SUBSCRIPTION AGREEMENT

 

a.

The Subscriber and Subscriber’s purchaser representative, if any, have reviewed  a copy of the Company’s most recent Annual Report on Form 10-K and Form 10-K/A, Quarterly Reports on Form 10-Q and Form 10-Q/A and current reports on Form 8-K.  The Subscriber, either alone or together with Subscriber’s purchaser representative, if any, have such knowledge and experience in financial and business matters as to be able to evaluate the merits and risks of an investment in the Company.  Since May 12, 2014, the date of filing of the Company’s most recent Quarterly Report on Form 10-Q, there has been no material adverse change in the business, properties, or results of operations of the Company.

 

b.

The Subscriber and Subscriber’s representative, if any, have had the opportunity to ask questions of and receive answers from the Company concerning the terms and conditions of the offering of the Shares by the Company and to obtain any additional information Subscriber has requested which is necessary to verify the accuracy of the information furnished to the Subscriber concerning the Company and such offering.

 

a.

The Subscriber is an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Act.

 

b.

The Shares and Warrants are being purchased for the Subscriber’s own account without the participation of any other person, with the intent of holding the Shares and Warrants for investment and without the intent of participating, directly or indirectly, in a distribution of the Shares and not with a view to, or for a resale in connection with, any distribution of the Shares and Warrants or any portion thereof, nor is the undersigned aware of the existence of any distribution of the Company’s securities.  Furthermore, the undersigned has no present intention of dividing such Shares and Warrants with others or reselling or otherwise disposing of any portion of such Shares and Warrants, either currently or after the passage of a fixed or predeterminable period of time, or upon the occurrence or nonoccurrence of any predetermined event or circumstance.

 

c.

The Subscriber has no need for liquidity with respect to his purchase of the Shares and Warrants and is able to bear the economic risk of an investment in the Shares and Warrants for an indefinite period of time and is further able to afford a complete loss of such investment.

 

d.

The Subscriber represents that his financial commitment to all investments (including his investment in the Company) is reasonable relative to his net worth and liquid net worth.

 

e.

The Subscriber recognizes that the Shares and Warrants will be sold to the Subscriber without registration under any United States federal or other law relating to the registration of securities for sale.

 

f.

The Subscriber is aware that any resale of the Shares and Warrants and shares of Common Stock purchased pursuant to the exercise of the Warrants (“Warrant Shares”) cannot be made except in accordance with the registration requirements of the United States Securities Act of 1933, as amended (the “Securities Act”) or an exemption therefrom.

 

g.

The Subscriber represents and warrants that all offers and sales of the Shares and Warrants shall be made pursuant to an exemption from registration under the Act or pursuant to registration under the Act, and the Subscriber will not engage in any hedging or short selling transactions with regard to the Shares and Warrants.

 

h.

The Subscriber is not acquiring the Shares and Warrants based upon any representation, oral or written, by any person with respect to the future value of, or income from, the Shares and Warrants but rather upon an independent examination and judgment as to the prospects of the Company.

 

i.

The Subscriber understands that the Company has had a limited operating history, and as a result, its operations have produced limited recurring revenues from its services and products; it has incurred expenses and has sustained losses.  Consequently, its operations are subject to all the risks inherent in the establishment of a biotechnology company.  The Subscriber appreciates and understands the risks involved with investing in a Company with a limited operating history and has read and understands the risk factors and other information set forth in the Company’s Annual Report on Form 10-K, filed on December 20, 2013, and Form 10-K/A filed on May 1, 2014,  and the Quarterly Reports on Form 10-Q and Form 10-Q/A for the quarterly periods ended December 31, 2013 filed on February 10, 2013 and May 2, 2014, respectively, and for the quarterly period ended March 31, 2013 filed in  May 2014.  These reports and any future filings made with the SEC under Section 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), can be obtained by visiting the Securities and Exchange Commission’s website at http://www.sec.gov.  The Subscriber agrees that it is not relying on any other written information which may have been provided by the Company.

 

j.

The Subscriber represents, warrants and agrees that it will not sell or otherwise transfer the Shares and Warrants without registration under the Securities Act or an exemption therefrom, and fully understands and agrees that the Subscriber must bear the economic risk of its purchase because, among other reasons, the Shares and Warrants have not been registered under the Securities Act or under the securities laws of any state and, therefore, cannot be resold, pledged, assigned or otherwise disposed of unless they are subsequently registered under the Securities Act and under the applicable securities laws of such states, or an exemption from such registration is available.  In particular, the Subscriber is aware that the Shares are, and the Warrant Shares will be, “restricted securities,” as such term is defined in Rule 144 promulgated under the Securities Act (“Rule 144”), and they may not be sold pursuant to Rule 144 unless all of the conditions of Rule 144 are met.

 

k.

The Company, by and through itself and/or legal counsel, has made no representations or warranties as to the suitability of the Subscriber’s investment in the Company, the length of time the undersigned will be required to own the Shares and Warrants, or the profit to be realized, if any, as a result of investment in the Company.  Neither the Company nor its counsel has made an independent investigation on behalf of the Subscriber, nor has the Company, by and through itself and counsel, acted in any advisory capacity to the Subscriber.

 

l.

The Company, by and through itself and/or legal counsel, has made no representations or warranties that the past performance or experience on the part of the Company, or any partner or affiliate, their partners, salesmen, associates, agents, or employees or of any other person, will in any way indicate the predicted results of the ownership of the Shares and Warrants.

 

m.

The Company has made available for inspection by the undersigned, and his purchaser representative, if any, the books and records of the Company.  Upon reasonable notice, such books and records will continue to be made available for inspection by investors upon reasonable notice during normal business hours at the principal place of business of the Company.

 

n.

The Shares and Warrants were not offered to the Subscriber by means of publicly disseminated advertisement or sales literature, nor is the Subscriber aware of any offers made to other persons by such means.

 

o.

All information which the Subscriber has provided to the Company concerning the Subscriber is correct and complete as of the date set forth at the end of this Subscription Agreement, and if there should be any material adverse change in such information prior to receiving notification that this subscription has been accepted, the undersigned will immediately provide the Company with such information.

 

a.

The sale of the Shares and Warrants by the Company has not been recommended by any United States federal or other securities commission or regulatory authority.  Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy of this Subscription Agreement or of any of the Company’s filings with the Securities and Exchange Commission.

 

b.

The Shares, Warrants and Warrant Shares will not be offered for sale, sold, or transferred other than pursuant to: (i) an effective registration under the Act or in a transaction otherwise in compliance with the Act; and (ii) evidence satisfactory to the Company of compliance with the applicable securities laws of other jurisdictions.  The Company shall be entitled to rely upon an opinion of counsel satisfactory to it with respect to compliance with the above laws.

 

c.

The Company is under no obligation to register the Shares, Warrants or Warrant Shares or to comply with any exemption available for sale of the Shares, Warrants or Warrant Shares without registration, and the information necessary to permit routine sales of securities of the Company under Rule 144 of the Act may not be available when you desire to resell them pursuant to Rule 144 of the Act.  The Company is under no obligation to act in any manner so as to make Rule 144 available with respect to the Shares and Warrant Shares.  The Company is required to file periodic reports with the Securities and Exchange Commission pursuant to Section 15(d) of the Securities Exchange Act of 1934, as amended.

 

d.

The Company may, if it so desires, refuse to permit the transfer of the Shares, Warrants and Warrant Shares unless the request for transfer is accompanied by an opinion of counsel acceptable to the Company to the effect that neither the sale nor the proposed transfer will result in any violation of the Act or the applicable securities laws of any other jurisdiction.

 

e.

A legend indicating that the Shares, Warrants and Warrant Shares have not been registered under such securities laws and referring to the restrictions and transferability of the Shares, Warrants and Warrant Shares may be placed on the certificates or instruments delivered to the Subscriber or any substitutes thereof and any transfer agent of the Company may be instructed to require compliance therewith.

 

Number of Shares:  __________________

 

Number of Warrants: _________________

 

Subscribed for:  ________ Shares at a cash purchase price of $$0.11454 per share and Warrants to purchase _____________ shares of common stock at an exercise price of $0.13744 per share, for an aggregate purchase price of $________.

Manner of Ownership of Shares and Warrants (please check below):  

____

One Individual                                                          

Please complete Section A, B, C and, if applicable, D, E and F.

____

Husband and Wife

Tenants by the Entirety                                                          

Please have one spouse complete Sections A, B, C and if applicable, D, E and F. Please have both spouses complete Section C.

____

Tenants in Common                                                          

Please have each individual separately complete Sections A, B, and C and if applicable, D, E and F.

____

Joint Tenants with Right of Survivorship Two or More

Individuals                                                          

Please have each individual separately complete Sections A, B, and C and if applicable, D, E and F.  (but not husband and wife)

____

Corporate Ownership                                                          

Please complete Sections A, B, D and, if applicable, E and F for the corporation.  Please have each person who owns an equity interest in the  corporation separately  complete Sections B and, if applicable, C, D, E and F.

____

Partnership Ownership                                                          

Please complete Sections A, B and D, and have each general partner and limited partner separately complete Sections B, C, D, E and F, if applicable.

____

Trust Ownership                                                          

Please complete Sections A, B and F, if applicable, and have each beneficiary and trustee of the trust separately complete Sections B, C, D, E and F, if applicable.

Please check one or more of the following definitions of “accredited investor,” if any, which applies to you.  If none of the following applies to you, please leave a blank.

____ (a)

A Bank as defined in Section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934 (the “Exchange Act”); an insurance company as defined in Section 2(13) of the Securities Act; an investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that act; a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, or its political subdivisions, or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are Accredited Investors.

____ (b)

A Private Business Development Company as defined in Section 202(a) (22) of the Investment Advisers Act of 1940.

____ (c)

An organization described in Section 501(c)(3) of the Internal Revenue Code or corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000.

____ (d)

A natural person whose individual net worth, or joint net worth with that person’s spouse, at the time of purchase exceeds $1,000,000, excluding the value of the person’s primary residence1.

____ (e)

A natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year.

____ (f)

Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Securities, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D.

____ (g)

Any entity in which all of the equity owners are Accredited Investors.

Education:  Please describe your business and/or professional education or training, listing any schools you have attended and degrees you have received.

Investment experience:

(a)

The frequency with which you invest in marketable securities is:

(b)

The frequency with which you invest in unmarketable securities is:

The undersigned represents and warrants as follows:

 

(a)

The corporation or partnership, as the case may be, has been duly incorporated or formed (if a partnership), is validly existing as a corporation or partnership in good standing under the laws of the jurisdiction of its incorporation or formation with full power and authority to enter into the transactions contemplated by the Subscription Agreement;

 

(c)

The officers of the corporation (if not Accredited Investors) or the partners of the partnership who, on its behalf, have considered the purchase of the Shares and Warrants and the advisors, if any, of the corporation or the partnership who, in connection with such consideration, together have such knowledge and experience in financial and business matters that such officer(s), partner(s) and such advisor(s), if any, together are capable of evaluating the merits and risks of the purchase of the Shares and Warrants and of making an informed investment decision;

 

(d)

Together with any corporation or group of corporations with which it files a consolidated federal income tax return, the undersigned has reserves and/or net worth adequate to permit it to satisfy any tax or other liabilities arising from its liability with respect to the investment and the operation thereof;

 

(e)

The net worth of the corporation or the partnership is in excess of $__________________.

 

(f)

The corporation or the partnership has had, during each of the past two fiscal or tax years, gross income from all sources of at least $__________________ and $_____________________ respectively;

 

(g)

The undersigned expects the corporation or the partnership to have during the current fiscal or tax year, gross income from all sources of at least $_______________; and

 

(h)

The undersigned knows of no pending or threatened litigation the outcome of which could adversely affect the answer to any question hereunder;

 

(i)

Indicate the following if a partnership offeree:

 

    (1)

 

    (2)

The names of each partner in the partnership:

 

 

General Information:

Is any  trustee a United States person, as that term is defined in Rule 902(k) promulgated under the Securities Act?

 

Authorization:  If the trust was established in connection with a deferred compensation plan, please attach a copy of the trust’s organizational documents and a properly certified copy of the resolutions adopted by the trust’s board of directors authorizing the trust to purchase the Shares and Warrants and authorizing the trustee named below to execute on behalf of the trust all relevant documents necessary to subscribe for and purchase the Shares and Warrants.  In all cases, please attach a properly certified copy of the resolutions adopted by the trustees of the trust authorizing the trust to purchase the Shares and Warrants and authorizing the trustee named below to execute on behalf of the trust all relevant documents necessary to subscribe for and purchase the Shares and Warrants.

 

Legal Name: 

 

Country of Formation: 

 

Date of Formation: 

I.D. Number: 

Number of Beneficiaries: 

Principal Purpose: 

Date of Execution:     May__, 2014

FOR INDIVIDUALS:

(Print Name)

Dated: ________, 2014

(Signature)

FOR CORPORATIONS:

Name of Company

Executive Officer of Company

Dated: _________, 2014

Signature of Officer

FOR PARTNERSHIPS:

Name of Partnership

Name of Partner executing

Questionnaire

Dated: _________, 2014

Signature of Partner

executing Questionnaire

FOR TRUSTS:

Name of Trust

Name of Authorized Trustee

Executing Questionnaire

Dated: _________, 2014

Signature of Authorized

Trustee