LOAN AGREEMENT
 
THIS LOAN AGREEMENT (“Loan Agreement”), made and entered into this 21st day of
October, 2010, by and between the West Virginia Economic Development Authority
(“WVEDA”), 160 Association Drive, NorthGate Business Park, Charleston, West
Virginia 25311, and Protea Biosciences, Inc., 955 Hartman Run Road, Suite 210,
Morgantown, West Virginia 26507.
 
WITNESSETH:
 
WHEREAS, Protea Biosciences, Inc., a Delaware corporation authorized to transact
business in West Virginia (the “Company”), has purchased, acquired and installed
certain equipment and machinery in its facility located at Morgantown,
Monongalia County, West Virginia, which equipment and machinery are more
particularly described in Exhibit A attached hereto (the “Phase I Equipment”)
and has agreed to purchase, acquire and install certain additional equipment and
machinery in its aforesaid facility in Morgantown, West Virginia, which
equipment and machinery are more particularly described in Exhibit B attached
hereto (the “Phase II Equipment” and together with the Phase I Equipment, the
“Project”); and
 
WHEREAS, the total estimated cost of the Project is $2,084,000.00; and
 
WHEREAS, WVEDA has agreed to make a loan to the Company in the amount of
$900,000.00 for a term of ten (10) years with interest fixed at the rate of
3.26% per annum, being the rate as of the day of closing equal to the rate from
the previous business day of a 10 year U.S. Treasury Security plus three-fourth
percent (as such rate is stated in the Daily Treasury Yield Curve Rates section
of the U.S. Treasury official website www.ustreas.gov) (the “WVEDA Loan”);
 
WHEREAS, the balance of the cost of the Project is to be paid with funds of the
Company in the amount of $284,000.00, and a loan in the amount of $900,000.00
made by the West Virginia Infrastructure and Jobs Development Council (the
“WVIJDC”) to the Company (the “WVIJDC Loan”);
 
Loan Agreement - 2010

 
 

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WHEREAS, at the request of the Company, the WVEDA has agreed to advance the
proceeds of the WVEDA Loan to permanently finance a portion of the costs of the
Phase I Equipment and the Company has agreed that the Phase II Equipment shall
be purchased, acquired and installed, and the costs thereof financed with a
portion of the WVIJDC Loan on or before May 1, 2011;
 
WHEREAS, the collateral for said WVEDA Loan shall initially be a sole first
priority security interest in all equipment, machinery, and replacements thereto
of the Company described in Exhibit A attached hereto, and upon the completion
of the purchase, acquisition and installation of the Phase II Equipment, and the
financing of a portion of the costs thereof by WVIJDC through the WVIJDC Loan,
by a first priority security interest in the equipment, machinery and
replacements thereto of the Company described in Exhibit A and Exhibit B
attached hereto shared on a pro rata basis with respect to security interests of
the WVIJDC therein to secure the repayment of the WVIJDC Loan, in accordance
with the provisions of the Intercreditor Agreement to be entered into by and
between WVEDA and the WVIJDC contemporaneously with the closing of the WVIJDC
Loan; and
 
WHEREAS, Company has represented to WVEDA that the WVEDA Loan shall ultimately
be applied toward the permanent financing of the costs of the purchase,
acquisition and installation of said equipment and machinery as outlined in the
loan application submitted to WVEDA.
 
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and
agreements herein contained, the parties hereto covenant and agree to and with
each other as follows:
 
A            The Loan and Collateral:
 
1.            The WVEDA Loan shall be made and disbursed, as set out in the loan
application to WVEDA.
 
Loan Agreement - 2010

 
 

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2.            WVEDA agrees to loan to Company the sum of $900,000.00 for a term
of ten (10) years at interest fixed at the rate of 3.26% per annum, being the
rate as of the day of closing equal to the rate from the previous business day
of a 10 year U.S. Treasury Security plus three-fourth percent (as such rate is
stated in the Daily Treasury Yield Curve Rates section of the U.S. Treasury
official website www.ustreas.gov), which WVEDA Loan shall represent not more
than forty-five percent (45%) of the total cost of the Project.
 
3.            The note evidencing the WVEDA Loan and the collateral which shall
secure the repayment of the WVEDA Loan shall be as follows:
 
 
(a)
Company agrees to execute and deliver to WVEDA a negotiable Promissory Note
payable to the order of WVEDA in the principal sum of $900,000.00 for a term of
ten (10) years and bearing interest at the rate set out above, said Promissory
Note to be substantially in the form set forth in Exhibit C attached hereto.

 
 
(b)
Company shall initially grant to WVEDA a sole first lien security interest,
pursuant to the Uniform Commercial Code, on all equipment and machinery of the
Company described in Exhibit A and all replacements, additions and improvements
thereto and proceeds thereof, to secure WVEDA in the payment of the WVEDA Loan
mentioned in paragraph (a) above, and upon the completion of the purchase,
acquisition and installation of the Phase II Equipment, and the financing of a
portion of the costs thereof by WVIJDC through the WVIJDC Loan, Company shall
grant to WVEDA a first lien security interest, pursuant to the Uniform
Commercial Code, shared on a pro rata basis with the WVIJDC Loan, on all
equipment and machinery of the Company described in Exhibit A and Exhibit B and
all replacements, additions and improvements thereto and proceeds thereof, to
secure WVEDA in the payment of the WVEDA Loan mentioned in paragraph (a) above.

 
Loan Agreement - 2010

 
 

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(c)
Company shall be in default hereunder upon failure to pay when due any amount
payable hereunder or under the said Promissory Note or upon failure to observe
or perform any of Company's other agreements contained herein as further
provided in Section D below.

 
 
(d)
Company shall be in default hereunder upon failure to pay when due any amount
payable under the WVIJDC Loan or upon failure to observe or perform any covenant
or agreement with respect to the WVIJDC Loan.

 
4. The Project shall be completed for a cost not to exceed $2,084,000.00. Should
at any time the WVEDA determine that said costs exceed $2,084,000.00, then the
Company shall expend or escrow with WVEDA from funds separate from the proceeds
of the WVEDA Loan, such additional amounts as shall be equal to the difference
between such increased cost and $2,084,000.00;
 
B.           The Disbursement of the WVEDA Loan Proceeds:
 
1.            The total loan proceeds of the WVEDA Loan to the Company hereunder
shall be used only for the purposes set forth in the loan application submitted
by the Company to WVEDA and shall be applied in those amounts set out in said
loan application.
 
2.           Disbursement of the proceeds of said WVEDA Loan shall be made at
closing.
 
C.           Representations, Covenants and Warranties of the Company:
 
1.           Company is a duly organized and existing corporation under the laws
of the State of Delaware and authorized to transact business in West Virginia.
 
2.           The execution, delivery and performance of this agreement and other
documents and writings referred to herein or otherwise relating hereto are all
within the Company's corporate powers, have been duly authorized and are not in
contravention of law, or the terms of the Company's charters, bylaws, or other
corporate papers, or of any indenture, agreement or undertaking to which the
Company is a party or by which the Company is bound.
 
Loan Agreement - 2010

 
 

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3.           Prior to closing and disbursement of any proceeds of the WVEDA Loan
by WVEDA to Company, the Company shall:
 
 
(a)
Provide WVEDA with certified copies of the Company's corporate resolutions
authorizing the Company's officers to execute this loan agreement, all notes and
other documents described above, as well as other documents necessary to
consummate the WVEDA Loan being made hereunder. All such documents shall be in
the usual and customary form, and shall be satisfactory to counsel for WVEDA.

 
 
(b)
Furnish to WVEDA an opinion of its counsel, with current date, covering such
matters incident to the transaction herein contemplated as may be requested in
form and substance satisfactory to counsel for WVEDA.

 
 
(c)
Acknowledge that the WVEDA Loan will be for permanent financing only. In the
event the Phase I Equipment includes construction or future delivery of
equipment, the Phase I Equipment shall be paid for utilizing interim financing,
with the WVEDA Loan closed and disbursed only at the completion of all proposed
construction, purchase and placement of all Phase I Equipment in operating
condition and acceptance by WVEDA.

 
 
(d)
Provide to WVEDA those certain items requested by WVEDA, including but not
limited to the following:

 
 
(i)
Copies of bank documents, including but not limited to, loan agreement(s),
deed(s) of trust, UCC financing statement(s), security agreement(s), and other
documents relating to the Phase I Equipment;

 
Loan Agreement - 2010
 
 
 

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(ii)
A Certificate of Good Standing for the Company from the office of the Delaware
Secretary of State and a Certificate of Authority for the Company from the
office of the West Virginia Secretary of State;

 
 
(iii)
A Certificate of Good Standing for the Company for unemployment coverage from
the West Virginia Bureau of Employment Programs, Unemployment Compensation
Division;

 

 
(iv)
Proof of applicable Workers' Compensation insurance coverage;

 

 
(v)
Appropriate insurance policies, as set forth in Section 6.9.(b).;

 

 
(vi)
Proof of Company's equity participation in the Phase I Equipment;

 

 
(vii)
Copies of all invoices related to the Phase I Equipment; and

 
 
(viii)
Any other document related to the Phase I Equipment that WVEDA may request.

 
4.           Company will provide evidence to the WVEDA that all Project
equipment is in place and fully operational.
 
5.           All information at any time or times furnished to WVEDA by Company
concerning Company's financial condition or otherwise, for the purpose of
obtaining the WVEDA Loan being made hereunder by WVEDA to Company and any other
credit or extension or renewal of such WVEDA Loan or other credit, and so long
as any part of such WVEDA Loan or extensions or renewals thereof remain
outstanding is and will be at the time the same is furnished, accurate and
correct in all material aspects and complete insofar as completion may be
necessary to give WVEDA true and accurate knowledge with respect thereto.
 
6.           At the time the proceeds of the WVEDA Loan are disbursed, as
provided herein, Company shall be in compliance with and shall thereafter remain
in compliance with all Federal and State of West Virginia laws, including
regulations applicable to its business for so long as any part of the WVEDA Loan
referred to in this Loan Agreement is outstanding.
 
Loan Agreement - 2010

 
 

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7.           So long as any part of the WVEDA Loan being made hereunder by WVEDA
to Company is outstanding:
 
 
(a)
Company shall promptly give WVEDA notice of any unusual problems or developments
affecting its business operations which may adversely affect: (i) its ability to
repay such WVEDA Loan; and (ii) the collateral securing such WVEDA Loan.

 
 
(b)
Company shall pay and discharge or cause to be paid or discharged all tax claims
relating to the collateral securing the WVEDA Loan being made hereunder, when
due, except such as to which a bona fide dispute exists, and which are being
contested in good faith.

 
 
(c)
Company shall maintain proper books of records and accounts in accordance with
generally accepted accounting principles consistently applied, in which full,
true and correct entries shall be made of all of its dealings and business
affairs, and Company shall permit WVEDA or its authorized representatives, to
inspect and audit its books of record and account at any reasonable time or
times upon receiving a request with respect thereto. WVEDA personnel and all
agents of WVEDA shall be authorized to enter upon the premises of Company and
into any building thereon, whether permanent or temporary, jointly or
separately, to carry out inspections. These inspections may be scheduled or
unscheduled.

 

 
(d)
Company shall:

 
 
(i)
Promptly furnish WVEDA annual financial statements within 120 days of the end of
Company's fiscal year, all in reasonable detail and prepared by an independent
certified public accountant of recognized standing acceptable to WVEDA and whose
certificate or opinion accompanying such financial statements is in form and
substance acceptable to WVEDA;

 
Loan Agreement - 2010
 
 
 

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(ii)
Refrain from declaring, or making, or incurring liability to make, any payment
in cash or other assets either as dividends, including inter-company and
related-company dividends, or other distributions upon any class of capital
stock of Company, or purchase, retire, redeem or otherwise acquire for value any
shares of any class of capital stock of Company, if any of the following
circumstances are in existence at that time: (1) Company is in default of any
financial covenant relating to the WVEDA Loan; (2) Company is in default or is
unable to pay its current financial obligations under any financing document
with any of its lenders; or (3) Company has failed to pay when due any
governmental tax, charge, fee or assessment (subject to the absolute right of
Company to in good faith challenge such tax, charge, fee or assessment). Any
change in this requirement for dividends must be approved by WVEDA. Salaries or
compensations of officers or owners will not be increased unless and all of
Company's debts, including without limitation the WVEDA Loan, are paid to a
current status;

 
 
(iii)
Not make any loans or advances to any officer, shareholder, director or
employee, except for temporary advances in the ordinary course of business; and

 
 
(iv)
Cause all loans of shareholders, directors or officers to Company to be
subordinated, both for collateral and repayment, to the WVEDA Loan, and payments
thereon shall be deferred until the WVEDA Loan is paid in full.

 
Loan Agreement - 2010

 
 

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8.           So long as the WVEDA Loan described hereunder from WVEDA to Company
or any renewal or extension thereof, remains unpaid in whole or in part, or so
long as any other liability or indebtedness of Company to WVEDA shall exist:
 
 
(a)
Company shall conduct its business in a normal manner in the ordinary course of
business and remain in business and employ persons from the general vicinity of
Monongalia County, West Virginia. The WVEDA Loan shall be callable at the option
of WVEDA should Company cease operations of the Project or if there is a
Significant Curtailment of Operations at the Project. “Significant Curtailment
of Operations” shall mean a condition at the Project location where employment
(as measured in terms of man hours) for any calendar quarter is less than 50% of
the average quarterly employment for the previous four quarters, unless such
reduction is the result of causes wholly beyond the control of the Company.

 
 
(b)
At all times during the term of this Loan Agreement, Company shall, at its own
expense, maintain adequate liability insurance in amounts and coverages
satisfactory to WVEDA and keep or cause to be kept all property, real or
personal, including without limitation the property described in Exhibit A and
Exhibit B, fully insured against fire with extended coverage in an amount and
with an insurance company or companies satisfactory to WVEDA and against other
hazards, casualties and contingencies in such amounts and for such coverages and
periods as may be required by WVEDA. All casualty insurance relating to the
collateral for the WVEDA Loan shall name WVEDA as an additional insured and as
loss payee, as its interest may appear, and providing for not less than thirty
(30) days written notice to WVEDA of the cancellation of such policy or
policies. Such casualty insurance policy or policies shall contain a “New York
Standard Mortgage Clause,” or its equivalent. In the event of a failure or
refusal of Company to agree with the insurance companies issuing such policies
as to the amount and terms of any loss within sixty (60) days from such loss,
WVEDA may negotiate with and settle said loss with such insurance company or
companies, and neither WVEDA nor the insurance companies so involved shall, upon
such settlement being made, be liable in any manner to Company. Company shall
carry Workers' Compensation insurance and other insurance against other risks as
are commonly insured against by companies in similar types of business, all in a
manner satisfactory to WVEDA. Company shall purchase Federal Flood Insurance in
amounts and coverage satisfactory to WVEDA if Company's county is designated as
a flood prone area and the FIA map shows that Company's property is located
within a special flood hazard area, which Federal Flood Insurance, if so
required, shall name WVEDA as an additional insured and as loss payee, as its
interest may appear.

 
Loan Agreement - 2010
 
 
 

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9.           Company covenants and warrants that the real estate on which the
equipment and machinery used as collateral for the WVEDA Loan is to be installed
is not contaminated by the disposal of hazardous substances and the Company
hereby agrees to indemnify and hold WVEDA and its assigns harmless from any loss
or damage, including costs or expenses connected therewith, resulting from
hazardous substances and waste being located on said real estate by reason of
the “Comprehensive Environmental Response Compensation and Liability Act of
1980” or other similar acts under the laws of the United States or of any state.
 
10.           Company shall perform and observe all covenants, agreements, terms
and conditions contained in the Promissory Note, Security Agreement and other
documents required to be executed and delivered hereunder.
 
11.           Except as provided herein or with the prior consent in writing of
WVEDA, Company shall not participate in any merger, consolidation or other
reorganization, or sell or otherwise transfer all or any part of its business or
assets which are encumbered to secure the WVEDA Loan described herein. The WVEDA
Loan shall be callable at the option of WVEDA in the event that 51% of the
capital stock of the Company ceases to be owned by the present stockholders,
unless prior consent in writing is received from WVEDA. The WVEDA Loan shall, at
the option of WVEDA, be due upon the sale or other transfer of Project assets in
any manner whatsoever by the Company to any person, firm or corporation without
the consent in writing of WVEDA.
 
Loan Agreement - 2010
 
 
 

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12.           Company shall from time to time execute such further writings,
instruments and documents and do such further acts as WVEDA may reasonably
require to effect the purposes of this Loan Agreement.
 
13.           All of Company's representations, covenants and warranties
contained in this Loan Agreement shall survive the execution and delivery of
this Loan Agreement, as well as the Promissory Note, Security Agreement and
other documents described above, and the disbursement of the WVEDA Loan proceeds
hereunder and any breach thereof by Company shall be considered an event of
default under such Note, Security Agreement and other documents.
 
14.           Whenever any approvals may be required hereby by the parties or
their respective counsel with respect to the form and sufficiency of any
documents or writings, the condition of the title to any collateral securing the
loans being made hereunder, or on any other matter, such approval shall not be
unreasonably withheld.
 
15.           The Company shall be responsible for all WVEDA Loan closing costs
and expenses, including, but not limited to, reasonable attorney's fees,
incurred by WVEDA in connection with this WVEDA Loan. Said closing costs and
expenses shall be in a total amount not to exceed one percent (1%) of the
principal amount of the loan and in the minimum amount of $2,500.00; provided,
however, that WVEDA's adherence to the 1% cap as hereinabove referenced in
contingent upon the Company's assistance with regard to the compilation and
delivery of the certain support documentation required or requested by WVEDA.
Attorney's fees shall be paid by the Company at closing.
 
Loan Agreement - 2010

 
 

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16.           The purchase, acquisition and installation of the Phase I
Equipment have been completed for a cost not to exceed $997,248.18.
 

 
D. 
Events of Default and Remedies:

 
1.           The occurrence of any one or more of the following shall constitute
an Event of Default:
 
 
(a)
Failure by the Company to pay any amounts required to be paid under this Loan
Agreement at the times specified herein and such failure shall continue for a
period of thirty (10 Per Amendment) days after the same has become due;

 
 
(b)
Failure by the Company to observe and perform any covenant, condition or
agreement on its part to be observed or performed in this Loan Agreement, other
than as referred to in (a) above and (c) below, for a period of 30 days after
written notice, specifying such failure, requesting that it be remedied and
stating that it is a notice of default, has been given to the Company by the
WVEDA, unless the WVEDA shall agree in writing to an extension of such time
prior to its expiration;

 
 
(c)
The dissolution or liquidation of the Company or the commencement by the Company
of a voluntary case under the United States Bankruptcy Code, as amended, or its
failure promptly to lift or suspend any execution, garnishment or attachment of
such consequence as will impair its ability to perform its obligations under
this Loan Agreement, or the entry of an order for relief in respect of the
Company under the United States Bankruptcy Code, as amended, or the appointment
of or taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator, or similar official of the Company or of any substantial part of
its property, or an assignment by it or by any such guarantor for the benefit of
creditors, or the entry by it into an agreement of composition with its
creditors, or the filing of a petition applicable to the Company in any
proceeding seeking its reorganization, liquidation, adjustment, composition or
other arrangement instituted pursuant to any federal or state law; provided,
however, that any such petition filed against the Company or not filed by the
Company that is dismissed or stayed within thirty (10 per amendment) days of
such filing shall not constitute an Event of Default so long as the Company
gives written notice of such filing to the WVEDA;

 
Loan Agreement - 2010
 
 
 

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(d)
Any warranty, representation or other statement by or on behalf of the Company
contained in this Loan Agreement or in any instrument or certificate furnished
in compliance with or in reference to this Loan Agreement is false or misleading
in any material respect, or failure by the Company to perform or observe any
condition or covenant contained in any such document for a period of 30 days
after compliance with the notice and request provisions of paragraph D.l.(b)
above;

 
 
(e)
The Company shall fail to pay when due any amount payable under the WVIJDC Loan
or shall fail to observe or perform any covenant or agreement with respect to
the WVIJDC Loan;

 
 
(f)
The Phase II Equipment has not been purchased, acquired and installed, and/or
the WVIJDC Loan has not been closed on May 1, 2011, or

 
 
(g)
Per Amendment

 
2.           Whenever any Event of Default shall have happened and is
continuing, the WVEDA may, to the extent permitted by applicable law, take any
one or more of the following remedial steps:
 
 
(a)
(i) The WVEDA may exercise any right, power or remedy permitted to it by law,
and shall have in particular, without limiting the generality of the foregoing,
the right to declare the entire amount of the WVEDA Loan (if not then due and
payable) to be due and payable immediately, and upon any such declaration the
entire amount of the WVEDA Loan shall become and be immediately due and payable,
anything in this Loan Agreement contained to the contrary notwithstanding. The
Company shall forthwith pay to the WVEDA such amounts.

Loan Agreement - 2010

 
 

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(ii) The WVEDA may waive, rescind and annul such declaration and the
consequences thereof.
 
 
(b)
The WVEDA may take any action or remedy specified in the Security Agreement
dated as of the date hereof between the Company and the WVEDA.

 
 
(c)
The WVEDA may take whatever action at law or in equity may appear necessary or
desirable to collect the payments and other amounts then due and thereafter to
become due or to enforce performance and observance of any obligation, agreement
or covenant of the Company under this Loan Agreement.

 
 
(d)
Added per amendment.

  
In case the WVEDA shall have proceeded to enforce its rights under this Loan
Agreement and such proceedings shall have been discontinued or abandoned for any
reason or shall have been determined adversely to the WVEDA, then and in every
such case the Company and the WVEDA shall be restored respectively to their
several positions and rights hereunder, and all rights, remedies and powers of
the Company and the WVEDA shall continue as though no such proceeding had been
taken.
 
The Company covenants that, without limiting any remedies of the WVEDA
hereunder, in case an Event of Default shall occur with respect to the payment
of any installment payable under WVEDA Loan then, upon demand of the WVEDA, the
Company will pay to the WVEDA the whole amount that then shall have become due
and payable under the WVEDA Loan, with interest on overdue principal (and
interest to the extent permitted by law) at the rate payable on the WVEDA Loan.
 
Loan Agreement - 2010

 
 

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In case the Company shall fail to pay such amounts within the time provided in
Section D.l.(a), the WVEDA shall be entitled and empowered to institute any
action or proceeding at law or in equity without demand for the collection of
the sums so due and unpaid, and may prosecute any such action or proceeding to
judgment or final decree, and may enforce any such judgment or final decree
against the Company and collect, in the manner provided by law, out of the
property of the Company, the moneys adjudged or decreed to be payable.
 
3.           In the event the Company should default under any of the provisions
of this Loan Agreement and the WVEDA should employ attorneys or incur other
expenses for the collection of the payments due under this Loan Agreement or the
enforcement of performance or observance of any obligation or agreement on the
part of the Company herein contained, the Company agrees that it will on demand
therefor pay to the WVEDA, the reasonable fees of such attorneys and such other
reasonable expenses so incurred by the WVEDA.
 
4.           To the extent permitted by law, the Company will not during the
continuance of any Event of Default hereunder insist upon, or plead, or in any
manner whatever claim or take any benefit or advantage of, any stay or extension
law wherever enacted, now or at any time hereafter in force, which may affect
the covenants and terms of performance of this Loan Agreement. The Company
hereby expressly waives all benefits or advantage of any such law or laws and
covenants not to hinder, delay or impede the execution of any power herein
granted or delegated to the WVEDA, but to suffer and permit the execution of
every power as though no such law or laws had been made or enacted.
 
5.           No remedy herein conferred upon or reserved to the WVEDA is
intended to be exclusive of any other available remedy or remedies, but each and
every such remedy shall be cumulative and shall be in addition to every other
remedy given under this Loan Agreement or now or hereafter existing at law or in
equity or by statute. No delay or omission to exercise any right or power
accruing upon any default shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right and power may be exercised
from time to time and as often as may be deemed expedient. In order to entitle
the WVEDA to exercise any remedy reserved to it in this Article, it shall not be
necessary to give any notice, other than such notice as may be herein expressly
required.
 
