Document:

Unassociated Document

    EMPLOYMENT
      AGREEMENT

    

    THIS
      EMPLOYMENT AGREEMENT (this “Agreement”) is entered into this 23rd day of
      October, 2006, by and between Andrew Casazza, an individual resident of Denver,
      Colorado (the “Executive”), and Rancher Energy Corp., a Nevada corporation (the
“Company”).

     

    RECITALS:

    

    A. The
      Company desires to employ the Executive as its Chief Operating Officer with
      the
      responsibilities and authority as set forth in this Agreement or as determined
      by the Company’s President & CEO pursuant to this Agreement, and the
      Executive desires to be employed by the Company as its Chief Operating Officer,
      on the terms set forth in this Agreement. 

     

    THE
      PARTIES HERETO AGREE AS FOLLOWS:

    

    1.  Employment
      and Duties.
      During
      the term of this Agreement, the Executive shall serve as the Chief Operating
      Officer, reporting to the Company’s President & CEO. Subject to the control
      and direction of the Company’s President & CEO, the Executive shall exercise
      general supervision and direction of the development of the Company operations,
      as more fully set forth on Exhibit A
      attached
      hereto. The parties agree that the Executive’s service as Chief Operating
      Officer of the Company is a full-time position, and the Executive agrees to
      devote substantially all of his business time and his best efforts to the
      performance of his responsibilities under this Agreement; provided, however,
      that the devotion of time to board or committee service for non-profit
      corporate, civic and charitable organizations unaffiliated with the Company
      and
      the devotion of limited amounts of time to personal or family investments will
      not be deemed a breach of this Agreement if such activities do not interfere
      or
      conflict with the performance of the Executive’s duties hereunder. The Executive
      shall duly, punctually, and faithfully perform and observe any and all rules
      and
      regulations which the Company may now or shall hereafter reasonably establish
      governing the conduct of its business or its employees. The Executive agrees
      to
      serve without additional compensation if elected or appointed to any position
      or
      office, including as a director of the Company or any subsidiary or affiliate
      of
      the Company.

     

    2.  Compensation.

     

    (a)  Base
      Salary; Withholding.
      The
      Company shall pay the Executive a base salary of $100,000 per year during the
      Term (as defined in Section 4), payable in arrears in accordance with the
      Company’s standard payroll procedures as in effect from time to time. During the
      Term additional increases may be made as determined in the discretion of the
      Company’s President & CEO. The Board shall consider the Executive’s base
      salary no less frequently than annually and may increase, but not decrease,
      the
      base salary. The parties shall comply with all applicable withholding
      requirements in connection with all compensation payable to the Executive
      hereunder.

     

    (b)  Discretionary
      Bonus.
      The
      Executive shall also be eligible to receive a discretionary bonus for each
      calendar year during the Term. For each calendar year during the Term, the
      Executive shall be eligible for such bonus as the Company’s Board of Directors,
      in its absolute discretion, may determine to be proper in light of the
      Executive’s performance and the Company’s performance during such calendar year
      and any other facts and circumstances that he may see fit to consider. The
      Company’s Board of Directors may condition a discretionary bonus upon the
      achievement of specific goals, objectives, and milestones during that calendar
      year that have been determined and approved by the Company’s President & CEO
      and Board of Directors. Whether any such goal, objective, or milestone has
      been
      achieved shall be determined by the Company’s Board of Directors acting in its
      good faith discretion. Unless otherwise provided in Section 5 below, that
      portion of the annual incentive bonus allocated to the achievement of any
      specific goal, objective, or milestone shall accrue only upon the actual
      achievement of that goal, objective, or milestone provided that the Executive
      remains in the employ of the Company (or an affiliate of the Company) on the
      date of achievement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (c)  Vacation.
      The
      Executive shall be entitled to such annual vacation time with full pay as the
      Company may provide in its standard policies and practices for its senior
      management; provided, however, that in any event the Executive shall be entitled
      to a minimum of three (3) weeks annual paid vacation time. 

     

    (d)  Car
      Allowance and Parking.
      The
      Executive shall receive a car allowance of $400 per month, payable in arrears
      at
      the end of each month. In addition, the Company shall pay for the Executive’s
      parking at the Company’s principal place of business.

     

    (e)  Other
      Benefits.
      The
      Executive shall be able to participate in and have the benefits of all present
      and future health insurance, life insurance, and profit-sharing plans, and
      all
      other plans and benefits that the Company now or in the future from time to
      time
      makes available to all of its senior management. 

     

    3.  Business
      Expenses.
      The
      Company shall promptly reimburse the Executive for all appropriately documented,
      reasonable business expenses incurred by the Executive in accordance with the
      Company’s policies for its senior management.

     

    4.  Term.
      This
      Agreement shall commence on October 11, 2006 and, if not terminated earlier
      as
      herein provided, shall expire on October 31, 2009 (the “Term”). Notwithstanding
      any expiration of this Agreement: (i) the Company’s severance and benefit
      obligations set forth in Sections 5, 7, 8 and 10 with respect to any termination
      of the Executive’s employment occurring prior to such expiration shall continue
      in full force and effect until such obligations are paid or provided in full
      as
      provided in those Sections, and (ii) the Company’s indemnification obligations
      under Section 11 shall continue indefinitely. 

     

    5.  Termination
      by the Company Without Cause.
      The
      Company may, by delivering written notice to the Executive, terminate this
      Agreement and the Executive’s employment at any time and for any reason without
      Cause (as “Cause” is defined in Section 6 below), or for no reason, by paying to
      the Executive:

     

    (i)  the
      Executive’s base salary accrued through the date of termination payable upon
      termination,

     

    (ii)  any
      and
      all accrued vacation pay, and accrued benefits through the date of termination
      payable upon termination,

     

    (iii)  the
      Executive’s base salary at the rate in effect on the date of notice of
      termination for a period of six months thereafter. Payments to the Executive
      pursuant to this Section 5(iii) and payments to the Executive pursuant to
      Sections 10(a) and 10(b) shall be conditioned upon the Company receiving a
      release from the Executive (or his representative) of any and all claims that
      the Executive and his representative may have against the Company and its
      agents, including its officers, directors, employees, and attorneys, in a form
      provided by the Company. During any period in which the Executive is receiving
      payments from the Company pursuant to this Agreement, the Executive shall not
      engage in, directly or indirectly, any business in any territory in which the
      Company conducts business that is competitive with the Company’s business
      operations, nor shall the Executive solicit any employee or customer of the
      Company to terminate their relationship with the Company.

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    6.  Termination
      by the Company for Cause.
      The
      Company may terminate this Agreement and the Executive’s employment at any time
      if such termination is for “Cause”, as defined below, by delivering to the
      Executive written notice of termination supported by a reasonably detailed
      statement of the relevant facts and reason for termination and such termination
      shall be effective immediately upon delivery of such notice to the Executive.
      In
      the event of such termination, the Company shall pay the Executive, no later
      than ten (10) days following the date of termination, a lump sum equal to the
      Executive’s accrued base salary through the date of termination, and any and all
      accrued vacation pay, and accrued benefits through the date of termination,
      but
      no accrued bonus under Section 2(b) or 2(c) above. For purposes of this
      Agreement, “Cause” shall exist if (i) the Executive has committed an act of
      embezzlement, fraud, or theft with respect to the property of the Company,
      (ii)
      disregarded the rules of the Company so as to cause material loss, damage,
      or
      injury to, or otherwise to materially endanger, the Company’s property, business
      ,or employees, (iii) the Executive has abused alcohol or drugs on the job or
      in
      a manner affecting his job performance, (iv) the Executive has been found guilty
      of or has plead nolo
      contendere
      to the
      commission of a felony offense or a misdemeanor offense involving moral
      turpitude, (v) the Executive has breached this Agreement or has failed to
      perform the Executive’s duties under this Agreement, including by reason of the
      Executive’s failure to execute the directives of the Company’s President &
CEO, or (vi) the Executive’s actions or inactions have caused or are reasonably
      likely to cause material loss, injury, or damage to, the Company’s property,
      business, or employees. Notwithstanding the foregoing sentence, in the event
      that a failure occurs under clause (v) or (vi) of the foregoing sentence,
“Cause” shall not exist if the failure is the result of the Executive’s
      unwillingness to execute any act that would constitute a violation of existing
      law, regulation, or rule applicable to Company or the Executive, or if the
      failure is the result of an act of a party or an intervening event outside
      of
      the Executive’s authority or control.

     

    7.  Termination
      for Good Reason.

     

    (a)  Definition
      of “Good Reason”. “Good Reason” shall mean any of the following conditions or
      events:

     

    (i)  The
      consistent assignment of the Executive for a period greater than one month
      to
      duties inconsistent with the duties or responsibilities set forth herein;

     

    (ii)  A
      reduction by the Company in the Executive’s base salary;

     

    (iii)  Any
      failure by the Company to continue in effect for the Executive any material
      benefit available to the Executive pursuant to this Agreement without providing
      a substitute benefit; or

     

    (iv)  Any
      material breach by the Company of this Agreement that is not cured within thirty
      (30) days of notice thereof by the Executive to the Company.

     

    (b)  Consequences
      of Termination for Good Reason.
      The
      Executive may terminate this Agreement and the Executive’s employment for Good
      Reason at any time upon providing written notice of termination to the Company,
      and such termination shall be effective immediately upon such notice. In the
      event of termination by the Executive of this Agreement for Good Reason, the
      Executive shall be entitled to receive those payments and benefits provided
      under Section 5 of this Agreement.

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    8.  Voluntary
      Termination by the Executive.
      In the
      absence of Good Reason, the Executive may terminate this Agreement and the
      Executive’s employment at any time for any reason or no reason upon delivering
      ninety (90) days’ prior written notice to the Company, and no later than the
      date of termination, the Company shall pay the Executive a lump sum equal to
      his
      accrued base salary through the date of termination, and any and all accrued
      vacation pay, accrued bonuses and accrued benefits through the date of
      termination, but no accrued bonus under Section 2(b) or 2(c) above.

     

    9.  No
      Termination by Merger; Transfer of Assets, or Dissolution.
      This
      Agreement shall not be terminated by any voluntary or involuntary dissolution
      of
      the Company or the transfer of all or substantially all the assets of the
      Company or the merger of the Company with or into another entity.

     

    10.  Termination
      by Death or Disability.

     

    (a)  Death.
      This
      Agreement shall terminate immediately in the event of the death of the Executive
      during the term hereof, and the Company, within ten (10) days of receiving
      notice of such death, shall pay the Executive’s estate all salary due or accrued
      as of the date of his death, and any and all accrued vacation pay and accrued
      benefits as of the date of death. Any bonus to be paid to the Executive will
      be
      prorated to reflect the time during the year that the Executive was employed
      with the Company. All bonuses, whether annual or otherwise, that would have
      been
      payable during the year of the Executive’s death shall be paid the following
      year as promptly as the amount of such prorated bonus can be determined.

     

    (b)  Disability.
      In the
      event of mental or physical Disability (as defined below) of the Executive
      during the term hereof, the Company may terminate this Agreement and the
      Executive’s employment immediately upon written notice to the Executive, and the
      Company, within ten (10) days following the notice of termination for
      Disability, shall pay the Executive all salary due or accrued as of the date
      of
      such termination, and any and all accrued vacation pay and accrued benefits
      as
      of the date of termination. Any bonus to be paid to the Executive will be
      prorated to reflect the time during the year that the Executive was employed
      with the Company. All bonuses, whether annual or otherwise, that would have
      been
      payable for the year of termination shall be paid the following year as promptly
      as the amount of such prorated bonus can be determined. For purposes of this
      Agreement, “Disability” shall mean a physical or mental condition, verified by a
      Colorado-licensed physician designated by the Company, which prevents the
      Executive from carrying out one or more of the material aspects of his assigned
      duties for at least ninety (90) consecutive days.

     

    11.  Indemnification.
      As an
      employee, officer, and agent of the Company, the Executive shall be fully
      indemnified by the Company to the fullest extent permitted by applicable
      law.

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

     

    12.  Confidential
      Information.
      The
      Executive hereby agrees to comply with any and all of the Company’s policies and
      procedures for the protection of Confidential Information (defined below) and,
      except as required by the nature of the Executive’s duties for the Company or
      with the prior written approval of the Board, the Executive will not, during
      the
      Term or thereafter, reveal, divulge or otherwise disclose, directly or
      indirectly in any manner or through any form of ownership, any Confidential
      Information of the Company. Without in any way limiting the foregoing, the
      Executive hereby agrees not to disclose Confidential Information to the public
      through any electronic or quasi-electronic means, including, without limitation,
      through web page postings, chat rooms or other venues related to the Internet
      environment. Notwithstanding the foregoing, the prohibition contained in this
      Section 12 shall not apply to any disclosure of Confidential Information made
      by
      the Executive pursuant to a valid order or subpoena issued by a court or
      administrative agency of competent jurisdiction, provided the Executive has
      given the Company reasonable notice of such order or subpoena in order to
      provide the Company with the opportunity to protect its interests. 

     

    The
      term
“Confidential Information” shall mean any and all information of a proprietary
      nature relating to the business of the Company or any of its affiliates,
      regardless of whether such information would otherwise be regarded or legally
      considered “confidential” and without regard to whether such information
      constitutes a trade secret under applicable law or is separately protectable
      at
      law or in equity as a trade secret. Notwithstanding the foregoing, “Confidential
      Information” shall include all of the following: all data bases, sales and
      marketing information; the names, addresses, telephone numbers, contact persons
      and other identifying information related to any business, client, or account
      of
      the Company; all compilations and lists of clients or accounts; any information
      with respect to products and services provided by the Company to any clients
      or
      accounts; terms and provisions of any contract or other agreement to which
      the
      Company is a party or by which it is bound; any rates or other pricing
      information related to the products and services provided by the Company to
      any
      client or account; any and all information related to any supplier of the
      Company, including the terms and provisions of any contract or other agreement
      with any such supplier; all business records and personal data relating to
      the
      employees of the Company, including compensation arrangements with such
      employees; any information contained in any confidential documents prepared
      by
      or on behalf of the Company; any and all financial information related to the
      Company or any of its businesses not yet publicly available; the existence,
      specifications, components, methodologies or elements of any and all inventions,
      discoveries, improvements, creations, formulae, processes, methods, recipes,
      works or ideas, whether or not the same are patentable or copyrightable, that
      any employee of the Company has conceived or made or may conceive or make during
      any period of employment with the Company and that are in any way directly
      connected with Company or its business; any trade secrets, know-how or
      confidential information used, disclosed, learned, or obtained by the Executive
      during the course of his employment with the Company; and any information
      related to any business system, program, or report (whether or not computerized)
      used or developed by the Company. Notwithstanding the foregoing, “Confidential
      Information” shall not include any information that (A) is or becomes generally
      known to the public through no fault of the Executive, (B) is supplied to the
      Executive by a third party under no restriction as to disclosure, or (C) is
      developed by the Executive after termination of this Agreement without the
      use
      of any Confidential Information.

     

    13.  Creations.
      

     

    (a)  The
      Executive hereby agrees that (i) all Creations (defined below) and other works
      created by the Executive or under the Company’s direction in connection with its
      business, whether or not the same are patentable or copyrightable, are “works
      made for hire” and shall be the sole and exclusive property of the Company; (ii)
      any and all copyrights, trademarks or patents to such Creations or other works
      shall belong to the Company; and (iii) the Executive shall execute all documents
      that may be necessary in order to convey or to assign to the Company any rights
      he may have in such Creations or other works. To the extent such Creations
      or
      other works are not deemed to be “works made for hire”, the Executive hereby
      assigns all proprietary rights, including copyright, in such Creations or other
      works to the Company without further compensation. 

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

     

    (b)  The
      Executive further agrees (i) to disclose promptly to the Company all such
      Creations that the Executive has made or may make solely, jointly or commonly
      with others; (ii) to assign all such Creations to the Company; and (iii) to
      execute and to deliver to the Company any and all applications, assignments,
      or
      other instruments that the Company may deem necessary in order to enable it
      to
      apply for, to prosecute and to obtain copyrights, patents or other proprietary
      rights with respect to such Creations or in order to transfer to the Company
      any
      and all right, title, and interest in such Creations.

     

    (c)  “Creations”
      means and includes any and all inventions, discoveries, improvements, creations,
      formulae, processes, methods, recipes, works or ideas, whether or not the same
      are patentable or copyrightable, that any employee of the Company has conceived
      or made or may conceive or make during any period of employment with the Company
      and that are in any way directly connected with Company or its
      business.

     

    14.  Ownership
      and Return of Company Documents and Equipment.
      All
      equipment, materials, files, customer lists, catalogs, price lists, management
      reports, memoranda, research, forms, financial data, reports and tapes, and
      all
      other written or recorded data and/or information in whatever form
      (collectively, “Materials”) that may be used by, or made available to, the
      Executive during his employment hereunder are and shall remain the sole property
      of the Company. Promptly upon the termination of this Agreement or the
      Executive’s employment with the Company, the Executive agrees to deliver
      promptly to the Company all Materials of or relating to the Company (including
      all copies of the foregoing) that are in his possession or control.

     

    15.  Assignment.
      The
      rights and obligations of the parties under this Agreement shall be binding
      upon
      and inure to the benefit of their respective successors, assigns, executors,
      administrators, and heirs; provided, however, that the Executive may not
      delegate any of the Executive’s duties under this Agreement. 

