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January 30, 2019

Pieris Pharmaceuticals, Inc.
255 State Street, 9th Floor
Boston, MA 02109
Attn: Allan Reine, Chief Financial Officer
Re:     3(a)(9) Exchange Agreement 
Ladies and Gentlemen:
This letter agreement (the “Agreement”) confirms the agreement of Pieris
Pharmaceuticals, Inc. (the “Company”), and the holders of the Common Stock
listed on Schedule I attached hereto (the “Stockholders”), pursuant to which the
Stockholders have agreed to exchange an aggregate of 5,000,000 shares (the
“Shares”) of Common Stock, par value $0.001 per share, of the Company (the
“Common Stock”), beneficially owned by the Stockholders in consideration for a
total of 5,000 shares of Series B Preferred Stock of the Company (the “Preferred
Shares”), which shall have the rights, preferences and privileges set forth in
the Certificate of Designations set forth on Exhibit A attached hereto (the
“COD”). The Preferred Shares will be convertible into a total of 5,000,000
shares of Common Stock (subject to adjustment as provided in the COD), subject
to beneficial ownership conversion limitations set forth in the COD.
In consideration of the foregoing, the Company and the Stockholders agree as
follows:
(1)No later than the close of business on the first business day after the date
hereof (the “Closing Date”) and subject to the satisfaction or waiver of the
conditions set forth herein, the Stockholders shall exchange the Shares for the
Preferred Shares (the “Exchange”) in the respective amounts listed on Schedule
I. The Exchange shall be consummated pursuant to Section 3(a)(9) of the
Securities Act of 1933, as amended (the “Securities Act”). On the Closing Date:
(a) the Company and the Stockholders shall jointly and irrevocably instruct
Computershare Trust Company, N.A. (the “Transfer Agent”) to cancel the direct
registration book-entry statements from the Transfer Agent evidencing the
Shares; and (b) the Company shall irrevocably instruct the Transfer Agent to
issue and deliver to the Stockholders the Preferred Shares in book-entry form,
in the amounts and in the names set forth on Schedule I.
(2)The Company represents and warrants to each Stockholder as follows:
(a)Neither the Company nor any of its affiliates nor any person acting on behalf
of or for the benefit of any of the forgoing, has paid or given, or agreed to
pay or give, directly or indirectly, any commission or other remuneration
(within the meaning of Section 3(a)(9) of the Securities Act and the rules and
regulations of the U.S. Securities and Exchange Commission (the “Commission”)
promulgated thereunder) for soliciting the Exchange. Assuming the
representations and warranties of the Stockholders contained herein are true and
complete, the Exchange will qualify for the registration exemption contained in
Section 3(a)(9) of the Securities Act.
(b)It has the requisite corporate power and authority and power to enter into
this Agreement and to consummate the Exchange and such transactions shall not
contravene any contractual, regulatory, statutory or other obligation or
restriction applicable to the Company.
(c)It has reserved a sufficient number of shares of Common Stock as may be
necessary to fully permit the conversion of the Preferred Shares and the
issuance of the Common Stock issuable upon conversion of the Preferred Shares,
without regard to any beneficial ownership limits.
(3)Each Stockholder, as to itself only, represents and warrants to the Company
as follows:

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(a)It has the requisite power and authority to enter into this Agreement and
consummate the Exchange and such transactions shall not contravene any
contractual, regulatory, statutory or other obligation or restriction applicable
to such Stockholder.
(b)It is the record and beneficial owner of the aggregate number of shares of
Common Stock and Series A Convertible Preferred Stock of the Company (the
“Series A Preferred Stock”) set forth opposite its name on Schedule I, which
shares constitute all of the shares of Common Stock and Series A Preferred Stock
beneficially owned by the Stockholders.
(c)It is the record and beneficial owner of, and has valid and marketable title
to, the Shares being exchanged by it pursuant to this Agreement, free and clear
of any lien, pledge, restriction or other encumbrance (other than restrictions
arising pursuant to applicable securities laws), and has the absolute and
unrestricted right, power and capacity to surrender and exchange the Shares
being exchanged by it pursuant to this Agreement, free and clear of any lien,
pledge, restriction or other encumbrance. It is not a party to or bound by, and
the Shares being exchanged by it pursuant to this Agreement are not subject to,
any agreement, understanding or other arrangement (i) granting any option,
warrant or right of first refusal with respect to such Shares to any person,
(ii) restricting its right to surrender and exchange such Shares as contemplated
by this Agreement, or (iii) restricting any other of its rights with respect to
such Shares.
(d)Neither it nor any of its affiliates nor any person acting on behalf of or
for the benefit of any of the forgoing, has paid or given, or agreed to pay or
give, directly or indirectly, any commission or other remuneration (within the
meaning of Section 3(a)(9) of the Securities Act and the rules and regulations
of the Commission promulgated thereunder) for soliciting the Exchange, and the
Stockholders have received no additional consideration for the Shares other than
the Preferred Shares.
(4)This Agreement, and any action or proceeding arising out of or relating to
this Agreement, shall be exclusively governed by the laws of the State of New
York.
(5)In the event that any part of this agreement is declared by any court or
other judicial or administrative body to be null, void or unenforceable, said
provision shall survive to the extent it is not so declared, and all of the
other provisions of this agreement shall remain in full force and effect. In
such an event, the Stockholders and the Company shall endeavor in good faith
negotiations to modify this agreement so as to affect the original intent of the
parties as closely as possible.
(6)No provision of this Agreement may be amended or modified except upon the
written consent of the Company and each of the Stockholders, and no provision
hereof may be waived other than by a written instrument signed by the party
against whom enforcement of such waiver is sought.
(7)This Agreement may be executed in two or more counterparts, each of which
shall constitute an original, but all of which, when taken together, shall
constitute but one instrument, and shall become effective when one or more
counterparts have been signed by each party hereto and delivered to the other
parties.
[SIGNATURE PAGE FOLLOWS]

2

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Please sign to acknowledge agreement with the above terms and return to the
undersigned.
 
