MAYOLY SPINDLER / PROTEA
 
JOINT RESEARCH AND DEVELOPMENT AGREEMENT
 
BETWEEN

LABORATOIRES MAYOLY SPINDLER SAS, a corporation created and organized under
French laws, having its registered office at 6, avenue de l’Europe, 78400
Chatou, France, represented by its President, SCORPIUS SAS, a corporation
created and organized under French laws, having its registered office at 55 rue
Jouffroy d’Abbans, 75017 Paris, France, itself being represented by its
President Mr. Jean-Nicolas VERNIN;

hereafter referred to as “LMS”,

ON THE ONE HAND,

PROTEA EUROPE SAS, a corporation created and organized under French laws having
its registered office at 8 Chemin de Maruejols, 30420 Calvisson, France,
represented by its President Mr. Daniel Dupret;

hereafter referred to as “PROTEA EUROPE”,
 
AND

PROTEA Biosciences Inc., a corporation created and organized under the laws of
Delaware, whose principal place of business is located at 955 Hartman Run Road,
26507 Morgantown WV, United States of America, represented by its Chief
Executive Officer, Mr. Steve Turner,

hereafter referred to as “PROTEA Inc.”,

PROTEA EUROPE and PROTEA Inc. being referred to hereafter, jointly and
severally, as “PROTEA”
 
ON THE OTHER HAND

(hereafter “this Agreement”)

LMS and PROTEA each also being referred to hereafter as a “Party” or
collectively as “the Parties”, entered into as of the 22nd day of March 2010.
 
WHEREAS, LMS is a duly authorized French laboratory engaged in the development,
production, manufacturing, marketing and distribution of over the counter (OTC)
and prescription drugs;

 
 

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MAYOLY SPINDLER / PROTEA
 
In 2000, LMS filed an international patent application entitled, “Cloning and
expressing an acid-resistant extracellular lipase of Yarrowia lipolytica” such
application being published under WO 01/83773. This application has entered the
European national stage and was granted and made effective in France, Germany,
Belgium, Austria, Cyprus, Denmark, Portugal, Switzerland, Sweden, UK, Spain,
Netherlands, Monaco, Finland, Italy, Luxembourg, Ireland, and Greece.
 
On June 15, 2006, LMS filed an international patent application entitled,
“Method for producing lipase, transformed Yarrowia lipolytica cell, capable of
producing said lipase and their uses”, such application being filed on June, 15,
2006 under Number PCT/FR2006/001352 and published under WO 2007/1444475; (a list
of all related patents and applications as stated in Appendix 1).
 
On February 2, 2006, LMS signed a licence agreement named “Accord d’exploitation
et de licences croisees” with INRA TRANSFERT representing INRA* and CNRS (a copy
attached hereto in Appendix 2).
 
LMS has already carried out and financially contributed to, in an amount of EUR
2,307,665, initial testing, non-clinical studies and Active Ingredient studies.
These tests and studies gave interesting results (listed in the Appendix 3)
showing that the Active Ingredient is a good candidate as a medicine for cystic
fibrosis and pancreatitis.
 
PROTEA EUROPE is a wholly-owned subsidiary of PROTEA Inc., which provides (i)
development services in proteomics at the research, non-clinic and clinic stages
of development to operators in the pharmaceutical industry and (ii) research and
development of new products for health and PROTEA EUROPE has been recently
created for the purpose of providing such services in Europe;
 
LMS and PROTEA have been conducting preliminary discussions with respect to the
development of the above-mentioned Lipase into various pharmaceutical dosage
forms for the treatment of exocrine pancreatic insufficiency in chronic
pancreatitis or cystic fibrosis and their respective investments in relation
thereto as well as with respect to the manufacturing and worldwide
commercialization of any drug resulting from such use;
 
Now, therefore, in consideration of the foregoing premises and the mutual
obligations set forth herein, LMS and PROTEA, intending to be legally bound,
agree as follows:
 
ARTICLE 1 - DEFINITIONS
 
For the understanding and interpretation of this Agreement the following terms,
whether they are capitalized or not, singular or plural, shall have the
following meaning:
 
1.1
Access Rights shall mean licenses and user rights to Foreground or Background.

 
1.2
Active Ingredient shall mean the lipase produced by the transformed yarrowia
lipolytica strain.

 
1.3
Affiliate shall mean, for a Party, any other business entity which directly or
indirectly controls, is controlled by or is under common control with such
Party. As used in this definition of “Affiliate”, the term “Control” shall mean
direct or indirect beneficial ownership of more than 30% of the voting rights or
income interest in such business entity or direct or indirect power to direct or
cause the direction of the management and the policies of the other business
entity by any means whatsoever.

 
 

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MAYOLY SPINDLER / PROTEA
 
1.4
Assigned Tasks shall mean the tasks assigned to each Party in the document to be
established pursuant to Article 5.1 (a) as may be amended from time to time by
the Review Committee.

 
1.5
Assigned Territory shall mean the geographical area assigned to a Party for the
commercialization of any Product, it being provided that North America,
referring to the United States of America and Canada, shall be PROTEA’s Assigned
Territory and the remaining part of the world shall be LMS’s Assigned Territory.
In the event of LMS’s withdrawal from the Development Program, worldwide shall
be PROTEA’s Assigned Territory.

 
1.6
Background shall mean information and knowledge held by a Party prior to the
Effective Date of this Agreement as well as copyrights or other intellectual
property rights which are needed for carrying out the Project or for using
Foreground, provided that regarding intellectual property rights for which a
patent application must be filed, only those intellectual property rights for
which a patent application was filed before the Effective Date of this Agreement
are included.

 
1.7
Completion Date shall mean the date when the Development Program is anticipated
to be completed as provided for in Article 5.2.

 
1.8
Confidential Information shall mean any information in whatever form, tangible
or intangible, whether or not protected by law and whether in writing, disclosed
orally, or otherwise, including but not limited to information of a commercial,
marketing, scientific or technical nature including, without limitation
Foreground and Background, patented or unpatented inventions, concepts,
know-how, experimental methods, processes, trade secrets, formulae, graphs,
biological materials and other materials relating to any of the Parties and/or
the Project. Confidential Information shall not include information which (a)
is, on the date received, already known to the recipient, (b) is in, or later
enters, the public domain through no wrongful act of the recipient, including
without limitation any breach of this Agreement, (c) has been lawfully received
by the recipient from a third party without similar restriction and without
breach of this Agreement, provided its written records document such receipt,
(d) has been independently developed by the recipient prior to the disclosure,
provided its written records document such development, or (e) the release or
use of which was approved by Notice by the disclosing Party.

 
1.9
Coordinator shall mean the person appointed pursuant to Article 4.

 
1.10
Development Program shall mean development of the Active Ingredient various
pharmaceutical dosage forms for the treatment of exocrine pancreatic
insufficiency in chronic pancreatitis or cystic fibrosis in order to get
Marketing Approval by U.S. or Canadian authorities (for PROTEA) and French
authorities or the European Medicines Agency (“EMEA”) (for LMS) (Appendix 4).

 
1.11
Dissemination shall mean the disclosure of Foreground by any appropriate means
other than that resulting from the formalities for protecting it, and including
the publication of Foreground in any medium.

 
 

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MAYOLY SPINDLER / PROTEA
 
1.12
Effective Date shall mean the date of signature of this Agreement as stated on
the signature page of this Agreement.

 
1.13
Foreground shall mean the results, including information, materials and
knowledge, generated by the Project in whatever form, tangible or intangible,
whether or not protected by law and whether in writing, disclosed orally, or
otherwise, including but not limited to intellectual property rights such as
rights resulting from copyright protection, related rights, design rights,
patent rights, plant variety rights or similar forms of protection.

