Document:

EX-10.26

 EXHIBIT 10.26 

PARTICIPATION AGREEMENT 

Contract on the establishment of a silent partnership 
  

			
	 between
  

Pieris Proteolab AG

Lise Meitner-Str. 30

85353 Freising-Weihenstephan
	  	 and
  

tbg Technologie-Beteiligungs-

Gesellschaft mbH der

Deutschen Ausgleichsbank

Ludwig-Erhard-Platz 1
  

53179 Bonn

  
 - referred to in the following as: technology company
(TC) -              - silent partner, in the following: tbg - 
 in the amount of

 *** 750,000.00 EUR *** 

(hereinafter participation amount) in words: seven hundred and fifty thousand EUR 

for the funding of the project described in section 1, para. 2. 

PREAMBLE 
 Within the
framework of the programme conducted with the Federal Ministry of Economics and Technology (BMWi) and the Deutschen Ausgleichsbank “Venture Capital for Small Technology Companies” and on the basis of the participation principles of this
programme, attached in the appendix, which are part of this contract, the parties conclude the following agreement: 
 Section 1

 PURPOSE OF COMPANY 

 

	(1)	The TC registered in the commercial register of the Local Court of Munich under number B 1 33223 conducts commercial business in compliance with the articles of association as amended on 26.01.2001 with the following
purpose: 

 Biotechnological research, development and the sale of applications arising from this research particularly in the
field of anticalins, a class of bio molecules obtained by protein design with possible applications in medicine and bio analytics, food technology and bioscience research, as well as participation in other companies with the same or similar
corporate purposes at home and abroad. Establishment of such companies and the acquisition of all or individual assets, 

 
regardless of whether tangible or intangible, or part of holdings of such companies. The company will not conduct any business that requires approval by the state. 

 

	(2)	In the context of this corporate purpose the TC shall be concerned with 

 The first preclinical
validation of anticalins for therapeutic applications 
 Section 2 

CAPITAL CONTRIBUTION 
  

	(1)	Exclusively for the promotion of the innovation project described in section 1, paragraph 2, and on the basis of information provided by the TC in the participation application dated 27.09.2002, tbg shall make a capital
contribution in the amount of EUR 750,000.00 if the TC presents the following participation agreements: 

 - Participation
agreement in the amount of 2,999,947.96 EUR with 
 Global Life Science Ventures GmbH 

Von-der-Tann-Str. 3, 80539 Munich 

(in the following, also in the case of multiple equity providers: EP) \ 

and the EP has concluded a cooperation agreement with tbg. 

- Direct debit authorization to collect the fixed remuneration due in favour of tbg. 

- Participation agreements with further investors totalling 8,999,577.16 EUR. 

- Approved funding from BioChance and BioRegio amounting to 1,117,000.00 EUR. 

 

	(2)	The capital contribution from tbg shall be used to co-finance the project-related planning listed in appendix I , which forms part of this participation agreement. The financing of investments specified in
the project-related planning for market launch in stock and supplies, launch advertising, personnel costs for the market launch and establishment and expansion of a distribution company shall be a de minimis aid of 0,00 EUR with the conclusion of
this contract. The subsidy value of all de minimis aid which the TC receives within a period of three years from the date of the first de minimis aid, shall not exceed 100,000.00 EUR. This shall not preclude the possibility for the TC, independent
of de minimis aid, to receive funds from notified European Commission aid programs. The company shall be obligated to keep this agreement for 10 years and submit it on request, within one week, to the European Commission or the Federal Government
(state administration, grant authority). Otherwise, the conditions for approval shall be eliminated retroactively, with the consequence of an immediate undertaking to repay the aid plus interest. 