 
 
 
Common Stockholder:
 
Biotechnology Value Fund, L.P.
 
By: BVF Partners L.P., General Partner
 
 
By:
 
BVF, Inc., General Partner
 
 
By:
 
/s/ Mark Lampert
Name:
 
Mark Lampert
Title:
 
President

 
Biotechnology Value Fund II, L.P.
 
By: BVF Partners L.P., General Partner
 
 
By:
 
BVF, Inc., General Partner
 
 
By:
 
/s/ Mark Lampert
Name:
 
Mark Lampert
Title:
 
President

Biotechnology Value Trading Fund OS, L.P.
 
By: BVF Partners OS, Ltd., General Partner
 
By: BVF Partners L.P., Sole Member
 
 
By:
 
BVF, Inc. General Partner
 
 
By:
 
/s/ Mark Lampert
Name:
 
Mark Lampert
Title:
 
President
 
 
 
 

[Signature Page to 3(a)(9_ Exchange Agreement]

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Acknowledged and agreed to:

Pieris Pharmaceuticals, Inc.
 
 
 
 
 
By:
 
/s/ Stephen S. Yoder
Name: Stephen S. Yoder
Title: President & CEO
 
 
 

[Signature Page to 3(a)(9_ Exchange Agreement]

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SCHEDULE I

Stockholder
Shares of Common Stock Beneficially Owned
Shares of Series A Preferred Stock Beneficially Owned
Shares of Common Stock
to be Exchanged
Shares of Series B Preferred Stock
to be Received
Biotechnology Value Fund, L.P.
3,551,200
1,567
2,573,000
2,573
Biotechnology Value Fund II, L.P.
2,915,324
1,021
2,143,000
2,143
Biotechnology Value Trading Fund OS, L.P.
425,346
319
284,000
284
MSI BVF SPV, LLC
566,051
-
-
-
Total
7,457,921
2,907
5,000,000
5,000

 

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EXHIBIT A

PIERIS PHARMACEUTICALS, INC.
Attachment to Certificate of Designation
CERTIFICATE OF DESIGNATION OF
SERIES B CONVERTIBLE PREFERRED STOCK
OF
PIERIS PHARMACEUTICALS, INC.
Pieris Pharmaceuticals, Inc., a Nevada corporation (the “Corporation”), in
accordance with the provisions of Nevada Revised Statutes (“NRS”) 78.195 and
78.1955, does hereby certify that, pursuant to the authority conferred upon the
board of directors of the Corporation (the “Board of Directors”) by the
Corporation’s articles of incorporation, as heretofore amended to date (the
“Articles of Incorporation”), the Board of Directors has, by a resolution duly
adopted pursuant thereto, established a series of the Corporation’s preferred
stock consisting of five thousand (5,000) shares of the Corporation’s preferred
stock, par value $0.001 per share, designated as “Series B Convertible Preferred
Stock” and having the voting powers, designations, preferences, privileges,
limitations, restrictions and relative rights set forth as follows, in addition
to any provisions of the Articles of Incorporation applicable to all classes and
series of Preferred Stock (all capitalized terms used but not defined herein
shall have the meanings set forth in the Articles of Incorporation):
Section 1. Definitions. For the purposes hereof, the following terms shall have
the following meanings:
“Affiliate” means any person or entity that, directly or indirectly through one
or more intermediaries, controls or is controlled by or is under common control
with a person or entity, as such terms are used in and construed under Rule 144
under the Securities Act. With respect to a Holder, any investment fund or
managed account that is managed on a discretionary basis by the same investment
manager as such Holder will be deemed to be an Affiliate of such Holder.
“Alternate Consideration” shall have the meaning set forth in Section 7(b).
“Beneficial Ownership Limitation” shall have the meaning set forth in Section
6(c).
“Business Day” means any day except Saturday, Sunday, any day which shall be a
federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close.
“Buy-In” shall have the meaning set forth in Section 6(d)(iii).
“Closing Sale Price” means, for any security as of any date, the last closing
trade price for such security prior to 4:00 p.m., New York City time, on the
principal securities exchange or trading market where such security is listed or
traded, as reported by Bloomberg, L.P. (or an equivalent, reliable reporting
service mutually acceptable to and hereafter designated by Holders of a majority
of the then-outstanding Series B Preferred Stock and the Corporation), or if the
foregoing do not apply, the last trade price of such security in the
over-the-counter market on the electronic bulletin board for such security as
reported by Bloomberg, L.P., or, if no last trade price is reported for such
security by Bloomberg, L.P., the average of the bid prices of any market makers
for such security as reported on the OTC Pink Market by OTC Markets Group, Inc.
If the Closing Sale Price cannot be calculated for a security on a particular
date on any of the foregoing bases, the Closing Sale Price of such security on
such date shall be the fair market value as determined in good faith by the
Board of Directors of the Corporation.
“Commission” means the Securities and Exchange Commission.
“Common Stock” means the Corporation’s common stock, par value $0.001 per share,
and stock of any other class of securities into which such securities may
hereafter be reclassified or changed into.
“Conversion Date” shall have the meaning set forth in Section 6(a).
“Conversion Price” shall mean $2.66, as adjusted pursuant to paragraph 7 hereof.
“Conversion Ratio” shall have the meaning set forth in Section 6(b).

