EXHIBIT A

 

SUBSCRIPTION AGREEMENT

 

SUBSCRIPTION AGREEMENT (this “Subscription Agreement”) made as of the last date
set forth on the signature page hereof between Avant Diagnostics, Inc., a Nevada
corporation (the “Company”), and the undersigned (the “Subscriber”).

 

W I T N E S S E T H:

 

WHEREAS, the Company is conducting a private offering (the “Offering”)
consisting of up to 2,000,000 shares of the Company’s series D convertible
preferred stock, par value $0.001 per share (the “Preferred Stock”), each share
of Preferred Stock having a stated value of $1.00 per share (the “Stated Value”)
and convertible into shares of the Company’s common stock, par value $0.00001
per share (the “Common Stock”) at a conversion price of later determined by the
board of directors of the Company, subject to adjustment, with each share to be
sold at a negotiated price of $1.00 per share (the “Offering Price”);

 

WHEREAS, the Offering is on a “reasonable efforts” basis as to the shares of
Preferred Stock to be sold up to the maximum offering amount of $2,000,000 (the
“Maximum Offering”) to a limited number of “accredited investors” (as that term
is defined by Rule 501(a) of Regulation D (“Regulation D”) promulgated under the
Securities Act of 1933, as amended (the “Securities Act”);

 

WHEREAS, the Company and each Subscriber is executing and delivering this
agreement in reliance upon the exemption from securities registration afforded
by Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D as
promulgated by the SEC under the Securities Act; and

 

WHEREAS the subscription for the Securities will be made in accordance with and
subject to the terms and conditions of this Subscription Agreement and the
Company’s Confidential Private Placement Memorandum dated March 13, 2019,
together with all amendments thereof and supplements and exhibits thereto and as
such may be amended from time to time (the “Memorandum”); and

 

WHEREAS, the Subscriber desires to purchase such number of shares of Preferred
Stock as set forth on the signature page hereof on the terms and conditions
hereinafter set forth.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

 -1- 

 

 

I. SUBSCRIPTION FOR SHARES AND REPRESENTATIONS BY SUBSCRIBER

 

1.1 Subject to the terms and conditions hereinafter set forth (including Section

1.19 hereof) and as set forth in the Memorandum, the Subscriber hereby
subscribes for and agrees to purchase from the Company, and the Company agrees
to sell to the Subscriber, such number of shares of Preferred Stock as is set
forth on the signature page hereof. The purchase price is payable by wire
transfer, to be held in escrow until a closing occurs, to the Company as
follows:

 

Bank:

Address:

ABA #:

Account #:

FBO:

 

1.2 The Subscriber understands, acknowledges, and agrees that, except as
otherwise set forth in Section 3.2 herein or otherwise required by law, that
once irrevocable, the Subscriber is not entitled to cancel, terminate or revoke
this Subscription Agreement or any agreements of the Subscriber hereunder and
that this Subscription Agreement and such other agreements shall survive the
death or disability of the Subscriber and shall be binding upon and inure to the
benefit of the parties and their heirs, executors, administrators, successors,
legal representatives and permitted assigns. If the Subscriber is more than one
person, the obligations of the Subscriber hereunder shall be joint and several
and the agreements, representations, warranties and acknowledgments herein
contained shall be deemed to be made by and be binding upon each such person and
his/her heirs, executors, administrators, successors, legal representatives and
permitted assigns

 

1.3 The Subscriber recognizes that the purchase of the Securities involves a
high degree of risk including, but not limited to, the following: (a) the
Company requires substantial funds in addition to the proceeds of the Offering;
(b) an investment in the Company is highly speculative, and only investors who
can afford the loss of their entire investment should consider investing in the
Company and the Securities; (c) the Subscriber may not be able to liquidate his,
her or its investment; (d) transferability of the Securities (including any
securities issuable upon conversion and/or exercise of the Securities) is
extremely limited; (e) in the event of a disposition, the Subscriber could
sustain the loss of its entire investment; and (f) the Company has not paid any
dividends since its inception and does not anticipate paying any dividends.

 

1.4 At the time such Subscriber was offered the Securities, it was, and as of
the date hereof it is, and on each date on which it converts the Preferred
Stock, it will be an “accredited investor” as defined in Rule 501(a) under the
Securities Act, as indicated by the Subscriber’s responses to the investor
questionnaire attached as Exhibit A to this Subscription Agreement, and that the
Subscriber is able to bear the economic risk of an investment in the Securities.

 

 -2- 

 

 

1.5 The Subscriber hereby acknowledges and represents that (a) the Subscriber
has adequate means of providing for the Subscriber’s current financial needs and
contingencies, (b) the Subscriber has knowledge and experience in business and
financial matters, prior investment experience, including investment in
securities that are non-listed, unregistered and/or not traded on a national
securities exchange or the Subscriber has employed the services of a “purchaser
representative” (as defined in Rule 501 of Regulation D), attorney and/or
accountant to read all of the documents furnished or made available by the
Company both to the Subscriber and to all other prospective investors in the
Securities to evaluate the merits and risks of such an investment on the
Subscriber’s behalf; (c) the Subscriber recognizes the highly speculative nature
of this investment; (d) the Subscriber is able to bear the economic risk that
the Subscriber hereby assumes, (e) the Subscriber could afford a complete loss
of such investment in the Securities.

 

1.6 The Subscriber hereby acknowledges receipt and careful review of this
Subscription Agreement, the Memorandum, the certificate of designation to be
filed with the Secretary of State of the State of Nevada for the Preferred Stock
(the “Certificate of Designations”) and all other exhibits, annexes and
appendices thereto (collectively referred to as the “Offering Materials”), and
has had access to the Company’s periodic and current reports filed with the
United States Securities and Exchange Commission (the “SEC”), including the
Company’s Annual Report on Form 10-K for the year ended September 30, 2018, a
copy of which is attached as an exhibit to the Memorandum, as publicly filed
with and available at the website of the SEC which can be accessed at
www.sec.gov, and hereby represents that the Subscriber has been furnished by the
Company during the course of the Offering with all information regarding the
Company, the terms and conditions of the Offering and any additional information
that the Subscriber has requested or desired to know, and has been afforded the
opportunity to ask questions of and receive answers from duly authorized
officers or other representatives of the Company concerning the Company and the
terms and conditions of the Offering; provided, however that no investigation
performed by or on behalf of the Subscriber shall limit or otherwise affect its
right to rely on the representations and warranties of the Company contained
herein. By the date of signature to this Subscription Agreement, the Subscriber
(along with its advisors) acknowledges its ability to conduct its own due
diligence, research and evaluation of the financial condition and integrity of
the parties involved and the particular transaction, and affirms it has made its
own appraisal of, and investigation into, the Company’s business, property,
financial and other condition and creditworthiness which has been completed to
the Subscriber’s total satisfaction.

 

1.7 (a) In making the decision to invest in the Securities, the Subscriber has
relied solely upon the information provided by the Company in the Offering
Materials. To the extent necessary, the Subscriber has retained, at its own
expense, and relied upon appropriate professional advice regarding the
investment, tax and legal merits and consequences of this Subscription Agreement
and the purchase of the Securities hereunder. The Subscriber disclaims reliance
on any statements made or information provided by any person or entity in the
course of Subscriber’s consideration of an investment in the Securities other
than the Offering Materials and the results of Subscriber’s own independent
investigation.

