Research Agreement - New Venture LLC and Diversa Corp.
INDUSTRIAL ENZYMES
RESEARCH AGREEMENT
BETWEEN
NEW VENTURE LLC
AND
DIVERSA CORPORATION
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INDUSTRIAL ENZYMES RESEARCH AGREEMENT (including the Appendices hereto,
the "IE R&D Agreement") by and between NEW VENTURE LLC, a limited liability
company, duly organized and existing under the laws of Delaware having a place
of business in San Diego, California, United States of America (the "LLC" or a
"Party"), and DIVERSA CORPORATION, a corporation duly formed and existing under
the laws of Delaware, having a place of business at 10665 Sorrento Valley Road,
San Diego, California 92121, United States of America ("DIVERSA" or a "Party").
R E C I T A L S
A. DIVERSA has discovered and developed enzymes and has expertise
in the rapid discovery, development, optimization and
characterization of enzymes utilizing proprietary
technologies.
B. The LLC has been formed to have expertise in the marketing and
commercialization of industrial enzymes.
C. The LLC and DIVERSA wish to enter into this Agreement in order
for the LLC to fund and support DIVERSA's research to discover
and optimize enzymes that will be marketed and commercialized
by the LLC to the industrial enzyme marketplace.
D. DIVERSA will perform research on projects funded and supported
by the LLC in order to discover and develop industrial
enzymes.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and for other good and valuable consideration, the Parties hereby agree
as follows:
Article 1. DEFINITIONS
When used in this IE R&D Agreement, the following terms shall have the meanings
set out below, unless the context requires otherwise. The singular shall be
interpreted as including the plural and vice versa, unless the context clearly
indicates otherwise.
1.1 "Affiliate" means the same as defined in the LLC Agreement, which
definition is incorporated herein by reference.
1.2 "Agreement Term" means [***] from the expiration or termination of the
Research Term (as defined below) or until this IE R&D Agreement is
otherwise terminated as provided herein.
1.3 "Approved Fields" shall mean the definition from the LLC Agreement,
which is incorporated herein by reference.
1.4 "Approved Project" means the same as defined in the LLC Agreement,
which definition is incorporated herein by reference.
1.5 "Board of Directors" means the governing body of the LLC established
under the terms of the LLC Agreement, which is incorporated herein by
reference.
1.6 "CDA Agreement" means the Confidential Transfer Agreement between DOW
and DIVERSA that is effective at the same Effective Date as this IE R&D
Agreement.
1.7 "Change of Control" means the same as defined in the LLC Agreement,
which definition is incorporated by reference.
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1.8 "Confidential Information" means all information, DIVERSA Know-How, DOW
Know-How, scientific, technical, or non-technical data, Materials,
business plans, financial projections, and marketing and sales
information disclosed by one Party to the other, whether disclosed or
provided in oral, written (including but not limited to electronic,
facsimile, paper or other means), graphic, photographic or any other
form, except to the extent that such information:
a) as of the date of disclosure is known to the receiving Party
as shown by written documentation, other than by virtue of a
prior confidential disclosure from the disclosing Party to the
receiving Party;
b) as of the date of disclosure is in, or subsequently enters,
the public domain through no fault or omission of the
receiving Party;
c) as of the date of disclosure or thereafter is obtained from a
Third Party free from any obligation of confidentiality; or
d) as of the date of disclosure or thereafter is developed by the
receiving Party independent of the disclosure by the
disclosing Party as evidenced by written documentation.
Any information first submitted to the other Party in a non-written
form must be identified as confidential information at that time, then
reduced to writing within thirty (30) days, marked as confidential and
provided to the receiving Party.
1.9 "Controls" or "Controlled" means, with respect to intellectual
property, possession (other than by virtue of this IE R&D Agreement) of
the ability to grant licenses or sublicenses to the other Party hereto
without violating the terms of any agreement or other arrangement with
any Third Party and to the knowledge and belief of the granting Party
without violating the rights of a Third Party.
1.10 "Development Agreement" means the Industrial Enzymes Development
Agreement between DOW and the LLC effective as of the Effective Date.
1.11 "DIVERSA Intellectual Property" means DIVERSA Patent Rights and DIVERSA
Know-How.
1.12 "DIVERSA Know-How" means [***] (a) which are conceived, discovered or
invented during the Research Term in the course of performance of the
R&D Program or (b) which have been conceived, discovered or invented by
DIVERSA prior to this IE R&D Agreement, and Controlled solely by
DIVERSA, and which are necessary or appropriate to develop and
commercialize Licensed Products; and does not include any inventions
within the DIVERSA Patent Rights. All rights to the LLC regarding the
DIVERSA Know-How are determined by this Agreement, the LLC License, the
CDA Agreement, and the LLC Agreement as stated respectively therein.
1.13 "DIVERSA Patent Rights" means (i) all patents and patent applications
which are conceived of during the Research Term and in the course of
performance of the R & D Program, and which are necessary for the LLC
to make, use or sell the Licensed Products (as defined in the LLC
License); if such patent rights arise they shall be listed on Appendix
B-1, attached hereto and made a part hereof; (ii) the patents and
patent applications listed on Appendix B-2, attached hereto and made a
part hereof, are patent rights of DIVERSA that predate this IE R&D
Agreement but which patent rights are necessary for the LLC to make,
use or sell the Licensed Products; and (iii) any divisions,
continuations, continuations-in-part, reissues, reexaminations,
extensions or other governmental actions which extend any of the
subject matter of the patent applications or patents in (i) or (ii)
above, and any substitutions, confirmations, patents-of-addition,
registrations or revalidations of any of the foregoing, in each case,
which are Controlled by DIVERSA during the Research Term and which are
necessary for the LLC to make, have made, use, sell, have sold, export
or import the Licensed Products. All patents and patent
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applications subject to this definition are listed on Appendix B or
will be included on Appendix B by the end of the IE R&D Agreement Term.
1.14 "DIVERSA Research Results" means Research Results invented or
discovered solely by DIVERSA.
1.15 "DOW" means The Dow Chemical Company, having a place of business at
Midland, MI.
1.16 "DOW Know-How" means [***] and other information of any kind (a) which
are conceived, discovered or invented during the Research Term under
the terms of the Development Agreement or (b) which have been
conceived, discovered or invented by DOW prior to this IE R&D
Agreement, and Controlled solely by DOW, which are provided by DOW
under the terms of the CDA Agreement, and which are necessary or
appropriate to develop and commercialize Licensed Products; and does
not include any inventions within the patent rights Controlled by DOW.
All rights to the LLC and DIVERSA regarding the DOW Know-How are
determined solely by the Development Agreement.
1.17 "Effective Date" means the effective date of the LLC Agreement upon the
Signature Date.
1.18 "Enzyme" means [***] provided to the LLC under this IE R&D Agreement by
DIVERSA which is within the claims of DIVERSA Patent Rights or that
incorporates, is derived from, or is identified, discovered, developed
or made through the use of DIVERSA Know-How.
1.19 "FTE" means the equivalent of one full year of work on a full time
basis by a scientist or other professional possessing skills and
experience necessary to carry out the R&D Program by DIVERSA,
determined in accordance with DIVERSA's normal policies and procedures.
1.19 "LLC Agreement" means the Limited Liability Company Agreement executed
between DOW and DIVERSA, having an effective date of June 29, 2000,
establishing a joint venture to market enzymes to the industrial enzyme
marketplace.
1.20 "LLC License" means the Industrial Enzyme License Agreement as
described in Section 5.1 hereof.
1.21 "Licensed Enzyme" means any Enzyme which is used in Approved Fields and
which is identified, discovered, or developed under this IE R&D
Agreement and which is designated by the Board of Directors to be
licensed under the LLC License and listed on Appendix F attached
hereto, and encompassed within DIVERSA Patent Rights and listed on
Appendix B-1 or B-2, which is attached hereto and made a part hereof.
1.22 "Licensed Product" means any product containing or consisting of a
Licensed Enzyme.
1.23 "Materials" mean any Enzyme as a sample, formulated product, or in any
tangible form provided by DOW on behalf of the LLC to DIVERSA under the
CDA Agreement.
1.24 "MTA" means a material transfer agreement for exchange of any Materials
or DIVERSA Know-How to any Third Party by DIVERSA or the LLC, a copy of
which is attached hereto as Appendix E.
1.25 "R&D Program" means the research and development program to be
conducted during the Research Term by DIVERSA pursuant to Article 2, as
more fully described in the Work Plans.
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1.26 "Research Committee" or "RC" means the scientific personnel from
DIVERSA and at least one person from the LLC that oversees the R&D
Program.
1.27 "Research Data" means all data, sequences and any other information
obtained or developed in the course of performance of the R&D Program.
1.28 "Research Management Committee" or "RMC" means the committee created
pursuant to the LLC Agreement.
1.29 "Research Materials" mean all tangible property obtained or developed
in the course of performance of the R&D Program, including but not
limited to Enzymes.
1.30 "Research Project Flow Chart" means a chart as Appendix G, attached
hereto for reference, to aid in understanding the efforts made under
this IE R&D Agreement and the transfers intended from libraries to
Enzymes to Licensed Enzymes to Licensed Product.
1.31 "Research Results" means Research Data and Research Materials.
1.32 "Research Term" means the period commencing on the Signature Date and
continues until the fifth (5th) anniversary of the Effective Date,
unless earlier terminated in accordance with Section 10.1 or extended
pursuant to Section 2.1.1(h).
1.33 "Signature Date" means the date of last signature to this IE R&D
Agreement.
1.34 "Staffing Level" shall have the meaning set forth in Section 2.1.1(e).
1.35 "Third Party" means any party who is not a Party, or an Affiliate.
1.36 "Work Plans" mean the written plans drafted by the RMC, and approved by
the Board of Directors as an Approved Project, defining the activities
to be carried out, and the budget, for each project within the Approved
Fields during each twelve (12) month period of the R&D Program, as more
specifically detailed in Appendix A-1 attached hereto and made a part
hereof, as modified from time to time by the RMC in its written
minutes. The Work Plan Procedures are provided in Appendix D and shown
in the Research Project Flow Chart in Appendix G, both attached hereto
and made a part hereof.
Article 2. R&D PROGRAM
2.1 Implementation of the R&D Program.
2.1.1 Basic Provisions of Program.
(a) The primary objective of the R&D Program shall be the
identification, development and commercialization of
Licensed Enzymes providing enhanced or new properties
useful in the Approved Fields. The Research Project
Flow Chart in Appendix G indicates the progress
expected to occur under this IE R&D Agreement;
namely, [***]. Once a Licensed Enzyme is identified
then the Development Agreement (as defined in the LLC
License) and other terms of the LLC Agreement pertain
for the remainder of the Chart.
(b) DIVERSA shall use its commercially reasonable efforts
to conduct the activities set forth in the Work
Plans. DIVERSA agrees that [***] as set forth in
[***] the LLC Agreement, which terms are incorporated
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herein by reference. To be [***] with respect to a
particular project, DIVERSA [***].
(c) DIVERSA will [***].
(d) The LLC shall fund and DIVERSA shall provide [***]
over the five year Research Term. In carrying out the
R&D Program, DIVERSA shall [***] ("Staffing Level"),
subject to payment under Section 4.2 herein. The FTEs
shall be paid and used in accord with the provisions
of Section 7.3 (a) of the LLC Agreement. Between the
Signature Date and the end of the year 2000, the
number of FTEs shall be those FTEs approved by the
Board of Directors. Any adjustments to the Staffing
Level shall be made by the Board of Directors. No
more than once per Research Term year, the LLC and
DOW shall have the right to audit, at their expense,
during regular business hours at DIVERSA's place of
business, for the time charging and utilization of
FTEs assigned to the R&D Program.
(e) DIVERSA shall perform all research in accordance with
the Work Plans and if it is necessary to use the
services of a Third Party for DIVERSA to perform such
work under the requirements of the Work Plan, DIVERSA
will contract and fund such services at its own
expense.
(f) DIVERSA will attempt to accommodate any reasonable
request of the Board of Directors, the LLC and DOW to
send or receive personnel for purposes of discussing
the R&D Program. Such visits and access will be at
mutually agreed times, have defined purposes, be of
agreed limited duration, and be scheduled in advance.
The exchange of information between DIVERSA, the LLC
and DOW shall be under the terms of the CDA
Agreement. Each Party shall bear all expenses of
their respective personnel related to these visits.
It is understood that any such visiting LLC personnel
may be subject to reasonable restrictions to protect
intellectual property, including trade secrets,
outside the R&D Program and the rights of Third
Parties, which may include sequestration from
research projects outside of the R&D Program. All
personnel shall abide by the required rules for any
Third Party visiting that Party's site, including,
but not limited to, security, safety, personal
injury, alcohol use and other matters.
(g) DIVERSA shall only use [***] in the R&D Program that,
to the best of DIVERSA's knowledge, [***]. Any use of
[***] in a Work Plan must be specifically mentioned
to the Board of Directors and not present added cost
or obligations to the LLC for its use.
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(h) The Research Term may be extended beyond the initial
five (5) year period (the "Initial Term") as follows:
(i) DOW, at its sole option, may extend the Research
Term under the same terms and conditions set forth
herein, except that the FTEs are paid in accord with
the LLC Agreement (which terms are incorporated
herein by reference) for a [***] period following the
Initial Term (the "First Extension") by providing
written notice to DIVERSA and the LLC at least [***]
prior to the end of the Initial Term; and (ii) if the
Research Term is extended for the First Extension,
the LLC and DIVERSA may extend the Research Term for
an additional [***] period following the First
Extension upon mutual written consent in accord with
the LLC Agreement (which terms are incorporated
herein by reference).
2.1.2 Collaborative Efforts and Reports
(a) The Parties agree that the successful execution of
the R&D Program will require the collaborative use of
both Parties' areas of expertise. The Parties shall
keep the RC fully informed about the status of the
portions of the R&D Program they respectively
perform, including any possible inventions. Without
limiting the foregoing, each Party shall furnish to
the RC annual written reports within thirty (30) days
after the end of each calendar year, describing the
progress of its activities in connection with the R&D
Program in reasonable detail, including at least:
(i) an estimation by DIVERSA of the FTEs used
for each project and the budget used for
each Work Plan, and
(ii) a summary of any testing and development of
Enzymes and Licensed Enzymes and Licensed
Products performed by DIVERSA and the LLC in
accordance with any Approved Project.
The reports described in this Section 2.1.2 (a) shall
describe [***], and shall also contain sufficient
other information to allow a Party to monitor the
other Party's compliance with this IE R&D Agreement.
All reports and information provided under this
Section 2.1.2 (a) shall be deemed Confidential
Information of the Party which provided the
information.
(b) The RC shall promptly inform the RMC of all RC
reports under Section 2.1.2 (a) for further
consideration by the RMC and provide any additional
information requested by the RMC or Board of
Directors so that the RMC may prepare a proposal for
its approval as an Approved Project to the Board of
Directors.
2.1.3 Records.
During the Research Term and continuing for a period of [***]
years thereafter, and/or as required by regulatory bodies,
DIVERSA and the LLC shall maintain records of the R&D Program
(or cause such records to be maintained), both in notebooks
and electronic forms that are generated for the R&D Program
that are separate from any Third Party information, in
sufficient detail and good scientific manner as will properly
reflect all work done in the R&D Program and results achieved
in the performance of the R&D Program. Each Party shall allow
the other Party to have reasonable access to all pertinent
Research Data generated by or on behalf of such Party with
respect to each Licensed Enzyme and Licensed Product. These
records may also be provided to DOW, at its request, under the
terms of the CDA Agreement. This retention of records may be
extended if there is a legal proceeding pending (i.e., court
action, or US interference or opposition in any country
involving the Intellectual Property) where those records are
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reasonably required and a written request with the reason is
provided to the Party. Nothing herein shall require, or be
construed to require, that DIVERSA disclose to the LLC any
DIVERSA Know-How, except to the extent necessary for the
commercialization of Licensed Products.
2.1.4 Work Plans.
(a) The LLC, Board of Directors, DIVERSA and DOW may
submit an idea for a project to the LLC. The LLC then
submits the proposed idea to the RMC for preparing a
project proposal for consideration of the project's
technical feasibility by the RMC, the market
opportunity analysis by the LLC, and intellectual
property evaluation by the LLC. The RMC shall then
present its project proposal to the LLC (for example
to the LLC's President or Board of Directors). When
the Board of Directors indicates by its written
minutes that a proposed project should proceed to be
developed in accordance with Section 14.2 of the LLC
Agreement, then that proposal becomes an Approved
Project.
(b) In order to carry out the R&D Program for an Approved
Project, the RMC shall request that the RC draft
detailed Work Plans which contains the items in 2.1.4
(c). These Work Plans shall be in writing and
attached hereto as Appendix A-1. The Work Plans for
each initial project will be agreed to no later than
thirty (30) days after the Signature Date and will be
attached hereto as Appendix A-1 and made a part
hereof. For each twelve-month period during the
Research Term after the period covered by the initial
Work Plans attached hereto as Appendix A-1, Work
Plans shall be prepared by the RC and approved by the
RMC and Board of Directors no later than thirty (30)
days before the end of the then current twelve-month
period. Only Approved Projects may have FTEs
assigned.
(c) Each Work Plan shall set forth [***] in accordance
with the procedures set forth in Appendix D attached
hereto.
(d) Work on each Work Plan will begin within thirty (30)
days of the Board of Directors approval in writing
for each relevant Work Plan. Licensed Enzymes derived
from the research work performed by DIVERSA
hereunder, and designated by the RMC in accordance
with Section 2.2.1, will be listed in Appendix F
attached hereto, and will be delivered to the LLC as
specified in Appendix D.
(e) If the RC, after consultation with the RMC, is unable
to agree as to the terms of a Work Plan for any given
[***] period following the initial twelve-month
period for a Work Plan, by the date provided in
Section 2.1.4 (b), above, then the matter shall be
addressed by the Board of Directors. If the Board of
Directors is unable to resolve the issue, then the
matter shall be addressed as provided in Article 13
below.
(f) The Work Plans may be modified by the RC to satisfy
the requirements of the project, but a written copy
of each revised Work Plan, signed by the chair of the
RC, reviewed by the RMC and approved by the Board of
Directors, shall be supplied to each Party as an
amendment to Appendix A-1.
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2.1.5 Disclosures.
If DIVERSA or the LLC wishes to disclose any Research Results
to a Third Party on a confidential basis (not for
publication), it shall first submit a description of the
proposed disclosure directly to all members of the RMC for
review at least thirty (30) days prior to any such disclosure.
Within thirty (30) days of receipt of such description, the
RMC shall notify DIVERSA or the LLC, as the case may be, of
its approval or denial of such disclosure, provided such
approval shall not be unreasonably withheld. Failure to
provide such notice within the thirty (30)-day period shall be
deemed to be consent to the proposed disclosure.
Notwithstanding the foregoing, subject to Section 2.5, DIVERSA
may provide any Licensed Enzyme under confidentiality terms at
least as strict as this Agreement to a Third Party without the
consent of the RMC or the LLC for use outside the Approved
Fields. DIVERSA shall not provide any Licensed Enzyme for use
in the Approved Fields to any Third Party. The LLC may provide
any Licensed Enzyme under confidentiality terms at least as
strict as this IE R&D Agreement to any Third Party without the
consent of DIVERSA within the Approved Fields.
2.2 Research Committees.
2.2.1 Establishment and Functions of the RC.
(a) DIVERSA and the LLC hereby agree to establish the RC
for the IE R&D Agreement to oversee the R&D Program.
The RC shall act in an advisory capacity to the RMC,
and all projects developed by the RC are subject to
the approval of the RMC and the Board of Directors.
The RC shall inform the RMC of all results as
promptly as possible to enable the further
commercialization efforts of the LLC. When advising
the RMC, the RC shall, among other things, provide
evidence of the technical feasibility of each project
proposed, offer alternative approaches to achieving
the objective of each project, and convey any
disagreements among the Committee Members that relate
to the Project. The RC will act on behalf of the
Parties and will be responsible for the planning,
coordinating, supervising and directing the R&D
Program, and for assisting the RMC in setting forth
research and development objectives, including,
without limitation:
(i) Projects. Determining whether research
projects should be continued as active
projects, and
(ii) Resources. Determining resource allocation
for the R&D Program, so as to insure that
meaningful research and development activity
will be undertaken on all projects in each
12-month period, taking into account that
the overall research and development focus
reflects both technical and commercial
priorities.
(iii) Design and Development of Work Plans. The RC
shall take into account the desires and
directions of the RMC and advise the RMC in
writing on all Work Plans undertaken
pursuant to this IE R&D Agreement in
accordance with the procedures set forth in
Appendix D, attached hereto and made a part
hereof. The design and development of the
Work Plans by the RC will be based on, but
not limited to, [***] and [***]. In
addition, for all Approved Fields which are
not Approved Fields, the RC shall advise the
RMC and Board of Directors whether DIVERSA
is free to collaborate or has previously
granted rights
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to a third party for the particular project
at the time the project is proposed.
(iv) Designation of Licensed Enzymes. Based on
the research and development efforts
undertaken pursuant to Work Plans, the RC
shall recommend to the RMC the selection of
Enzymes for designation as Licensed Enzymes.
Such recommendation shall be accompanied by
an amendment to the relevant Work Plan with
respect to the further evaluation and
commercial development of such Enzymes.
Based on the information received from the
RMC, the Board of Directors shall notify the
RMC in writing whether it accepts such
Enzymes as Licensed Enzymes. Upon acceptance
by the Board of Directors, DIVERSA shall
deliver any Licensed Enzymes under the terms
of the LLC License to the LLC, or if
requested by the LLC to DOW, for evaluation
and commercial development.
(b) Projects. Either Party, DOW or the Board of Directors
may propose projects for a Work Plan. If a Work Plan
for any candidate project within the Approved Fields
is not approved in writing by the Board of Directors
then the terms of Section 3.8 (b) and (c) the LLC
Agreement control what either Party may do with that
project.
2.2.2 RC Membership.
DIVERSA and the LLC each shall appoint, in its sole
discretion, three members to the RC, including a chair
designated by DIVERSA (which may be substituted by another
DIVERSA person at any time by written notice to the LLC prior
to any meeting of the RC). All RC members shall be full time
employees of DIVERSA and the LLC. If either Party desires that
an employee of an Affiliate or a consultant attend an RC
meeting, then such consultant to a Party must be under
confidentiality obligations to that Party having terms at
least a strict as those of this IE R&D Agreement, must be
approved in writing to attend by the other Party, and such
person has no vote in the decisions of the RC. The initial RC
members are identified in Appendix A-2 attached hereto and
made a part hereof, which Appendix shall be updated in writing
from time to time to reflect any changes in RC membership.
2.2.3 Meetings.
The RC shall meet at least quarterly, in San Diego,
California, unless the Parties agree otherwise. The first such
meeting shall be held within thirty (30) days after the
Signature Date at which time the initial Work Plans shall be
finalized. Any additional meetings, other than quarterly
meetings, shall be held at places and on dates selected by the
chair of the RC. RC members may participate in any such
meeting in person, by telephone or by videoconference. In
addition, the RC may act without a formal meeting by a written
memorandum signed by the chair of the RC with consensus of all
other RC members. Subject to the obligations set forth in
Article 6, other full-time employees of each Party, in
addition to the members of the RC, may attend RC meetings as
non-voting observers at the invitation of either Party with
the prior written approval of the other Party.
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2.2.4 Minutes.
The RC shall keep minutes of its meetings that record all
decisions and all actions recommended or taken. The Party
hosting the meeting shall be responsible for the preparation
of the meeting agenda and the LLC shall be responsible for the
preparation and circulation of the draft minutes. Draft
minutes shall be delivered by mail, electronic mail or
facsimile to each RC member within twenty (20) days after each
meeting. Any intellectual property issues that may need
attention will be highlighted and forwarded to each Party's
patent coordinator. Draft minutes shall be edited by the chair
and shall be issued in final form only with his/her approval
and agreement as evidenced by his/her signature on the
minutes. A copy of the signed minutes shall be retained in
each Party's files for at least five (5) years after
termination of this IE R&D Agreement.
2.2.5 Quorum; Voting; Decisions.
At each RC meeting, at least two members appointed by each
Party shall constitute a quorum and decisions shall be made by
unanimous vote. If the RC is unable to reach agreement on any
matter, such dispute shall be settled pursuant to Article 13
below.
2.2.6 Expenses.
DIVERSA and the LLC shall each bear all expenses of their
respective RC members related to their participation on the RC
and attendance at RC meetings.
2.3 Third Party Licenses.
2.3.1 LLC Responsibility.
In the event that the DIVERSA or the LLC can reasonably
demonstrate that infringement of a Third Party's patent rights
would reasonably result from the LLC's performance under a
Work Plan, then that party shall so notify the other. In the
event that it is necessary to acquire any Third Party license
for the LLC to perform its obligations under the R&D Program
with regard to materials provided to or on behalf of the LLC,
including, without limitation, any gene provided to the LLC,
the LLC will be responsible for the payment of any amounts due
to Third Parties for the license of intellectual property
necessary for the performance of the R&D Program with regard
to such materials and the costs of negotiating and preparing
any such license. The decision whether such a license is
required shall be solely the LLC's, and DIVERSA shall be
notified of that decision. In the event that DIVERSA disagrees
with the decision of the LLC and DIVERSA believes that it is
at risk to perform a Work Plan, DIVERSA may notify the LLC,
and the relevant Work Plan may be modified or terminated by
the LLC. The LLC may, at its discretion and expense, then work
with a Third Party for such Work Plan.
2.3.2 DIVERSA Responsibility.
In the event that it is necessary to acquire any Third Party
license for DIVERSA to perform its obligations under the R&D
Program DIVERSA will be responsible for the payment of any
amounts due to Third Parties for the license of intellectual
property necessary for the performance of the R&D Program with
regard to materials and the costs of negotiating and preparing
any such license. The decision whether such a license is
required shall be solely DIVERSA's, and the LLC shall be
notified of that decision.
In the event that DIVERSA does not obtain the Third Party license
(whether by choice or otherwise), then the LLC may require either that
the material or other information or act cease being used in the R&D
Program or the LLC may obtain a license for itself.
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2.4 Infringement Claims.
In the event that LLC or DIVERSA receives a written notice of an
allegation of possible patent infringement from a Third Party or
determines that there is such possible infringement based on the use of
an Enzyme, material or Licensed Enzyme, such Party shall, within thirty
(30) days, notify the other Party in writing and provide an explanation
of the circumstances. DIVERSA may provide a legal memorandum to the LLC
from its counsel, which may be based on a prior written opinion by that
counsel, explaining DIVERSA's position and the basis therefore.
2.5 Post Research Term Cooperation. At least [***] prior to the expiration
of the Research Term, the Parties shall meet to agree on mechanisms for
coordinating and managing activities (including, but not limited to,
patent prosecution and publication review) that will occur after the
expiration of the Research Term which would otherwise be addressed by
the RC. Any patent applications included in DIVERSA Intellectual
Property which have not been filed shall be filed in the first instance
during the IE R&D Agreement Term, and all Parties shall cooperate with
respect to all issues and formal papers. As part of such consideration,
if any research project has not yet resulted in a Licensed Enzyme and
requires reasonable additional development to accomplish such result,
and the RC notifies the LLC, at the RC's last meeting of this further
development request, then if the LLC wishes to continue such research
project with the help of DIVERSA, then DIVERSA agrees to consider in
good faith the terms of such a continuation as proposed by the LLC,
which, in any event, may include the undertaking by DIVERSA to give to
the LLC access to experienced DIVERSA FTEs to be employed in the
diligent continuation of the research project at the same cost as set
forth in this IE R&D Agreement. Notwithstanding the foregoing, in no
event will DIVERSA be obligated to continue any Research Project beyond
the Research Term. Should DIVERSA elect not to continue with such
incomplete research project, then the LLC is permitted to continue such
research project in any manner, including with a Third Party, but
without the use of DIVERSA Intellectual Property.
For [***] after the Agreement Term, the Parties agree to provide
services support for such matters as required (e.g., this Section 2.5)
to the other Parties in accord with a Services Agreement to be executed
subsequently between the Parties as described in the LLC Agreement
(which terms are incorporated herein by reference).
2.6 Research Exclusivity.
During the Research Term, DIVERSA will not collaborate with or license
the rights to any Third Party to use any Licensed Enzyme in the
Approved Fields, so long as the LLC satisfies the diligence obligations
set forth in the Work Plan with respect to the development of the
applicable Licensed Enzyme.
During the Research Term, the LLC will not collaborate with or license
the rights to any Third Party to discover or evolve any enzyme in the
Approved Fields.
Article 3. ASSIGNMENT AND RETAINED RIGHTS
3.1 Assignment.
3.1.1 The LLC. The LLC shall be able to assign its rights under this
IE R&D Agreement to its Affiliate so long as such Affiliate
can perform the obligations for the LLC.
3.1.2 DIVERSA. DIVERSA shall not have the right to assign this IE
R&D Agreement in connection with the transfer or sale of all
or substantially all of the business of DIVERSA to which this
IE R&D Agreement relates, whether by merger, sale of stock,
sale of assets or otherwise, without the prior written consent
of the LLC, which consent would not be unreasonably withheld.
If any Change of Control of DIVERSA occurs during this IE R&D
*CONFIDENTIAL TREATMENT REQUESTED
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Agreement Term, then the Change of Control provisions under
the LLC Agreement shall be applied to this IE R&D Agreement.
3.2 Retained Rights.
3.2.1 DIVERSA shall retain all right, title and interest in and to
the DIVERSA Intellectual Property. The only rights granted to
the LLC and research performed for the LLC are stated in
Article 2 and in the LLC License and the LLC Agreement (which
terms are incorporated herein by reference).
3.2.2 DIVERSA may grant to Third Parties licenses under the DIVERSA
Intellectual Property for use of Licensed Enzymes outside the
Approved Fields; provided, however, that such licenses do not
conflict with any rights granted to the LLC herein or under
the LLC License.
3.2.3 DIVERSA shall retain the right to use [***]. Also, all DIVERSA
Know-How is retained by DIVERSA with the only rights granted
as stated herein.
3.2.4 DIVERSA shall retain the right to use [***]. However, DIVERSA
may not [***].
Article 4. PAYMENTS
4.1 Technology Development and Exclusivity Fees.
The payments due for technology development and exclusivity shall be
made in accord with the terms of the LLC Agreement.
4.2 FTE Payments.
In addition to the other payments due pursuant to this Article 4, the
LLC will pay DIVERSA for the FTEs in the manner described in the LLC
Agreement.
4.3 Consideration.
The Parties hereby acknowledge that the payments under Article 4
constitute sufficient, adequate and sufficient consideration for this
IE R&D Agreement.
Article 5. LLC LICENSE
5.1 LLC License.
The Parties have entered into a LLC License covering Licensed Enzymes
and Licensed Products executed contemporaneously with this IE R&D
Agreement, a copy of which is attached hereto for reference as Appendix
C.
*CONFIDENTIAL TREATMENT REQUESTED
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<PAGE>
5.2 Representations.
DIVERSA hereby represents that:
(a) it is willing and able to grant to the LLC an
exclusive, worldwide license under the DIVERSA
Intellectual Property to use the Licensed Enzymes
solely to make, have made, use, sell, offer for sale
and import Licensed Products (as defined in the LLC
License) in the Approved Fields, and
(b) that to the best of its knowledge, there are no Third
Party licenses required for the LLC to practice the
DIVERSA Intellectual Property.
Article 6. TREATMENT OF CONFIDENTIAL INFORMATION
6.1 Confidentiality.
6.1.1 General.
(a) DIVERSA and the LLC each recognize that the other
Party's Confidential Information constitutes highly
valuable and proprietary confidential information.