 

	(3)	The TC can draw the capital contribution after the beginning of the company (c.f. section 4 para 1) in so far as 

	a)	its immediate intended proper use, a proportionate employment of funds with the other funding listed in appendix I and the overall financing of the innovation project are guaranteed. A partial draw shall be permitted
only if neither fundamental economic or technical doubts regarding the feasibility of the innovation project funded by tbg exist and the TC is not in such economic difficulties that even after drawing the capital contribution of tbg
the filing of an application for the opening insolvency proceedings over the assets of the TC is to be expected within a short period of time. 

A draw shall be accompanied by a confirmation of the draw conditions of the EP; 

 

	b)	the TC has access to the tbg Internet portal via a secure Internet connection (section 6 para. 6) and is registered there as a user. 

 

	c)	The following milestone-dependent tranche payments are adhered to: 

 I. tranche in the amount of
250,000.00 EUR from contract signing and closing the round of participation 
 II. tranche in the amount of 250,000.00 EUR from 01.10. 2003;
milestone: 
 Identification of an anticalin against a biological target with sub micromolar affinity 

III. tranche in the amount of 250,000.00 EUR from 01.12.2003; milestone: 

Evidence of in vitro efficacy of an anticalin 
  

	(4)	The TC shall prove, by the submission of a certified excerpt from the commercial register, that this agreement has been entered in the commercial register pursuant to section 294 AktG (German Stock Corporation Act) and
shall confirm that the resolution of the General Meeting regarding the approval of this contract was not challenged within the one-month term of contestation. If a disbursement takes place before entry into the trade register, the contract shall
come into force with registration in the commercial register retroactively at the time of the disbursement. 

  

	(5)	This agreement shall be terminated, if at least 10% of the capital contribution is not drawn no later than six weeks after the start of the company (section 4 para 1) despite the existence of the prerequisite conditions
of section 2 para 3 a). 

  

	(6)	With the first partial dispensation tbg shall retain a processing fee of 2.00% of the agreed participation amount. 

  

	(7)	The capital contribution from tbg shall be credited to a separate deposit account by the TC. Withdrawals from this account by tbg are excluded. 

Section 3 

EVIDENCE OF USE 
  

	(1)	The TC shall confirm the proper use of the funds within 3 months of the end of the project period as given in appendix I to this contract, in the form specified by tbg, subject to an extension of that period by
the tbg. The evidence of use shall also be confirmed by the EP. The intended use shall be proven to the EP and tbg upon request. 

  

	(2)	If the cost of the project, as given in appendix I, is reduced or further public funds are subsequently raised, tbg shall be entitled to make a corresponding reduction of their capital contribution in relation to the
reduction of the volume of investment. The amount of the reduction shall be promptly transferred back to tbg. 

  

	(3)	The project period shall be deemed expired 

  

	 	a)	if an application for opening insolvency proceedings over the assets of the TC is filed; 

  

	 	b)	if the participation agreement is terminated by the TC or by tbg; 

  

	 	c)	when the funds are repaid to tbg. 

 In the cases mentioned under a) to c) the evidence of use
shall be submitted within a period of four weeks after the occurrence of the respective event. 
 Section 4 

BEGINNING AND DURATION OF THE COMPANY 

 

	(1)	The silent partnership shall begin as soon as this agreement is signed by both parties. 

  

	(2)	The silent partnership shall expire on 31.12.2013. 

  

	(3)	Upon termination of the business relationship, the capital contribution from tbg and outstanding profit shares and final remuneration (section 9) shall be due for payment to tbg. 

 

	(4)	As far as the funds granted by the EP are repaid before 31.12.2013 the company shall expire, that is, the capital contribution from tbg shall be due at the same time and shall be repaid in the same percentage amount.
The same shall apply if and as far as the EP receives payment from a third party for his participation in the TC and for this reason divests his participation wholly or in part. 

Section 5 

TBG’S RIGHT OF PARTICIPATION 

 

	(1)	tbg shall not be represented on the board of management of the TC and shall not be involved in the management, unless otherwise provided below. 