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“Conversion Shares” means, collectively, the shares of Common Stock issuable
upon conversion of the shares of Series B Preferred Stock in accordance with the
terms hereof.
“DTC” shall have the meaning set forth in Section 6(a).
“DWAC Delivery” shall have the meaning set forth in Section 6(a).
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
“Fundamental Transaction” shall have the meaning set forth in Section 7(b).
“Holder” means any holder of Series B Preferred Stock.
“Issuance Date” means January 31, 2019.
“Junior Securities” shall have the meaning set forth in Section 5(a).
“Notice of Conversion” shall have the meaning set forth in Section 6(a).
“Parity Securities” shall have the meaning set forth in Section 5(a).
“Person” means any individual or corporation, partnership, trust, incorporated
or unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
“Senior Securities” shall have the meaning set forth in Section 5(a).
“Series B Preferred Stock Register” shall have the meaning set forth in Section
2(b).
“Share Delivery Date” shall have the meaning set forth in Section 6(d)(i).
“Stated Value” shall mean $2,660.00 per share.
“Trading Day” means a day on which the Common Stock is traded for any period on
the principal securities exchange or if the Common Stock is not traded on a
principal securities exchange, on a day that the Common Stock is traded on
another securities market on which the Common Stock is then being traded.
Section 2.     Designation, Amount and Par Value; Assignment.
a.     The series of preferred stock designated by this Certificate of
Designation shall be designated as the Corporation’s Series B Convertible
Preferred Stock (the “Series B Preferred Stock”) and the number of shares so
designated shall be five thousand (5,000) (which shall not be subject to
increase except pursuant to an amendment to this Certificate of Designation duly
adopted in accordance with the applicable law and the written consent of the
Holders of a majority of the issued and outstanding Series B Preferred Stock).
Each share of Series B Preferred Stock shall have a par value of $0.001 per
share.
b.     The Corporation shall register shares of the Series B Preferred Stock in
the name of the Holders thereof from time to time upon records to be maintained
by the Corporation for that purpose (the “Series B Preferred Stock Register”).
The Series B Preferred Stock shall be issued in book entry only, provided that
the Corporation shall issue one or more certificates representing shares of
Series B Preferred Stock, to the extent such issuance is requested by a given
Holder. References herein to “certificates” representing the Series B Preferred
Stock shall apply only if such shares have been issued in certificated form. The
Corporation may deem and treat the registered Holder of shares of Series B
Preferred Stock as the absolute owner thereof for the purpose of any conversion
thereof and for all other purposes. The Corporation shall register the transfer
of any shares of Series B Preferred Stock in the Series B Preferred Stock
Register, upon surrender of the certificates evidencing such shares to be
transferred, duly endorsed by the Holder thereof, to the Corporation at its
address specified herein. Upon any such registration or transfer, a new
certificate evidencing the shares of Series B Preferred Stock so transferred
shall be issued to the transferee (if requested) and a

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new certificate evidencing the remaining portion of the shares not so
transferred, if any, shall be issued to the transferring Holder, in each case,
within three Business Days. The provisions of this Certificate of Designation
are intended to be for the benefit of all Holders from time to time and shall be
enforceable by any such Holder.
Section 3.     Dividends. Holders be entitled to receive when, as and if
dividends are declared and paid on the Corporation’s Common Stock, an equivalent
dividend (with the same dividend declaration date and payment date), calculated
on an as-converted basis without regard to the Beneficial Ownership Limitation.
Other than the foregoing, the Holders of Series B Preferred Stock shall not be
entitled to receive any dividends in respect of the Series B Preferred Stock,
unless and until specifically declared by the Board of Directors of the
Corporation to be payable to the Holders of the Series B Preferred Stock.
Section 4.     Voting Rights. Except as otherwise provided herein or as
otherwise required by the NRS, the Series B Preferred Stock shall have no voting
rights. However, as long as any shares of Series B Preferred Stock are
outstanding, the Corporation shall not, without the affirmative vote of the
Holders of a majority of the then outstanding shares of the Series B Preferred
Stock, (a) alter or change adversely the powers, preferences or rights given to
the Series B Preferred Stock or alter or amend this Certificate of Designation,
(b) increase the number of authorized shares of Series B Preferred Stock, or (c)
enter into any agreement with respect to any of the foregoing.
Section 5.     Rank; Liquidation.
a.     The Series B Preferred Stock shall rank (i) senior to the Common Stock,
and (ii) senior to any class or series of capital stock of the Corporation
hereafter created specifically ranking by its terms junior to any Series B
Preferred Stock (“Junior Securities”); (iii) on parity with all shares of the
Corporation’s Series A Convertible Preferred Stock; (iv) on parity with any
class or series of capital stock of the Corporation hereafter created
specifically ranking by its terms on parity with the Series B Preferred Stock
(together with the Corporation’s Series A Convertible Preferred Stock, the
“Parity Securities”); and (v) junior to any class or series of capital stock of
the Corporation hereafter created specifically ranking by its terms senior to
any Series B Preferred Stock (“Senior Securities”), in each case, as to
distributions of assets upon liquidation, dissolution or winding up of the
Corporation, whether voluntarily or involuntarily.
b.     Subject to the prior and superior rights of the holders of any Senior
Securities of the Corporation, upon liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, each Holder shall be entitled
to receive, in preference to any distributions of any of the assets or surplus
funds of the Corporation to the holders of the Common Stock and Junior
Securities and pari passu with any distribution to the holders of Parity
Securities, an amount equal to $0.001 per share of Series B Preferred Stock,
plus an additional amount equal to any dividends declared but unpaid on such
shares, before any payments shall be made or any assets distributed to holders
of any class of Common Stock or Junior Securities. If, upon any such
liquidation, dissolution or winding up of the Corporation, the assets of the
Corporation shall be insufficient to pay the holders of shares of the Series B
Preferred Stock the amount required under the preceding sentence, then all
remaining assets of the Corporation shall be distributed ratably to holders of
the shares of the Series B Preferred Stock and Parity Securities.
Section 6.     Conversion.
a.     Conversions at Option of Holder. Each share of Series B Preferred Stock
shall be convertible, at any time and from time to time from and after the
Issuance Date, at the option of the Holder thereof, into a number of shares of
Common Stock equal to the Conversion Ratio. Holders shall effect conversions by
providing the Corporation with the form of conversion notice attached hereto as
Annex A (a “Notice of Conversion”), duly completed and executed. Other than a
conversion following a Fundamental Transaction or following a notice provided
for under Section 7(d)(ii) hereof, the Notice of Conversion must specify at
least a number of shares of Series B Preferred Stock to be converted equal to
the lesser of (x) 100 shares (such number subject to appropriate adjustment
following the occurrence of an event specified in Section 7(a) hereof) and (y)
the number of shares of Series B Preferred Stock then held by the Holder.
Provided the Corporation’s transfer agent is participating in the Depository
Trust Company (“DTC”) Fast Automated Securities Transfer program, the Notice of
Conversion may specify, at the Holder’s election, whether the applicable
Conversion Shares shall be credited to the account of the Holder’s prime broker
with DTC through its Deposit Withdrawal Agent Commission system (a “DWAC
Delivery”). The “Conversion Date”, or the date on which a conversion shall be
deemed effective, is defined as the Trading Day that the Notice of Conversion,
completed and executed, is sent by facsimile to, and received during regular
business hours by, the Corporation; provided that if such shares of Series B
Preferred Stock were issued in certificated form, then the original
certificate(s) representing such shares of Series B Preferred Stock being
converted, duly endorsed, and the accompanying Notice of Conversion, are
received by the Corporation

