EXHIBIT 10.29

April 14, 2014

Convertible Bridge Loan Agreement

Dated April 14, 2014

between

 

1. Pieris AG, Lise-Meitner-Str. 30, 85354 Freising, Germany (the “Company”),
represented by its management board, consisting of Stephen S. Yoder, and its
supervisory board, represented by its chairman, Dr. Hans A. Küpper, and

 

2. the persons or entities listed in Exhibit A, who are the shareholders of the
Company (the “Shareholders”).

The Company and the Shareholders shall be jointly referred to as the “Parties”.

Preamble

 

1. The Shareholders are the current holders of all shares in the Company, which
is registered in the commercial register of the local court of Munich
(hereinafter referred to as the “Commercial Register”) under no. HRB 133223. The
Preferred Shares Series A, Preferred Shares Series A-1 and Preferred Shares
Series B of the Company (the “Preferred Shares”) are currently held by the
persons listed in Exhibit A as holders of Preferred Shares Series A, Preferred
Shares Series A-1 and Preferred Shares Series B (the “Preferred Shareholders”).
The object of the Company is biotechnological research as well as the
development and distribution of the research results.

 

2. With regard to the Company a series of rounds of financing providing for
equity capital were closed and corresponding agreements were entered into, in
particular the Investment Agreement and the Shareholders Agreement both dated
October 23, 2002, the Investment Agreement dated October 14, 2004 (file no.
V 2519/2004 of the notary Dr. Oliver Vossius, Munich), the Investment Agreement
and the Shareholders Agreement both dated November 13, 2006, the Consolidated
Shareholders’ Agreement 2008 and Investment Agreement both dated March 26, 2008
as well as the Convertible Bridge Loan Agreement dated November 12, 2012 (the
“Convertible Bridge Loan Agreement 2012”) and the Consolidated Shareholders’
Agreement 2012 (the “CSA 2012”), attached hereto as Exhibit B, dated
November 12, 2012, by which agreement all aforementioned shareholders’
agreements were consolidated and replaced. The Convertible Bridge Loan Agreement
2012 was amended by an Amendment Agreement dated March 2014 (the “Bridge Loan
2012 Amendment”).

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3. Under the Convertible Bridge Loan Agreement 2012, a convertible bridge loan
in the amount of EUR 2,000,000 was granted to the Company by certain Preferred
Shareholders (the “Convertible Bridge Loan 2012”). The parties thereto agreed in
the Bridge Loan 2012 Amendment (i) that the Company should repay the EUR
equivalent of up to USD four hundred thousand (400,000) of the Convertible
Bridge Loan 2012 (the “Repayment Amount”) to its holders before its maturity
date and (ii) that the Company should pay this amount on behalf of the holders
to the identified Shell Company (as defined in para. (9) of the Preamble) and/or
its shareholders in order to ensure all necessary corporate actions and other
measures in connection with the intended Reverse Merger (as defined in para.
(9) of the Preamble) are taken by the Shell Company and/or its shareholders. Of
this Repayment Amount, the EUR equivalent of up to USD fifty thousand
(50,000) was paid for this purpose on March 31, 2014. As of the signing of this
Convertible Bridge Loan Agreement, the remaining principal amount of the
Convertible Bridge Loan 2012 is still outstanding and has not been repaid.

 

4. The current shareholding in the Company is as follows:

 

Shareholder

   Number of
Common
Shares      Number of
Preferred
Shares
Series A      Number of
Preferred
Shares
Series A-1      Number of
Preferred
Shares
Series B  

Prof. Skerra Bet. GmbH

     43,663            

Dr. Steffen Schlehuber

     1,162            

Claus Schalper

     870            

Dr. Karsten Schürrle

     584            

MAPO Bet. GmbH

     5,664            

BioM AG

     2,950               1,852   

BioM Venture Capital GmbH & Co. KG

     1,870         40,537         8,277         5,926   

Transconnect Corporate Finance Beratungs GmbH

     3,230         6,755         2,570         6,189   

The Global Life Science Ventures Fonds II GmbH & Co. KG

        45,606         17,358         31,035   

The Global Life Science Ventures Fund II LP

        35,474         13,501         24,139   

Gilde Europe Food & Agribusiness Fund B.V.

        81,080         30,858         55,174   

Baytech Venture Capital GmbH & Co. KG

        60,812         9,312         9,312   

Coöperatieve AAC LS U.A.

        54,049         14,070         33,575   

KfW

           22,973         11,324   

Technologie Beteiligungsfonds II Bayern GmbH & Co. KG

           13,513         6,659   

Orbimed Private Investments III, LP

              183,438   

Orbimed Associates III, LLC

              1,747   

Novo Nordisk A/S

              92,593   

Total

     59,993         324,313         132,432         462,963   

 

– 2 / 27 –

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5. The Company now seeks a bridge financing amounting to a total of up to
EUR 2,000,000 in this financing round (the “2014 Financing Round”) to be
provided by a convertible bridge loan granted to the Company by certain
Preferred Shareholders.

 

6. To this end, those Preferred Shareholders listed in the table in Sec. 1
(Convertible Bridge Loan) para. (2) of this Convertible Bridge Loan Agreement
with a Loan Amount other than zero (0) (the “Investors”) intend to make
available to the Company a bridge loan in the total amount of up to EUR
2,000,000 which may be convertible into shares of the Company as provided in
this Agreement and is divided into (i) a tranche A of EUR 1,500,000 and (ii) a
tranche B of up to EUR 500,000 subject to the terms and conditions of this
Convertible Bridge Loan Agreement (the “Convertible Bridge Loan”). Each
Preferred Shareholder was initially offered an investment in the Convertible
Bridge Loan pro rata to his shareholding of Preferred Shares. As one or several
Preferred Shareholders did not participate in the granting of the Convertible
Bridge Loan or participated with less than their pro rata share of the
Convertible Bridge Loan, the remaining principal amount of the Convertible
Bridge Loan was offered to the other Preferred Shareholders pro rata to their
shareholding of Preferred Shares, resulting in the allocation of the principal
amount of the Convertible Bridge Loan among the Preferred Shareholders as set
forth the table under Sec. 1 (Convertible Bridge Loan) para. (2) of this
Convertible Bridge Loan Agreement.