 

	(2)	The TC shall require the consent of tbg 

  

	 	a)	for any amendment of the articles of association, in particular a modification of the object of the company, the admission of new partners or the agreement of new investments; 

 

	 	b)	for the appointment and dismissal of members of the board of management of the TC or significant changes to the employment contracts of members of the board of management; 

 

	 	c)	for the conclusion, amendment and termination of contracts relating to the granting of licenses, trademarks or know-how (except in the business of everyday software), patents, utility models or design patterns, insofar
as they relate to the innovation projects funded with the participation of tbg; 

  

	 	d)	the acquisition of rights referred to in c) shall only require the approval of tbg if they involve the innovation project funded by tbg and the resulting obligation for the TC exceeds an amount of 5,000 EUR per month or
a one-off amount of 50,000 EUR; 

  

	 	e)	for a partial or entire relocation,—leasing, divestiture or closure of the operation; 

  

	 	f)	for the conclusion and termination of controlling and profit and loss transfer agreements; 

  

	 	g)	for abandonment or substantial changes to the innovation project described in section 1, paragraph 2; 

  

	 	h)	for the assumption of obligations for investments which are not included in the project financing by tbg and which exceed the amount of EUR 50,000 or for leasing, rental or tenancy contracts which exceed the
amount of EUR 5,000 monthly. 

  

	(3)	Approvals pursuant to section 5 para. 2 shall be obtained from tbg. If tbg has not declared its refusal to grant consent in writing within a period of 14 days after receipt of the notification of the
measures requiring approval according to section 5 para 2, consent shall be deemed granted. 

 Section 6 

INFORMATION AND MONITORING RIGHTS 

 

	(1)	The TC shall report semi-annually, in the manner specified by tbg, respectively by 31.03. and 30.09. of each year, on the economic situation of the TC and on the status of the innovation project in described
section 1 para. 2, as long as tbg does not waive such reports because the EP monitors the TC simultaneously on behalf of tbg. In addition, tbg shall receive monthly from the TC a brief status report in the manner specified by
tbg, and at the end of the fiscal year an accordingly updated business plan for the following year. 

  

	(2)	Regardless of whether the EP simultaneously monitors the TC on behalf of tbg, the TC shall promptly inform tbg of all measures which extend beyond the framework of normal business activities. It shall
inform tbg in the event of a planned IPO in particular on any application made by the TC for permission to trade on a national, international and transnational stock exchange. 

 

	(3)	In addition, tbg is entitled to exercise the monitoring rights pursuant to section 716 BGB (German Civil Code). This shall apply even after termination of the company to the extent necessary to verify the
settlement credit. 

 Furthermore, tbg shall also be entitled at any time to examine all documentation of the TC which
relates to the innovation project described in section 1 para. 2. tbg may employ third parties in the exercise of its monitoring rights. 
  

	(4)	The TC shall grant the BMWi and its designated representative the rights of presentation, information and audit to the same extent as to tbg. The TC agrees that tbg may forward data relating to the company
and to the funded innovation project of the program referred to in the preamble to this agreement to the BMWi or an institution appointed by it for scientific analysis. Furthermore, it also agrees to promptly provide the information necessary for
scientific evaluation of the programme to the BMWi and an institute commissioned by it, if necessary even after the expiry of the silent partnership. The BMWi is entitled to forward the data that becomes known to it to the European Commission in
order to exercise supervisory and monitoring authority. When preparing and if necessary when publishing data from the program, it shall be ensured that the TC suffers no detriment. 

	(5)	The Federal Audit Office is entitled to a right of inspection with regard to the TC pursuant to section 91 BHO (Federal Budget Code). The TC shall provide the Federal Audit Office and tbg with all documentation
that the General Audit Office deems necessary for inspection and shall provide appropriate information. 

  

	(6)	The TC shall undertake to deliver reports falling under the contractual information and reporting obligations, to send documents and information, as well as all other correspondence electronically via a secure Internet
connection to an Internet portal of tbg, provided that tbg requires this. The tbg shall ensure that the necessary technical requirements are met and the necessary technical equipment is provided to the TC. 

Section 7 

FISCAL YEAR, ANNUAL FINANCIAL STATEMENTS 

 

	(1)	The silent partnership’s financial year shall correspond to that of the TC (“participation year”). The fiscal year of the TC ends on 31.12. 

 

	(2)	The TC shall prepare its annual financial statements (balance sheet, profit and loss account, appendices) in compliance with sections 238-289 HGB (German Commercial Code) within six months of the end of the fiscal year
and deliver these to tbg as signed originals together with the audit certificate from a auditor or certified accountant in accordance with section 322 HGB (German Commercial Code). The audit of the financial statements shall be carried
out according to the legal provisions for large corporations. 

 Section 8 

PROFIT AND LOSS PARTICIPATION 

 

	(1)	tbg shall receive a minimum remuneration in the amount of 8,00% p.a. on its capital contribution independent of the annual result of the TC. This shall be due semi-annually, on 31.3. and 30.09. each year, paid in
arrears. 

  

	(2)	In addition, from the time of the draw of the capital contribution, tbg shall receive 12.00% of the annual surpluses generated. 

For any period of time in which the tbg holds more than one investment in the TC , it shall receive, in addition to the
respective minimum remuneration, only a total of 12.00% of the generated annual surpluses however. 
 If the TC, within the framework of
further financing rounds, receives additional capital, then profit sharing can be adjusted to reflect the then-current capital ratios. 

This profit share shall be payable within 2 weeks of approval of the annual financial statements (section 7 para. 2). 

 

	(3)	Annual net profit, which is adjusted by the following items, is decisive for the calculation referred to in paragraph 2: 

  

	 	a)	The following items shall be added to the annual net profit 

  

	 	-	Taxes on income and earnings, as well as any bonuses for the board members, as far as they have reduced reported annual net profit; 

	 	-	extraordinary expenses, insofar as they stem from business transactions which occurred prior to the beginning of the silent partnership; 

 

	 	-	Losses from the sale or destruction of fixed assets, insofar as the latter at the time of the commencement of the company already existed; 

 

	 	-	profit-sharing schemes (e.g. for silent partners), as far as they have reduced reported annual net profit. 

  

	 	b)	The following items shall be deducted from the annual net profit 

  

	 	-	Amounts from the reversal of tax-free reserves which were formed before the beginning of the silent participation; 

  

	 	-	extraordinary income, provided they are based on business transactions that occurred prior to the beginning of the silent partnership; 

 

	 	-	Subsidies, allowances and Government grants, as far as these affected profit or loss; 

  

	 	-	Income from the disposal of fixed assets, insofar as the latter at the time of the commencement of the company were already present. 

 

	 	c)	In the year in which the capital contribution is drawn, the annual net profit for the calculation of profit sharing under para. 2 shall be considered to be distributed evenly throughout the year. 

 

	(4)	tbg shall not participate in losses incurred by the TC. 

 Section 9

 PREMIUM 
  

	(1)	In the event of termination of the silent partnership up to the end of the fifth full year of participation, tbg is entitled to demand a one-off payment amounting to 30% of the amount of the participation valued
at the time of the repayment (final remuneration) at the end of the participation period. Annual profit sharing pursuant to section 8 para 2 shall not be credited to the final remuneration to be paid, unless the silent partnership ends due to the
dissolution of the TC in accordance with section 11. If in the latter case the sum of the profit sharing exceeds the final remuneration, no refund shall be made. 

 

	(2)	In the event of termination of the silent partnership after the end of the fifth full year of participation, tbg shall be entitled to demand, to the end of the investment period, a one-time payment amounting to
30 % of the amount of the participation valued at the time of the repayment plus 6 % of the amount of the participation valued at the time of the repayment for each year after the end of the fifth full year of participation (final
remuneration). Annual profit sharing pursuant to section 8 para. 2 shall be credited to the final remuneration to be paid. If the sum of the profit sharing exceeds the final remuneration, no refund shall be made. 

