Exhibit 10.3


 


UNIT PURCHASE AGREEMENT


 


BY AND AMONG


 


PROTEA
BIOSCIENCES GROUP, INC.


 


AND


 


THE PURCHASERS PARTY HERETO


 




    	 	 	 



     


    

 


Exhibits

TO

Unit PURCHASE AGREEMENT


 


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


 




    	 	 	 



     


    

 


PROTEA BIOSCIENCES GROUP,
INC.


 


Unit PURCHASE
AGREEMENT


 


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


 


BACKGROUND


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 




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1.            AGREEMENT
TO SELL AND PURCHASE.


 


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


 


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


 


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


 


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


 


2.            CLOSINGS,
DELIVERY AND PAYMENT.


 


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


 




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


 


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


 


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


 


3.           REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.


 


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


 




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3.1           Organization,
Good Standing and Qualification. The Company is a corporation duly incorporated, validly existing and in good standing under
the corporate and general laws of the State of Delaware. Each of the other Protea Entities is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of incorporation. Each Protea Entity has all requisite
corporate power and authority to own and operate its properties and assets. Neither the Company nor any Protea Entity is in violation
nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational
or charter documents. Each of the Company and the Protea Entities is duly qualified to conduct business and is in good standing
as a foreign corporation in each jurisdiction set forth on Schedule 3.1, except where failure to be so qualified or
in good standing, as the case may be, could not reasonably be expected to result in: (i) a material adverse effect on the legality,
validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company and the Protea Entities, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction
Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any
such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.


 


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


 


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


 




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


 


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


 


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


 


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


 




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


 


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


 




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


 


3.10        Agreements;
Action.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 




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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 




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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 




    	 	9	 



     


    

 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


3.13       Intellectual
Property.


 


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


 




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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 




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


 


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


 


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


 




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3.16       Tax
Returns and Payments.


 


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


 


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


 


3.17       Employees.


 


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


 


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


 




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3.18       Pension
and Other Employee Benefit Plans.


 


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


 


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


 


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


 


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


 


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


 




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3.20       Permits;
Regulatory.


 


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


 


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


 


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


 




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


 


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


 


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


 


3.24         Disclosure.
Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company
confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel
with any information that it believes constitutes or might constitute material, non-public information. The Company understands
and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities of the Company.
All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company and its Subsidiaries, their
respective businesses and the transactions contemplated hereby, is, as of each Closing Date, true and correct and does not contain
any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company during
the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made and when made, not misleading. The Company acknowledges and agrees that no Purchaser
makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically
set forth in Section 3.2 hereof.


 




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


 


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


 


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


 


3.28         Foreign
Payments; Undisclosed Contract Terms.


 


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


 


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


 


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


 


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


 




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


 


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


 


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


 


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


 


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


 


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


 


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


 




    	 	18	 



     


    

 


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


 


3.39         Bad
Actor Disqualification


 


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


 


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


 


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


 


3.43         Transactions
with Affiliates and Employees. Except as set forth in the Protea SEC Reports, none of the officers or directors of the Company
and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company
or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring
payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer,
director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess
of $120,000 other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred
on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan of the
Company.


 




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3.44         Sarbanes-Oxley;
Internal Accounting Controls. The Company is in material compliance with all provisions of the Sarbanes-Oxley Act of 2002 which
are applicable to it as of the Closing Date. Except as disclosed in the Company’s Protea SEC Reports, the
Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that:
(i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect
to any differences. Except as disclosed in the Company’s Protea SEC Reports, the Company
has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and
designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports
it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in
the Commission’s rules and forms. The Company’s certifying officers have evaluated the effectiveness of the Company’s
disclosure controls and procedures as of the end of the period covered by the Company’s most recently filed periodic report
under the Exchange Act (such date, the “Evaluation Date”). The Company presented in its most recently filed
periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls
and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the
Company’s internal control over financial reporting (as such term is defined in the Exchange Act) that has materially affected,
or is reasonably likely to materially affect, the Company’s internal control over financial reporting.


 


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


 


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


 


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


 


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


 




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


 


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


 


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


 


4.            REPRESENTATIONS
AND WARRANTIES OF THE PURCHASERS.


 


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


 


5.            CONDITIONS
TO THE CLOSING.


 


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


 


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


 




    	 	21	 



     


    

 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 




    	 	22	 



     


    

 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 




    	 	23	 



     


    

 


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


 


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



 


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


 


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


 


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


 


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


 


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


 


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


 


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


 




    	 	24	 



     


    

 


6.            COVENANTS
OF THE PARTIES.


 


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


 


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


 


6.3         Transfer
Restrictions.


 


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


 


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


 


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


 




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


 


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


 


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


 




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


 


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


 




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


 


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


 


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


 


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


 


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


 


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


 


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


 




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


 


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


 


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


 


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


 


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


 




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


 


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


 


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


 


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


 


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


 




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


 


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


 


7.            INDEMNIFICATION
AND EXPENSES.


 


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


 


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


 


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


 


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


 




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


 


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


 


8.            MISCELLANEOUS.


 


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


 


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


 


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


 




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


 


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


 


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


 


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


 


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


 


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


 




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


 


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


 


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


 


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


 


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


 


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


 


9.            DEFINITIONS.


 


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


 


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


 




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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 




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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 




    	 	36	 



     


    

 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 




    	 	37	 



     


    

 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


9.56         “SEC”
shall mean Securities and Exchange Commission.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 




    	 	38	 



     


    

 


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


 


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


 


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


 


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


 


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


 


[SIGNATURES
ON FOLLOWING PAGES]


 




    	 	39	 



     


    

 


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


 


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


 


PURCHASERS:


 


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