Document:

PROMISSORY NOTE

(Non-Revolving)

	
$900,000.00

	
Charleston, West Virginia

	  	
December 10, 2010

 

FOR VALUE RECEIVED, PROTEA BIOSCIENCES, INC., a Delaware corporation (the “Borrower”), does hereby promise to pay to the order of the WEST VIRGINIA WATER DEVELOPMENT AUTHORITY, on behalf of the WEST VIRGINIA INFRASTRUCTURE AND JOBS DEVELOPMENT COUNCIL (the “Lender”), at its principal place of business at 180 Association Drive, Charleston, West Virginia 25311-1571, the principal sum of $900,000, or such lesser amount as may be advanced by the Lender pursuant to that certain Loan Agreement (the “Loan Agreement”) of even date herewith between Lender and Borrower, together with interest on the unpaid principal balances outstanding from time to time on this Note.

 

1.           Monthly Payments. Subject to the terms of Section 1 of the Loan Agreement, the principal of and interest on this Note shall be payable as follows:

 

(a)           Commencing on the 3 rd day of January, 2011, and continuing thereafter on the same day of each of the next succeeding 118 months, the Borrower shall make payments of principal and interest to the Lender on the principal balances outstanding on the loan (the “Loan”) evidenced by this Note sufficient to amortize the Loan over the remainder of its 10-year term, which payments shall be in the amounts set forth on the amortization schedule attached hereto as Exhibit A.

 

(b)           On December 3, 2020, the Borrower shall make a final payment to Lender in an amount equal to the unpaid principal balance on this Note together with all accrued interest thereon.

 

{C1859842.1}

  

 

  

 

2.           Prepayment. The Loan may be prepaid at any time without premium or penalty. Prepayments of the Loan may not be reborrowed. Partial prepayments will be applied to installments due in inverse order of maturity.

 

3.           Interest Rate. The principal balances outstanding on the Loan shall bear interest at a fixed rate of 3.25% per annum.

 

4.           Evidence and Security. This Note is issued and disbursement of Loan proceeds will be made pursuant to the Loan Agreement. Payment of this Note is secured by a Security Agreement of even date herewith executed by Borrower in favor of Lender which, together with the Loan Agreement and all other instruments, documents and agreements securing, evidencing or otherwise pertaining to the Loan are herein collectively referred to as the “Collateral Documents.”

 

5.           Late Charges. Any payment due to the Lender under this Note and not made within ten (10) days of its due date may be subject to a late payment charge equal to five percent (5%) of the monthly payment due. An additional five percent (5%) may be charged for each successive month the payment remains past due. All such late payment charges may be imposed by Lender in its sole and absolute discretion, and shall apply individually to all payments due and there shall be no daily pro-rata adjustment. All late charges accrue to the benefit of the Lender and are in addition to, not in lieu of, the continuing accrual of interest.

 

6.           Remedies. If an Event of Default (as defined in the Loan Agreement) shall have occurred and be continuing or there shall be a breach of or a default in the performance of any of the terms, conditions, warranties, covenants and agreements of any of the other Collateral Documents, then, upon the expiration of any applicable grace period, the entire unpaid principal balance on this Note, together with all accrued interest hereon, shall, at the option of the holder hereof, without notice, immediately become due and payable for all purposes, and the holder may exercise the rights and remedies provided for in the Collateral Documents and under applicable law.

 

{C1859842.1}

  

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7.           Applicable Law. This Note shall be governed and the rights and obligations of the parties hereto shall be construed under the laws of the State of West Virginia.

 

8.           Waiver. Each party to this Note, whether as principal, endorser, guarantor, surety or otherwise, jointly and severally, waives presentment, demand, protest and notice of dishonor and agrees that an extension or extensions of time of payment of this Note or any installment hereof may be made before, at or after maturity by agreement with any one or more of the parties hereto without notice to and without releasing the liability of any other party.

	  	
PROTEA BIOSCIENCES, INC.

	  	  	  
	  	
By:

	
/s/ Stephen Turner

	  	  	
Title: 

	
CEO

 

{C1859842.1}

  

3CANCELLATION AGREEMENT

 

This Agreement (this “Agreement”) is made as of the 2nd day of September, 2011 by and among SRKP 5, Inc., a Delaware corporation having its offices at 4737 North Ocean Drive, Suite 207, Lauderdale by the Sea, FL 33308 (the “Company”) and the individuals set forth on Schedule I hereto (the “Sellers”).

WITNESSETH:

 

WHEREAS, the Company entered into a Merger Agreement dated as of the date of this Agreement (the “Merger Agreement”),, by and among, the Company, SRKP 5 Acquisition Corp. (“MergerCo”), a wholly owned subsidiary of the Company and Protea Biosciences, Inc. (“Protea”), pursuant to which MergerCo shall merge with and into Protea, and Protea, as the surviving entity shall become the wholly owned subsidiary of the Company (the “Merger”); and

 

WHEREAS, pursuant to the terms of the Merger Agreement, simultaneous with, and as a condition to the closing (the “Closing”) of the transactions contemplated by the Merger Agreement, for an aggregate purchase price equal to $40,000 (the “Purchase Price”), the Company has agreed to cancel (1) an aggregate of 3,857,150 shares of common stock, par value $0.0001 per share (the “Common Stock”) of the Company and (2) warrants to purchase 3,857,150 shares of Common Stock (the “Warrants”, collectively with the Shares, the “Securities”) owned by the Sellers as set forth on Schedule I hereto; and

 

WHEREAS, upon delivery of the Purchase Price to the Sellers, the Securities shall be immediately cancelled.

 

NOW, THEREFORE, the parties hereto hereby agree as follows:

 

ARTICLE I

SALE AND PURCHASE OF THE SHARES

1.1.   Cancellation of the Shares and Warrants.  Subject to the terms and conditions of this Agreement, and in reliance upon the representations, warranties, covenants and agreements contained in this Agreement, the Sellers agree to cancel the Securities for the Purchase Price to be allocated to the Sellers, as set forth on Schedule I attached hereto.

 

1.2.   Closing.  At the Closing, the Sellers agree to execute any and all documents, including but not limited to, stock powers for the stock certificates representing the Shares, as the Company reasonably determines necessary to effect the cancellation of the Securities pursuant to the terms of this Agreement and the Company agrees to deliver the Purchase Price to the Sellers to be allocated to each Seller as set forth on Schedule I hereto.

 

ARTICLE II

REPRESENTATIONS, WARRANTIES AND COVENANTS

Each Sellers, individually and solely as to himself or itself, hereby makes the following representations and warranties to and covenants with the Company, which shall be true and correct through the date of the Closing as if made on that date:

   

  

  

  

2.1.   Each Seller has the requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby and otherwise to carry out Seller’s obligations hereunder. No consent, approval or agreement of any individual or entity is required to be obtained by the Sellers in connection with the execution and performance by the Sellers of this Agreement or the execution and performance by the Sellers of any agreements, instruments or other obligations entered into in connection with this Agreement.

 

2.2.   Each Seller owns the Securities free and clear of any and all liens, claims, encumbrances, preemptive rights, right of first refusal and adverse interests of any kind. Seller is a party to any agreement or understanding pursuant to which the Securities are to be transferred.

 

2.3.   Each Seller acknowledge that immediately prior to the cancellation contemplated hereby the Company may issue and sell shares of Common Stock to certain purchasers at a per share purchase price that may be lower or higher than the Purchase Price paid for the Shares.

 

2.4.   Each Seller is an accredited investor as defined in Rule 501(a) of Regulation D under the Securities Act of 1933.

2.5.  Each Seller has had had a reasonable opportunity to ask questions of and receive answers from a person or persons acting on behalf of the Company concerning the cancellation of the Securities and the business, financial condition and results of operations of the Company and all such questions have been answered to the full satisfaction of the Seller.

ARTICLE III

TERMINATION

3.1.   Termination by Mutual Agreement.  This Agreement may be terminated at any time by mutual consent of the parties hereto, provided that such consent to terminate is in writing and is signed by each of the parties hereto.

 

ARTICLE IV

MISCELLANEOUS

4.1.   Entire Agreement.  This Agreement constitutes the entire agreement of the parties, superseding and terminating any and all prior or contemporaneous oral and written agreements, understandings or letters of intent between or among the parties with respect to the subject matter of this Agreement.  No part of this Agreement may be modified or amended, nor may any right be waived, except by a written instrument which expressly refers to this Agreement, states that it is a modification or amendment of this Agreement and is signed by the parties to this Agreement, or, in the case of waiver, by the party granting the waiver.  No course of conduct or dealing or trade usage or custom and no course of performance shall be relied on or referred to by any party to contradict, explain or supplement any provision of this Agreement, it being acknowledged by the parties to this Agreement that this Agreement is intended to be, and is, the complete and exclusive statement of the agreement with respect to its subject matter.  Any waiver shall be limited to the express terms thereof and shall not be construed as a waiver of any other provisions or the same provisions at any other time or under any other circumstances.

  

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4.2.   Severability.  If any section, term or provision of this Agreement shall to any extent be held or determined to be invalid or unenforceable, the remaining sections, terms and provisions shall nevertheless continue in full force and effect.

 

4.3.   Notices.  All notices provided for in this Agreement shall be in writing signed by the party giving such notice, and delivered personally or sent by overnight courier, mail or messenger against receipt thereof or sent by registered or certified mail, return receipt requested, or by facsimile transmission or similar means of communication if receipt is confirmed or if transmission of such notice is confirmed by mail as provided in this Section 4.3.  Notices shall be deemed to have been received on the date of personal delivery or telecopy or attempted delivery.  Notice shall be delivered to the parties at the following addresses:

 

	  	
If to the Company:

	
SRKP 5, Inc.

	  	  	
c/o 4737 North Ocean Drive

	  	  	
Suite 207

	  	  	
Lauderdale by the Sea, FL 33308

	  	  	
Phone: (310) 203-2902

	  	  	  
	  	
If to Sellers:

	
to the address set forth on Schedule I.

Either party may, by like notice, change the address, person or telecopier number to which notice shall be sent.

 

4.4.   Governing Law.  This Agreement shall be governed and construed in accordance with the laws of the State of Delaware applicable to agreements executed and to be performed wholly within such State, without regard to any principles of conflicts of law.

 

4.5.   Waiver of Jury Trial.  EACH PARTY HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN THE EVENT OF ANY SUIT, ACTION OR PROCEEDING TO ENFORCE THIS AGREEMENT OR ANY OTHER ACTION OR PROCEEDING WHICH MAY ARISE OUT OF OR IN ANY WAY BE CONNECTED WITH THIS AGREEMENT OR ANY OF THE OTHER DOCUMENTS.

 

4.6.   Parties to Pay Own Expenses.  Each of the parties to this Agreement shall be responsible and liable for its own expenses incurred in connection with the preparation of this Agreement, the consummation of the transactions contemplated by this Agreement and related expenses.

 

4.7.   Successors.  This Agreement shall be binding upon the parties and their respective heirs, executors, administrators, legal representatives, successors and permitted assigns; provided, however, that no party may assign this Agreement or any of its rights under this Agreement without the prior written consent of the other parties.

 

4.8.   Further Assurances.  Each party to this Agreement agrees, without cost or expense to any other party, to deliver or cause to be delivered such other documents and instruments as may be reasonably requested by any other party to this Agreement in order to carry out more fully the provisions of, and to consummate the transaction contemplated by, this Agreement.

 

  

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4.9.   Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

 

4.10.   No Strict Construction.  The language used in this Agreement will be deemed to be the language chosen by the parties with the advice of counsel to express their mutual intent, and no rules of strict construction will be applied against any party.

 

4.11.   Headings.  The headings in the Sections of this Agreement are inserted for convenience only and shall not constitute a part of this Agreement.

[Remainder of this page intentionally left blank.]

  

  

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

	  	  	
SRKP 5, INC.

	  	  	  
	  	  	
By:

	
/s/ Richard Rappaport

	  	  	  	
Richard Rappaport, President

	  	  	  
	  	  	
SELLERS

	  	  	  
	  	  	
WESTPARK CAPITAL FINANCIAL SERVICES LLC

	  	  	  
	  	
By:

	
/s/ Richard Rappaport

	  	  	
Richard Rappaport, Manager

	  	  	  
	  	  	
/s/ Anthony Pintsopoulos

	  	  	
Anthony Pintsopoulos

	  	  	  
	  	  	
/s/ Richard Rappaport

	  	  	
Richard Rappaport

	  	  	  
	  	  	
/s/ Glenn Krinsky

	  	  	
Glenn Krinsky

	  	  	  
	  	  	
/s/ Debbie Schwartzberg

	  	  	
Debbie Schwartzberg

	  	  	  
	  	  	
/s/ Charles Frisco

	  	  	
Charles Frisco

	  	  	  
	  	  	
THE JULIE SCHWARTZBERG TRUST

	  	  	  
	  	  	
/s/ Debbie Schwartzberg

	  	  	
Debbie Schwartzberg, Trustee

	  	  	  
	  	  	
THE DAVID N. STERLING TRUST

	  	  	  
	  	  	
/s/ Debbie Schwartzberg

	  	  	
Debbie Schwartzberg, Trustee

  

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SCHEDULE I

 

	
Seller

	 	
No. of Shares

	 	 	
No. of 

Warrants

	 	 	
Purchase Price

	 
	
WestPark Capital Financial Services LLC

1900 Avenue of the Stars

Suite 310

Los Angeles, CA 90067

	 	 	1,157,150	 	 	 	1,157,150	 	 	$	12,000	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Anthony Pintsopoulos

4737 North Ocean Drive.

Suite 207

Fort Lauderdale, FL 33308

	 	 	243,000	 	 	 	243,000	 	 	$	2,520	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Richard Rappaport

1900 Avenue of the Stars

Suite 310

Los Angeles, CA 90067

	 	 	1,039,500	 	 	 	1,039,500	 	 	$	10,800	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Glenn Krinsky

1900 Avenue of the Stars

Suite 310

Los Angeles, CA 90067

	 	 	135,000	 	 	 	135,000	 	 	$	1,400	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Debbie Schwartzberg

785 Fifth Avenue

Apt. 10C

New York, NY 10022

	 	 	839,500	 	 	 	839,500	 	 	$	8,680	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Charles Frisco

117 Belmont Avenue

Long Beach, CA

	 	 	243,000	 	 	 	243,000	 	 	$	2,520	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	
The Julie Schwartzberg Trust

269 S Beverly Drive #1315

Beverly Hills, CA 90212

	 	 	100,000	 	 	 	100,000	 	 	$	1,040	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	
The David N. Sterling Trust

785 Fifth Avenue

Apt. 10C

New York, NY 10022

	 	 	100,000	 	 	 	100,000	 	 	$	1,040	 

 

  

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