 

	(3)	tbg will only make use of the right to demand final remuneration, if in its view this appears justified, due to the overall economic situation of the TC, due to its profits in the last three years prior to the
termination of participation or the hidden reserves formed during the participation period. 

	(4)	The beginning of the first year of participation within the meaning of the above provisions shall be deemed to be the time at which this contract is signed by both parties. 

Section 10 

TAXES 
 The TC shall provide
for the transfer of the statutory capital gains tax plus solidarity surcharge on remuneration for the silent partnership contribution and shall withhold the capital gains tax and the solidarity surcharge from payments to tbg and remit these
immediately directly to the competent tax office when due. After transfer, the TC shall issue certificates to tbg within the meaning of section 45a para. 2 EStG (Income Tax Act) on the forms provided by the tbg, within 2 months after
due date. 
 Section 11 

DISSOLUTION OF THE SILENT PARTNERSHIP 

In the event of the dissolution of the TC, the silent partnership shall be dissolved. In this case, the silent participation shall be repaid. 

Section 12 

TERMINATION 
  

	(1)	The TC is entitled wholly or partly to replace the participation of tbg in compliance with a notice period of three months to 30.6. or 31.12. of each year. 

 

	(2)	Furthermore, the silent partnership may be terminated by written declaration without notice by any of its shareholders if there is a good cause. As far as the capital contribution has not yet or not fully been paid,
tbg shall be free of its contribution obligation with the notice of termination. 

 tbg is entitled to terminate
the contract for important cause in particular if 
  

	 	a)	the TC made false statements in the participation application; 

  

	 	b)	it transpires that the conditions for granting or retaining the participation did not exist or the conditions for the retention of the participation cease to exist, in particular the innovation project described in
section 1 subsection 2 has proven to be unfeasible or has been abandoned by the TC is or has been significantly amended. 

  

	 	c)	the TC has not submitted the evidence of use in accordance with section 3 within three months of the due date despite an overdue notice; 

	 	d)	bills of exchange accepted from the TC are protested, the TC suspends payments, insolvency proceedings over the assets of the TU are opened or inability to pay is determined in any other way; 

 

	 	e)	the possessor or possessors of know-how in management at the conclusion of the contract regarding the silent partnership, are no longer employed full time in management at the TC; 

 

	 	f)	one of the measures listed in section 5 para 2 is taken without the prior consent of the tbg; 

  

	 	g)	the TC is dissolved and liquidation proceedings are carried out; 

  

	 	h)	the shareholders of the TC sell the shares respectively held by them in the course of a company sale. 

  

	(3)	Furthermore, tbg is entitled to a right of extraordinary termination if 

  

	 	a)	the TC goes public. tbg’s right of termination arises at the time shares of the TC are first listed on a national, international or transnational stock exchange. 

 

	 	b)	all shares in the TC are sold to an investor (trade sale). tbg’s right of termination arises at the time of conclusion of the purchase agreement for the shares. 

Section 13 

GENERAL PROVISIONS 
  

	1.	Changes and additions to this contract must be made in writing. There are no oral collateral agreements to this contract. 

  

	2.	Should any provision of this contract be invalid, the remaining provisions shall remain unaffected. The TC and tbg are obliged to replace ineffective contractual provisions with those that are legally binding and which
correspond as far as possible to the sense and purpose of the invalid provisions. 

  

	3.	Bonn is agreed as place of jurisdiction for all legal disputes arising from this agreement or its implementation. 

Bonn, 
 tbg Technologie-Beteiligungs- 

Gesellschaft mbH der Deutschen 
 Ausgleichsbank 

Project-Related Planning (Appendix I) 
 Participation Principles
of tbg 
 Freising-Weihenstephan, 8.5.2003 
 Proteolab AG 

/s/ M. Pohlelr 

 PROJECT-RELATED PLANNING 

Appendix I 
 Plan Period: 01.10.2002 until
31.03.2004 
  

					
	 Project-Specific Expenses
	  	 Amount Excl. VAT
	 
	 I. For pre-competitive development
	  			
		
	 1. Tangible fixed assets accounted investments
	  			
	 1.1 Laboratory equipment and instruments
	  	 	1,456,000.00 EUR	  
	 1.2 Machinery and equipment for the manufacture of prototypes
	  	 	0.00 EUR	  
	 1.3 Other
	  	 	0.00 EUR	  
		
	 2. Non-investment pre-competitive expenses
	  			
	 2.1 Staff
	  	 	6,248,525.12 EUR	  
	 2.2 Material
	  	 	623,000.00 EUR	  
	 2.3 External services (procurement / consulting)
	  	 	3,765,000.00 EUR	  
	 2.4 Patents and approvals
	  	 	165,000.00 EUR	  
	 2.5 Travel expenses
	  	 	169,000.00 EUR	  
	 2.6 Other
	  	 	1,440,000.00 EUR	  
		
	 II. For investments to launch
	  	 	0.00 EUR	  
	 I. Fixed and current assets

of this, stock and supplies
	  	 	0.00 EUR	  
		
	 2. Strategic investments
	  	 	0.00 EUR	  
		
	 of this, launch advertising
	  			
	 of this, personnel costs for the launch
	  			
		
	 3. Financial assets
	  	 	0.00 EUR	  
		
	 of this, establishment and expansion of a distribution company
	  			
		
	 Total
	  	 	13,866,525.12 EUR	  
		
	 Project-Specific Financing
	  	 Amount
	 
		
	 1. Own resources
	  	 	0.00 EUR	  
	 2. Participation capital
	  			
	 2.1 From tbg
	  	 	750,000.00 EUR	  
	 2.2 From lead investor
	  	 	2,999,947.96 EUR	  
	 2.3 Other stakeholders
	  	 	8,999,577.16 EUR	  
	 3. Public funds
	  			
	 3.1 Subsidies, grants, allowances
	  	 	0.00 EUR	  
	 3.2 Other
	  	 	1,117,000.00 EUR	  
	 4. Borrowed funds
	  			
	 4.1 From the bank
	  	 	0.00 EUR	  
	 4.2 Other
	  	 	0.00 EUR	  
	 Total
	  	 	13,866,525.12 EUREX-10.27

 EXHIBIT 10.27 

Ruth Oppenheimer, M.A. (Oxford) 

Offenlich bestelite Übersetzerin für die englische Sprache / Publicly appointed translator for German & English 

Am Graben le, 86925 Fuchstal, Germany * Tel. +49 8243 9609223 * Fax +49 8243 9609224 

CERTIFIED TRANSLATION FROM GERMAN INTO ENGLISH 

REPAYMENT AGREEMENT 

entered into by and between 

Pieris AG 
 Liese-Meitner-Str. 30,
85354 Freising 
 referred to hereinafter as: Technology Enterprise (TE) 

and 
 tbg
Technologie-Beteiligungs-Gesellschaft mbH 
 Ludwig-Erhard-Platz 1, 53179 Bonn 

referred to hereinafter as: tbg 

Preamble 
 In the context of the programme
“Venture Capital for Small Technology Enterprises” conducted by the Federal Ministry of Economics and Technology and KfW (formerly Deutsche Ausgleichsbank), tbg on 13.05.2003 concluded an agreement with TE on a typical silent partnership
amounting to EUR 750,000 (referred to hereinafter as “VCTE Agreement”. The capital contribution has been paid up by tbg in full and tbg has not received any repayments in this respect. 