     

    16.  Counterparts.
      This
      Agreement may be executed in multiple counterparts, each of which shall
      constitute an original, and all of which together shall constitute one and
      the
      same agreement.

     

    17.  The
      Executive’s Prior Employment.
      The
      Executive represents to the Company that the Executive is not bound by the
      terms
      of any non-competition, non-solicitation, or confidentiality agreement, and
      that
      he can perform his assigned duties for the Company without reference to any
      such
      agreement. 

     

    18.  Miscellaneous.

     

    (a)  Complete
      Agreement.
      This
      Agreement constitutes the entire agreement between the parties and cancels
      and
      supersedes all other prior or contemporaneous agreements between the parties
      which relate to the subject matter contained in this Agreement.

     

    (b)  Modification;
      Amendment; Waiver.
      No
      modification or amendment of any provisions of this Agreement shall be effective
      unless approved in writing by both parties. The failure at any time to enforce
      any of the provisions of this Agreement shall in no way be construed as a waiver
      of such provisions and shall not affect the right of either party thereafter
      to
      enforce each and every provision hereof in accordance with its
      terms.

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

     

    (c)  Governing
      Law.
      This
      Agreement shall be construed in accordance with the laws of the State of
      Colorado without regard to any such laws relating to choice or conflict of
      laws.

     

    (d)  Severability.
      Whenever possible, each provision of this Agreement shall be interpreted in
      such
      manner as to be effective and valid under applicable law, but if any provision
      of this Agreement shall be held to be prohibited by or invalid under applicable
      law, such provision shall be ineffective only to the extent of such prohibition
      or invalidity, without invalidating the remainder of such provision or the
      remaining provisions of this Agreement.

     

    (e)  Mediation;
      Waiver of Jury Trial.
      Any
      dispute arising out of or relating to this Agreement that cannot be settled
      by
      good faith negotiation between the parties will be submitted to a mediator
      for
      non-binding mediation in Denver, Colorado. If complete agreement cannot be
      reached within 30 days of submission to mediation, either party may commence
      litigation in any court of competent jurisdiction, state or federal, located
      in
      Denver, Colorado. THE PARTIES HERETO WAIVE A JURY TRIAL IN ANY LITIGATION WITH
      RESPECT TO THIS AGREEMENT.

     

    (f)  Notices.
      All
      notices and other communications under this Agreement shall be in writing and
      shall be given in person or by first class mail, certified or registered with
      return receipt requested, and shall be deemed to have been duly given when
      delivered personally or three days after mailing, as the case may be, to the
      respective persons named below:

     

    If
      to the
      Company:     Rancher
      Energy Corp.

    1050
      17th
      Street, Suite 1700

    Denver,
      Colorado 80265

    Attention:
      President & CEO

    

    If
      to the
      Executive:     Andrew
      Casazza

    2361
      Locust Street

    Denver,
      Colorado 80207

    

     

    IN
      WITNESS WHEREOF, the parties have executed this Employment Agreement as of
      the
      day and year first above written.

     

    
      	 	 	 
	
              THE
                COMPANY:

            	
              Rancher
                Energy Corp.,

              a
                Nevada corporation

            
	 
 	 
 	 
 
	 	By:  	 
	 	
              
John
              Works
	 	President
&
              CEO

    

     

    
      
        	 	 	 
	
                THE
                  EXECUTIVE:

              	
                 

              
	 
 	 
 	 
 
	 	        	 
	 	
                
Andrew
                Casazza
	 	 

      

       

      
        
           

        

        
          -7-

          
            

          

        

        
           

        

         

      

    

    Exhibit
      A

    Duties
      of the Executive

    

    Chief
      Operating Officer

    

     

    	·  	
            Operation
              Management - 

          

    	o  	
            Management
              and development of building operational infrastructure for an early
              stage
              oil & gas company, including implementing strategic oil & gas
              acquisition initiatives, identifying oil & gas properties, negotiating
              purchase and sale agreements, recruiting of key personnel, and
              coordinating of all aspects of upstream oil & gas projects.
              

          

    	o  	
            Responsible
              for developing strategic industry partners, including contract operators,
              engineering services, drilling services, gas suppliers, and other
              professional services.

          

    	o  	
            Responsible
              for preparing oil fields for tertiary recovery, including gas supply,
              pipeline development, regulatory permits, and
              unitization.

          

    	o  	
            Overall
              responsibility of the performance of oil & gas
              fields.

          

    	o  	
            Responsible
              for the preparation, tracking and controlling of the annual field
              operating budget.

