Exhibit 10.3

 

UNIT PURCHASE AGREEMENT

 

BY AND AMONG

 

PROTEA BIOSCIENCES GROUP, INC.

 

AND

 

THE PURCHASERS PARTY HERETO

 

   

 

 

Exhibits
TO
Unit PURCHASE AGREEMENT

 

Exhibit A Schedule of Purchasers Exhibit B Form of Warrant Exhibit C Form of
Subscription Agreement Exhibit D Funding Instructions Exhibit E Form of Legal
Opinion Exhibit F Form of Registration Rights Agreement

 

   

 

 

PROTEA BIOSCIENCES GROUP, INC.

 

Unit PURCHASE AGREEMENT

 

THIS UNIT PURCHASE AGREEMENT (the “Agreement”) is entered into as of the date
set forth on the signature page hereto by and among Protea Biosciences Group,
Inc., a Delaware corporation (“Protea” or the “Company”) and the purchasers
identified on Exhibit A on the date hereof (which purchasers are hereinafter
collectively referred to as the “Purchasers” and each individually as, a
“Purchaser”).

 

BACKGROUND

 

A.           Unless otherwise defined in this Agreement, capitalized terms used
in this Agreement shall have the respective meanings ascribed to such terms in
Section 9.

 

B.           The Company is offering (the “Offering”) Units to a limited number
of persons who qualify as “accredited investors” as defined in Rule 501 of
Regulation D promulgated under the Securities Act at a price per Unit of
$100,000 pursuant to the terms set forth in the Company’s Confidential Private
Placement Memorandum, dated as of August 4, 2015, as may be amended and/or
supplemented, from time to time (collectively, the “Memorandum”).

 

C.           The Company is offering to a limited number of persons who qualify
as “accredited investors” as defined in Rule 501 of Regulation D promulgated
under the Securities Act (the “Offering”) units of the common stock, par value,
$0.0001 per share, of the Company (the “Common Stock”) and warrants to purchase
shares of Common Stock (collectively, the “Units”) at a price per Unit of
$100,000.

 

D.           Each Unit shall consist of (a) 400,000 Shares of Common Stock at a
price of $0.25 per share, and (b) a Warrant to purchase 200,000 shares of Common
Stock, at an exercise price of $0.375 per share for a period of 3 years
following the final closing (the “Final Closing Date”) of the Offering (the
“Warrant”),

 

E.           The Units are being offered on a “reasonable efforts, all or none”
basis with respect to the minimum of $100,000 (the “Minimum Offering Amount”),
which shall be exclusive of the Exercise Amount (defined below) and thereafter
on a “reasonable efforts” basis up to the maximum of $4,000,000 (the “Maximum
Offering Amount”); provided, that, the Company and Laidlaw may mutually agree,
prior to the “Termination Date” referred to below, to terminate the Offering a
total of $500,000 of Units has been sold. In addition to the Maximum Offering
Amount, Laidlaw may, in its sole discretion, sell up to an additional $500,000
in Units to cover over-subscriptions (the “Over-Allotment”) which amounts shall
be exclusive of the Maximum Offering Amount. Such Maximum Offering Amount and
Over-Allotment shall not include up to an additional $3,000,000 or $3,375,000 if
the Over-Allotment Option is exercised (the “Exercise Amount”) in Common Stock
issuable to the holders of the Warrants upon the full exercise thereof.

 

F.           The Company desires to issue and sell the Units to each Purchaser
in one or more closings (each a “Closing” and collectively the “Closings”) as
set forth herein.

 

NOW, THEREFORE, in consideration of the representations, warranties, covenants
and agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties, intending
to be legally bound, hereby agree as follows:

 

 1 

 

 

1.            AGREEMENT TO SELL AND PURCHASE.

 

1.1           Authorization of Units. The board of directors of the Company (the
“Board of Directors”) has authorized (i) the sale of up to 45 Units, including
the Over-Allotment; each Unit consisting of (a) 400,000 shares of Common Stock
and (b) a Warrant to purchase 200,000 shares of Common Stock at an exercise
price of $0.375 per share for a period of 3 years from the Final Closing Date
hereunder. From and after the applicable Closing, the Company shall issue and
reverse for issuance (i) up to 18,000,000 shares of its Common Stock; and (ii)
up to 9,000,000 shares of Common Stock that may be issued upon full exercise of
the Warrants (the “Warrant Shares”) plus such additional number of Warrant
Shares as shall be required to be issued pursuant to the anti-dilution and
adjustment provisions of the Warrants.

 

1.2           Initial Sale and Purchase of Units. Subject to the terms and
conditions hereof, and in reliance upon the representations, warranties and
covenants contained herein, at the Initial Closing, the Company shall issue and
sell to each Purchaser, and each Purchaser shall purchase from the Company, the
number of Units set forth opposite such Purchaser’s name on Exhibit A under the
“Initial Units” column, at a purchase price of $100,000 per Unit (subject to
appropriate and proportionate adjustment for stock dividends payable in shares
of, forward or reverse stock splits and other subdivisions and combinations of,
and recapitalizations and like occurrences with respect to, the Common Stock,
the “Per Unit Purchase Price”). The minimum purchase by each Purchaser is one
Unit, unless the Company and the Placement Agent agree, in their mutual
discretion, to allow a Purchaser to purchase a partial Unit.

 

1.3           Subsequent Sales and Purchases of Units. Subject to the terms and
conditions hereof, and in reliance upon the representations, warranties and
covenants contained herein, at each subsequent Closing, the Company shall issue
and sell to each Purchaser who is identified as a “Subsequent Closing Purchaser”
on Exhibit A, which shall be deemed amended at each such subsequent Closing to
add each such additional Purchaser (each, a “Subsequent Closing Purchaser”), and
each Subsequent Closing Purchaser shall purchase from the Company, the number
Units set forth opposite such Purchaser’s name on Exhibit A at the Per Unit
Purchase Price.

 

1.4           Issuance of Warrants. The Warrants shall be in form and substance
substantially the same as the form of Warrant in Exhibit B.

 

2.            CLOSINGS, DELIVERY AND PAYMENT.

 

2.1           Initial Closing. Subject to the conditions set forth in Section 5
herein, the initial closing of the sale and purchase of the Units (the “Initial
Closing”), shall take place electronically on such date and at such time as is
agreed between the Company and the Placement Agent (such date the “Initial
Closing Date”); upon the earliest of (1) August 31, 2015 if the Minimum Offering
Amount has not been raised, which period may be extended by the Company and the
Placement Agent in their joint discretion, without notice to or consent by
prospective investors, until October 31, 2015 (collectively, the “Minimum
Offering Amount Deadline”) (2) the sale of the Maximum Offering Amount unless
the Placement Agent exercises the Overallotment Option, or (3) August 31, 2015
(the “Termination Date”), which Termination Date may be extended by the Company
and Placement Agent in their joint discretion, without notice or vote by
prospective investors, to a date no later than October 31, 2015 (the “Final
Termination Date”) if the Minimum Offering Amount has not been raised by the
Minimum Offering Amount Deadline. Subject to the foregoing, at the Initial
Closing, the Company must sell the minimum of one full Unit for $100,000 (the
“Initial Unit”), and the Company may thereafter sell up to a maximum of 25
Units, which amount shall include the Over-Allotment.

 

 2 

 

 

2.2           Subsequent Closings. If the Minimum Offering Amount has been
raised by the Minimum Amount Deadline, subject to the conditions set forth in
Section 5, each Subsequent Closing shall take place electronically on such date
and at such time as is agreed between the Company and the Placement Agent (such
date the “Subsequent Closing Date”), in no event later than the Termination
Date, which date may be extended without further notice to prospective investors
by the Company and the Placement Agent, to a date no later than the Final
Termination Date. Subject to the foregoing, at Subsequent Closings, the Company
may sell up to a maximum of 25 Units less the number of Units sold in all prior
Closings, which amount shall include, the Over-Allotment. The Units sold at the
Subsequent Closings are sometimes referred to herein as “Subsequent Units.”

 

2.3           Delivery; Payment. At each Closing, subject to the terms and
conditions hereof, the Purchasers will deliver the full amount of the Purchase
Price in cash by wire transfer of immediately available funds in accordance with
instructions attached hereto as Exhibit D, or as the Company shall otherwise
direct and the Company will deliver (1) one (1) certificate registered in such
Purchaser’s name, to purchase such number of shares of Common Stock included in
the Units purchased by such Purchaser or Subsequent Closing Purchaser, as the
case may be, at such Closing and (2) one Warrant, registered in such Purchaser’s
name to purchase such number of Warrant Shares included in the Units purchased
by such Purchaser or Subsequent Closing Purchaser, as the case may be, at such
Closing. The Company and the Placement Agent, in their mutual discretion, may
allow a Purchaser to purchase a partial Unit, in which case the Purchaser shall
receive a certificate representing the appropriate number of shares of Common
Stock included in such partial Unit and a Warrant for the appropriate number of
corresponding Warrant Shares.

 

2.4           Subsequent Offering; Reverse Stock Split.    Each Purchaser
acknowledges that during the course of the Offering of the Units, the Company
has engaged Laidlaw on a non-binding basis to act as managing underwriter or
placement agent in connection with a proposed public or private offering of its
Common Stock and/or other securities outside of this offering (the “Subsequent
Offering”). In connection with such Subsequent Offering, and with a view toward
meeting the initial listing requirements to list its Common Stock for trading on
the Nasdaq Capital Markets or NYSE Amex LLC, simultaneous with consummation of
such Concurrent Offering, the Company intends to effect a reverse stock split of
its outstanding Common Stock (the “Reverse Stock Split”). We currently
anticipate that the Reverse Stock Split will be within a range of between
one-for-fifteen (1:15) and one-for-twenty five (1:25). The extent of such
Reverse Stock Split will be subject to the discretion of the Company’s Board of
Directors (within a range to be approved by the holders of a majority of the
outstanding Common Stock). Accordingly, all shares of Common Stock and all
Warrant Shares issued in the Offering contemplated hereby will be appropriately
reduced, and the exercise price of the Warrants will be appropriately increased,
based upon such Reverse Stock Split and the extent thereof. There can be no
assurance that the Company will be able to consummate the Subsequent Offering.
Even if consummate, there is no assurance that the Subsequent Offering will not
be at per share prices below the purchase price and exercise price of the Common
Stock and Warrants included in the Units or otherwise result in significate
dilution of the equity of Purchaser’s in this Offering.

 

3.           REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

The Company represents and warrants to each of the Purchasers that the
statements made in this Section 3, except as qualified in the disclosure
schedules referenced herein and attached hereto (the “Schedules”), are true and
correct on the date hereof, as of the Initial Closing and shall be true and
correct as of each Subsequent Closing, except as qualified by any updated
Schedules delivered at the Subsequent Closing in accordance with Section 5.1.1
herein, all of which qualifications in the Schedules attached hereto and updated
Schedules delivered at the Subsequent Closing shall be deemed to be
representations and warranties as if made hereunder. The Schedules shall be
arranged to correspond to the numbered paragraphs contained in this Section 3,
and the disclosure in any paragraph of the Schedules shall qualify other
subsections in Section 3 only to the extent that it is readily apparent from a
reading of the disclosure that such disclosure is applicable to such other
subsections. For purposes of this Section 3, “knowledge” shall mean the personal
knowledge of any of the Company’s officers or directors or what they would have
known upon having made reasonable inquiry.

 

 3 

 

 

3.1           Organization, Good Standing and Qualification. The Company is a
corporation duly incorporated, validly existing and in good standing under the
corporate and general laws of the State of Delaware. Each of the other Protea
Entities is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation. Each Protea Entity
has all requisite corporate power and authority to own and operate its
properties and assets. Neither the Company nor any Protea Entity is in violation
nor 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 Protea Entities is duly qualified to conduct business and is
in good standing as a foreign corporation in each jurisdiction set forth on
Schedule 3.1, except where failure to be so qualified or in good standing, as
the case may be, could not reasonably be expected to result in: (i) a material
adverse effect on the legality, validity or enforceability of any Transaction
Document, (ii) a material adverse effect on the results of operations, assets,
business, prospects or condition (financial or otherwise) of the Company and the
Protea Entities, taken as a whole, or (iii) a material adverse effect on the
Company’s ability to perform in any material respect on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or (iii), 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.

 

3.2           Subsidiaries. The Protea SEC Reports includes a true and complete
list of each of the Protea Entities and their respective jurisdictions of
organization. Except as set forth on Schedule 3.2, no Protea Entity owns or
controls any ownership interest or profits interest in any other corporation,
limited liability company, limited partnership or other entity. The Company
owns, directly or indirectly, all of the capital stock or other equity interests
of each Protea Entity free and clear of any Liens, and all of the issued and
outstanding shares of capital stock of each Protea Entity are validly issued and
are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.. Except as set forth on Schedule 3.2, no
Protea Entity is a participant in any joint venture, partnership or similar
arrangement.

 

3.3           Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and each of the other Transaction Documents and
otherwise to carry out its obligations hereunder and thereunder. The execution
and delivery of this Agreement and each of 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 action on the part of the
Company and no further action is required by the Company, the Board of Directors
or the Company’s stockholders in connection herewith or therewith other than in
connection with the Required Approvals. This Agreement and each other
Transaction Document to which it is a party has been (or upon delivery will have
been) duly executed by the Company and, when delivered in accordance with the
terms hereof and thereof, will constitute the valid and binding obligation of
the Company enforceable against the Company in accordance with its terms,
except: (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.

 

 4 

 

 

3.4           No Conflicts. The execution, delivery and performance by the
Company of this Agreement and the other Transaction Documents to which it is a
party, the issuance and sale of the Securities and the consummation by it of the
transactions contemplated hereby and thereby do not and will not: (i) conflict
with or violate any provision of the Company’s or any Protea Entities’
certificate or articles of incorporation, bylaws or other organizational or
charter documents, (ii) conflict with, or constitute a default (or an event that
with notice or lapse of time or both would become a default) under, result in
the creation of any Lien upon any of the properties or assets of the Company or
any Protea Entities, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any agreement, credit facility, debt or other instrument (evidencing a Company
or Protea Entities’ debt or otherwise) or other understanding to which the
Company or any Protea Entity is a party or by which any property or asset of the
Company or any Protea Entity is bound or affected, or (iii) subject to the
Required Approvals, conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company or a Protea Entity is
subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company or a Protea Entity is bound or
affected; except in the case of each of clauses (ii) and (iii), such as could
not have or reasonably be expected to result in a Material Adverse Effect.

