Document:

Exhibit 10.1

 

AMENDMENT NO. 2 TO

 

SHARE PURCHASE AGREEMENT

 

among

 

PROTEA BIOSCIENCES GROUP, INC.

 

vivoPHARM PTY LTD.

 

DR. RALF BRANDT 

 

and

 

THE BRANDT FAMILY TRUST

 

SOUTH AUSTRALIAN LIFE SCIENCE ADVANCEMENT
PARTNERSHIP, LP 

 

TERRA ROSSA CAPITAL PTY LTD

 

ROYAL MELBOURNE INSTITUTE OF TECHNOLOGY
trading as “RMIT UNIVERSITY”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dated August 7, 2015

 

    1 

     

    

 

AMENDMENT NO. 2 TO SHARE PURCHASE
AGREEMENT

 

THIS AMENDMENT NO. 2 TO SHARE PURCHASE
AGREEMENT (“Amendment”), dated this 7th day of August 2015 is made and entered into by and among Protea
Biosciences Group, Inc., a Delaware corporation (the “Buyer” or “Protea”), Dr.
Ralf Brandt (“Brandt”), The Brandt Family Trust, a trust organized under the laws of Australia,
Mrs. Sabine Brandt, trustee (the “Trust”), South Australian Life Science Advancement Partnership, LP,
ABN 39 229 293 655 a limited partnership organized under the laws of Australia (“SALSA”), Terra Rossa
Capital Pty Ltd ACN 114 576 742 in its capacity as manager of the South Australian Life Science Advancement
Partnership, LP (“Terra Rossa”) Royal Melbourne Institute of Technology trading as “RMIT University”
established under the laws of Victoria, Australia (  (“RMIT”) and vivoPharm Pty Ltd. ACN 106 101
615, a corporation organized under the laws of Australia (the “Company”). The Trust, SALSA and RMIT are
hereinafter sometimes individually referred to as a “Selling Shareholder” and collectively as the “Selling
Shareholders.”

 

This Amendment amends certain of the provisions
of a SHARE PURCHASE AGREEMENT, dated as of March 31, 2015, as amended by Amendment No. 1 to the Share Purchase Agreement,
dated 10th day of June 2015, by and among the Buyer, the Company and the Selling Shareholders (collectively, the (the
“Purchase Agreement”).

 

W I T N E S S E T H:

 

WHEREAS, the Selling
Shareholders, the Company and the Buyer executed the Purchase Agreement on March 7, 2015 (the “Execution Date”);
and

 

WHEREAS, the Closing
Date under the Purchase Agreement is currently September 7, 2015; and

 

WHEREAS, the Buyer
desires to extend the Closing Date to as late as January 31, 2016 (the “Outside Closing Date”); and

 

WHEREAS, subject to
the terms and conditions hereinafter set forth, the Selling Shareholders and the Company are willing to extend the Closing Date
under the Purchase Agreement,

 

NOW, THEREFORE, in
consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, and
covenants herein contained, the parties agree as follows:

 

1.Definitions.Unless
otherwise defined in this Agreement, all capitalized terms, when used herein, shall have the same meaning as they are defined in
the Purchase Agreement.

 

2.Payment of Fixed
Consideration.Section 2.2 of the Purchase Agreement is hereby deleted and the following Section 2.2 is substituted in place
thereof.

 

“SECTION 2.2.
Payment of Fixed Consideration.

 

(a)Forthwith after
the signing of this Agreement by all parties, the Buyer will pay the sum of $100,000.00 by way of deposit and part payment of the
Cash Consideration in accordance with Section 2.2(a) below. On the Closing Date, in consideration for sale and delivery of
the Subject Shares, the Buyer shall pay to the Selling Shareholders the sum of the following:

 

    2 

     

    

 

(i) the sum of (A)
$5,790,280 of Cash Consideration, including the Company Option Payment, and (B) the 627,280.4 shares of Protea Series A Preferred
Stock, evidencing $6,272,804 as Stock Consideration, representing a total of Twelve Million and Sixty Three Thousand and Eighty
Four ($12,063,084) Dollars, plus the Company Option Payment of Fixed Consideration, less (iii) the Holdback Amount set forth in
Section 2.3 below; plus

 

(ii)an additional
one (1.0%) percent increase in the aforesaid Twelve Million and Sixty Three Thousand and Eighty Four ($12,063,084) Dollars, plus
the Company Option Payment of Fixed Consideration for each month, or part thereof, between October 2015 and January 2016 in which
the Closing Date shall occur. For the avoidance of doubt, if the Closing occurs (A) in the month of October 2015, the Fixed Consideration
shall be increased by one (1%) percent, or 101% of $12,063,084, (B) in the month of November 2015, the Fixed Consideration shall
be increased by two (2%) percent or 102% of $12,063,084, (C) in the month of December 2015, the Fixed Consideration shall be increased
by three (3%) percent or 103% of $12,063,084, and (D) in the month of January 2016, the Fixed Consideration shall be increased
by four (4%) percent or 104% of $12,063,084.

 

The allocation of the
Fixed Consideration payable on the Closing Date as between each of the Selling Shareholders shall be as set forth on Schedule
2.2 annexed hereto and made a part hereof.

 

(b)Payment of
Cash Consideration.The Cash Consideration shall be paid to the Selling Shareholders by means of wire transfers of immediately
available funds to a trust account maintained by Company Counsel in accordance with wire instructions provided by such legal counsel.
Promptly following the Closing Date, such Cash Consideration shall be disbursed by Company Counsel to accounts designated by the
Selling Shareholders and the Option Holders. The Liquidation Amount will be paid to SALSA from the Cash Consideration and the amount
of the Cash Consideration payable to each of the Selling Shareholders and the Option Holders shall be as set forth on Schedule
2.2 annexed hereto, and for an Option Holder in accordance with the Option Holder’s Letter. All incremental increases
in the Fixed Consideration set forth above from the amounts originally set forth in the Purchase Agreement (the “Fixed
Consideration Increases”) shall be allocated as follows: (i) SALSA and RMIT shall be entitled to receive their allocable
portions of 100% of the Fixed Consideration Increases as Cash Consideration, and (ii) the Trust and the Option Holders shall receive
its allocable portion of 100% of the Fixed Consideration Increases as Stock Consideration, all as set forth on Schedule 2.2
annexed hereto.

 

(b)Payment of
Stock Consideration.On the Closing Date, the Buyer shall cause to be delivered to the Selling Shareholders stock certificates
evidencing (i) the applicable number of shares of Protea Series A Preferred Stock, or (ii) upon consummation of the anticipated
underwritten public offering referred to in Section 2.5(b) below and listing of its Common Stock on the Nasdaq Capital Markets,
the applicable number of shares of Protea Common Stock, in either case, representing (A) the Stock Consideration, less (B) the
Holdback Amount set forth in Section 2.3 below. Such stock certificates shall be registered in the names of each of the Selling
Shareholders and the Option Holders and shall be in such number of shares of Protea Stock Consideration to be issued or issuable
to each Selling Shareholder as shall be as set forth on Schedule 2.2 annexed hereto and for an Option Holder in accordance
with the Option Holder’s Letter.

 

(c)Restricted
Securities. Without limiting the obligations of the Buyer pursuant to Section 6.20, each of the Selling Shareholders
acknowledge that the Stock Consideration and any Contingent Consideration have not been registered under the Securities Act and
may not be sold in the absence of a registration statement declared effective by the SEC or an applicable exemption for the registration
requirements of the Securities Act. Each certificate evidencing the Stock Consideration and any Contingent Consideration shall
bear the following legend:

 

    3 

     

    

 

“The
shares evidenced by this certificate have not be registered under the Securities Act of 1933, as amended (the “Act”),
and may not be sold, pledged, hypothecated or assigned in the absence of an effective registration statement under the Act, or
an opinion of counsel satisfactory to the Company that registration is not required under the Act.”

 

(d)Deposit and
Break-up Fee. Forthwith on the signing of this Agreement by all parties, the Buyer will pay by means of wire transfer of immediately
available funds to a trust account maintained by Company Counsel in accordance with wire instructions provided by such legal counsel
the sum of $100,000.00 (“Deposit”) by way of deposit and part payment of the Cash Consideration. The Deposit
will be held by Company Counsel and paid and applied as Cash Consideration on Closing. If the Break-up Fee is payable in accordance
with Section 7.8 or Section 7.9 of this Agreement, Company Counsel shall pay and apply the Deposit on behalf of the Buyer
in satisfaction of the Break-up Fee in accordance with Section 7.9(e).

 

(e)If this Agreement
is terminated by the Buyer and the Selling Shareholders pursuant to Section 10.1(a), or by the Buyer pursuant to Section 10.1(d),
or by the Buyer pursuant to Section 10.1(f), the Deposit will be repaid to the Buyer.

 

(f)Summary of
Terms of Protea Series A Preferred Stock.As set forth in the Certificate of Designations, if issued, the Protea Series
A Preferred Stock shall:

 

(i)have
a stated or liquidation value per share of ten ($10.00) Dollars which shall be payable upon any sale or liquidation of the Buyer
prior to any payments in respect of the Buyer Common Stock;

 

(ii)pay
an annual dividend of four (4%) percent which shall accrue annually, be payable in additional shares of Protea Series A Preferred
Stock, and be added to the face or stated amount of such shares of Protea Series A Preferred Stock;

 

(iii)be convertible
at any time, at the option of the holder, into shares of Buyer Common Stock at the Conversion Price then in effect;

 

(iv)be subject
to automatic conversion into Buyer Common Stock in the event that either (A) the average of the VWAP of shares of
Buyer Common Stock, as traded on any United States Stock Exchange for any twenty (20) consecutive Trading Days shall equal or exceed
one hundred and fifty (150%) percent of the Conversion Price then in effect; or (B) Protea shall consummate an underwritten public
offering of not less than $15,000,000 of its shares of Buyer Common Stock.

 

(v)vote,
together with the Buyer Common Stock, on an “as converted basis” with respect to all matters submitted to the vote
of holders of Buyer Common Stock; and

 

(vi)be subject
to redemption and repurchase at the sole option of the Buyer, upon thirty days prior written notice to the holders, for a cash
amount, payable in United States Dollars, equal to the $10.00 per share stated value of the Protea Series A Preferred Stock plus
accrued dividends thereon.

 

The foregoing
provisions of this Section 2.2(e) is merely a summary of the principal terms and conditions of the Protea Series A Preferred
Stock and is qualified in all respects by the terms, conditions and provisions of the Certificate of Designations annexed hereto
as Exhibit A and made a part hereof.”

 

    4 

     

    

 

3.Closing Date.Section
2.5 of the Purchase Agreement is hereby deleted and the following Section 2.5 is substituted in place thereof.

 

“SECTION 2.5
The Closing.

 

(a)The closing
of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of CKR Law,
LLP, 1330 Avenue of the Americas, 35th Floor, New York, New York 10019, commencing at 10:00 a.m. local time on a date
(the “Closing Date”) which shall be the earlier to occur of (i) five business days following the satisfaction
or waiver of all conditions to the obligations of the parties to consummate the transactions contemplated hereby (other than conditions
with respect to actions the respective parties will take at the Closing itself) or such other date as the Selling Shareholders
and the Buyer may mutually determine; or (ii) as late as January 31 2016 (the “Outside Closing Date”).
It is the intent of the parties that Buyer shall assume control of the Company and its Subsidiaries immediately after the close
of business on the Closing Date.

 

(b)The Buyer has
submitted to the Selling Shareholders a letter of intent from Laidlaw & Company (UK), Ltd., a nationally recognized investment
bank (“Laidlaw”) to serve as the managing underwriter to underwrite on a firm commitment basis up to a (USD)
$25,000,000 public offering of common stock or related securities of the Buyer; a portion of the net proceeds of which shall be
used to pay the applicable amount of the Cash Consideration (the “Public Offering”). The Buyer shall file a
registration statement with the United States Securities and Exchange Commission (“SEC”), apply to list its
shares of Common Stock for trading on the Nasdaq Capital Markets (“Nasdaq”) and use its best efforts to cause
such registration statement to be declared effective by the SEC and the listing of Buyer’s shares of Common Stock to be approved
by Nasdaq. In the event that, for any reason at any time prior to the Outside Closing Date, such Public Offering shall be abandoned
by the Buyer or Laidlaw shall terminate the letter of intent, unless the Buyer shall have then supplied the Selling Shareholders
with an alternative fully executed copy of a definitive term letter of intent or term sheet with one or more financially creditable
and reputable institutional or related investors for the Required Financing the Selling Parties shall have the right to immediately
terminate the Purchase Agreement and all transactions contemplated hereby.”

 

4.SECTION 6.5

 

(a) The paragraph currently referred to as Section 6.5 of the Purchase Agreement shall become paragraph (a) of Section 6.5. A new Section
6.5(b) shall be added, to read as follows:

 

"(b)Notwithstanding the obligations
on the Shareholders and the Company under Section 6.5(a), TRC shall have the right to enter into discussions with potential corporate
advisors regarding alternative strategic transactions before the Outside Closing Date. In addition, the Company shall have the
ability to provide such advisors with relevant Company information, subject to (i) Company information (including the existence
of this Agreement) being covered under a suitable non-disclosure agreement (NDA) and (ii) neither TRC nor the Company shall engage
a corporate advisor prior to the earlier to occur of (A) the Outside Closing Date, or (B) the prior termination of this Agreement
pursuant to Section 2.5(b) above."

 

5.Transaction
Documents; Incorporation by Reference.Except as expressly amended pursuant to this Amendment, all of the terms and conditions
of the Purchase Agreement and all of the Exhibits and Schedules hereto and thereto collectively, the “Transaction Documents”)
shall remain in full force and effect, and are hereby deemed to be incorporated herein by this reference.

  

*************************

 

Signature page follows

 

    5 

     

    

 

IN WITNESS WHEREOF,
the parties hereto have executed this Agreement as of the date first above written.

 

PROTEA BIOSCIENCES GROUP, INC.

 

	 	By:  	/s/ Stephen Turner

Stephen Turner, President and CEO

 

	 	vivoPHARM PTY LTD pursuant to Section 127 of the 

Corporations Act 2001 (Cth)

 

	 	By:  	/s/ Ralph Brandt

Dr. Ralf Brandt, Director

 

	 	 

[Name] Director

 

	 	/s/ Ralf Brandt

RALF BRANDT

 

	 	THE BRANDT
FAMILY TRUST

 

	 	By:  	/s/ Sabine Brandt

Sabine Brandt, Trustee

 

SOUTH AUSTRALIAN LIFE SCIENCE 

ADVANCEMENT PARTNERSHIP, LP

by its duly authorised manager and agent

TERRA ROSSA CAPITAL PTY LTD

 

	 	By:  	 

[Name], Director

 

	 	  	 

 

ROYAL MELBOURNE
INSTITUTE OF TECHNOLOGY

 

 

	 	By:  	 

_____________, Authorized Officer

in the presence of:

 

	 	  	 

Witness

	 	  	 

Name of Witness

 

    6 

     

    

 

Schedule 2.2

Schedule 2.2 Agreed Distribution of
Fixed Consideration at Closing (USD)

 

See Attached.

 

    7Exhibit 10.2

 

To subscribe for Units including Common
Stock and Warrants 

to Purchase Shares of Common Stock in
the private offering of

 

PROTEA BIOSCIENCES GROUP, INC.

 

		1.	Date and Fill in the number of units (the “Units”), with each Unit consisting
of (a) 400,000 shares of common stock, par value $0.0001 per share, of the Company (“Common Stock”) at
a purchase 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 three (3) years following the Final Closing Date (as such term is defined in the Warrant) (the “Warrant”)
being subscribed for and Complete and Sign the Signature Page included in this Subscription Agreement.

 

		2.	Initial the Accredited Investor Certification attached to this Subscription Agreement.

 

		3.	Complete and Sign the Signature Page attached to this Subscription Agreement. NOTICE: Please
note that by executing the attached Subscription Agreement, you will be deemed to have executed the Unit Purchase Agreement (Exhibit
B to this Subscription Agreement), the Warrant (Exhibit B to the Unit Purchase Agreement), and the Registration Rights Agreement
(Exhibit F to the Unit Purchase Agreement) (this Subscription Agreement, together with the Memorandum, the Unit Purchase Agreement,
the Registration Rights Agreement, and the Warrant are collectively referred to herein as the “Transaction Documents”),
each of which are attached to the Memorandum, and will be treated for all purposes as if you did sign each such Transaction Document
even though you may not have physically signed the signature pages to such documents. 

 

		4.	Complete and Return the attached Investor Questionnaire and, if applicable, Wire Transfer
Authorization attached to this Subscription Agreement.

 

		5.	Return all forms to your Account Executive and then
send all signed original documents with a check (if applicable) to:

 

Laidlaw & Company (UK) Ltd.

546 Fifth Avenue, 5th Floor

New York, NY 10036

 

		6.	Please make your subscription payment payable to the order of “Signature Bank, as Escrow
Agent for Protea Biosciences Group, Inc.” Account No. 1502614645.

 

For
wiring funds directly to the escrow account, use the following instructions:

 

	Signature Bank
	261 Madison Avenue
	New York, NY 10016
	Acct. Name:	Signature Bank as Escrow Agent for
	 	Protea Biosciences Group, Inc.
	ABA Number:	026013576
	SWIFT Code:	SIGNUS33
	A/C Number:	1502614645

 

	FBO:	Purchaser Name
	 	Social Security Number
	 	Address

 

    	 	 	1

     

    

 

ALL SUBSCRIPTION DOCUMENTS MUST BE FILLED IN AND SIGNED EXACTLY
AS SET FORTH WITHIN.

 

SUBSCRIPTION AGREEMENT

 

FOR

 

PROTEA BIOSCIENCES GROUP, INC.

 

Dated: _________________,
2015

 

Protea Biosciences Group, Inc.

c/o Laidlaw & Company (UK) Ltd.

546 Fifth Avenue, 5th Floor

New York, NY 10036

 

Ladies and Gentlemen:

 

1.      Subscription.
The undersigned (the “Purchaser”) will purchase the number of units (“Units”)
of securities of Protea Biosciences Group, Inc., a Delaware corporation (the “Company”), set forth on
the signature page to this Subscription Agreement, at a purchase price of $100,000 per Unit, with each Unit consisting of (a) 400,000
shares of common stock, par value $0.0001 per share, of the Company (“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 three (3) years following the
Final Closing Date (as such term is defined in the Warrant) (the “Warrant”). The shares of Common Stock
underlying the Warrant may hereinafter be referred to as the “Warrant Shares”). The Units are being offered
(the “Offering”) by the Company pursuant to the offering 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”).

 

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 & Company (UK) Ltd. (“Laidlaw” or the “Placement Agent”)
may increase the Maximum Offering to as much as 45 Units or up to $4,500,000 to cover over-allotments in subscriptions on the same
terms and conditions as otherwise set forth in the Transaction Documents (the “Overallotment Amount”).
The Maximum Offering Amount and the Overallotment Amount shall not include up to an additional $3,375,000 (the “Exercise
Amount”) that may be paid to the Company upon full exercise of all Warrants included in the Units sold in the Offering
upon the Initial Closing of the Offering and/or such other investors as the Company and the Placement Agent may mutually agree
upon (collectively, the “Additional Investors”).

 

The Initial Closing
(as defined herein) of this Offering shall be subject to subscriptions being received from qualified investors and accepted by
the Company. Upon acceptance by the Company after the date hereof of subscriptions for the Minimum Offering Amount, the Placement
Agent and the Company shall have the right at any time thereafter, prior to the Termination Date (as defined below), to effect
an initial closing with respect to this Offering (the “Initial Closing”). Thereafter, the Placement Agent
and the Company shall continue to accept, and continue to have closings (together with the Initial Closing, each a “Closing”)
for, additional subscriptions for Securities from investors from time to time.

 

    	 	 	2

     

    

 

The Units will be offered
for a period (the “Initial Offering Period”) commencing on the date of the Memorandum and continue until
the earliest of (i) August 31, 2015 (the “Minimum Offering Amount Deadline”), (ii) the date upon which
subscriptions for the Maximum Offering offered hereunder have been accepted, or (iii) the date upon which the Company elects to
terminate the Offering (the “Termination Date”), subject to the right of the Company and the Placement
Agent to extend the Offering until as late as October 31, 2015 (the “Final Termination Date”), without
further notice to or consent by investors, if the Minimum Offering Amount has not be subscribed by the Minimum Offering Amount
Deadline. This additional period, together with the Initial Offering Period, shall be referred to herein as the “Offering
Period.”

 

The minimum investment
amount that may be purchased by an investor is one Unit at a price of $100,000 (the “Investor Minimum Investment”);
provided however, the Company and the Placement Agent, in their mutual discretion, may accept an investor subscription for an amount
less than the Investor Minimum Investment. The subscription for the Units will be made in accordance with and subject to the terms
and conditions of this Subscription Agreement and the Memorandum.

 

All subscription funds
will be held in a non-interest bearing escrow account in the Company’s name at Signature Bank (the “Escrow Agent”),
261 Madison Avenue, New York, New York 10016, or with such other escrow agent as may be appointed by Laidlaw and the Company (the
“Escrow Account”).

 

In
the event that (i) subscriptions for the Offering are rejected in whole (at the sole discretion of the Company),
(ii) the Minimum Offering Amount has not been subscribed for prior to September 30, 2015, or, if extended, prior to October
31, 2015, or (iii) the Offering is otherwise terminated by the Company or the Placement Agent prior to the expiration of the Initial
Offering Period or, if extended, prior to the Final Termination Date, then the Escrow Agent will refund all subscription funds
held in the Escrow Account to the persons who submitted such funds, without interest, penalty or deduction. If a subscription
is rejected in part (at the sole discretion of the Company or Laidlaw) and the Company accepts the portion not so rejected, the
funds for the rejected portion of such subscription will be returned without interest, penalty, expense or deduction.

 

Laidlaw and the Company
each reserves the right (but is not obligated) to have its employees, agents, officers, directors and affiliates of Laidlaw or
the Company to purchase Units in the Offering and all such purchases will be counted towards the Minimum Offering Amount and the
Maximum Offering Amount.

 

The terms of the Offering
are more completely described in the Memorandum and such terms are incorporated herein in their entirety. Certain capitalized terms
used, but not otherwise defined herein, will have the respective meanings provided in the Memorandum.

 

2.           Payment.
The Purchaser encloses herewith a check payable to, or will immediately make a wire transfer payment to, “Signature
Bank, as Escrow Agent for Protea Biosciences Group, Inc.,” in the full amount of the purchase price of the Units being
subscribed for. Together with the check for, or wire transfer of, the full purchase price, the Purchaser is delivering a completed
and executed Signature Page to this Subscription Agreement along with a completed and executed Investor Questionnaire, which is
attached hereto as Exhibit A. By executing this Subscription Agreement (this “Subscription Agreement”),
you will also be deemed to have executed each of the Unit Purchase Agreement in the form of Exhibit B to this Subscription Agreement,
the Warrant in the form Exhibit B to the Unit Purchase Agreement and the Registration Rights Agreement in the form of Exhibit
F to the Unit Purchase Agreement (this Subscription Agreement, together with the Memorandum, the Unit Purchase Agreement, the
Registration Rights Agreement, and the Warrant are collectively referred to herein as collectively the “Transaction Documents”),
and will be bound by the respective terms of each of them.

 

    	 	 	3

     

    

 

3.            Deposit of
Funds. All payments made as provided in Section 2 hereof will be deposited by the Purchaser as soon as practicable with
the Escrow Agent, or such other escrow agent appointed by Laidlaw and the Company, in the Escrow Account. In the event that the
Company does not effect a Closing during the Offering Period, the Escrow Agent will refund all subscription funds, without deduction
and/or interest accrued thereon, and will return the subscription documents to each Purchaser. If the Company or Laidlaw rejects
a subscription, either in whole or in part (at the sole discretion of the Company or Laidlaw), the rejected subscription funds
or the rejected portion thereof will be returned promptly to such Purchaser without interest, penalty, expense or deduction.

 

4.            Acceptance
of Subscription. The Purchaser understands and agrees that the Company or Laidlaw, each in its sole discretion, reserves the
right to accept this or any other subscription for the Units, in whole or in part, notwithstanding prior receipt by the Purchaser
of notice of acceptance of this or any other subscription. The Company will have no obligation hereunder until the Company executes
an executed copy of the Subscription Agreement. If Purchaser’s subscription is rejected in whole (at the sole discretion
of the Company or Laidlaw), the Offering is terminated or the Minimum Offering Amount is not subscribed for and accepted prior
to the expiration of the Initial Offering Period or, if extended, prior to the Final Termination Date, all funds received from
the Purchaser will be returned without interest, penalty, expense or deduction, and this Subscription Agreement will thereafter
be of no further force or effect. If Purchaser’s subscription is rejected in part (at the sole discretion of the Company
or Laidlaw) and the Company accepts the portion not so rejected, the funds for the rejected portion of such subscription will be
returned without interest, penalty, expense or deduction, and this Subscription Agreement will continue in full force and effect
to the extent such subscription was accepted. The Purchaser may revoke its subscription and obtain a return of the subscription
amount paid to the Escrow Account at any time before the date of the Initial Closing. The Purchaser may not revoke this subscription
or obtain a return of the subscription amount paid to the Escrow Agent on or after the date of the Initial Closing. Any subscription
received after the Initial Closing but prior to the Termination Date shall be irrevocable.

 

5.            Representations
and Warranties of the Purchaser. The Purchaser hereby acknowledges, represents, warrants, and agrees as follows:

 

(a)            None of the Common Stock, the Warrants,
the Conversion Shares, or the Warrant Shares (collectively referred to hereafter as the “Securities”)
are registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities
laws. The Purchaser understands that the offering and sale of the Securities is intended to be exempt from registration under the
Securities Act, by virtue of Section 4(a)(2) thereof and the provisions of Regulation D promulgated thereunder, based, in part,
upon the representations, warranties and agreements of the Purchaser contained in this Subscription Agreement and the Unit Purchase
Agreement;

 

(b)            The Purchaser
and the Purchaser’s attorney, accountant, purchaser representative and/or tax advisor, if any (collectively, “Advisors”),
have received and have carefully reviewed the Memorandum, this Subscription Agreement, and each of the Transaction Documents and
all other documents requested by the Purchaser or its Advisors, if any, and understand the information contained therein, prior
to the execution of this Subscription Agreement;

 

(c)            Neither the Securities
and Exchange Commission (the “Commission”) nor any state securities commission has approved or disapproved
of the Securities or passed upon or endorsed the merits of the Offering or confirmed the accuracy or determined the adequacy of
the Memorandum. The Memorandum has not been reviewed by any Federal, state or other regulatory authority. Any representation to
the contrary may be a criminal offense;

 

    	 	 	4

     

    

 

(d)            All documents,
records, and books pertaining to the investment in the Securities including, but not limited to, all information regarding the
Company and the Securities, have been made available for inspection and reviewed by the Purchaser and its Advisors, if any;

 

(e)            The Purchaser
and its Advisors, if any, have had a reasonable opportunity to ask questions of and receive answers from the Company’s officers
and any other persons authorized by the Company to answer such questions, concerning, among other related matters, the Offering,
the Securities, the Transaction Documents and the business, financial condition, results of operations and prospects of the Company
and all such questions have been answered by the Company to the full satisfaction of the Purchaser and its Advisors, if any;

 

(f)            In evaluating
the suitability of an investment in the Company, the Purchaser has not relied upon any representation or other information (oral
or written) other than as stated in the Memorandum;

 

(g)           The Purchaser
is unaware of, is in no way relying on, and did not become aware of the offering of the Securities through or as a result of, any
form of general solicitation or general advertising including, without limitation, any article, notice, advertisement or other
communication published in any newspaper, magazine or similar media or broadcast over television, radio or over the Internet, in
connection with the offering and sale of the Securities and is not subscribing for the Securities and did not become aware of the
Offering through or as a result of any seminar or meeting to which the Purchaser was invited by, or any solicitation of a subscription
by, a person not previously known to the Purchaser in connection with investments in securities generally;

 

(h)           The Purchaser
has taken no action which would give rise to any claim by any person for brokerage commissions, finders’ fees or the like
relating to this Subscription Agreement or the transactions contemplated hereby (other than fees to be paid by the Company to Laidlaw,
as described in the Memorandum);

 

(i)            The Purchaser,
either alone or together with its Advisors, if any, has such knowledge and experience in financial, tax, and business matters,
and, in particular, investments in securities, so as to enable it to utilize the information made available to it in connection
with the Offering to evaluate the merits and risks of an investment in the Securities and the Company and to make an informed investment
decision with respect thereto;

 

(j)            The Purchaser
is not relying on the Company, Laidlaw or any of their respective employees or agents with respect to the legal, tax, economic
and related considerations of an investment in any of the Securities and the Purchaser has relied on the advice of, or has consulted
with, only its own Advisors;

 

(k)           The Purchaser
is acquiring the Securities solely for such Purchaser’s own account for investment and not with a view to resale or distribution
thereof, in whole or in part. The Purchaser has no agreement or arrangement, formal or informal, with any person to sell or transfer
all or any part of any of the Securities and the Purchaser has no plans to enter into any such agreement or arrangement;

 

(l)           The Purchaser
understands and agrees that purchase of the Securities is a high risk investment and the Purchaser is able to afford an investment
in a speculative venture having the risks and objectives of the Company. The Purchaser must bear the substantial economic risks
of the investment in the Securities indefinitely because none of the Securities may be sold, hypothecated or otherwise disposed
of unless subsequently registered under the Securities Act and applicable state securities laws or an exemption from such registration
is available. Legends will be placed on the certificates representing the Common Stock, the Warrants and the shares of Common Stock
issuable upon exercise of the Warrants to the effect that such securities have not been registered under the Securities Act or
applicable state securities laws and appropriate notations thereof will be made in the Company’s books;

 

    	 	 	5

     

    

 

(m)           The Purchaser
has adequate means of providing for such Purchaser’s current financial needs and foreseeable contingencies and has no need
for liquidity from its investment in the Securities for an indefinite period of time;

 

(n)            The Purchaser
is aware that an investment in the Securities involves a number of very significant risks and has carefully read and considered
the matters set forth in the Memorandum and, in particular, the matters under the caption “Risk Factors” therein and
understands any of such risk may materially adversely affect the Company’s operations and future prospects;

 

(o)           At the time such
Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on which it exercises any Warrants,
it will be an“accredited investor” within the meaning of Regulation D, Rule 501(a), promulgated by the Securities and
Exchange Commission under the Securities Act and has truthfully and accurately completed the Investor Questionnaire attached as
Exhibit A to this Subscription Agreement and will submit to the Company such further assurances of such status as may be
reasonably requested by the Company;

 

(p)            The Purchaser:
(i) if a natural person, represents that the Purchaser has reached the age of 21 and has full power and authority to execute and
deliver this Subscription Agreement and all other related agreements or certificates and to carry out the provisions hereof and
thereof; (ii) if a corporation, partnership, or limited liability company, or association, joint stock company, trust, unincorporated
organization or other entity, represents that such entity was not formed for the specific purpose of acquiring the Securities,
such entity is duly organized, validly existing and in good standing under the laws of the state of its organization, the consummation
of the transactions contemplated hereby is authorized by, and will not result in a violation of state law or its charter or other
organizational documents, such entity has full power and authority to execute and deliver this Subscription Agreement and all other
related agreements or certificates and to carry out the provisions hereof and thereof and to purchase and hold the Securities,
the execution and delivery of this Subscription Agreement has been duly authorized by all necessary action, this Subscription Agreement
has been duly executed and delivered on behalf of such entity and is a legal, valid and binding obligation of such entity; or (iii)
if executing this Subscription Agreement in a representative or fiduciary capacity, represents that it has full power and authority
to execute and deliver this Subscription Agreement in such capacity and on behalf of the subscribing individual, ward, partnership,
trust, estate, corporation, or limited liability company or partnership, or other entity for whom the Purchaser is executing this
Subscription Agreement, and such individual, partnership, ward, trust, estate, corporation, or limited liability company or partnership,
or other entity has full right and power to perform pursuant to this Subscription Agreement and make an investment in the Company,
and represents that this Subscription Agreement constitutes a legal, valid and binding obligation of such entity. The execution
and delivery of this Subscription Agreement will not violate or be in conflict with any order, judgment, injunction, agreement
or controlling document to which the Purchaser is a party or by which it is bound;

 

(q)            The Purchaser
and its Advisors, if any, have had the opportunity to obtain any additional information, to the extent the Company had such information
in its possession or could acquire it without unreasonable effort or expense, necessary to verify the accuracy of the information
contained in the Memorandum including, but not limited to, the terms and conditions of the Securities as set forth therein and
the Transaction Documents and all other related documents, received or reviewed in connection with the purchase of the Securities
and have had the opportunity to have representatives of the Company provide them with such additional information regarding the
terms and conditions of this particular investment and the financial condition, results of operations, business and prospects of
the Company deemed relevant by the Purchaser or its Advisors, if any, and all such requested information, to the extent the Company
had such information in its possession or could acquire it without unreasonable effort or expense, has been provided by the Company
in writing to the full satisfaction of the Purchaser and its Advisors, if any;

 

    	 	 	6

     

    

 

(r)            The Purchaser
represents to the Company that any information which the undersigned has heretofore furnished or is furnishing herewith to the
Company is complete and accurate and may be relied upon by the Company in determining the availability of an exemption from registration
under Federal and state securities laws in connection with the offering of securities as described in the Memorandum;

 

(s)           The Purchaser
has significant prior investment experience, including investment in non-listed and unregistered securities. The Purchaser has
a sufficient net worth to sustain a loss of its entire investment in the Company in the event such a loss should occur. The Purchaser’s
overall commitment to investments which are not readily marketable is not excessive in view of the Purchaser’s net worth
and financial circumstances and the purchase of the Securities will not cause such commitment to become excessive. This investment
is a suitable one for the Purchaser;

 

(t)            The Purchaser
is satisfied that it has received adequate information with respect to all matters which it or its Advisors, if any, consider material
to its decision to make this investment;

 

(u)           The Purchaser
acknowledges that any and all estimates or forward-looking statements or projections included in the Memorandum were prepared by
the Company in good faith, but that the attainment of any such projections, estimates or forward-looking statements cannot be guaranteed,
will not be updated by the Company and should not be relied upon;

 

(v)           No oral or written
representations have been made, or oral or written information furnished, to the Purchaser or its Advisors, if any, in connection
with the offering of the Securities which are in any way inconsistent with the information contained in the Memorandum;

 

(w)          Within five (5)
days after receipt of a request from the Company, the Purchaser will provide such information and deliver such documents as may
reasonably be necessary to comply with any and all laws and ordinances to which the Company is subject;

 

(x)           THE SECURITIES
OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF CERTAIN STATES AND ARE BEING OFFERED
AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSION, ANY STATE
SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE
MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL;

 

(y)           In making
an investment decision, investors must rely on their own examination of Company and the terms of the Offering, including the merits
and risks involved. Investors should be aware that they will be required to bear the financial risks of this investment for an
indefinite period of time;

 

    	 	 	7

     

    

 

(z)            (For ERISA
plans only) The fiduciary of the ERISA plan (the “Plan”) represents that such fiduciary has been
informed of and understands the Company’s investment objectives, policies and strategies, and that the decision to invest
“plan assets” (as such term is defined in ERISA) in the Company is consistent with the provisions of ERISA that require
diversification of plan assets and impose other fiduciary responsibilities. The Purchaser or Plan fiduciary (a) is responsible
for the decision to invest in the Company; (b) is independent of the Company and any of its affiliates; (c) is qualified to make
such investment decision; and (d) in making such decision, the Purchaser or Plan fiduciary has not relied on any advice or recommendation
of the Company or any of its affiliates; and

 

(aa)            The Purchaser
has read in its entirety the Memorandum and all exhibits thereto, including, but not limited to, all information relating to the
Company, and the Securities, and understands fully to its full satisfaction all information included in the Memorandum including,
but not limited to, the Section entitled “Risk Factors”.

 

(bb)            The Purchaser
represents that (i) the Purchaser was contacted regarding the sale of the Securities by the Company or the Placement Agent (or
another person whom the Purchaser believed to be an authorized agent or representative thereof) with whom the Purchaser had a prior
substantial pre-existing relationship and (ii) it did not learn of the offering of the Securities by means of any form of general
solicitation or general advertising, and in connection therewith, the Purchaser did not (A) receive or review any advertisement,
article, notice or other communication published in a newspaper or magazine or similar media or broadcast over television or radio,
whether closed circuit, or generally available; or (B) attend any seminar meeting or industry investor conference whose attendees
were invited by any general solicitation or general advertising;

 

(cc)            The Purchaser
consents to the placement of a legend on any certificate or other document evidencing the Securities and, when issued, the Warrant
Shares, that such securities have not been registered under the Securities Act or any state securities or “blue sky”
laws and setting forth or referring to the restrictions on transferability and sale thereof contained in this Agreement. The Purchaser
is aware that the Company will make a notation in its appropriate records with respect to the restrictions on the transferability
of such Securities. The legend to be placed on each certificate shall be in form substantially similar to the following:

 

“THE SECURITIES REPRESENTED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE
SECURITIES OR “BLUE SKY LAWS,” AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED ABSENT
AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY
HAS RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”

 

(dd)            The Purchaser
acknowledges that if he or she is a Registered Representative of a Financial Industry Regulatory Authority (“FINRA”)
member firm, he or she must give such firm the notice required by the FINRA’s Rules of Fair Practice, receipt of which must
be acknowledged by such firm prior to an investment in the Securities.

 

    	 	 	8

     

    

 

(ee)            To effectuate
the terms and provisions hereof, the Purchaser hereby appoints the Placement Agent as its attorney-in-fact (and the Placement Agent
hereby accepts such appointment) for the purpose of carrying out the provisions of the Escrow Agreement by and between the Company,
the Placement Agent and Signature Bank (the “Escrow Agreement”) including, without limitation, taking any action on
behalf of, or at the instruction of, the Purchaser and executing any release notices required under the Escrow Agreement and taking
any action and executing any instrument that the Placement Agent may deem necessary or advisable (and lawful) to accomplish the
purposes hereof. All acts done under the foregoing authorization are hereby ratified and approved and neither the Placement Agent
nor any designee nor agent thereof shall be liable for any acts of commission or omission, for any error of judgment, for any mistake
of fact or law except for acts of gross negligence or willful misconduct. This power of attorney, being coupled with an interest,
is irrevocable while the Escrow Agreement remains in effect.

 

(ff)            The Purchaser
agrees not to issue any public statement with respect to the Offering, Purchaser’s investment or proposed investment in the
Company or the terms of any agreement or covenant between them and the Company without the Company’s prior written consent,
except such disclosures as may be required under applicable law.

 

(gg)          The Purchaser
understands, acknowledges and agrees with the Company that this subscription may be rejected, in whole or in part, by the Company,
in the sole and absolute discretion of the Company, at any time before any Closing notwithstanding prior receipt by the Purchaser
of notice of acceptance of the Purchaser’s subscription.

 

(hh)          The Purchaser
acknowledges that the information contained in the Transaction Documents or otherwise made available to the Purchaser is confidential
and non-public and agrees that all such information shall be kept in confidence by the Purchaser and neither used by the Purchaser
for the Purchaser’s personal benefit (other than in connection with this subscription) nor disclosed to any third party for
any reason, notwithstanding that a Purchaser’s subscription may not be accepted by the Company; provided, however, that (a)
the Purchaser may disclose such information to its affiliates and advisors who may have a need for such information in connection
with providing advice to the Purchaser with respect to its investment in the Company so long as such affiliates and advisors have
an obligation of confidentiality, and (b) this obligation shall not apply to any such information that (i) is part of the public
knowledge or literature and readily accessible at the date hereof, (ii) becomes part of the public knowledge or literature and
readily accessible by publication (except as a result of a breach of this provision) or (iii) is received from third parties without
an obligation of confidentiality (except third parties who disclose such information in violation of any confidentiality agreements
or obligations, including, without limitation, any subscription or other similar agreement entered into with the Company).

 

6.           Representations
and Warranties of the Company. The representations and warranties contained in Section 3 of the Unit Pruchase Agreement to
be entered into between the Company and the Purchasers are incorporated herein by refence and are deemed to be made under this
Subscription Agreement.

 

7.           Indemnification.
The Purchaser agrees to indemnify and hold harmless the Company, Laidlaw and each of their respective officers, directors, managers,
employees, agents, attorneys, control persons and affiliates from and against all losses, liabilities, claims, damages, costs,
fees and expenses whatsoever (including, but not limited to, any and all expenses incurred in investigating, preparing or defending
against any litigation commenced or threatened) based upon or arising out of any actual or alleged false acknowledgment, representation
or warranty, or misrepresentation or omission to state a material fact, or breach by the Purchaser of any covenant or agreement
made by the Purchaser herein or in any other document delivered in connection with this Subscription Agreement.

 

    	 	 	9

     

    

 

8.            Binding Effect.
This Subscription Agreement will survive the death or disability of the Purchaser and will be binding upon and inure to the benefit
of the parties and their heirs, executors, administrators, successors, legal representatives, and permitted assigns. If the Purchaser
is more than one person, the obligations of the Purchaser hereunder will be joint and several and the agreements, representations,
warranties and acknowledgments herein will be deemed to be made by and be binding upon each such person and such person’s
heirs, executors, administrators, successors, legal representatives and permitted assigns.

 

9.            Modification.
This Subscription Agreement will not be modified or waived except by an instrument in writing signed by the party against whom
any such modification or waiver is sought.

 

10.          Notices.
Any notice or other communication required or permitted to be given hereunder will be in writing and will be mailed by certified
mail, return receipt requested, or delivered by reputable overnight courier such as FedEx against receipt to the party to whom
it is to be given (a) if to the Company, at the address set forth in the Unit Purchase Agreement or (b) if to the Purchaser, at
the address set forth on the signature page hereof (or, in either case, to such other address as the party will have furnished
in writing in accordance with the provisions of this Section 10). Any notice or other communication given by certified mail will
be deemed given at the time of certification thereof, except for a notice changing a party’s address which will be deemed
given at the time of receipt thereof. Any notice or other communication given by overnight courier will be deemed given at the
time of delivery.

 

11.          Assignability.
This Subscription Agreement and the rights, interests and obligations hereunder are not transferable or assignable by the Purchaser
and the transfer or assignment of any of the Securities will be made only in accordance with all applicable laws.

 

12.          Applicable
Law.  This Subscription Agreement will be governed by and construed under the laws of the State of New York as applied to
agreements among New York residents entered into and to be performed entirely within New York. The parties hereto (1) agree that
any legal suit, action or proceeding arising out of or relating to this Subscription
Agreement will be instituted exclusively in New York State Supreme Court, County of New York, or in the United States District
Court for the Southern District of New York, (2) waive any objection which the parties may have now or hereafter to the venue
of any such suit, action or proceeding, and (3) irrevocably consent to the jurisdiction of the New York State Supreme Court, County
of New York, and the United States District Court for the Southern District of New York in any such suit, action or proceeding.
Each of the parties hereto further agrees to accept and acknowledge service of any and all process which may be served in any
such suit, action or proceeding in the New York State Supreme Court, County of New York, or in the United States District Court
for the Southern District of New York and agrees that service of process upon it mailed by certified mail to its address will
be deemed in every respect effective service of process upon it, in any such suit, action or proceeding. THE PARTIES HERETO AGREE
TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS SUBSCRIPTION
AGREEMENT OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED HEREBY.

 

13.          Blue Sky
Qualification. The purchase of Securities pursuant to this Subscription Agreement is expressly conditioned upon the exemption
from qualification of the offer and sale of the Securities from applicable federal and state securities laws.

 

14.          Use of Pronouns.
All pronouns and any variations thereof used herein will be deemed to refer to the masculine, feminine, neuter, singular or plural
as the identity of the person or persons referred to may require.

 

    	 	 	10

     

    

 

15.          Confidentiality.
The Purchaser acknowledges and agrees that any information or data the Purchaser has acquired from or about the Company not otherwise
properly in the public domain, was received in confidence. The Purchaser agrees not to divulge, communicate or disclose, except
as may be required by law or for the performance of this Subscription Agreement, or use to the detriment of the Company or for
the benefit of any other person or persons, or misuse in any way, any confidential information of the Company, including any trade
or business secrets of the Company and any business materials that are treated by the Company as confidential or proprietary, including,
without limitation, confidential information obtained by or given to the Company about or belonging to third parties.

 

16.          Miscellaneous.

 

(a)            This Subscription
Agreement, together with the other Transaction Documents, constitute the entire agreement between the Purchaser and the Company
with respect to the subject matter hereof and supersede all prior oral or written agreements and understandings, if any, relating
to the subject matter hereof. The terms and provisions of this Subscription Agreement may be waived, or consent for the departure
therefrom granted, only by a written document executed by the party entitled to the benefits of such terms or provisions.

 

(b)            Each of the Purchaser’s
and the Company’s representations and warranties made in this Subscription Agreement will survive the execution and delivery
hereof and delivery of the Securities.

 

(c)            Each of the parties
hereto will pay its own fees and expenses (including the fees of any attorneys, accountants, appraisers or others engaged by such
party) in connection with this Subscription Agreement and the transactions contemplated hereby whether or not the transactions
contemplated hereby are consummated.

 

(d)            This Subscription
Agreement may be executed in one or more counterparts each of which will be deemed an original, but all of which will together
constitute one and the same instrument.

 

(e)            Each provision
of this Subscription Agreement will be considered separable and, if for any reason any provision or provisions hereof are determined
to be invalid or contrary to applicable law, such invalidity or illegality will not impair the operation of or affect the remaining
portions of this Subscription Agreement.

 

(f)            Paragraph titles
are for descriptive purposes only and will not control or alter the meaning of this Subscription Agreement as set forth in the
text.

 

17.          Signature
Page. It is hereby agreed by the parties hereto that the execution by the Purchaser of this Subscription Agreement, in the
place set forth hereinbelow, will be deemed and constitute the agreement by the Purchaser to be bound by all of the terms and conditions
hereof as well as by the Unit Purchase Agreement and each of the other Transaction Documents, and will be deemed and constitute
the execution by the Purchaser of all such Transaction Documents without requiring the Purchaser’s separate signature on
any of such Transaction Documents.

 

[Remainder of page intentionally left
blank.]

 

    	 	 	11

     

    

 

ANTI-MONEY LAUNDERING REQUIREMENTS

 

	The USA PATRIOT Act	 	What is money laundering?	 	How big is the problem and 

why is it important?
	 	 	 	 	 
	The USA PATRIOT Act is designed to detect, deter, and punish terrorists in the United States and abroad.  The Act imposes new anti-money laundering requirements on brokerage firms and financial institutions.  Since April 24, 2002 all brokerage firms have been required to have new, comprehensive anti-money laundering programs. To help you understand these efforts, we want to provide you with some information about money laundering and our steps to implement the USA PATRIOT Act.	 	Money laundering is the process of disguising illegally obtained money so that the funds appear to come from legitimate sources or activities.  Money laundering occurs in connection with a wide variety of crimes, including illegal arms sales, drug trafficking, robbery, fraud, racketeering, and terrorism.	 	The use of the U.S. financial system by criminals to facilitate terrorism or other crimes could well taint our financial markets.  According to the U.S. State Department, one recent estimate puts the amount of worldwide money laundering activity at $1 trillion a year.

 

What are we required to do to eliminate money laundering?

 

	Under new rules required by the USA PATRIOT Act, our anti-money laundering program must designate a special compliance officer, set up employee training, conduct independent audits, and establish policies and procedures to detect and report suspicious transaction and ensure compliance with the new laws.	 	As part of our required program, we may ask you to provide various identification documents or other information.  Until you provide the information or documents we need, we may not be able to effect any transactions for you.

 

    	 	 	12

     

    

 

PROTEA BIOSCIENCES GROUP, INC.

SIGNATURE PAGE TO

SUBSCRIPTION AGREEMENT 

 

Purchaser hereby elects to purchase
a total of $_________________, representing ________ ______Unit(s), each Unit consisting of (i) 400,000 shares of Common Stock
and (ii) a Warrant to purchase 200,000 shares of Common Stock, at a purchase price of $100,000 per Unit (NOTE: to be completed
by the Purchaser).

 

Date (NOTE: To be completed by the Purchaser):
__________________, 2015

 

 

 

If the Purchaser is an INDIVIDUAL,
and if purchased as JOINT TENANTS, as TENANTS IN COMMON, or as COMMUNITY PROPERTY:

 

	 	 	 
	Print Name(s)	 	Social Security Number(s)
	 	 	 
	Print Name(s)	 	Social Security Number(s)
	 	 	 
	Signature(s) of Purchaser(s)	 	Signature
	 	 	 
	Address:	 	 
	 	 	 
	 	 	Date
	 	 	 

 

 

 

If the Purchaser is a PARTNERSHIP, CORPORATION,
LIMITED LIABILITY COMPANY or TRUST:

 

	 	 	 
	 	 	Federal Taxpayer
	Name of Partnership,	 	Identification Number
	Corporation, Limited	 	 
	Liability Company or Trust	 	 
	 	 	 	 
	By:	 	 	 
	 	Name:	 	State of Organization
	 	Title:	 	 
	 	 	 
	Address:	 	 
	 	 	 
	 	 	Date
	 	 	 

 

AGREED AND ACCEPTED:

 

PROTEA BIOSCIENCES GROUP, INC.

 

	By:	 	 	 
	 	Name:	 	Date
	 	Title:	 	 

 

    	 	 	 

     

    

 

Exhibit
A

 

FORM OF INVESTOR QUESTIONNAIRE

 

PROTEA BIOSCIENCES GROUP, INC.

 

For Individual Investors Only

 

(All individual investors must INITIAL
where appropriate. Where there are joint investors both parties must INITIAL):

 

		Initial _______	I certify that I have a “net worth”
of at least $1 million either individually or through aggregating my individual holdings and those in which I have a joint, community
property or other similar shared ownership interest with my spouse. For purposes of calculating net worth under this paragraph,
(i) the primary residence shall not be included as an asset, (ii) to the extent that the indebtedness that is secured by the primary
residence is in excess of the fair market value of the primary residence, the excess amount shall be included as a liability,
and (iii) if the amount of outstanding indebtedness that is secured by the primary residence exceeds the amount outstanding 60
days prior to the execution of this Subscription Agreement, other than as a result of the acquisition of the primary residence,
the amount of such excess shall be included as a liability.

 

		Initial _______	I certify that I have had an annual gross income
for the past two years of at least $200,000 (or $300,000 jointly with my spouse) and expect my income (or joint income, as appropriate)
to reach the same level in the current year.

 

For Non-Individual
Investors

 

(all Non-Individual
Investors must INITIAL where appropriate):

 

		Initial _______	The undersigned certifies that it is a partnership, corporation,
limited liability company or business trust that is 100% owned by persons who meet either of the criteria for Individual Investors,
above.

 

		Initial _______	The undersigned certifies that it is a partnership, corporation,
limited liability company or business trust that has total assets of at least $5 million and was not formed for the purpose of
investing in Company.

 

		Initial _______	The undersigned certifies that it is an employee benefit
plan whose investment decision is made by a plan fiduciary (as defined in ERISA §3(21)) that is a bank, savings and loan
association, insurance company or registered investment adviser.

 

		Initial _______	The undersigned certifies that it is an employee benefit
plan whose total assets exceed $5,000,000 as of the date of the Subscription Agreement.

 

		Initial _______	The undersigned certifies that it is a self-directed employee
benefit plan whose investment decisions are made solely by persons who meet either of the criteria for Individual Investors, above.

 

    	 	 	 

     

    

 

		Initial _______	The undersigned certifies that it is a U.S. bank, U.S.
savings and loan association or other similar U.S. institution acting in its individual or fiduciary capacity.

 

		Initial _______	The undersigned certifies that it is a broker-dealer registered
pursuant to §15 of the Securities Exchange Act of 1934.

 

		Initial _______	The undersigned certifies that it is an organization described
in §501(c)(3) of the Internal Revenue Code with total assets exceeding $5,000,000 and not formed for the specific purpose
of investing in Company.

 

		Initial _______	The undersigned certifies that it is a trust with total
assets of at least $5,000,000, not formed for the specific purpose of investing in Company, and whose purchase is directed by
a person with such knowledge and experience in financial and business matters that he is capable of evaluating the merits and
risks of the prospective investment.

 

		Initial _______	The undersigned certifies that it is a plan established
and maintained by a state or its political subdivisions, or any agency or instrumentality thereof, for the benefit of its employees,
and which has total assets in excess of $5,000,000.

 

		Initial _______	The undersigned certifies that it is an insurance company
as defined in §2(a)(13) of the Securities Act of 1933, as amended, or a registered investment company.

 

    	 	 	 

     

    

 

PROTEA BIOSCIENCES GROUP, INC.

 

Investor
Questionnaire

(Must be completed by Purchaser)

 

Section A - Individual Purchaser
Information

 

Purchaser Name(s):

 

 

 

Individual executing Profile or Trustee:

 

 

 

Social Security Numbers / Federal I.D. Number:

 

 

 

Date of Birth: _________________ Marital Status: _________________

Joint Party Date of Birth:_________________

Investment Experience (Years): ___________

Annual Income: _________________

Liquid Net Worth:_____________

Net Worth: ________________

 

	Investment Objectives (circle one or more): 	Long Term Capital Appreciation, Short Term Trading, Income, Safety of Principal, Tax Exempt Income or other

 

Home Street Address:

 

 

 

Home City, State & Zip Code:

 

 

 

Home Phone: ________________________ Home Fax: _____________________

 

Home Email: _______________________________

 

Employer:

 

 

 

Employer Street Address:

 

 

 

Employer City, State & Zip Code:

 

 

 

Bus. Phone: __________________________ Bus. Fax: _______________________

 

Bus. Email: ________________________________

 

Type of Business:

 

 

 

LAIDLAW Account Executive / Outside Broker/Dealer:

 

 

 

Please check if you are a FINRA
member or affiliate of a FINRA member firm: _______

 

    	 	 	 

     

    

 

Section B – Entity Purchaser
Information

 

Purchaser Name(s):

 

 

 

Authorized Individual executing Profile or Trustee:

 

 

 

Social Security Numbers / Federal I.D. Number:

 

 

 

Investment Experience (Years): ___________

 

Annual Income: _______________ 

 

Net Worth: ________________

 

Was the Trust formed for the specific purpose of purchasing
the Units?

 

 ̈
Yes  ̈ No

 

Principal Purpose (Trust)____________________________________________________

 

	Type of Business: 	 

 

	Investment Objectives (circle one or more): 	Long Term Capital Appreciation, Short Term Trading, Income, Safety of Principal, Tax Exempt Income or other

 

Street Address:

 

 

 

City, State & Zip Code:

 

 

 

Phone: ________________________ Fax: ________________________

 

Email: __________________________

 

Laidlaw Account Executive / Outside Broker/Dealer:

 

 

 

    	 	 	 

     

    

 

Section C – Form of Payment
– Check or Wire Transfer

 

		____	Check payable to “SIGNATURE BANK, AS ESCROW AGENT
FOR PROTEA BIOSCIENCES GROUP, INC.

 

		____	Wire funds from my outside account according to the “To
subscribe for Units of Common Stock and Warrants to Purchase Shares of Common Stock in the private offering of PROTEA BIOSCIENCES
GROUP, INC.”

 

		____	Wire funds from my LAIDLAW Account – See following
page

 

		____	The funds for this investment are rolled over, tax deferred
from ____________________ within the Allowed 60-day window

 

Section D – Purchaser Instructions
for Payments of any Dividends

 

	 ̈	 	Please make any dividend and any other payment checks pursuant to the Units to “Sterne Agee & Leach Inc. c/f  ____________________[Insert Client Name]” and deliver such checks to Laidlaw so that they may deposit them into my Laidlaw brokerage account
	 	 	 
	 ̈	 	Please make out any dividend and any other payment checks pursuant to the Units in the registered name of the Purchaser set forth in the signature page to the Subscription Agreement for the Units and mail such checks to me at the address specified in such signature page.

 

Section E – Securities Delivery
Instructions (check one)

 

		____	Please deliver my securities to Laidlaw for deposit into
my brokerage account.

            

		____	Please deliver my securities to the address listed in the
above Investor Questionnaire.

 

		____	Please deliver my securities to the below address:

	 	 
	 	 
	 	 
	 	 

 

Purchaser
Signature(s) _______________________________________        Date_______________

 

    	 	 	 

     

    

 

Wire Transfer Authorization

 

	TO:	OPERATIONS MANAGER
	 	LAIDLAW & CO. (UK) LTD.
	 	 
	RE:	Client Wire Transfer Authorization
	 	PROTEA BIOSCIENCES GROUP, INC.
	 	 
	DATE: 	________________

 

 

 

This memorandum authorizes the transfer of the following
listed funds from my LAIDLAW Brokerage Account as follows:

 

	LAIDLAW Brokerage Account #	  ______________________
	 	 
	Wire Amount	$______________________

 

SIGNATURE BANK

261 Madison Avenue

New York, NY 10016

 

ABA Number: 026013576

For Credit to Signature Bank, as Escrow Agent for

Protea Biosciences Group, Inc.

Account No.: 1502614645

 

	 	REFERENCE:
	 	 
	 	PURCHASER'S LEGAL NAME
	 	 
	 	 
	 	TAX ID NUMBER
	 	 
	 	 
	 	PURCHASER'S ADDRESS
	 	 

 

	FBO:  	 

 

	Signature:	 	 
	 	 	 
	Signature:	 	 
	 	 	(Joint Signature)

 

    	 	 	 

     

    

 

Exhibit
B

 

Form
of Unit Purchase Agreement

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