PARADIGM GENETICS INC
ALLIANCE AGREEMENT LION BIOSCIENCE AG & THE REGIST
<DOCUMENT>
<TYPE>EX-10.18
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>ALLIANCE AGREEMENT LION BIOSCIENCE AG & THE REGIST
<TEXT>

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CONFIDENTIAL


                                                                   EXHIBIT 10.18


Paradigm Genetics, Inc. has omitted from this Exhibit 10.18 portions of the
Agreement for which Paradigm Genetics, Inc. has requested confidential treatment
from the Securities and Exchange Commission. The portions of the Agreement for
which confidential treatment has been requested have been filed separately with
the Securities and Exchange Commission. Such omitted portions have been marked
with an asterisk.


                              Alliance Agreement


                                    Between



                              LION bioscience AG
                               Waldhofer Str. 98
                      69123 Heidelberg-Wieblingen Germany
                       represented by its managing board



                                          -called "LION" hereinafter-

                                      and


                            Paradigm Genetics Inc.
                       104 Alexander Drive, Building Two
            Research Triangle Park, North Carolina 27709-4528, USA
                   Represented by the CEO John Ryals, Ph.D.

                                                   - called "PGI" hereinafter-


                                   -  collectively called "Parties" hereinafter-

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                                 Confidential


                               ALLIANCE AGREEMENT

This agreement is entered into by and between Lion bioscience AG, hereinafter
"LION", of Waldhofer Str. 98, 69123 Heidelberg-Wieblingen, Germany, with offices
at 141 Portland Street, 10/th/ Floor, Cambridge, Massachusetts 02139, and
Paradigm Genetics, Inc., hereinafter "PGI", of 104 Alexander Drive, Building 2,
Research Triangle Park, North Carolina 27709.

     WHEREAS, PGI is in the business of genomic research and has know-how,
facilities, experience and personnel in the field of genomics, particularly
functional genomics relating to life sciences;

     WHEREAS, LION has know-how, facilities, experience and personnel in the
field of developing, marketing and distributing bioinformatics software tools
and services; and

     WHEREAS, LION and PGI desire to conduct collaborative development and sales
and marketing in the area of bioinformatics for functional genomics for certain
life sciences.

     NOW, THEREFORE, in consideration of the mutual covenants and conditions
herein, the parties agree as follows:

     1.   Scope of Relationship. a) LION and PGI shall undertake a collaboration
          ---------------------
          ("COLLABORATION") in the area of Bioinformatics for Functional
          Genomics (the "FIELD"). For the purposes of this Agreement,
          "Functional Genomics" means functional genomics in the areas of crop
          production ("Crop Production"), nutrition, industrial products and
          foods for human health; "Crop Production" means any business activity
          resulting in the production or enhanced production of crops, food,
          animal feed or industrial feed stocks. "Bioinformatics" means database
          architecture, information storage and retrieval, software, data
          analysis and query tools and data display and user interface.

          b)   The COLLABORATION consists of the activities to be conducted by
               PGI and LION pursuant to the Product Development Plan and the
               Marketing Plan.

          c)   The Product Development Plan consists of i) the development of
               New Software Products that are useful for Functional Genomics and
               for use in the generation of, or with, a Metabolic Profiling
               Database on plants and fungi and ii) development of a Metabolic
               Profiling Database for the FIELD and

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               the Health Care Market in accordance with the Plan attached
               hereto as Exhibit A.

          d)   The Sales & Marketing Program consists of i) the sales and
               marketing of New Software Products that are useful for Functional
               Genomics and for use in the generation of, or with, a Metabolic
               Profiling Database on plants and fungi and ii) the sales and
               marketing of a Metabolic Profiling Database for the FIELD and the
               Health Care Market in accordance with the Plan attached hereto as
               Exhibit B. In addition, a mutually agreed upon business plan will
               be completed by April 1, 2001.

          e)   The COLLABORATION shall be under the direction and supervision of
               a Joint Collaboration Committee consisting of an R & D
               representative and a Business representative from both PGI and
               LION as listed in the attached Exhibit C (each respectively a
               "REPRESENTATIVE" and collectively the "JOINT COLLABORATION
               COMMITTEE"). A party may change a designated REPRESENTATIVE by
               notice to the other party. All decisions relating to the
               COLLABORATION, as well as any modification of the Product
               Development Plan or the Marketing Plan, shall be effective only
               upon mutual agreement of all REPRESENTATIVES. In the event that
               the REPRESENTATIVES are unable to agree, the matter shall be
               referred to the persons designated in Article 22b. In addition,
               the scope of the COLLABORATION may be modified upon mutual
               written consent of the Parties.

