Exhibit 10.1

 

NEITHER THE ISSUANCE NOR SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES FILED PURSUANT TO THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE
HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.

 

Principal Amount: $500,000.00   Issue Date: November 30, 2018

 

PROMISSORY NOTE

 

FOR VALUE RECEIVED, PRECISION THERAPEUTICS INC., a Delaware corporation
(hereinafter called the “Borrower”), as of November 30, 2018 (the “Issue Date”),
hereby promises to pay to the order of Carl Schwartz, or his registered assigns
(the “Holder”) the principal sum of up to $500,000.00 based on the amount of
Consideration paid (the “Principal Amount”), together with interest at the rate
of eight percent (8%) per annum on the Principal Amount, at maturity or upon
acceleration or otherwise, as set forth herein (the “Note”). The maturity date
for the Note shall be the earlier of (a) the date five (5) business days after
the closing of Borrower’s sale of equity or debt securities of Borrower
resulting in gross proceeds of at least $1,000,000.00, or (b) twelve (12) months
from the date that this Note is issued (the earlier of such dates is referred to
as the “Maturity Date”), and is the date upon which the principal sum, as well
as any accrued and unpaid interest and other fees, shall be due and payable.

 

The consideration to the Borrower for this Note is $500,000.00 (the
“Consideration”) in United States currency. The Holder shall pay the first
tranche of $370,000.00 of the Consideration on or about the date of issuance of
this Note, at which time the Principal Amount shall be equal to $370,000.00. The
Holder shall pay the second tranche of another $130,000.00 in Consideration on a
date or dates mutually agreed by Holder and Borrower, in which case the
Principal Amount shall be adjusted accordingly, to $500,000.00. If the second
tranche involves less than $130,000.00 in Consideration, then the Principal
Amount shall be adjusted appropriately.

 

Any amount of principal or interest on this Note which is not paid by the
Maturity Date shall bear interest at the rate of the lesser of (i) eighteen
percent (18%) per annum on the Principal Amount or (ii) the maximum amount
allowed by law, from the due date thereof until the same is paid (“Default
Interest”). Interest shall commence accruing on the Principal Amount on the date
that this Note is issued and shall be computed on the basis of a 365-day year
and the actual number of days elapsed. All payments due hereunder shall be made
in lawful money of the United States of America. All payments shall be made at
such address as the Holder shall hereafter give to the Borrower by written
notice made in accordance with the provisions of this Note. Whenever any amount
expressed to be due by the terms of this Note is due on any day which is not a
business day, the same shall instead be due on the next succeeding day which is
a business day and, in the case of any interest payment date which is not the
date on which this Note is paid in full, the extension of the due date thereof
shall not be taken into account for purposes of determining the amount of
interest due on such date. As used in this Note, the term “business day” shall
mean any day other than a Saturday, Sunday or a day on which commercial banks in
the city of New York, New York are authorized or required by law or executive
order to remain closed.

 

This Note is free from all taxes, liens, claims and encumbrances with respect to
the issue thereof and shall not be subject to preemptive rights or other similar
rights of shareholders of the Borrower and will not impose personal liability
upon the holder thereof.

 

This Note shall be an unsecured obligation of the Borrower.  

 

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The following additional terms shall also apply to this Note:

 

ARTICLE I. EVENTS OF DEFAULT

 

The occurrence of each of the following events of default shall each be an
“Event of Default”, with no right to notice or cure except as specifically
stated:

 

1.1 Failure to Pay Principal or Interest. The Borrower fails to pay the
principal hereof or interest thereon when due on this Note.

 

1.2 Breach of Covenants. The Borrower breaches any material covenant or other
material term or condition contained in this Note and such breach continues for
a period of three (3) days after written notice thereof to the Borrower from the
Holder or after five (5) days after the Borrower should have been aware of the
breach.

 

1.3 Receiver or Trustee. The Borrower or any Subsidiary of the Borrower shall
make an assignment for the benefit of creditors, or apply for or consent to the
appointment of a receiver or trustee for it or for a substantial part of its
property or business, or such a receiver or trustee shall otherwise be
appointed. 

 

1.4 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings, voluntary or involuntary, for relief under any
bankruptcy law or any law for the relief of debtors shall be instituted by or
against the Borrower or any subsidiary of the Borrower and, in the case of
involuntary proceedings, have not been dismissed within 61 days.

 

1.5 Liquidation. The Borrower commences any dissolution, liquidation, or winding
up of Borrower or any substantial portion of its business.

 

1.6 Cessation of Operations. The Borrower ceases operations or Borrower admits
it is otherwise generally unable to pay its debts as such debts become due,
provided, however, that any disclosure of the Borrower’s ability to continue as
a “going concern” shall not be an admission that the Borrower cannot pay its
debts as they become due.

 

Upon the occurrence of any Event of Default, this Note shall become immediately
due and payable and the Borrower shall pay to the Holder, in full satisfaction
of its obligations hereunder, an amount equal to the then outstanding entire
balance of this Note (including principal and accrued and unpaid interest) plus
Default Interest from the date of the Event of Default, if any (collectively, in
the aggregate of all of the above, the “Default Amount”), and all other amounts
payable hereunder shall immediately become due and payable, all without demand,
presentment or notice, all of which hereby are expressly waived, together with
all costs, including, without limitation, legal fees and expenses, of
collection, and the Holder shall be entitled to exercise all other rights and
remedies available at law or in equity.