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within two Trading Days thereafter. In all other cases, the Conversion Date
shall be defined as the Trading Day on which the original certificates (if any)
representing the shares of Series B Preferred Stock being converted, duly
endorsed, and the accompanying Notice of Conversion, are received by the
Corporation. The calculations set forth in the Notice of Conversion shall
control in the absence of manifest or mathematical error.
b.     Conversion Ratio. The “Conversion Ratio” for each share of Series B
Preferred Stock shall be equal to the Stated Value divided by the Conversion
Price.
c.     Beneficial Ownership Limitation. Notwithstanding anything in this
Certificate of Designation to the contrary, the Corporation shall not effect any
conversion of the Series B Preferred Stock, and a Holder shall not have the
right to convert any portion of the Series B Preferred Stock, to the extent
that, after giving effect to an attempted conversion set forth on an applicable
Notice of Conversion, such Holder (together with such Holder’s Affiliates, and
any other Person whose beneficial ownership of Common Stock would be aggregated
with the Holder’s for purposes of Section 13(d) of the Exchange Act and the
applicable regulations of the Commission, including any “group” of which the
Holder is a member) would beneficially own a number of shares of Common Stock in
excess of the Beneficial Ownership Limitation (as defined below). For purposes
of the foregoing sentence, the number of shares of Common Stock beneficially
owned by such Holder and its Affiliates shall include the number of shares of
Common Stock issuable upon conversion of the Series B Preferred Stock subject to
the Notice of Conversion with respect to which such determination is being made,
but shall exclude the number of shares of Common Stock which are issuable upon
(A) conversion of the remaining, unconverted Series B Preferred Stock
beneficially owned by such Holder or any of its Affiliates, and (B) exercise or
conversion of the unexercised or unconverted portion of any other securities of
the Corporation (including any warrants) beneficially owned by such Holder or
any of its Affiliates that are subject to a limitation on conversion or exercise
similar to the limitation contained herein. Except as set forth in the preceding
sentence, for purposes of this Section 6(c), beneficial ownership shall be
calculated in accordance with Section 13(d) of the Exchange Act and the
applicable regulations of the Commission. In addition, for purposes hereof,
“group” has the meaning set forth in Section 13(d) of the Exchange Act and the
applicable regulations of the Commission. For purposes of this Section 6(c), it
is understood that the number of shares of Common Stock beneficially owned by
each Holder shall be aggregated with each other Holder for purposes of Section
13(d) of the Exchange Act. For purposes of this Section 6(c), in determining the
number of outstanding shares of Common Stock, absent actual knowledge of such
Holder to the contrary, a Holder may rely on the number of outstanding shares of
Common Stock as stated in the most recent of the following: (A) the
Corporation’s most recent periodic or annual filing with the Commission, as the
case may be, (B) a more recent public announcement by the Corporation that is
filed with the Commission, or (C) a more recent notice by the Corporation or the
Corporation’s transfer agent to the Holder setting forth the number of shares of
Common Stock then outstanding. Upon the written request of a Holder (which may
be by email), the Corporation shall, within three Trading Days thereof, confirm
in writing to such Holder (which may be via email) the number of shares of
Common Stock then outstanding. In any case, the number of outstanding shares of
Common Stock shall be determined after giving effect to any actual conversion or
exercise of securities of the Corporation, including shares of Series B
Preferred Stock, by such Holder or its Affiliates since the date as of which
such number of outstanding shares of Common Stock was last publicly reported or
confirmed to the Holder. The initial “Beneficial Ownership Limitation” shall be
9.99% of the number of shares of the Common Stock outstanding immediately after
giving effect to the issuance of shares of Common Stock pursuant to such Notice
of Conversion (to the extent permitted pursuant to this Section 6(c)). By
written notice to the Corporation, which will not be effective until the 61st
day after such notice is delivered to the Corporation, a Holder may increase or
decrease the Beneficial Ownership Limitation applicable solely to such Holder to
such other percentage limit as may be determined by the Holder, not to exceed
19.99%, provided that any increase in the Beneficial Ownership Limitation shall
not be effective until the 61st day after such notice is delivered to the
Corporation. The Corporation shall be entitled to rely on representations made
to it by the Holder in any Notice of Conversion regarding its Beneficial
Ownership Limitation.
d.     Mechanics of Conversion.
i.     Delivery of Certificate or Electronic Issuance Upon Conversion. Not later
than three Trading Days after the applicable Conversion Date, or if the Holder
requests the issuance of physical certificate(s), two Trading Days after receipt
by the Corporation of the original certificate(s) representing such shares of
Series B Preferred Stock being converted, duly endorsed, and the accompanying
Notice of Conversion (the “Share Delivery Date”), the Corporation shall (a)
deliver, or cause to be delivered, to the converting Holder a physical
certificate or certificates representing the number of Conversion Shares being
acquired upon the conversion of shares of Series B Preferred Stock or (b) in the
case of a DWAC Delivery, electronically transfer such Conversion Shares by
crediting the account of the Holder’s prime broker with DTC through its DWAC
system. If in the case of any Notice of Conversion such certificate or
certificates are not delivered to or as directed by or, in the case of a DWAC
Delivery, such shares are not electronically delivered to or as directed by, the
applicable Holder by the Share Delivery Date, the applicable