Loan Agreement - 2010

 
 

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6.           In the event any agreement contained in this Loan Agreement should
be breached by the Company and thereafter waived by the WVEDA, such waiver shall
be limited to the particular breach so waived and shall not be deemed to waive
any other breach hereunder.
 
7.           The Events of Default and remedies set forth in this Section D
shall be in addition to all other defaults and remedies set forth in this Loan
Agreement.
 
E.           General Provisions:
 
1.           This Agreement shall be binding upon and inure to the benefit of
all of the parties hereto, and their respective successors and assigns. This
Agreement and the agreements and documents relating thereto may be assigned by
WVEDA without the consent of the Company. Company may not assign this Loan
Agreement or any of its rights and obligations hereunder or under the other
documents and agreements relating thereto without the written consent of WVEDA,
and any attempted assignment without such consent shall be null and void.
 
2.           No statements or representations made before or after the issuance
of the WVEDA Loan by any member of the WVEDA Board, or agent or employee of
WVEDA, shall be construed as approval to alter or amend the commitment
underlying the WVEDA Loan as all such amendments or alterations shall only be
made in writing after the approval of WVEDA. The parties hereto shall not be
deemed to have waived or agreed to the modification of any of the provisions of
this Loan Agreement, except by instrument in writing duly signed by them.
 
3.           If any provision of this Loan Agreement shall be held or deemed to
be or shall, in fact, be illegal, inoperative or unenforceable, the same shall
not affect any other provision or provisions herein contained or render the same
invalid, inoperative or unenforceable to any extent whatsoever.
 
4.           This Loan Agreement and all other agreements related hereto shall
be governed and construed in accordance with the laws of the State of West
Virginia. Headings and titles herein and therein are for convenience only and
shall not influence such construction or interpretation.
 
Loan Agreement - 2010
 
 
 

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5.           All notices required or desired to be given hereunder shall be
served by certified mail on the party intended at its address shown below, which
notice shall be deemed given at the time deposited in the U.S. Mail, postage
prepaid:
    
West Virginia Economic Development Authority
NorthGate Business Park
160 Association Drive
Charleston, West Virginia 25311
 
Protea Biosciences, Inc.
955 Hartman Run Road
Suite 210
Morgantown, West Virginia 26507
 
IN WITNESS WHEREOF, WVEDA and Company have caused their corporate names to be
signed hereto by their respective officers or partners duly authorized, all as
of the day and year first above written.
      

  WEST VIRGINIA ECONOMIC   DEVELOPMENT AUTHORITY        
By:
/s/ David G. Warner
  Its:
Executive Director
        PROTEA BIOSCIENCES, INC.        
By:
/s/ Stephen Turner
  Its:
President

Loan Agreement - 2010
 
 
 

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EXHIBIT A
 
LIST OF PHASE I EQUIPMENT AND MACHINERY

Vendor
 
Equipment
 
Model #
 
Serial #
             
AB Sciex
 
ABI 5500 QTRAP LC/MS/MS
 
5500
 
AU23751008
             
AB Sciex
 
HPLC/API 4000 Mass Spec (2 Units)
 
4000
 
J1030110 & J2480202
             
Hitachi
 
Total Amino Acid Analyzer
 
L-8900
 
2145-003

 
Loan Agreement - 2010

 
 

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EXHIBIT B
 
LIST OF PHASE II EQUIPMENT AND MACHINERY
 

       
Invoice
 
Vendor
 
Equipment
 
amount
             
AB Sciex
 
HPLC/API 4000 related equipment
  $ 97,491  
Thermo Fisher
 
Watson LIMS
  $ 318,500  
Waters
 
Synapt G2 HDMS with UPLC
  $ 730,526                    
Total
  $ 1,146,517  

Loan Agreement - 2010

 
 

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EXHIBIT C

PROMISSORY NOTE
 
Loan Agreement - 2010
3281684.1
 
 
 

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