     2.   Meetings and Reports. a) Designees of LION and PGI shall meet
          --------------------
          regularly to discuss the COLLABORATION, set specific objectives,
          define timelines and acceptance criteria, and evaluate and report
          progress. It is mutually agreed that PGI and LION will allocate
          efforts to projects based on the alignment with each party's business
          strategy. Participants of such meetings shall be determined by the
          REPRESENTATIVES. Meetings shall take place at a location that is
          mutually agreed upon by both parties. Each party shall be responsible
          for its out-of-pocket expenses associated with attendance at such
          meetings.

          b)   PGI and LION shall produce a written summary of meetings of the
               JOINT COLLABORATION COMMITTEE and a final written report
               summarizing the results of the PRODUCT DEVELOPMENT PLAN within
               sixty (60) days of its completion. The final report shall
               include, but not be limited to, all data, conclusions, results,
               observations, a detailed description of all procedures, and the
               like. All such reports may be utilized by both parties in the
               FIELD. All reports shall constitute CONFIDENTIAL INFORMATION (as
               defined below) subject to provisions of Article 6.

     3.   Consideration from PGI to LION.  In consideration of the services
          ------------------------------
          provided by LION and the rights obtained by PGI under this agreement,
          PGI shall provide LION with:

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          a)   a minimum two full time employee (FTE) effort, as described in
               the attached Product Development Plan as Exhibit A, for the co-
               development of New Software Products and the Metabolic Profiling
               Database pertaining to this COLLABORATION. If appropriate, LION
               employees will work within PGI facilities under the appropriate
               confidentiality and non-disclosure agreements.

          b)   The current architectural schema for the FunctionFinder(TM)
               software solely to assist in the Product Development Plan covered
               under this agreement. LION will not use this schema for any other
               purpose, nor will LION market, sell or distribute this schema or
               any modified form of the schema to any third party without
               written consent of PGI.

          c)   Access to certain relevant Development Data for the Product
               Development Plan. LION will not market, sell or distribute these
               data, or copies of these data, to any third party. "Development
               Data" for the purposes of this Agreement means data that is
               useful in the Development Plan to develop New Software Products
               and the Metabolic Profiling Database.

          d)   Certain metabolic profiling data from plants and fungi to be used
               for the sole purpose of marketing and supporting the Metabolic
               Profiling Database. All plant and fungal metabolic profiling data
               shall remain the sole property of PGI. No license is granted to
               LION for this or any other data for any other activity.

          e)   All data to be used as part of this COLLABORATION which will be
               structured to be compatible with user interfaces designed by LION
               (for example, bioSCOUT(TM)) provided LION continues to use SRS
               and as long as LION provides PGI with timely updates on
               requirements.

          f)   Payments for any development which is carried out by LION for the
               benefit of PGI, which is not part of the Product Development Plan
               for the development of New Software Products or that is not used
               in the generation of the Metabolic Profiling Database. The rate
               of payment will be at a consultancy rate of $ [____] *
               /person/day. Travel and subsistence expenses will also be
               charged.

_____________________________________________________________________________
* Confidential treatment requested as to certain portions, which portions are
omitted and filed separately with the Commission.

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          g)   A royalty of [___] * of the Net Sales of any Metabolic Profiling
               Database, which is licensed as a database by PGI under mutually
               agreed upon terms, as between PGI and LION, in the FIELD and the
               Health Care Market. This royalty shall be paid in US dollars
               within 30 days of the end of each quarter after sales have
               occurred. For purposes of this subsection g), "Net Sales" are the
               total revenue received for a license to the Metabolic Profiling
               Database before taxes and net of refunds, credits or discounts.
               If the Metabolic Profiling Database is sold as a part of a
               package of products, databases and/or services the royalty shall
               reflect the relative value of the Metabolic Profiling Database to
               the total contract value and PGI and LION shall negotiate the
               royalty rate in good faith.

          h)   Recommendation for LION products. PGI will market its functional
               genomics data, databases and products resulting from its internal
               discovery efforts. PGI and LION will market the Metabolic
               Profiling Database in the FIELD and in the Health Care Market. If
               a customer is interested in solutions to bioinformatics problems,
               PGI will mention that LION is the provider of choice for
               bioinformatics software for functional genomics. PGI will attempt
               to facilitate a favorable viewing of LION products and services.
               However, PGI is free to work with any customer it finds,
               independent of other agreements the customer may have with the
               competitors of LION. PGI agrees to protect the confidential
               information of LION to at least the same degree as set forth in
               the rules for confidentiality in the Letter of Intent dated
               January 19, 2000.

          i)   PGI will not enter into an agreement with any third party to co-
               develop bioinformatics software or the Metabolic Profiling
               Database covered under this agreement with the intention of
               marketing these tools in the FIELD with the exception of foods
               for human health. "Third Party" for this subsection i) means an
               entity other than the entity having a preexisting relationship
               with either party or an entity that provides a product or tools
               for which LION has no reasonable alternative or comparable
               product.

          j)   A royalty of [___] * of the Net Sales of any New Software
               Product, which is sold by PGI under mutually agreed upon terms,
               as between PGI and LION. This royalty shall be paid in US dollars
               within 30 days of the end of each quarter after sales have
               occurred. For purposes of this subsection j), "Net Sales" are the
               total revenue received for a license to the New Software Product
               before taxes and net of refunds, credits or discounts.

_____________________________________________________________________________
* Confidential treatment requested as to certain portions, which portions are
omitted and filed separately with the Commission.

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               If the New Software Product is sold as a part of a package of
               products, databases and/or services the royalty shall reflect the
               relative value of the New Software Product to the total contract
               value and PGI and LION shall negotiate the royalty rate in good
               faith.

          k)   For new bioinformatics software which is co-developed pursuant to
               the COLLABORATION but is not a New Software Product, the revenue
               split between PGI and LION will be based on the percentage of the
               value contributed by each party to any new bioinformatics
               software.

     4.   Consideration from LION to PGI.  In consideration of the services
          ------------------------------
          provided by PGI and the rights obtained by LION under this Agreement,
          LION shall provide PGI with:

          a)   In addition to the terms and conditions of the license agreements
               dated October 26, 1999 and June 14, 2000, continued updates and
               support for SRS, bioSCOUT(TM) and arraySCOUT(TM) and associated
               software modules at prices no greater than those previously
               negotiated between the parties and no higher than licensed to
               other commercial entities in arms length transactions. LION will
               provide PGI with software development kits for SRS,
               arraySCOUT(TM) and bioSCOUT(TM) tools.

          b)   At commercially reasonable terms available to other customers,
               LION shall provide to customers of PGI a license to SRS,
               bioSCOUT, arraySCOUT and other tools required to use the
               Metabolic Profiling Data Analysis and Display Software and
               Metabolic Profiling Database. PGI will not independently market,
               sell or distribute the license or kits without the written
               consent of LION.

          c)   A minimum two full time employee (FTE) effort, as described in
               the Product Development Plan attached as Exhibit A, for the co-
               development of New Software Product and the Metabolic Profiling
               Database pursuant to this COLLABORATION. If appropriate, PGI
               employees will work within LION facilities under the appropriate
               confidentiality and non-disclosure agreements. Furthermore, LION
               will provide training and access to early phase products (-test
               site) that are appropriate for PGI.

          d)   The marketing of SRS, bioSCOUT(TM) and other bioinformatics
               software tools to industry. If the customer is in the Functional
               Genomics markets, LION will mention that PGI is the provider of
               choice for functional genomics. LION will attempt to facilitate a
               favorable viewing of PGI products and services. However, LION is
               free to work with any customer it finds, independent of that
               customer's interest in working with PGI and independent of other
               agreements the customer may have with competitors of PGI.

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          e)   LION will not enter into an agreement with any third party to co-
               develop bioinformatics software or the Metabolic Profiling
               Database covered under this agreement with the intention of
               marketing these tools in the FIELD with the exception of foods
               for human health. "Third Party" for this subsection means an
               entity other than the entity having a preexisting relationship
               with either party or an entity that provides a product or tools
               for which PGI has no reasonable alternative or comparable
               product.

          f)   A royalty of [___] * of the Net Sales of any Metabolic Profiling
               Database, which is sold as a database by LION under mutually
               agreed upon terms, as between PGI and LION, in the FIELD or
               Health Care Market. This royalty shall be paid in US dollars
               within 30 days of the end of each quarter after sales have
               occurred. For purposes of this subsection f), "Net Sales" are the
               total revenue received for a license to the Metabolic Profiling
               Database before taxes and net of refunds, credits or discounts.
               If the Metabolic Profiling Database is sold as a part of a
               package of products, databases and/or services the royalty shall
               reflect the relative value of the Metabolic Profiling Database to
               the total contract value and PGI and LION shall negotiate the
               royalty rate in good faith.

          g)   A royalty of [___] * of the Net Sales of any New Software
               Product, which is licensed by LION under mutually agreed upon
               terms, as between PGI and LION. This royalty shall be paid in US
               dollars within 30 days of the end of each quarter after sales
               have occurred. For purposes of this subsection g), "Net Sales"
               are the total revenue received for a license to the
               Bioinformatics Software Tool before taxes and net of refunds,
               credits or discounts. If the New Software Product is sold as a
               part of a package of products, databases and/or services the
               royalty shall reflect the relative value of the New Software
               Product to the total contract value and PGI and LION shall
               negotiate the royalty rate in good faith.

     5.   Grants, Licenses and Options.  a) Under the SRS license agreement
          -----------------------------
               dated October 26, 1999 and the bioSCOUT(TM) and arraySCOUT(TM)
               licenses dated June 14, 2000, LION has granted to PGI annual
               licenses to use these products. Following the first sale of a New
               Software Product or a Metabolic Profiling Database at a price to
               be agreed between LION and PGI, LION will grant to PGI a non-
               exclusive license to use SRS, bioSCOUT(TM) and arraySCOUT(TM)
               from the date of the annual license renewals.

_____________________________________________________________________________
* Confidential treatment requested as to certain portions, which portions are
omitted and filed separately with the Commission.

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          b)   The granted non-exclusive licenses, pursuant to article 5(a),
               shall survive the termination of this Agreement provided that the
               royalties received or sales revenues retained by LION pursuant to
               articles 3(g), 3(j), 4(e) and 4(f) exceed the annual list price
               of the software for the year in which such royalties or sale
               revenues are received. However, the non-exclusive licenses
               granted pursuant to article 5(a) do not include new versions of
               the software or technical support.

          c)   LION is free to use, market, sell, license and distribute any
               product or service not specifically covered under this
               COLLABORATION without interference from PGI. PGI is free to sell
               and distribute any product or service not specifically covered
               under this COLLABORATION without interference from LION.

          d)   (i) LION herewith grants PGI a non-exclusive, world-wide, royalty
               free License to use and market the New Software Product and the
               Know-How related to the New Product Software solely for the
               purposes of this Agreement, without the right to sublicense, and
               subject to all terms and conditions hereof; and (ii) LION
               herewith also grants PGI and its affiliates an irrevocable, non-
               exclusive, world-wide, royalty-free License to use New Software
               Products and the Know-How related to the New Software Products
               for internal purposes without the right to sublicense.

          e)   (i) PGI herewith grants LION a non-exclusive, world-wide,
               royalty-free License to use and market the Metabolic Profiling
               Database and the Know-How related to the Metabolic Profiling
               Database solely for the purposes of this Agreement, without the
               right to sublicense, and subject to all terms and conditions
               hereof; and (ii) PGI herewith also grants LION and its affiliates
               an irrevocable, non-exclusive, world-wide, royalty-free License
               to use the Metabolic Profiling Database and the Know-How related
               to the Metabolic Profiling Database for internal purposes without
               the right to sublicense.

     6.   Confidentiality. In view of the parties' proprietary rights and
          ----------------
          interests concerning their facilities and technology, PGI and LION
          agree that during the term of and any subsequent extension of this
          Agreement and for a period of five (5) years thereafter, each party
          shall hold in confidence any CONFIDENTIAL INFORMATION (as defined
          below): a) received by one party ("Receiving Party") from the other
          party ("Disclosing Party"), or 2) that results from the COLLABORATION
          under this Agreement ("New Information") except as required under
          clause 5 for the purpose of the sale and marketing of the results of
          the COLLABORATION. "CONFIDENTIAL INFORMATION" includes, but is not
          limited to, confidential or proprietary information, business plan
          information, reports, materials, know-how, data, both technical and
          non-technical, procedures, databases, documents, specifications,
          techniques, assays, results, product development, conclusions, and the
          like (including the terms of

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          this Agreement). Each party shall not disclose CONFIDENTIAL
          INFORMATION to any third party or use such CONFIDENTIAL INFORMATION
          for any purpose, except as provided herein, without the prior written
          approval of the other party. The parties shall have no obligations
          with respect to any portion of such CONFIDENTIAL INFORMATION which:

          a)   is or later becomes generally available to the public by use,
               publication or the like through no fault of the Receiving Party;

          b)   is obtained from a third party who had the legal right to
               disclose the same to the Receiving Party;

          c)   the Receiving Party already possesses, as evidenced by written
               records, predating receipt thereof from the Disclosing Party; or

          d)   is independently developed by the Receiving Party without
               reference to the CONFIDENTIAL INFORMATION, provided such
               independent development can reasonably be documented by the
               Receiving Party by written records.

     7.   Publication. PGI and LION recognize the importance to present or
          -----------
          publish scientific articles and the importance to protect CONFIDENTIAL
          INFORMATION from premature disclosure to third parties. However, LION
          agrees to obtain written permission from PGI prior to submission of
          any such presentation or article for publication that contains PGI's
          CONFIDENTIAL INFORMATION or prior to disclosure of PGI's CONFIDENTIAL
          INFORMATION to third parties. PGI agrees to obtain written permission
          from LION prior to submission of any such presentation or article for
          publication that contains LION's CONFIDENTIAL INFORMATION or prior to
          disclosure of LION's CONFIDENTIAL INFORMATION to third parties. Each
          party agrees to provide to the REPRESENTATIVE of the other party all
          such presentations or articles or disclosures of CONFIDENTIAL
          INFORMATION to the third parties at least sixty (60) days prior to
          submission of such presentations or articles for publication or prior
          to the intended disclosure of CONFIDENTIAL INFORMATION to third
          parties. The receiving REPRESENTATIVE will notify the party within
          thirty (30) days following receipt of the contents of the proposed
          publication or disclosure of any comments they may have. The parties
          agree to remove any CONFIDENTIAL INFORMATION contained in such
          proposed presentations, articles or disclosures and the parties agree
          to delay such disclosures, presentations or articles for publication
          for up to ninety (90) days in order to file a patent application if it
          is determined that the presentations or articles for publication or
          disclosure contain CONFIDENTIAL INFORMATION with potentially
          patentable subject matter.

     8.   Property Rights. a) Intellectual property developed by one or both
          ---------------
               Parties relating to or incorporating LION's core-software-
               products (including but

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               not limited to SRS, bioSCOUT(TM), arraySCOUT(TM),
               genomeSCOUT(TM), pathSCOUT(TM), miSCOUT(TM)) shall belong to LION
               ("LION Intellectual Property").

          b)   Subject to Section 8a intellectual property relating to the
               Metabolic Profiling Database developed by one or both parties
               during the Product Development Plan shall be owned by PGI ("PGI
               Intellectual Property").

          c)   Intellectual property relating to New Software Products developed
               by one or both parties during the COLLABORATION shall be owned by
               LION ("LION Intellectual Property").

          d)   Intellectual property relating to Functional Genomics developed
               by one or both parties pursuant to the Product Development Plan
               shall be owned by PGI ("PGI Intellectual Property").

          e)   Subject to Sections 8a, 8b, 8c and 8d, other intellectual
               property developed by one more employees of both Parties pursuant
               to the Product Development Plan shall be jointly owned by LION
               and PGI ("Joint Intellectual Property"). Each owner of a jointly
               owned patent shall have the rights to use such Joint Intellectual
               Property pursuant to the rights granted in this Agreement.

          f)   Subject to Sections 8a, 8b, 8c, 8d and 8e any intellectual
               property developed solely by one or more employees of PGI, shall
               be owned by PGI ("PGI Intellectual Property").

          g)   Subject to Sections 8a, 8b, 8c, 8d and 8e any intellectual
               property developed solely by one or more employees of LION, shall
               be owned by LION ("LION Intellectual Property").

          h)   PGI shall be responsible for all costs associated with the
               preparation, filing, prosecution and maintenance of all PGI
               Intellectual Property and 50% of the costs for Joint Intellectual
               Property. LION shall be responsible for all costs associated with
               the preparation, filing, prosecution and maintenance of all LION
               Intellectual Property and 50% of the costs of Joint Intellectual
               Property.

     9.   Term.  a) This agreement shall be effective beginning November 1, 2000
          -----
          and shall remain in effect until December 31, 2005 unless terminated
          earlier or unless the goals of the Development Plan have been achieved
          earlier as mutually agreed by both Parties. This Agreement may be
          extended upon the mutual written agreement of both parties.

          b)   A party may terminate this Agreement upon or after the breach of
               any material provision of this Agreement, if the breaching party
               has not cured such breach within ninety (90) days after notice
               thereof from the other party.

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               Any licenses granted hereunder to the non-breaching party shall
               survive a termination of this Agreement under this Article 9b and
               shall remain in full force and effect under the terms and
               conditions of the associated license agreement so long as such
               non-breaching party shall continue to comply with its obligations
               under this Agreement to the breaching party in respect of such
               licenses (including without limitation, any reporting, payment,
               funding, development, commercialization, or royalty obligations)
               as if this Agreement had not been terminated. A termination for
               breach as provided in this Article 9b shall not affect any
               licenses granted to third parties prior to such breach unless the
               granting of the license constitutes a breach of this Agreement.

     10.  Termination.  This Agreement shall terminate upon the expiration of
          ------------
          the term of Article 9 or for any reason prior thereto by either party
          after giving thirty (30) days notice.

     11.  Notices. Unless otherwise stated, any notice or reports required to be
          --------
          given under the terms of this Agreement may be given by certified
          letter addressed to the other party and addressed to the party at the
          following address. Any notice so given shall be deemed to have been
          served when hand delivered to the other Party or at the expiration of
          seven (7) days from the time of posting.

     For LION:                Dr. Friedrich von Bohlen
                              LION bioscience AG
                              Waldhofer Str. 98
                              69123 Heidelberg-Wieblingen
                              Germany

                              with a copy to:

                              Dr. Reinhard Schneider, CEO
                              Lion Bioscience Inc.
                              141 Portland Street
                              Cambridge, Massachusetts 02139

     For PGI:                 John Ryals, CEO
                              Paradigm Genetics, Inc.
                              104 Alexander Drive, Building 2
                              Research Triangle Park, North Carolina 27709

     12.  Publicity.  During the term of this Agreement, neither party hereto
          ----------
          will use the name of the other party in publicity or advertising
          without the written approval of the other party, such approval not to
          be unreasonably withheld. However, nothing in this Article or
          elsewhere in this Agreement or from including the existence and nature
          of this Agreement in the routine reporting of its activities.

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     13.  Liability. Each party hereto agrees to be responsible and assume
          ----------
          liability for its own wrongful or negligent acts or omissions, or
          those of its officers, agents, or employees to the full extent allowed
          by law and further agrees to indemnify and hold harmless the other
          party against any action brought against the other party to the extent
          that such action is based on such wrongful or negligent acts or
          omissions. Further, each party warrants and represents that it
          possesses adequate liability insurance, which will remain in effect
          for the entire term of this Agreement, for the protection of itself
          and its officers, employees and agents, while acting within the scope
          of their employment by the party.

          a)   Indemnification of LION.  PGI shall indemnify, defend and hold
               -----------------------
               harmless LION against any action to the extent that such action
               is based on a claim that LION's use of the Metabolic Profiling
               Database, the Documentation, the Updates, the Know How or any
               part thereof under this Contract infringes an enforceable patent
               or copyright, or misappropriates or infringes upon a trade secret
               or other intellectual property right and PGI shall pay all costs
               (including reasonable attorney's fees) awarded or agreed to in
               settlement by PGI in such action; provided that PGI is given
               notice within fifteen (15) calendar days of the date the LION
               knows of such a claim, unless the failure to give such notice
               shall not, in the reasonable opinion of PGI, materially prejudice
               PGI's defense thereof. PGI shall control the defense in any such
               action and at its discretion may enter into a stipulation of
               discontinuance and settlement thereof. The foregoing indemnity
               shall not apply in respect of any infringement or
               misappropriation claim if such infringement or misappropriation
               claim is based on: (a) use of a superseded or altered release of
               the Metabolic Profiling Database if the infringement would have
               been avoided by the use of a current unaltered release of the
               Metabolic Profiling Database which PGI provides to LION, (b) the
               modification or alteration of the Metabolic Profiling Database or
               the source code by LION if such infringement would have been
               avoided by use of the Metabolic Profiling Database without such
               modification or alteration, or (c) the combination, operation or
               use of the New Software Product with software, hardware or other
               materials not furnished by PGI if such infringement would have
               been avoided by the use of the New Software Product without such
               software, hardware or other materials. In the event that portions
               of the Software are held or are believed by PGI to infringe, PGI
               may, in its sole discretion, terminate the license for the
               infringing New Software Product. This Section states PGI's entire
               liability and LION's exclusive remedy for infringement or
               misappropriation.