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Holder shall be entitled to elect to rescind such Conversion Notice by written
notice to the Corporation at any time on or before its receipt of such
certificate or certificates for Conversion Shares or electronic receipt of such
shares, as applicable, in which event the Corporation shall promptly return to
such Holder any original Series B Preferred Stock certificate delivered to the
Corporation and such Holder shall promptly return to the Corporation any Common
Stock certificates or otherwise direct the return of any shares of Common Stock
delivered to the Holder through the DWAC system, representing the shares of
Series B Preferred Stock unsuccessfully tendered for conversion to the
Corporation.
ii.     Obligation Absolute. Subject to Section 6(c) hereof and subject to
Holder’s right to rescind a Conversion Notice pursuant to Section 6(d)(i) above,
the Corporation’s obligation to issue and deliver the Conversion Shares upon
conversion of Series B Preferred Stock in accordance with the terms hereof are
absolute and unconditional, irrespective of any action or inaction by a Holder
to enforce the same, any waiver or consent with respect to any provision hereof,
the recovery of any judgment against any Person or any action to enforce the
same, or any setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by such Holder or any other Person of any obligation to
the Corporation or any violation or alleged violation of law by such Holder or
any other Person, and irrespective of any other circumstance which might
otherwise limit such obligation of the Corporation to such Holder in connection
with the issuance of such Conversion Shares. Subject to Section 6(c) hereof and
subject to Holder’s right to rescind a Conversion Notice pursuant to Section
6(d)(i) above, in the event a Holder shall elect to convert any or all of its
Series B Preferred Stock, the Corporation may not refuse conversion based on any
claim that such Holder or any one associated or affiliated with such Holder has
been engaged in any violation of law, agreement or for any other reason, unless
an injunction from a court, on notice to Holder, restraining and/or enjoining
conversion of all or part of the Series B Preferred Stock of such Holder shall
have been sought and obtained by the Corporation, and the Corporation posts a
surety bond for the benefit of such Holder in the amount of 150% of the value of
the Conversion Shares into which would be converted the Series B Preferred Stock
which is subject to such injunction, which bond shall remain in effect until the
completion of arbitration/litigation of the underlying dispute and the proceeds
of which shall be payable to such Holder to the extent it obtains judgment. In
the absence of such injunction, the Corporation shall, subject to Section 6(c)
hereof and subject to Holder’s right to rescind a Conversion Notice pursuant to
Section 6(d)(i) above, issue Conversion Shares upon a properly noticed
conversion. Nothing herein shall limit a Holder’s right to pursue actual damages
for the Corporation’s failure to deliver Conversion Shares within the period
specified herein and such Holder shall have the right to pursue all remedies
available to it hereunder, at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief; provided that Holder
shall not receive duplicate damages for the Corporation’s failure to deliver
Conversion Shares within the period specified herein. The exercise of any such
rights shall not prohibit a Holder from seeking to enforce damages pursuant to
any other Section hereof or under applicable law.
iii.     Compensation for Buy-In on Failure to Timely Deliver Certificates Upon
Conversion. If the Corporation fails to deliver to a Holder the applicable
certificate or certificates or to effect a DWAC Delivery, as applicable, by the
Share Delivery Date pursuant to Section 6(d)(i) (other than a failure caused by
incorrect or incomplete information provided by Holder to the Corporation), and
if after such Share Delivery Date such Holder is required by its brokerage firm
to purchase (in an open market transaction or otherwise), or the Holder’s
brokerage firm otherwise purchases, shares of Common Stock to deliver in
satisfaction of a sale by such Holder of the Conversion Shares which such Holder
was entitled to receive upon the conversion relating to such Share Delivery Date
(a “Buy-In”), then the Corporation shall (A) pay in cash to such Holder (in
addition to any other remedies available to or elected by such Holder) the
amount by which (x) such Holder’s total purchase price (including any brokerage
commissions) for the shares of Common Stock so purchased exceeds (y) the product
of (1) the aggregate number of shares of Common Stock that such Holder was
entitled to receive from the conversion at issue multiplied by (2) the actual
sale price at which the sell order giving rise to such purchase obligation was
executed (including any brokerage commissions) and (B) at the option of such
Holder, either reissue (if surrendered) the shares of Series B Preferred Stock
equal to the number of shares of Series B Preferred Stock submitted for
conversion or deliver to such Holder the number of shares of Common Stock that
would have been issued if the Corporation had timely complied with its delivery
requirements under Section 6(d)(i). For the avoidance of doubt, this Section
6(d)(ii) shall not apply if the Corporation does not effect a conversion
pursuant to the limitations of Section 6(c). For example, if a Holder purchases
shares of Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted conversion of shares of Series B Preferred
Stock with respect to which the actual sale price (including any brokerage
commissions) giving rise to such purchase obligation was a total of $10,000
under clause (A) of the immediately preceding sentence, the Corporation shall be
required to pay such Holder $1,000. The Holder shall provide the Corporation
written notice, within three (3) Trading Days after the occurrence of a Buy-In,
indicating the amounts payable to such Holder in respect of such Buy-In together
with applicable confirmations and other evidence reasonably requested by the
Corporation. Nothing herein shall limit a Holder’s right to pursue any other
remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Corporation’s failure to timely deliver certificates representing
shares of Common Stock upon conversion of the shares of Series B Preferred

