of which such officer, director or stockholder becomes aware prior
to such amendment or repeal. To the fullest extent permitted by law, any Person
purchasing or otherwise acquiring any interest in any shares of capital stock of
the corporation shall be deemed to have notice of and to have consented to the
provisions of this paragraph. As used herein, “Person” shall mean any
individual, corporation, general or limited partnership, limited liability
company, joint venture, trust association or any other entity.

 

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15.           The books of this Corporation may (subject to any statutory
requirements) be kept outside the State of Delaware as may be designated by the
Board of Directors or in the by-laws of this Corporation.

 

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation has
been executed by a duly authorized officer of this Corporation on this 15th day
of December, 2015.

 

 

 

 

Steven C. Quay

President

 

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