 

 -3- 

 

 

(b) The Subscriber represents that (i) the Subscriber was contacted regarding
the sale of the Securities by the Company (or another person whom the Subscriber
believed to be an authorized agent or representative thereof) with whom the
Subscriber had a prior substantial pre-existing relationship and (ii) it did not
learn of the offering of the Securities by means of any form of general
solicitation or general advertising, and in connection therewith, the Subscriber
did not (A) receive or review any advertisement, article, notice or other
communication published in a newspaper or magazine or similar media or broadcast
over television or radio, whether closed circuit, or generally available; or (B)
attend any seminar meeting or industry investor conference whose attendees were
invited by any general solicitation or general advertising.

 

1.8 The Subscriber hereby acknowledges that the Offering has not been reviewed
by the SEC nor any state regulatory authority since the Offering is intended to
be exempt from the registration requirements of Section 5 of the Securities Act,
pursuant to Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D.
The Subscriber understands that the Securities have not been registered under
the Securities Act or under any state securities or “blue sky” laws and agrees
not to sell, pledge, assign or otherwise transfer or dispose of the Securities
unless they are registered under the Securities Act and under any applicable
state securities or “blue sky” laws or unless an exemption from such
registration is available.

 

1.9 The Subscriber understands that the Securities (have not been registered
under the Securities Act by reason of a claimed exemption under the provisions
of the Securities Act that depends, in part, upon the Subscriber’s investment
intention. In this connection, the Subscriber hereby represents that the
Subscriber is purchasing the Securities for the Subscriber’s own account for
investment and not with a view toward the resale or distribution to others;
provided, however, that nothing contained herein shall constitute an agreement
by the Subscriber to hold the Securities for any particular length of time and
the Company acknowledges that the Subscriber shall at all times retain the right
to dispose of its property as it may determine in its sole discretion, subject
to any restrictions imposed by applicable law. The Subscriber, if an entity,
further represents that it was not formed for the purpose of purchasing the
Securities.

 

1.10 The Subscriber consents to the placement of a legend on any certificate or
other document evidencing the Securities and, that such securities have not been
registered under the Securities Act or any state securities or “blue sky” laws
and setting forth or referring to the restrictions on transferability and sale
thereof contained in this Subscription Agreement. The Subscriber is aware that
the Company will make a notation in its appropriate records with respect to the
restrictions on the transferability of such Securities. The legend to be placed
on each certificate shall be in form substantially similar to the following:

 

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE SECURITIES OR
“BLUE SKY LAWS,” AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR
COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY AND ITS
COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”

 

 -4- 

 

 

1.11 The Subscriber hereby represents that the address of the Subscriber
furnished by Subscriber on the signature page hereof is the Subscriber’s
principal residence if Subscriber is an individual or its principal business
address if it is a corporation or other entity.

 

1.12 The Subscriber represents that the Subscriber has full power and authority
(corporate, statutory and otherwise) to execute and deliver this Subscription
Agreement and to purchase the Securities. This Subscription Agreement
constitutes the legal, valid and binding obligation of the Subscriber,
enforceable against the Subscriber in accordance with its terms.

 

1.13 If the Subscriber is a corporation, partnership, limited liability company,
trust, employee benefit plan, individual retirement account, Keogh Plan, or
other tax-exempt entity, it is authorized and qualified to invest in the Company
and the person signing this Subscription Agreement on behalf of such entity has
been duly authorized by such entity to do so.

 

1.14 The Subscriber acknowledges that if he or she is a Registered
Representative of a Financial Industry Regulatory Authority (“FINRA”) member
firm, he or she must give such firm the notice required by the FINRA’s Rules of
Fair Practice, receipt of which must be acknowledged by such firm.

 

1.15 To effectuate the terms and provisions hereof, until the consummation of
the Reverse Split (as defined herein), the Subscriber hereby appoint AVDX
Investors Group LLC (the “Investor Representative”) as its attorney-in-fact (and
the Investor Representative hereby accepts such appointment) for the purpose of
carrying out the Shareholder Approval (as defined herein) including, without
limitation, taking any action on behalf of, or at the instruction of, the
Subscriber and executing any documentation required and taking any action and
executing any instrument that the Investor Representative may deem necessary or
advisable (and lawful) to accomplish the purposes hereof. All acts done under
the foregoing authorization are hereby ratified and approved and neither the
Investor Representative nor any designee nor agent thereof shall be liable for
any acts of commission or omission, for any error of judgment, for any mistake
of fact or law except for acts of gross negligence or willful misconduct. This
power of attorney, being coupled with an interest, is irrevocable until the
Reverse Split is consummated.

 

1.16 The Subscriber agrees not to issue any public statement with respect to the
Offering, Subscriber’s investment or proposed investment in the Company or the
terms of any agreement or covenant between them and the Company without the
Company’s prior written consent, except such disclosures as may be required
under applicable law.

 

1.17 The Subscriber understands, acknowledges and agrees with the Company that
this subscription may be rejected, in whole or in part, by the Company, in the
sole and absolute discretion of the Company, at any time before any Closing
notwithstanding prior receipt by the Subscriber of notice of acceptance of the
Subscriber’s subscription.

 

 -5- 

 

 

1.18 The Subscriber acknowledges that the information contained in the Offering
Materials or otherwise made available to the Subscriber is confidential and non-
public, has been delivered to it in reliance upon agreement to maintain the
confidentiality of the information and upon Regulation FD promulgated by the
Commission, and agrees that all such information shall be kept in confidence by
the Subscriber and neither used by the Subscriber for the Subscriber’s personal
benefit (other than in connection with this subscription) nor disclosed to any
third party for any reason, notwithstanding that a Subscriber’s subscription may
not be accepted by the Company; provided, however, that (a) the Subscriber may
disclose such information to its affiliates and advisors who may have a need for
such information in connection with providing advice to the Subscriber with
respect to its investment in the Company so long as such affiliates and advisors
have an obligation of confidentiality, and (b) this obligation shall not apply
to any such information that (i) is part of the public knowledge or literature
and readily accessible at the date hereof, (ii) becomes part of the public
knowledge or literature and readily accessible by publication (except as a
result of a breach of this provision) or (iii) is received from third parties
without an obligation of confidentiality (except third parties who disclose such
information in violation of any confidentiality agreements or obligations,
including, without limitation, any subscription or other similar agreement
entered into with the Company).

 

1.19 The Subscriber understands that the Securities being offered and sold to it
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 such Subscriber’s compliance with, the
representations, warranties, agreements, acknowledgements and understandings of
such Subscriber set forth herein in order to determine the availability of such
exemptions and the eligibility of such Subscriber to acquire the Securities. The
Subscriber agrees to supply the Company, within five (5) days after the
Subscriber receives the request therefor from the Company, with such additional
information concerning the Subscriber as the Company deems necessary or
advisable

 

1.20 The Subscriber understands that Rule 144 promulgated under the Act (“Rule
144”) requires, among other conditions, a minimum holding period of six-months
prior to the resale of securities acquired in a non-public offering without
having to satisfy the registration requirements under the Act. The Subscriber
understands and hereby acknowledges that the Company is under no obligation to
register the Securities under the Act or any state securities or “blue sky” laws
or to assist the Subscriber in obtaining an exemption from various registration
requirements, other than as set forth herein.