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Stock as required pursuant to the terms hereof; provided, however, that the
Holder shall not be entitled to both (i) require the reissuance of the shares of
Series B Preferred Stock submitted for conversion for which such conversion was
not timely honored and (ii) receive the number of shares of Common Stock that
would have been issued if the Corporation had timely complied with its delivery
requirements under Section 6(d)(i).
iv.     Reservation of Shares Issuable Upon Conversion. The Corporation
covenants that it will at all times reserve and keep available out of its
authorized and unissued shares of Common Stock for the sole purpose of issuance
upon conversion of the Series B Preferred Stock, free from preemptive rights or
any other actual contingent purchase rights of Persons other than the Holders of
the Series B Preferred Stock, not less than such aggregate number of shares of
the Common Stock as shall be issuable (taking into account the adjustments of
Section 7) upon the conversion of all outstanding shares of Series B Preferred
Stock. The Corporation covenants that all shares of Common Stock that shall be
so issuable shall, upon issue, be duly authorized, validly issued, fully paid
and nonassessable.
v.     Fractional Shares. No fractional shares or scrip representing fractional
shares of Common Stock shall be issued upon the conversion of the Series B
Preferred Stock. As to any fraction of a share which a Holder would otherwise be
entitled to receive upon such conversion, the Corporation shall pay a cash
adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Conversion Price.
vi.     Transfer Taxes. The issuance of certificates for shares of the Common
Stock upon conversion of the Series B Preferred Stock shall be made without
charge to any Holder for any documentary stamp or similar taxes that may be
payable in respect of the issue or delivery of such certificates, provided that
the Corporation shall not be required to pay any tax that may be payable in
respect of any transfer involved in the issuance and delivery of any such
certificate upon conversion in a name other than that of the registered
Holder(s) of such shares of Series B Preferred Stock and the Corporation shall
not be required to issue or deliver such certificates unless or until the Person
or Persons requesting the issuance thereof shall have paid to the Corporation
the amount of such tax or shall have established to the satisfaction of the
Corporation that such tax has been paid.
e.     Status as Stockholder. Upon each Conversion Date, (i) the shares of
Series B Preferred Stock being converted shall be deemed converted into shares
of Common Stock and (ii) the Holder’s rights as a holder of such converted
shares of Series B Preferred Stock shall cease and terminate, excepting only the
right to receive certificates for such shares of Common Stock and to any
remedies provided herein or otherwise available at law or in equity to such
Holder because of a failure by the Corporation to comply with the terms of this
Certificate of Designation. In all cases, the Holder shall retain all of its
rights and remedies for the Corporation’s failure to convert Series B Preferred
Stock.
Section 7.     Certain Adjustments.
a.     Stock Dividends and Stock Splits. If the Corporation, at any time while
any Series B Preferred Stock is outstanding: (i) pays a stock dividend or
otherwise makes a distribution or distributions payable in shares of Common
Stock (which, for avoidance of doubt, shall not include any shares of Common
Stock issued by the Corporation upon conversion of any Series B Preferred Stock)
with respect to the then outstanding shares of Common Stock; (ii) subdivides
outstanding shares of Common Stock into a larger number of shares; or (iii)
combines (including by way of a reverse stock split) outstanding shares of
Common Stock into a smaller number of shares, then the Conversion Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding any treasury shares of the Corporation) outstanding
immediately before such event and of which the denominator shall be the number
of shares of Common Stock outstanding immediately after such event (excluding
any treasury shares of the Corporation). Any adjustment made pursuant to this
Section 7(a) shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a
subdivision or combination.
b.     Fundamental Transaction. If, at any time while any Series B Preferred
Stock is outstanding, (i) the Corporation effects any merger or consolidation of
the Corporation with or into another Person (other than a merger in which the
Corporation is the surviving or continuing entity and its Common Stock is not
exchanged for or converted into other securities, cash or property), (ii) the
Corporation effects any sale of all or substantially all of its assets in one
transaction or a series of related transactions, (iii) any tender offer or
exchange offer (whether by the Corporation or another Person) is completed
pursuant to which more than 50% of the Common Stock is exchanged for or
converted into other securities, cash or property, or (iv) the Corporation
effects any reclassification of the Common Stock or any compulsory share
exchange pursuant (other than as a result of a dividend, subdivision or
combination covered by Section 7(a) above) to which the Common Stock is
effectively converted into or exchanged

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for other securities, cash or property (in any such case, a “Fundamental
Transaction”), then, upon any subsequent conversion of Series B Preferred Stock
the Holders shall have the right to receive, in lieu of the right to receive
Conversion Shares, for each Conversion Share that would have been issuable upon
such conversion immediately prior to the occurrence of such Fundamental
Transaction, the same kind and amount of securities, cash or property as it
would have been entitled to receive upon the occurrence of such Fundamental
Transaction if it had been, immediately prior to such Fundamental Transaction,
the holder of one share of Common Stock (the “Alternate Consideration”).For
purposes of any such subsequent conversion, the determination of the Conversion
Ratio shall be appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect of one share
of Common Stock in such Fundamental Transaction, and the Corporation shall
adjust the Conversion Ratio in a reasonable manner reflecting the relative value
of any different components of the Alternate Consideration. If holders of Common
Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holders shall be given the same choice as
to the Alternate Consideration it receives upon any conversion of Series B
Preferred Stock following such Fundamental Transaction. To the extent necessary
to effectuate the foregoing provisions, any successor to the Corporation or
surviving entity in such Fundamental Transaction shall file a new Certificate of
Designation with the same terms and conditions and issue to the Holders new
preferred stock consistent with the foregoing provisions and evidencing the
Holders’ right to convert such preferred stock into Alternate Consideration. The
terms of any agreement to which the Corporation is a party and pursuant to which
a Fundamental Transaction is effected shall include terms requiring any such
successor or surviving entity to comply with the provisions of this Section 7(b)
and insuring that the Series B Preferred Stock (or any such replacement
security) will be similarly adjusted upon any subsequent transaction analogous
to a Fundamental Transaction. The Corporation shall cause to be delivered to
each Holder, at its last address as it shall appear upon the stock books of the
Corporation, written notice of any Fundamental Transaction at least 10 calendar
days prior to the date on which such Fundamental Transaction is expected to
become effective or close.
c.     Calculations. All calculations under this Section 7 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be. For purposes
of this Section 7, the number of shares of Common Stock deemed to be issued and
outstanding as of a given date shall be the sum of the number of shares of
Common Stock (excluding any treasury shares of the Corporation) issued and
outstanding.
d.     Notice to the Holders.
i.     Adjustment to Conversion Price. Whenever the Conversion Price is adjusted
pursuant to any provision of this Section 7, the Corporation shall promptly
deliver to each Holder a notice setting forth the Conversion Ratio after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment.
ii.     Other Notices. If (A) the Corporation shall declare a dividend (or any
other distribution in whatever form) on the Common Stock, (B) the Corporation
shall declare a special nonrecurring cash dividend on or a redemption of the
Common Stock, (C) the Corporation shall authorize the granting to all holders of
the Common Stock of rights or warrants to subscribe for or purchase any shares
of capital stock of any class or of any rights, (D) the approval of any
stockholders of the Corporation shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to which the
Corporation is a party, any sale or transfer of all or substantially all of the
assets of the Corporation, or any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property, or (E) the
Corporation shall authorize the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Corporation, then, in each case,
the Corporation shall cause to be filed at each office or agency maintained for
the purpose of conversion of the Series B Preferred Stock, and shall cause to be
delivered to each Holder at its last address as it shall appear upon the stock
books of the Corporation, at least 10 calendar days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as
of which the holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be determined or
(y) the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or close, and the
date as of which it is expected that holders of the Common Stock of record shall
be entitled to exchange their shares of the Common Stock for securities, cash or
other property deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange, provided that the failure to deliver such
notice or any defect therein or in the delivery thereof shall not affect the
validity of the corporate action required to be specified in such notice.
Section 8.     Miscellaneous.
a.     Redemption. The Series B Preferred Stock is not redeemable.

