Exhibit 10.3

 

EXCHANGE AGREEMENT

 

THIS EXCHANGE AGREEMENT (the “Agreement”), dated as of June 29, 2017, is made by
and between Precipio, Inc. (formerly Transgenomic, Inc.), a Delaware corporation
(“Company”), and the holders of certain 4% Promissory Notes of the Company,
dated April 12, 2017 ( the “Note”) and common stock purchase warrants, dated as
of April 12, 2017 (the “Warrants”), held by the parties signatory hereto (the
“Holders”).

 

WHEREAS, pursuant to that certain Securities Purchase Agreement (the “Purchase
Agreement”), dated as of April 12, 2017, by and between the Company and the
Holders, whereby, among other things, the Holders purchased from the Company
certain Notes in the principal amounts set forth on the signature page hereto
and certain Warrants to purchase shares of the Company’s Common Stock amounts
set forth on the signature page hereto; and

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended (the
“Securities Act”), the Company desires to exchange with the Holders, and the
Holders desires to exchange with the Company, the Note for a new note in the
same principal amount, but which contains certain modified terms (the “New
Note”); and

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended (the
“Securities Act”), the Company desires to exchange with the Holders, and the
Holders desires to exchange with the Company, the Warrant for a new warrant to
purchase additional shares of Common Stock (the “New Warrant”).

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and Holder agree as
follows:

 

1.          Terms of the Exchange. The Company and Holder agree that each Holder
will exchange the Note and the Warrant and will relinquish any and all other
rights he may have under the Note or the Warrant in exchange for the New Note,
in the form attached hereto as Exhibit A and the New Warrant in the form of
Exhibit B, in amounts set forth on Schedule B (collectively, the “Securities”).
Upon any repayment or conversion of the New Note, interest at the rate of 4% per
annum shall be paid on the principal amount of the original Note, from the
period April 12, 2017, through the date hereof (to be paid in the same form as
amounts being paid or issued on the New Note).

 

2.          Closing. Upon satisfaction of the conditions set forth herein, a
closing shall occur at the principal offices of the Company, or such other
location as the parties shall mutually agree. At closing, Holder shall deliver
certificates representing the Note to the Company and the Company shall deliver
to the Holder a certificate evidencing the New Note.

 

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

 

4.          Representations and Warranties of the Holder. Each Holder represents
and warrants as of the date hereof and as of the closing to the Company as
follows:

 

 

 

 

a.           Authorization; Enforcement. The Holder has the requisite corporate
power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its obligations
hereunder and thereunder.  The execution and delivery of this Agreement by the
Holder and the consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all necessary action on the part of the
Holder and no further action is required by the Holder.  This Agreement has been
(or upon delivery will have been) duly executed by the Holder and, when
delivered in accordance with the terms hereof, will constitute the valid and
binding obligation of the Holder enforceable against the Holder in accordance
with its terms, except: (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors’ rights generally, (ii)
as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.

 

c.           Information Regarding Holder. Holder is an “accredited investor”,
as such term is defined in Rule 501 of Regulation D promulgated by the United
States Securities and Exchange Commission (the “Commission”) under the
Securities Act, is experienced in investments and business matters, has made
investments of a speculative nature and has purchased securities of companies in
private placements in the past and, with its representatives, has such knowledge
and experience in financial, tax and other business matters as to enable the
Holder to utilize the information made available by the Company to evaluate the
merits and risks of and to make an informed investment decision with respect to
the proposed purchase, which represents a speculative investment. Holder has the
authority and is duly and legally qualified to purchase and own the Securities.
Holder is able to bear the risk of such investment for an indefinite period and
to afford a complete loss thereof.

 

d.           Legend. The Holder understands that the Securities have been issued
(or will be issued in the case of the shares of Common Stock issuable upon
conversion of the New Note or exercise of the New Warrant) pursuant to an
exemption from registration or qualification under the Securities Act and
applicable state securities laws, and except as set forth below, the Securities
shall bear any legend as required by the “blue sky” laws of any state and a
restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of such stock certificates):

 

[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN][THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT 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 UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER
(IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY,
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE
TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

5.          Representations and Warranties of the Company. The Company hereby
makes the following representations and warranties to the Holder:

 