          b)   Indemnification of PGI.  LION shall indemnify, defend and hold
               ----------------------
               harmless PGI against any action to the extent that such action is
               based on a claim that PGI's use of the New Software Products, the
               Documentation, the Updates, the Know How or any part thereof
               under this Contract infringes an enforceable patent or copyright,
               or misappropriates or infringes upon a trade secret or other
               intellectual property right and LION shall pay all costs
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          (including reasonable attorney's fees) awarded or agreed to in
          settlement by LION in such action; provided that LION is given notice
          within fifteen (15) calendar days of the date the PGI knows of such a
          claim, unless the failure to give such notice shall not, in the
          reasonable opinion of LION, materially prejudice LION's defense
          thereof. LION shall control the defense in any such action and at its
          discretion may enter into a stipulation of discontinuance and
          settlement thereof. The foregoing indemnity shall not apply in respect
          of any infringement or misappropriation claim if such infringement or
          misappropriation claim is based on: (a) use of a superseded or altered
          release of a New Software Product if the infringement would have been
          avoided by the use of a current unaltered release of the New Software
          Product which LION provides to PGI, (b) the modification or alteration
          of a New Software Product or the source code thereof by PGI if such
          infringement would have been avoided by use of the New Software
          Product without such modification or alteration, or (c) the
          combination, operation or use of a New Software Product with software,
          hardware or other materials not furnished by LION if such infringement
          would have been avoided by the use of the New Software Product without
          such software, hardware or other materials. In the event that portions
          of the New Software Product are held or are believed by LION to
          infringe, LION may, in its sole discretion, terminate the license for
          the infringing New Software Product. This Section states LION's entire
          liability and PGI's exclusive remedy for infringement or
          misappropriation.

     c)   Limitation of Liability.  EXCEPT WITH RESPECT TO THE PARTIES'
          -----------------------
          OBLIGATIONS UNDER SECTIONS 6, 13(a) AND 13(b) HEREOF, NEITHER LION NOR
          PGI SHALL HAVE ANY LIABILITY TO THE OTHER PARTY WITH RESPECT TO ITS
          OBLIGATIONS UNDER THIS AGREEMENT OR OTHERWISE FOR CONSEQUENTIAL,
          EXEMPLARY, SPECIAL, INCIDENTAL OR PUNITIVE DAMAGES EVEN IF IT HAS BEEN
          ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. EXCEPT WITH RESPECT TO THE
          PARTIES' OBLIGATIONS UNDER SECTIONS 6, 13(a) AND 13(b) HEREOF, THE
          LIABILITY OF LION OR PGI TO THE OTHER PARTY FOR ANY REASON AND UPON
          ANY CAUSE OF ACTION SHALL BE LIMITED TO USD TWO HUNDRED & FIFTY
          THOUSAND DOLLARS ($250,000). THIS LIMITATION APPLIES TO ALL CAUSES OF
          ACTION IN THE AGGREGATE, INCLUDING WITHOUT LIMITATION TO BREACH OF
          CONTRACT, BREACH OF WARRANTY, NEGLIGENCE, STRICT LIABILITY,
          MISREPRESENTATIONS, AND OTHER TORTS. BOTH PARTIES UNDERSTAND AND AGREE
          THAT THE REMEDIES AND LIMITATIONS HEREIN ALLOCATE THE RISKS OF PRODUCT
          AND SERVICE NONCONFORMITY BETWEEN THE PARTIES AS AUTHORIZED BY THE
          UNIFORM COMMERCIAL CODE AND BY OTHER APPLICABLE LAWS. THE AGREEMENTS
          HEREIN REFLECT, AND ARE SET IN RELIANCE UPON, THIS

13
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          ALLOCATION OF RISK AND THE LIMITATION OF DAMAGES SET FORTH IN THIS
          CONTRACT.

     14.  Independent Contractor.  In the performance of all services hereunder,
          ----------------------
          neither party is authorized or empowered to act as agent for the other
          for any purpose and shall not on behalf of the other enter into any
          contract, warranty, or representation as to any matter. Neither party
          shall be bound by the acts of the other.

     15.  Warranties.  The parties warrant and represent that they have the
          ----------
          right to enter into this Agreement. Both parties further warrant and
          represent that the terms of this Agreement are not inconsistent with
          other contractual obligations, expressed or implied that they may
          have.

     16.  Amendments. No modification to this Agreement shall be effective
          ----------
          unless made in writing and signed by a duly authorized representative
          of each party.

     17.  Entire Agreement.  This agreement constitutes the entire Agreement
          ----------------
          between the parties with respect to the subject matter hereof and
          supercedes all prior agreements and understandings between the parties
          (whether written or oral) relating to said subject matter.

     18.  Survival of Terms.  The terms of Articles 3, 4, 5, 6, 7, 8, 11, 13,
          -----------------
          19, 20 and 22 any shall survive any termination of this Agreement
          pursuant to Article 10.

     19.  No Implied License.  Neither Party by this Agreement grants to the
          ------------------
          other any license, express or implied, to any technology, know-how,
          inventions, improvements, trade secrets or materials that it
          possesses, except for research purposes necessary to conduct the
          Product Development Plan. Upon the termination of the Product
          Development Plan, the Parties' intellectual property rights with
          respect to the results of the Product Development Plan shall be as set
          forth in Article 6 and 8, and neither Party shall have any implied
          license to any other technology, know-how, inventions, improvements,
          trade secrets or materials of the other Party.

     20.  Assignment.  Neither Party shall assign or transfer an interest in
          ----------
          this Agreement, nor assign any claims for money due or to become due
          during this Agreement, other than to an Affiliated Company, without
          prior written approval of the other party. Subject to the foregoing,
          the Agreement shall inure to the benefit of and shall be binding upon
          the successors and permitted assigns of the Parties. For the purposes
          of this Section 20, "Affiliated Company" means a corporation or other
          entity which controls, is controlled by, or is under common control
          with a party to this Agreement. A corporation or other entity shall be
          deemed to control another corporation or entity if it owns, directly
          or indirectly, more than fifty percent (50%) of the voting shares or
          other interest, or has the power to elect

14
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          more than half the directors, of such other corporation or entity.

     21.  Compliance with Laws.  Each Party agrees that it will comply with all
          --------------------
          applicable federal, state, and local laws, codes, regulations, rules
          and orders in the performance and direction of the work under this
          Agreement.

     22.  Governing Law, Dispute Resolution, Arbitration. a) This Agreement and
          ----------------------------------------------
          all of the obligations contained herein, including possible claims for
          damages arising from the withdrawal of one of the parties from the
          Agreement, shall be construed in accordance with the laws of the State
          of Delaware in The United States of America under exclusion of the UN
          law on sales. Place of jurisdiction shall be Delaware.

          b)   LION and PGI shall deal with each other in good faith. The
               parties agree in the event of a dispute between them arising
               from, concerning or in any way relating to this Agreement, the
               REPRESENTATIVES shall undertake good faith efforts to amicably
               resolve such dispute, the matter shall be referred to
               [_______________________] * or another designated representative
               of LION, and to [_____________] * or another designated
               representative of PGI, for further review and resolution.

          c)   In the event that a dispute is unable to be resolved, pursuant to
               Section 21.b, within ninety (90) days, the parties agree that any
               and all disputes arising directly or indirectly out of or
               relating in any way to this Agreement shall be submitted to
               binding arbitration pursuant to the Rules then in effect of the
               American Arbitration Association (AAA). One arbitrator shall hold
               arbitration. Arbitration shall be held in the English language.
               The arbitrator shall decide the matters submitted to him based
               upon the evidences presented and the terms of this Agreement. The
               arbitrator shall issue a written decision which shall state the
               reasons of the decision and which shall include findings of fact
               and conclusions of law. The decision of the arbitration shall be
               final, non-appealable and binding upon the parties and their
               respective successors and permitted assigns.

     23.  Force Majeure.  Neither party shall be held liable or responsible to
          -------------
          the other party nor be deemed to have defaulted under or breached this
          Agreement for failure or delay in fulfilling or performing any term of
          this Agreement to the extent, and for so long as, such failure or
          delay is caused by or results from causes beyond the reasonable
          control of the affected party including but not limited to fire,
          floods, embargoes, war, acts of war (whether war be declared or not),
          insurrections, riots, civil commotion, strikes, lockouts or other
          labor disturbances, acts of God or acts, omissions, or delays in
          acting by any governmental authority of the other party.

_____________________________________________________________________________
* Confidential treatment requested as to certain portions, which portions are
omitted and filed separately with the Commission.

15
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     24.  Severability of Clauses.  If any provision or provisions of this
          -----------------------
          Agreement are deemed illegal, invalid, or unenforceable in any state
          or country, to the extent of such illegality, invalidity or
          unenforceability, be deemed severed and shall not affect the legality,
          validity or enforceability of any other provision hereof. The invalid
          provision or the gap shall be filled by an appropriate provision which
          to the extent legally possible, comes closest to the Parties' intent
          of what the Parties would have laid down had they been aware of the
          invalidity or gap in order to meet the spirit and purpose of this
          Agreement.

          IN WITNESS WHEREOF, the parties have executed this Agreement as of the
          dates set forth below.

          PGI                                   LION

          By: /s/ John A. Ryals                 By: /s/  Friedrich von Bohlen
              ---------------------------           --------------------------

          Title: CEO, President                 Title: Chief Executive Officer
                 ------------------------              -----------------------

          Date: November 22, 2000               Date: November 14, 2000
                -------------------------             ------------------------

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                                   EXHIBIT A

                           Product Development Plan

The parties shall agree on a business plan and mechanism for
marketing/commercialization of the Bioinformatics Software Tools and Metabolic
Profiling Database co-developed by LION and PGI.

1.  Bioinformatics Software Tools

This software will analyze and display biochemical profile data and will be
integrated into LION's proprietary SRS/bioSCOUT(TM) system for ease of use.

     a)   Milestones and Support for Metabolic Profiling Data Analysis and
          Display Software

          i)   LION agrees to support this co-development activity with at least
               2 Full Time Employees with the goal of developing [___________] *
               of biochemical profiling tools by 1 June 2001. [___________] *
               will be able to [________________] * and [______________________]
               * for biochemical profile data obtained at PGI.

          ii)  PGI agrees to support this co-development activity with at least
               2 Full Time Employees with the goal of developing [___________] *
               of biochemical profiling tools by 1 June 2001. [___________] *
               will be able to [________________] * and [______________________]
               * for biochemical profile data obtained at PGI.

     b)   A detailed project scope is: The [___________________________________]
          [_________________] * provides non-specialist users in the context of
          this tool, particularly biologists and geneticists who are not
          specialists in analytical chemistry, a powerful tool for the discovery
          of novel [_____________________] [__________] * that arise from the
          introduction of mutations in the genome of a target organisms. The
          [______________] * platform produces qualitative and quantitative
          information on the detectable [_______________________] *. Genetically
          characterized specimens are subjected to [_____________] * , followed
          by [______________] * to produce [_______] * that enable the
          identification of [__________________________________________________]
          [_______________] * processes [___] * data from the [_________] *
          through [__________] * and [__________] * processes to a finished data
          [________] * for

_____________________________________________________________________________
* Confidential treatment requested as to certain portions, which portions are
omitted and filed separately with the Commission.

17
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          data [________] * by the end user with [____________________________]
          [_______] *. The overall scope of the software system is to provide a
          graphical user interface for access to [_________________________] *
          and data processing pipelines to fulfill the following major
          objectives:

               i)   Enable non-specialist users to compare [__________________]
                    * between and among specimens, treatments or experiments.

               ii)  Enable non-specialist users to predict the
                    [__________________] * in individual specimens based on
                    known genetic manipulation of the genome.

               iii) Enable non-specialist users to list [___________] * that
                    show significant changes in [_______________] *.

               iv)  Enable non-specialist users to display [________________] *
                    for specific samples or experiments.

               v)   Enable non-specialist users to plot groups of [_________] *
                    that are related [__________] * or on the [___________] * by
                    indicating the levels all the [__________] * in the group by
                    specimen or experiment.

               vi)  Enable non-specialists users to add novel [______________] *
                    and edit [____________] *.

     c)   A detailed list of intermediate milestones will be determined by the
          Joint Collaboration Committee by January 1, 2001.


2.   Metabolic Profiling Database

The Metabolic Profiling Database shall consist of [____________] * data from
[______] * and [_____] * linked to [________] * and accessible through a
graphical user interface. Metabolic profiling will help find [___________] * by
quickly relating changes in [______] * and [_________________] * to
[___________] * changes that are relevant to the disease.

_____________________________________________________________________________
* Confidential treatment requested as to certain portions, which portions are
omitted and filed separately with the Commission.

18
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                                   EXHIBIT B

                                Marketing Plan

The parties shall agree on a plan and mechanism for marketing/commercialization
of products and services co-developed by LION and PGI.

1.   Marketing Milestones

          a)   LION agrees to provide PGI with one potential [________________]
               [___________] * by [___________] *. LION agrees to introduce PGI
               to one eventual [_______________] * whereby the relationship
               between PGI and the [____________] * is consummated by
               [__________] *.

          b)   PGI agrees to provide LION with one potential [_______________] *
               by [__________________] *. PGI agrees to introduce PGI to one
               eventual [____________] * whereby the relationship between LION
               and the [_________]* is consummated by [______________] *.

2.   Sharing of Company Contacts

          a)   The following is intended: LION agrees to provide PGI with a list
               of [________________________] * within [____________] * of the
               signing of the Alliance agreement. This customer list will
               include [______________] * and [__________________] *.

          b)   PGI agrees to provide LION with a list of [______________] *
               within [____________________] * of the signing of the Alliance
               agreement. This customer list will include [___________________]
               * and [________________]*.

_____________________________________________________________________________
* Confidential treatment requested as to certain portions, which portions are
omitted and filed separately with the Commission.

19
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                                   EXHIBIT C

                         JOINT COLLABORATION COMMITTEE

LION R & D:               [______________] *
                          [______________] *

LION Business:            [_____________] *

PGI R & D:                [______________] *
                          [______________] *

PGI Business:             [_____________] *



_____________________________________________________________________________
* Confidential treatment requested as to certain portions, which portions are
omitted and filed separately with the Commission.

20
</TEXT>
</DOCUMENT>