 

 

ARTICLE II. MISCELLANEOUS

 

2.1 Failure or Indulgence Not Waiver. No failure or delay on the part of the
Holder in the exercise of any power, right or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude other or further exercise thereof or of any other
right, power or privileges. All rights and remedies existing hereunder are
cumulative to, and not exclusive of, any rights or remedies otherwise available.

 

2.2 Notices. All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and, unless
otherwise specified herein, shall be (i) personally served, (ii) deposited in
the mail, registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, facsimile, or electronic mail addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand
delivery, upon electronic mail delivery, or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall be:

 

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If to the Borrower, to:

 

PRECISION THERAPEUTICS INC.
2915 Commers Drive, Suite 900

Eagan, Minnesota 55121

Attention: Bob Myers, CFO

E-mail: bmyers@skylinemedical.com
Phone: 651.389.4800

 

If to the Holder:

 

Carl Schwartz

2915 Commers Drive, Suite 900

Eagan, Minnesota 55121

E-mail: cschwartz@ skylinemedical.com

Phone:

  

2.3 Amendments. This Note and any provision hereof may only be amended by an
instrument in writing signed by the Borrower and the Holder. The term “Note” and
all reference thereto, as used throughout this instrument, shall mean this
instrument as originally executed, or if later amended or supplemented, then as
so amended or supplemented.

 

2.4 Assignability. This Note shall be binding upon the Borrower and its
successors and assigns, and shall inure to be the benefit of the Holder and its
successors and assigns. Notwithstanding anything to the contrary herein, the
rights, interests or obligations of the Borrower hereunder may not be assigned,
by operation of law or otherwise, in whole or in part, by the Borrower without
the prior signed written consent of the Holder, which consent may be withheld at
the sole discretion of the Holder (any such assignment or transfer shall be null
and void if the Borrower does not obtain the prior signed written consent of the
Holder). This Note or any of the severable rights and obligations inuring to the
benefit of or to be performed by Holder hereunder may be assigned by Holder to a
third party, in whole or in part, without the need to obtain the Borrower’s
consent thereto. Each transferee of this Note must be an “accredited investor”
(as defined in Rule 501(a) of the Securities Act). Notwithstanding anything in
this Note to the contrary, this Note may be pledged as collateral in connection
with a bona fide margin account or other lending arrangement.

 

2.5 Cost of Collection. If default is made in the payment of this Note, the
Borrower shall pay the Holder hereof costs of collection, including reasonable
attorneys’ fees.

 

2.6 Governing Law. This Note shall be governed by and interpreted in accordance
with the laws of the State of Minnesota without regard to the principles of
conflicts of law (whether of the State of Minnesota or any other jurisdiction).

 

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2.7 Venue; Severability; Attorney’s Fees. Any action brought by either party
against the other concerning the transactions contemplated by this Note shall be
brought only in the state or federal courts of Dakota County, Minnesota. The
parties to this Note hereby irrevocably waive any objection to jurisdiction and
venue of any action instituted hereunder and shall not assert any defense based
on lack of jurisdiction or venue or based upon forum non conveniens. The costs
and expenses of such action shall be paid by and be the sole responsibility of
the Borrower, including but not limited to the Holder’s attorneys’ fees and
court fees. In the event that any provision of this Note or any other agreement
delivered in connection herewith is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such provision which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of any agreement. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any suit, action or proceeding in connection with this Note by mailing
a copy thereof via registered or certified mail or overnight delivery (with
evidence of delivery) to such party at the address in effect for notices to it
under this Note 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 other manner
permitted by law.

 

2.8 JURY TRIAL WAIVER. THE BORROWER AND THE HOLDER HEREBY WAIVE A TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES
HERETO AGAINST THE OTHER IN RESPECT OF ANY MATTER ARISING OUT OF OR IN
CONNECTION WITH THIS NOTE.

 

2.9 Remedies. The Borrower acknowledges that a breach by it of its obligations
hereunder may cause irreparable harm to the Holder, by vitiating the intent and
purpose of the transaction contemplated hereby. Accordingly, the Borrower
acknowledges that the remedy at law for a breach of its obligations under this
Note may be inadequate and agrees, in the event of a breach or threatened breach
by the Borrower of the provisions of this Note, that the Holder shall be
entitled, in addition to all other available remedies at law or in equity, and
in addition to the penalties assessable herein, to an injunction or injunctions
restraining, preventing or curing any breach of this Note and to enforce
specifically the terms and provisions thereof, without the necessity of showing
economic loss and without any bond or other security being required.

 

2.10 Usury. If it shall be found that any interest or other amount deemed
interest due hereunder violates the applicable law governing usury, the
applicable rate of interest due hereunder shall automatically be lowered to
equal the maximum rate of interest permitted under applicable law. The Borrower
covenants (to the extent that it may lawfully do so) that it shall not at any
time insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay, extension or usury law or other law which would
prohibit or forgive the Borrower from paying all or any portion of the principal
of or interest on this Note as contemplated herein, wherever enacted, now or at
any time hereafter in force, or which may affect the covenants or the
performance of this Note, and the Borrower (to the extent it may lawfully do so)
hereby expressly waives all benefits or advantage of any such law, and covenants
that it will not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Holder, but will suffer and permit
the execution of every such as though no such law has been enacted.

 

** signature page to follow **

 

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** signature page to Promissory Note**

 

IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by
its duly authorized officer on the Issue Date.

 

  PRECISION THERAPEUTICS INC.             By: /s/ Bob Myers     Name: Bob Myers
    Title: Chief Financial Officer  

 

 

 

 

 

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