 

7. The Shareholders are in agreement that their current and future relationship
as shareholders of the Company is governed by the CSA 2012. The CSA 2012 forms
an integral part of this Convertible Bridge Loan Agreement. Terms used but not
defined herein have the same meaning as given to them in the CSA 2012.

 

8. It is intended by the Parties that all of the Company’s shares, irrespective
of their liquidation preference, will be contributed (eingebracht) by the
Shareholders into a U.S. shell company (the “Shell Company”), which is to be
listed on a stock exchange (e.g. first on OTC Bulletin and, subsequently, on
NASDAQ), or into a subsidiary of such Shell Company, against issuance of shares
of common stock in the Shell Company to the Shareholders (the “Reverse Merger”).
The Company has identified Zosano, Inc., a Delaware corporation, as the Shell
Company.

NOW, THEREFORE, the Parties hereto enter into the following Convertible Bridge
Loan Agreement (hereinafter referred to as this “Agreement”):

 

– 3 / 27 –

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Sec.1

Convertible Bridge Loan

 

1. Subject to the terms and conditions of this Agreement, the Investors grant to
the Company a loan in the amount of up to Euro 2,000,000 which may be
convertible into shares of the Company as provided in this Agreement and is
divided into (i) a tranche A of EUR 1,500,000 and (ii) a tranche B of up to
EUR 500,000 (the “Convertible Bridge Loan”).

 

2. The principal amount of the Convertible Bridge Loan shall be allocated among
the Investors as displayed in the table below (the portion of each Investor of
the Convertible Bridge Loan a “Loan Amount” and, collectively, the “Loan
Amounts”; each Investor’s pro rata portion of the Convertible Bridge Loan, based
on his or its shareholding of Preferred Shares, insofar as such pro portion does
not exceed his or its Loan Amount, a “Pro Rata Loan Amount” and, collectively,
the “Pro Rata Loan Amounts”; the amount by which each Investor’s Loan Amount
exceeds his Pro Rata Loan Amount, if applicable, a “Super Pro Rata Loan Amount”
and, collectively, the “Super Pro Rata Loan Amounts”; and the portion of each
Investor of the Tranche A and of the Tranche B a “Tranche A Loan Amount” and a
“Tranche B Loan Amount”, respectively, and collectively, the “Tranche A Loan
Amounts” and “Tranche B Loan Amounts”, respectively):

 

– 4 / 27 –

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Investor

   Loan
Amount in
EUR      Pro Rata
Loan
Amount in
EUR      Super
Pro Rata
Loan
Amount
in EUR      Tranche A
in EUR      Tranche
B in
EUR  

Orbimed Private Investments III, LP

     797.987         395.444         402.543         598.490         199.497   

Orbimed Associates III, LLC

     5.001         3.766         1.235         3.751         1.250   

Novo Nordisk A/S

     199.606         199.606            149.705         49.902   

Transconnect Corporate Finance Beratungs GmbH

     53.659         40.407         13.252         40.244         13.415   

BioM AG

     13.747         10.352         3.395         10.310         3.437   

BioM Venture Capital GmbH & Co. KG

     0         122.036            0         0   

The Global Life Science Ventures Fonds II GmbH & Co. KG

     168.746         202.637            126.560         42.197   

The Global Life Science Ventures Fund II LP

     131.254         157.614            98.440         32.813   

Gilde Europe Food & Agribusiness Fund B.V.

     300.000         360.249            225.000         75.000   

Baytech Venture Capital GmbH & Co. KG

     200.000         171.243         28.757         150.000         50.000   

Coöperatieve AAC LS U.A.

     130.000         219.225            97.500         32.500   

KfW

     0         73.935            0         0   

Technologie Beteiligungsfonds II Bayern GmbH & Co. KG (BayernKapital)

     0         43.485            0         0   

Total

     2.000.000         2.000.000         449.182         1.500.000        
500.000   

 

3. All Shareholders hereby expressly and irrevocably consent to the allocation
of the principal amount of the Convertible Bridge Loan among the Investors
pursuant to para. (2) of this Sec. 1 and hereby waive any subscription rights or
similar rights in relation to the Convertible Bridge Loan.

 

4. The Loan Amounts shall be paid out by the Investors to the Company as
follows:

 

  a. The Tranche A Loan Amounts shall be paid out by the Investors to an account
notified by the Company to the Investors, once the Company has made a capital
call to the Investors, at the earliest upon the signing of this Agreement by all
Parties and subject to Sec. 13 (Lapse of Outstanding Capital Commitments; New
Capital Commitments) of this Agreement, within ten (10) bank working days in
Frankfurt/Main, Germany, after receipt of such capital call.

 

– 5 / 27 –

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  b. The Tranche B Loan Amounts shall be paid out by the Investors to an account
notified by the Company to the Investors within ten (10) bank working days in
Frankfurt/Main, Germany, after all of the following events have taken place:
(i) the management board of the Company has determined that a financial need of
the Company arises before the Maturity Date (as defined in Sec. 3 (Term) of this
Agreement), and (ii) the Investors have received a capital call made by the
Company, subject to Sec. 13 (Lapse of Commitments) of this Agreement.

Sec. 2

Use of Proceeds

The Company shall use the Convertible Bridge Loan for general corporate
purposes, including repayment (or partial repayment) of the Convertible Bridge
Loan 2012.