 

1.21 The Subscriber agrees to hold the Company and its directors, officers,
employees, controlling persons and agents (including its managers, members,
officers, directors, employees, counsel, controlling persons and agents) and
their respective heirs, representatives, successors and assigns harmless from
and to indemnify them against all liabilities, costs and expenses incurred by
them as a result of (i) any misrepresentation made by the Subscriber contained
in this Subscription Agreement (including Article VII hereunder) or breach of
any warranty by the Subscriber in this Subscription Agreement or in any Exhibits
or Schedules attached hereto; (ii) any untrue statement of a material fact made
by the Subscriber and contained herein; or (iii) after any applicable notice
and/or cure periods, any breach or default in performance by the Subscriber of
any covenant or undertaking to be performed by the Subscriber hereunder, or any
other Offering Materials entered into by the Company and Subscriber relating
hereto. Notwithstanding the foregoing, in no event shall the liability of the
Subscriber hereunder be greater than the aggregate subscription amount paid for
the Securities as set forth on the signature page hereto.

 

 -6- 

 

 

1.22 If the Subscriber is purchasing the Securities in a fiduciary capacity for
another person or entity, including without limitation a corporation,
partnership, trust or any other entity, the Subscriber has been duly authorized
and empowered to execute this Subscription Agreement and all other subscription
documents, and such other person fulfills all the requirements for purchase of
the Securities as such requirements are set forth herein, concurs in the
purchase of the Securities and agrees to be bound by the obligations,
representations, warranties and covenants contained herein. Upon request of the
Company, the Subscriber will provide true, complete and current copies of all
relevant documents creating the Subscriber, authorizing its investment in the
Company and/or evidencing the satisfaction of the foregoing.

 

1.23 Neither the Subscriber nor, to the Subscriber’s knowledge, any of its
directors, executive officers, other officers that may serve as a director or
officer of any company in which it invests, general partners or managing members
is subject to any Disqualification Events, except for Disqualification Events
covered by Rule 506(d)(2)(ii) or (iii) under the Securities Act, and disclosed
in writing in reasonable detail to the Company.

 

1.24 Each Subscriber understands that the Company is not current in its
reporting obligations with the SEC and that the Company was previously was a
“shell company” as defined in Rule 12b-2 under the Exchange Act. Pursuant to
Rule 144(i), securities issued by a current or former shell company that
otherwise meet the holding period and other requirements of Rule 144
nevertheless cannot be sold in reliance on Rule 144 until one year after the
Company (a) is no longer a shell company; and (b) has filed current “Form 10
information” (as defined in Rule 144(i)) with the SEC reflecting that it is no
longer a shell company, and provided that at the time of a proposed sale
pursuant to Rule 144, the Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act and has filed all reports and other
materials required to be filed by Section 13 or 15(d) of the Exchange Act, as
applicable, during the preceding 12 months (or for such shorter period that the
issuer was required to file such reports and materials), other than Form 8-K
reports. As a result, the restrictive legends on certificates for the Preferred
Stock and any Common Stock to be issued in exchange of such shares, cannot be
removed except in connection with an actual sale meeting the foregoing
requirements or pursuant to an effective registration statement.

 

 -7- 

 

 

II. REPRESENTATIONS BY AND COVENANTS OF THE COMPANY

 

The Company hereby represents and warrants to the Subscriber that:

 

2.1 Organization, Good Standing and Qualification. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Nevada and has full corporate power and authority to own and use its
properties and its assets and conduct its business as currently conducted. The
Company is not in violation of any of the provisions of their respective
articles of incorporation, by-laws or other organizational or charter documents,
including, but not limited to the Charter Documents (as defined below). The
Company is duly qualified to conduct business and is in good standing as a
foreign corporation in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the case may be,
would not result in a direct and/or indirect (i) material adverse effect on the
legality, validity or enforceability of any of the Securities and/or this
Subscription Agreement, (ii) material adverse effect on the results of
operations, assets, business, condition (financial and other) or prospects of
the Company and its Subsidiaries, taken as a whole, or (iii) material adverse
effect on the Company’s ability to perform in any material respect on a timely
basis its obligations under the Offering Materials (as defined below) (any of
(i), (ii) or (iii), a “Material Adverse Effect”).

 

2.2 Authorization; Enforceability. The Company has all corporate right, power
and authority to enter into, execute and deliver this Subscription Agreement and
each other agreement, document, instrument and certificate to be executed by the
Company in connection with the consummation of the transactions contemplated
hereby, including, but not limited to the Offering Materials, and to perform
fully its obligations hereunder and thereunder. All corporate action on the part
of the Company, its directors and stockholders necessary for the (a)
authorization execution, delivery and performance of this Subscription Agreement
and the Offering Materials by the Company; and (b) authorization, sale, issuance
and delivery of the Securities contemplated hereby and the performance of the
Company’s obligations under this Subscription Agreement and the Offering
Materials has been taken. This Subscription Agreement and the Offering Materials
have been duly executed and delivered by the Company and each constitutes a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its respective terms, subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies, and to limitations of public policy. The Securities are duly
authorized and, when issued and paid for in accordance with the applicable
Offering Materials, will be duly and validly issued, fully paid and
nonassessable, free and clear of all encumbrances other than restrictions on
transfer provided for in the Offering Materials. Except as set forth on Schedule
2.3 hereto, the issuance and sale of the Securities contemplated hereby will not
give rise to any preemptive rights or rights of first refusal on behalf of any
person.

 

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2.3 No Conflict; Governmental Consents.

 

(a) The execution and delivery by the Company of this Subscription Agreement and
the Offering Materials, the issuance and sale of the Securities and the
consummation of the other transactions contemplated hereby or thereby do not and
will not (i) result in the violation of any law, statute, rule, regulation,
order, writ, injunction, judgment or decree of any court or governmental
authority to or by which the Company is bound including without limitation all
foreign, federal, state and local laws applicable to its business and all such
laws that affect the environment, except in each case as could not have or
reasonably be expected to result in a Material Adverse Effect, (ii) conflict
with or violate any provision of the Company’s Articles of Incorporation (the
“Articles”), as amended or the Bylaws, (and collectively with the Articles, the
“Charter Documents”) of the Company, and (iii) conflict with, or result in a
material breach or violation of, any of the terms or provisions of, or
constitute (with or without due notice or lapse of time or both) a default or
give to others any rights of termination, amendment, acceleration or
cancellation (with or without due notice, lapse of time or both) under any
agreement, credit facility, lease, loan agreement, mortgage, security agreement,
trust indenture or other agreement or instrument to which the Company or any
Subsidiary is a party or by which any of them is bound or to which any of their
respective properties or assets is subject, nor result in the creation or
imposition of any Encumbrances upon any of the properties or assets of the
Company or any Subsidiary.

 

(b) Except for the Charter Amendment and the Reverse Stock Split as discussed in
the Memorandum, no approval by the holders of Common Stock, or other equity
securities of the Company is required to be obtained by the Company in
connection with the authorization, execution, delivery and performance of this
Subscription Agreement and the other Offering Materials or in connection with
the authorization, issue and sale of the Securities, except as has been
previously obtained.

 

(c) Except as set forth on Schedule 2.4 hereto, no consent, approval,
authorization or other order of any governmental authority or any other person
is required to be obtained by the Company in connection with the authorization,
execution, delivery and performance of this Subscription Agreement and the other
Offering Materials or in connection with the authorization, issue and sale of
the Securities and, upon issuance, the Underlying Shares, except such post-sale
filings as may be required to be made with the SEC, FINRA and with any state or
foreign blue sky or securities regulatory authority, all of which shall be made
when required.

 

2.4 Consents of Third Parties. No vote, approval or consent of any holder of
capital stock of the Company or any other third parties is required or necessary
to be obtained by the Company in connection with the authorization, execution,
deliver and performance of this Subscription Agreement and the other Offering
Materials or in connection with the authorization, issue and sale of the
Securities and, upon issuance, the Warrant Shares, except as previously
obtained, each of which is in full force and effect.