 
1.14
Good Manufacturing Practices or c-GMP shall mean the regulatory requirements for
good manufacturing practices promulgated by the United States Food and Drug
Administration (FDA) under the Federal Food, Drug and Cosmetic Act, as amended,
21 C.F.R, § 210 et seq. and 21 C.F.R. § 600-610, as applicable, or any
manufacturing standards set now or in the future by the FDA or by the currently
applicable regulations, directives, or decisions of the European Union as
published in the Official Journal of the European Union or its successor
publication or either Party directed specifically to LMS by the appropriate
regulatory authorities. Moreover, GMP shall be understood to be the higher or
more stringent of the FDA or European Community (“EC”) standards unless
otherwise mutually agreed by the Parties.

GLP or Good Laboratory Practices shall mean the regulatory requirement for Good
Laboratory practices according to the “Directive 2004/10/EC of the European
Parliament and of the Council of 11 February 2004 on the harmonization of laws,
regulations and administrative provisions relating to the application of the
principles of good laboratory practice and the verification of their
applications for tests on chemical substances” and Directive 2004/9/EC of the
European Parliament and of the Council of 11 February 2004 on the inspection and
verification of good laboratory practice (GLP) and US Food Drug Administration,
Good Laboratory Practice Regulations 21 CFR Part 58, December 22, 1978 (and
subsequent amendments), Japanese Ministry of Health and Welfare, Good laboratory
Practice Standards, Pharmaceutical Affairs Bureau, Ordinance No 21, March 26
,1997. The GLP embodies a set of principles that provides a framework within
which laboratory studies are planned, performed, monitored, recorded, reported
and archived.

GCP or Good Clinical Practices shall mean the regulatory requirement for Good
Clinical practice according to the ICH E6 guidelines for Clinical Practice, EU
Directive 2001/20/EC, article 1, clause 2 “Good clinical practice is a set of
internationally recognized ethical and scientific quality requirements which
must be observed for designing, conducting, recording and reporting clinical
trials that involve the participation of human subjects.” EU Directive
2005/28/EC.
 
1.15
Management Committee shall mean the management committee established pursuant to
Article 4.

 
1.16
Marketing Approval shall mean the official communication delivered by the
competent authority of any portion of the Parties’ Assigned Territories that
allows the commercial marketing of any Product in such portion of the Assigned
Territories.

 
1.17.1
Annual Net Sales Price shall mean amount invoiced on the Product to the clients
by PROTEA, and all amount invoiced to the clients by PROTEA’s sublicensees, less
any taxes, duties, transportation and insurance costs, rebates, discounts, and
returns during each twelve months period (starting on January 1st, to December
31st).

 
 

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MAYOLY SPINDLER / PROTEA
 
1.17.2
Gross Margin Profit shall mean the Annual Net sales Price deducted from the cost
of goods. Cost of good shall mean all direct and indirect cost incurred for the
manufacturing of Product.

 
1.18
Notice shall mean a certified mail with return receipt requested or a special
delivery service, such as Federal Express or DHL, provided that some record of
delivery is maintained or, where urgent, a facsimile, or an e-mail, provided
that receipt of that facsimile or e-mail is acknowledged by the party to whom it
is addressed by non-automatic means.

 
1.19
Patent(s) shall mean any patent granted in any portion of the Parties’ Assigned
Territories as a result of the application filed by LMS and INRA:

 
 
·
On June 15, 2006, LMS filed international patent application number
PCT/FR2006/001352, entitled “Method for producing lipase, transformed Yarrowia
lipolytica cell, capable of producing said lipase and their uses”, and published
under WO 2007/1444475. National and regional phases have been filed, but are not
yet issued.

 
 
·
On April, 28, 2000, LMS filed international patent application number
PCT/FR00/01148, entitled “Cloning and expressing an acid-resistant extracellular
lipase of Yarrowia lipolytica”, and published under WO 01/83773.. National and
regional phases have been filed, and have issued in France, Germany, Belgium,
Austria, Cyprus, Denmark, Portugal, Switzerland, Sweden, UK, Spain, Netherlands,
Monaco, Finland, Italy, Luxembourg, Ireland, and Greece.

 
 
·
On September 1st, 1998, INRA and CNRS filed an international patent application
Method for non-homologous transformation of Yarrowia lipolytica”, filed on
September 1st 1998 in France, and issuing from national stage applications based
on application number PCT/FR99/02079. National and regional phases have been
filed, and have issued in, Germany, Austria, Belgium, Cyprus, Denmark, Finland,
France, Greece, Ireland, Italy, Luxembourg, Monaco, Netherlands, Portugal,
United Kingdom, Sweden, Switzerland, USA.

 
It is established that the industrial application of patents issuing from
national stage applications based on PCT/FR2006/001352 and PCT/FR00/01148 are
dependent on the patents issued to Institut National de law Recherche
Agronomique (“INRA”) and Centre National de Recherche Scientifique (“CNRS”)
entitled, “Method for non-homologous transformation of Yarrowia lipolytica”,
filed on September 1st 1998 in France, and issuing from national stage
applications based on application number PCT/FR99/02079.
 
On February 2, 2006, LMS and INRA TRANSFERT, as representative for INRA and
CNRS, signed a reciprocal license agreement named “Accord d’exploitation et de
licences croisees” (hereafter the “reciprocal license agreement” a copy of which
is attached hereto in Appendix 2 that PROTEA recognizes to have known). LMS and
INRA/CNRS patents are defined in the reciprocal license agreement as
“INRA-CNRS/LMS Technology”.

 
 

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MAYOLY SPINDLER / PROTEA
 
The Parties acknowledge that PCT/FR2006/001352 is a continuation of the
“INRA-CNRS/LMS Technology”, and that LMS and PROTEA will have to comply with the
terms of the reciprocal license agreement, especially about agreement by INRA
TRANSFERT (subsidiary of INRA in charge of patent management), sublicensing, and
the scope of the scope of the licensed activities.
 
By a letter signed on April 29, 2009, INRA TRANSFERT has agreed to the
sublicenses granted to PROTEA by LMS under the present agreement on the
INRA/CNRS patent application Number PCT/FR99/02079 for lipase production in the
field of human therapeutic.
 
1.20
Products shall mean any human pharmaceutical medicine developed from the Active
Ingredient.

 
1.21
Project shall mean the development of the Active Ingredient into various
pharmaceutical dosage forms for the treatment of exocrine pancreatic
insufficiency in chronic pancreatitis or cystic fibrosis, and the manufacturing
and marketing of any Product

 
1.22
Project Schedule shall mean the initial schedule referred to in Article 2.2 and
attached as Appendix 5 to this Agreement as may be amended from time to time by
the Review Committee.

 
1.23
Development Budget shall mean the expenses anticipated to be incurred for the
Development Program as stated in the initial budget attached as Appendix 6 to
this Agreement as may be amended from time to time by the Review Committee.

 
1.24
Review Committee shall mean the review committee established pursuant to Article
4.

 
1.25
Starting Date shall mean the date when the Development Program is to start as
provided in Article 5.2.

 
1.26
Steps shall mean the stages of activities set forth in Appendix 6 as Steps I,
II, III and IV.

 
1.27
Technical Documentation shall mean the documentation and technical information
regarding any Product, including, but not limited to information on the
composition, manufacturing process of any Product as well as non-clinical and
clinical studies for delivery of any Marketing Approval.

 
1.28
Use shall mean the direct or indirect utilization of Foreground in further
research activities other than those covered by the Project, or for developing
creating and marketing a product or process, or for creating and providing a
service.

 
ARTICLE 2 - SUBJECT MATTER AND SCOPE OF THE AGREEMENT
 
2.1
The subject matter of this Agreement is to organize the Parties’ relationships
for the completion of the Project including, but not limited to, (i) determining
their respective rights and obligations in the conduct of the Project, (ii)
organizing the management of the Project, (iii) setting up the rules for the
ownership and Access Rights to intellectual property rights, including, but not
limited to, Background and Foreground and (iv) setting up the principles for the
manufacturing and marketing of any Product.

 
 

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MAYOLY SPINDLER / PROTEA
 
2.2
The Project shall be conducted, according to the Project Schedule, in four Steps
(see Appendix 6).

 
ARTICLE 3 - CONTRIBUTIONS OF THE PARTIES
 
3.1
Contributions

 
For the performance of the work required for the completion of the Project, each
Party shall use reasonable efforts to ensure the success of the Project,
including, but not limited, to (i) devoting sufficient personnel and facilities
required for the performance of its Assigned Tasks, (ii) making available for
the Project appropriately qualified personnel to supervise, analyze, and report
on the results obtained in the furtherance of the Project and, (iii) deploying
such scientific, technical, financial and other resources as is necessary to
conduct the Project as specified herein.
 
3.2
Financial Contributions and Public Aids

 
Based on the Development Budget, the Parties shall contribute to the financing
of the Development Program in respective shares of 60% for LMS and 40% for
PROTEA.
 
It is understood that the Parties shall use their best efforts to obtain any
public funding for which the Development Program may be eligible to, including,
but not limited to, nonreimbursable aids available through French centers of
competitiveness such as the one established in Region LR and Region PACA named
Orpheme.
 
3.3
Withdrawal from Development Program and/or Project

 
Either Party may at any time withdraw from the Development Program or the
Project with a three (3) month prior Notice to the other Party. In this event,
the other Party shall be entitled to continue the Development Program or the
Project on its own or in cooperation with a third-party and the continuing Party
shall not be prevented access to Confidential Information and all Technical
Documentation as may be necessary for the performance of the Development Program
or the Project, provided, however, that the continuing Party shall not enter
into any kind of agreement with any third-party for the purpose of continuing
the Development Program and/or the Project without informing the other Party.
Notwithstanding the provisions of Article 14.2, withdrawal of Development
Program or Project by one Party shall not be considered as an event of Agreement
termination.
 
Notwithstanding the provisions of Article 9 hereafter, in the event of LMS’s
withdrawal from the Development Program, PROTEA shall be granted a world wide
Access Right to the Patent as per Article 6.2 Background and Foreground
hereafter and LMS shall be entitled to the payment by PROTEA of royalties as
provided for in Article 6.3.
 
In the event that PROTEA EUROPE and/or PROTEA Inc.’s withdrawal from the
Development Program only, but continue to participate in the Project, LMS shall
be entitled to the payment of royalties as provided in Article 7.3 on the Annual
Net Sales of Products made by or on behalf of PROTEA and/or PROTEA Inc. in
PROTEA’s Assigned Territory.

 
 

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MAYOLY SPINDLER / PROTEA
 
In the event of PROTEA’s withdrawal of both the Development Program and the
Project, LMS would recover its complete freedom of action in PROTEA’s Assigned
Territory.
 
In the event Party’s withdrawal from the Development Program and continuation by
the other Party, the entire Agreement shall be maintained in full force except
any material and financial obligations that should have been directly performed
by the withdrawal party in the Development Program, as referred in the Appendix
4, 5, 6, 7 and except any right to nominate and participate to the Management
committee.
 
ARTICLE 4 - PROJECT MANAGEMENT
 
The management of the Project shall be organized with a Coordinator, a
Management Committee and a Review Committee.
 
4.1
Coordinator

 
Appointment. - Promptly upon the Effective Date, LMS shall appoint one of its
employees to act as Coordinator, that could be the LMS Project manager/ Project
Engineer.
 
Duties. - The Coordinator shall monitor the compliance by each Party with its
obligations under this Agreement and act as an effective intermediary between
the Parties. In this regard, the Coordinator shall carry out the following
tasks, including but not limited to:
 
 
(a)
receiving the financial contributions of each Party provided for under Article
3.2 above and allocating them as decided by the Review Committee;

 
(b)
keeping the records and financial accounts relevant for the financial
contributions of each Party;

 
(c)
being responsible for the communication between the Parties including without
limitation the exchange of information related to Foreground and Background;

 
(d)
coordinating the day-to-day actions of the Parties ;

 
(e)
convening meetings with the Management Committee and the Review Committee as
provided for in Articles 4.2 and 4.3.

 
The Coordinator shall not act beyond the scope of his duties as provided above.
He shall not be entitled to enter into any agreements or make any commitments on
behalf of either Party or both Parties without their prior written consent.
 
4.2
Management Committee

 
Composition and Management Committee Meetings. - Within thirty (30) days from
the Effective Date, each Party shall designate a Project Manager and/or a
Project Engineer who shall compose the Management Committee.
 
Each Project Manager and/or Project Engineer shall be assigned to the Project
until satisfactory completion of the Project.

 
 

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MAYOLY SPINDLER / PROTEA
 
Each Project Manager shall be responsible for communicating all instructions and
information in relation to the Project to the Coordinator and will be available
on an agreed upon regular basis for consultation at pre-arranged times during
the course of the Project.
 
In his or her absence, the Party which originally appointed such Project Manager
or Project Engineer shall appoint a substitute or replacement, as necessary.
 
The Management Committee shall meet every two months, unless the Coordinator
calls for an extraordinary meeting. The Coordinator shall distribute the minutes
of each meeting to all members of the Management Committee within twenty (20)
days after the relevant meeting.
 
Duties of the Management Committee. - The Management Committee shall be
responsible for:
 
 
(a)
preparing a detailed schedule of the Assigned Tasks to be performed by each
Party as well as the Development Budget and any other anticipated detailed
financial expenses to be incurred;

 
(b)
organizing all logistics and material support for the performance of the
Project, it being provided that - Clinical Studies of the Development Program
shall be performed under the supervision of LMS’s Project Manager by a team
composed of employees of both Parties. PROTEA’s employees shall be based in
PROTEA’s facilities;

 
(c)
following-up the Parties’ contributions and the payment of public aid if any;

 
In order to allow a better financial sharing as defined in the present agreement
(i.e 60% for LMS and 40% for PROTEA), a balance of Project cost will be drafted,
the party having financed more than his commitment shall send an invoice to the
other Party who shall pay such invoice within 30 days of receipt. The first such
balance of costs shall be drafted at the end of December 2009. Then for the
subsequent period, balances will be determined and made every 6 months.
 
During the Agreement, balance of cost will be drafted according to the financial
Appendix or as revised by the committee.
 
 
(d)
monitoring the implementation of the Development Program schedule and the
Program Budget;

 
(e)
submitting quarterly a scientific, technical, financial progress report (the
“Progress Report”) on the implementation of the Project to the Review Committee.

 
4.3
Review Committee

 
Composition and Review Committee Meetings. - The Review Committee shall consist
of:
 
 
(a)
LMS’s President, or his nominee, LMS’s Project Manager and such other person(s)
designated by the Project Manager;

 
(b)
PROTEA’s President, or his nominee, PROTEA’s Project Manager and such other
person(s) designated by the Project Manager.

 
 

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MAYOLY SPINDLER / PROTEA
 
The Review Committee will meet at least twice a year to review the progress of
the Project, unless either Party calls for an extraordinary meeting. Any meeting
of the Review Committee shall be called upon at least every 6 months.
The Chairman for each meeting of the Review Committee shall alternate between a
representative of LMS and a representative of PROTEA with the initial Chairman
of the Review Committee being appointed by LMS. The Chairman of the Review
Committee shall be responsible for providing an agenda for each meeting at least
ten (10) days in advance of such meeting and shall prepare written minutes of
all Review Committee meetings in reasonable details. The Chairman shall
distribute such minutes to all members of the Review Committee within twenty
(20) days after the relevant meeting.
 
The Parties agree that the first Review Committee shall take place before the
end of March 2010, at LMS’s facilities in Chatou.
 
Duties. - The Review Committee shall have the strategic direction of the Project
and shall make all decisions required for the implementation of the Project of a
strategic, financial and/or contractual nature, including but not limited to:
 
 
(a)
amendments to the Project schedule

 
(b)
amendments to the contributions of the Parties, including, but not limited to,
their Assigned Tasks and the Development Budget;

 
(c)
the progress of implementation of the contributions;

 
(d)
amendments to this Agreement.

 
Decisions. - Decisions of the Review Committee shall be taken unanimously LMS
and PROTEA each having one vote.

Should the Review Committee fail to agree on any issue related to the Project,
the Review Committee shall have an internationally reputed independent expert
(the “Independent Expert”) selected as provided for in Article 19 hereafter.

The Independent Expert acting pursuant to this provision shall be a reputed
expert qualified in the field relevant to the issue to be determined provided,
however, that the Independent Expert shall not act if he/she is, whether
individually or through his/her association with any firm or network, in a
position of conflict of interest with any of the Parties or with any Affiliate
of a Party.
 
4.4
Locations of Committees

The location of meetings as mentioned art 4.2 and 4.3 will be on a rotating
basis between LMS facilities in Chatou and PROTEA’s facilities in Nimes and each
Party shall bear its own costs in relation thereto. Additionally, the Committees
will communicate by telephone, facsimile and/or video conference, as may be
necessary.

 
 

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MAYOLY SPINDLER / PROTEA
 
ARTICLE 5 - COMMITMENTS
 
5.1
Upon the Effective Date, the Parties will promptly establish:

 
 
(a)
a document stating their detailed respective Assigned Tasks for the performance
of the Project, provided that (i) during the performance of step I, II & III,
PROTEA shall be responsible for analytical development and work, in biological
matrices including serum assays for lipase and related protein targets, and LMS
shall be responsible for all other tasks and that (ii) for the performance of
Step IV each Party shall be responsible for the marketing of Products on its own
Assigned Territory; This sentence is not understood able

 
(b)
Working methods and procedures allowing traceability/tracking of the works and
coordination between the Parties;

 
(c)
the structures for the management of the Project as provided for in Article 4
above.

 
5.2
Duration of Development Program

 
Starting Date. - The Parties shall use their best efforts to start the
Development Program i.e., Step I on or before October 31, 2009.
 
Step II shall start immediately upon completion and validation of the Step I.
In the event the Starting Date is not met, either Party shall be entitled to
terminate this Agreement upon Notice of such termination to the other Party and
without incurring any liability towards such other Party, subject to any
extension to be decided, by the Review Committee, in advance of such Starting
Date.
 
Completion Date. - Step III shall be deemed performed upon satisfactory
completion of the Development Program, provided that the Parties shall use their
best efforts to have the Development Program completed by December 31, 2014,
subject to any extension to be decided, on a yearly basis, by the Review
Committee, in advance of such Completion Date or any anniversary date of such
Completion Date.
 
ARTICLE 6 - MARKETING OF PRODUCTS
 
6.1
Exclusive rights

 
LMS hereby grants to PROTEA the exclusive right to commercialize any Products in
its Assigned Territory, subject to the terms and conditions of this Agreement,
including the financial terms in Article 6.3, and on other terms and conditions
to be negotiated in good faith by the Parties. No later than one year after the
completion of Step III, the Parties shall enter into a definitive
commercialization license agreement defining such other terms and conditions
with respect to such Products. PROTEA shall be the holder of any and all
applications to obtain Marketing Approval filed in its Assigned Territory,
including New Drug Applications and Investigational New Drug Applications, and
shall retain ownership to all such pending and approved applications. For
purposes of this Agreement, the term “commercialize” shall mean to market, offer
for sale, sell, or distribute.
 
The Parties hereby agree that the definitive commercialization license agreement
shall be effective from its effective date and shall continue to be in full
force and effect until the expiry date of the international patent filed by LMS
on June 15th 2006, under application number PCT/FR2006/001352, entitled “Method
for producing lipase, transformed Yarrowia lipolytica cell, capable of producing
said lipase and their uses”, i.e. until June 15th, 2026.

 
 

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MAYOLY SPINDLER / PROTEA
 
Terms and conditions of a renewal of the definitive commercialization license
agreement shall be provided for in such document.
 
According to INRA Transfert and LMS “reciprocal license agreement” signed on
February 2nd 2006, LMS grants to PROTEA a limited Access Rights for
“INRA-CNRS/LMS Technology” in the field of human therapeutics, subject to the
agreement of INRA Transfert.
 
6.2
Licenses and Sub-licenses

 
Subject to the terms and conditions of this Agreement, LMS grants to PROTEA an
exclusive license in the Assigned Territory, with the right to sublicense, to
use the Patents to make, have made, use, import, offer for sale and sell
Products. Any sublicenses by PROTEA of its rights under this Agreement shall be
consistent with the terms and conditions hereof and shall be subject to LMS’s
prior written approval, which shall not be unreasonably withheld. LMS shall give
its approval as for any sublicenses within 30 days of PROTEA’s request to
sublicense. Failure by LMS to give such approval within the above-mentioned time
period shall be deemed as an acceptance to grant the sublicense.
 
6.3
Lump-Sum and Royalties

 
6.3.1 MILESTONES ROYALTIES PROTEA / LMS
 
Option 1: Achievement of Development Program by both Parties
 
In the event of commercialization of any Product in PROTEA’s Assigned Territory,
PROTEA shall pay to LMS:
 
 
(a)
First, a lump sum of EUR 1,000,000 upon the first delivery of a Marketing
Approval in PROTEA’s Assigned Territory, and;

 
(b)
Second, for the life of any patent issuing in PROTEA’s Assigned territory from a
national stage application based on PCT/FR2006/001352, royalties calculated on
the Annual Net Sales Price of the Products of

(i) 7% up to EUR 20,000,000,
(ii) 6% between EUR 20,000,000 and EUR 40,000,000 and
(iii) 5% above EUR 40,000,000,
 
The royalties defined above (b) shall be due only after PROTEA’s actual
contribution in the funding of the Development Program, through and including
all costs actually incurred for obtaining Marketing Approval in PROTEA’s
Assigned Territory for each Product, has been covered by the Gross Profit Margin
earned on such Annual Net sales Price.
 
Royalties shall not begin to accrue until after PROTEA recovers amounts actually
paid for funding of the development program.

 
 

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MAYOLY SPINDLER / PROTEA
 
Option 2: LMS’s withdrawal during the Development Program, but continuation by
PROTEA:
 
 
·
PROTEA shall be entitled to market Products in the whole Assigned Territory, i.e
worldwide commercialization.

 
 
·
PROTEA shall pay to LMS:

 
 
(1)
In case of LMS’s withdrawal up to Step I, for the duration of the life of any
patents issuing from a national stage application based on PCT/FR2006/001352

 
 
a)
Provided that the commercialization of the Product is carried out by PROTEA
and/or PROTEA’s Affiliates.

 
Royalties calculated on the Annual Net Sales Price of the Products of:
 
(i) 3% up to EUR 20,000,000,
(ii) 2% between EUR 20,000,000 and EUR 40,000,000 and
(iii) 1% above EUR 40,000,000,
 
 
b)
Subject to a commercialization of any Product by PROTEA’s sublicense other than
PROTEA or PROTEA’s Affiliate, PROTEA will pay to LMS 15% of any kind of amounts
earned by PROTEA from its sublicensees.

 
 
(2)
In case of LMS’s withdrawal up to Step 2, for the duration of the life of any
patents issuing from a national stage application based on PCT/FR2006/001352,
royalties calculated on the Annual Net Sales Price of the Products of

 
 
a)
Provided that the commercialization of the Product is carried out by PROTEA
and/or PROTEA’s Affiliates.

 
Royalties calculated on the Annual Net Sales Price of the Products of:
 
(i) 5% up to EUR 20,000,000,
(ii) 4% between EUR 20,000,000 and EUR 40,000,000 and
(iii) 3% above EUR 40,000,000,
 
 
b)
Subject to a commercialization of any Product by PROTEA’s sublicense other than
PROTEA or PROTEA’s Affiliate, PROTEA will pay to LMS 20% of any kind of amounts
earned by PROTEA from its sublicensees.

 
 
(3)
In case of LMS’s withdrawal up to Step 3, for the duration of the life of any
patents issuing from a national stage application based on PCT/FR2006/001352,
royalties calculated on the Annual Net Sales Price of the Products of

 
 
a)
Provided that the commercialization of the Product is carry out by PROTEA and/or
PROTEA’s Affiliates.

 
Royalties calculated on the Annual Net Sales Price of the Products of:

 
 

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MAYOLY SPINDLER / PROTEA
 
(i) 7% up to EUR 20,000,000,
(ii) 6% between EUR 20,000,000 and EUR 40,000,000 and
(iii) 5% above EUR 40,000,000,
 
 
b)
Subject to a commercialization of any Product by PROTEA’s sublicense other than
PROTEA or PROTEA’s Affiliate, PROTEA will pay to LMS 25% of any kind of amounts
earned by PROTEA from its sublicensees.

 
The royalties defined above under parts 1(a), 2(a), and 3(a) shall be due only
after PROTEA’s actual contribution in the funding of the Development Program,
through and including all costs actually incurred for obtaining Marketing
Approval in PROTEA’s Assigned Territory for each Product, has been covered by
the Gross Profit Margin earned on such Annual Net Sales Price.
 
Option 3: PROTEA’s withdrawal during the Development Program, continuation by
LMS, but commercialization by Protea in the Assigned Territory, as defined
Article 1:
 
 
(1)
PROTEA’s withdrawal up to Step 1,

PROTEA shall initially first pay to LMS for the duration of the life of any
patents issuing in PROTEA’s Assigned Territory from a national stage application
based on PCT/FR2006/001352, royalties calculated on the Annual Net Sales Price
of the Products of
(i) 12% up to EUR 20,000,000,
(ii) 11% between EUR 20,000,000 and EUR 40,000,000 and
(iii) 10% above EUR 40,000,000,
AND only after the supplementary contribution caused by the PROTEA’s withdrawal,
and paid by LMS (i.e all expenses above 6 946 200€) in the funding of the
Development Program, has been covered by the Gross profit Margin earned on such
Annual Net Sales Price.

Following the achievement of this clause and for the life of any patents issuing
in PROTEA’s Assigned Territory from a national stage application based on
PCT/FR2006/001352, PROTEA will pay to LMS the lump sum (1,000,000€) and
royalties according to the whole settlement defined in option 1
 
 
(2)
PROTEA’s withdrawal up to Step 2

 
PROTEA shall initially first pay to LMS for the duration of the life of any
patents issuing in PROTEA’s Assigned Territory from a national stage application
based on PCT/FR2006/001352, royalties calculated on the Annual Net Sales Price
of the Products of
(i) 11% up to EUR 20,000,000,
(ii) 10% between EUR 20,000,000 and EUR 40,000,000 and
(iii) 9% above EUR 40,000,000,
 
AND only after the supplementary contribution caused by the PROTEA’s withdrawal,
and paid by LMS (i.e. all expenses above 6 946 200€) in the funding of the
Development Program has been covered by the Gross profit Margin earned on such
Annual Net Sales Price.

 
 

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MAYOLY SPINDLER / PROTEA
 
Following the achievement of this clause and for the duration of the life of any
patents issuing in PROTEA’s Assigned Territory from a national stage application
based on PCT/FR2006/001352, PROTEA will pay to LMS the lump sum (1,000,000€) and
royalties according to the whole settlement defined in option 1
 
 
(3)
PROTEA’s withdrawal up to Step 3

 
PROTEA shall pay to LMS, for the duration of for the life of any patents issuing
in PROTEA’s Assigned Territory from a national stage application based on
PCT/FR2006/001352, royalties calculated on the Annual Net Sales Price of the
Products of
(i) 7% up to EUR 20,000,000,
(ii) 6% between EUR 20,000,000 and EUR 40,000,000 and
(iii) 5% above EUR 40,000,000,
 
AND only after the supplementary contribution caused by the PROTEA’s withdrawal,
and paid by LMS (i.e. all expenses above 6 946 200€) in the funding of the
Development Program through and including all costs actually incurred for
obtaining Marketing Approval in PROTEA’s Assigned Territory for each Product,
has been covered by the Gross Profit Margin earned on such Annual Net Sales
Price.
 
Following the achievement of this clause and for the duration of for the life of
any patents issuing in PROTEA’s Assigned Territory from a national stage
application based on PCT/FR2006/00135, PROTEA will pay to LMS the lump sum
(1,000,000€) royalties according to the whole settlement defined in option 1
 
OPTION 4: PROTEA’s withdrawal during the Development Program, at any time, and
without commercialization by PROTEA
 
No fee, expenses, or royalties shall be due by both Party.
 
6.3.2
PROTEA, its Affiliates and Sublicensees shall keep complete, true and accurate
books of account and records for the purpose or determining the amounts payable
or accountable hereunder. Such books and records shall be kept at one of the
principal places of business of Licensee, its Affiliates and Sublicensees for at
least five (5) years following the end of the Quarter to which they pertain.

 
Upon the written request of LMS, PROTEA shall permit LMS to have access during
normal business hours, and upon reasonable prior written notice, to such of the
records of PROTEA as may be reasonably necessary to verify the accuracy of the
calculations of royalties and other amounts due and payable under this
Agreement.
 
6.4
Expenses

 
Each Party shall bear the expenses incurred in its own Assigned Territory in
relation to the marketing of any Product, including, but not limited to,
expenses incurred in relation to any application for the delivery of any
Marketing Approval.

 
 

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MAYOLY SPINDLER / PROTEA
 
ARTICLE 7 - MANUFACTURING PROCESS
 
The manufacturing process shall be conducted in compliance with the in force
Good Manufacturing Practices. To all possible extent, the production of the
Active Ingredient for any Product will be conducted in common facilities, each
Party remaining free to choose its own facilities for the manufacture and/or
packaging of any Product.
 
ARTICLE 8 - SUBCONTRACTING
 
Subject to written approval consent by the other party, either Party may
subcontract the performance of its obligations hereunder to approved
subcontractors, provided that the subcontracting Party shall be fully
responsible for the work of his subcontractors, as for its own work and that
such subcontracting shall not relieve the subcontracting Party of any of its
obligations hereunder.
 
ARTICLE 9 - INTELLECTUAL PROPERTY
 
9.1
Foreground and Background

 
Ownership. - Each Party shall retain ownership of its own Background. Unless
otherwise agreed between the Parties in writing, ownership to any part of the
Foreground shall be retained by the Party which carried out the work generating
that part of the Foreground. Unless otherwise agreed between the Parties in
writing, ownership of any part of the Foreground created jointly by LMS and
PROTEA shall be owned jointly by the Parties.
 
For the performance of the work required for the completion of the Project, each
Party shall be entitled to grant non assignable non-exclusive licenses to third
parties in its respective Assigned Territory, without any right to sub-license,
subject to the licensing Party giving at least a thirty (30) days prior Notice
to the other Party.
 
If employees or other personnel working for a Party are entitled to claim rights
to any part of the Foreground that Party shall ensure that it is possible to
exercise those rights in a manner compatible with its obligations under this
Agreement.
 
Transfer of Foreground. - Subject to the provisions of Article 15, where a Party
transfers ownership of all or part of its Foreground, it shall assign its
obligations regarding such part of its Foreground under this Agreement to the
assignee, including the obligation to assign those obligations on to any
subsequent assignee.
 
Where a Party intends to transfer ownership of all or part of its Foreground to
a third party established in the other Party’s Assigned Territory, such other
Party may oppose such transfer of ownership of Foreground if it considers that
such transfer would adversely affect its rights under this Agreement in which
case, the transfer of ownership shall not take place unless the other Party has
been satisfied that appropriate measures are taken and has authorized the
transfer in writing.

 
 

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MAYOLY SPINDLER / PROTEA
 
Protection. - Where all or part of Foreground is capable of industrial or
commercial application, the owning Party shall provide for its adequate and
effective protection, having due regard to its legitimate interests and the
legitimate interests, especially the commercial interests, of the other Party.
 
Where all or part of Foreground is capable of industrial or commercial
application and its owner does not protect it, the other Party or an Affiliate
of such other Party may assume ownership of that Foreground and take all
measures for ensuring its adequate and effective protection. The owning Party
may refuse consent only if it can demonstrate that its legitimate interests
would be adversely affected.
 
Use. - Either Party may freely, directly or indirectly use its Foreground which
it owns in further research activities other than those covered by the Project,
or for developing creating and marketing a drug or process, or for creating and
providing a service, provided, however, that such Party shall promptly report to
the others on the expected Use to be made of Foreground in the Progress Reports.
 
Dissemination. - Dissemination activities by either Party shall be compatible
with the protection of intellectual property rights, confidentiality obligations
and the legitimate interests of the owner of the Foreground.
 
At least forty-five (45)-day prior a Notice of any Dissemination activity shall
be given to the other Party, including sufficient information concerning the
planned Dissemination activity and the data considered to be disseminated.
 
Within thirty (30) days from such Notice’ any Party may object to the
Dissemination activity if it considers that its legitimate interests in relation
to its Foreground or Background could be adversely affected, in which case the
Dissemination activity shall not take place unless appropriate steps are taken
to safeguard these legitimate interests. This can not apply for dissemination
which comes from a legal requirement (as government, court decision auditors,
regulatory agencies, etc...). In such ever, the Party will disclose only
Dissemination activity that is strictly necessary to satisfy the legal
requirement.
 
9.2
Access Rights

 
Principles. - Access Rights for the implementation of the Project to Foreground
and Background under this Agreement shall be granted on the basis of the
following principles:
 
 
(a)
the granting of Access Rights shall be conditioned upon the acceptance of
specific conditions aimed at ensuring that such rights will be used only for the
intended purpose and that appropriate confidentiality obligations are entered
into;

 
(b)
without prejudice to their obligations regarding the granting of Access Rights,
each Party shall inform the other as soon as possible of any limitation to the
granting of Access Rights to Background, or of any other restriction which might
adversely affect the granting of Access Rights;

 
(c)
the withdrawal of a Party from the Project shall in no way affect the obligation
of that Party to grant Access Rights to the other Party;

 
(d)
a Party shall not be entitled to grant sub-licenses unless expressly authorized
in writing by the owner of the relevant Foreground or Background

 
 

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MAYOLY SPINDLER / PROTEA
 
 
(e)
all requests for Access Rights shall be made in writing sent to the other Party
with copy to the Coordinator.

 
Access Rights for Implementation of the Project and for Use. - To the extent
that they are needed to enable any Party to carry out its own work under the
Project and for Use, either Party grants Access Rights to all Foreground and
Background to the other Party on a non exclusive, non assignable, paid-up,
royalty-free basis, during the term of this Agreement and for so long as
Products are marketed under the terms of this Agreement in its own Assigned
Territory, provided that, regarding Background, the Party holding the Background
is entitled to grant such Access Rights.
 
Access Rights for Use. - Each Party shall be entitled to Access Rights for Use
of the other Party’s Foreground to the extent necessary to allow the requesting
Party to utilize its own Foreground, provided that, regarding Background, the
Party holding the Background is entitled to grant such Access Rights.
 
Affiliate. - An Affiliate of a Party established in that Party’s Assigned
Territory shall also be entitled to Access Rights to Foreground and/or
Background as provided above under the same conditions as the Party to which it
is affiliated to the extent, that (i) such access is needed to utilize its own
Foreground, and (ii) the Foreground was transferred by assignment or license to
such Affiliate.
 
A request for Access Rights under this provision may be made up to one (1) year
after either of the following events: (i) the end of the Project (Project
Completion); (ii) the withdrawal from the Project of the owner of the relevant
Background or Foreground; or (iii) the issuance of any patent to Foreground for
which Access Rights are deemed necessary or useful by the requesting Party.
 
9.3
Claims

 
All claims in relation to any rights provided in this Articles 9.1 or 9.2 which
cannot be decided by the Review Committee shall be submitted to an Independent
Expert selected as provided for in Article 19 hereafter.
 
The Independent Expert acting pursuant to such provision shall be an
internationally reputed expert qualified in the field relevant the claim to be
determined, provided, however, that the Independent Expert shall not act if
he/she is, whether individually or through his/her association with any firm or
network, in a position of conflict of interest with any of the Parties or with
any affiliate of a Party.
 
ARTICLE 10 - CONFIDENTIALITY
 
10.1
The Parties will maintain the Confidential Information in strict confidence,
prevent their respective employees and advisors from disclosing Confidential
Information, limit the exposure of Confidential Information to those of their
employees and representatives with a need-to-know, prevent disclosure of any
Confidential Information by any employee, agent or representative to
unauthorized parties and will not use any Confidential Information except for
the performance of the Project, unless otherwise agreed in writing by the
non-disclosing Party.

 
 

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MAYOLY SPINDLER / PROTEA
 
10.2
The Parties shall take all measures necessary to protect and safeguard the
Confidential Information against any unauthorized use, publication or
disclosure. The Parties shall advise the other Party of the persons to whom it
provides access to any of the Confidential Information of the other Party for
the performance of the Project, ensure that such persons are strictly prohibited
from making any use, publishing or otherwise disclosing to others, or permitting
others to use for their benefit or to the detriment of the other Party any of
the Confidential Information. Upon the request of either Party, the other Party
shall provide a copy of a written agreement signed by such persons acknowledging
their commitment to abide by such prohibition. Either Party shall hold harmless
and indemnify the other of any direct or indirect damages resulting from any
breach of such agreement by any such person.

The confidentiality obligation as set forth in this Article shall not apply to
Confidential Information for which the recipient Party reasonably proves is
legally required (by oral questions, interrogatories, requests for information
or documents, subpoena, civil or criminal investigative demand or similar
process) to disclose, provided that the recipient party promptly (and, in any
event, before complying with any such requirement) has provided the discloser
with notice of such requirement so that it may seek a protective order or other
appropriate remedy.
 
10.3
Neither Party shall, directly or indirectly, research any manufacturing secrets
of the other Party which have not been communicated to it pursuant to this
Agreement.

 
10.4
Termination or expiration of this Agreement for any reason shall not relieve the
Parties of their obligations hereunder with respect to the non-disclosure and
protection of the Confidential Information received prior to the effective date
of the termination or expiration.

 
ARTICLE 11 - LIMITATION OF LIABILITY

Subject to the provisions of Articles 12 and 13 below, each Party will carry out
the Project and use the other Party’s Background at its own risk. To the full
extent permitted at law, each Party excludes all warranties applicable to the
Project and its Background. Where under law any warranty cannot be excluded,
each Party’s liability is, at the option of the other Party, limited to the
performance of its contributions to the Project or the payment of the cost of
having its contributions to the Project performed again. TO THE FULL EXTENT
LAWFUL, NEITHER PARTY IS LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, INDIRECT OF
CONSEQUENTIAL DAMAGES ARISING UNDER OR PURSUANT TO THIS AGREEMENT, WHETHER IN
RESPECT OF ITS NEGLIGENCE OR OTHER DEFAULT, OR OTHERWISE.
 
ARTICLE 12 - REPRESENTATIONS AND WARRANTIES
 
12.1
Each Party represents and warrants to the other that:

 
 
(a)
it has the legal power, authority and right to enter into this Agreement and to
perform its respective obligations set forth herein;

 
 

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MAYOLY SPINDLER / PROTEA
 
 
(b)
as of the Effective Date of this Agreement it is not a party to any agreement or
arrangement with any third party or under any obligation or restriction,
including pursuant to its certificate of incorporation or bylaws or rules, which
in any way limits or conflicts with its ability to fulfill any of its
obligations under this Agreement, and will not enter into any such agreement
during the term of this Agreement;

 
(c)
to the best of its belief as of the Effective Date of this Agreement, there are
no actions, suits, investigations, claims or proceedings pending or threatened
in any way relating to its Background.

 
12.2
PROTEA warrants to LMS that it is not bound by, and except as provided in
section 3.3 will not during the period the Project is being conducted enter
into, any arrangement or understanding with any third party, which arrangement
or understanding requires PROTEA or any of its Affiliates to conduct any
projects or activities alone or with third parties where the primary purpose of
such projects or activities is treatments for exocrine pancreatic insufficiency

 
12.3
Subject to Articles 12.1 and 12.2, PROTEA and LMS each specifically disclaim
that the Project will be successful, in whole or in part, or that any activities
undertaken by one or both of them with respect to the Project will be
successful. PROTEA AND LMS EXPRESSLY DISCLAIM ANY WARRANTIES OR CONDITIONS,
EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, WITH RESPECT TO THE CONFIDENTIAL
INFORMATION, INTELLECTUAL PROPERTY RIGHTS OF SUCH PARTY INCLUDING WITHOUT
LIMITATION, PATENTS OR KNOW-HOW, IMPROVEMENTS, INCLUDING, WITHOUT LIMITATION,
ANY WARRANTY OF MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE, VALIDITY
OF FOREGROUND, PATENTED OR UNPATENTED, OR NON-INFRINGEMENT OF THE INTELLECTUAL
PROPERTY RIGHTS OF THIRD PARTIES.

 
ARTICLE 13 - INDEMNIFICATION AND INSURANCE
 
13.1
Indemnification

Either Party will indemnify, defend and hold harmless the other Party and its
officers, employees and agents from and against any and all third party actions,
claims, demands, costs, liabilities or expenses (including reasonable legal
costs and fees) (each a “Liability”) made, sustained, brought or prosecuted or
in any manner based upon, occasioned by or attributable to any injury to any
person (including death) or loss of or damage to property which may arise from
or as a direct result of such Party’s conduct of activities in connection with
the Project; except, in each case, to the extent due to the negligence or
willful misconduct of any Party. The aggregate liability of LMS shall not exceed
the maximum amount of the LMS’s guarantee policy insurance; i.e., €7, 900,000.
The aggregate liability of PROTEA shall not exceed the maximum amount of the
PROTEA’s guarantee policy insurance i.e., $2,000,000.

 
 

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MAYOLY SPINDLER / PROTEA
 
13.2
Insurance

Each Party will procure adequate insurance coverage such as are customary and
appropriate in its industry, including product liability insurance at the time
of exploitation by such Party, and third party liability insurance in respect of
its participation in the Project and its use and permitted exploitation of the
Background and Foreground. Each Party will, upon the request of the other Party,
produce evidence of the currency of the insurance policies referred to in this
Article 13.2. Each Party undertakes at all times to comply with the terms of its
insurance policies the subject of this Article 13.2.
 
ARTICLE 14 - TERM AND TERMINATION
 
14.1
Term

This Agreement is entered into from its Effective Date and, unless terminated
earlier as provided in this Article 14.2, it shall continue in full force and
effect on a country-by-country and Product-by-Product basis until there is no
remaining obligation for such Product in such country.
 
14.2
Anticipated Termination

Termination with Immediate Effect.- Either Party may at any time terminate this
Agreement as of right prior to the end of its term, effective upon Notice to the
other Party, if any of the following events occur:
 
 
(a)
either Party commits a material breach of any of its obligations hereunder which
is not cured within one (1) month from the receipt of Notice identifying the
breach and requiring its remedial;

 
(b)
either Party (i) becomes unable to pay its debts as they become due, (ii)
suspends payment of its debts, (iii) enters into or becomes subject to corporate
rehabilitation or bankruptcy proceedings or liquidation or dissolution, (iv)
makes an assignment for the benefit of its creditors, or (v) seeks relief under
similar laws for debtor’s relief;

 
(c)
subject to the terms of Article 5.2, the Starting Date is not met;.

 
Unless otherwise provided herein, such termination as of right shall be in
addition to any other remedy the non-breaching Party may have due to the other
Party’s breach of its obligations hereunder and shall occur without the need to
have recourse to any judicial authority whatsoever.
 
14.3
Effect of Termination

 
Upon the expiration or termination of this Agreement:
 
 
(a)
the respective rights of the Parties to indemnification shall survive
termination of this Agreement with respect to any claims that relate to or
derive from the Project, or any acts or failures to act, of either Party in
connection with the Project that occurred prior to termination;

 
(b)
LMS and PROTEA will each promptly return to the other Party all Confidential
Information received from the other Party, except for a single copy and/or
sample to be retained for documentation purposes only;

 
 

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MAYOLY SPINDLER / PROTEA
 
14.4
WITHDRAWAL OF THE DEVELOPMENT PROGRAM

 
Notice of withdrawal.- Either Party may at any time terminate the Development
Program with a three (3) month prior Notice to the other Party as provided for
in Article 3.3 above if it withdraws from the Project.
 
According to Article 3.3 and except as otherwise provided herein, the licenses
and Access Rights granted to the Parties under this Agreement in effect on the
date of such Termination shall survive; provided, however, that nothing in this
Article 14.4 shall prohibit or be construed to prohibit the later termination of
such a surviving Access Right.
 
ARTICLE 15 - ASSIGNMENT
 
Notwithstanding any provision of this Agreement to the contrary, neither Party
may assign any of its rights or obligations under this Agreement in any country
to any third party without the prior written consent of the non-assigning Party,
which consent will not be unreasonably withheld; provided, however, that either
party may assign its rights and obligations under this Agreement without the
consent of the other party to any Affiliate. Notwithstanding the foregoing, any
such assignment to an Affiliate will not relieve the assigning Party of its
responsibilities for performance of its obligations under this Agreement. In the
event of such transaction, however, intellectual property rights of a party to
such transaction other than one of the Parties to this Agreement will not be
included in the technology licensed under this Agreement. Any successor to
substantially all of the business of Party to which this Agreement relates,
whether by merger, sale of stock, sale of assets or other transaction shall be
deemed a third party requiring prior written consent of the other Party that
shall not be unreasonably refused. The acceptance or non acceptance shall not be
given in more than thirty (30) days from the notification to the other Party.
 
ARTICLE 16 - NON WAIVER AND SEVERABILITY
 
The failure of either Party to enforce at any time any of the provisions of this
Agreement or to require at any time performance by the other Party of any of the
provisions hereof, shall in no way be construed to be a waiver of such
provision, nor in any way to affect the validity of this Agreement or any part
hereof, or the right of either Party thereafter to enforce each and every
provision. Notwithstanding the above, the Parties may modify or amend any
provisions of this Agreement if in writing and signed by both Parties.
 
If any provision of this Agreement or application thereof to any person or
circumstance is held invalid,
 
 
(a)
such invalidity shall not affect the validity of this Agreement if it can be
given effect without the invalid provision or application,

 
(b)
this Agreement shall be construed, and the Parties shall agree to amend this
Agreement, so as to effectuate as nearly as possible the intent of the invalid
clauses or application and

 
(c)
to this end the provisions of this Agreement are declared to be severable.

 
 

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MAYOLY SPINDLER / PROTEA
 
ARTICLE 17 - FORCE MAJEURE AND HARDSHIP
 
The ICC Force Majeure Clause 2003 and the ICC Hardship Clause 2003 ICC
Publication 650 E) are, hereby, incorporated by reference, provided, however,
that the “reasonable period” and the “reasonable time” referred to in paragraphs
8 and 2 of the ICC Force Majeure Clause and the ICC Hardship Clause,
respectively, shall be three (3) months.
 
ARTICLE 18 - MISCELLANEOUS
 
18.1
Expenses

No party shall be responsible for any expenses of the other Party in connection
with the negotiations, documents or transactions contemplated therein.
 
18.2
Entire Agreement

The binding provisions of this Agreement, constitute the entire agreement
between the parties, superseding all prior oral or written agreements,
understandings, representations and warranties, and course of conduct or dealing
among the parties on the subject matter hereof. This Agreement cancels and
replaces the agreement signed for the same purpose between the Parties on May,
27th 2009. Except as otherwise provided, herein, this Agreement may be amended
or modified only by a writing signed by all Parties.
 
18.3
Publicity

No press release or other form of publicity regarding the Project or this
Agreement shall be permitted by either Party to be published unless all the
Parties have indicated their consent to the form of the release in writing.
 
18.4
Compliance with Laws

The Parties shall perform the work for the completion of the Project hereunder
in compliance with c-GMP, GLP, GCP, as applicable, and all laws, ordinances and
governmental rules or regulations applicable in their respective Assigned
Territories.
 
18.5
Notices

Any Notice required or permitted to be given under this Agreement shall be
deemed to have been validly delivered to the Parties following address:

 
if to LMS at
LABORATOIRES MAYOLY SPINDLER,

6, avenue de l’Europe,
78400 Chatou, France
Attn: Mr. Olivier GUTH
E-mail: olivier.guth@mayoly-spindler.fr

 
 

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MAYOLY SPINDLER / PROTEA

 
if to PROTEA at
PROTEA EUROPE SAS,

80 rue Etienne Lenoir,
30900 Nimes, France
Attn: Mr. Daniel Dupret
Facsimile: +33 4 66 67 41 77

E-mail: d.dupret@eu.proteabio.com
with copy via facsimile or e-mail to
PROTEA Inc.,
955 Hartman Run Road,
26507 Morgantown WV, United States of America
Attn: Mr. Stephen Turner
Facsimile: (304)29-7101
E-mail: stephen.turner@proteabio.com
 
or at such other address as either Party may from time to time notify in writing
to the other Party.
 
18.6
LANGUAGE

This Agreement is executed in the English and French languages. The Parties
intend that the English and French language provisions have the same meaning. In
the event of a dispute between the English and French language provisions, the
Agreement executed in the English language will be controlling in all respects.
 
ARTICLE 19 – TECHNICAL EXPERTISE
 
The Independent Expert provided for in Articles 4.3, 5.1 and 9.3 herein shall be
selected by mutual agreement of the Parties within one (1) month from a Notice
of either Party requesting such selection and specifying the issues as to which
the Parties have not agreed and to be determined by the Independent Expert (the
“Disputed Item”).
 
If the Parties have not agreed upon the selection of the Independent Expert
within the above-mentioned time limit, the Independent Expert shall be appointed
at the request of the first Party to make such request by the International
Center for Expertise of the International Chamber of Commerce acting pursuant to
its Rules for Expertise (ICC Publication Nr. 649), a copy of which is attached
hereto as Appendix 7.
 
In either case, the work of the Independent Expert shall be administered
according to such Rules. The Independent Expert shall apply the provisions and
principles set forth in this Agreement to resolve the Disputed Item. The
Independent Expert shall not review any item other than those required to
resolve the Disputed Item and shall base his/her determination exclusively on
the materials and arguments presented by the Parties. The Parties shall
cooperate with the Independent Expert in all reasonable respects.

 
 

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MAYOLY SPINDLER / PROTEA
 
The Independent Expert shall simultaneously deliver to the Parties a letter
setting forth his/her final determination of the Disputed Item within the
shortest practicable time and shall use his/her reasonable efforts to do so
within one (1) month after his/her_appointment.
 
Such final determination shall, except in the case of manifest error, be final
and binding on the Parties, and shall be given by the Independent Expert as an
expert and not as an arbitrator.
 
ARTICLE 20 - GOVERNING LAW
 
This Agreement shall be governed by, and interpreted in accordance with, the
laws of France.
 
ARTICLE 21 – DISPUTE RESOLUTION
 
21.1
Amicable Settlement

 
The Parties recognize that disputes as to certain matters may from time to time
arise during the Term which relate to either Party’s rights and/or obligations
hereunder. It is the objective of the Parties to establish procedures to
facilitate the resolution of disputes arising under this Agreement in an
expedient manner by mutual cooperation and without resort to arbitration. The
Parties agree that prior to any arbitration pursuant to Article 21.3 hereafter.
LMS’ Project Manager and PROTEA’s Project Manager will meet in person or by
video-conferencing in a good faith effort to resolve any disputes concerning
this Agreement. Within thirty days of formal request by either Party to the
other Party, either Party may by Notice to the other Party have such disputes
referred to their respective officers for attempted resolution by good faith
negotiations, such good faith negotiations to begin within thirty (30) days
after such Notice is received. Any dispute which is not resolved between the
Parties or the designated officers will be resolved in accordance with Article
21.3.
 
21.2
Pre Arbitral Referee

 
Any Party to this Agreement shall have the right to have recourse to and shall
be bound by the pre-arbitral referee procedure of the International Chamber of
Commerce in accordance with its Rules for a Pre-arbitral Referee Procedure.
 
21.3
Arbitration

 
All disputes arising out of or in connection to this Agreement shall be finally
settled under the Rules of Arbitration of the International Chamber of Commerce
by one (1) arbitrator appointed in accordance with the said Rules.
 
The place of arbitration shall be Paris, France and the language to be used in
the arbitration shall be the English language.

 
 

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MAYOLY SPINDLER / PROTEA
 
If the Parties have not agreed upon the selection of the Independent Expert
within the above-mentioned time limit, the Independent Expert shall be appointed
at the request of the first Party to make such request by the International
Center for Expertise of the International Chamber of Commerce acting pursuant to
its Rules for Expertise (ICC Publication Nr. 649), a copy of which is attached
hereto as Appendix 7.
 
In either case, the work of the Independent Expert shall be administered
according to such Rules. The Independent Expert shall apply the provisions and
principles set forth in this Agreement to resolve the Disputed Item. The
Independent Expert shall not review any item other than those required to
resolve the Disputed Item and shall base his/her determination exclusively on
the materials and arguments presented by the Parties. The Parties shall
cooperate with the Independent Expert in all reasonable respects.
 
The Independent Expert shall simultaneously deliver to the Parties a letter
setting forth his/her final determination of the Disputed Item within the
shortest practicable time and shall use his/her reasonable efforts to do so
within one (1) month after his/her_appointment.
 
Such final determination shall, except in the case of manifest error, be final
and binding on the Parties, and shall be given by the Independent Expert as an
expert and not as an arbitrator.
 
This Agreement is entered into on March 22nd, 2010.

/s/ Jean-Nicolas VERNIN
/s/ Daniel DUPRET
Laboratoires MAYOLY SPINDLER SAS
PROTEA EUROPE SAS
Mr. Jean-Nicolas VERNIN
Mr. Daniel DUPRET
President
       
/s/ Stephen TURNER
 
PROTEA, Inc.
 
Mr. Stephen TURNER

 
 

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MAYOLY SPINDLER / PROTEA

APPENDIX 1
List of patents

APPENDIX 2
INRA/CNRS/MAYOLY License

APPENDIX 3

PROTEA acknowledges to have received the hereinafter non clinical study reports
by e-mail from Yves Leblond on February, 4, 2009 to Daniel Dupret and the
“Executive summary” on March 30, 2009.

APPENDIX 4
Development Program

APPENDIX 5
Project Schedule

APPENDIX 6
Development Budget

APPENDIX 7
Rules of Expertise ICC Publication No. 649

 
 

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