Sec. 3

Term

The Convertible Bridge Loan is granted until December 31, 2015 (the “Maturity
Date”). The Convertible Bridge Loan (as well as each called Loan Amount to the
respective Investor) shall be due for repayment, on the Maturity Date, unless
the Convertible Bridge Loan is terminated before the Maturity Date in accordance
with Sec. 5 (Early Termination and Repayment), whereupon the Convertible Bridge
Loan (as well as each called Loan Amount to the respective Investor) shall be
due for repayment in accordance with Sec. 5 (Early Termination and Repayment)
para. (5). In the event that the Company fails to repay the full amount of
(i) the called Loan Amounts plus (ii) accrued interests, within thirty (30) days
from the Maturity Date, then a repayment scheme will be negotiated in good faith
between the Company and the Shareholders, contemplating a defaulting interest
rate.

Sec. 4

Interest

The Loan Amounts shall bear interest on the amount outstanding until the Loan
Amounts are repaid at a rate of 12% per annum on or before the Maturity Date. If
and to the extent the Loan Amounts have not been repaid by the Maturity Date,
the Loan Amounts shall from then on bear interest on the amount out-

 

– 6 / 27 –

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standing at a rate of 18% per annum. The interest is to be calculated on the
basis of a year with 360 days with 12 months of 30 days each. The interest on
the Loan Amounts is due and payable upon repayment of the Loan Amounts to the
Investors. If the Convertible Bridge Loan is converted into shares of the
Company as provided in this Agreement, the respective formula set out in Sec. 11
(Number of New Shares) of this Agreement shall apply.

Sec. 5

Early Termination and Repayment

 

1. Except where Investors have request the conversion under Sec. 9. (Conversion
Request) of this Agreement and subject to Sec. 14 (Exercise of Investor Rights)
of this Agreement, the Investors are entitled to terminate the Convertible
Bridge Loan before the Maturity Date and request the repayment of the called
Loan Amounts plus any interest accrued thereon,

 

  a. in case of the closing of an Exit Event (as such term is defined in Sec. 11
(Preference / Sale Proceeds / Conversion) para. (1) of the CSA 2012); or

 

  b. in case of the closing of a financing of the Company lead by a financial or
strategic investor currently not affiliated with the Company resulting in
aggregate proceeds available to the Company of not less than EUR 10,000,000
(“Qualified Financing”).

 

2. The Company and the Investors, subject to Sec. 14 (Exercise of Investor
Rights) of this Agreement, are entitled to terminate the Convertible Bridge Loan
for good cause (aus wichtigem Grund) at any time. Furthermore and
notwithstanding the foregoing, each Investor individually is entitled to
terminate the respective Loan Amount for good cause at any time. Good cause for
the Investors includes, without limitation, the following events:

 

  a. voluntary bankruptcy / insolvency events of the Company (in particular, if
the Company is insolvent within the meaning of § 17 German Insolvency Code
(Insolvenzordnung) or if the Company applies for such proceedings to be
commenced or offers an out-of-court settlement in order to avoid such
proceedings); or

 

  b. the opening of involuntary bankruptcy / insolvency proceedings (Eröffnung
eines Insolvenzverfahrens) over the Company’s assets.

 

3. The termination right pursuant to para. (1) and (2) of this Sec. 5 must be
exercised in writing.

 

– 7 / 27 –

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4. In case the Convertible Bridge Loan or a Loan Amount is validly terminated,
the Company is obliged to repay the called Loan Amounts or Loan Amount,
respectively (plus interest accrued until that date), within five (5) bank
working days in Frankfurt/Main, Germany.

Sec. 6

Payments

 

1. Unless an Investor gives other instructions in writing to the Company, all
payments to be made to the respective Investor under this Agreement shall
exclusively be made by money transfer in Euros by the Company to an account of
the respective Investor, which account should be submitted by such Investor to
the Company.

 

2. When the Company makes payments to the Investors, it is obliged to treat the
Investors equally. Therefore, all payments to the Investors have to be made at
the same time, if reasonably practicable, and pro rata to their Loan Amounts.

 

3. Insofar as the Company makes payments to the Investors disregarding the
regulation under para. (2) of this Sec. 6, the Investors undertake vis-à-vis
each other to compensate each other for such deviating payment to the extent
that the aggrieved Investor would have receive such payments if the Company had
considered the regulations under para. (2) of this Sec. 6.

Sec. 7

Taxes and Duties

All payments by the Company to be made to the Investors under this Agreement
shall be made without a discount or deduction of any existent or future taxes or
duties of whatever kind raised in the Federal Republic of Germany, unless the
Company is obliged by law to withhold or deduct such taxes or duties.

Sec. 8

Qualified Subordination

 

1.

The Parties herewith agree that claims for repayment of the Loan Amounts
(including interest, costs and any other accessory claim, if any) (the “Claims”)
shall be irrevocably subordinated to any and all other liabilities, with the
exception of those ranking pari passu, of the Company vis-à-vis its current or
future creditors and therefore do not have to be settled, as long as and to the
extent that the Company is insolvent or over-indebted or was to be qualified as
insolvent or over-indebted pursuant to §§ 17, 19 German Insolvency Code
(Insolvenzordnung), would the Claims not be subordinated, or would an insolvency
or over-indebtedness of the Company exist for any other reason. This

 

– 8 / 27 –

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  subordination also applies to the final distribution of liquidation proceeds
pursuant to § 199 German Insolvency Code in the event of an insolvency
proceeding (Insolvenzverfahren). Repayments of the Loan Amounts shall only be
made from future annual net income, net income from winding up or from other
free assets (sonstiges freies Vermögen) of the Company. To the extent the Claims
are subordinated, the Claims are ranked behind claims pursuant to § 39 para. 1
no. 5 German Insolvency Code (Insolvenzordnung).