 

2.5 Brokers. Except as defined in the memorandum, neither the Company nor any of
the Company’s officers, directors, employees or stockholders has employed or
engaged any broker or finder in connection with the transactions contemplated by
this Subscription Agreement and no fee or other compensation is or will be due
and owing to any broker, finder, underwriter, placement agent or similar person
in connection with the transactions contemplated by this Subscription Agreement.
Except as defined in the memorandum, the Company is not party to any other
agreement, arrangement or understanding whereby any person has an exclusive
right to raise funds and/or place or purchase any debt or equity securities for
or on behalf of the Company.

 

 -9- 

 

 

2.6 Bad Actor Disqualification

 

(a) No Disqualification Events. With respect to Securities to be offered and
sold hereunder in reliance on Rule 506 under the Securities Act (“Regulation D
Securities”), none of the Company, any of its predecessors, any affiliated
issuer, any director, executive officer, other officer of the Company
participating in the offering, any beneficial owner of 20% or more of the
Company’s outstanding voting equity securities, calculated on the basis of
voting power, nor any promoter (as that term is defined in Rule 405 under the
Securities Act) connected with the Company in any capacity at the time of sale
(each, an “Issuer Covered Person” and, together, “Issuer Covered Persons”) is
subject to any of the “Bad Actor” disqualifications described in Rule
506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”),
except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The
Company has exercised reasonable care to determine whether any Issuer Covered
Person is subject to a Disqualification Event. The Company has complied, to the
extent applicable, with its disclosure obligations under Rule 506(e), and has
furnished to the Subscriber a copy of any disclosures provided thereunder.

 

(b) Other Covered Persons. The Company is not aware of any person that (i) has
been or will be paid (directly or indirectly) remuneration for solicitation of
purchasers in connection with the sale of the Securities and (ii) who is subject
to a Disqualification Event.

 

(c) Notice of Disqualification Events. The Company will notify in writing of (i)
any Disqualification Event relating to any Issuer Covered Person and (ii) any
event that would, with the passage of time, become a Disqualification Event
relating to any Issuer Covered Person, prior to any Closing of this Offering.

 

III. TERMS OF SUBSCRIPTION

 

3.1 The Securities will be offered for sale until the earlier of (i) the date
upon which subscriptions for the Maximum Offering offered hereunder have been
accepted, (ii) May 31, 2019, which period may be extended without further notice
to prospective investors by the Company, in their mutual discretion, until July
31, 2019, or (iii) the date upon which the Company elects to terminate the
Offering (the “Termination Date”). The Offering is being conducted on a
“reasonable efforts” basis for the Maximum Offering.

 

 -10- 

 

 

3.2 The Company may hold an initial closing (“Initial Closing”) at any time
after the receipt of accepted subscriptions by the Company. After the Initial
Closing, subsequent closings with respect to additional Securities may take
place at any time prior to the Termination Date as determined by the Company,
with respect to subscriptions accepted prior to the Termination Date (each such
closing, together with the Initial Closing, being referred to as a “Closing”).
The last Closing of the Offering, occurring on or prior to the Termination Date,
shall be referred to as the “Final Closing”. Any subscription documents or funds
received after the Final Closing will be returned, without interest or
deduction. In the event that the any Closing does not occur prior to the
Termination Date, all amounts paid by the Subscriber shall be returned to the
Subscriber, without interest or deduction. The Subscriber may revoke its
subscription and obtain a return of the subscription amount paid to the
Company’s bank account at any time before the date of the Initial Closing by
providing written notice to the Company as provided in Section 6.1 below. Upon
receipt of a revocation notice from the Subscriber prior to the date of the
Initial Closing, all amounts paid by the Subscriber shall be returned to the
Subscriber, without interest or deduction. The Subscriber may not revoke this
subscription or obtain a return of the subscription amount paid to the Escrow
Agent on or after the date of the Initial Closing. Any subscription received
after the Initial Closing but prior to the Termination Date shall be
irrevocable. Subscriber acknowledges that funds from any Closing will be held in
a control account and will not be able to be used by the Company without the
consent of the Investor Representative.

 

3.3 The minimum purchase that may be made by any prospective investor shall be
$50,000. Subscriptions for investment below the minimum investment may be
accepted at the discretion of the Company. The Company reserve the right to
reject any subscription made hereby, in whole or in part, in their sole
discretion. The Company’s agreement with each Subscriber is a separate agreement
and the sale of the Securities to each Subscriber is a separate sale.

 

3.4 All funds shall be deposited in the account identified in Section 1.1
hereof.

 

3.5 Certificates representing the Preferred Stock purchased by the Subscriber
pursuant to this Subscription Agreement will be prepared for delivery to the
Subscriber as soon as practicable following the Closing (but in no event later
than seven (7) days after a Closing) at which such purchase takes place. The
Subscriber hereby authorizes and directs the Company to deliver the certificates
representing the Securities purchased by the Subscriber pursuant to this
Subscription Agreement directly to the Subscriber’s residential or business or
brokerage house address indicated on the signature page hereto.

 

3.6 The Company’s agreement with each Subscriber is a separate agreement and the
sale of Securities to each Subscriber is a separate sale.

 

IV. CONDITIONS TO OBLIGATIONS OF THE SUBSCRIBER

 

4.1 The Subscriber’s obligation to purchase the Securities at the Closing at
which such purchase is to be consummated is subject to the fulfillment on or
prior to such Closing of the following conditions, which conditions may be
waived at the option of each Subscriber to the extent permitted by law:

 

 -11- 

 

 

(a) Representations and Warranties; Covenants. The representations and
warranties made by the Company in Section 2 hereof qualified as to materiality
shall be true and correct at all times prior to and on the Closing Date(s),
except to the extent any such representation or warranty expressly speaks as of
an earlier date, in which case such representation or warranty shall be true and
correct as of such earlier date, and, the representations and warranties made by
the Company in Section 2 hereof not qualified as to materiality shall be true
and correct in all material respects at all times prior to and on the Closing
Date, except to the extent any such representation or warranty expressly speaks
as of an earlier date, in which case such representation or warranty shall be
true and correct in all material respects as of such earlier date. All
covenants, agreements and conditions contained in this Subscription Agreement to
be performed by the Company on or prior to the date of such Closing shall have
been performed or complied with in all material respects.

 

(b) No Legal Order Pending. There shall not then be in effect any legal or other
order enjoining or restraining the transactions contemplated by this
Subscription Agreement.

 

(c) No Law Prohibiting or Restricting Such Sale. There shall not be in effect
any law, rule or regulation prohibiting or restricting such sale or requiring
any consent or approval of any person, which shall not have been obtained, to
issue the Securities (except as otherwise provided in this Subscription
Agreement).

 

(d) Required Consents. The Company shall have obtained any and all consents,
permits, approvals, registrations and waivers necessary or appropriate for
consummation of the purchase and sale of the Securities and the consummation of
the other transactions contemplated by the Offering Materials, all of which
shall be in full force and effect.

 

(e) Adverse Changes. As of the date of execution of this Subscription Agreement,
no event or series of events shall have occurred that reasonably could have or
result in a Material Adverse Effect.

 

(f) Blue Sky. The Company shall have completed qualification for the Securities
under applicable Blue Sky laws.

 

(g) Conditions Precedent. As of the date of the Memorandum, all conditions
precedent are completed for the commencement of the Offering.

 

V. COVENANTS OF THE COMPANY

 

5.1 Listing of Securities. The Company agrees, (i) if the Company applies to
have the Common Stock traded on any other trading market and (ii) it will take
all action reasonably necessary to continue the listing and trading of its
Common Stock on a trading market and will comply in all material respects with
the Company’s reporting, filing and other obligations under the bylaws or rules
of the trading market.