          

    	o  	
            Providing
              day-today supervision and guidance to direct reports while fostering
              an
              atmosphere of safety awareness and regulatory
              compliance.

          

    

    	·  	
            Due
              Diligence - Responsible
              for review of potential oil & gas property acquisition candidates,
              including coordination of engineering, title, environmental
              review.

          

    

    	·  	
            Infrastructure
              Development - Responsible
              for the development of corporate company infrastructure, including
              real
              estate, IT systems, human resources, and other organizational duties
              on an
              as needed basis.

          

    

    

    
      
         

      

      
        -8-Exhibit 10.1

                       PROTEIN POLYMER TECHNOLOGIES, INC.
                           8% SECURED PROMISSORY NOTE
                                DUE JULY 12, 2006
                            NOW DUE JANUARY 10, 2007
                                 AMENDMENT NO. 3
                         DATED AS OF SEPTEMBER 29, 2006

      On April 13, 2006, Protein Polymer Technologies, Inc., ("Maker"), issued
to Matthew J. Szulik ("Payee") a note (the "Note") in the Principal amount of
One Million ($1,000,000.00) Dollars pursuant to which, among other things, Maker
agreed to pay the Obligations, as defined therein, to Payee on July 12, 2006, or
sooner as otherwise provided therein. On July 12, 2006, Maker and Taurus
Advisory Group, LLC, as agent for Payee, ("Agent") executed Amendment No. 1 to
the Note pursuant to which, among other things, "July 12, 2006" in the first
paragraph of the Note was changed to "October 10, 2006." On August 18, 2006, as
of July 14, 2006, Maker and Agent executed Amendment No. 2 to the Note pursuant
to which, among other things, One Million ($1,000,000.00) Dollars" was changed
to "One Million Five Hundred Thousand ($1,500,000.00) Dollars." In accordance
with the terms of Section 10 (f) thereof, the Note is hereby amended as follows:

1. In the first paragraph (i) Payee's address is changed from c/o Taurus
Advisory Group, LLC, 2 Landmark Square, Suite 211, Stamford, Connecticut 06901
to c/o Taurus Advisory Group, LLC, One Hibiscus Alley, St. Thomas, VI 00802;
(ii) "One Million Five Hundred Thousand ($1,500,000.00) Dollars" is changed to
"Two Million Five Hundred Thousand ($2,500,000.00) Dollars"; and (iii) "October
10, 2006" is changed to "January 10, 2007."

Maker shall accrue Interest to Payee as follows: (i) 8% per annum on Principal
in the amount of One Million ($1,000,000.00) Dollars from April 12, 2006 through
the date that all of the Obligations are paid in full; plus (ii) 8% per annum on
Principal in the amount of Five Hundred Thousand ($500,000.00) Dollars from July
14, 2006 through the date that all of the Obligations are paid in full; plus
(iii) 8% per annum on Principal in the amount of One Million ($1,000,000.00)
Dollars from September 6, 2006 through the date that all of the Obligations are
paid in full.

2. In Section 10(c) the governing law is changed from the State of Connecticut
to such jurisdiction as shall be determined by Payee and the venue is changed
from the state or federal courts, as appropriate, in Fairfield County,
Connecticut to such jurisdiction and venue as shall be determined by Payee.

      Counterparts. This Amendment No. 3 may be executed in one or more
counterparts, including by facsimile, each of which shall be deemed an original,
but all such counterparts together shall constitute but one and the same
Amendment No. 3.

      Governing Law. This Amendment No. 3 shall be governed by and construed in
accordance with the internal laws (and not the law of conflicts) of such
jurisdiction as shall be determined by Payee.

<PAGE>

Amendment No. 3, executed on September 29, 2006
to $1,000,000.00 Secured Promissory Note
of Protein Polymer Technologies, Inc.
payable to Mathew J. Szulik
dated April 13, 2006 and Amended
as of July 12, 2006 and July 14, 2006

      Except as set forth above, the Note, as amended pursuant to Amendment No.
1 and Amendment No. 2, is not modified, changed or otherwise amended and remains
in full force and effect in accordance with its terms as amended herein.

      IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 3 to
the Note on September 29, 2006.

                                     Protein Polymer Technologies, Inc., Maker,
                                     a Delaware corporation

                                     By:
                                         ---------------------------------------
                                         William N. Plamondon III,
                                         Chief Executive Officer

                                     Taurus Advisory Group, LLC, as agent for
                                     Matthew J. Szulik, Payee

                                     -------------------------------------------
                                     James Tagliaferri,
                                     Managing Director

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