 

2. If German jurisprudence should require further requirements for a qualified
subordination agreement to be apt to avoid insolvency or over-indebtedness under
German Insolvency Law, the Claims of the Holder shall be regarded as having such
rank as required in particular pursuant to German jurisprudence in order to
avoid the passivation as liability in an over-indebtedness balance sheet
(Überschuldungsbilanz) of the Company.

Sec. 9

Conversion Request

 

1. At any time after the Maturity Date, the Investors are entitled but not
obliged to request the conversion in accordance with Sec. 10 (Conversion) and
subject to Sec. 14 (Exercise of Investor Rights) of this Agreement, in whole or
in part, of the Loan Amounts into series B shares of the Company at the Series B
Conversion Price (as defined in Sec. 11 (Number of New Shares) of this
Agreement) for their Pro Rata Loan Amounts and at the Preferred Series B
Conversion Price (as defined in Sec. 11 (Number of New Shares) of this
Agreement) for their Super Pro Rata Loan Amounts, if and to the extent the Loan
Amounts have not been repaid on or before the Maturity Date.

 

2. Upon the occurrence of an Exit Event prior to the Maturity Date, the
Investors are entitled but not obliged to request the conversion in accordance
with Sec. 10 (Conversion) and subject to Sec. 14 (Exercise of Investor Rights)
of this Agreement, in whole or in part, of the Loan Amounts into series B shares
of the Company at the Series B Conversion Price (as defined in Sec. 11 (Number
of New Shares) of this Agreement) for their Pro Rata Loan Amounts and at the
Preferred Series B Conversion Price (as defined in Sec. 11 (Number of New
Shares) of this Agreement) for their Super Pro Rata Loan Amounts, if and to the
extent the Loan Amounts have not been repaid.

 

3.

Upon the closing of a Qualified Financing, the Investors are entitled but not
obliged to request the conversion in accordance with Sec. 10 (Conversion) and
subject to Sec. 14 (Exercise of Investor Rights) of this Agreement, in whole or
in part, of the Loan Amounts into the preferred stock of the Company, whether
this

 

– 9 / 27 –

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  is series B or any other series of preferred stock which is issued to new
investors in a Qualified Financing (the “Qualified Financing Shares”) at the
Qualified Financing Conversion Price (as defined in Sec. 11 (Number of New
Shares) of this Agreement) for their Pro Rata Loan Amounts and at the Preferred
Qualified Financing Conversion Price (as defined in Sec. 11 (Number of New
Shares) of this Agreement) for their Super Pro Rata Loan Amounts, if and to the
extent the Loan Amounts have not been repaid.

 

4. The Investors may request the conversion of the Loan Amounts in accordance
with para. (2) and (3) of this Sec. 9 at any time during a period of four
(4) weeks after the occurrence of the Exit Event or closing of the Qualified
Financing, respectively.

Sec. 10

Conversion

 

1. In order to request conversion of the Loan Amounts pursuant to Sec. 9
(Conversion Request) of this Agreement, the Investors shall submit to the
Company a notice of conversion, in whole or in part, of the Loan Amounts (using
the form enclosed in Exhibit C) (the “Conversion Notice”).

 

2. In the event that the Company receives a Conversion Notice, the Company shall
invite all Shareholders, with the exception of the persons listed as indirect
shareholders in Exhibit A, to a shareholders’ meeting to be held within three
(3) months after receipt of the Conversion Notice by the Company, and all
Shareholders undertake to vote their shares in such a shareholders’ meeting, to
pass all resolutions required (including but not limited to resolutions on a
capital increase required to issue the New Shares as defined below (the “Capital
Increase”) and necessary amendments to the Company’s Articles of Association) to
issue the respective number of new series B shares or Qualified Financing
Shares, respectively (the “New Shares”), to be calculated according to Sec. 11
(Number of New Shares) of this Agreement, to the Investors. The New Shares shall
each be in registered form, and shall be issued as non-par value shares with a
portion of the Company’s share capital (anteiliger Betrag des Grundkapitals) of
EUR 1.00 each, and shall be issued at an issue price (Ausgabebetrag) of EUR
1.00 per share without any premium. The New Shares shall have the right to
participate in profits as from the beginning of the financial year in which they
have been issued.

 

3.

Each Shareholder undertakes individually for himself or itself vis-à-vis each
other party hereto, to do or cause to be done everything necessary to implement
the conversion request. Thus, the Shareholders undertake in particular to co-

 

– 10 / 27 –

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  operate in the Capital Increase of the Company and in necessary amendments to
the Company’s Articles of Association by exercising their voting rights in said
shareholders’ meeting of the Company, by subscribing to the New Shares as
provided in this Agreement and/or by waiving subscriptions rights to New Shares
in the Company if required to implement the conversion request.

 

4. To the extent legally permitted, the Company and Shareholders shall secure
that (i) the Company’s management board and the supervisory board will execute
the Capital Increase, and (ii) the Company will (a) accept the subscription of
New Shares as described above, as well as (b) without undue delay apply for
registration and of the consummation of the Capital Increase with the Commercial
Register.

 

5. The Investors shall pay in full their respective part of the cash
contribution (EUR 1.00 per share) within ten (10) bank working days in
Frankfurt/Main, Germany, after such Investor has subscribed for New Shares to
the Company’s special account to be named by the Company. Payments shall be made
exclusively to this special account, which will be opened solely for this
purpose and must not be used for other transactions or payments prior to the
conclusion of the aforementioned payments. This special account must not have a
debit balance immediately prior to the aforementioned payments being effected,
so that the Company’s management board can freely dispose of the amounts paid
(cf. Sec. 188, 36, 36a, 37 German Act on Stock Corporations; “AktG”).

 

6. In the event that the Investors request the conversion, in whole or in part,
of the Loan Amounts in accordance with Sec. 9 (Conversion Request) para. (1),
(2) or (3) of this Agreement and subscribe for the New Shares, each Investor
shall contribute (einlegen) without further consideration his claim for
repayment of the respective Loan Amount into the Company’s capital reserves
pursuant to § 272 para. (2) no. 4 German Commercial Code (Handelsgesetzbuch).
The aforementioned contribution will be made subject to the implementation
(Durchführung) of the Capital Increase, i.e. the effective issue of the
respective New Shares to such Investor. For clarification purposes: the Company
itself shall not be entitled to demand the contribution pursuant to this para.
(6). Alternatively, to the aforementioned contribution of the claim for
repayment, the Investors may elect to waive their claims for repayment vis-à-vis
the Company. In this case, sentences 2 and 3 of this para. (6) shall apply
accordingly.

 

– 11 / 27 –

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Sec. 11

Number of New Shares

 

1. The number of new series B shares to be issued in the course of the
conversion in accordance with Sec. 9 (Conversion Request) para. (1) and (2) of
this Agreement to each Investor shall be determined by the Pro Rata Loan Amount,
to the extent that has been paid out, divided by the “Series B Conversion
Price”, plus the Super Pro Rata Loan Amount, to the extent that has been paid
out, divided by the “Preferred Series B Conversion Price”, which are to be
calculated as follows:

 

  a. Series B Conversion Price:

 

     Series B Conversion Price =

 

     EUR 53 divided by [1 + (0.01 * M + 0.015 * N)],

 

     whereby M is the number of full months (rounded off) from the payment of
the Loan Amounts to the Company until the earlier of the (i) Maturity Date, or,
(ii) the closing of a Qualified Financing or an Exit Event and

 

     whereby N is the number of full months (rounded off) from the payment of
the Loan Amounts to the Company until Conversion less M,

 

     but in any case not less than EUR 1.00.

 

  b. Preferred Series B Conversion Price:

 

     Preferred Series B Conversion Price =

 

     Series B Conversion Price * 0.7,

 

     but in any case not less than EUR 1.00.

 

2. The number of new Qualified Financing Shares with a nominal value of EUR 1.00
each to be issued in the course of the conversion in accordance with Sec. 9
(Conversion Request) para. (3) of this Agreement to each Investor shall be
determined by the Pro Rata Loan Amount, to the extent that has been paid out,
divided by the “Qualified Financing Conversion Price”, plus the Super Pro Rata
Loan Amount, to the extent that has been paid out, divided by the “Preferred
Qualified Financing Conversion Price”, which are to be calculated as follows:

 

  a. Qualified Financing Conversion Price:

 

     Qualified Financing Conversion Price =

 

– 12 / 27 –

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     the price per share of preferred stock of the Company issued to investors
in a Qualified Financing less a discount of twenty percent (20%) divided by [1 +
(0.01 * M + 0.015 * N)],

 

     whereby M and N have the meaning as defined in para. (1) of this Sec. 11,

 

     but in any case not less than EUR 1.00.

 

  b. Preferred Qualified Financing Conversion Price:

 

     Preferred Qualified Financing Conversion Price =

 

     Qualified Financing Conversion Price * 0.9,

 

     but in any case not less than EUR 1.00.

 

3. Residual amounts of the respective Loan Amounts that are indivisible after
application of para. (1) and (2) of this Sec. 11 are awarded to such Investor
who has the highest Loan Amount and will increase his Loan Amount which is
subject to conversion in accordance with para. (1) and (2) of this Sec. 11, the
result being rounded down to the nearest whole number.

Sec. 12

Lapse of the Conversion Right

 

1. The right of the Investors to request conversion pursuant to Sec. 9
(Conversion Request) of this Agreement shall lapse, provided that

 

  a. the Company is converted to a different or into another legal entity within
the meaning of the German Act on Transformations (Umwandlungsgesetz), and

 

  a. the Investors are compensated with (i) conversion rights to shares of the
new legal entity, or (ii) shares of the new legal entity, each of equal value.

 

2. Shares or respectively conversion rights in the new legal entity are
considered as having equal value, if their value is equivalent to the value of
the conversion rights of the Company on the point in time of the effectiveness
of the conversion. The valuation of these conversion rights / shares will be
undertaken by the auditor of the conversion or, if an audit within the
conversion is not mandatory by law, by a business valuator to be instructed by
the Company and the Investors.

 

3.

In the event that the Reverse Merger takes place (i.e. with the contribution of
all shares in the Company into the Shell Company becoming effective) before De

 

– 13 / 27 –

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  cember 31, 2014 (the “Reverse Merger Event”), (i) the right of the Investors
to request conversion pursuant to Sec. 9 (Conversion Request) of this Agreement
shall lapse, and (ii) the Company shall be entitled to, subject to Sec. 3 (Term)
of this Agreement, repay the called Loan Amounts plus any interest accrued
thereon in accordance with a payment schedule to be notified by the Company to
the Inventors.

Sec. 13

Lapse of Loan Commitments; New Capital Commitments

 

1. In case of a Reverse Merger Event, any amounts of Tranche A or Tranche B
which have not been called at the time of the Reverse Merger Event can no longer
be called by the Company and the respective outstanding capital commitments made
by the Investors in this Agreement with regard to their Loan Amounts, to the
extent these have not been paid in (the “Outstanding Capital Commitments”),
shall lapse.

 

2. The Investors hereby undertake to make new capital commitments, in case of a
Reverse Merger Event, in an amount equal to the Outstanding Capital Commitments,
during the first PIPE (private investment in public equity) financing of the
Shell Company, wherein each Inventor will make new capital commitment, during
said PIPE financing, equal to his or its uncalled Loan Amount in accordance with
Sec. 1 para. (2).

 

3. The Investors hereby undertake to, for the purposes of said new capital
commitments, enter into a share purchase agreement to subscribe shares of common
stock in the Shell Company substantially in the form as attached as Exhibit D,
with a purchase price per share identical to that paid by other investors
participating in said PIPE financing.

Sec. 14

Exercise of Investor Rights

 

1. Investor rights, including but not limited to the right to claim repayment
and the right to request conversion of the Convertible Bridge Loan, may only be
exercised jointly by the Investors and upon demand of Investors whose aggregated
Loan Amounts exceed 50% of the total Loan Amounts (the “Investor Majority”),
unless specified differently in this Agreement.

 

2. Each Investor shall exercise his rights in accordance with the decision of
the Investor Majority and shall procure to take all measures required to not
block or prevent such decision of the Investor Majority and its implementation.

 

– 14 / 27 –

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Sec. 15

Expenses

 

   The Company shall pay the Investors’ reasonable due diligence and legal
expenses (including VAT, if applicable), limited to an aggregate amount of EUR
15,000.00 for all Investors, subject to the Convertible Bridge Loan being paid
out.

Sec. 16

Final Provisions

 

1. Each of the Shareholders shall be entitled to transfer its rights and
obligations under this Agreement together with the shares to which such rights
and obligations relate in whole or in part, provided that such Shareholder may
transfer his shares under the CSA 2012.

 

2. Each of the Shareholders undertakes individually for himself or itself
vis-à-vis each other Shareholder, to impose on his individual legal successors,
if any, the rights and obligations arising under this Agreement in such a way,
that his individual legal successors are bound by the rights and obligations
under this Agreement as if they had themselves undertaken these rights and
obligations. This shall also apply to the obligation undertaken in this para. 2
to impose the rights and obligations under this Agreement on any individual
legal successors.

 

3. The Shareholders are entitled to the rights under this Agreement to the
exclusion of any joint entitlement, i.e. in such a way that each of the
Shareholders may individually exercise the rights to which they are entitled,
unless otherwise expressly provided in this Agreement. Joint and several
liability (gesamtschuldnerische Haftung) of the Shareholders – including but not
limited to the payment of the Loan Amounts to the Company – shall be excluded.

 

4. Amendments and additions to this Agreement must be made in writing to be
effective unless notarization is required. This shall also apply to a waiver of
the written form requirement. Signatures transmitted by way of facsimile
communication shall satisfy the written form requirement of this para. (4) and
shall also suffice in all other cases where a written form requirement is made
in this Agreement.

 

5. Should individual terms of this Agreement be or become invalid or
unenforceable or if this Agreement contains gaps, this shall not affect the
validity of the remaining terms of this Agreement or the CSA 2012. In place of
the invalid, unenforceable or missing term, such valid term which the parties
would reasonably have agreed, had they been aware at the conclusion of this
Agreement that the relevant term was invalid, unenforceable or missing, shall be
deemed to have been agreed. Should a term of this Agreement be or become invalid
because of the scope or time of performance for which it provides, then the
agreed scope or time of performance shall be amended to correspond with the
extent legally permitted.

 

– 15 / 27 –

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6. The Parties shall keep strictly confidential the fact that they have entered
into negotiations regarding the transactions contemplated in this Agreement and
the contents of such negotiations and the contents of this Agreement, except if
and to the extent that disclosure is required by law or stock exchange
regulations and the other parties have been notified of such requirement. This
Agreement, however, may be shared with the existing shareholders and potential
outside investors. Furthermore, the Parties are permitted to share such
information with the persons/entities/bodies mentioned in Sec. 22 (Additional
Undertakings, Prohibition to Compete, D & O Insurance) para. (2) sentence 2 of
the CSA 2012. In particular, Technologie Beteiligungsfonds II Bayern GmbH & Co.
KG and KfW shall be allowed to disclose their participations in the Company
vis-à-vis the Bavarian Supreme Auditing Agency (Bayerischer Oberster
Rechnungshof), the Federal Supervisory Agency (Bundesrechungshof) and the
Federal Department of Economics (Bundeswirtschaftsministerium) as required by
applicable law.

 

7. Prior to any announcement, the Company and the Investors shall agree upon the
form and contents of any press release with respect to this Convertible Bridge
Loan.

 

8. With regard to the signing of the Agreement, signatures transmitted by way of
facsimile communication shall suffice and be binding. Reception of an original
copy of this Agreement signed by all Parties is not a condition for the validity
of this Agreement.

 

9. This Agreement is governed by and shall be construed in accordance with the
laws of Germany, without regard to its provisions of private international law
and excluding the UN Sales Convention.

 

10. To the extent legally permissible, place of venue and performance shall be
Munich. All disputes arising in connection with this Agreement shall be finally
settled in accordance with the Arbitration Rules of the German Institution of
Arbitration e.V. (DIS) without recourse to the ordinary courts of law and
according to the Arbitration Agreement enclosed as Exhibit E. This shall include
disputes regarding the validity, the performance or the termination of this
Investment Agreement in whole or in part including possible amendments of the
same. The place of arbitration is Munich. The arbitration tribunal consists of
three arbitrators. The language of the arbitration proceeding is English.

 

11. The Exhibits to this Agreement are an essential part of it. The headings in
this Agreement only serve for a better orientation and are of no significance
for the content and interpretation of this Agreement. Explanations in a
provision or Exhibit to this Agreement are also deemed to be listed for purposes
of all other provisions or Exhibits.

 

– 16 / 27 –

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12. German definitions in this document shall take precedence over the
respective English terms.