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a.           Authorization; Enforcement. The Company has the requisite corporate
power and authority to enter into and to consummate the transactions
contemplated by this Agreement and each of the other agreements entered into by
the parties hereto in connection with the transactions contemplated by this
Agreement (collectively, the “Exchange Documents”) and otherwise to carry out
its obligations hereunder and thereunder.  The execution and delivery of this
Agreement by the Company and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
action on the part of the Company and no further action is required by the
Company, the Board of Directors of the Company or the Company’s stockholders in
connection therewith, including, without limitation, the issuance of the New
Note and the New Warrant and the reservation for issuance and issuance of shares
issuable upon conversion of the New Note and exercise of the New Warrant have
been duly authorized by the Company's Board of Directors and no further filing,
consent, or authorization is required by the Company, its Board of Directors or
its stockholders.  This Agreement has been (or upon delivery will have been)
duly executed by the Company and, when delivered in accordance with the terms
hereof, will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except: (i) as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

 

b.           Organization and Qualification. Each of the Company and its
subsidiaries (the “Subsidiaries”) are entities duly organized and validly
existing and in good standing under the laws of the jurisdiction in which they
are formed, and have the requisite power and authorization to own their
properties and to carry on their business as now being conducted and as
presently proposed to be conducted. Each of the Company and each of its
Subsidiaries is duly qualified as a foreign entity to do business and is in good
standing in every jurisdiction in which its ownership of property or the nature
of the business conducted by it makes such qualification necessary, except to
the extent that the failure to be so qualified or be in good standing would not
have a Material Adverse Effect. As used in this Agreement, “Material Adverse
Effect” means any material adverse effect on (i) the business, properties,
assets, liabilities, operations (including results thereof), condition
(financial or otherwise) or prospects of the Company or any Subsidiary,
individually or taken as a whole, (ii) the transactions contemplated hereby or
in any of the other Exchange Documents or (iii) the authority or ability of the
Company to perform any of its obligations under any of the Exchange Documents.
Other than its Subsidiaries, there is no Person (as defined below) in which the
Company, directly or indirectly, owns capital stock or holds an equity or
similar interest. “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization, any other entity and any governmental entity or any department or
agency thereof.

 

c.           No Conflict. The execution, delivery and performance of the
Exchange Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance of the New Note and New Warrant and reservation for issuance and
issuance of the shares thereunder) will not (i) result in a violation of the
Certificate of Incorporation (as defined below) or other organizational
documents of the Company or any of its Subsidiaries, any capital stock of the
Company or any of its Subsidiaries or Bylaws (as defined below) of the Company
or any of its Subsidiaries, (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its Subsidiaries is a party, or (iii) result in a violation of any law,
rule, regulation, order, judgment or decree (including foreign, federal and
state securities laws and regulations and the rules and regulations of the
Company’s principal trading market (the “Principal Market”) applicable to the
Company or any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected except, in the case of
clause (ii) or (iii) above, to the extent such violations that could not
reasonably be expected to have a Material Adverse Effect.

 

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d.           No Consents. Neither the Company nor any Subsidiary is required to
obtain any consent from, authorization or order of, or make any filing or
registration with, any court, governmental agency or any regulatory or
self-regulatory agency or any other Person in order for it to execute, deliver
or perform any of its respective obligations under or contemplated by the
Exchange Documents, in each case, in accordance with the terms hereof or
thereof. All consents, authorizations, orders, filings and registrations which
the Company or any Subsidiary is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date of this
Agreement, and neither the Company nor any of its Subsidiaries is aware of any
facts or circumstances which might prevent the Company or any of its
Subsidiaries from obtaining or effecting any of the registration, application or
filings contemplated by the Exchange Documents. The Company is not in violation
of the requirements of the Principal Market and has no knowledge of any facts or
circumstances which could reasonably lead to delisting or suspension of the
Common Stock in the foreseeable future. The Company has obtained all necessary
consents and approvals from the Principal Market, including, if required, a
Listing of Additional Shares application covering the listing of the shares with
the Principal Market.

 

e.           Securities Law Exemptions. Assuming the accuracy of the
representations and warranties of the Holder contained herein, the offer and
issuance by the Company of the Securities is exempt from registration under the
Securities Act. The offer and issuance of the Securities is exempt from
registration under the Securities Act pursuant to the exemption provided by
Section 3(a)(9) thereof. The Company covenants and represents to the Holder that
neither the Company nor any of its Subsidiaries has received, anticipates
receiving, has any agreement to receive or has been given any promise to receive
any consideration from the Holder or any other Person in connection with the
transactions contemplated by the Exchange Documents.

 

f.            Issuance of Securities. The issuance of the New Note and New
Warrant are duly authorized and upon issuance in accordance with the terms of
the Exchange Documents shall be validly issued, fully paid and non-assessable
and free from all taxes, liens, charges and other encumbrances with respect to
the issue thereof. Upon issuance or conversion in accordance with the terms of
the New Note or the New Warrant, the shares of Common Stock and Series A
Preferred Stock, when issued, will be validly issued, fully paid and
nonassessable and free from all preemptive or similar rights, taxes, liens,
charges and other encumbrances with respect to the issue thereof, with the
holders being entitled to all rights accorded to a holder of Common Stock or
Series A Preferred Stock, respectively.

 

g.           Transfer Taxes. As of the date of this Agreement, all share
transfer or other taxes (other than income or similar taxes) which are required
to be paid in connection with the issuance of the New Note to be exchanged with
the Holder hereunder will be, or will have been, fully paid or provided for by
the Company, and all laws imposing such taxes will be or will have been complied
with.

  

6.         Additional Acknowledgments. The Holder and the Company confirm that
the Company has not received any consideration for the transactions contemplated
by this Agreement. Pursuant to Rule 144 promulgated by the Commission pursuant
to the Securities Act and the rules and regulations promulgated thereunder as
such Rule 144 may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule 144, the holding period of the New Note (including the
shares upon conversion of the New Note and exercise of the New Warrant) tacks
back to April 12, 2017, the original issue date of the Note and the Warrant. The
Company agrees not to take a position contrary to this paragraph.

 

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7.         Additional Payment to Dominion. In addition to the Note and Warrant
exchange, solely with respect to Dominion Capital, LLC (“Dominion”), upon
repayment of the New Note, the Company shall pay Dominion an additional payment
in the amount $40,000.

 

8.         Miscellaneous.

 

a.           Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns.

 

b.           Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement
shall be governed by and construed under the laws of the State of New York
without regard to the choice of law principles thereof. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the State of New York located in The City of New York, Borough
of Manhattan for the adjudication of any dispute hereunder or in connection
herewith or therewith or with any transaction contemplated hereby or thereby,
and hereby irrevocably waives any objection that such suit, action or proceeding
is brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

c.           Severability. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement in
that jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.

 

d.           Counterparts/Execution. This Agreement may be executed in two or
more identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party. In the event that any signature is
delivered by facsimile transmission or by an e-mail which contains an electronic
file of an executed signature page, such signature page 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 electronic file
signature page (as the case may be) were an original thereof.

 

e.           Notices. Any notice or communication permitted or required
hereunder shall be in writing and shall be deemed sufficiently given if
hand-delivered or sent (i) postage prepaid by registered mail, return receipt
requested, or (ii) by facsimile, to the respective parties as set forth below,
or to such other address as either party may notify the other in writing.

 

If to the Company, to: Precipio, Inc.       Attention:  

 

If to Holders, to the address set forth on the signature page of the Holder

 

f.            Expenses. The Company shall pay costs and expenses of counsel for
the Note holders in the amount of $10,000 in connection herewith.

 

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g.           Entire Agreement; Amendments. This Agreement constitutes the entire
agreement between the parties with regard to the subject matter hereof and
thereof, superseding all prior agreements or understandings, whether written or
oral, between or among the parties. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by all parties, or, in the
case of a waiver, by the party waiving compliance. Except as expressly stated
herein, no delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party of any right, power or privilege hereunder preclude any
other or future exercise of any other right, power or privilege hereunder.

 

h.           Headings. The headings used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.

 

j.            Listing. The Company shall use reasonable best efforts to promptly
secure the listing or designation for quotation (as the case may be) of all of
the shares of Common Stock issuable upon conversion the New Note or exercise of
the New Warrant, upon the Principal Market or any other national securities
exchange or automated quotation system, upon which the Common Stock is then
listed or designated for quotation (as the case may be) (subject to official
notice of issuance) (but in no event later than the date of this Agreement) and
shall use reasonable best efforts to maintain such listing or designation for
quotation (as the case may be) of all such shares from time to time issuable
under the terms of this Agreement on such national securities exchange or
automated quotation system. The Company shall maintain the Common Stock’s
listing or authorization for quotation (as the case may be) on the Principal
Market, The New York Stock Exchange, the NYSE MKT, the Nasdaq Global Market, the
Nasdaq Global Select Market, the OTCQB or the OTCQX or any successor thereto
(each, an “Eligible Market”). Neither the Company nor any of its Subsidiaries
shall take any action which could be reasonably expected to result in the
delisting or suspension of the Common Stock on an Eligible Market. The Company
shall pay all fees and expenses in connection with satisfying its obligations
under this Section 8(j).

 

(Signature Pages Follow)

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as of the day and year first above written.

 

PRECIPIO, INC.         By:       Name:       Title:    

 

HOLDER:           By:           Address for Notices:                      
Address for delivery of Securities: