SIGMA LABS, INC.
 
SUBSCRIPTION INSTRUCTIONS

Sigma Labs, Inc., a Nevada corporation (the “Company”) is offering and selling
shares of its common stock to investors who qualify as “accredited investors,”
as that term is defined in Rule 501 and Rule 506 (a) promulgated under the
Securities Act of 1933, as amended (the “Securities Act”), and who meet the
other suitability standards stated herein.  The Company may also accept
subscriptions from a limited number of unaccredited investors who undertake
substantial representations regarding their suitability for an investment in the
Company.
 
If you wish to subscribe to purchase shares of common stock of the Company, you
must complete, sign separately and deliver to the Company the attached
Subscription Agreement, along with a check payable to “Sigma Labs, Inc.”  If you
are an “accredited investor,” you must also complete, sign and deliver to the
Company the Confidential Purchaser Questionnaire attached as Exhibit A to the
Subscription Agreement.
 
The Subscription Agreement provides that the Company may accept or reject your
subscription, in whole or in part.  If the Company rejects your subscription,
the rejected subscription funds will be returned promptly, without deduction or
interest. Questions regarding these instructions should be directed to Mark Cola
at 505-438-2576 or cola@b6sigma.com.

 
 

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SIGMA LABS, INC.
 
SUBSCRIPTION AGREEMENT

Sigma Labs, Inc.
3900 Paseo del Sol
Santa Fe, New Mexico 87507
Attention: Richard Mah

Gentlemen:
 
The undersigned subscriber (hereinafter, the “Purchaser”) acknowledges that he
has received and carefully read the Offering Memorandum, dated January 2011 (the
“Memorandum”), including the “Risk Factors” section of the Memorandum, which
describes certain of the risks associated with an investment in Sigma Labs,
Inc., a Nevada corporation (the “Company”).  The Company is offering pursuant to
the Memorandum to sell and issue up to 75,000,000 shares of the Company’s common
stock, $0.001 par value per share (the “Shares”).
 
Subscription.  Subject to the terms and conditions of this subscription
agreement (this “Subscription Agreement”), the Purchaser hereby irrevocably
subscribes for and agrees to purchase from the Company the number of the Shares
indicated on the signature page hereof at a price of $0.02 per share.  The
Purchaser hereby tenders this Subscription Agreement, together with a check
payable to “Sigma Labs, Inc.” for the total subscription amount indicated on the
signature page hereof.
 
The Purchaser agrees that this subscription shall be irrevocable and shall
survive the death or disability of the Purchaser.
 
1.           Acceptance of Subscription.  The Purchaser acknowledges that the
Company has the right to accept or reject this subscription, in whole or in
part, for any reason, and that this subscription shall be deemed to be accepted
by the Company only when it is signed on its behalf.  The Subscription Agreement
either will be accepted or rejected, or accepted in part and rejected in part,
as promptly as practical after receipt.  The Purchaser agrees that subscriptions
need not be accepted in the order they are received by the Company.  Upon
rejection of this Subscription Agreement for any reason, all items received with
this Subscription Agreement shall be returned to the Purchaser without deduction
for any fee, commission or expense, and without interest with respect to any
money received, and this Subscription Agreement shall be deemed to be null and
void and of no further force or effect.  The Purchaser understands and agrees
that the acceptance of this subscription, or a part of this subscription, will
in no way constitute a determination that an investment in the Company is a
suitable investment for the Purchaser.
 
2.           Accredited Investor Representations, Warranties and
Covenants.  This Section 2 and the following representations and warranties
apply only to a Purchaser who is an “accredited investor,” as that term is
defined in Rule 501 and Rule 506 (a) promulgated under the Securities Act of
1933, as amended (the “Securities Act”). By checking the following box ⁫, the
Purchaser hereby represents and warrants to and covenants with the Company as
follows, which representations and warranties are true and accurate as of the
date hereof, shall be true and accurate as of the date of delivery of this
Subscription Agreement and accompanying documents to the Company and shall
survive the delivery of the Shares:
 
(a)            Purchaser is an “accredited investor” as such term is defined in
Rule 501(a) of Regulation D promulgated under the Securities Act, and that the
information contained in the Confidential Purchaser Questionnaire (the
“Questionnaire”) attached hereto as Exhibit A is complete, accurate and true in
all respects.  This representation and warranty is true and accurate as of the
date hereof, shall be true and accurate as of the date of delivery of this
Subscription Agreement and accompanying documents to the Company and shall
survive the delivery of the Shares.  Pursuant to this Section 2, the Purchaser
agrees that the foregoing representation may be used as a defense in any actions
relating to the Company or the offering of the Shares, and that it is only on
the basis of such representations and warranties that the Company may be willing
to accept the Purchaser's subscription for the Shares as an “accredited
investor.”

 
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(b)           The Purchaser has examined the Memorandum and has relied solely
upon the investigations made by or on behalf of the Purchaser or his
representative in evaluating the suitability of an investment in the Company and
recognizes that an investment in the Shares involves a high degree of risk;
 
(c)           The Purchaser has been advised that there is a limited trading
market for the Shares, and there is no assurance that an active public market
for the Shares will develop in the foreseeable future, if ever; and it may not
be possible to readily liquidate the Purchaser’s investment in the Company.
 
(d)           The Purchaser has such knowledge and experience in financial and
business matters that he, she or it is capable of evaluating the merits and
risks of an investment in the Shares, or the Purchaser has employed the services
of an independent investment advisor, attorney or accountant to read all of the
documents furnished or made available to him, her or it by the Company and to
evaluate the merits and risks of such an investment on the Purchaser's behalf;
 
(e)           The Purchaser's overall commitment to investments which are not
readily marketable is not disproportionate to his, her or its net worth; his,
her or its investment in the Shares will not cause such overall commitment to
become excessive; and he, she or it can afford to bear the loss of his, her or
its entire investment in the Shares;
 
(f)           The Purchaser has adequate means of providing for his, her or its
current needs and personal contingencies and has no need for liquidity in his,
her or its investment in the Shares;
 
(g)           The Purchaser hereby acknowledges that the Purchaser has been
advised that this offering has not been registered with, or reviewed by, the
Securities and Exchange Commission (the “SEC”) because this offering is intended
to be a non-public offering pursuant to Section 4(2) of the Securities Act and
Regulation D thereunder (“Regulation D”).  The Purchaser represents that the
Purchaser's Shares are being purchased for the Purchaser's own account, for
investment purposes only and not with a view towards distribution or resale to
others.  The Purchaser agrees that the Purchaser will not attempt to sell,
transfer, assign, pledge or otherwise dispose of all or any portion of the
Shares unless they are registered under the Securities Act or unless in the
opinion of counsel satisfactory to the Company an exemption from such
registration is available.  The Purchaser understands that the Shares have not
been registered under the Securities Act by reason of a claimed exemption under
the provisions of the Securities Act, which depends, in part, upon the
Purchasers’ investment intention;
 
(h)           The signatures on the Subscription Agreement are genuine; and the
Purchaser has legal competence and capacity to execute the same; and this
Subscription Agreement constitutes the legal, valid and binding obligation of
the Purchaser, enforceable in accordance with its terms; and
 
(i)           The Purchaser acknowledges that the Shares have not been
recommended by any U.S. Federal or state securities commission or regulatory
authority.  Furthermore, the foregoing authorities have not confirmed the
accuracy or determined the adequacy of this document.  Any representation to the
contrary is a criminal offense.
 
Purchaser agrees that the foregoing representations and warranties may be used
as a defense in any actions relating to the Company or the offering of the
Shares, and that it is only on the basis of such representations and warranties
that the Company may be willing to accept the Purchaser's subscription for the
Shares
 
3.           General Investor Representations, Warranties and Covenants.  This
Section 3 and the following representations and warranties apply only to a
Purchaser who is not an “accredited investor,” as that term is defined in Rule
501 and Rule 506 (a) promulgated under the Securities Act. By checking the
following box ⁫, the Purchaser hereby represents and warrants to and covenants
with the Company as follows, which representations and warranties are true and
accurate as of the date hereof, shall be true and accurate as of the date of
delivery of this Subscription Agreement and accompanying documents to the
Company and shall survive the delivery of the Shares:

 
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(a)           The Purchaser has examined the Memorandum and has relied solely
upon the investigations made by or on behalf of the Purchaser or his
representative in evaluating the suitability of an investment in the Company and
recognizes that an investment in the Shares involves a high degree of risk;
 
(b)           The Purchaser has been advised that there is a limited trading
market for the Shares, and there is no assurance that an active public market
for the Shares will develop in the foreseeable future, if ever; and it may not
be possible to readily liquidate the Purchaser’s investment in the Company.
 
(c)           The Purchaser has such knowledge and experience in financial and
business matters that he, she or it is capable of evaluating the merits and
risks of an investment in the Shares, or the Purchaser has employed the services
of an independent investment advisor, attorney or accountant to read all of the
documents furnished or made available to him, her or it by the Company and to
evaluate the merits and risks of such an investment on the Purchaser's behalf;
 
(d)           The Purchaser's overall commitment to investments which are not
readily marketable is not disproportionate to his, her or its net worth; his,
her or its investment in the Shares will not cause such overall commitment to
become excessive; and he, she or it can afford to bear the loss of his, her or
its entire investment in the Shares;
 
(e)           The Purchaser has adequate means of providing for his, her or its
current needs and personal contingencies and has no need for liquidity in his,
her or its investment in the Shares;
 
(f)           The Purchaser hereby acknowledges that the Purchaser has been
advised that this offering has not been registered with, or reviewed by, the
Securities and Exchange Commission (the “SEC”) because this offering is intended
to be a non-public offering pursuant to Section 4(2) of the Securities Act and
Regulation D thereunder (“Regulation D”).  The Purchaser represents that the
Purchaser's Shares are being purchased for the Purchaser's own account, for
investment purposes only and not with a view towards distribution or resale to
others.  The Purchaser agrees that the Purchaser will not attempt to sell,
transfer, assign, pledge or otherwise dispose of all or any portion of the
Shares unless they are registered under the Securities Act or unless in the
opinion of counsel satisfactory to the Company an exemption from such
registration is available.  The Purchaser understands that the Shares have not
been registered under the Securities Act by reason of a claimed exemption under
the provisions of the Securities Act, which depends, in part, upon the
Purchasers’ investment intention;
 
(g)           The signatures on the Subscription Agreement are genuine; and the
Purchaser has legal competence and capacity to execute the same; and this
Subscription Agreement constitutes the legal, valid and binding obligation of
the Purchaser, enforceable in accordance with its terms; and
 
(h)           The Purchaser acknowledges that the Shares have not been
recommended by any U.S. Federal or state securities commission or regulatory
authority.  Furthermore, the foregoing authorities have not confirmed the
accuracy or determined the adequacy of this document.  Any representation to the
contrary is a criminal offense.
 
Purchaser agrees that the foregoing representations and warranties may be used
as a defense in any actions relating to the Company or the offering of the
Shares, and that it is only on the basis of such representations and warranties
that the Company may be willing to accept the Purchaser's subscription for the
Shares.

 
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4.           Indemnification.  The Purchaser acknowledges that he, she or it
understands the meaning and legal consequences of the representations,
warranties and covenants in paragraph 2 and 3 hereof, as applicable, and that
the Company has relied upon such representations, warranties and covenants, as
applicable, and he, she or it hereby agrees to indemnify and hold harmless the
Company and any of its officers, directors, controlling persons, agents and
employees, who is or may be a party or is or may be threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of or
arising from any actual or alleged misrepresentation or misstatement of facts or
omission to represent or state facts made or alleged to have been made by the
undersigned to the Company (or any agent or representative of the Company), or
omitted or alleged to have been omitted by the undersigned, concerning the
undersigned or the undersigned's authority to invest or financial position in
connection with the offering or sale of the Shares, including, without
limitation, any such misrepresentation, misstatement or omission contained in
the Questionnaire submitted by the Purchaser (if any), against losses, damages,
liabilities or expenses for which the Company or any officer, director or
controlling person of the Company has not otherwise been reimbursed (including
reasonable attorney's fees, judgments, fines and amounts paid in settlement)
actually and reasonably incurred by the Company or such officer, director or
controlling person in connection with such action, suit or
proceeding.  Notwithstanding the foregoing, however, no representation,
warranty, covenant, acknowledgment or agreement made herein by the Purchaser
shall in any manner be deemed to constitute a waiver of any rights granted to
the Purchaser under U.S. Federal or state securities laws.  All representations,
warranties and covenants contained in this Subscription Agreement and the
indemnification contained in this paragraph 4 shall survive the acceptance of
this Subscription Agreement and the delivery of the Shares.
 
5.           Restrictions on Transfer.  The Purchaser understands and agrees
that the Shares purchased pursuant to this subscription are being offered
pursuant to Section 4(2) of the Securities Act and Regulation D thereunder and
any interests therein may not be offered, sold, transferred, pledged or
otherwise disposed of except pursuant to (i) an effective registration statement
under the Securities Act and any applicable state securities laws or (ii) an
exemption from registration under such act and such laws which, in the opinion
of counsel for the holder of such Shares, which counsel and opinion are
reasonably satisfactory to counsel for the Company, is available.  The Purchaser
also understands and agrees that the following legend shall appear on all
certificates representing the Shares and that the Company may give appropriate
instructions to the transfer agent for the Shares to enforce such restrictions:
 
“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW.  THESE SHARES
MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNLESS FIRST REGISTERED UNDER SUCH LAWS, OR UNLESS THE COMPANY HAS RECEIVED
EVIDENCE REASONABLY SATISFACTORY TO IT THAT REGISTRATION UNDER SUCH LAWS IS NOT
REQUIRED.”
 
6.           Entire Agreement.  This Subscription Agreement (including all
exhibits hereto) contains the entire agreement of the parties with respect to
the subject matter of this Agreement and there are no representations, covenants
or other agreements except as stated or referred to herein or as are embodied in
the Subscription Agreement.
 
7.           Assignability.  This Subscription Agreement is not transferable or
assignable by the undersigned or any successor thereto.
 
8.           Applicable Law.  This Subscription Agreement shall be governed by
and construed in accordance with the internal laws of the State of Nevada,
without reference to the principles thereof relating to conflicts of law.
 
[Signature page follows]

 
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IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement as
of the ____ day of _________, 2011.
 
Subscription Amount: _______________ shares of common stock at a price of $0.02
per share, or a total of $_______________.
 
If the Purchaser is an INDIVIDUAL, or if purchased as JOINT TENANTS, as TENANTS
IN COMMON, or as COMMUNITY PROPERTY by more than one individual:
       
(Signature of Purchaser)
                 
(Name Typed or Printed)
                 
(Signature of Co-Purchaser)
                 
(Name Typed or Printed)
     
If the Purchaser is a CORPORATION, PARTNERSHIP OR LIMITED LIABILITY COMPANY:
         
(Signature of Authorized Officer or Agent)
                 
(Name of Authorized Officer or Agent)
                 
(Name of Business Entity Typed or Printed)

Accepted as of this _____ day of __________, 20__

SIGMA LABS, INC.

By:
   
 
Mark Cola, President and Chief Operating Officer

 
 
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EXHIBIT A
 
CONFIDENTIAL PURCHASER QUESTIONNAIRE
(TO BE COMPLETED ONLY BY NATURAL PERSONS)
 
Name(s) of Purchaser(s):* 
 

     
(1)                                                                                                                                    
             
(2)                                                                                                                                    
            1.    Background Information.              
a.
 
Home Address:
 
—
                 
  
               
b.
 
Home Telephone:
 
—
             
c.
 
Social Security #(s):
 
—
             
d.
 
U.S. Citizen:
______ Yes ______ No
               
e.
 
Occupation:
 
—
             
f.
 
Employer:
 
—
             
g.
 
Bus. Address:
 
—
             
h.
 
Bus. Telephone:
 
—
             
i.
 
E-Mail Address:
 
—
             
j.
 
Age:
 
—
             
k.
 
Send Mail to:
______ Home    ______ Office     ______ E-Mail
                 
Other:
                 

 

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*      If there is more than one Purchaser (other than husband and wife), a
separate Confidential Purchaser Questionnaire must be completed for each such
Purchaser. If Purchaser is a business entity, a separate Confidential Purchaser
Questionnaire must be completed for each Equity Owner (as defined in Section 3 –
Purchaser Suitability below) thereof.

 
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2.
Type of Ownership.

 
Indicate type of ownership subscribed for (if other than for a single individual
or business entity):
 
______ Joint Tenants with Rights of Survivorship
 
______ Tenants in Common
 
______ Tenants by the Entirety
 
3.
Purchaser Suitability.

 
Please indicate all of the following (if any) certifications that apply to you:
 
a.            If the Purchaser is an individual, or if purchased as joint
tenants, as tenants in common or as community property by more than one
individual):
 
(i)           I certify that I am an “accredited investor” because I have an
individual net worth* (or joint net worth* with my spouse) in excess of
$1,000,000 or total corporate assets of in excess of $5,000,000.
 
Yes ______No ______
 
(ii)           I certify that I am an “accredited investor” because I had an
individual income** (not including any amounts attributable to my spouse or to
property owned by my spouse) of more than $200,000 in each of the previous two
calendar years and I reasonably expect to reach the same income level in the
current year.
 
Yes ______No ______
 
(iii)           I certify that I am an “accredited investor” because I had a
joint income** with my spouse in excess of $300,000 in each of the previous two
calendar years and I reasonably expect to reach the same income level in the
current year.
 
Yes ______No ______
 

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*      For purposes of this Questionnaire, your “net worth” is equal to the
excess of your total assets at fair market value over your total liabilities,
excluding from this calculation the value of your primary residence and the
amount of any indebtedness secured by your primary residence (up to the fair
value of the residence). The amount of any indebtedness secured by your primary
residence in excess of the fair value of the residence must be included in total
liabilities.
 
**      For purposes of this Questionnaire, “income” means adjusted gross
income, as reported for Federal income tax purposes, less any income
attributable to a spouse or to property owned by a spouse, increased by the
following amounts (but not including any amounts attributable to a spouse or to
property owned by a spouse): (i) the amount of any tax-exempt interest income
under Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”)
received, (ii) the amount of losses claimed as a limited partner in a limited
partnership as reported on Schedule E of Form 1040 and (iii) any deduction
claimed for depletion under Section 611 et. seq. of the Code.

 
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b.            If the Purchaser is a business entity:
 
(i)           I certify that Purchaser is a corporation, partnership or limited
liability company, and was not formed for the specific purpose of acquiring the
Shares.
 
Yes ______No ______
 
(ii)           I certify that I am an equity owner of Purchaser (“Equity Owner”)
and an “accredited investor” because I have an individual net worth* (or joint
net worth* with my spouse) in excess of $1,000,000 or total corporate assets of
in excess of $5,000,000.
 
Yes ______No ______
 
(iii)           I certify that I am an Equity Owner and an “accredited investor”
because I had an individual income** (not including any amounts attributable to
my spouse or to property owned by my spouse) of more than $200,000 in each of
the previous two calendar years and I reasonably expect to reach the same income
level in the current year.
 
Yes ______No ______
 
(iv)           I certify that I am an Equity Owner and an “accredited investor”
because I had a joint income** with my spouse in excess of $300,000 in each of
the previous two calendar years and I reasonably expect to reach the same income
level in the current year.
 
Yes ______No ______
 
4.
Reliance by the Company.

 
I understand that the Company will be relying on the accuracy and completeness
of my responses to the foregoing questions and I represent, warrant and covenant
to the Company as follows:
 
(i)           The answers to the above questions are complete and correct and
may be relied upon by the Company in determining whether the Offering in
connection with which I have executed this Questionnaire is exempt from
registration under the Securities Act;
 
(ii)           I will notify the Company immediately of any material change in
any statement made herein or any event resulting in the omission of any
statement required to be made herein that occurs prior to the acceptance of my
subscription; and
 
(iii)           I understand that an investment in the Shares involves a high
degree of risk.

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*      For purposes of this Questionnaire, your “net worth” is equal to the
excess of your total assets at fair market value over your total liabilities,
excluding from this calculation the value of your primary residence and the
amount of any indebtedness secured by your primary residence (up to the fair
value of the residence). The amount of any indebtedness secured by your primary
residence in excess of the fair value of the residence must be included in total
liabilities.
 
**      For purposes of this Questionnaire, “income” means adjusted gross
income, as reported for Federal income tax purposes, less any income
attributable to a spouse or to property owned by a spouse, increased by the
following amounts (but not including any amounts attributable to a spouse or to
property owned by a spouse): (i) the amount of any tax-exempt interest income
under Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”)
received, (ii) the amount of losses claimed as a limited partner in a limited
partnership as reported on Schedule E of Form 1040 and (iii) any deduction
claimed for depletion under Section 611 et. seq. of the Code.

 
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Dated:   ___________, 20__
     
(Signature of Purchaser)
           
(Name Type or Printed)
           
(Signature of Co-Purchaser)
           
 (Name Typed or Printed)

 
 
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