 

3.5           Filings, Consents and Approvals. The Company is not required to
obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of the Transaction Documents.

 

3.6           Issuance of the Securities. The Units, the shares of Common Stock
and the Warrants are duly authorized and, when issued and paid for in accordance
with the applicable Transaction Documents, will be duly and validly issued,
fully paid and nonassessable, free and clear of all Liens imposed by the Company
other than restrictions on transfer provided for in the Transaction Documents.
The Warrant Shares, when issued in accordance with the terms of the Warrants,
will be validly issued, fully paid and nonassessable, free and clear of all
Liens imposed by the Company other than restrictions on transfer provided for in
the Transaction Documents. The Company has reserved from its duly authorized
capital stock a number of shares of Common Stock for issuance of the Warrant
Shares on the date hereof.

 

3.7           Capitalization. The capitalization of the Company is as set forth
on Schedule 3.7, which Schedule 3.7 shall also include the number of shares of
Common Stock and Preferred Stock owned beneficially, and of record, by
Affiliates of the Company as of the date hereof. Except as set forth on Schedule
3.7, there are no outstanding securities of any Protea Entity which contain any
right of first refusal, preemptive right, right of participation, or any similar
right. No Person has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents. Except as a result of the purchase
and sale of the Securities, and except as set forth on Schedule 3.7, there are
no outstanding options, warrants, scrip rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exercisable or exchangeable for, or giving any
Person any right to subscribe for or acquire any shares of Common Stock, or
contracts, commitments, understandings or arrangements by which the Company or
any Subsidiary is or may become bound to issue additional shares of Common Stock
or common stock equivalents. The issuance and sale of the Securities will not
obligate the Company to issue shares of Common Stock or other securities to any
Person (other than the Purchasers) and will not result in a right of any holder
of Company securities to adjust the exercise, conversion, exchange or reset
price under any of such securities. There are no proxies, stockholder
agreements, or any other agreements between any Protea Entity and any
securityholder of such Protea Entity or, to the knowledge of the Company, among
any securityholders of any Protea Entity, including agreements relating to the
voting, transfer, redemption or repurchase of any securities of such Protea
Entity. No Protea Entity has any outstanding shareholder purchase rights or
“poison pill” or any similar arrangement in effect giving any person the right
to purchase any equity interest in such Protea Entity upon the occurrence of
certain events. All of the outstanding shares of capital stock of the Company
are duly authorized, validly issued, fully paid and nonassessable, have been
issued in compliance with all federal and state securities laws, and none of
such outstanding shares was issued in violation of any preemptive rights or
similar rights to subscribe for or purchase securities. No further approval or
authorization of any stockholder, the Board of Directors or others is required
for the issuance and sale of the Securities. There are no stockholders
agreements, voting agreements or other similar agreements with respect to the
Company’s capital stock to which the Company is a party or, to the knowledge of
the Company, between or among any of the Company’s stockholders. Except as
required by law, including any federal securities rules and regulations, there
are no restrictions upon the voting or transfer of any of the shares of capital
stock of any Protea Entity pursuant to its Organizational Documents or other
governing documents or any agreement or other instruments to which any Protea
Entity is a party or by which it is bound.

 

 5 

 

 

3.8           Shell Company Status; Protea SEC Reports; Financial Statements.
The Company was initially formed as a “shell” company as described in Rule
144(i)(1) under the Securities Act and as of September 2, 2011, has ceased to be
a shell company. The Company has filed all reports, schedules, forms, statements
and other documents required to be filed by it under the Securities Exchange Act
, including pursuant to Section 13(a) or 15(d) thereof, for the two years
preceding the date hereof (or such shorter period as the Company was required by
law or regulation to file such material) (the foregoing materials and any
amendments filed through the date hereof, including the exhibits thereto and
documents incorporated by reference therein, being collectively referred to
herein as the “Protea SEC Reports”) on a timely basis or has received a valid
extension of such time of filing and has filed any such Protea SEC Reports prior
to the expiration of any such extension. As of their respective dates, the
Protea SEC Reports complied in all material respects with the requirements of
the Securities Act and the Exchange Act, as applicable, and none of the Protea
SEC Reports, 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. The financial statements of the Company
included in the Protea SEC Reports comply in all material respects with
applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing. The
financial statements (the “Financial Statements”) of the Company included in the
Memorandum have been prepared in accordance with United States generally
accepted accounting principles applied on a consistent basis during the periods
involved (“GAAP”), except as may be otherwise specified in such financial
statements or the footnotes thereto except that unaudited financial statements
may not contain all footnotes required by GAAP, and fairly present in all
material respects the financial position of the Company and the Protea Entities
as of and for the dates thereof and the results of operations and cash flows for
the periods then ended, subject to normal, immaterial, year-end audit
adjustments. There is no transaction, arrangement, or other relationship between
a Protea Entity and an unconsolidated or other off balance sheet entity that is
not disclosed in its financial statements that should be disclosed in accordance
with GAAP and that would be reasonably likely to have a Material Adverse Effect.

 

3.9           Absence of Liabilities. Except as set forth in the Protea SEC
Reports on Schedule 3.9 hereto, since the Balance Sheet Date (hereinafter
defined): (i) there has been no event, occurrence or development that has had or
that could reasonably be expected to result in a Material Adverse Effect, (ii)
the Company has not incurred any liabilities (contingent or otherwise) other
than (A) trade payables and accrued expenses incurred in the ordinary course of
business consistent with past practice and (B) liabilities not required to be
reflected in the Company’s financial statements pursuant to GAAP or disclosed in
filings made with the Commission, (iii) the Company has not altered its method
of accounting, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock and (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock option plans.
Except for the issuance of the Securities contemplated by this Agreement or as
set forth in the Protea SEC Reports no event, liability, fact, circumstance,
occurrence or development has occurred or exists or is reasonably expected to
occur or exist with respect to the Company or its Subsidiaries or their
respective businesses, properties, operations, assets or financial condition,
that would be required to be disclosed by the Company under applicable
securities laws at the time this representation is made or deemed made. Except
as set forth in the Protea SEC Reports or on Schedule 3.9, no Protea Entity is a
guarantor or indemnitor of any liability of any other Person.

 

 6 

 

 

For purposes of this Section 3.9, is March 31, 2015 is referred to as the
“Balance Sheet Date”.

 

3.10        Agreements; Action.

 

3.10.1.      Disclosure. Except as set forth on Schedule 3.10.1 , the Protea SEC
Reports includes exhibits consisting of all of the following Contracts to which
the Company and any Protea Entity or any of their respective properties or
assets are a party or otherwise bound (each a “Material Contract”):

 

(a)          Contracts not made in the ordinary course of business;

 

(b)          each Contract pursuant to which (x) any Protea Entity is granted
rights to, or ownership in, any Intellectual Property by any other Person
(excluding “shrink wrap” licenses for generally available, commercial,
off-the-shelf Software that has not been modified), (y) any Protea Entity
purchases components, raw materials, equipment, instruments, and other supplies
and machinery that are material to the Protea Entities’ businesses, or supplies
any other Person with any components, raw materials, equipment, instruments, and
other supplies and machinery, or (z) any Protea Entity grants another person
rights to, or ownership in, any Intellectual Property;

 

(c)          Contracts relating to the manufacture or production of any of the
Products;

 

(d)          Contracts among one or more stockholders of any Protea Entity which
by their respective terms require performance after the date hereof;

 

(e)          Contracts or commitments involving future expenditures, actual or
potential, in excess of $150,000 after the date hereof;

 

(f)          Contracts or commitments for the performance of services for any
Protea Entity by a third party which has a term of one (1) year or more and
involves expenditures by any Protea Entity of $150,000 or more;

 

(g)          Contracts or commitments relating to commission arrangements with
any other Person;

 

(h)          Contracts (A) to employ, engage or terminate executive officers and
other Contracts with present or former executive officers or directors of Protea
which by their respective terms require performance after the date hereof, or
(B) that will result in the payment of, or the creation of any Liability on the
part of any Protea Entity to pay, any severance, termination, “golden
parachute,” or other similar payments to any present or former executive
officers or directors of Protea following termination of employment or
engagement or otherwise;

 

 7 

 

 

(i)          any lease under which any Protea Entity is either lessor or lessee
of personal property requiring annual lease payments (including rent and any
other charges) in excess of $150,000, and any lease under which any Protea
Entity is either lessor or lessee of any real property, including any Real
Property Lease;

 

(j)          promissory notes, loans, agreements, indentures, evidences of
indebtedness, letters of credit, guarantees, or other instruments relating to an
obligation to pay in excess of $150,000, whether any Protea Entity shall be the
borrower, lender or guarantor thereunder (excluding credit provided by any
Protea Entity in the ordinary course of business to purchasers of its products
or services and obligations to pay vendors in the ordinary course of business
and consistent with past practice);

 

(k)          Contracts containing covenants limiting the freedom of any Protea
Entity to engage in any activity anywhere in the world;

 

(l)          Contracts between any Protea Entity and any United States federal,
state or local government or any foreign government, or any Governmental or
Regulatory Authority, or any agency or department thereof, or with any
educational institution or part thereof;

 

(m)         any power of attorney granted by any Protea Entity in favor of any
Person;

 

(n)          Contracts pertaining to any material joint ventures, partnerships
or similar arrangements;

 

(o)          any Contract or other arrangement with an Affiliate; and

 

(p)          any Contract not otherwise required to be listed pursuant to
Subsections (a) – (s) above and with respect to which the consequences of a
default, non-renewal or termination could reasonably be expected to have a
Material Adverse Effect in the absence of a replacement Contract or arrangement
therefor.

 

3.10.2.      The Company has provided or made available, either through access
to the Protea SEC Reports or otherwise upon request, true and complete copies,
of all of the Material Contracts to the Purchasers. Each of the Material
Contracts is (a) in full force and effect, (b) a valid and binding obligation
of, and is enforceable in accordance with its terms against the applicable
Protea Entity that is party thereto and, to the knowledge of the Company, each
of the other parties thereto, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or other law affecting the enforcement of
creditors’ rights generally or by general equitable principles, (c) except for
those Material Contracts disclosed pursuant to Section 3.10.1(a) and identified
as such, was made in the ordinary course of business, and (d) contains no
provision or covenant prohibiting or limiting the ability of any Protea Entity
to operate its business in the manner in which it is currently operated.

 

 8 

 

 

3.10.3.      To the best of the Company’s knowledge, each Protea Entity has in
all material respects performed the obligations required to be performed by it
to date under each Material Contract to which it is a party and is not in
default or breach thereof, and no event or condition has occurred, whether with
or without the passage of time or the giving of notice, or both, that would
constitute such a breach or default. No Protea Entity or any other party to any
Material Contract has provided any notice to the other party or to any Protea
Entity, as applicable, of its intent to terminate, withdraw its participation
in, or not renew any such Material Contract. No Protea Entity has, and to the
knowledge of the Company, no other party to any Material Contract has,
threatened to terminate, withdraw from participation in, or not renew any such
Material Contract. To the knowledge of the Company, no other party to any
Material Contract is in breach or default under any provision thereof, and no
event or condition has occurred, whether with or without the passage of time or
the giving of notice, or both, that would constitute such a breach or default.

 

3.10.4.      No Consent of any party to any Material Contract is required in
connection with the transactions contemplated by this Agreement and the other
Transaction Documents.

 

3.10.5.      The execution, delivery and performance of this Agreement and the
other Transaction Documents do not and will not (a) result in or give to any
Person any right of termination, non-renewal, cancellation, withdrawal,
acceleration or modification in or with respect to any Material Contract, (b)
result in or give to any Person any additional rights or entitlement to
increased, additional, accelerated or guaranteed payments under any such
Material Contract or (c) result in the creation or imposition of any Liability
or any Encumbrances upon the Protea Intellectual Property or any Protea Entity‘s
assets under the terms of any such Material Contract.

 

3.10.6.      Except as disclosed in the Protea SEC Filings, no Protea Entity or
any representative thereof is a party to any binding Contract has engaged in the
past twelve (12) months in any discussions regarding, and is not a party to or
otherwise bound by any Contract in respect of, (a) any purchase, lease, license
or other acquisition of any other Person, whether by equity purchase, merger,
consolidation, reorganization or otherwise, or all or substantially all of the
assets of any other Person, or the entering into by any Protea Entity of any
share exchange with any other Person, (b) any change of control transaction with
respect to any of the Protea Entities, or (c) liquidation with respect to any of
the Protea Entities.

 

3.11        Changes. Except as set forth on Schedule 3.11, or where the
occurrence of any of the following events would not have a Material Adverse
Effect, since December 31, 2013 there has not been:

 

3.11.1.      any effect, event, condition or circumstance (including, without
limitation, the initiation of any litigation or other legal, regulatory or
investigative proceeding) against the Company that individually or in the
aggregate, with or without the passage of time, the giving of notice, or both,
has had or could reasonably be expected to have a Material Adverse Effect;

 

3.11.2.      any resignation or termination of any director, officer or key
employee of any Protea Entity, and no Protea Entity has received notification of
any impending resignation from any such Person;

 

3.11.3.      any material change in the contingent obligations of any Protea
Entity by way of guaranty, endorsement, indemnity, warranty or otherwise;

 

3.11.4.      any material damage, destruction or loss adversely affecting the
assets, properties, business, financial condition or prospects of any Protea
Entity, whether or not covered by insurance;

 

3.11.5.      any waiver by any Protea Entity of a valuable right or of any debt;

 

 9 

 

 

3.11.6.      any development, event, change, condition or circumstance that
constitutes, whether with or without the passage o time or the giving of notice
or both, a default under any Protea Entity’s outstanding debt obligation; or

 

3.11.7.      any change in any compensation arrangement or agreement with any
employee, consultant, officer, director or stockholder of any Protea Entity that
would increase the cost of any such agreement or arrangement to any Protea
Entity by more than $10,000 in each instance;

 

3.11.8.      any labor organization activity of the employees of any Protea
Entity;

 

3.11.9.      any declaration or payment of any dividend or other distribution of
the assets of any Protea Entity;

 

3.11.10.    any change in the accounting methods or practices followed by any
Protea Entity; or

 

3.11.11.    any Contract or commitment made by any Protea Entity to do any of
the foregoing.

 

3.12       Title to Properties and Assets; Liens, etc. Except where a violation
of this Section 3.12 could reasonably be expected to have a Material Adverse
Effect, the Company and each Protea Entity has good and marketable title to the
properties and assets it owns, and the Company and each Protea Entity has a
valid license in all properties and assets licensed by it, including the
properties and assets reflected as owned in the most recent balance sheet
included in the Financial Statements, and has a valid leasehold interest in its
leasehold estates, in each case subject to no Encumbrance, other than those
resulting from Taxes which have not yet become delinquent or those of the
lessors of leased property or assets. All facilities, machinery, equipment,
fixtures, vehicles and other properties owned, leased or used by each of the
Protea Entities are in good operating condition and repair, ordinary wear and
tear excepted and are fit and usable for the purposes for which they are being
used. Each Protea Entity is in compliance with all terms of each lease to which
it is a party or is otherwise bound.

 

3.13       Intellectual Property.

 

3.13.1.          Protea or the applicable Protea Entity is the owner or licensee
of all Owned Intellectual Property and all Licensed Intellectual Property as
described in the Memorandum (collectively, the “Protea Intellectual Property”).
Except as set forth on Schedule 3.13.1 and identified as such, no Protea Entity
has licensed any Protea Intellectual Property to any Person. All of the
registrations and applications for registration of the Protea Intellectual
Property are valid, subsisting and in full force and effect, and all actions and
payments necessary for the maintenance and continuation of such Protea
Intellectual Property have been taken or paid on a timely basis. Each Protea
Entity owns or possesses sufficient legal rights to use all of the Protea
Intellectual Property and the exclusive right to use all Owned Intellectual
Property and all Licensed Intellectual Property as being licensed to any Protea
Entity.

 

 10 

 

 

3.13.2.       To the knowledge of the Company, the business as currently
conducted and as proposed to be conducted by the Protea Entities has not and
will not constitute any infringement of the Intellectual Property rights of any
other Person which could reasonably be expected to have a Material Adverse
Effect. To the knowledge of the Company, the development of Product candidates
and the use, manufacture or sale of the Protea Entities’ Products based on the
Protea Intellectual Property does not, and will not, infringe the Intellectual
Property rights of any third Person. To the knowledge of the Company, no
employee or agents of the Protea Entities have misappropriated the Intellectual
Property rights of any Person.

 

3.13.3.       Except as set forth on Schedule 3.13.3 or in the Protea SEC
Reports, there are no outstanding options or other rights to acquire any Protea
Intellectual Property. To the knowledge of the Company, each licensor of the
Licensed Intellectual Property is the sole and exclusive owner of such Licensed
Intellectual Property and has the sole and exclusive right and authority to
grant licenses to such Licensed Intellectual Property.

 

3.13.4.       Except as set forth on Schedule 3.13.4 or in the Protea SEC
Reports, no Protea Entity has received any communications alleging or suggesting
that it has violated or, by conducting its business as currently conducted or
proposed to be conducted, would infringe or misappropriate any of the
Intellectual Property rights of any other Person.

 

3.13.5.       It is not necessary to the business of any Protea Entity, as
currently conducted or as proposed to be conducted, to utilize any inventions,
trade secrets or proprietary information of any of its employees, agents,
developers, consultants or contractors made prior to their employment by or
service to such Protea Entity, except for inventions, trade secrets or
proprietary information that have been assigned or licensed to any Protea
Entity.

 

3.13.6.       Except as disclosed in the Protea SEC Reports, since the date of
the Company’s incorporation, there has not been any sale, assignment or transfer
of any material Protea Intellectual Property or other material intangible assets
of any Protea Entity.

 

3.13.7.       To the knowledge of the Company, no Protea Intellectual Property
is subject to any interference, reissue, reexamination, opposition or
cancellation proceeding or any other Legal Proceeding or subject to or otherwise
bound by any outstanding Order or Contract (other than in the case of any
Licensed Intellectual Property, the Contract pursuant to which the Company
licenses the rights to such Licensed Intellectual Property) that restricts in
any manner the use, transfer or licensing thereof by any Protea Entity or may
affect the validity, use or enforceability of such Protea Intellectual Property.
No Protea Entity has any knowledge of any fact or circumstance that would render
any portion of the Protea Intellectual Property invalid or unenforceable.

 

3.13.8.       Except where the failure to comply with this Section 3.13.8 could
not be reasonably expected to have a Material Adverse Effect, each current and
former officer, employee, agent, developer, consultant and contractor who (a)
has had or has access to any Protea Intellectual Property has executed a
confidentiality and nondisclosure agreement that protects the confidentiality of
the trade secrets of the Protea Intellectual Property; and (b) contributed to or
participated in the creation and/or development of the Protea Intellectual
Property either: (i) is a party to a “work made for hire” agreement under which
one or more Protea Entities is deemed to be the original owner/author of all
right, title and interest in the Intellectual Property created or developed by
such Person; or (ii) has executed an assignment or an agreement to assign in
favor of one or more Protea Entities of all such Person’s right, title and
interest in the Intellectual Property.

 

3.13.9.       The execution and delivery of this Agreement and the other
Transaction Documents and consummation of the transactions contemplated hereby
and thereby will not result in the breach of, or create on behalf of any third
party the right to terminate or modify, any license, sublicense, agreement or
permission: (a) relating to or affecting any Protea Intellectual Property; or
(b) pursuant to which any Protea Entity is granted a license or otherwise
authorized to use any third party Intellectual Property.

 

 11 

 

 

3.13.10.     Except as set forth in the Protea SEC Reports or on Schedule
3.13.10, to the knowledge of the Company, no Person is infringing, violating,
misappropriating or making unauthorized use of any of the Protea Intellectual
Property. The Protea Entities have enforced and taken such commercially
reasonable steps as are necessary to protect and preserve all rights in the
Protea Intellectual Property against the infringement, violation,
misappropriation and unauthorized use thereof by any Person. Each Protea Entity
has the right to: (a) bring actions for past, present and future infringement,
dilution, misappropriation or unauthorized use of any Protea Intellectual
Property owned or licensed by such Protea Entity, injury to goodwill associated
with the use of any such Protea Intellectual Property, unfair competition or
trade practices violations of and other violation of such Protea Intellectual
Property; and (b) with respect to the Protea Intellectual Property owned
exclusively by any one or more Protea Entities, receive all proceeds from the
foregoing set forth in subsection (a) hereof, including, without limitation,
licenses, royalties income, payments, claims, damages and proceeds of suit.

 

3.14         Compliance with Other Instruments. Except as set forth in the
Protea SEC Reports or on Schedule 3.14, no Protea Entity (i) is in default under
or in violation of (and no event has occurred that has not been waived that,
with notice or lapse of time or both, would result in a default by the Company
or any Subsidiary under), nor has the Company or any Subsidiary received notice
of a claim that it is in default under or that it is in violation of, any
indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound (whether or
not such default or violation has been waived), (ii) is in violation of any
judgment, decree or order of any court, arbitrator or other governmental
authority or (iii) is or has been in violation of any statute, rule, ordinance
or regulation of any governmental authority, including without limitation all
foreign, federal, state and local laws relating to taxes, environmental
protection, occupational health and safety, product quality and safety and
employment and labor matters, except in each case as could not have or
reasonably be expected to result in a Material Adverse Effect.

 

3.15         Litigation. Except as set forth in the Protea SEC Reports, the
Memorandum or on Schedule 3.15, there is no Legal Proceeding pending or, to the
knowledge of the Company, threatened against the Company or any Protea Entity or
any investigation of the Company or any Protea Entity, nor is the Company aware
of any fact that would make any of the foregoing reasonably likely to arise. No
Protea Entity is a party or subject to the provisions of any Order. Except as
set forth in the Protea SEC Reports or on Schedule 3.15, there is no Legal
Proceeding by the Company any Protea Entity currently pending or that the
Company or any Protea Entity intends to initiate. Neither the Company nor Protea
Entity, nor any director or officer thereof, is or has been the subject of any
Order involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty. There has not been, and
to the knowledge of the Company, there is not pending or contemplated, any
investigation by the Commission involving the Company or any current or former
director or officer of the Company.

 

 12 

 

 

3.16       Tax Returns and Payments.

 

3.16.1.      Except as set forth in the Protea SEC Reports or on Schedule
3.16.1, the Company and each Protea Entity has filed all Tax Returns required to
be filed by it, and each Protea Entity has timely paid all Taxes owed (whether
or not shown on any Tax Return). All such Tax Returns were complete and correct,
and such Tax Returns correctly reflected the facts regarding the income,
business, assets, operations, activities, status and other matters of such
Protea Entity and any other information required to be shown thereon. The
Company and each Protea Entity has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any Employee,
creditor, independent contractor, shareholder, member or other third party. The
Company and each Protea Entity has established adequate reserves for all Taxes
accrued but not yet payable. No deficiency assessment with respect to or
proposed adjustment of the Company and/or Protea Entity’s Taxes is pending or,
to the knowledge of the Company, threatened. There is no tax lien (other than
for current Taxes not yet due and payable), imposed by any taxing authority,
outstanding against the assets, properties or the business of any Protea Entity.

 

3.16.2.      Neither the Company nor any Protea Entity has agreed to make any
adjustment under Section 481(a) of the Internal Revenue Code of 1986, as amended
(the “Code”) (or any corresponding provision of state, local or foreign tax law)
by reason of a change in accounting method or otherwise, and no Protea Entity
will be required to make any such adjustment as a result of the transactions
contemplated by this Agreement. Neither the Company nor any Protea Entity has
been or is a party to any tax sharing or similar agreement. No Protea Entity is
or has ever been a party to any joint venture, partnership, limited liability
company, or other arrangement or Contract which could be treated as a
partnership for federal income tax purposes. No Protea Entity is or has ever
been a “United States real property holding corporation” as that term is defined
in Section 897 of the Code.

 

3.17       Employees.

 

3.17.1.       (a) Neither the Company nor any Protea Entity has, or has ever had
any, collective bargaining agreements with any of its employees; (b) there is no
labor union organizing activity pending or, to the knowledge of the Company,
threatened with respect to the Company or any Protea Entity; (c) no employee has
or is subject to any agreement or Contract to which the Company or any Protea
Entity is a party (including, without limitation, licenses, covenants or
commitments of any nature) regarding his or her employment or engagement; (d) to
the best of the Company’s knowledge, no employee is subject to any Order that
would interfere with his or her duties to the Company or any Protea Entities or
that would conflict with the Company or any tProtea Entities’ businesses as
currently conducted and as proposed to be conducted; (e) no employee is in
violation of any term of any employment contract, proprietary information
agreement or any other agreement relating to the right of any such Person to be
employed by, or to contract with, the Company or any Protea Entity; (f) to the
best of the Company’s knowledge, the continued employment by the Company or any
Protea Entity of its present employees, and the performance of their respective
duties to such Protea Entity, will not result in any violation of any term of
any employment contract, proprietary information agreement or any other
agreement relating to the right of any such individual to be employed by, or to
contract with, the Company or any Protea Entity, and neither the Company nor any
Protea Entity has received any written notice alleging that such violation has
occurred; (g) no Employee or consultant has been granted the right to continued
employment by or service to the Company or any Protea Entity or to any
compensation following termination of employment with or service to the Company
or any Protea Entity; and (h) neither the Company nor any Protea Entity has any
present intention to terminate the employment or engagement or service of any
officer or any significant employee or consultant

 

3.17.2.      Except as set forth in the Protea SEC Reports or on Schedule
3.17.1, there are no outstanding or, to the knowledge of the Company, threatened
claims against the Company or any Protea Entity or any Affiliate (whether under
federal or state law, under any employment agreement, or otherwise) asserted by
any present or former employee or consultant of the Company or any Protea
Entity. Neither the Company nor any Protea Entity is in violation of any law or
Requirement of Law concerning immigration or the employment of persons other
than U.S. citizens.

 

 13 

 

 

3.18       Pension and Other Employee Benefit Plans.

 

3.18.1.       There are set forth or identified in the Protea SEC Reports or in
Schedule 3.18.1 all of the plans, funds, policies, programs and arrangements
sponsored or maintained by the Company or any Protea Entity on behalf of any
employee or former employee of the Company or any Protea Entity (or any
dependent or beneficiary of any such Employee or former employee) with respect
to (a) deferred compensation or retirement benefits; (b) severance or separation
from service benefits (other than those required by law); (c) incentive,
performance, stock, share appreciation or bonus awards; (d) health care
benefits; (e) disability income or wage continuation benefits; (f) supplemental
unemployment benefits; (g) life insurance, death or survivor’s benefits; (h)
accrued sick pay or vacation pay; or (i) any other material benefit offered
under any arrangement constituting an “employee benefit plan” within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”) and not excepted by Section 4 of ERISA (the foregoing being
collectively called “Employee Benefit Plans”). Schedule 3.18.1 sets forth all
such Employee Benefit Plans subject to the provisions of Section 412 of the Code
as well as any “multi-employer plans” within the meaning of Section 3(37) of
ERISA or Section 4001(a)(3) of ERISA. Except as set forth on Schedule 3.18.1,
the transactions contemplated by this Agreement will not result in any payment
or series of payments by the Purchasers, the Company or any Protea Entity of an
“excess parachute payment” within the meaning of Section 280G of the Code or any
other severance, bonus or other payment on account of such transactions. Except
as set forth on Schedule 3.18.1, none of the Employee Benefit Plans is under
investigation or audit by the United States Department of Labor, the Internal
Revenue Service or any other Governmental or Regulatory Authority.

 

3.18.2.       Except as set forth in the Protea SEC Reports or on Schedule
3.18.2, (a) each Protea Entity has complied with its obligations under all
applicable Requirements of Law including, without limitation, of ERISA and the
Code with respect to such Employee Benefit Plans and all other arrangements that
provide compensation or benefits to any Employee and the terms thereof, whether
or not such person is directly employed by any Protea Entity and (b) there are
no pending or, to the knowledge of the Company, threatened actions or claims for
benefits by any Employee, other than routine claims for benefits in the ordinary
course of business. No Employee Benefit Plan provides any benefits to any former
employees.

 

3.18.3.       All Employee Benefit Plans that are intended to meet the
requirements of Section 401(a) of the Code have been determined by the Internal
Revenue Service to meet such requirements and have at all times operated in
compliance with such requirements.

 

3.18.4.       All employment Taxes, premiums for employee benefits provided
through insurance, contributions to Employee Benefit Plans, and all other
compensation and benefits to which employees are entitled, have been timely paid
or provided as applicable, and there is no liability for any such payments,
contributions or premiums.

 

3.19       Real Property. Neither the Company nor any Protea Entity has any
interest in any real estate, except that the Protea Entities lease the
properties described in the Protea SEC Reports or on Schedule 3.19 (the “Leased
Real Property”). The Leased Real Property is adequate for the operations of each
of the Protea Entities’ businesses as currently conducted and as contemplated to
be conducted. True and complete copies of the lease agreements (the “Real
Property Leases”) pertaining to the Leased Real Property have been delivered or
made available to the Placement Agent. Except as set forth in the Protea SEC
Reports or Schedule 3.19, the Company and each Protea Entity has paid all
amounts due from it, and is not in default under any of the Real Property Leases
and there exists no condition or event, which, with the passage of time, giving
of notice or both, would reasonably be expected to give rise to a default under
or breach of the Real Property Leases.

 

 14 

 

 

3.20       Permits; Regulatory.

 

3.20.1        No Regulatory Approval or Consent of, or any designation,
declaration or filing with, any Governmental or Regulatory Authority or any
other Person is required in connection with the valid execution, delivery and
performance of this Agreement and the other Transaction Documents (including,
without limitation, the issuance of the Units), except such Regulatory
Approvals, Consents, designations, declarations or filings that have been duly
and validly obtained or filed, or with respect to any filings that must be made
after the Initial Closing or the Subsequent Closing as will be filed in a timely
manner. The Company and each Protea Entity has all franchises, Permits, licenses
and any similar authority necessary for the conduct of its business as now being
conducted, including, without limitation, the Food and Drug Administration
(“FDA”) of the U.S. Department of Health and Human Services.

 

3.20.2         To the best of the Company’s knowledge, all manufacturing and
production operations conducted by the Protea Entities (or by third parties on
behalf of the Protea Entities including, without limitation, any manufacturing
or production being done by any third party in connection with any feasibility,
preclinical, clinical or other study, test or trial for or on behalf of any
Protea Entity or any such study, test or trial that is being sponsored by any
Protea Entity or in which any Protea Entity or any of the Protea Entities’
Products is participating), if any, relating to the manufacture or production of
the Products are being conducted in compliance with all applicable Requirements
of Law including to the extent mandated by relevant regulatory agencies, without
limitation, current Good Manufacturing Practices or similar foreign
requirements.

 

3.20.3         No Protea Entity or, to the knowledge of the Company, any other
Person has received (a) any reports of inspection observations, (b) any
establishment inspection reports or (c) any warning letters or any other
documents from the FDA or any other Governmental or Regulatory Authority
relating to the Products and/or arising out of the conduct of any Protea Entity
or any Person which has conducted or is conducting any feasibility, preclinical,
clinical or other study, test or trial for or on behalf of any Protea Entity or
any such study, test or trial that is being sponsored by any Protea Entity or in
which any Protea Entity’s Products is participating that assert a material
violation or material non-compliance with any applicable Requirements of Law
(including, without limitation, those of the FDA).

 

 15 

 

 

3.21         Environmental and Safety Laws. Neither the Company nor any Protea
Entity has caused or allowed, or contracted with any party for, the generation,
use, transportation, treatment, storage or disposal of any Hazardous Substances
in connection with the operation of its business or otherwise, except in
compliance with all applicable Environmental Laws. To the best of the Company’s
knowledge, each Protea Entity and the operation of its business are in
compliance with all applicable Environmental Laws. To the best of the Company’s
knowledge, all of the Leased Real Property and all other real property which any
one or more Protea Entities occupy (the “Premises”) is in compliance with all
applicable Environmental Laws and Orders or directives of any Governmental or
Regulatory Authority having jurisdiction under such Environmental Laws,
including, without limitation, any Environmental Laws or Orders or directives
with respect to any cleanup or remediation of any release or threat of release
of Hazardous Substances. Each Protea Entity and the operation of its business is
and has been in compliance with all applicable Environmental Laws. To the
knowledge of the Company, there have occurred no and there are no events,
conditions, circumstances, activities, practices, incidents, or actions that may
give rise to any common law or statutory liability, or otherwise form the basis
of any Legal Proceeding, any Order, any remedial or responsive action, or any
investigation or study involving or relating to any Protea Entity, based upon or
related to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling, or the emission, discharge, release or
threatened release into the environment, of any pollutants, contaminants,
chemicals, or industrial, toxic or Hazardous Substance. To the knowledge of the
Company, (a) there is no asbestos contained in or forming a part of any
building, structure or improvement comprising a part of any of the Leased Real
Property, (b) there are no polychlorinated byphenyls (PCBs) present, in use or
stored on any of the Leased Real Property, and (c) no radon gas or the presence
of radioactive decay products of radon are present on, or underground at any of
the Leased Real Property at levels beyond the minimum safe levels for such gas
or products prescribed by applicable Environmental Laws. Each Protea Entity has
obtained and is maintaining in full force and effect all necessary Permits,
licenses and approvals required by all Environmental Laws applicable to the
Premises and the business operations conducted thereon, and is in compliance
with all such Permits, licenses and approvals. No Protea Entity has caused or
allowed a release, or a threat of release, of any Hazardous Substance onto, at
or near the Premises, and, to the knowledge of the Company, neither the Premises
nor any property at or near the Premises has ever been subject to a release, or
a threat of release, of any Hazardous Substance.

 

3.22         Regulatory Permits. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses, except where the failure to possess such permits could
not reasonably be expected to result in a Material Adverse Effect (“Material
Permits”), and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material Permit

 

3.23         Offering Valid. Assuming the accuracy of the representations and
warranties of the Purchasers contained in the subscription agreements entered
into by each Purchaser in connection with this Agreement, the offer, sale and
issuance of the Units will be exempt from the registration requirements of the
Securities Act of 1933, as amended (the “Securities Act”), and will be exempt
from registration and qualification under applicable state securities laws.

 

3.24         Disclosure. 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 any of the Purchasers or their agents or counsel with any information
that it believes constitutes or might constitute material, non-public
information. The Company understands and confirms that the Purchasers will rely
on the foregoing representation in effecting transactions in securities of the
Company. All of the disclosure furnished by or on behalf of the Company to the
Purchasers regarding the Company and its Subsidiaries, their respective
businesses and the transactions contemplated hereby, is, as of each Closing
Date, true and correct and does not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. The press releases disseminated by the Company during the
twelve months preceding the date of this Agreement taken as a whole do not
contain any untrue statement of a material fact or omit 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 and when made,
not misleading. The Company acknowledges and agrees that no Purchaser makes or
has made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 3.2
hereof.

 

 16 

 

 

3.25         Minute Books. A copy of all minutes of all meetings of directors
and stockholders and all actions by written consent without a meeting by the
directors and stockholders since January 1, 2010, has been made available to the
Placement Agent in a virtual data room and accurately reflect all actions taken
by the directors (and any committee of the directors) and stockholders with
respect to all transactions referred to in such minutes.

 

3.26         Insurance. Schedule 3.28 sets forth, by Protea Entity, a list of
all policies or binders of fire, casualty, liability, product liability,
worker’s compensation, vehicular or other insurance held by the Protea Entities
concerning its assets and/or its businesses (specifying for each such insurance
policy the insurer, the policy number or covering note number with respect to
binders, and each pending claim thereunder of more than $5,000). Such policies
and binders are valid and in full force and effect. No Protea Entity is in
default with respect to any provision contained in any such policy or binder or
has failed to give any notice or present any claim of which it has notice under
any such policy or binder in a timely fashion. No Protea Entity has received or
given a notice of cancellation or non-renewal with respect to any such policy or
binder. None of the applications for such policies or binders contain any
material inaccuracy, and all premiums for such policies and binders have been
paid when due. No Protea Entity has knowledge of any state of facts or the
occurrence of any event that could reasonably be expected to form the basis for
any claim against it not fully covered by the policies referred to on Schedule
3.28. No Protea Entity has received written notice from any of their respective
insurance carriers that any insurance premiums will be materially increased
after the applicable Closing Date or that any insurance coverage listed on
Schedule 3.28 will not be available after such Closing Date on substantially the
same terms as now in effect.

 

3.27         Investment Company Act. Neither the Company nor any Protea Entity
is an “investment company”, or a company “controlled” by an “investment
company”, within the meaning of the Investment Company Act of 1940, as amended.

 

3.28         Foreign Payments; Undisclosed Contract Terms.

 

  3.28.1.       To the knowledge of the Company, no Protea Entity has made any
offer, payment, promise to pay or authorization for the payment of money or an
offer, gift, promise to give, or authorization for the giving of anything of
value to any Person in violation of the Foreign Corrupt Practices Act of 1977,
as amended and the rules and regulations promulgated thereunder.

 

  3.28.2.       To the knowledge of the Company, there are no understandings,
arrangements, agreements, provisions, conditions or terms relating to, and there
have been no payments made to any Person in connection with any agreement,
Contract, commitment, lease or other contractual undertaking of any Protea
Entity which are not expressly set forth in such contractual undertaking.

 

3.29         No Broker. Other than commissions (including fees, expenses and
warrants) payable to the Placement Agent as described in the Memorandum, neither
the Company nor any Protea Entity has employed any broker or finder, or incurred
any liability for any brokerage or finder’s fees in connection with the sale of
the Units, or the Common Stock and Warrants underlying the Units pursuant to
this Agreement or the other Transaction Documents.

 

3.30         Compliance with Laws. The Company nor any Protea Entity is in
violation of, or in default under, any Requirement of Law applicable to such
Protea Entity, or any Order issued or pending against such Protea Entity or by
which such Protea Entity or any of such Protea Entities’ properties are bound,
except for such violations or defaults that have not had, and could not
reasonably be expected to have, a Material Adverse Effect.

 

 17 

 

 

3.31         No Integrated Offering. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 4, neither the Company, nor
any of its Affiliates, nor any Person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would cause this
offering of any of the shares of Common Stock, Warrants and Warrant Shares
(collectively, the “Securities”) to be integrated with prior offerings by the
Company for purposes of (i) the Securities Act which would require the
registration of any such securities under the Securities Act, or (ii) any
applicable shareholder approval provisions of any Trading Market on which any of
the securities of the Company are listed or designated.

 

3.32         Application of Takeover Protections. The Company and the Board of
Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s certificate of incorporation (or
similar charter documents) or the laws of its state of incorporation that is or
could become applicable to the Purchasers as a result of the Purchasers and the
Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including without limitation as a result of the Company’s
issuance of the Securities and the Purchasers’ ownership of the Securities.

 

3.33         No General Solicitation. Neither the Company nor any person acting
on behalf of the Company has offered or sold any of the Securities by any form
of general solicitation or general advertising. The Company has offered the
Securities for sale only to the Purchasers and certain other “accredited
investors” within the meaning of Rule 501 under the Securities Act.

 

3.34         Foreign Corrupt Practices. Neither the Company nor any Protea
Entity, nor to the knowledge of the Company or any Protea Entity, any agent or
other person acting on behalf of the Company or any Subsidiary, has: (i)
directly or indirectly, used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company or any Subsidiary (or made by any person acting
on its behalf of which the Company is aware) which is in violation of law or
(iv) violated in any material respect any provision of the Foreign Corrupt
Practices Act of 1977, as amended.

 

3.35         Stock Option Plans. Except as set forth in the Protea SEC Reports
or on Schedule 3.37, each stock option granted by the Company under the
Company’s stock option plan was granted (i) in accordance with the terms of the
Company’s stock option plan and (ii) with an exercise price at least equal to
the fair market value of the Common Stock on the date such stock option would be
considered granted under GAAP and applicable law. No stock option granted under
the Company’s stock option plan has been backdated. The Company has not
knowingly granted, and there is no and has been no Company policy or practice to
knowingly grant, stock options prior to, or otherwise knowingly coordinate the
grant of stock options with, the release or other public announcement of
material information regarding the Company or its Subsidiaries or their
financial results or prospects.

 

3.36         Office of Foreign Assets Control. Neither the Company nor any
Subsidiary nor, to the Company's knowledge, any director, officer, agent,
employee or affiliate of the Company or any Subsidiary is currently subject to
any U.S. sanctions administered by the Office of Foreign Assets Control of the
U.S. Treasury Department (“OFAC”).

 

3.37         U.S. Real Property Holding Corporation. The Company is not and has
never been a U.S. real property holding corporation within the meaning of
Section 897 of the Internal Revenue Code of 1986, as amended, and the Company
shall so certify upon Purchaser’s request.

 

 18 

 

 

3.38         Money Laundering. The operations of the Company and its
Subsidiaries are and have been conducted at all times in compliance with
applicable financial record-keeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, applicable money
laundering statutes and applicable rules and regulations thereunder
(collectively, the “Money Laundering Laws”), and no action, suit or proceeding
by or before any court or governmental agency, authority or body or any
arbitrator involving the Company or any Subsidiary with respect to the Money
Laundering Laws is pending or, to the knowledge of the Company or any
Subsidiary, threatened.

 

3.39         Bad Actor Disqualification

 

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

 

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

 

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

 

3.43         Transactions with Affiliates and Employees. Except as set forth in
the Protea SEC Reports, none of the officers or directors of the Company and, to
the knowledge of the Company, none of the employees of the Company 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 $120,000 other than for: (i) payment of
salary or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) other employee benefits, including
stock option agreements under any stock option plan of the Company.

 

 19 

 

 

3.44         Sarbanes-Oxley; Internal Accounting Controls. The Company is in
material compliance with all provisions of the Sarbanes-Oxley Act of 2002 which
are applicable to it as of the Closing Date. Except as disclosed in the
Company’s Protea SEC Reports, the Company and the Subsidiaries maintain a system
of internal accounting controls sufficient 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 GAAP 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.
Except as disclosed in the Company’s Protea SEC Reports, the Company has
established disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls
and procedures to ensure that information required to be disclosed by the
Company in the reports it files or submits under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
Commission’s rules and forms. The Company’s certifying officers have evaluated
the effectiveness of the Company’s disclosure controls and procedures as of the
end of the period covered by the Company’s most recently filed periodic report
under the Exchange Act (such date, the “Evaluation Date”). The Company presented
in its most recently filed periodic report under the Exchange Act the
conclusions of the certifying officers about the effectiveness of the disclosure
controls and procedures based on their evaluations as of the Evaluation Date.
Since the Evaluation Date, there have been no changes in the Company’s internal
control over financial reporting (as such term is defined in the Exchange Act)
that has materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting.

 

3.40         Listing and Maintenance Requirements. The Common Stock is
registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
Company has taken no action designed to, or which to its knowledge is likely to
have the effect of, terminating the registration of the Common Stock under the
Exchange Act nor has the Company received any notification that the SEC is
contemplating terminating such registration. The Company has not, in the 12
months preceding the date hereof, received notice from any Trading Market on
which the Common Stock is or has been listed or quoted to the effect that the
Company is not in compliance with the listing or maintenance requirements of
such Trading Market. The Company is, and has no reason to believe that it will
not in the foreseeable future continue to be, in compliance with all such
listing and maintenance requirements.

 

3.41         Regulation M Compliance.  The Company has not, and to its knowledge
no one acting on its behalf has, (i) taken, directly or indirectly, any action
designed to cause or to result in the stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of any of the
Securities, (ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the securities of the Company, or (iii) paid or
agreed to pay to any Person any compensation for soliciting another to purchase
any other securities of the Company, other than, in the case of clauses (ii) and
(iii), compensation paid to the Company’s placement agent in connection with the
placement of the Securities.

 

3.42         DTC Status. The Company’s transfer agent, Island Stock Transfer,
(the “Transfer Agent”) is a member participant of the Depository Trust Company
Automated Securities Transfer Program. The Company's Common Stock is currently
eligible for transfer pursuant to the Depository Trust Company Automated
Securities Transfer Program. As of the date of the Agreement, the Company’s
securities are currently trading on the OTC Bulletin Board and the OTC Link
under the symbol “PRGB”.

 

3.43         OFAC. No Protea Entity or, to the Company’s knowledge, any
director, officer, agent, employee, Affiliate or person acting on behalf of any
Protea Entity, is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and
the Company will not directly or indirectly use the proceeds of the sale of the
Units, or lend, contribute or otherwise make available such proceeds to any
joint venture partner or other person or entity, towards any sales or operations
in Cuba, Iran, Syria, Sudan, Myanmar or any other country sanctioned by OFAC or
for the purpose of financing the activities of any person currently subject to
any U.S. sanctions.

 

 20 

 

 

3.44         Registration Rights. Except as set forth in the Memorandum, the
Protea SEC Reports or on Schedule 3.44 and as required pursuant to the
Registration Rights Agreement, no Protea Entity is under any obligation, or has
granted any rights that have not been terminated, to register any of such Protea
Entity’s currently outstanding securities or any of its securities that may
hereafter be issued.

 

3.45         Material Non-Public Information. Except with respect to the
transactions contemplated hereby that will be publicly disclosed, no Protea
Entity has provided any Purchaser with any information that such Protea Entity
believes constitutes material non-public information.

 

3.46         Right to Receive Additional Shares. Except as set forth in the
Memorandum, the Protea SEC Reports or in connection with the Units issued in
this Offering, no existing shareholder of the Company has any right to cause the
Company to issue additional shares of Common Stock (the “Existing Right
Issuances”) to such shareholder.

 

4.            REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.

 

Each of the Purchasers hereby severally, and not jointly, represents and
warrants to the Company that each such Purchaser’s representations and
warranties in such Purchaser’s subscription agreement (each a “Subscription
Agreement” and collectively, the “Subscription Agreements”) entered into in
connection with this Agreement, in form and substance substantially the same as
the form of Subscription Agreement in Exhibit C are true and correct as of their
respective Closing, and such representations and warranties are deemed repeated
as if contained herein.

 

5.            CONDITIONS TO THE CLOSING.

 

5.1            Conditions to Purchasers’ Obligations at the Closings. The
obligations of the Purchasers to consummate the transactions contemplated herein
to be consummated at the Initial Closing and of each Subsequent Closing, as the
case may be, are subject to the satisfaction, on or prior to the date of such
Closing, of the conditions set forth below and applicable thereto, which
satisfaction shall be determined, or may be waived in writing, the Purchasers or
Subsequent Closing Purchasers, as the case may be, who have subscribed for at
least a majority of the Units to be purchased at such Closing.

 

5.1.1.         Representations and Warranties; Performance of Obligations. Each
of the representations and warranties of the Company contained herein shall be
true and correct on and as of the Initial Closing Date. As of the Initial
Closing, the Company shall have performed and complied with the covenants and
provisions of this Agreement required to be performed or complied with by it at
or prior to the Initial Closing Date. As to the Subsequent Closings, each of the
representations and warranties of the Company contained herein shall be true and
correct on and as of the Subsequent Closing Date, as qualified by any updated
Schedules delivered at least five (5) days in advance of the Subsequent Closing
to the Subsequent Closing Purchasers participating in the Subsequent Closing. As
to the Subsequent Closings, the Company shall have performed and complied with
the covenants and provisions of this Agreement and the other Transaction
Documents required to be performed or complied with by it at or prior to the
Subsequent Closing Date. At each Closing, the Purchasers participating in such
Closing shall have received certificates of the Company dated as of the date of
such Closing, signed by the president or chief executive officer of the Company,
certifying as to the fulfillment of the conditions set forth in this Section 5.1
and the truth and accuracy of the representations and warranties of the Company
contained herein (as qualified by the most recently delivered Schedules) as of
the Initial Closing Date and, as to each Subsequent Closing, the Subsequent
Closing Date.

 

 21 

 

 

5.1.2.        Issuance in Compliance with Laws. The sale and issuance of the
Units shall be legally permitted by all laws and regulations to which any of the
Purchasers and the Company are subject.

 

5.1.3.        Filings, Consents, Permits, and Waivers. The Company and the
Purchasers shall have made all filings and obtained any and all Consents,
Permits, waivers, and Regulatory Approvals necessary for consummation of the
transactions contemplated by the Agreement and the other Transaction Documents,
except for such filings as are not due to be made until after the applicable
Closing.

 

5.1.4.        Reservation of the Common Stock and Warrant Shares. From and after
the Initial Closing and any Subsequent Closing, the Common Stock and Warrant
Shares, which were the subject of such Closing shall have been duly authorized
and reserved for issuance by the Board of Directors.

 

5.1.5.        Registration Rights Agreement. Concurrently with the issuance of
the Units occurring at the Initial Closing, the Registration Rights Agreement,
substantially in the form attached hereto as Exhibit F (the “Registration Rights
Agreement”), shall have been executed and delivered by the Company and each
Purchaser.

 

5.1.6.          Lock-Up Agreements. Each of (a) the officers and directors of
the Company, (b) any stockholder of the Company owning 7.5% or more (giving
effect to the conversion or exercise of all convertible securities held by each
such stockholder) of the issued and outstanding Common Stock as of the date of
such Closing (but not including any Purchaser of Units), and (c) any other
controlling persons shall have executed a form of lock-up agreement reasonably
satisfactory to the Placement Agent and the Company whereby each such Person
agrees not sell or otherwise transfer any shares of the Company owned by such
Person until (i) the date that is ninety (90) days— following the effective date
of the Registration Statement (as defined in the Registration Rights Agreement).
Further, each executive officer and director of the Company agrees not to sell
or otherwise transfer any shares of Common Stock until three months after the
Company up-lists its common stock to a U.S. national senior stock exchange, such
as, but not limited to, NASDAQ or NYSE MKT.

 

5.1.7.        Legal Opinion. At each Closing, the Placement Agent and the
Purchasers or the Subsequent Closing Purchasers, as the case may be, shall have
received a legal opinion addressed to each of them, dated as of such Closing
Date, substantially in the form attached hereto as Exhibit E from CKR Law, LLP

 

5.1.8.        Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closings and all documents
and instruments incident to such transactions shall be reasonably satisfactory
in substance and form to the Purchasers or the Subsequent Closing Purchasers, as
the case may be, and their counsel, and the Purchasers or the Subsequent Closing
Purchasers, as the case may be, and their counsel shall have received all such
counterpart originals or certified or other copies of such documents as they may
reasonably request.

 

5.1.9.        Proceedings and Litigation. No action, suit or proceeding shall
have been commenced by any Person against any party hereto seeking to restrain
or delay the purchase and sale of the Units or the other transactions
contemplated by this Agreement or any of the other Transaction Documents.

 

 22 

 

 

5.1.10.      No Material Adverse Effect. Since the date hereof, there shall not
have occurred any effect, event, condition or circumstance (including, without
limitation, the initiation of any litigation or other legal, regulatory or
investigative proceeding) that individually or in the aggregate, with or without
the passage of time, the giving of notice, or both, that has had, or could
reasonably be expected to have, a Material Adverse Effect or which could
adversely affect the Company’s ability to perform its respective obligations
under this Agreement or any of the other Transaction Documents.

 

5.1.11.      Updated Disclosures. As to the Subsequent Closings, the Company
must have delivered to the Purchasers an updated set of schedules in accordance
with Section 5.1.1 and such updated schedules do not reveal any information or
the occurrence, since the Initial Closing Date, of any effect, event, condition
or circumstance, which individually, or in the aggregate, has had or could
reasonably be expected to have, a Material Adverse Effect and do not include any
state of facts that occur as a result of the breach by the Company of any of its
obligations under this Agreement or any of the other Transaction Documents.

 

5.1.12.      Payment of Purchase Price. As to the Initial Closing, each
Purchaser shall have delivered to the Company the total purchase price to be
paid for such Purchaser’s Initial Units, in the amount set forth opposite such
Purchaser’s name on Exhibit A, which shall be no less than $100,000 in aggregate
gross proceeds, excluding Units issued upon conversion of the Exercise Amount.
As to each Subsequent Closing, each Subsequent Closing Purchaser shall have
delivered to the Company the total purchase price to be paid for such Subsequent
Closing Purchaser’s Subsequent Units.

 

5.1.13.      Delivery of Documents at the Initial Closing. The Company shall
have executed and delivered the following documents, on or prior to the Initial
Closing Date:

 

(a)          Certificates. Certificates representing the Common Stock to be
purchased and sold on the Initial Closing Date;

 

(b)          Warrants: An executed Warrant, in substantially the form of Exhibit
B for the Warrants to be issued on the Initial Closing Date;

 

(c)          Legal Opinion. The legal opinion required by Section 5.1.6 hereof;

 

(d)          Secretary’s Certificate. A certificate of the Secretary of the
Company (i)attaching and certifying as to the Company’s Certificate of
Incorporation (the “Certificate”), (ii) attaching and certifying as to the
Bylaws of the Company in effect at the Initial Closing, (iii) attaching and
certifying as to copies of resolutions by the Board of Directors of the Company
authorizing and approving this Agreement and the other Transaction Documents and
the transactions contemplated hereby (collectively, the “Minutes”); and (iv)
certifying as to the incumbency of the officers of the Company executing this
Agreement and the other Transaction Documents.

 

5.1.14.      Delivery of Documents at the Subsequent Closing. At the Subsequent
Closing, the Company shall deliver, or shall cause to be delivered to the
Subsequent Closing Purchasers the following documents, to be held in escrow
pending the completion of the Subsequent Closing:

 

 23 

 

 

(a)          Certificates. Certificates representing the Common Stock to be
purchased and sold on the Subsequent Closing Date bearing the legends required
to be placed on such certificates pursuant to the Transaction Documents;

 

(b)          Warrants: An executed Warrant, in substantially the form of Exhibit
B for the Warrants to be issued on the Subsequent Closing Date;

 

(c)          Compliance Certificate. The certificate required by
Section 5.1.15(e) hereof certifying that all representations and warranties made
by the Company as of the Subsequent Closing Date are true, complete and correct
as of the Subsequent Closing Date, as qualified by the updated Schedules
delivered pursuant to Section 5.1.1 and that all covenants in this Agreement and
the other Transaction Documents required to be performed by the Company prior to
the Subsequent Closing Date have been so performed;

 

(d)          Legal Opinion. The legal opinion required by Section 5.1.6 hereof;
and

 

(e)          Secretary’s Certificate. A Certificate of the Secretary of the
Company (i) certifying that the resolutions by the Board of Directors of the
Company authorizing and approving this Agreement and the other Transaction
Documents delivered at the Initial Closing have not been modified in any way or
rescinded and are otherwise in effect as of the Subsequent Closing, (ii)
certifying as to the incumbency of the officers of the Company executing any
documents contemplated by this Agreement to be executed and delivered by the
Company at the Subsequent Closing, and (iii) attaching and certifying as to
(iii) the Certificate as in effect at the Subsequent Closing, and (iv) the
Bylaws of the Company in effect at the Subsequent Closing.

 

5.2           Conditions to Obligations of the Company at the Closings. The
obligation of the Company to consummate the transactions contemplated herein to
be consummated at the Initial Closing or the Subsequent Closing, as the case may
be, is subject to the satisfaction, on or prior to the date of such Closing of
the conditions set forth below and applicable thereto, any of which may be
waived in writing by the Company:

 

5.2.1.          Representations and Warranties; Performance of Obligations. Each
of the representations and warranties of the Purchasers contained herein shall
be true and correct on and as of the Initial Closing Date. As of the Initial
Closing Date, the Purchasers shall have performed and complied with the
covenants and provisions of this Agreement required to be performed or complied
with by them at or prior to the Initial Closing Date. As to the Subsequent
Closing, each of the representations and warranties of the Purchaser(s)
contained herein shall be true and correct on and as of the Subsequent Closing
Date. As to the Subsequent Closing, the Subsequent Closing Purchaser(s) shall
have performed and complied with the covenants and provisions of this Agreement
required to be performed and complied with by them at or prior to the Subsequent
Closing Date.

 

5.2.2.          Proceedings and Litigation. No action, suit or proceeding shall
have been commenced by any Governmental Authority against any party hereto
seeking to restrain or delay the purchase and sale of the Units or the other
transactions contemplated by this Agreement.

 

5.2.3.          Qualifications. All Permits, if any, that are required in
connection with the lawful issuance and sale of the Units pursuant to this
Agreement shall be obtained and effective as of the Initial Closing or
Subsequent Closing, as applicable.

 

 24 

 

 

6.            COVENANTS OF THE PARTIES.

 

6.1         Commercially Reasonable Efforts. Upon the terms and subject to the
conditions set forth in this Agreement, the parties to this Agreement shall use
their respective good faith commercially reasonable efforts to take, or cause to
be taken, without any party being obligated to incur any material internal costs
or make any payment or payments to any third party or parties which,
individually or in the aggregate, are material and are not otherwise legally
required to be made, all actions, and to do or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable for such party to consummate and make effective, in the most
expeditious manner practicable, each Closing and the other transactions
contemplated hereunder.

 

6.2         Post-Closing Filings. In connection with each Closing, the Company
and the Purchasers, if applicable, agree to file all required forms or filings
under applicable securities laws.

 

6.3         Transfer Restrictions.

 

6.3.1         The Securities may only be disposed of in compliance with state
and federal securities laws. In connection with any transfer of Securities other
than pursuant to an effective registration statement or Rule 144 promulgated
under the Securities Act, to the Company or to an Affiliate of a Purchaser, the
Company may require the transferor thereof to provide to the Company an opinion
of counsel selected by the transferor and reasonably acceptable to the Company,
the form and substance of which shall be reasonably satisfactory to the Company,
to the effect that such transfer does not require registration of such
transferred Securities under the Securities Act. As a condition of transfer, any
such transferee shall agree in writing to be bound by the terms of this
Agreement and shall have the rights of a Purchaser under this Agreement.

 

6.3.2         The Purchaser agrees to the imprinting, so long as is required by
this Section 6.1, of a legend on any of the Securities, including the Warrant
Shares, substantially in the following form:

 

[NEITHER] THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS
EXERCISABLE HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.

 

 25 

 

 

6.3.3           Certificates evidencing the shares of Common Stock and Warrant
Shares shall be eligible for removal of the restrictive legend set forth in
Section 6.1.2 hereof, (a) following any sale of such shares of Common Stock or
Warrant Shares pursuant to Rule 144, or (b) if such shares of Common Stock, or
Warrant Shares are eligible for sale under Rule 144, without the requirement for
the Company to be in compliance with the current public information required
under Rule 144 as to such shares of Common Stock and Warrant Shares and without
volume or manner-of-sale restrictions, (c) following any sale of such shares of
Common Stock, or Warrant Shares, pursuant to the plan of distribution in an
effective registration statement (in compliance with any prospectus delivery
requirements), or (d) if such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the staff of the Commission) (the “Removal Date”).  The
Company shall cause its counsel to issue a legal opinion to the Transfer Agent
promptly after the Removal Date if required by the Transfer Agent to effect the
removal of the legend hereunder as permitted by applicable law then in effect.
The Company agrees that following the Removal Date, it will, no later than five
(5) trading days following the delivery by a Purchaser to the Company or the
Transfer Agent of a certificate representing shares of Common Stock or Warrant
Shares, as the case may be, issued with a restrictive legend, together with any
reasonable certifications requested by the Company, the Company’s counsel or the
Transfer Agent (such fifth (5th) trading day, the “Legend Removal Date”),
deliver or cause to be delivered to such Purchaser a certificate representing
such shares that is free from all restrictive and other legends. The Company may
not make any notation on its records or give instructions to the Transfer Agent
that enlarge the restrictions on transfer set forth in this Section 6.
Certificates for shares of Common Stock and Warrant Shares subject to legend
removal hereunder shall be transmitted by the Transfer Agent to the Purchaser by
crediting the account of the Purchaser’s prime broker with the Depository Trust
Company System as directed by such Purchaser if the Transfer Agent is then a
participant in such system and the Company is eligible to use such system and as
directed by such Purchaser if either (i) there is an effective registration
statement permitting the resale of such shares of Common Stock, or Warrant
Shares by the Purchaser (and the Purchaser provides the Company or the Company’s
counsel with any requested certifications with respect to future sales of such
shares) or (ii) the shares are eligible for resale by the Purchaser under Rule
144, without the requirement for the Company to be in compliance with the
current public information required under Rule 144 as to such shares of Common
Stock and Warrant Shares and without volume or manner-of-sale restrictions.

 

6.3.4           In addition to any other rights available to a Purchaser, if the
Company fails to deliver to a Purchaser unlegended Warrant Shares as required
pursuant to this Agreement and after the Legend Removal Date such Purchaser, or
a broker on such Purchaser’s behalf, purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by such
Purchaser of the Warrant Shares that such Purchaser was entitled to receive from
the Company (a “Buy-In”), then the Company shall promptly pay in cash to such
Purchaser (in addition to any remedies available to or elected by such
Purchaser) the amount by which (a) such Purchaser’s total purchase price
(including brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (b) the aggregate purchase price of the Warrant Shares
delivered to the Company for reissuance as unlegended shares (which amount shall
be paid as liquidated damages and not as a penalty). For example, if a Purchaser
purchases shares of Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to Common Stock or Warrant Shares delivered to the
Company for reissuance as unlegended shares having an aggregate purchase price
of $10,000, the Company shall be required to pay the Purchaser $1,000, plus
interest. The Purchaser shall provide the Company written notice indicating the
amounts payable to the Purchaser in respect of the Buy-In. For purposes of this
Agreement, the “purchase price” of a (a) share of Common Stock shall be $0.25
per share, and (B) Warrant Share shall be the Exercise Price (as defined in the
Warrants).

 

6.3.5           In addition to such Purchaser’s other available remedies, the
Company shall pay to such Purchaser, in cash, as partial liquidated damages and
not as a penalty, for each $1,000 of Warrant Shares (based on the Exercise Price
of such Warrant Shares, as the case may be) delivered for removal of the
restrictive legend, $10 per trading day (increasing to $20 per trading day five
(5) trading days after such damages have begun to accrue)) for each trading day
after the fifth (5th) trading day following the Legend Removal Date until such
certificate is delivered without a legend. Nothing herein shall limit such
Purchaser’s right to pursue actual damages for the Company’s failure to deliver
certificates representing any Securities as required by the Transaction
Documents, and such Purchaser shall have the right to pursue all remedies
available to it at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief.

 

 26 

 

 

6.4           Furnishing of Information; Public Information.     For so long as
any Purchaser holds any Securities, or if earlier, for a period of twenty-four
(24) months following the Termination Date (or the Final Termination Date if the
Offering is extended by the Company) the Company covenants to file all annual
and quarterly periodic reports with the SEC pursuant to Section 15(d) of the
Exchange Act or alternatively, if registered under Section 12(b) or 12(g) of the
Exchange Act, maintain the registration of the Common Stock under Section 12(b)
or 12(g) of the Exchange Act and to timely file (or obtain extensions in respect
thereof and file within the applicable grace period) all such annual and
quarterly reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act. Unless the Securities owned by such Purchaser
shall have been registered for resale, if at any time during the period
commencing from the date that is 6 months after the date hereof and ending 24
months following the Termination Date (or the Final Termination Date if the
Offering is extended by the Company) the Company shall fail for any reason to
satisfy the current public information requirement under Rule 144(c) (a “Public
Information Failure”) then, in addition to such Purchaser’s other available
remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated
damages and not as a penalty, by reason of any such delay in or reduction of its
ability to sell the Securities, an amount in cash equal to two percent (2.0%) of
the pro-rata portion of such Purchaser’s Purchase Price attributable to the
unsold Warrant Shares on the day of a Public Information Failure and on every
thirtieth (30th) day (prorated for periods totaling less than thirty (30) days)
thereafter until the earlier of (A) the date such Public Information Failure is
cured and (B) such time that such public information is no longer required for
the Purchasers to transfer their shares of Common Stock and Warrant Shares
pursuant to Rule 144. The payments to which a Purchaser shall be entitled
pursuant to this Section 6.2 are referred to herein as “Public Information
Failure Payments”. Public Information Failure Payments shall be paid on the
earlier of (Y) the last day of the calendar month during which such Public
Information Failure Payments are incurred, and (Z) the third (3rd) business day
after the event or failure giving rise to the Public Information Failure
Payments is cured. Nothing herein shall limit such Purchaser’s right to pursue
actual damages for the Public Information Failure, and such Purchaser shall have
the right to pursue all remedies available to it at law or in equity including,
without limitation, a decree of specific performance and/or injunctive relief.
Notwithstanding anything herein to the contrary, the maximum payment hereunder
shall not exceed twelve (12%) percent of such Purchaser’s Purchase Price. As
long as any Purchaser owns Securities, if the Company is not required to file
reports pursuant to such laws, it will prepare and furnish to the Purchasers and
make publicly available in accordance with Rule 144(c) such information as is
required for the Purchasers to sell the Securities under Rule 144. The Company
further covenants that it will take such further action as any holder of
Securities may reasonably request, to the extent required from time to time to
enable such person to sell such Securities without registration under the
Securities Act within the requirements of the exemption provided by Rule 144.

 

6.5           Listing of Securities. The Company agrees, (i) if the Company
applies to have the Common Stock traded on any other trading market, it will
include in such application the Warrant Shares of each Purchaser, and will take
such other action as is necessary or desirable to cause such Common Stock and
any Warrant Shares to be listed on such other trading market as promptly as
possible, and (ii) it will take all action reasonably necessary to continue the
listing and trading of its Common Stock on a Trading Market (as defined in the
Warrant) and will comply in all material respects with the Company’s reporting,
filing and other obligations under the bylaws or rules of any such Trading
Market (as defined in the Warrant).

 

 27 

 

 

6.6           Reservation of Shares. From and after the Initial Closing and any
Subsequent Closing, the Company shall at all times thereafter while the Common
Stock and Warrants which were purchased and sold at such Closing are outstanding
maintain a reserve from its duly authorized shares of Common Stock of a number
of shares of Common Stock sufficient to allow for the issuance of Common Stock
and Warrant Shares, which were the subject of such Closing.

 

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

 

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

 

6.9           Form D; Blue Sky Filings. The Company agrees to timely file a Form
D with respect to the Securities as required under Regulation D promulgated
under the Securities Act and to provide a copy thereof, promptly upon request of
the Purchaser. The Company shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for, or to
qualify the Securities for, sale to the Purchaser at the Closing under
applicable securities or “Blue Sky” laws of the states of the United States, and
shall provide evidence of such actions promptly upon request of any Purchaser.

 

6.10         Equal Treatment of Purchasers. No consideration (including any
modification of any Transaction Document) shall be offered or paid to any person
to amend or consent to a waiver or modification of any provision of any of the
Transaction Documents unless the same consideration is also offered to all of
the parties to the Transaction Documents.

 

6.11         Non-Public Information. Except with respect to the material terms
and conditions of the transactions contemplated by the Transaction Documents,
the Company covenants and agrees that neither it, nor any other person acting on
its behalf, will provide Purchaser or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless
prior thereto Purchaser shall have executed a written agreement regarding the
confidentiality and use of such information. The Company understands and
confirms that Purchaser shall be relying on the foregoing covenant in effecting
transactions in securities of the Company.

 

6.12         Use of Proceeds. The Company shall use the net proceeds from the
sale of the Securities hereunder for working capital purposes and shall not use
the proceeds for (a) the satisfaction of any portion of the Company’s debt
(other than payment of trade payables in the ordinary course of the Company’s
business and prior practices), (b) the redemption of any Common Stock or Common
Stock Equivalents or (c) the settlement of any outstanding litigation.

 

 28 

 

 

6.13         Commercially Reasonable Efforts. Upon the terms and subject to the
conditions set forth in this Agreement, the parties to this Agreement shall use
their respective good faith commercially reasonable efforts to take, or cause to
be taken, without any party being obligated to incur any material internal costs
or make any payment or payments to any third party or parties which,
individually or in the aggregate, are material and are not otherwise legally
required to be made, all actions, and to do or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable for such party to consummate and make effective, in the most
expeditious manner practicable, each Closing and the other transactions
contemplated hereunder.

 

6.14         Participation in Future Financing. Except as otherwise set forth in
this Section 6.14:

 

6.14.1     From the date hereof until the one year anniversary of the Final
Closing Date, upon any issuance by the Company, any of its Subsidiaries (or any
resulting Person due to any “Spin-Outs”) in an offering pursuant to which any of
the foregoing raises gross proceeds of at least $1,000,000 of Common Stock or
Common Stock Equivalents (a “Subsequent Financing”), each Purchaser shall have
the right to participate in up to an amount of the Subsequent Financing equal to
such Purchaser’s proportionate share of the Subsequent Financing based on such
Purchaser’s participation in this Offering (the “Participation Maximum”) on the
same terms, conditions and price provided for in the Subsequent Financing;
provided, however, that Purchasers shall not have the right to participate in
any offering by the Company or any of its Subsidiaries of Common Stock or Common
Stock Equivalents to be issued solely to Company Investors.

 

6.14.2     At least 10 trading days prior to the closing of the Subsequent
Financing, the Company shall deliver to each Purchaser a written notice of its
intention to effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice
shall ask such Purchaser if it wants to review the details of such financing
(such additional notice, a “Subsequent Financing Notice”). Upon the request of a
Purchaser, and only upon a request by such Purchaser made within one trading day
following the receipt by the Purchaser of the Pre-Notice, for a Subsequent
Financing Notice, the Company shall promptly, but no later than 1 trading day
after such request, deliver a Subsequent Financing Notice to such Purchaser. The
Subsequent Financing Notice shall describe in reasonable detail the proposed
terms of such Subsequent Financing, the amount of proceeds intended to be raised
thereunder and the person or persons through or with whom such Subsequent
Financing is proposed to be effected and shall include a term sheet or similar
document relating thereto as an attachment.

 

6.14.3     Any Purchaser desiring to participate in such Subsequent Financing
must provide written notice to the Company by not later than 5:30 p.m. (New York
City time) on the 5th trading day after all of the Purchasers have received the
Pre-Notice that the Purchaser is willing to participate in the Subsequent
Financing, the amount of the Purchaser’s participation, and that the Purchaser
has such funds ready, willing, and available for investment on the terms set
forth in the Subsequent Financing Notice. If the Company receives no notice from
a Purchaser as of such 5th trading day, such Purchaser shall be deemed to have
notified the Company that it does not elect to participate.

 

 29 

 

 

6.14.4       If by 5:30 p.m. (New York City time) on the 5th trading day after
all of the Purchasers have received the Pre-Notice, notifications by the
Purchasers of their willingness to participate in the Subsequent Financing (or
to cause their designees to participate) is, in the aggregate, less than the
total amount of the Subsequent Financing, then the Company may effect the
remaining portion of such Subsequent Financing on the terms and with the persons
set forth in the Subsequent Financing Notice.

 

6.14.5       If by 5:30 p.m. (New York City time) on the 5th trading day after
all of the Purchasers have received the Pre-Notice, the Company receives
responses to a Subsequent Financing Notice from Purchasers seeking to purchase
more than the aggregate amount of the Participation Maximum, each such Purchaser
shall have the right to purchase its Pro Rata Portion (as defined below) of the
Participation Maximum. “Pro Rata Portion” means the ratio of (x) the Units
purchased on the Closing Date by a Purchaser participating under this Section
6.12 and (y) the sum of the aggregate Units purchased by all Purchasers
participating under this Section 6.12.

 

6.14.6       The Company must provide the Purchasers with a second Subsequent
Financing Notice, and the Purchasers will again have the right of participation
set forth above in this Section 6.12, if the Subsequent Financing subject to the
initial Subsequent Financing Notice is not consummated for any reason on the
terms set forth in such Subsequent Financing Notice within 30 trading days after
the date of the initial Subsequent Financing Notice.

 

6.14.7       Notwithstanding the foregoing, this Section 6.12 shall not apply in
respect of issuances in connection with (i) an Exempt Issuance (as defined in
Section 6.13 below); (ii) an underwritten public offering pursuant to a
registration statement filed under the Securities Act; (iii) a joint venture or
acquisition of another entity by the Company, whether by purchase of stock,
merger, consolidation, purchase of all or substantially all of the assets of
such entity or otherwise; (iv) services rendered to or equipment leases of the
Company.

 

6.15        Most Favored Nation Provision. Until the earliest of (a) the third
year anniversary of the date hereof; (b) the date that the Purchaser no longer
owns any securities sold in the Offering; or (c) the date that the Company’s
shares of Common Stock are approved for uplisting to a senior U.S. stock
exchange such as The NASDAQ Capital Markets, the NYSE:Amex Exchange or the NYSE
MKT, in the event that the Company issues or sells any shares of Common Stock or
any Common Stock Equivalents pursuant to which shares of Common Stock may be
acquired at a price less than the $0.25 per share (subject to appropriate
adjustments for any stock dividend, stock split, stock combination,
reclassification or similar transaction after the date hereof) (such lower
price, the “Base Price” and such issuances, collectively, a “Dilutive
Issuance”), then the Company shall promptly issue additional shares of Common
Stock to such Purchaser, for no additional consideration, in an amount
sufficient so that the pro rata portion of the Purchase Price paid by such
Purchaser hereunder attributable to the Common Stock then held, shall be reduced
to a price (rounded to the nearest cent) when multiplied by a fraction, of which
(i) the numerator shall be the number of shares of Common Stock outstanding on a
fully diluted basis immediately prior to such Dilutive Issuance plus the number
of shares of Common Stock which the aggregate consideration received or to be
received by the Company for the total number of shares of Common Stock issued
pursuant to the Dilutive Issuance would purchase at the Base Price; and (ii) the
denominator shall be the number of shares of Common Stock outstanding on a fully
diluted basis immediately prior to such Dilutive Issuance plus the number of
such additional shares of Common Stock so issued in connection with the Dilutive
Issuance (such adjustment, a “Dilution Adjustment”). Such Dilution Adjustment
shall be made successively whenever such an issuance is made. Notwithstanding
the foregoing, this Section 6.15 shall not apply in respect of an Exempt
Issuance (as herein defined). No adjustment shall be made hereunder which would
require any Purchaser to surrender any shares of Common Stock to the Company.

 

 30 

 

 

For the purposes of this Sub-Section, Exempt Issuance shall mean the issuance of
(a) shares of Common Stock or options to employees, officers or directors of the
Company pursuant to any stock or option plan duly adopted for such purpose, by a
majority of the non-employee members of the Board of Directors or a majority of
the members of a committee of non-employee directors established for such
purpose (collectively, the “ESOP”), (b) except as specifically provided herein,
securities upon the exercise or exchange of or conversion of any Securities
issued hereunder and/or other securities exercisable or exchangeable for or
convertible into shares of Common Stock issued and outstanding on the date of
this Agreement, provided that such securities have not been amended since the
date of this Agreement to increase the number of such securities or to decrease
the exercise price, exchange price or conversion price of such securities and
which securities and the principal terms thereof are set forth on Schedule 6.15,
and (c) securities issued to the shareholders of VivoPharm Pty Ltd., a
corporation organized under the laws of Australia (“vivoPharm”) or otherwise
pursuant to acquisitions or strategic transactions approved by a majority of the
directors of the Company, provided that any such issuance shall only be to a
Person (or to the equityholders of a Person) which is, itself or through its
subsidiaries, an operating company or an owner of an asset in a business
synergistic with the business of the Company and shall provide to the Company
additional benefits in addition to the investment of funds, but shall not
include a transaction in which the Company is issuing securities primarily for
the purpose of raising capital or to an entity whose primary business is
investing in securities.

 

In addition to the rights described above, if at any time while the Purchaser
holds any Securities, any anti-dilution rights existing prior to the Initial
Closing of the Offering shall be triggered causing the Company to issue
additional shares of Common Stock (the “Existing Right Issuances”), the Company
shall issue to the Purchasers, on a pro rata basis, the number of additional
shares of Common Stock that shall be required so that immediately following the
Existing Rights Issuance, the Purchasers shall retain the same percentage of
issued and outstanding shares of Common Stock as owned of record immediately
prior to the Existing Rights Issuance.

 

7.            INDEMNIFICATION AND EXPENSES.

 

7.1          The Company Indemnification. The Company shall indemnify and hold
harmless each Purchaser and any of such Purchaser’s Affiliates and any Person
which controls, is controlled by, or under common control with (within the
meaning of the Securities Act) such Purchaser or any such Affiliate, and each of
their respective directors and officers, and the successors and assigns and
executors and estates of any of the foregoing (each, an “Indemnified Party”, and
collectively, the “Indemnified Parties”) from and against all Indemnified Losses
imposed upon, incurred by, or asserted against any of the Indemnified Parties
resulting from, relating to or arising out of:

 

7.1.1.         any representation or warranty made in this Agreement or any of
the other Transaction Documents or in any certificate or other instrument
delivered by or on behalf of the Company not being true and correct in any
material respect when made;

 

7.1.2.         any breach or non-fulfillment of any covenant or agreement to be
performed by the Company under this Agreement or the other Transaction
Documents;

 

7.1.3.         any third party action or claim against any Indemnified Party
arising out of any misrepresentation or breach described in Section 7.1.1 or
Section 7.1.2; or

 

 31 

 

 

7.1.4.         any third party action or claim relating in any way to the
Indemnified Party’s status as a security holder of the Company, as a Person
which controls, is controlled by or under common control with (within the
meaning of the Securities Act) any such Indemnified Party or as a director or
officer of any of the foregoing (including, without limitation, any and all
Indemnifiable Losses arising under the Securities Act, the Securities Exchange
Act of 1934, as amended, or similar securities law, or any other Requirements of
Law or otherwise, which relate directly or indirectly to the registration,
purchase, sale or ownership of any securities of the Company or to any fiduciary
obligation owed with respect thereto), including, without limitation, in
connection with any action or claim relating to any action taken or omitted to
be taken or alleged to have been taken or omitted to have been taken by such
Indemnified Party as a security holder; provided that the Company shall not be
obligated to indemnify or hold harmless any Indemnified Party under this Section
7.1.4 against any Indemnified Losses resulting from or arising out of any such
action or claim if it has been adjudicated by a final and non-appealable
determination of a court or other trier of fact of competent jurisdiction that
such Indemnified Losses were the result of (a) a breach of such Indemnified
Party’s fiduciary duty, (b) any action or omission made by the Indemnified Party
in bad faith, (c) such Indemnified Party’s willful misconduct, or (d) any
criminal action on the part of such Indemnified Party.

 

7.2          Attorneys’ Fees and Expenses.  If any action at law or in equity
(including arbitration) is necessary to enforce or interpret the terms of this
Agreement or any Transaction Document, the prevailing party shall be entitled to
reasonable attorneys’ fees, costs and necessary disbursements in addition to any
other relief to which such party may be entitled as determined by such court,
equity or arbitration proceeding.

 

8.            MISCELLANEOUS.

 

8.1           Governing Law; Submission to Jurisdiction; Waiver of Trial by
Jury. This Agreement shall be governed in all respects by the laws of the State
of New York without regard to the conflict of laws principles of the State of
New York or any other jurisdiction. No suit, action or proceeding with respect
to this Agreement or any of the Transaction Documents may be brought in any
court or before any similar authority other than in a court of competent
jurisdiction in the State of New York and the parties hereby submit to the
exclusive jurisdiction of such courts for the purpose of such suit, proceeding
or judgment. Each of the parties hereto hereby irrevocably waives any right
which it may have had to bring such an action in any other court, domestic or
foreign, or before any similar domestic or foreign authority and agrees not to
claim or plead the same. Each of the parties hereto hereby irrevocably and
unconditionally waives trial by jury in any legal action or proceeding in
relation to this Agreement or any of the Transaction Documents and for any
counterclaim therein.

 

8.2           Survival of Representations and Warranties. The representations
and warranties made by the Company and the Purchasers herein at each Closing
shall survive such Closing for a period of twelve (12) months. All statements
contained in any certificate or other instrument delivered by or on behalf of
any party to this Agreement, pursuant to or in connection with the transactions
contemplated by this Agreement or any of the other Transaction Documents shall
be deemed to be representations and warranties made by such party as of the date
of such certificate or other instrument.

 

8.3           Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided that no party may assign, delegate or otherwise
transfer any of its rights or obligations under this Agreement without the
consent of each other party. Notwithstanding the foregoing (a) any Purchaser may
assign or transfer, in whole or, from time to time, in part, the right to
purchase all or any portion of the Units to one or more of its Affiliates
(subject to Affiliate qualification as an Accredited Investor) and (b) from and
after the Initial Closing Date, any Purchaser or other holder of Common Stock
may assign, pledge or otherwise transfer, in whole or from time to time in part,
its rights hereunder to any Person who acquires any interest in any Common Stock
and (c) any Purchaser may assign or transfer any of its rights or obligations
under this Agreement, in whole or from time to time in part, to the Company or
any other Purchaser or any Affiliate of any other Purchaser. As a condition of
any transfer pursuant to this Section 8.3, the transferee must agree in writing
for the benefit of all parties to this Agreement (which writing shall be in form
and substance reasonably acceptable to all parties to this Agreement) to be
bound by the terms and conditions of this Agreement and all other Transaction
Documents with respect to any Common Stock being transferred hereunder.

 

 32 

 

 

8.4           Entire Agreement. This Agreement, the Exhibits and Schedules
hereto, the other Transaction Documents and each of the Exhibits delivered
pursuant thereto constitute the full and entire understanding and agreement
between the parties hereto with regard to the subject matter hereof and thereof
and no party hereto shall be liable or bound to any other party hereto in any
manner by any representations, warranties, covenants and agreements except as
specifically set forth herein and therein.

 

8.5           Severability. If any provision of the Agreement is held to be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.

 

8.6           Amendment and Waiver. Any provision of this Agreement may be
amended or waived if, but only if, such amendment or waiver is in writing and is
signed by the Company and the Purchasers (and, to the extent of any assignment
under Section 8.3 hereof, their respective permitted assigns and any permitted
assigns thereof) holding a majority of the voting power of the then outstanding
Common Stock and Warrant Shares purchased under this Agreement held by such
holders.

 

8.7           Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any party, upon any breach, default or noncompliance
by another party under this Agreement, the other Transaction Documents, shall
impair any such right, power or remedy, nor shall it be construed to be a waiver
of any such breach, default or noncompliance, or any acquiescence therein, or of
or in any similar breach, default or noncompliance thereafter occurring. Any
waiver or approval of any kind or character on any Purchaser’s part of any
breach, default or noncompliance under this Agreement, the other Transaction
Documents or any waiver on such party’s part of any provisions or conditions of
the Agreement, the other Transaction Documents, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement, the other Transaction Documents, or
otherwise afforded to any party, shall be cumulative and not alternative.

 

8.8           Notices. All notices, requests, demands and other communications
given or made in accordance with the provisions of this Agreement shall be
addressed (i) if to a Purchaser, at such Purchaser’s address, fax number or
email address, as furnished to the Company on the signature page below or as
otherwise furnished to the Company by the Purchaser in writing, or (ii) if to
the Company, to the attention of the President at such address, fax number or
email address furnished to the Purchasers on the signature page below or as
otherwise furnished by the Company in writing, and shall be made or sent by a
personal delivery or overnight courier, by registered, certified or first class
mail, postage prepaid, or by facsimile or electronic mail with confirmation of
receipt, and shall be deemed to be given on the date of delivery when made by
personal delivery or overnight courier, 48 hours after being deposited in the
U.S. mail, or upon confirmation of receipt when sent by facsimile or electronic
mail. Any party may, by written notice to the other, alter its address, number
or respondent, and such notice shall be considered to have been given three (3)
days after the overnight delivery, airmailing, faxing or sending via e-mail
thereof.

 

8.9           Expenses. The Company shall pay all costs and expenses that it
incurs with respect to the preparation, negotiation, execution, delivery and
performance of this Agreement, including, without limitation, any costs and
expenses of its counsel. The Company shall pay the reasonable fees and expenses
of independent counsel for the Placement Agent with respect to the negotiation
and execution of this Agreement and the other Transaction Documents in
accordance with the terms of the Company’s agreement with the Placement Agent. .

 

 33 

 

 

8.10         Titles and Subtitles. The titles of the sections and subsections of
the Agreement are for convenience of reference only and are not to be considered
in construing this Agreement.

 

8.11         Counterparts; Execution by Facsimile Signature. This Agreement may
be executed in any number of counterparts (including execution by facsimile),
each of which shall be an original, but all of which together shall constitute
one instrument. This Agreement may be executed by facsimile signature(s) which
shall be binding on the party delivering same, to be followed by delivery of
originally executed signature pages.

 

8.12         Acknowledgment. Any investigation or other examination that may
have been made at any time by or on behalf of a party to whom representations
and warranties are made in this Agreement or in any other Transaction Documents
shall not limit, diminish, supersede, act as a waiver of, or in any other way
affect the representations, warranties and indemnities contained in this
Agreement and the other Transaction Documents, and the respective parties may
rely on the representations, warranties and indemnities made to them in this
Agreement and the other Transaction Documents irrespective of and
notwithstanding any information obtained by them in the course of any
investigation, examination or otherwise, whether before or after any Closing.

 

8.13         Publicity. Except as otherwise required by law or applicable stock
exchange rules, no announcement or other disclosure, public or otherwise,
concerning the transactions contemplated by this Agreement shall be made, either
directly or indirectly, by any party hereto which mentions another party (or
parties) hereto without the prior written consent of such other party (or
parties), which consent shall not be unreasonably withheld, delayed or
conditioned.

 

8.14         No Third Party Beneficiaries. Nothing in this Agreement, express or
implied, is intended to confer on any person other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations or
Liabilities under or by reason of this Agreement.

 

8.15         Pronouns. All pronouns contained herein, and any variations
thereof, shall be deemed to refer to the masculine, feminine or neutral,
singular or plural, as to the identity of the parties hereto may require.

 

9.            DEFINITIONS.

 

As used in this Agreement, the following terms shall have the meanings herein
specified:

 

9.1           “Affiliate” shall mean, with respect to any Person specified: (i)
any Person that directly or indirectly through one or more intermediaries
controls, is controlled by or under common control with the Person specified;
(ii) any director, officer, or Subsidiary of the Person specified; and (iii) the
spouse, parents, children, siblings, mothers-in-law, fathers-in law,
sons-in-law, daughters-in-law, brothers-in-law, and sisters-in-law of the Person
specified, whether arising by blood, marriage or adoption, and any Person who
resides in the specified Person’s home. For any director, officer, or Subsidiary
of the Person specified. For purposes of this definition and without limitation
to the previous sentence, (x) “control” (including, with correlative meanings,
the terms “controlled by” and “under common control with”) of a Person means the
power, direct or indirect, to direct or cause the direction of management and
policies of such Person, whether through ownership of voting securities, by
contract or otherwise, and (y) any Person beneficially owning, directly or
indirectly, more than ten percent (10%) or more of any class of voting
securities or similar interests of another Person shall be deemed to be an
Affiliate of that Person.

 

 34 

 

 

9.2           “Agreement” shall have the meaning set forth in the preamble to
this Agreement.

 

9.3           “Balance Sheet Date” shall have the meaning set forth in Section
3.9.

 

9.4           “Budget” shall have the meaning set forth in Section 3.21.

 

9.5           “Certificate” shall have the meaning set forth in Section 5.1.13.

 

9.6           “Closing” shall mean the Initial Closing or the Subsequent
Closing, as applicable.

 

9.7           “Code” shall have the meaning set forth in Section 3.16.2.

 

9.8           “Closing Date” shall mean the Initial Closing Date or the
Subsequent Closing Date, as applicable.

 

9.9            “Common Stock” shall have the meaning set forth in the preamble
to this Agreement.

 

9.10         “Common Stock Equivalents” shall means any securities of the
Company or the Subsidiaries which would entitle the holder thereof to acquire at
any time Common Stock, including, without limitation, any debt, preferred stock,
rights, options, warrants 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.

 

9.11         “Company” shall have the meaning set forth in the preamble to this
Agreement.

 

9.12         “Consents” shall mean any consents, waivers, approvals,
authorizations, or certifications from any Person or under any Contract,
Organizational Document or Requirement of Law, as applicable.

 

9.13         “Contracts” shall mean any indentures, indebtedness, contracts,
leases, agreements, instruments, licenses, undertakings and other commitments,
whether written or oral.

 

9.14         “Copyrights” shall mean all copyrights, copyrightable works, mask
works and databases, including, without limitation, any computer software
(object code and source code), Internet web-sites and the content thereof, and
any other works of authorship, whether statutory or common law, registered or
unregistered, and registrations for and pending applications to register the
same including all reissues, extensions and renewals thereto, and all moral
rights thereto under the laws of any jurisdiction.

 

9.15         “Employee” shall have the meaning set forth in Section 3.17.1.

 

9.16         “Employee Benefit Plans” shall have the meaning set forth in
Section 3.18.1.

 

9.17         “Encumbrances” shall mean any security interests, liens,
encumbrances, pledges, mortgages, conditional or installment sales Contracts,
title retention Contracts, transferability restrictions and other claims or
burdens of any nature whatsoever.

 

 35 

 

 

9.18         “Environmental Laws” shall mean any Federal, state or local law or
ordinance or Requirement of Law or regulation pertaining to the protection of
human health or the environment, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Sections 9601, et seq., the Emergency Planning and Community Right-to-Know Act,
42 U.S.C. Sections 11001, et seq., and the Resource Conservation and Recovery
Act, 42 U.S.C. Sections 6901, et seq.

 

9.19         “ERISA” shall have the meaning set forth in Section 3.18.1.

 

9.20         “FDA” shall have the meaning set forth in Section 3.22.1.

 

9.21         “Financial Statements” shall have the meaning set forth in Section
3.8.

 

9.22         “Governmental or Regulatory Authority” shall mean any court,
tribunal, arbitrator, authority, agency, commission, official or other
instrumentality of the government of the United States or of any foreign
country, any state or any political subdivision of any such government (whether
state, provincial, county, city, municipal or otherwise).

 

9.23         “Hazardous Substances” shall mean oil and petroleum products,
asbestos, polychlorinated biphenyls, urea formaldehyde and any other materials
classified as hazardous or toxic under any Environmental Laws.

 

9.24         “Indemnified Losses” shall mean all losses, Liabilities,
obligations, claims, demands, damages, penalties, settlements, causes of action,
costs and expenses arising out of any third party claim or action against an
Indemnified Party, including, without limitation, the actual costs paid in
connection with an Indemnified Party’s investigation and evaluation of any claim
or right asserted against such Indemnified Party and all reasonable attorneys’,
experts’ and accountants’ fees, expenses and disbursements and court costs
including, without limitation, those incurred in connection with the Indemnified
Party’s enforcement of the indemnification provisions of Section 7 of this
Agreement.

 

9.25         “Indemnified Party” shall have the meaning set forth in Section
7.1.

 

9.26          “Initial Closing” shall have the meaning set forth in Section 2.1.

 

9.27         “Initial Closing Date” shall have the meaning set forth in Section
2.1.

 

9.28         “Initial Units” shall have the meaning set forth in Section 1.2.

 

9.29         “Leased Real Property” shall have the meaning set forth in Section
3.19.

 

9.30         “Legal Proceeding” shall mean any action, suit, arbitration, claim
or investigation by or before any Governmental or Regulatory Authority, any
arbitration or alternative dispute resolution panel, or any other legal,
administrative or other proceeding.

 

9.31         “Liabilities” shall mean all obligations and liabilities including,
without limitation, direct or indirect indebtedness, guaranties, endorsements,
claims, losses, damages, deficiencies, costs, expenses, or responsibilities, in
any of the foregoing cases, whether fixed or unfixed, known or unknown, asserted
or unasserted, choate or inchoate, liquidated or unliquidated, or secured or
unsecured.

 

 36 

 

 

9.32         “Licensed Intellectual Property” shall mean all Copyrights,
Patents, Trademarks, technology rights and licenses, trade secrets, know-how,
inventions, methods, techniques and other intellectual property any one or more
Entities have or has the right to use in connection with its business or their
respective businesses, as applicable, pursuant to license, sublicense, agreement
or permission.

 

9.33         “Material Adverse Effect” shall have the meaning set forth in
Section 3.1.

 

9.34         “Material Contract” shall have the meaning set forth in Section
3.10.1.

 

9.35         “Minimum Offering Amount Deadline” shall have the meaning set forth
in Section 2.1.

 

9.36         “Order” shall mean any judgment, order, writ, decree, stipulation,
injunction or other determination whatsoever of any Governmental or Regulatory
Authority, arbitrator or any other Person whose finding, ruling or holding is
legally binding or is enforceable as a matter of right (in any case, whether
preliminary or final and whether voluntarily imposed or consented to).

 

9.37         “Organizational Documents” shall mean, with respect to any Person,
such Person’s articles or certificate of incorporation, by-laws or other
governing or constitutive documents, if any.

 

9.38         “Owned Intellectual Property” shall mean all Copyrights, Patents,
Trademarks, technology, trade secrets, know-how, inventions, methods, techniques
and other intellectual property owned by the Company or any of its Subsidiaries.

 

9.39         “Patents” shall mean patents and patent applications (including,
without limitation, provisional applications, utility applications and design
applications), including, without limitation, reissues, patents of addition,
continuations, continuations-in-part, substitutions, additions, divisionals,
renewals, registrations, confirmations, re-examinations, certificates of
inventorship, extensions and the like, any foreign or international equivalent
of any of the foregoing, and any domestic or foreign patents or patent
applications claiming priority to any of the above.

 

9.40         “Permits” shall mean all licenses, permits, certificates of
authority, authorizations, approvals, registrations, franchises, rights, Orders,
qualifications and similar rights or approvals granted or issued by any
Governmental or Regulatory Authority relating to the Business.

 

9.41         “Per Unit Purchase Price” shall have the meaning set forth in
Section 1.2.

 

9.42         “Person” shall mean any individual, corporation, partnership, firm,
joint venture, association, limited liability company, limited liability
partnership, joint-stock company, trust, unincorporated organization or
Governmental or Regulatory Authority.

 

9.43         “Placement Agent” shall mean Laidlaw & Company (UK) Ltd.

 

9.44          “Premises” shall have the meaning set forth in Section 3.23.

 

9.45         “Products” shall have the meaning set forth in Section 3.10.1(c)

 

9.46         “Protea Entities” shall mean the Company, Protea Biosciences, Inc.
and Protea Europe collectively.

 

 37 

 

 

9.47         “Protea Entity” shall mean any Person which comprises part of the
Protea Entities.

 

9.48          “Protea Intellectual Property” shall have the meaning set forth in
Section 3.13.1.

 

9.49         “Purchase Price” shall mean the “Total Purchase Price Amount” set
forth in Exhibit A for each respective Purchaser.

 

9.50         “Purchasers” and “Purchaser” shall have the meaning set forth in
the preamble to this Agreement.

 

9.51         “Real Property Leases” shall have the meaning set forth in Section
3.19.

 

9.52         "Registration Rights Agreement” shall have the meaning set forth in
Section 5.1.5.

 

9.53         “Regulatory Approvals” shall mean all Consents from all
Governmental or Regulatory Authorities.

 

9.54         “Requirement of Law” shall mean any provision of law, statute,
treaty, rule, regulation, ordinance or pronouncement having the effect of law,
and any Order.

 

9.55         “Schedules” shall have the meaning set forth in the preamble to
Section 3.

 

9.56         “SEC” shall mean Securities and Exchange Commission.

 

9.57         “Securities” shall have the meaning set forth in Section 3.33.

 

9.58         “Securities Act” shall have the meaning set forth in Section 3.25.

 

9.59         “Subsequent Closing” shall mean the funding which occurs on the
Subsequent Closing Date.

 

9.60         “Subsequent Closing Date” shall have the meaning set forth in
Section 2.2.

 

9.61         “Subsequent Closing Purchaser” shall have the meaning set forth in
Section 1.3.

 

9.62          “Subsidiaries” and “Subsidiary” shall mean, with respect to any
Person (including the Company), any corporation, partnership, association or
other business entity of which more than 50% of the issued and outstanding stock
or equivalent thereof having ordinary voting power is owned or controlled by
such Person, by one or more Subsidiaries or by such Person and one or more
Subsidiaries of such Person.

 

9.63         “Suppliers” shall have the meaning set forth in Section 3.20.2.

 

9.64         “Tax Returns” shall mean any declaration, return, report, estimate,
information return, schedule, statements or other document filed or required to
be filed in connection with the calculation, assessment or collection of any
Taxes or, when none is required to be filed with a taxing authority, the
statement or other document issued by, a taxing authority.

 

 38 

 

 

9.65         “Taxes” shall mean (i) any tax, charge, fee, levy or other
assessment including, without limitation, any net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, payroll,
employment, social security, unemployment, excise, estimated, stamp, occupancy,
occupation, property or other similar taxes, including any interest or penalties
thereon, and additions to tax or additional amounts imposed by any federal,
state, local or foreign Governmental or Regulatory Authority, domestic or
foreign or (ii) any Liability for the payment of any taxes, interest, penalty,
addition to tax or like additional amount resulting from the application of
Treasury Regulation §1.1502-6 or comparable Requirement of Law.

 

9.66         “Trademarks” shall mean trademarks, service marks, trade names,
corporate names, company names, business names, fictitious business names, trade
styles, uniform resource locators (URLs), domain names, trade dress, any other
names and locators associated with the Internet, other source of business
identifiers, whether registered or unregistered and whether or not currently in
use, and registrations, applications to register and all of the goodwill of the
business related to the foregoing.

 

9.67         “Transaction Documents” shall mean this Agreement, the Subscription
Agreements, the Warrant, the Registration Rights Agreement and all other
documents, certificates and instruments executed and delivered at any Closing.

 

9.68         “Units” shall have the meaning set forth in the preamble to this
Agreement.

 

9.69          “Warrant Shares” shall have the meaning set forth in Section 1.1.

 

[SIGNATURES ON FOLLOWING PAGES]

 

 39 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Unit Purchase
Agreement as of [____________], 2015.

 

COMPANY:       PROTEA BIOSCIENCES GROUP, INC.         By:
                                    Name:      Steve Turner  
Title:        Chief Executive Officer       Address:  1311 Pineview Drive  
                 Morgantown, WV 26507   Tel:          (304) 292-2226  
Fax:          (304) 292-710   email:       stephen.turner@proteabio.com         

 

PURCHASERS:

 

The Purchasers set forth on Exhibit A to the Agreement have executed a
Subscription Agreement with the Company which provides, among other things, that
by executing the Subscription Agreement each Purchaser is deemed to have
executed the UNIT PURCHASE AGREEMENT in all respects and is bound to purchase
the Units set forth in such Subscription Agreement and Exhibit A to the
Agreement.