 

 -12- 

 

 

5.2 Replacement of Securities. If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement securities. If a replacement
certificate or instrument evidencing any securities is requested due to a
mutilation thereof, the Company may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance of a
replacement.

 

5.3 Furnishing of Information. As long as Subscriber owns Securities, if the
Company is not required to file reports pursuant to the Exchange Act, it will
prepare and furnish to Subscriber and make publicly available in accordance with
Rule 144(c) such information as is required for the Subscribers to sell the
Securities under Rule 144. The Company further covenants that it will take such
further action as any holder of Securities may reasonably request, to the extent
required from time to time to enable such person to sell such Securities without
registration under the Securities Act within the requirements of the exemption
provided by Rule 144.

 

5.4 Securities Laws; Publicity. The Company shall, by 8:30 a.m. (New York City
time) on the fourth Trading Day immediately following a Closing hereunder, issue
a Current Report on Form 8-K disclosing the material terms of the transactions
contemplated hereby and including the Offering Materials as exhibits thereto.
The Company shall not publicly disclose the name of Subscriber, or include the
name of any Subscriber in any filing with the Commission or any regulatory
agency or trading market, without the prior written consent of Subscriber,
except: (a) as required by federal securities law in connection with (i) any
registration statement contemplated by this Subscription Agreement and (ii) the
filing of final Offering Materials (including signature pages thereto) with the
SEC and (b) to the extent such disclosure is required by law, in which case the
Company shall provide the Subscriber with prior notice of such disclosure
permitted under this clause (b).

 

5.5 Blue Sky Filings. The Company shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for, or to
qualify the Securities for, sale to the Subscriber at the Closing under
applicable securities or “Blue Sky” laws of the states of the United States, and
shall provide evidence of such actions promptly upon request of any Subscriber.

 

5.6 Use of Proceeds. Except as set forth in the Memorandum, the Company shall
not use the net proceeds from the sale of the Securities hereunder for the
redemption of any Common Stock or Common Stock equivalents.

 

 -13- 

 

 

5.7 Stockholder Approval. As soon as practicable after the Final Closing, the
Company shall use commercially reasonable efforts to take all necessary actions
and to obtain such approvals of the Company’s stockholders as may be required to
increase the Company’s authorized shares of Common Stock such that the Company
can issue all of the shares of Common Stock issuable upon completion of the
restructuring and undertake a reverse stock split at such ratio where the number
of shares of Common Stock outstanding after consummation of such reverse stock
split shall be approximately 1,500,000 shares (the “Reverse Split”) before the
conversion of the Series D Convertible Preferred securities of the Offering, all
in accordance with the Nevada Revised Statutes (the “Stockholder Approval”). The
Company shall furnish to each Buyer and its legal counsel promptly (but in no
event less than one (1) business days) before the same is filed with the SEC,
one copy of the proxy or information statement and any amendment thereto, and
shall deliver to each Buyer promptly each letter written by or on behalf of the
Company to the SEC or the staff of the SEC, and each item of correspondence from
the SEC or the staff of the SEC, in each case relating to such proxy or
information statement (other than any portion thereof which contains information
for which the Company has sought confidential treatment).

 

VI REGISTRATION RIGHTS

 

6.1 Definitions. As used in this Section, the following terms shall have the
following meanings:

 

“Effectiveness Date” means, with respect to the Initial Registration Statement
required to be filed hereunder, as soon as commercially practicable following
the filing of the Initial Registration Statement, and with respect to any
additional Registration Statements which may be required pursuant to Section
5.3(c), as soon as commercially practicable following the date on which an
additional Registration Statement is required to be filed hereunder.

 

“Effectiveness Period” means the period from the Effectiveness Date of a
Registration Statement through the date that all Registrable Securities covered
by such Registration Statement have been sold, or may be sold without volume
restrictions pursuant to Rule 144, as determined by the counsel to the Company
pursuant to a written opinion letter to such effect, addressed and acceptable to
the Company’s transfer agent and the affected Holders.

 

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

 

“Legal Counsel” means one (1) counsel as designated by a majority of the holders
of the Registrable Securities.

 

“Prospectus” means the prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated by the Commission pursuant to
the Securities Act), as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the Registrable
Securities covered by a Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.

 

 -14- 

 

 

“Registrable Securities” means (a) all of the shares of Common Stock issuable
upon exchange of the Preferred Stock (b) all shares of Common Stock issuable for
any series of Preferred Stock issued prior to the date of this Offering and (c)
any securities issued or issuable upon any stock split, dividend or other
distribution, recapitalization or similar event with respect to the foregoing;
provided, however, that the Company shall not be required to maintain the
effectiveness, or file another Registration Statement hereunder with respect to
any Registrable Securities that are (i) not subject to the current public
information requirement under Rule 144 and that are eligible for resale without
volume or manner-of-sale restrictions without current public information
pursuant to Rule 144 promulgated by the Commission or (ii) not required to be
registered in reliance upon the exemption in Section 4(1) under the Securities
Act, in either case pursuant to a written opinion letter to such effect,
addressed, delivered and acceptable to the affected Subscribers.

 

“Registration Statement” means any registration statement required to be filed
hereunder pursuant to Section 5.2(a) and any additional registration statements
contemplated by Section 5.3(c), including (in each case) the Prospectus,
amendments and supplements to any such registration statement or Prospectus,
including pre- and post-effective amendments, all exhibits thereto, and all
material incorporated by reference or deemed to be incorporated by reference in
any such registration statement.

 

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

 

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.

 

“SEC Guidance” means (i) any publicly-available written or oral guidance,
comments, requirements or requests of the Commission staff and (ii) the
Securities Act.

 

6.2 Demand Registration.

 

(a) Beginning on the six month anniversary of the Final Closing, on or prior to
the sixth (60th) calendar day after the date of receipt of written demand from
Subscribers holding at least 51% of Registrable Securities, the Company shall
prepare and file with the Commission a Registration Statement covering the
resale of all of the Registrable Securities that are not then registered on an
effective Registration Statement for an offering to be made on a continuous
basis pursuant to Rule 415. Subject to the terms of this Subscription Agreement,
the Company shall use its best efforts to cause a Registration Statement filed
under this Subscription Agreement to be declared effective under the Securities
Act as promptly as possible after the filing thereof, but in any event no later
than the applicable Effectiveness Date, and shall use its best efforts to keep
such Registration Statement continuously effective during the Effectiveness
Period.

 

 -15- 

 

 

(b) Notwithstanding the registration obligations set forth in Section 6.2(a), if
the Commission informs the Company that all of the Registrable Securities
cannot, as a result of the application of Rule 415, be registered for resale as
a secondary offering on a single registration statement, the Company agrees to
promptly inform each of the Holders thereof and use its commercially reasonable
efforts to file amendments to the Initial Registration Statement as required by
the Commission, covering the maximum number of Registrable Securities permitted
to be registered by the Commission, provided, however, that, prior to filing
such amendment, the Company shall be obligated to use diligent efforts to
advocate with the Commission for the registration of all of the Registrable
Securities in accordance with the SEC Guidance, including without limitation,
Compliance and Disclosure Interpretation 612.09.

 

(c) Notwithstanding any other provision of this Subscription Agreement, if the
Commission or any SEC Guidance sets forth a limitation on the number of
Registrable Securities permitted to be registered on a particular Registration
Statement as a secondary offering (and notwithstanding that the Company used
diligent efforts to advocate with the Commission for the registration of all or
a greater portion of Registrable Securities), unless otherwise directed in
writing by a Holder as to its Registrable Securities, the number of Registrable
Securities to be registered on such Registration Statement will eliminate any
securities to be included other than Registrable Securities; and Second, the
Company shall reduce or eliminate any securities issued as warrants.

 

(d) In the event the Company amends the Initial Registration Statement in
accordance with the foregoing, the Company will use its best efforts to file
with the Commission, as promptly as allowed by Commission or SEC Guidance
provided to the Company or to registrants of securities in general, one or more
registration statements on Form S-1 or such other form available to register for
resale those Registrable Securities that were not registered for resale on the
Initial Registration Statement, as amended. Notwithstanding anything to the
contrary contained herein, in no event shall the Company be permitted to name
any Holder or affiliate of a Holder as any Underwriter without the prior written
consent of such Holder.

 

6.3 Piggy Back Registration.

 

(a) At any time the Registrable Securities are owned by a Subscriber and there
is not an effective registration statement covering all of the Registrable
Securities, and if the Company shall determine to prepare and file with the SEC
a registration statement relating to an offering for its own account or the
account of others under the Act, of any of its equity securities, other than on
Form S-4 or Form S-8 (each as promulgated under the Act) or their then
equivalents, relating to equity securities to be issued solely in connection
with any acquisition of any entity or business or equity securities issuable in
connection with the Company’s stock option or other employee benefit plans, then
the Company shall deliver to each Subscriber a written notice of such
determination and, if within fifteen (15) days after the date of the delivery of
such notice, any such Subscriber shall so request in writing, the Company shall
include in such registration statement all or any part of such Registrable
Securities such Subscriber requests to be registered; provided, however, that
Registrable Securities will not be included if the underwriter(s) associated
with the offering which is the subject of the registration statement believes,
in good faith, that the inclusion of such Registrable Securities will have an
adverse effect on the sale of the securities for which such registration
statement was filed, and further provided, however, that the Company shall not
be required to register any Registrable Securities pursuant to this Section 6.2
that are eligible for resale pursuant to Rule 144 promulgated by the SEC
pursuant to the Act or that are the subject of a then effective registration
statement. If any SEC Guidance sets forth a limitation on the number of
securities permitted to be registered on a particular registration statement
(and notwithstanding that the Company used diligent efforts to advocate with the
SEC for the registration of all or a greater portion of Registrable Securities),
unless otherwise directed in writing by a Subscriber as to its Registrable
Securities, the number of Registrable Securities to be registered on such
registration statement will be reduced on a pro rata basis with such other
securities being registered on the applicable registration after as full an
allocation as possible has been afforded for the securities for which the
registration statement has been filed.

 

 -16- 

 

 

(b) Reserved.

 

(c) Subject to the terms and conditions of this Subscription Agreement,
Subscribers shall have the right to select Legal Counsel to review and oversee,
solely on its behalf, any Registration Statement pursuant to this Subscription
Agreement, if such Registration Statement is filed. The Company shall also
reimburse Legal Counsel for its documented fees and disbursements in connection
with registration, filing or qualification pursuant to this Subscription
Agreement which amount shall be limited to $5,000.

 

6.4 Registration Procedures. In connection with the Company’s registration
obligations hereunder, the Company shall:

 

(a) Not less than five (5) Trading days prior to the filing of each Registration
Statement and not less than one (1) Trading day prior to the filing of any
related Prospectus or any amendment or supplement thereto (including any
document that would be incorporated or deemed to be incorporated therein by
reference), the Company shall (i) furnish to Legal Counsel copies of the
Registration Statement proposed to be filed, which documents (other than those
incorporated or deemed to be incorporated by reference) will be subject to the
review of Legal Counsel; and (ii) cause its officers and directors, counsel and
independent registered public accountants to respond to such inquiries as shall
be necessary, in the reasonable opinion of Legal Counsel, to conduct a
reasonable investigation within the meaning of the Securities Act. The Company
shall not file a Registration Statement or any such Prospectus or any amendments
or supplements thereto to which the Subscribers of a majority of the Registrable
Securities or Legal Counsel shall reasonably object in good faith, provided
that, the Company is notified of such objection in writing no later than three
(3) Trading days after Legal Counsel has been so furnished a copy of a
Registration Statement or one (1) Trading day after Legal Counsel has been so
furnished copies of any related Prospectus or amendments or supplements thereto.
Each Subscriber agrees to furnish to the Company a completed questionnaire in
the form attached to this Subscription Agreement as Annex B (a “Selling
Stockholder Questionnaire”) on a date that is not less than two (2) Trading days
prior to the Filing Date or by the end of the fourth (4th) Trading day following
the date on which such Subscriber receives draft materials in accordance with
this Section.

 

 -17- 

 

 

(b) (i) Prepare and file with the Commission such amendments, including
post-effective amendments, to a Registration Statement and the Prospectus used
in connection therewith as may be necessary to keep a Registration Statement
continuously effective as to the applicable Registrable Securities for the
Effectiveness Period and prepare and file with the Commission such additional
Registration Statements in order to register for resale under the Securities Act
all of the Registrable Securities, (ii) cause the related Prospectus to be
amended or supplemented by any required Prospectus supplement (subject to the
terms of this Subscription Agreement), and, as so supplemented or amended, to be
filed pursuant to Rule 424, (iii) respond as promptly as reasonably possible to
any comments received from the Commission with respect to a Registration
Statement or any amendment thereto and provide as promptly as reasonably
possible to the Subscriber’s true and complete copies of all correspondence from
and to the Commission relating to a Registration Statement (provided that, the
Company may excise any information contained therein which would constitute
material non-public information as to any Subscriber which has not executed a
confidentiality agreement with the Company), and (iv) comply in all material
respects with the provisions of the Securities Act and the Exchange Act with
respect to the disposition of all Registrable Securities covered by a
Registration Statement during the applicable period in accordance (subject to
the terms of this Subscription Agreement) with the intended methods of
disposition by the Subscribers thereof set forth in such Registration Statement
as so amended or in such Prospectus as so supplemented.

 

Notify the Subscribers of Registrable Securities to be sold (which notice shall,
pursuant to clauses (iii) through (vi) hereof, be accompanied by an instruction
to suspend the use of the Prospectus until the requisite changes have been made)
as promptly as reasonably possible (and, in the case of (i)(A) below, not less
than one trading day prior to such filing) and (if requested by any such Person)
confirm such notice in writing no later than one Trading day following the day
(i)(A) when a Prospectus or any Prospectus supplement or post-effective
amendment to a Registration Statement is proposed to be filed, (B) when the
Commission notifies the Company whether there will be a “review” of such
Registration Statement and whenever the Commission comments in writing on such
Registration Statement, and (C) with respect to a Registration Statement or any
post-effective amendment, when the same has become effective, (ii) of any
request by the Commission or any other federal or state governmental authority
for amendments or supplements to a Registration Statement or Prospectus or for
additional information, (iii) of the issuance by the Commission or any other
federal or state governmental authority of any stop order suspending the
effectiveness of a Registration Statement covering any or all of the Registrable
Securities or the initiation of any Proceedings for that purpose; (iv) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of any
Proceeding for such purpose, (v) of the occurrence of any event or passage of
time that makes the financial statements included in a Registration Statement
ineligible for inclusion therein or any statement made in a Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires any revisions to a Registration Statement, Prospectus or other
documents so that, in the case of a Registration Statement or the Prospectus, as
the case may be, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading and (vi) of the occurrence or existence of any pending
corporate development with respect to the Company that the Company believes may
be material and that, in the determination of the Company, makes it not in the
best interest of the Company to allow continued availability of a Registration
Statement or Prospectus, provided that, any and all of such information shall
remain confidential to each Subscriber until such information otherwise becomes
public, unless disclosure by a Subscriber is required by law.

 

 -18- 

 

 

(c) Use its commercially reasonable efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of (i) any order stopping or suspending the
effectiveness of a Registration Statement, or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable moment.

 

(d) Furnish to Legal Counsel, without charge, at least one conformed copy of
each such Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference to the extent requested by such person, and
all exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission; provided, that any such item which is available
on the EDGAR system need not be furnished in physical form.

 

(e) Subject to the terms of this Subscription Agreement, the Company hereby
consents to the use of such Prospectus and each amendment or supplement thereto
by each of the selling Subscribers in connection with the offering and sale of
the Registrable Securities covered by such Prospectus and any amendment or
supplement thereto, except after the giving of any notice pursuant to Section
3(c).

 

(f) The Company shall effect a filing with respect to the public offering
contemplated by the Registration Statement (an “Issuer Filing”) with the
Financial Industry Regulatory Authority, Inc. (“FINRA”) Corporate Financing
Department pursuant to FINRA Rule 5110 within one Trading Day of the date that
the Registration Statement is first filed with the Commission and pay the filing
fee required by such Issuer Filing. The Company, shall use commercially
reasonable efforts to pursue the Issuer Filing until the FINRA issues a letter
confirming that it does not object to the terms of the offering contemplated by
the Registration Statement. A copy of the Issuer Filing and all related
correspondence with respect thereto shall be provided to the Company.

 

(g) Prior to any resale of Registrable Securities by a Subscriber, use its
commercially reasonable efforts to register or qualify or cooperate with the
selling Subscribers in connection with the registration or qualification (or
exemption from the Registration or qualification) of such Registrable Securities
for the resale by the Subscriber under the securities or Blue Sky laws of such
jurisdictions within the United States as any Subscriber reasonably requests in
writing, to keep each registration or qualification (or exemption therefrom)
effective during the Effectiveness Period and to do any and all other acts or
things reasonably necessary to enable the disposition in such jurisdictions of
the Registrable Securities covered by each Registration Statement; provided,
that, the Company shall not be required to qualify generally to do business in
any jurisdiction where it is not then so qualified, subject the Company to any
material tax in any such jurisdiction where it is not then so subject or file a
general consent to service of process in any such jurisdiction.

 

 -19- 

 

 

(h) If requested by a Subscriber, cooperate with such Subscribers to facilitate
the timely preparation and delivery of certificates representing Registrable
Securities to be delivered to a transferee pursuant to an effective Registration
Statement, which certificates shall be free, to the extent permitted by the
Subscription Agreement, of all restrictive legends, and to enable such
Registrable Securities to be in such denominations and registered in such names
as any such Subscriber may request.

 

The Company will, as promptly as reasonably possible under the circumstances
taking into account the Company’s good faith assessment of any adverse
consequences to the Company and its stockholders of the premature disclosure of
such event, prepare a supplement or amendment, including a post-effective
amendment, to a Registration Statement or a supplement to the related Prospectus
or any document incorporated or deemed to be incorporated therein by reference,
and file any other required document so that, as thereafter delivered, neither a
Registration Statement nor such Prospectus will contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. If the Company notifies the Subscribers in
accordance with clauses (iii) through (vi) of Section 6.3(c) above to suspend
the use of any Prospectus until the requisite changes to such Prospectus have
been made, then the Subscribers shall suspend use of such Prospectus. The
Company will use its best efforts to ensure that the use of the Prospectus may
be resumed as promptly as is practicable.

 

(i) Comply with all applicable rules and regulations of the Commission.

 

(j) The Company may require each selling Subscriber to furnish to the Company a
certified statement as to the number of shares of Common Stock beneficially
owned by such Subscriber and, if required by the Commission, the natural persons
thereof that have voting and dispositive control over the shares. During any
periods that the Company is unable to meet its obligations hereunder with
respect to the registration of the Registrable Securities solely because any
Subscriber fails to furnish such information within three Trading days of the
Company’s request, any liquidated damages that are accruing at such time as to
such Subscriber only shall be tolled and any Event that may otherwise occur
solely because of such delay shall be suspended as to such Subscriber only,
until such information is delivered to the Company.

 

6.5. Registration Expenses. All fees and expenses incident to the performance of
or compliance with Section by the Company shall be borne by the Company whether
or not any Registrable Securities are sold pursuant to a Registration Statement.
In no event shall the Company be responsible for any broker or similar
commissions of any Subscriber or, except to the extent provided for in the
Offering Materials, any legal fees (except per section 6.3(c)) or other costs of
the Subscribers.

 

 -20- 

 

 

VII. MISCELLANEOUS

 

7.1 Any notice or other communication given hereunder shall be deemed sufficient
if in writing and sent by registered or certified mail, return receipt
requested, or delivered by hand against written receipt therefor, addressed as
follows:

 

if to the Company, to it at:

 

Avant Diagnostics, Inc.

1050 30th Street NW Suite 107

Washington, D.C. 20007 Attn: Secretary

With a copy to (which shall not constitute notice): Sheppard, Mullin, Richter &
Hampton LLP

30 Rockefeller Plaza, 39th Floor

New York, NY 10112

Attn: Stephen A. Cohen, Esq.

 

if to the Subscriber, to the Subscriber’s address indicated on the signature
page of this Subscription Agreement.

 

7.2 Notices shall be deemed to have been given or delivered on the date of
receipt. Except as otherwise provided herein, this Subscription Agreement shall
not be changed, modified or amended except by a writing signed by the parties to
be charged, and this Subscription Agreement may not be discharged except by
performance in accordance with its terms or by a writing signed by the party to
be charged. No waiver of any default with respect to any provision, condition or
requirement of this Subscription Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any delay or
omission of any party to exercise any right hereunder in any manner impair the
exercise of any such right.

 

7.3 This Subscription Agreement shall be binding upon and inure to the benefit
of the parties hereto and to their respective heirs, legal representatives,
successors and assigns. The Company may not assign this Subscription Agreement
or any rights or obligations hereunder without the prior written consent of
Subscriber (other than by merger). Subscriber may assign any or all of its
rights under this Subscription Agreement to any person to whom Subscriber
assigns or transfers any Securities, provided that such transferee agrees in
writing to be bound, with respect to the transferred Securities, by the
provisions of the Offering Materials and this Subscription Agreement.

 

7.4 The Offering Materials, together with the exhibits and schedules thereto,
contain the entire understanding of the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, oral or
written, with respect to such matters, which the parties acknowledge have been
merged into such documents, exhibits and schedules.

 

 -21- 

 

 

7.5 Upon the execution and delivery of this Subscription Agreement by the
Subscriber and the Company, this Subscription Agreement shall become a binding
obligation of the Subscriber with respect to the purchase of Securities as
herein provided, subject, however, to the right hereby reserved by the Company
to enter into the same agreements with other Subscriber and to reject any
subscription, in whole or in part, provided the Company returns to Subscriber
any funds paid by Subscriber with respect to such rejected subscription or
portion thereof, without interest or deduction.

 

All questions concerning the construction, validity, enforcement and
interpretation of the Offering Materials shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York, without
regard to the principles of conflicts of law thereof. Each party agrees that all
legal proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Subscription Agreement and any other Offering
Materials (whether brought against a party hereto or its respective affiliates,
directors, officers, shareholders, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of New York.
Each party hereby irrevocably submits to the exclusive jurisdiction of the state
and 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 (including with respect to
the enforcement of any of the Offering Materials), 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 improper or is an inconvenient venue for such
proceeding.

 

7.6 In order to discourage frivolous claims the parties agree that unless a
claimant in any proceeding arising out of this Subscription Agreement succeeds
in establishing his claim and recovering a judgment against another party
(regardless of whether such claimant succeeds against one of the other parties
to the action), then the other party shall be entitled to recover from such
claimant all of its/their reasonable legal costs and expenses relating to such
proceeding and/or incurred in preparation therefor.

 

7.7 The holding of any provision of this Subscription Agreement to be invalid or
unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Subscription Agreement, which shall remain in full force and
effect. If any provision of this Agreement shall be declared by a court of
competent jurisdiction to be invalid, illegal or incapable of being enforced in
whole or in part, such provision shall be interpreted so as to remain
enforceable to the maximum extent permissible consistent with applicable law and
the remaining conditions and provisions or portions thereof shall nevertheless
remain in full force and effect and enforceable to the extent they are valid,
legal and enforceable, and no provisions shall be deemed dependent upon any
other covenant or provision unless so expressed herein.

 

7.8 The representations, warranties, covenants and agreements contained in this
Agreement, shall survive the Closing of the transactions contemplated by this
Subscription Agreement and the delivery of the Securities for the applicable
statute of limitations.

 

7.9 It is agreed that a waiver by either party of a breach of any provision of
this Subscription Agreement shall not operate, or be construed, as a waiver of
any subsequent breach by that same party.

 

 -22- 

 

 

7.10 The Company agrees to execute and deliver all such further documents,
agreements and instruments and take such other and further action as may be
necessary or appropriate to carry out the purposes and intent of this
Subscription Agreement.

 

7.11 This Subscription Agreement may be executed in two or more counterparts
each of which shall be deemed an original, but all of which shall together
constitute one and the same instrument. In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a “.pdf” format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or “.pdf” signature page were an original
thereof.

 

7.12 Nothing in this Subscription Agreement shall create or be deemed to create
any rights in any person or entity not a party to this Subscription Agreement.

 

7.13 In addition to being entitled to exercise all rights provided herein or
granted by law, including recovery of damages, the Subscriber and the Company
will be entitled to specific performance under this Subscription Agreement. The
parties agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any breach of obligations described in this
Subscription Agreement and hereby agrees to waive in any action for specific
performance of any such obligation the defense that a remedy at law would be
adequate.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 -23- 

 

 

DOLLAR SUBSCRIPTION_______   / $1.00 = ______________________   NUMBER OF SHARES
OF PREFERRED STOCK

 

          Signature   Signature (if purchasing jointly)                        
Name Typed or Printed   Name Typed or Printed                         Title (if
Subscriber is an Entity)   Title (if Subscriber is an Entity)                  
      Entity Name (if applicable)    Entity Name (if applicable                
                  Address   Address                         City, State and Zip
Code   City, State and Zip Code                         Telephone-Business  
Telephone-Business                         Telephone-Residence  
Telephone-Residence                         Facsimile-Business  
Facsimile-Business                         Facsimile-Residence  
Facsimile-Residence                         Tax ID # or Social Security #   Tax
ID # or Social Security #                         E-Mail Address   E-Mail
Address               Name in which securities should be issued:                
  Dated: __________________, 2019        

 

This Subscription Agreement is agreed to and accepted as of ___________, 2019.

 

  AVANT DIAGNOSTICS, INC.         By:                            Name:    
Title:  

 

 -24- 

 

 

CERTIFICATE OF SIGNATORY

 

(To be completed if Securities are being subscribed for by an entity)

 

I,______________________________________________ , am the
______________________________________
of ___________________________________________(the “Entity”).

 

I certify that I am empowered and duly authorized by the Entity to execute and
carry out the terms of the Subscription Agreement and to purchase and hold the
Securities (and, upon issuance, the Underlying Shares), and certify further that
the Subscription Agreement has been duly and validly executed on behalf of the
Entity and constitutes a legal and binding obligation of the Entity.

 

IN WITNESS WHEREOF, I have set my hand this ___________________________day of
_____________________, 20__

 

      (Signature)

 

 -25- 

 

 

EXHIBIT A

 

INVESTOR QUESTIONNAIRE AVANT DIAGNOSTICS, INC.

 

For Individual Investors Only

(All individual investors must INITIAL where appropriate.

Where there are joint investors both parties must INITIAL):

 

Initial _______ I certify that I have a “net worth” of at least $1 million
either individually or through aggregating my individual holdings and those in
which I have a joint, community property or other similar shared ownership
interest with my spouse. For purposes of calculating net worth under this
paragraph, (i) the primary residence shall not be included as an asset, (ii) to
the extent that the indebtedness that is secured by the primary residence is in
excess of the fair market value of the primary residence, the excess amount
shall be included as a liability, and (iii) if the amount of outstanding
indebtedness that is secured by the primary residence exceeds the amount
outstanding 60 days prior to the execution of this Subscription Agreement, other
than as a result of the acquisition of the primary residence, the amount of such
excess shall be included as a liability.

 

Initial _______ I certify that I have had an annual gross income for the past
two years of at least$200,000 (or $300,000 jointly with my spouse) and expect my
income (or joint income, as appropriate) to reach the same level in the current
year.

 

For Non-Individual Investors

(all Non-Individual Investors must INITIAL where appropriate):

 

Initial _______ The undersigned certifies that it is a partnership, corporation,
limited liability company or business trust that is 100% owned by persons who
meet either of the criteria for Individual Investors, above.

 

Initial _______ The undersigned certifies that it is a partnership, corporation,
limited liability company or business trust that has total assets of at least $5
million and was not formed for the purpose of investing in Company.

 

Initial _______ The undersigned certifies that it is an employee benefit plan
whose investment decision is made by a plan fiduciary (as defined in ERISA
§3(21)) that is a bank, savings and loan association, insurance company or
registered investment adviser.

 

Initial _______ The undersigned certifies that it is an employee benefit plan
whose total assets exceed $5,000,000 as of the date of the Subscription
Agreement

 

Initial _______ The undersigned certifies that it is a self-directed employee
benefit plan whose investment decisions are made solely by persons who meet
either of the criteria for Individual Investors, above.

 

 -1- 

 

 

Initial _______ The undersigned certifies that it is a U.S. bank, U.S. savings
and loan association or other similar U.S. institution acting in its individual
or fiduciary capacity.

 

Initial _______ The undersigned certifies that it is a broker-dealer registered
pursuant to §15 of the Securities Exchange Act of 1934.

 

Initial _______ The undersigned certifies that it is an organization described
in §501(c)(3) of the Internal Revenue Code with total assets exceeding
$5,000,000 and not formed for the specific purpose of investing in Company.

 

Initial _______ The undersigned certifies that it is a trust with total assets
of at least $5,000,000, not formed for the specific purpose of investing in
Company, and whose purchase is directed by a person with such knowledge and
experience in financial and business matters that he is capable of evaluating
the merits and risks of the prospective investment.

 

Initial _______ The undersigned certifies that it is a plan established and
maintained by a state or its political subdivisions, or any agency or
instrumentality thereof, for the benefit of its employees, and which has total
assets in excess of $5,000,000.

 

Initial _______ The undersigned certifies that it is an insurance company as
defined in §2(a)(13) of the Securities Act of 1933, as amended, or a registered
investment company.

 

 

Printed Name of Subscriber (Individual OR Non-Individual Entity)

 

 -2-