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b.     Notices. Any and all notices or other communications or deliveries to be
provided by the Holders hereunder including, without limitation, any Notice of
Conversion, shall be in writing and delivered personally, via email, by
facsimile, or sent by a nationally recognized overnight courier service,
addressed to the Corporation, at 225 State Street, 9th Floor, Boston, MA, email
mousa@pieris.com, or such other facsimile number or address as the Corporation
may specify for such purposes by notice to the Holders delivered in accordance
with this Section. Any and all notices or other communications or deliveries to
be provided by the Corporation hereunder shall be in writing and delivered
personally, by facsimile, or sent by a nationally recognized overnight courier
service addressed to each Holder at the facsimile number or address of such
Holder appearing on the books of the Corporation, or if no such facsimile number
or address appears on the books of the Corporation, at the principal place of
business of such Holder. Any notice or other communication or deliveries
hereunder shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section prior to 5:30 p.m. (New York City
time) on any date, (ii) the date immediately following the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
number specified in this Section between 5:30 p.m. and 11:59 p.m. (New York City
time) on any date, (iii) the second Business Day following the date of mailing,
if sent by nationally recognized overnight courier service, or (iv) upon actual
receipt by the party to whom such notice is required to be given.
c.     Lost or Mutilated Series B Preferred Stock Certificate. If a Holder’s
Series B Preferred Stock certificate shall be mutilated, lost, stolen or
destroyed, the Corporation shall execute and deliver, in exchange and
substitution for and upon cancellation of a mutilated certificate, or in lieu of
or in substitution for a lost, stolen or destroyed certificate, a new
certificate for the shares of Series B Preferred Stock so mutilated, lost,
stolen or destroyed, but only upon receipt of evidence of such loss, theft or
destruction of such certificate, and of the ownership thereof, reasonably
satisfactory to the Corporation and, in each case, customary and reasonable
indemnity, if requested. Applicants for a new certificate under such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable third-party costs as the Corporation
may prescribe.
d.     Waiver. Any waiver by the Corporation or a Holder of a breach of any
provision of this Certificate of Designation shall not operate as or be
construed to be a waiver of any other breach of such provision or of any breach
of any other provision of this Certificate of Designation or a waiver by any
other Holders. The failure of the Corporation or a Holder to insist upon strict
adherence to any term of this Certificate of Designation on one or more
occasions shall not be considered a waiver or deprive that party (or any other
Holder) of the right thereafter to insist upon strict adherence to that term or
any other term of this Certificate of Designation. Any waiver by the Corporation
or a Holder must be in writing. Notwithstanding any provision in this
Certificate of Designation to the contrary, any provision contained herein and
any right of the Holders of Series B Preferred Stock granted hereunder may be
waived as to all shares of Series B Preferred Stock (and the Holders thereof)
upon the written consent of the Holders of not less than a majority of the
shares of Series B Preferred Stock then outstanding, unless a higher percentage
is required by the NRS, in which case the written consent of the Holders of not
less than such higher percentage shall be required.
e.     Severability. If any provision of this Certificate of Designation is
invalid, illegal or unenforceable, the balance of this Certificate of
Designation shall remain in effect, and if any provision is inapplicable to any
Person or circumstance, it shall nevertheless remain applicable to all other
Persons and circumstances. If it shall be found that any interest or other
amount deemed interest due hereunder violates the applicable law governing
usury, the applicable rate of interest due hereunder shall automatically be
lowered to equal the maximum rate of interest permitted under applicable law.
f.     Next Business Day. Whenever any payment or other obligation hereunder
shall be due on a day other than a Business Day, such payment shall be made on
the next succeeding Business Day.
g.     Headings. The headings contained herein are for convenience only, do not
constitute a part of this Certificate of Designation and shall not be deemed to
limit or affect any of the provisions hereof.
h.     Status of Converted Series B Preferred Stock. If any shares of Series B
Preferred Stock shall be converted or reacquired by the Corporation, such shares
shall, without need for any action by the Board of Directors or otherwise,
resume the status of authorized but unissued shares of preferred stock and shall
no longer be designated as Series B Preferred Stock.
********************

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IN WITNESS WHEREOF, the undersigned has executed this Certificate of Designation
this 31st day of January, 2019.
PIERIS PHARMACEUTICALS, INC.
By: /s/ Stephen S. Yoder    
Name: Stephen S. Yoder
Title: President and Chief Executive Officer

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ANNEX A
NOTICE OF CONVERSION
(TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES
OF SERIES B PREFERRED STOCK)
The undersigned Holder hereby irrevocably elects to convert the number of shares
of Series B Convertible Preferred Stock indicated below, represented by stock
certificate No(s). (the “Preferred Stock Certificates”), into shares of common
stock, par value $0.001 per share (the “Common Stock”), of Pieris
Pharmaceuticals, Inc., a Nevada corporation (the “Corporation”), as of the date
written below. If securities are to be issued in the name of a person other than
the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto. Capitalized terms utilized but not defined herein shall have
the meaning ascribed to such terms in that certain Certificate of Designation of
Preferences, Rights and Limitations of Series B Convertible Preferred Stock (the
“Certificate of Designation”) filed by the Corporation with the Secretary of
State of the State of Nevada on January 31, 2019.
As of the date hereof, the number of shares of Common Stock beneficially owned
by the undersigned Holder (together with such Holder’s Affiliates, and any other
Person whose beneficial ownership of Common Stock would be aggregated with the
Holder’s for purposes of Section 13(d) of the Exchange Act and the applicable
regulations of the Commission, including any “group” of which the Holder is a
member), including the number of shares of Common Stock issuable upon conversion
of the Series B Preferred Stock subject to this Notice of Conversion, but
excluding the number of shares of Common Stock which are issuable upon (A)
conversion of the remaining, unconverted Series B Preferred Stock beneficially
owned by such Holder or any of its Affiliates, and (B) exercise or conversion of
the unexercised or unconverted portion of any other securities of the
Corporation (including any warrants) beneficially owned by such Holder or any of
its Affiliates that are subject to a limitation on conversion or exercise
similar to the limitation contained in Section 6(c) of the Certificate of
Designation, is [ ]. For purposes hereof, beneficial ownership shall be
calculated in accordance with Section 13(d) of the Exchange Act and the
applicable regulations of the Commission. In addition, for purposes hereof,
“group” has the meaning set forth in Section 13(d) of the Exchange Act and the
applicable regulations of the Commission.
Conversion calculations:
Date to Effect Conversion:     
Number of shares of Series B Preferred Stock owned prior to
Conversion:         
Number of shares of Series B Preferred Stock to be
Converted:         
Number of shares of Common Stock to be Issued:     
Address for delivery of physical certificates:     
or
for DWAC Delivery:

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DWAC    Instructions:
Broker no:     
Account no:     
[HOLDER]
By:     
Name:     
Title:     
Date:     
[HOLDER]
By:     
Name:
Title:
Date: