Exhibit 10.1

 

 

SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of February 5,
2020, (the “Execution Date”), is entered into by and between PREDICTIVE ONCOLOGY
INC., a Delaware corporation (the “Company”), and OASIS CAPITAL, LLC, a Puerto
Rico limited liability company (the “Buyer”).

 

WHEREAS, the Company and the Buyer are executing and delivering this Agreement
in reliance upon an exemption from securities registration afforded by the rules
and regulations as promulgated by the United States Securities and Exchange
Commission (the “SEC”) under the Securities Act of 1933, as amended (the
“Securities Act”); and

 

WHEREAS, the Buyer desires to purchase and the Company desires to issue and
sell, upon the terms and conditions set forth in this Agreement (i) an 8% senior
secured convertible promissory note of the Company, in the form attached hereto
as Exhibit A, in the aggregate principal amount of up to US$1,450,000.00
(together with any note(s) issued in replacement thereof or as a dividend
thereon or otherwise with respect thereto in accordance with the terms thereof,
the “Note”), convertible into shares (the “Conversion Shares”) of common stock,
$0.01 par value per share, of the Company (the “Common Stock”) pursuant to the
terms of the Note; (ii) warrants to acquire up to that number of shares (the
“Warrant Shares”) of Common Stock as set forth on the schedule of buyers
attached hereto (the “Schedule of Buyers”) in the form attached hereto as
Exhibit B (the “Warrants”), upon the terms and subject to the limitations and
conditions set forth in the Warrants; and (iii) that number of shares of Common
Stock set forth on the Schedule of Buyers to be issued as an inducement to the
Buyer to enter into this Agreement (the “Inducement Shares”), on the terms set
forth in this Agreement.

 

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 the Buyer hereby
agree as follows:

 

1.                  DEFINED TERMS. As used in this Agreement, the following
terms shall have the following meanings specified or indicated (such meanings to
be equally applicable to both the singular and plural forms of the terms
defined):

 

“Common Stock Equivalents” means any securities of the Company or the
Subsidiaries that would entitle the holder thereof to acquire at any time Common
Stock, including, without limitation, any debt, preferred stock, right, option,
warrant or other instrument that is at any time convertible into or exercisable
or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.

 

“Damages” shall mean any loss, claim, damage, liability, cost and expense
(including, without limitation, reasonable attorneys’ fees and disbursements and
costs and expenses of expert witnesses and investigation).

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.

 

 

 

 

“Hazardous Material” means and includes any hazardous, toxic or dangerous waste,
substance or material, the generation, handling, storage, disposal, treatment or
emission of which is subject to any Environmental Law.

 

“Issuance Shares” means, collectively, the Inducement Shares, Conversion Shares
and the Warrant Shares.

 

“Knowledge” including the phrase “to the Company’s Knowledge” shall mean the
actual knowledge after reasonable investigation of the Company’s officers and
directors.

 

“Lien” means a lien, charge, pledge, security interest, encumbrance, right of
first refusal, preemptive right or any other restriction.

 

“Material Adverse Effect” means any effect on the business, operations,
properties, or financial condition of the Company and/or the Subsidiaries that
is material and adverse to the Company and/or the Subsidiaries and/or any
condition, circumstance, or situation that prohibits or otherwise materially
interferes with the ability of the Company and/or the Subsidiaries to enter into
and/or perform its obligations under any Transaction Document.

 

“Person” means an individual, a corporation, a partnership, an association, a
trust or other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.

 

“Securities” means, collectively, the Note, the Warrant, the Inducement Shares,
the Conversion Shares, and the Warrant Shares, and any other securities of the
Company issued in connection with or in exchange for any of the foregoing.

 

“Subsidiary” or “Subsidiaries” means any Person the Company wholly-owns or
controls, or in which the Company, directly or indirectly, owns a majority of
the voting stock or similar voting interest, in each case that would be
disclosable pursuant to Item 601(b)(21) of Regulation S-K promulgated under the
Securities Act.

 

“Trading Day” shall mean a day on which the Trading Market shall be open for
business.

 

“Trading Market” means the NASDAQ stock market.

 

“Transaction Documents” shall mean this Agreement, the Note, the Warrant, the
Security Agreement, the Transfer Agent Instruction Letter and all schedules and
exhibits hereto and thereto.

 

“Transfer Agent” shall mean Corporate Stock Transfer, Inc., the current transfer
agent of the Company, and any successor transfer agent of the Company.

 

“Transfer Agent Instruction Letter” means the letter from the Company to the
Transfer Agent in the form of Exhibit C attached hereto.

 

2.                  PURCHASE AND SALE OF SECURITIES.

 

(a)                Purchase of Securities.

 

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(i)                 First Tranche. On the First Closing Date (as defined below),
the Company shall sell and issue to the Buyer and the Buyer shall purchase and
fund such principal amount of the Note as is set forth on the Schedule of Buyers
under the section “FIRST TRANCHE,” subject to the express terms of the Note (the
“First Tranche”). On the First Closing Date, the Company shall issue to Buyer as
a commitment fee, a Warrant to purchase the number of Warrant Shares set forth
on the Schedule of Buyers under the section “FIRST TRANCHE,” subject to the
terms of such Warrant. On the First Closing Date, the Company shall also issue
the number of Inducement Shares as a commitment fee to Buyer set forth on the
Schedule of Buyers under the section “FIRST TRANCHE.”

 

(ii)              Second Tranche. On the Second Closing Date (as defined below),
the Company shall sell and issue to the Buyer and the Buyer shall purchase and
fund such principal amount of the Note as is set forth on the Schedule of Buyers
under the section “SECOND TRANCHE,” subject to the express terms of the Note
(the “Second Tranche”). On the Second Closing Date, the Company shall issue to
Buyer as a commitment fee, a Warrant to purchase the number of Warrant Shares
set forth on the Schedule of Buyers under the section “SECOND TRANCHE,” subject
to the terms of such Warrant.

 

(iii)            Third Tranche. On the Third Closing Date (as defined below),
the Company shall sell and issue to the Buyer and the Buyer shall purchase and
fund such principal amount of the Note as is set forth on the Schedule of Buyers
under the section “THIRD TRANCHE,” subject to the express terms of the Note (the
“Third Tranche”). On the Third Closing Date, the Company shall issue to Buyer as
a commitment fee, a Warrant to purchase the number of Warrant Shares set forth
on the Schedule of Buyers under the section “THIRD TRANCHE,” subject to the
terms of such Warrant.

 

(iv)             Consolidated Note Issued. For the avoidance of doubt, the
Company and the Buyer acknowledge and agree that, notwithstanding any other
terms contained in this Agreement, the Note shall be issued to the Buyer on the
First Closing Date but will evidence the aggregate amounts funded or to be
funded by the Buyer for the First Tranche, Second Tranche and Third Tranche
(i.e. such that additional notes will not need to be issued on subsequent
Closing Dates).

 

(b)                Closing Dates.

 

(i)                 First Closing. Subject to the satisfaction (or written
waiver) of the conditions set forth in Section 7 and Section 8 below, the date
of the issuance and sale of the Securities constituting the First Tranche
pursuant to this Agreement (the “First Closing Date”) shall be the Execution
Date.

 

(ii)              Second Closing. Subject to the satisfaction (or written
waiver) of the conditions set forth in Section 7 and Section 8 below, the date
of the issuance and sale of the Securities constituting the Second Tranche
pursuant to this Agreement (the “Second Closing Date”) shall be on the date that
is thirty (30) days after the First Closing Date.

 

(iii)            Third Closing. Subject to the satisfaction (or written waiver)
of the conditions set forth in Section 7 and Section 8 below, the date of the
issuance and sale of the Securities constituting the Third Tranche pursuant to
this Agreement (the “Third Closing Date”) shall be on the date that is sixty
(60) days after the First Closing Date. The First Closing Date, Second Closing
Date and Third Closing Date are sometimes referred to herein individually as a
“Closing Date”, and collectively as the “Closing Dates”. Each closing of the
transactions contemplated by this Agreement (each, a “Closing”) shall occur on
the Closing Dates at such location as may be agreed to by the parties.

 

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(c)                Form of Payment. On the First Closing Date, the Buyer shall
pay the purchase price of $400,000.00 (the “First Purchase Price”) for the First
Tranche of $490,000.00 (which amount includes a prorated portion the OID (as
defined in the Note) and a $10,000.00 credit for the Buyer’s transaction
expenses) under the Note, by wire transfer of immediately available funds, in
accordance with the Company’s written wiring instructions against delivery of
the Note, pursuant to the terms of the Note.

 

In the event that the Buyer funds the Second Tranche under the Note, as
contemplated by subsections (a) and (b) above, the Buyer shall pay the purchase
price of $400,000.00 (the “Second Purchase Price”) for the Second Tranche of
$480,000.00 (which includes a prorated portion of the OID) under the Note, by
wire transfer of immediately available funds, in accordance with the Company’s
written wiring instructions against delivery of the Note, pursuant to the terms
of the Note.

 

In the event that the Buyer funds the Third Tranche under the Note, as
contemplated by subsections (a) and (b) above, the Buyer shall pay the purchase
price of $400,000.00 (the “Third Purchase Price”, and with the First Purchase
Price and Second Purchase Price, each a “Purchase Price”) for the Third Tranche
of $480,000.00 (which includes a prorated portion of the OID) under the Note, by
wire transfer of immediately available funds, in accordance with the Company’s
written wiring instructions against delivery of the Note, pursuant to the terms
of the Note.

 

3.                  REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer
represents and warrants to the Company that:

 

(a)                Investment Purpose. As of the Execution Date, the Buyer is
purchasing the Securities for its own account for investment only and not with a
view towards the public sale or distribution thereof, except pursuant to sales
registered or exempted from registration under the Securities Act; provided,
however, that by making the foregoing representation and warranty, the Buyer
does not agree to hold any of the Securities for any minimum or other specific
term and reserves the right to dispose of the Securities at any time in
accordance with or pursuant to a registration statement or an exemption under
the Securities Act.

 

(b)                Reliance on Exemptions. The Buyer understands that the
Securities are being offered and sold to it in reliance upon specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying upon the truth and accuracy of, and the
Buyer’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of the Buyer
to acquire the Securities.

 

(c)                Information. The Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities
which have been requested by the Buyer or its advisors. The Buyer and its
advisors, if any, have been afforded the opportunity to ask questions of the
Company. Notwithstanding the foregoing, the Company has not disclosed to the
Buyer any material nonpublic information and will not disclose such information
unless such information is disclosed to the public prior to or promptly
following such disclosure to the Buyer. Neither such inquiries nor any other due
diligence investigation conducted by Buyer or any of its advisors or
representatives shall modify, amend or affect Buyer’s right to rely on the
Company’s representations and warranties contained in Section 4 below. The Buyer
understands that its investment in the Securities involves a significant degree
of risk, including the risk of loss of the Buyer’s entire investment. The Buyer
is not aware of any facts that may constitute a breach of any of the Company’s
representations and warranties made herein.

 

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(d)                Governmental Review. The Buyer understands that no United
States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Securities or
the fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.

 

(e)                Transfer or Re-sale. The Buyer understands that (i) the sale
or re-sale of the Securities has not been and is not being registered under the
Securities Act or any applicable state securities laws and the Securities may
not be transferred unless (a) the Securities are sold pursuant to an effective
registration statement under the Securities Act, (b) the Buyer shall have
delivered to the Company, at the cost of the Company, an opinion of counsel that
shall be in form, substance and scope customary for opinions of counsel in
comparable transactions, to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration, which opinion shall be accepted by the Company (c) the Securities
are sold or transferred to an “affiliate” (as defined in Rule 144 promulgated
under the Securities Act (or a successor rule) (“Rule 144”)) of the Buyer who
agrees to sell or otherwise transfer the Securities only in accordance with this
Section 3(e) and who is an Accredited Investor, (d) the Securities are sold
pursuant to Rule 144, or (e) the Securities are sold pursuant to Regulation S
under the Securities Act (or a successor rule) (“Regulation S”), and the Buyer
shall have delivered to the Company, at the cost of the Company, an opinion of
counsel that shall be in form, substance and scope customary for opinions of
counsel in comparable transactions, which opinion shall be accepted by the
Company; (ii) any sale of such Securities made in reliance on Rule 144 may be
made only in accordance with the terms of said rule and further, if said rule is
not applicable, any re-sale of such Securities under circumstances in which the
seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any other
person is under any obligation to register such Securities under the Securities
Act or any state securities laws or to comply with the terms and conditions of
any exemption thereunder (in each case). Notwithstanding the foregoing or
anything else contained herein to the contrary, the Securities may be pledged as
collateral in connection with a bona fide margin account or other lending
arrangement.

 

(f)                 Legends. The Buyer understands that the Note, the Warrant
and, until such time as the Issuance Shares have been registered under the
Securities Act or may be sold pursuant to Rule 144 or Regulation S without any
restriction as to the number of securities as of a particular date that can then
be immediately sold, the Issuance Shares may bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of the certificates for such Securities):

 

“NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE 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 (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. 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.”

 

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The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Security upon which it is
stamped, if, unless otherwise required by applicable state securities laws, (a)
such Security is registered for sale under an effective registration statement
filed under the Securities Act or otherwise may be sold pursuant to Rule 144 or
Regulation S without any restriction as to the number of securities as of a
particular date that can then be immediately sold, or (b) such holder provides
the Company with an opinion of counsel, in form, substance and scope customary
for opinions of counsel in comparable transactions, to the effect that a public
sale or transfer of such Security may be made without registration under the
Securities Act, which opinion shall be accepted by the Company so that the sale
or transfer can be effected. The Buyer agrees to sell all Securities, including
those represented by a certificate(s) from which the legend has been removed, in
compliance with applicable prospectus delivery requirements, if any. In the
event that the Company does not accept the opinion of counsel provided by the
Buyer in accordance with the preceding sentence with respect to the transfer of
Securities pursuant to an exemption from registration, such as Rule 144 or
Regulation S, at the Deadline (as defined in the Note) or at the Warrant Share
Delivery Date (as defined in the Warrant), it will constitute an Event of
Default under the Note.

 

(g)                Authorization; Enforcement. This Agreement has been duly and
validly authorized by the Buyer. This Agreement has been duly executed and
delivered on behalf of the Buyer, and this Agreement constitutes a valid and
binding agreement of the Buyer enforceable in accordance with its terms.

 

(h)                Accredited Investor Status. The Buyer is (i) an “accredited
investor” as that term is defined in Rule 501 of the General Rules and
Regulations under the Securities Act by reason of Rule 501(a)(3) (an “Accredited
Investor”), (ii) experienced in making investments of the kind described in this
Agreement and the related documents, (iii) able, by reason of the business and
financial experience of its officers (if an entity) and professional advisors
(who are not affiliated with or compensated in any way by the Company or any of
its affiliates or selling agents), to protect its own interests in connection
with the transactions described in this Agreement, and the related documents,
and (iv) able to afford the entire loss of its investment in the Securities.

 

(i)                 Residency. The Buyer is a limited liability company
organized under the laws of the Territory of Puerto Rico.

 

(j)                 General Solicitation. The Buyer is not purchasing the
Securities as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar
or any other general solicitation or general advertisement.

 

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4.                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Buyer that:

 

(a)                Organization and Qualification. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware, with the requisite corporate power and authority to own and
use its properties and assets and to carry on its business as currently
conducted. Each of the Subsidiaries is an entity duly incorporated or otherwise
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, with the requisite corporate
power and authority to own and use its properties and assets and to carry on its
business as currently conducted. Each of the Company and the Subsidiaries is not
in violation or default of any of the provisions of its respective certificate
or articles of incorporation, bylaws or other organizational or charter
documents. Each of the Company and the Subsidiaries is duly qualified to conduct
business and is in good standing as a foreign corporation or other entity 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, could not have or
reasonably be expected to result in a Material Adverse Effect and no proceeding
has been instituted in any such jurisdiction revoking, limiting or curtailing or
seeking to revoke, limit or curtail such power and authority or qualification.

 

(b)                Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and perform its obligations under
this Agreement and the other Transaction Documents. The execution and delivery
of this Agreement and the other Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action, and no further consent or
authorization of the Company or its Board of Directors or stockholders is
required. Each of this Agreement and the other Transaction Documents has been
duly executed and delivered by the Company and constitutes a valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws relating to, or affecting generally the enforcement
of, creditors’ rights and remedies or by other equitable principles of general
application.

 

(c)                Capitalization. As of the Execution Date, the authorized
capital stock of the Company is as set forth in the SEC Documents (as defined
below). Except as set forth on Schedule 4(c), the Company has not issued any
capital stock since its most recently filed SEC Document, other than pursuant to
the exercise of employee stock options under the Company’s stock option plans,
the issuance of shares of Common Stock to employees pursuant to the Company’s
employee stock purchase plans and pursuant to the conversion and/or exercise of
Common Stock Equivalents outstanding as of the date of the most recently filed
SEC Document. Except as disclosed in the SEC Documents, no shares are reserved
for issuance pursuant to the Company’s stock option plans, no shares are
reserved for issuance pursuant to the terms of any Common Stock Equivalents
(other than the Note and the Warrant) exercisable for, or convertible into or
exchangeable for shares of Common Stock and sufficient shares are reserved for
issuance upon conversion of the Note and exercise of the Warrant (as required by
the Note, the Warrant and Transfer Agent Instruction Letter). All of such
outstanding shares of capital stock are, or upon issuance will be, duly
authorized, validly issued, fully paid and non-assessable. No shares of capital
stock of the Company are subject to preemptive rights or any other similar
rights of the stockholders of the Company or any liens or encumbrances imposed
through the actions or failure to act of the Company. Except as disclosed in the
SEC Documents, as of the Execution Date, (i) there are no outstanding options,
warrants, scrip, rights to subscribe for, puts, calls, rights of first refusal,
agreements, understandings, claims or other commitments or rights of any
character whatsoever relating to, or securities or rights convertible into or
exchangeable for any shares of capital stock of the Company or any of its
Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is
or may become bound to issue additional shares of capital stock of the Company
or any of its Subsidiaries, (ii) there are no agreements or arrangements under
which the Company or any of its Subsidiaries is obligated to register the sale
of any of its or their securities under the Securities Act and (iii) there are
no anti-dilution or price adjustment provisions contained in any security issued
by the Company (or in any agreement providing rights to security holders) that
will be triggered by the issuance of the Securities. The Company has filed in
its SEC Documents true and correct copies of the Company’s Certificate of
Incorporation as in effect on the Execution Date, the Company’s bylaws, as in
effect on the Execution Date, and the terms of all securities convertible into
or exercisable for Common Stock of the Company and the material rights of the
holders thereof in respect thereto. The Company shall provide the Buyer a
certification of this representation signed by the Company’s Chief Executive
Officer on behalf of the Company as of each Closing Date.

 

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(d)                Issuance of Shares. The Inducement Shares have been duly
authorized and on the Execution Date will be validly issued, fully paid and
non-assessable, and free from all taxes, liens, claims and encumbrances with
respect to the issue thereof with the holders being entitled to all rights
accorded to a holder of Common Stock. The Conversion Shares and Warrant Shares
have been duly authorized and fully reserved for issuance and, upon conversion
of the Note and upon exercise of the Warrant in accordance with their terms,
will be validly issued, fully paid and non-assessable, and free from all taxes,
liens, claims and encumbrances with respect to the issue thereof, with the
holders being entitled to all rights accorded to a holder of Common Stock. The
Issuance Shares shall not be subject to preemptive rights or other similar
rights of stockholders of the Company (except to the extent already waived) and
will not impose personal liability upon the holder thereof, other than
restrictions on transfer provided for in the Transaction Documents and under the
Securities Act.

 

(e)                Acknowledgment of Dilution. The Company understands and
acknowledges the potentially dilutive effect to the Common Stock upon the
issuance of the Conversion Shares upon conversion of the Note, and the Warrant
Shares upon exercise of the Warrant. The Company further acknowledges that its
obligation to issue Conversion Shares upon conversion of the Note, and Warrant
Shares upon exercise of the Warrant in accordance with this Agreement, and the
Note and Warrant are absolute and unconditional regardless of the dilutive
effect that such issuances may have on the ownership interests of other
stockholders of the Company.

 

(f)                 No Conflicts. The execution, delivery and performance of
this Agreement and the other Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
(including, without limitation, the issuance and reservation for issuance of the
Issuance Shares) will not (a) result in a violation of the Company’s or any
Subsidiary’s certificate or articles of incorporation, by-laws or other
organizational or charter documents, (b) conflict with, or constitute a material
default (or an event that with notice or lapse of time or both would become a
material default) under, result in the creation of any Lien upon any of the
properties or assets of the Company or any Subsidiary, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture, instrument or any “lock-up” or similar provision of any
underwriting or similar agreement to which the Company or any Subsidiary is a
party, or (c) result in a violation of any federal, state or local law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations) applicable to the Company or any Subsidiary or by which
any property or asset of the Company or any Subsidiary is bound or affected
(except for such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate,
have a Material Adverse Effect), nor is the Company otherwise in violation of,
conflict with or in default under any of the foregoing. The business of the
Company is not being conducted in violation of any law, ordinance or regulation
of any governmental entity, except for possible violations that either singly or
in the aggregate do not and will not have a Material Adverse Effect. The Company
is not required under federal, state or local law, rule or regulation to obtain
any consent, authorization or order of, or make any filing or registration with,
any court or governmental agency in order for it to issue the Issuance Shares or
to execute, deliver or perform any of its obligations under this Agreement or
the other Transaction Documents (other than any SEC, FINRA or state securities
filings that may be required to be made by the Company subsequent to Closing or
any registration statement that may be filed pursuant hereto or any filing
required by Nasdaq); provided that, for purposes of the representation made in
this sentence, the Company is assuming and relying upon the accuracy of the
relevant representations and agreements of the Buyer herein. The Company is not
in violation of the listing requirements of the Nasdaq Capital Market
(“Nasdaq”), and does not reasonably anticipate that the Common Stock will be
delisted by Nasdaq in the foreseeable future. Except as set forth on Schedule
4(f), the Company and its Subsidiaries are unaware of any facts or circumstances
which might give rise to any of the foregoing; provided that the Company can
provide no assurance that the trading price of the Company’s common stock will
not be below $1.00 during the foreseeable future.

 

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(g)                SEC Documents; Financial Statements. The Company has filed
all reports, schedules, forms, statements and other documents required to be
filed by the Company under the Securities Act and the Exchange Act, including
pursuant to Section 13(a) or 15(d) thereof, for the one (1) year preceding the
Execution Date (or such shorter period as the Company was required by law or
regulation to file such material) (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein, being
collectively referred to herein as the “SEC Documents”) on a timely basis or has
received a valid extension of such time of filing and has filed any such SEC
Documents prior to the expiration of any such extension. As of their respective
dates, the SEC Documents complied in all material respects with the requirements
of the Securities Act and the Exchange Act, as applicable, and other federal
laws, rules and regulations applicable to such SEC Documents, and none of the
SEC Documents when filed contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company included
in the SEC Documents (the “Financial Statements”) comply as to form and
substance in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC or other applicable rules and
regulations with respect thereto. Such Financial Statements have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except (a) as may be otherwise
indicated in such Financial Statements or the notes thereto or (b) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements) and fairly present in all material
respects the financial position of the Company as of the dates thereof and the
results of operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal, immaterial, year-end audit
adjustments). The Company maintains a system of internal accounting controls
appropriate for its size. There is no transaction, arrangement, or other
relationship between the Company and an unconsolidated or other off balance
sheet entity that is not disclosed by the Company in its Financial Statements or
otherwise that would be reasonably likely to have a Material Adverse Effect.
Except with respect to the material terms and conditions of the transactions
contemplated by the Transaction Documents, the Company confirms that neither it
nor any other Person acting on its behalf has provided the Buyer or its agents
or counsel with any information that it believes constitutes or might constitute
material, non-public information. The Company understands and confirms that the
Buyer will rely on the foregoing representation in effecting transactions in
securities of the Company.

 

 9 

 

 

(h)                Absence of Certain Changes. No event has occurred that would
have a Material Adverse Effect on the Company or any Subsidiary that has not
been disclosed in the SEC Documents. Without limiting the generality of the
foregoing, except as disclosed in the SEC Documents, neither the Company nor any
of its Subsidiaries has:

 

(1)                declared, set aside or paid any dividend or other
distribution with respect to any shares of capital stock of the Company or any
of its Subsidiaries or any direct or indirect redemption, purchase or other
acquisition of any such shares;

 

(2)                sold, assigned, pledged, encumbered, transferred or otherwise
disposed of any tangible asset of the Company or any of its Subsidiaries (other
than sales or the licensing of its products to customers in the ordinary course
of business consistent with past practice), or sold, assigned, pledged,
encumbered, transferred or otherwise disposed of any Intellectual Property (as
defined below), other than licensing of products of the Company or its
Subsidiaries in the ordinary course of business and on a non-exclusive basis;

 

(3)                entered into any licensing or other agreement with regard to
the acquisition or disposition of any Intellectual Property other than licenses
in the ordinary course of business consistent with past practice or any
amendment or consent with respect to any licensing agreement filed or required
to be filed with respect to any governmental authority;

 

(4)                made capital expenditures, individually or in the aggregate,
in excess of $100,000;

 

(5)                incurred any obligation or liability (whether absolute,
accrued, contingent or otherwise, and whether due or to become due) on the
Company’s behalf or any of its Subsidiaries, in excess of $100,000 individually,
other than obligations under customer contracts, current obligations and
liabilities, in each case incurred in the ordinary course of business and
consistent with past practice;

 

(6)                had any Lien on any property of the Company or any of its
Subsidiaries except as disclosed in the SEC Documents or described on Schedule
4(h)(6);

 

(7)                made any payment, discharge, satisfaction or settlement of
any suit, action, claim, arbitration, proceeding or obligation of the Company or
any of its Subsidiaries, except in the ordinary course of business and
consistent with past practice;

 

(8)                effected any split, combination or reclassification of any
equity securities;

 

(9)                sustained any material loss, destruction or damage to any
property of the Company or any Subsidiary, whether or not insured;

 

(10)            effected any acceleration or prepayment of any indebtedness for
borrowed money or the refunding of any such indebtedness;

 

 10 

 

 

(11)            experienced any labor trouble involving the Company or any
Subsidiary or any material change in their personnel or the terms and conditions
of employment;

 

(12)            made any waiver of any valuable right, whether by contract or
otherwise;

 

(13)            made any loan or extension of credit to any officer or employee
of the Company;

 

(14)            made any change in the independent public accountants of the
Company or its Subsidiaries or any material change in the accounting methods or
accounting practices followed by the Company or its Subsidiaries, as applicable,
or any material change in depreciation or amortization policies or rates;

 

(15)            experienced any resignation or termination of any officer, key
employee or group of employees of the Company or any of its Subsidiaries;

 

(16)            effected any change in any compensation arrangement or agreement
with any employee, officer, director or stockholder that would result in the
aggregate compensation to such Person in such year to exceed $100,000, except as
disclosed on Schedule 4(h)(16);

 

(17)            effected any material increase in the compensation of employees
of the Company or its Subsidiaries (including any increase pursuant to any
written bonus, pension, profit sharing or other benefit or compensation plan,
policy or arrangement or commitment), or any increase in any such compensation
or bonus payable to any officer, stockholder, director, consultant or agent of
the Company or any of its Subsidiaries having an annual salary or remuneration
in excess of $100,000, except as disclosed on Schedule 4(h)(17);

 

(18)            made any revaluation of any of their respective assets,
including, without limitation, writing down the value of capitalized inventory
or writing off notes or accounts receivable or any sale of assets other than in
the ordinary course of business;

 

(19)            made any acquisition or disposition of any material assets (or
any contract or arrangement therefor), or any other material transaction by the
Company or any Subsidiary otherwise than for fair value in the ordinary course
of business;

 

(20)            written-down the value of any asset of the Company or its
Subsidiaries or written-off as uncollectible of any accounts or notes receivable
or any portion thereof except in the ordinary course of business and in a
magnitude consistent with historical practice;

 

(21)            cancelled any debts or claims or any material amendment,
termination or waiver of any rights of the Company or its Subsidiaries; or

 

(22)            entered into any agreement, whether in writing or otherwise, to
take any of the actions specified in the foregoing items (1) through (21),
except as disclosed on Schedule 4(h)(22).

 

 11 

 

 

(i)                 Absence of Litigation. Except as disclosed in the SEC
Documents or as set forth on Schedule 4(i), there are no actions, suits,
investigations, inquiries or proceedings pending or, to the Knowledge of the
Company, threatened against or affecting the Company, any Subsidiary or any of
their respective properties, nor has the Company received any written or oral
notice of any such action, suit, proceeding, inquiry or investigation, which
would have a Material Adverse Effect or would require disclosure under the
Securities Act or the Exchange Act. No judgment, order, writ, injunction or
decree or award has been issued by or, to the Knowledge of the Company,
requested of any court, arbitrator or governmental agency which would have a
Material Adverse Effect. Except as disclosed in the SEC Documents or as set
forth on Schedule 4(i) there has not been, and to the Knowledge of the Company,
there is not pending or contemplated, any investigation by the SEC involving the
Company, any Subsidiary or any current or former director or officer of the
Company or any Subsidiary.

 

(j)                 Patents, Copyrights, etc. The Company and the Subsidiaries
own or possess adequate rights or licenses to use all material trademarks, trade
names, service marks, service mark registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their respective
businesses as now conducted (“Intellectual Property”). None of the Company’s nor
any Subsidiary’s Intellectual Property rights have expired or terminated, or, by
the terms and conditions thereof, could expire or terminate within two years
from the Execution Date. The Company does not have any Knowledge of any
infringement by the Company and/or any Subsidiary of any material trademark,
trade name rights, patents, patent rights, copyrights, inventions, licenses,
service names, service marks, service mark registrations, trade secret or other
similar rights of others, or of any such development of similar or identical
trade secrets or technical information by others, and there is no claim, action
or proceeding being made or brought against, or to the Company’s Knowledge,
being threatened against, the Company and/or any Subsidiary regarding trademark,
trade name, patents, patent rights, invention, copyright, license, service
names, service marks, service mark registrations, trade secret or other
infringement, which could reasonably be expected to have a Material Adverse
Effect.

 

(k)                Tax Status. The Company and each of its Subsidiaries has made
or filed all federal and material state and foreign income and all other
material tax returns, reports and declarations required by any jurisdiction to
which it is subject (unless and only to the extent that the Company and each of
its Subsidiaries has set aside on its books provisions reasonably adequate for
the payment of all unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company know of no basis for any such
claim. The Company has not executed a waiver with respect to the statute of
limitations relating to the assessment or collection of any foreign, federal,
state or local tax. None of the Company’s tax returns is presently being audited
by any taxing authority.

 

(l)                 Certain Transactions. Except as set forth in the SEC
Documents, none of the officers or directors of the Company or any Subsidiary,
and to the Knowledge of the Company, none of the employees of the Company or any
Subsidiary is presently a party to any transaction with the Company or any
Subsidiary (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the Knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner, in each case in excess of the
lesser of (i) $120,000 or (ii) one percent of the average of the Company’s total
assets at year end for the last two completed fiscal years, other than for (i)
payment of salary or consulting fees for services rendered, (ii) reimbursement
for expenses incurred on behalf of the Company or any Subsidiary and (iii) other
employee benefits, including stock option agreements under any stock option plan
of the Company.

 

 12 

 

 

(m)              Disclosure. All information relating to or concerning the
Company or any of its Subsidiaries set forth in this Agreement and provided to
the Buyer pursuant in connection with the transactions contemplated hereby is
true and correct in all material respects and the Company has not omitted to
state any material fact necessary in order to make the statements made herein or
therein, in light of the circumstances under which they were made, not
misleading. No event or circumstance has occurred or exists with respect to the
Company or any of its Subsidiaries or its or their business, properties,
prospects, operations or financial conditions, which, under applicable law, rule
or regulation, requires public disclosure or announcement by the Company but
which has not been so publicly announced or disclosed (assuming for this purpose
that the Company’s reports filed under the Exchange Act are being incorporated
into an effective registration statement filed by the Company under the
Securities Act).

 

(n)                Acknowledgment Regarding Buyer’s Purchase of Securities. The
Company acknowledges and agrees that the Buyer is acting solely in the capacity
of an arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and that the Buyer is neither (i)
an officer or director of the Company or any of its Subsidiaries, nor (ii) an
“affiliate” (as defined in Rule 144) of the Company or any of its Subsidiaries.
The Company further acknowledges that the Buyer is not acting as a financial
advisor or fiduciary of the Company or any of its Subsidiaries (or in any
similar capacity) with respect to the Transaction Documents and the transactions
contemplated hereby and thereby, and any advice given by a Buyer or any of its
representatives or agents in connection with the Transaction Documents and the
transactions contemplated hereby and thereby is merely incidental to the Buyer’s
purchase of the Securities. The Company further represents to the Buyer that the
Company’s decision to enter into the Transaction Documents has been based solely
on the independent evaluation by the Company and its representatives.

 

(o)                No Integrated Offering. Neither the Company, nor any person
acting on its or their behalf, has directly or indirectly made any offers or
sales in any security or solicited any offers to buy any security under
circumstances that would require registration under the Securities Act of the
issuance of the Securities to the Buyer. The issuance of the Securities to the
Buyer will not be integrated with any other issuance of the Company’s securities
(past, current or future) for purposes of any stockholder approval provisions
applicable to the Company or its securities.

 

(p)                No Brokers. No broker is entitled to a commission payable by
the Company in connection with the transactions contemplated by this transaction
and the Company has taken no action which would give rise to any claim by any
person for brokerage commissions, transaction fees or similar payments relating
to this Agreement or the transactions contemplated hereby.

 

(q)                Permits; Compliance. The Company and each of its Subsidiaries
is in possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted (collectively, the “Company Permits”), and there is
no action pending or, to the Knowledge of the Company, threatened regarding
suspension or cancellation of any of the Company Permits. Neither the Company
nor any of its Subsidiaries is in conflict with, or in default or violation of,
any of the Company Permits, except for any such conflicts, defaults or
violations which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries has received any notification with respect to possible conflicts,
defaults or violations of applicable laws, except for notices relating to
possible conflicts, defaults or violations, which conflicts, defaults or
violations would not have a Material Adverse Effect.

 

 13 

 

 

(r)                 Environmental Matters. The Company is in compliance with all
applicable Environmental Laws in all respects except where the failure to comply
does not have and could not reasonably be expected to have a Material Adverse
Effect. For purposes of the foregoing: “Environmental Laws” means, collectively,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, the Superfund Amendments and Reauthorization Act of 1986, the
Resource Conservation and Recovery Act, the Toxic Substances Control Act, as
amended, the Clean Air Act, as amended, the Clean Water Act, as amended, any
other “Superfund” or “Superlien” law or any other applicable federal, state or
local statute, law, ordinance, code, rule, regulation, order or decree
regulating, relating to, or imposing liability or standards of conduct
concerning, the environment or any Hazardous Material.

 

(s)                 Title to Property. Except as disclosed in the SEC Documents,
the Company and each Subsidiary has good and marketable title in fee simple to
all real property owned by it and good and marketable title in all personal
property owned by it that is material to the business of the Company and each
Subsidiary, in each case free and clear of all Liens and, except for Liens as do
not materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the Company or any
Subsidiary and Liens for the payment of federal, state or other taxes, the
payment of which is neither delinquent nor subject to penalties. Any real
property and facilities held under lease by the Company or any Subsidiary is
held under valid, subsisting and enforceable leases with which the Company is in
compliance with such exceptions as are not material and do not interfere with
the use made and proposed to be made of such property and buildings by the
Company or any Subsidiary.

 

(t)                 Internal Accounting Controls. Except as disclosed in the SEC
Documents the Company and each of its Subsidiaries maintain a system of internal
accounting controls sufficient, in the judgment of the Company’s board of
directors, to provide reasonable assurance that (i) transactions are executed in
accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. The Company is in compliance with all provisions of the
Sarbanes-Oxley Act of 2002, as amended, which are applicable to it.

 

(u)                Foreign Corrupt Practices. Neither the Company, nor any of
its Subsidiaries, nor any director, officer, agent, employee or other person
acting on behalf of the Company or any Subsidiary has, in the course of his
actions for, or on behalf of, the Company, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended, or made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.

 

 14 

 

 

(v)                Solvency. The Company (after giving effect to the
transactions contemplated by this Agreement) is solvent (i.e., its assets have a
fair market value in excess of the amount required to pay its probable
liabilities on its existing debts as they become absolute and matured) and
currently the Company has no information that would lead it to reasonably
conclude that the Company would not, after giving effect to the transaction
contemplated by this Agreement, have the ability to, nor does it intend to take
any action that would impair its ability to, pay its debts from time to time
incurred in connection therewith as such debts mature. Except as disclosed in
the SEC Documents or on Schedule 4(v), the Company did not receive a qualified
opinion from its auditors with respect to its most recent fiscal year end and,
after giving effect to the transactions contemplated by this Agreement, does not
anticipate or know of any basis upon which its auditors might issue a qualified
opinion in respect of its current fiscal year. For the avoidance of doubt any
qualification of the auditors’ opinion relating to the Company’s ability to
continue as a “going concern” shall not, by itself, be a violation of this
Section 4(v).

 

(w)              Insurance. The Company and each Subsidiary is insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and each Subsidiary is engaged.
Neither the Company, nor any Subsidiary has been refused any insurance coverage
sought or applied for, and the Company has no reason to believe that it or any
Subsidiary will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not materially and
adversely affect the condition, financial or otherwise, or the earnings,
business or operations of the Company, taken as a whole.

 

(x)                Breach of Representations and Warranties by the Company. If
the Company breaches any of the representations or warranties set forth in this
Section 4, and in addition to any other remedies available to the Buyer pursuant
to this Agreement, it will be considered an Event of Default under the Note.

 

(y)                No General Solicitation; Placement Agent. Neither the
Company, nor any of its Subsidiaries or affiliates, nor any Person acting on its
or their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with the offer or
sale of the Securities. Neither the Company nor any of its Subsidiaries has
engaged any placement agent in connection with the sale of the Securities. In
the event that a broker-dealer or other agent or advisory is engaged by the
Company subsequent to the initial Closing, the Company shall be responsible for
the payment of any placement agent’s fees, financial advisory fees, or brokers’
commissions (other than for persons engaged by any Buyer or its investment
advisor) relating to or arising out of the transactions contemplated hereby in
connection with the sale of the Securities. The Company shall pay, and hold the
Buyer harmless against, any liability, loss or expense (including, without
limitation, attorney’s fees and out-of-pocket expenses) arising in connection
with any such claim.

 

(z)                No Undisclosed Events, Liabilities, Developments or
Circumstances. Except as set forth in the SEC Documents or on Schedule 4(z)
hereto, the Company and its Subsidiaries have no liabilities or obligations of
any nature (whether accrued, absolute, contingent, unasserted or otherwise and
whether due or to become due) other than those liabilities or obligations that
are disclosed in the Financial Statements or which do not exceed, individually
in excess of $50,000 and in the aggregate in excess of $200,000. The reserves,
if any, established by the Company or the lack of reserves, if applicable, are
reasonable based upon facts and circumstances known by the Company on the
Execution Date and there are no loss contingencies that are required to be
accrued by the Statement of Financial Accounting Standard No. 5 of the Financial
Accounting Standards Board which are not provided for in the Financial
Statements.

 

 15 

 

 

(aa)             Management. During the past five year period, no current or
former officer or director or, to the Knowledge of the Company, stockholder of
the Company or any of its Subsidiaries has been the subject of any matter that
would require disclosure under Paragraph (f) of Rule 401 of Regulation S-K that
has not been publicly disclosed.

 

(bb)            Assets; Title. Except as disclosed on Schedule 4(bb), each of
the Company and its Subsidiaries has good and valid title to, or a valid
leasehold interest in, as applicable, all of its properties and assets, free and
clear of all Liens except (i) any Lien for taxes not yet due or delinquent or
being contested in good faith by appropriate proceedings for which adequate
reserves have been established in accordance with GAAP, (ii) any statutory Lien
arising in the ordinary course of business by operation of law with respect to a
liability that is not yet due or delinquent, (iii) any Lien created by operation
of law, such as materialmen’s liens, mechanics’ liens and other similar liens,
arising in the ordinary course of business with respect to a liability that is
not yet due or delinquent or that are being contested in good faith by
appropriate proceedings, and (iv) such as have been disposed of in the ordinary
course of business. To the Company’s Knowledge, all tangible personal property
owned by the Company and its Subsidiaries has been maintained in good operating
condition and repair, except (x) for ordinary wear and tear, and (y) where such
failure would not have a Material Adverse Effect. To the Company’s Knowledge,
all assets leased by the Company or any of its Subsidiaries are in the condition
required by the terms of the lease applicable thereto during the term of such
lease and upon the expiration thereof. To the Company’s Knowledge, the Company
and its Subsidiaries have good and marketable title in fee simple to all real
property and good and marketable title to all personal property owned by them
which is material to the business of the Company and its Subsidiaries, in each
case free and clear of all liens, encumbrances and defects. Any real property
and facilities held under lease by the Company or any of its Subsidiaries are
held by them under valid, subsisting and enforceable leases with such exceptions
as are not material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its Subsidiaries.

 

(cc)             Subsidiary Rights. Except as set forth on Schedule 4(cc), the
Company or one of its Subsidiaries has the unrestricted right to vote, and to
receive dividends and distributions on, all equity securities of its
Subsidiaries as owned by the Company or such Subsidiary.

 

(dd)            Investment Company Status. The Company is not, and upon
consummation of the sale of the Securities will not be, an “investment company,”
a company controlled by an “investment company” or an “affiliated person” of, or
“promoter” or “principal underwriter” for, an “investment company” as such terms
are defined in the Investment Company Act of 1940, as amended.

 

(ee)             Illegal or Unauthorized Payments; Political Contributions.
Neither the Company or any of its Subsidiaries nor, to the Knowledge of the
Company, any of the officers, directors, employees, agents or other
representatives of the Company or any of its Subsidiaries or any other business
entity or enterprise with which the Company or any Subsidiary is or has been
affiliated or associated, has, directly or indirectly, made or authorized any
payment, contribution or gift of money, property, or services, whether or not in
contravention of applicable law, (a) as a kickback or bribe to any Person or (b)
to any political organization, or the holder of or any aspirant to any elective
or appointive public office except for personal political contributions not
involving the direct or indirect use of funds of the Company or any of its
Subsidiaries.

 

 16 

 

 

(ff)               Transfer Taxes. On each Closing Date, all stock transfer or
other taxes (other than income or similar taxes) which are required to be paid
in connection with the sale and transfer of the Securities to be sold to the
Buyer 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.

 

(gg)            Books and Records. To the Company’s Knowledge, the books of
account, ledgers, order books, records and documents of the Company and its
Subsidiaries accurately and completely reflect all information relating to the
respective businesses of the Company and its Subsidiaries, the nature,
acquisition, maintenance, location and collection of each of their respective
assets, and the nature of all transactions giving rise to material obligations
or accounts receivable of the Company or its Subsidiaries, as the case may be,
except where the failure to so reflect such information would not have a
Material Adverse Effect. To the Company’s Knowledge, the minute books of the
Company and its Subsidiaries contain accurate records in all material respects
of all meetings and accurately reflect all other actions taken by the
stockholders, boards of directors and all committees of the boards of directors,
and other governing Persons of the Company and its Subsidiaries, respectively.

 

(hh)            Money Laundering. The Company and its Subsidiaries are in
compliance with, and have not previously violated, the USA PATRIOT ACT of 2001
and all other applicable U.S. and non-U.S. anti-money laundering laws and
regulations, including, but not limited to, the laws, regulations and Executive
Orders and sanctions programs administered by the U.S. Office of Foreign Assets
Control, including, but not limited, to (i) Executive Order 13224 of September
23, 2001 entitled, “Blocking Property and Prohibiting Transactions With Persons
Who Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079
(2001)); and (ii) any regulations contained in 31 CFR, Subtitle B, Chapter V.

 

(ii)               Shell Company Status. The Company is not currently an issuer
identified in Rule 144(i)(1)(i) under the Securities Act, and, if it was at any
time previously been such an issuer, then the Company is subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, 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, and, as of a date at
least one year prior to the Execution Date, has filed current “Form 10
information” with the SEC (as defined in Rule 144(i)(3) of the Securities Act)
reflecting its status as an entity that is no longer an issuer described in Rule
144(i)(1)(i) of the Securities Act.

 

(jj)               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 hereunder, 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” disqualifying events described in Rule
506(d)(1)(i)(viii) under the Securities Act (each, 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 Buyers a copy of any disclosures provided thereunder.

 

 17 

 

 

(kk)            Other Covered Persons. The Company is not aware of any Person
(other than any Issuer Covered Person) that has been or will be paid (directly
or indirectly) remuneration for solicitation of buyers or potential purchasers
in connection with the sale of any Regulation D Securities.

 

(ll)               Absence of Schedules. In the event that at the First Closing
Date, the Company does not deliver and attach hereto any disclosure schedule
contemplated by this Agreement, the Company hereby acknowledges and agrees that
(i) each such undelivered disclosure schedule shall be deemed to read as
follows: “Nothing to Disclose”, and (ii) the Buyer has not otherwise waived
delivery of such disclosure schedule.

 

5.                  COVENANTS.

 

(a)                Best Efforts. The parties shall use their commercially
reasonable best efforts to satisfy timely each of the conditions described in
Section 7 and 8 of this Agreement.

 

(b)                Use of Proceeds. The Company shall use the proceeds from the
sale of the Note for working capital and other general corporate purposes and
shall not, directly or indirectly, use such proceeds for any loan to or
investment in any other corporation, partnership, enterprise or other person.

 

(c)                Financial Information. The Company agrees to send or make
available the following reports to the Buyer until the Buyer transfers, assigns,
or sells all of the Securities: (i) within ten (10) days after the filing with
the SEC, a copy of its Annual Report on Form 10-K, its Quarterly Reports on Form
10-Q and any Current Reports on Form 8-K; (ii) within one (1) day after release,
copies of all press releases issued by the Company or any of its Subsidiaries
relating to the transactions contemplated hereby; and (iii) contemporaneously
with the making available or giving to the stockholders of the Company, copies
of any notices or other information the Company makes available or gives to such
stockholders. For the avoidance of doubt, filing the documents required in (i)
above via EDGAR or releasing any documents set forth in (ii) above via a
recognized wire service shall satisfy the delivery requirements of this Section
5(c).

 

(d)                Listing. The Company shall work in good faith to secure the
listing of the Issuance Shares upon each national securities exchange or
automated quotation system, if any, upon which shares of Common Stock are then
listed (subject to official notice of issuance) and, so long as the Buyer owns
any of the Securities, shall maintain, so long as any other shares of Common
Stock shall be so listed, such listing of all Warrant Shares from time to time
issuable upon exercise of the Warrant. The Company will obtain and, so long as
the Buyer owns any of the Securities, maintain the listing and trading of its
Common Stock on the Trading Market and will comply in all respects with the
Company’s reporting, filing and other obligations under the bylaws or rules of
the Financial Industry Regulatory Authority (“FINRA”) and such exchanges, as
applicable.

 

(e)                Corporate Existence. So long as the Buyer beneficially owns
the Note, the Company shall maintain its corporate existence and shall not sell
all or substantially all of the Company’s assets, except in the event of a
merger or consolidation or sale of all or substantially all of the Company’s
assets, where the surviving or successor entity in such transaction (i) assumes
the Company’s obligations hereunder and under the agreements and instruments
entered into in connection herewith and (ii) is a publicly traded corporation
whose Common Stock is listed or quoted for trading on the Trading Market.

 

 18 

 

 

(f)                 No Integration. The Company shall not make any offers or
sales of any security (other than the Securities) under circumstances that would
require registration of the Securities being offered or sold hereunder under the
Securities Act or cause the offering of the Securities to be integrated with any
other offering of securities by the Company for the purpose of any stockholder
approval provision applicable to the Company or its securities.

 

(g)                Failure to Comply with the Exchange Act. So long as the Buyer
beneficially owns any of the Securities, the Company shall comply with the
reporting requirements of the Exchange Act; and the Company shall continue to be
subject to the reporting requirements of the Exchange Act.

 

(h)                Breach of Covenants. If the Company materially breaches any
of the covenants set forth in this Section 5, then in addition to any other
remedies available to the Buyer pursuant to this Agreement, it will be
considered an event of default under the Note.

 

(i)                 Reservation of Shares. The Company covenants that while the
Note and Warrant remain outstanding, the Company will reserve from its
authorized and unissued Common Stock, three times (300%) of the number of shares
of Common Stock, free from preemptive rights, that would be issuable upon full,
unconditioned conversion of the Note and exercise of the Warrant calculated on
the basis of the Alternative Conversion Price (as defined in the Note) and the
exercise price, respectively, in effect as of each Closing Date, which such
reserved amounts shall be increased by the Company from time to time in
accordance with its obligations under such Securities.

 

(j)                 Indemnification. Each party hereto (an “Indemnifying Party”)
agrees to indemnify and hold harmless the other party along with its officers,
directors, employees, and authorized agents, and each Person or entity, if any,
who controls such party within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act or the rules and regulations thereunder (an
“Indemnified Party”) from and against any Damages, joint or several, and any
action in respect thereof to which the Indemnified Party becomes subject to,
resulting from, arising out of or relating to any misrepresentation, breach of
warranty or nonfulfillment of or failure to perform any covenant or agreement on
the part of the Indemnifying Party contained in this Agreement.

 

(k)                [RESERVED]

 

(l)                 Variable Rate Transactions. The Company covenants and agrees
that it will not, without the prior written consent of the Buyer, enter into any
equity line of credit agreement with any other party or enter into any
transaction resulting in, or with, any Variable Security Holders, excluding the
Buyer, without the Buyer’s prior written consent, which consent may be granted
or withheld in the Buyer’s sole and absolute discretion unless the process of
such transaction are used first and primarily to repay the Note in full;
provided that such arrangements evidenced by written agreements that exist as of
the Execution Date shall not be subject to the provisions of this Section 5(l).
“Variable Security Holder” means any holder of any securities of the Company
that are not subject to a conversion/exercise price having a floor price that is
within 50% of the Company’s then current market price, and (A) have or may have
conversion rights of any kind, contingent, conditional or otherwise, in which
the number of shares that may be issued pursuant to such conversion right varies
with the market price of the Common Stock, and/or (B) are or may become
convertible into Common Stock (including without limitation convertible debt,
warrants or convertible preferred stock), with a conversion price that varies
with the market price of the Common Stock, even if such security only becomes
convertible following an event of default, the passage of time, or another
trigger event or condition.

 

 19 

 

 

(m)              Additional Equity Line Transactions. During the twenty four
(24) months following the Execution Date, if the Company has a bona fide offer
of capital or financing from any 3rd party via an “equity line” transaction,
that the Company intends to act upon, then the Company must first offer such
opportunity to the Buyer to provide such capital or financing to the Company on
the same or similar terms as each respective 3rd party’s terms, and the Buyer
may in its sole discretion determine whether the Buyer will provide all or a
portion of such capital or financing. Should the Buyer be unwilling or unable to
provide such capital or financing to the Company within five (5) Trading Days
from Buyer’s receipt of written notice of the offer (the “Offer Notice”) from
the Company, then the Company may obtain such capital or financing from that
respective 3rd party upon terms and conditions no less favourable to the Company
than those offered by the Company to the Buyer, which transaction must be
completed within fifteen (15) Trading Days after expiry of the Offer Notice. If
the Company does not receive the capital or financing from the respective 3rd
party within fifteen (15) Trading Days after expiry of the respective Offer
Notice, then the Company must again offer the capital or financing opportunity
to the Buyer as described above, and the process detailed above shall be
repeated. The Offer Notice must be sent by electronic transmission via email to
adam@oasis-cap.com.

 

(n)                Other Offerings. During the twenty four (24) months following
the Execution Date, if the Company has a bona fide offer of capital or financing
from any 3rd party comprised of any securities offering, not including that
which is described in subsection (m) above, that the Company intends to act
upon, then the Company must first offer such opportunity to the Buyer to provide
such capital or financing to the Company on the same or similar terms as each
respective 3rd party’s terms, and the Buyer may in its sole discretion determine
whether the Buyer will provide up to 25% of such capital or financing. Should
the Buyer be unwilling or unable to provide such capital or financing to the
Company within 15 Trading Days from Buyer’s receipt of Offer Notice from the
Company, then the Company may obtain such capital or financing from that
respective 3rd party upon terms and conditions no less favourable to the Company
than those offered by the Company to the Buyer, which transaction must be
completed within 15 Trading Days after expiry of the Offer Notice. If the
Company does not receive the capital or financing from the respective 3rd party
within 15 days after the date of the respective Offer Notice, then the Company
must again offer the capital or financing opportunity to the Buyer as described
above, and the process detailed above shall be repeated. The Offer Notice must
be sent by electronic transmission via email to adam@oasis-cap.com. In the event
that the Company completes any offering or sale of securities after the
Execution Date, in the sole discretion of, and at the option of the Buyer, (i)
up to $200,000 of the proceeds of the first such offering under any Form S-3 or
other registration statement utilized by the Company, shall first be applied to
the repayment of the Note, and (ii) fifty percent (50%) the proceeds of any
additional such offering or sale shall first be applied to the repayment of the
Note until the same shall have been paid and satisfied in full.

 

(o)                Prohibition on Certain Transactions. The Buyer covenants and
agrees that neither it, nor any affiliate acting on its behalf or pursuant to
any understanding with it will execute any “short sales” of the Common Stock as
defined in Rule 200 of Regulation SHO under the Exchange Act.

 

(p)                Piggyback Registration Rights. The Company shall include on
any registration statement filed with the SEC, all Inducement Shares. In
addition to all other remedies at law or in equity or otherwise under this
Agreement, failure to do so will result in liquidated damages of $25,000.00,
being immediately due and payable to the Buyer at its election in the form of
cash payment.

 

(q)                Certain Fees and Expenses. The Company shall pay all stamp
taxes and other taxes and duties levied in connection with the delivery of the
Note to the Buyer. In addition, the Buyer shall receive a $10,000.00 credit for
the Buyer’s transaction expenses which shall be evidenced in the face value of
the Note.

 

 20 

 

 

6.                  Transfer Agent Instructions. Prior to registration of the
Issuance Shares under the Securities Act or the date on which the Issuance
Shares may be sold pursuant to Rule 144 without any restriction as to the number
of Securities as of a particular date that can then be immediately sold, all
such certificates shall bear the restrictive legend specified in Section 3(f) of
this Agreement. The Company warrants that: (i) no stop transfer instructions
will be given by the Company to its Transfer Agent and that the Securities shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement and the Note and Warrant; (ii) it will
not direct its Transfer Agent not to transfer or delay, impair, and/or hinder
its Transfer Agent in transferring (or issuing) (electronically or in
certificated form) any certificate for Conversion Shares or Warrant Shares to be
issued to the Buyer upon conversion/exercise of or otherwise pursuant to the
Note or Warrant as and when required by the Note or Warrant or this Agreement;
and (iii) it will not fail to remove (or direct its Transfer Agent not to remove
or impairs, delays, and/or hinders its Transfer Agent from removing) any
restrictive legend (or to withdraw any stop transfer instructions in respect
thereof) on any certificate for any Issuance Shares as contemplated by the terms
of this Agreement, the Note and the Warrant. Nothing in this Section shall
affect in any way the Buyer’s obligations and agreement to comply with all
applicable prospectus delivery requirements, if any, upon re-sale of the
Securities. If the Buyer provides the Company (which shall be at the cost of the
Company), with (i) an opinion of counsel in form, substance and scope customary
for opinions in comparable transactions, to the effect that a public sale or
transfer of such Securities may be made without registration under the
Securities Act and such sale or transfer is effected or (ii) the Buyer provides
reasonable assurances that the Securities can be sold pursuant to Rule 144, the
Company shall permit the transfer, and, in the case of the Issuance Shares,
promptly instruct its Transfer Agent to issue one or more certificates, free
from restrictive legend, in such name and in such denominations as specified by
the Buyer. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Buyer, by vitiating the intent and
purpose of the transactions contemplated hereby. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this
Section may be inadequate and agrees, in the event of a breach or threatened
breach by the Company of the provisions of this Section, that the Buyer shall be
entitled, in addition to all other available remedies, to an injunction
restraining any breach and requiring immediate transfer, without the necessity
of showing economic loss and without any bond or other security being required.

 

7.                  CONDITIONS PRECEDENT TO THE COMPANY’S OBLIGATIONS TO SELL.
The obligation of the Company hereunder to issue and sell the Note, Warrant and
Inducement Shares to the Buyer at each Closing is subject to the satisfaction,
at or before the Closing Date of each of the following conditions thereto,
provided that these conditions are for the Company’s sole benefit and may be
waived by the Company at any time in its sole discretion:

 

(a)                The Buyer shall have executed this Agreement and delivered
the same to the Company.

 

(b)                The Buyer shall have delivered the applicable Purchase Price
in accordance with Section 2 above.

 

(c)                The representations and warranties of the Buyer shall be true
and correct in all material respects as of the date when made and as of the
applicable Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date), and the Buyer shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Buyer at or prior to the applicable Closing Date.

 

 21 

 

 

(d)                No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by or in any court or governmental authority of competent jurisdiction
or any self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of the transactions
contemplated by this Agreement.

 

8.                  CONDITIONS PRECEDENT TO THE BUYER’S OBLIGATION TO PURCHASE.
The obligation of the Buyer hereunder to purchase the Note and fund each of the
First Tranche, Second Tranche, and Third Tranche of the Note at the Closings is
subject to the satisfaction, at or before the applicable Closing Date of each of
the following conditions, provided that these conditions are for the Buyer’s
sole benefit and may be waived by the Buyer at any time in its sole discretion:

 

(a)                The Company shall have executed this Agreement and delivered
the same to the Buyer on the First Closing Date.

 

(b)                The Company shall have delivered to the Buyer the duly
executed Note in accordance with Section 2(a) above on the First Closing Date.

 

(c)                The Company shall have delivered to the Buyer a duly executed
Warrant in accordance with Section 2(a) above on each applicable Closing Date.

 

(d)                The Company shall have delivered to the Buyer the Inducement
Shares on the First Closing Date.

 

(e)                The Company shall have delivered to the Buyer the duly
executed Transfer Agent Instruction Letter on the First Closing Date.

 

(f)                 The Company shall have delivered a copy of its Directors’
resolutions relating to the transactions contemplated hereby, the form of which
is attached hereto as Exhibit D, on the First Closing Date.

 

(g)                The Company shall have delivered an executed copy of the
security agreement to the Buyer, in the form attached hereto as Exhibit E (the
“Security Agreement”), on the First Closing Date.

 

(h)                No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by or in any court or governmental authority of competent jurisdiction
or any self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of the transactions
contemplated by this Agreement, as of each Closing Date.

 

(i)                 No event shall have occurred which could reasonably be
expected to have a Material Adverse Effect on the Company including but not
limited to a change in the Exchange Act reporting status of the Company or the
failure of the Company to be timely in its Exchange Act reporting obligations,
as of each Closing Date.

 

 22 

 

 

(j)                 The representations and warranties of the Company shall be
true and correct in all material respects as of the date when made and as of
each Closing Date as though made at such time (except for representations and
warranties that speak as of a specific date, which shall be true and correct in
all material respects as of such specific date) and the Company shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to each Closing Date. The Buyer
shall have received a certificate or certificates, executed by the chief
executive officer of the Company, dated as of each Closing Date, to the
foregoing effect and as to such other matters as may be reasonably requested by
the Buyer, in the form prescribed by the Buyer.

 

9.                  GOVERNING LAW; MISCELLANEOUS.

 

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

 

(b)                Arbitration. Any disputes, claims, or controversies arising
out of or relating to the Transaction Documents, or the transactions,
contemplated thereby, or the breach, termination, enforcement, interpretation or
validity thereof, including the determination of the scope or applicability of
this Agreement to arbitrate, shall be referred to and resolved solely and
exclusively by binding arbitration to be conducted before the Judicial
Arbitration and Mediation Service (“JAMS” ), or its successor pursuant the
expedited procedures set forth in the JAMS Comprehensive Arbitration Rules and
Procedures (the “Rules” ), including Rules 16.1 and 16.2 of those Rules. The
arbitration shall be held in New York, New York, before a tribunal consisting of
three (3) arbitrators each of whom will be selected in accordance with the
“strike and rank” methodology set forth in Rule 15. Either party to this
Agreement may, without waiving any remedy under this Agreement, seek from any
federal or state court sitting in the State of New York any interim or
provisional relief that is necessary to protect the rights or property of that
party, pending the establishment of the arbitral tribunal. The costs and
expenses of such arbitration shall be paid by and be the sole responsibility of
the Company, including but not limited to the Buyer’s attorneys’ fees and each
arbitrator’s fees. The arbitrators’ decision must set forth a reasoned basis for
any award of damages or finding of liability. The arbitrators’ decision and
award will be made and delivered as soon as reasonably possibly and in any case
within sixty (60) days’ following the conclusion of the arbitration hearing and
shall be final and binding on the parties and may be entered by any court having
jurisdiction thereof. Notwithstanding the foregoing, the choice of arbitration
shall not limit the Buyer’s exercise of remedies under the Uniform Commercial
Code.

 

(c)                JURY TRIAL WAIVER. THE COMPANY AND THE BUYER HEREBY WAIVE A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE
PARTIES HERETO AGAINST THE OTHER IN RESPECT OF ANY MATTER ARISING OUT OF OR IN
CONNECTION WITH THE TRANSACTION DOCUMENTS.

 

(d)                Counterparts; Signatures by Electronic Mail. This Agreement
may be executed in one or more counterparts, each of which shall be deemed an
original but all of which shall constitute one and the same agreement and shall
become effective when counterparts have been signed by each party and delivered
to the other party. This Agreement, once executed by a party, may be delivered
to the other party hereto by electronic mail transmission of a copy of this
Agreement bearing the signature of the party so delivering this Agreement.

 

 23 

 

 

(e)                Headings. The headings of this Agreement are for convenience
of reference only and shall not form part of, or affect the interpretation of,
this Agreement.

 

(f)                 Severability. In the event that any provision of this
Agreement or of any of the Transaction Documents is invalid or unenforceable
under any applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any provision hereof which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision hereof.

 

(g)                Entire Agreement; Amendments. This Agreement and the
instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Buyer
makes any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived or amended other than by
an instrument in writing signed by the majority in interest of the Buyer.

 

(h)                Notices. All notices, demands, requests, consents, approvals,
and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (a) personally served, (b)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (c) delivered by reputable air courier service with charges
prepaid, or (d) transmitted by hand delivery, telegram, or e-mail as a PDF,
addressed as set forth below or to such other address as such party shall have
specified most recently by written notice given in accordance herewith. Any
notice or other communication required or permitted to be given hereunder shall
be deemed effective (i) upon hand delivery or delivery by e-mail at the address
designated below (if delivered on a business day during normal business hours
where such notice is to be received), or the first business day following such
delivery (if delivered other than on a business day during normal business hours
where such notice is to be received) or (ii) on the second business day
following the date of mailing by express courier service or on the fifth
business day after deposited in the mail, in each case, fully prepaid, addressed
to such address, or upon actual receipt of such mailing, whichever shall first
occur.

 

If to the Company, to:

 

PREDICTIVE ONCOLOGY INC.
2915 Commers Drive,

Suite 900

Eagan, MN 55121Attention: Robert Myers, CFO

E-mail: rmyers@skylinemedical.com

Phone: 651-389-4508

 

With a copy (which shall not constitute notice) to:

 

Maslon LLP

3300 Wells Fargo Center

90 South Seventh Street

Minneapolis, MN 55402

E-mail: martin.rosenbaum@maslon.com

Attention: Martin R. Rosenbaum, Esq.

Phone: 612-672-8326

 

 24 

 

 

If to the Buyer, to:

 

OASIS CAPITAL, LLC

208 Ponce de Leon Ave, Suite 1600

San Juan, PR 00918

E-mail: adam@oasis-cap.com

Attention: Adam Long, Managing Partner

Phone: 816.960.0100

 

With a copy (which shall not constitute notice) to:

 

K&L Gates LLP

200 S. Biscayne Blvd., Suite 3900

Miami, FL 33131

E-mail: john.owens@klgates.com

Attention: John D. Owens, III, Esq.

Phone: 305.539.3328

 

Either party hereto may from time to time change its address or e-mail for
notices under this Section 9(h) by giving at least ten (10) days’ prior written
notice of such changed address to the other party hereto.

 

(i)                 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and assigns.
Neither the Company nor the Buyer shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other.
Notwithstanding the foregoing, subject to Section 3(e), the Buyer may assign its
rights hereunder to any person that purchases Securities in a private
transaction from the Buyer or to any of its “affiliates,” as that term is
defined under the Exchange Act, without the consent of the Company.

 

(j)                 Third Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

 

(k)                Survival. The representations and warranties of the Company
and the agreements and covenants set forth in this Agreement shall survive the
Closings hereunder. The Company agrees to indemnify and hold harmless the Buyer
and all their officers, directors, employees and agents for loss or damage
arising as a result of or related to any breach by the Company of any of its
representations, warranties and covenants set forth in this Agreement or any of
its covenants and obligations under this Agreement, including advancement of
expenses as they are incurred.

 

(l)                 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 the 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.

 

 25 

 

 

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

 

(n)                Remedies.

 

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

 

(ii)               In addition to any other remedy provided herein or in any
document executed in connection herewith, the Company shall pay the Buyer for
all costs, fees and expenses in connection with any arbitration, litigation,
contest, dispute, suit or any other action to enforce any rights of the Buyer
against the Company in connection herewith, including, but not limited to, costs
and expenses and attorneys’ fees, and costs and time charges of counsel to the
Buyer. In furtherance of the foregoing, the Company shall pay an amount equal to
$25,000 to the Buyer immediately upon the Buyer’s filing of any arbitration,
litigation, contest, dispute, suit or any other action to enforce any rights of
the Buyer against the Company in connection herewith, which such amount shall be
used to pay the Buyer’s attorneys’ fees, cost and expenses. Additional amounts
shall be paid by the Company to the Buyer immediately upon the Company’s receipt
of invoices from the Buyer’s attorney evidencing the charges and fees assessed
in connection with any such arbitration, litigation, contest, dispute, suit or
any other action to enforce any rights of the Buyer and, upon receiving such
invoices which indicate outstanding fees in excess of $25,000 at any time, the
Company shall promptly pay an additional $25,000 to the Buyer to be used in
satisfaction of additional attorneys’ fees, and costs and time charges of
counsel to the Buyer. Further, the Company agrees to save and hold the Buyer
harmless from and against any and all liabilities with respect to or resulting
from any delay in paying or omission to pay such costs and expenses. In the
event that the Company is the prevailing party in any such action, Buyer shall
refund all such amounts.

 

(o)                Publicity. The Company and the Buyer shall have the right to
review a reasonable period of time before issuance of any press releases, SEC,
Trading Market, or FINRA filings, or any other public statements with respect to
the transactions contemplated hereby; provided, however, that the Company shall
be entitled, without the prior approval of the Buyer, to make any press release
or SEC, Trading Market or FINRA filings with respect to such transactions as is
required by applicable law and regulations (although the Buyer shall be
consulted by the Company in connection with any such press release prior to its
release and shall be provided with a copy thereof).

 

 

 

** signature page follows **

 

 26 

 

 

IN WITNESS WHEREOF, the Buyer and the Company have caused their respective
signature page to this Securities Purchase Agreement to be duly executed as of
the Execution Date.

 

  COMPANY:             PREDICTIVE ONCOLOGY INC.                   By:  /s/ Bob
Myers     Name: Bob Myers     Title: CFO                     BUYER:            
OASIS CAPITAL, LLC                     By:  /s/ Adam Long     Name: Adam Long  
  Title: Managing Partner   

 

 

 

 

 

 

 

** Signature Page to Securities Purchase Agreement **

 

 

 

 

 

SCHEDULE OF BUYERS

 

FIRST TRANCHE

 

(1) (2) (3)

 

(4)

 

(5)

(6) (7)

Buyer

Address and E-mail

Aggregate Note Face Value

Number of

Warrant Shares

Inducement Shares

Purchase Price

Legal Representative’s
Address and E-mail

Oasis Capital, LLC

208 Ponce de Leon Ave, Suite 1600

San Juan, PR 00918

E-mail: adam@oasis-cap.com Attn: Adam Long, Managing Partner

E-mail: adam@oasis-cap.com

$490,000.001 94,631 46,875 $400,000.00

K&L Gates LLP

200 S. Biscayne Blvd.

Ste. 3900

Miami, FL 33131

Attn: John D. Owens III, Esq.

E-mail: john.owens@klgates.com

1.        Aggregate Note Face Value includes $10,000.00 for Oasis Capital, LLC
transaction expenses and an $80,000.00 OID.

 

SECOND TRANCHE

 

(1) (2) (3)

 

(4)

 

(5)

(6) (7)

Buyer

Address and E-mail

Aggregate Note Face Value

Number of

Warrant Shares

Inducement Shares

Purchase Price

Legal Representative’s
Address and E-mail

Oasis Capital, LLC Same as “First Tranche Above” $480,000.00 92,700 0
$400,000.00 Same as “First Tranche Above”              

THIRD TRANCHE

 

(1) (2) (3)

 

(4)

 

(5)

(6) (7)

Buyer

Address and E-mail

Aggregate Note Face Value

Number of

Warrant Shares

Inducement Shares

Purchase Price

Legal Representative’s
Address and E-mail

Oasis Capital, LLC

Same as “First Tranche Above”

 

$480,000.00 92,700 0 $400,000.00 Same as “First Tranche Above”  

 

 

 

 

 

 

 

DISCLOSURE SCHEDULES

 

 

[Attached]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBITS

 

A - NOTE

 

B - WARRANT

 

C - TRANSFER AGENT INSTRUCTIONS

 

D - BOARD RESOLUTIONS

 

E - SECURITY AGREEMENT