Freising, April 2014

 

    /s/ Stephen Yoder     /s/ Hans Küpper Pieris AG
signed for and on behalf of the Management Board     Pieris AG
signed for and on behalf of the Supervisory Board     /s/ Authorized Signatory  
  /s/ Authorized Signatory Orbimed Private Investments III, LP     Orbimed
Associates III, LLC     /s/ Authorized Signatory     /s/ Authorized Signatory
Novo Nordisk A/S     Transconnect Corporate Finance Beratungs GmbH     /s/
Authorized Signatory     /s/ Authorized Signatory BioM AG     BioM Venture
Capital GmbH & Co. KG     /s/ Authorized Signatory     /s/ Authorized Signatory
The Global Life Science Ventures Fonds II GmbH & Co. KG     The Global Life
Science Ventures Fund II LP     /s/ Authorized Signatory     /s/ Authorized
Signatory Gilde Europe Food & Agribusiness Fund B.V.     Baytech Venture Capital
GmbH & Co. KG     /s/ Authorized Signatory     /s/ Authorized Signatory
Coöperatieve AAC LS U.A.     KfW

 

– 17 / 27 –

--------------------------------------------------------------------------------

    /s/ Authorized Signatory     /s/ Arne Skerra Technologie Beteiligungsfonds
II Bayern GmbH & Co. KG (BayernKapital)     Prof. Skerra Bet. GmbH

 

– 18 / 27 –

--------------------------------------------------------------------------------

    /s/ Steffan Schlehuber     /s/ Claus Schalper Dr. Steffen Schlehuber    
Claus Schalper     /s/ Karsten Schürrle     /s/ Martin Pöhlchen Dr. Karsten
Schürrle     MAPO Bet. GmbH     /s/ Arne Skerra     /s/ Martin Pöhlchen Prof.
Dr. Arne Skerra     Dr. Martin Pöhlchen

 

– 19 / 27 –

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Table of Annexes to the Convertible Bridge Loan Agreement

 

Exhibit A

   List of Holders of Common Shares, of Preferred Shares Series A, of Preferred
Shares Series A-1, of Preferred Shares Series B and of Indirect Shareholders

Exhibit B

   Conversion Notice

Exhibit C

   Arbitration Agreement

 

– 20 / 27 –

--------------------------------------------------------------------------------

Exhibit A:

List of Holders of Common Shares, of Preferred Shares Series A, of Preferred
Shares Series A-1, of Preferred Shares Series B and of Indirect Shareholders

 

Name

  

Participation as

Prof. Skerra Beteiligungsgesellschaft mbH, Max-Lehner-Straße 19, 85354 Freising,
Germany    Holder of Common Shares Dr. Steffen Schlehuber, In den Kappesgärten
22, 67152 Ruppertsberg, Germany    Holder of Common Shares Claus Schalper,
Ismaningerstraße 62, 81675 Munich, Germany    Holder of Common Shares
Dr. Karsten Schürrle, Palmstraße 7, 60316 Frankfurt a.M., Germany    Holder of
Common Shares MAPO Beteiligungsgesellschaft mbH, Hubertusweg 34, 85540 Haar,
Germany    Holder of Common Shares BioM Aktiengesellschaft Munich, BioTech
Development, Am Klopferspitz 19, 82152 Planegg, Germany   

Holder of Common Shares

 

Holder of Preferred Shares Series B

BioM Venture Capital GmbH & Fonds KG, Am Klopferspitz 19, 82152 Planegg, Germany
  

Holder of Common Shares

 

Holder of Preferred Shares Series A

 

Holder of Preferred Shares Series A-1

 

Holder of Preferred Shares Series B

Transconnect Corporate Finance Beratungs GmbH, Prinzregentenstraße 56, 80538
Munich, Germany   

Holder of Common Shares

 

Holder of Preferred Shares Series A

 

Holder of Preferred Shares Series A-1

 

Holder of Preferred Shares Series B

 

– 21 / 27 –

--------------------------------------------------------------------------------

The Global Life Science Ventures Fonds II GmbH & Co. KG, Von-der-Tann-Straße 3,
80539 Munich, Germany   

Holder of Preferred Shares Series A

 

Holder of Preferred Shares Series A-1

 

Holder of Preferred Shares Series B

The Global Life Science Ventures Fund II Limited Partnership, PO Box 431,
Alexander House,13-15 Victoria Road, St. Peter Port, Guernsey,G41 3ZD   

Holder of Preferred Shares Series A

 

Holder of Preferred Shares Series A-1

 

Holder of Preferred Shares Series B

Gilde Europe Food & Agribusiness Fund B.V., Newtonlaan 91, 3584 BP Utrecht, The
Netherlands   

Holder of Preferred Shares Series A

 

Holder of Preferred Shares Series A-1

 

Holder of Preferred Shares Series B

BayTech Venture Capital GmbH & Co. KG, Theatinerstraße 7, 80353 Munich, Germany
  

Holder of Preferred Shares Series A

 

Holder of Preferred Shares Series A-1

 

Holder of Preferred Shares Series B

Coöperatieve AAC LS U.A., Gooimeer 2-35, P.O. Box 5187, 1410 AD Naarden, The
Netherlands   

Holder of Preferred Shares Series A

 

Holder of Preferred Shares Series A-1

 

Holder of Preferred Shares Series B

 

– 22 / 27 –

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KfW, Ludwig-Erhard-Platz 1-3, 53179 Bonn   

Holder of Preferred Shares Series A-1

 

Holder of Preferred Shares Series B

Technologie Beteiligungsfonds Bayern II GmbH & Co. KG, Altstadt 72, 84028
Landshut, (BayernKapital)   

Holder of Preferred Shares Series A-1

 

Holder of Preferred Shares Series B

Orbimed Private Investments III, LP, 601 Lexington Ave, Floor 54, New York, NY
10022, USA    Holder of Preferred Shares Series B Orbimed Associates III, LLC,
601 Lexington Ave, Floor 54, New York, NY 10022, USA    Holder of Preferred
Shares Series B Novo Nordisk A/S, Novo Allé, 2880 Bagsværd, Denmark    Holder of
Preferred Shares Series B Prof. Dr. Arne Skerra, Max-Lehner-Straße 19, 85354
Freising, Germany    Indirect Shareholder Dr. Martin Pöhlchen, Hubertusweg 34,
85540 Haar, Germany    Indirect Shareholder

 

– 23 / 27 –

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Exhibit B:

Conversion Notice

To:

Pieris AG

Management Board

Lise-Meitner-Str. 30

85354 Freising

Germany

We, the Investors as set forth in Sec. 1 (Convertible Bridge Loan) para. (2) of
the Convertible Bridge Loan Agreement dated April, 2014 (the “Convertible Bridge
Loan Agreement”), have granted Pieris AG, a company registered in the commercial
register of the local court of Munich under no. HRB 133223 (the “Company”), a
convertible bridge loan in the total amount of up to EUR 2,000,000 (the
“Convertible Bridge Loan”), in accordance with the Convertible Bridge Loan
Agreement.

In relation to the Convertible Bridge Loan, the amount of

EUR                                      

has not been repaid by the Company to the Investors (the “Remaining Loan
Amount”) as of the date of this Conversion Notice.

Based on the foregoing, we hereby request conversion

 

  ¨ of the whole Remaining Loan Amount

 

  ¨ of EUR                                      of the Remaining Loan Amount

pursuant to

 

  ¨ Sec. 9 (Conversion Request) para. (1) of the Convertible Bridge Loan
Agreement (after the Maturity Date) into series B shares of the Company.

 

  ¨ Sec. 9 (Conversion Request) para. (2) of the Convertible Bridge Loan
Agreement (occurrence of an Exit Event prior to the Maturity Date) into series B
shares of the Company.

 

  ¨ Sec. 9 (Conversion Request) para. (3) of the Convertible Bridge Loan
Agreement (closing of a Qualified Financing) into Qualified Financing Shares.

 

– 24 / 27 –

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Conversion shall be effected in accordance with the provisions of the
Convertible Bridge Loan Agreement at the price and on the terms set out in the
Convertible Bridge Loan Agreement.

All terms used herein shall have the meaning as given to them in the Convertible
Bridge Loan Agreement.

With regard to the signing of this Conversion Notice, signatures transmitted by
way of facsimile communication shall suffice and be binding.

Freising,             , 20        

 

 

 

     

 

Orbimed Private Investments III, LP     Orbimed Associates III, LLC  

 

     

 

Novo Nordisk A/S    

Transconnect Corporate Finance

Beratungs GmbH

 

 

     

 

BioM AG     BioM Venture Capital GmbH & Co. KG  

 

     

 

The Global Life Science Ventures Fonds II

GmbH & Co. KG

    The Global Life Science Ventures Fund II LP  

 

     

 

Gilde Europe Food & Agribusiness Fund B.V.     Baytech Venture Capital GmbH &
Co. KG  

 

     

 

Coöperatieve AAC LS U.A.     KfW  

 

   

 

Technologie Beteiligungsfonds II Bayern

GmbH & Co. KG (BayernKapital)

   

 

– 25 / 27 –

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Exhibit C:

Arbitration Agreement

 

1. With regard to all disputes arising out of this Convertible Bridge Loan
Agreement of Pieris AG, Lise-Meitner-Strasse 30, 85354 Freising, the Parties
agree on the following arbitration clause:

 

2. Place of venue and performance shall, to the extent legally permissible, be
Munich. All disputes arising in connection with the Convertible Bridge Loan and
the Consolidated Shareholders` Agreement shall be finally settled in accordance
with the Arbitration Rules of the German Institution of Arbitration e.V. (DIS)
without recourse to the ordinary courts of law. This shall include disputes
regarding the validity, the performance or the termination of the Convertible
Bridge Loan and the Consolidated Shareholders` Agreement in whole or in part
including possible amendments of the same. The place of arbitration is Munich.
The arbitral tribunal consists of three arbitrators. The language of the
arbitral proceedings is English.

Freising, April 2014

 

/s/ Stephen S. Yoder     /s/ Hans Küpper

Pieris AG

signed for and on behalf of the Management Board

   

Pieris AG

signed for and on behalf of the Supervisory Board

/s/ Authorized Signatory     /s/ Authorized Signatory Orbimed Private
Investments III, LP     Orbimed Associates III, LLC /s/ Authorized Signatory    
/s/ Authorized Signatory Novo Nordisk A/S    

Transconnect Corporate Finance

Beratungs GmbH

/s/ Authorized Signatory     /s/ Authorized Signatory BioM AG     BioM Venture
Capital GmbH & Co. KG

 

– 26 / 27 –

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/s/ Authorized Signatory     /s/ Authorized Signatory

The Global Life Science Ventures Fonds II

GmbH & Co. KG

    The Global Life Science Ventures Fund II LP /s/ Authorized Signatory     /s/
Authorized Signatory Gilde Europe Food & Agribusiness Fund B.V.     Baytech
Venture Capital GmbH & Co. KG /s/ Authorized Signatory    

/s/ Authorized Signatory

Coöperatieve AAC LS U.A.     KfW /s/ Authorized Signatory     /s/ Arne Skerra

Technologie Beteiligungsfonds II Bayern

GmbH & Co. KG (BayernKapital)

    Prof. Skerra Bet. GmbH /s/ Steffen Schlehuber     /s/ Claus Schalper Dr.
Steffen Schlehuber     Claus Schalper /s/ Karsten Schürrle     /s/ Martin
Pöhlchen Dr. Karsten Schürrle     MAPO Bet. GmbH /s/ Arne Skerra     /s/ Martin
Pöhlchen Prof. Dr. Arne Skerra     Dr. Martin Pöhlchen

 

– 27 / 27 –