Upon expiry of the agreed term of the silent partnership on 31.12.2013, the following claims to which tbg was entitled under the VCTE Agreement fell due: 

 

					
	 1. Nominal amount of the silent partnership pursuant to § 2 of the VCTE Agreement:
	  	EUR	750,000.00	  
		
	 2. Outstanding earnings-related payment (gross) pursuant to § 9 of the VCTE Agreement
	  	EUR	 450,000.00	  
		  	  
	  
	 
		
	 Total amount:
	  	EUR	1,200,000.00	  
		  	  
	  
	 

 CERTIFIED TRANSLATION FROM GERMAN INTO ENGLISH 

 

 Since TE is unable to repay the total amount on the date on which the agreement expires and its liquidity
position does not allow immediate repayment, the parties have agreed that the aforementioned total amount is to be repaid as follows: 

§ 1 Repayment of the Total Amount, Interest 
  

	(1)	By 11.04.2014 at the latest, TE shall pay tbg a tranche of the nominal amount due, which shall amount to 

  

					
		  	EUR	100,000.00	  

  

	(2)	Repayment of the residual total amount still outstanding following payment of the tranche pursuant to Item (1) above and repayment of the further claims shall be made in several instalments as follows:

  

					
	 1. Instalment on 30.09.2014 (nominal amount)
	  	EUR	50,000.00	  
		
	 2. Instalment on 31.03.2015 (nominal amount)
	  	EUR	250,000.00	  
		
	 3. Instalment on 30.09.2015 (nominal amount)
	  	EUR	250,000.00	  
		
	 4. Instalment on 31.03.2016 (nominal amount /final compensation gross)
	  	EUR	275,000.00	  
		
	 5. Instalment on 30.09.2016 (final compensation gross)
	  	EUR	275,000.00	  

  

	(3)	As from the end of the contractual term of the VCTE Agreement, interest shall be paid on the respective nominal amount still outstanding at a rate totalling 10.53 p.a. The interest shall fall due half-yearly in arrears
on 31.03. and on 30.09. of each year. It shall include a handling fee and a risk premium. No interest shall be paid on any claims by tbg to payment of the fixed remuneration, final compensation or earnings-related payment such as may still be
outstanding. 

  

	(4)	TE shall also be entitled to pay the instalments on an earlier date. 

  

	(5)	TE shall ensure payment of the statutory capital gains tax plus “solidarity surcharge” which is due on the earnings-related payment for the original silent partner’s capital contribution; when these
payments fall due, it shall make such payments directly to TE’s competent tax office, and within one month it shall issue tbg with a tax certificate within the meaning of Income Tax Act § 45a (2) using the printed forms provided by
tbg. 

  

	(6)	 On 12 November 2012, TE concluded a “Convertible Bridge Loan Agreement” for EUR 2 million, which likewise fell due for repayment
on 31.12.2013. TE is currently holding negotiations on how this convertible bridge loan is to be dealt with. If repayment of the convertible bridge loan takes place timewise before the repayment dates according to the provisions of § 1
Item 1 and § 1 Item 2 of this Agreement, and/or if the (pro rata) 

 CERTIFIED TRANSLATION FROM GERMAN INTO ENGLISH 

 

	 	
repayment instalments are higher than the repayment instalments according to the provisions of § 1 Item 1 and § 1 Item 2 of this Agreement, the parties undertake to adjust the
repayment terms as laid down in the provisions of § 1 Item 1 and § 1 Item 2 of this Agreement accordingly. 

§ 2 Information and Control Rights 
  

	(1)	Within 6 weeks of the end of each calendar quarter at the latest, TE shall prepare a report on the preceding calendar quarter - i.e. 4 quarterly reports per year - containing the information requested by tbg, and submit
same to tbg in the form required by the latter. 

  

	(2)	TE undertakes to submit TE’s annual financial statement to tbg within six months of the the balance sheet date at the latest. In exceptional cases, tbg may waive certification by an auditor or chartered public
accountant pursuant to Commercial Code § 322. 

 Moreover, tbg shall have the right to demand submission of other
documents and to inspect TE’s accounting records at any time. For exercising its control rights, tbg may avail itself of third parties. 
  

	(3)	Should TE fall in arrears with the payment of instalments, copies of TE’s bank statements (as per the last day of the month) for all TE’s bank accounts shall be submitted within the first ten days of the
following month as evidence of TE’s financial position and liquidity. 

  

	(4)	TE shall grant to the Federal Ministry of Economics and an agent authorised by the latter the same scope of presentation, information and inspection rights as is granted to tbg. TE agrees that tbg may forward the data
obtained on its enterprise and on the innovation project being funded to the Federal Ministry of Economics or to any institute commissioned by the latter for the purpose of scientifically evaluating the programme underlying this Agreement. Moreover,
TE agrees to also provide the information that is required for scientifically evaluating the programme directly to the Federal Ministry of Economics or to any institute commissioned by the latter. The Federal Ministry of Economics is entitled to
disclose the data reported to it to the EU Commission in order for the latter to exercise its powers of supervision and control. When data on the programme is drawn up and possibly published, it shall be ensured that no detriment is caused to TE.

  

	(5)	Vis-à-vis TE, the Federal Audit Office has an auditing right pursuant to Federal Budget Code § 91. For auditing purposes, TE shall make available to the Federal Audit Office, and to tbg all the records which
the Federal Audit Office deems necessary and shall furnish information accordingly. 

 § 4 Payments 

Payments to tbg shall be made into tbg’s account at KfW Bank, Frankfurt (acc. no. 12-28833392, sort code 500 204 00), stating the
following payment purpose: “Repayment participation Pieris AG, loan no. 5961592, tbg no. 1767”. tbg shall collect due receivables under this Agreement on the dates given, using the direct debit authorisation it has been granted by TE. 

 CERTIFIED TRANSLATION FROM GERMAN INTO ENGLISH 

 

 § 5 Termination 

 

	(1)	If TE is in arrears with at least two instalments, tbg shall be entitled to terminate this Agreement with immediate effect. 

  

	(2)	If an important cause exists, the contracting parties shall be entitled to terminate this Agreement by written notice with immediate effect. 

tbg shall be entitled to terminate for important cause in particular: 
  

	 	a)	if bills of exchange accepted from TE are protested, TE discontinues making payments, insolvency proceedings are instituted against TE’s assets, or insolvency is ascertained in any other manner; 

 

	 	b)	if TE is dissolved or wound up in liquidation proceedings; 

  

	 	c)	if TE fails to perform its reporting obligations as contractually agreed. 

 § 6 General
Provisions 
  

	(1)	Amendments and supplements to this Agreement including this clause on written form must be done in writing. No oral ancillary agreements exist in relation to this Agreement. 

 

	(2)	If any provision of this Agreement is ineffective in law, this shall not affect the remaining provisions. TE and tbg shall be under obligation to replace ineffective contractual terms with arrangements which are
effective in law and correspond to the legally ineffective provision as closely as possible in meaning and purpose. The same shall apply in the event of any omission in the contractual terms. 

 

	(3)	It is agreed that Bonn shall be place of jurisdiction for all and any legal disputes arising from this Agreement or implementation thereof. 

 

									
	(4) All the services rendered by tbg under this Agreement are financial services exempt from turnover tax. KfW Bank’s VAT number is: DE 114 104 280. (Fiscal unity with KfW Bank for turnover tax purposes). Bonn,
(date)	 		 	Freising, (date)
			
		 		 	 /s/ Claus Schalper

		 		 	Pieris AG
		 		 	Lisa-Meitner-Straße 30
				
	 /s/ Authorized Signatory
	 		 		 	
	 tbg Technologie-
 Beteiligungs-

Gesellschaft mbH
	 		 		 	Fuchstal (date):	 	 10 April 2014

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