Subject to the terms and conditions of Article 8,
DIVERSA and the LLC agree that, except as required by
applicable law, rule or regulation (including the
filing and prosecution of patent applications) or
judicial or administrative order, during the
Agreement Term and for five (5) years thereafter,
unless these terms are modified by the LLC License
after the expiration of the Agreement Term that:
(i) it will keep confidential and will cause its
employees, consultants, and Affiliates, to
keep confidential, all Confidential
Information of another Party that is
disclosed to it, or to any of its employees
or consultants, under or in connection with
this LLC Agreement; and
(ii) neither it nor any of its respective
employees, consultants or Affiliates shall
use Confidential Information of another
Party for any purpose whatsoever, except as
expressly permitted in this IE R&D
Agreement.
(b) Notwithstanding subsection (a) above:
(i) either Party may disclose another Party's
Confidential Information to the extent reasonably
necessary in prosecuting or defending litigation,
complying with applicable governmental regulations or
court orders or otherwise submitting information to
tax or other governmental authorities; provided that,
if a Party is required to make any such disclosure of
another Party's Confidential Information, it will
give reasonable advance notice to the concerned Party
of such disclosure and will use reasonable efforts to
secure confidential treatment of such Confidential
Information (whether through protective orders or
otherwise); and
(ii) the Parties will reasonably cooperate with each
other in the making of reasonable disclosures of
Confidential Information to actual and potential
agents, investment bankers, investors and potential
investors of each Party; provided, however, that such
disclosures shall be critically required for an
investment objective, notice shall be provided to the
Party who owns the Confidential Information to
protect its rights, and only be made under the terms
of a confidentiality agreement providing protections
no less stringent than those contained herein.
(c) CDA Agreement.
The Parties agree that to exchange
Confidential Information between themselves and DOW
under agreements concerning the LLC to which they are
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<PAGE>
not all a party, they will comply with the terms of
the LLC Agreement and the CDA Agreement. The CDA
shall provide protection for exchange of information
that is not otherwise provided under this IE R&D
Agreement and shall control for that Confidential
Information exchange purpose.
(d) MTA.
The Parties agree that to ensure the
exchange of Materials, Enzymes or Licensed Enzymes,
if needed, they will execute a MTA in the form of
attached Appendix E, which shall be attached hereto
and made a part hereof. If the CDA Agreement is
deemed sufficient by the Parties for that exchange,
then an MTA shall not be required.
6.2 Restricted Access.
6.2.1 Disclosure of a Party's Confidential Information to any of the
officers, employees, consultants or agents of the other Party
shall be made only if and to the extent necessary to carry out
rights and responsibilities under this IE R&D Agreement and
shall be limited to the maximum extent possible, consistent
with such rights and responsibilities, and shall only be made
to persons who are bound to maintain the confidentiality
thereof and not to use such Confidential Information except as
expressly permitted by this IE R&D Agreement. If the LLC
discloses any DIVERSA Confidential Information to LLC's
Affiliates, it shall do so under these same terms and
conditions of this Section 6.2.
6.2.2 Under the terms of the CDA Agreement, either DIVERSA or the
LLC may disclose Confidential Information to DOW.
6.2.3 Each Party shall use at least the same standard of care, but
no less than a reasonable standard of care for this industry,
as it uses to protect its own Confidential Information to
ensure that its Affiliates, employees, agents, consultants and
other representatives do not disclose or make any unauthorized
use of Confidential Information of the other Party. Each Party
shall promptly notify the other Party of any unauthorized use
or disclosure of Confidential Information of the other Party.
6.2.4 Within 60 days following termination or expiration of this IE
R&D Agreement, each Party will return to the other Party, or
destroy, upon the written request of the other Party, all
Confidential Information disclosed to it by the other Party
pursuant to this IE R&D Agreement, including all copies and
extracts of documents; provided that a Party may retain
Confidential Information of the other Party relating to any
license under the LLC License or right to use Intellectual
Property that survives such termination and one copy of all
other Confidential Information may be retained in confidential
and inactive legal archives solely for the purpose of
establishing the contents thereof and to determine the
continuing obligations of each Party.
6.3 Employee Confidentiality Agreements.
DIVERSA and the LLC each represent that all of its employees
and any consultants to such Party participating in the R&D
Program or who shall otherwise have access to Confidential
Information of the other Party are bound by written agreements
to maintain such information in confidence and not to use such
information except as expressly permitted herein. Each Party
agrees to enforce confidentiality obligations by which its
employees and consultants are bound.
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<PAGE>
6.4 Publicity.
6.4.1 Except as expressly provided herein, neither Party may
disclose the existence or terms of this IE R&D Agreement
without the prior written consent of the other Parties;
provided, however, that a Party may make such disclosure to
the extent required by law and that either Party may make a
disclosure of the existence of this IE R&D Agreement to its
attorneys, advisers, investors, prospective investors, lenders
and other financing sources, under circumstances that
reasonably ensure the confidentiality thereof.
Notwithstanding the foregoing, the Parties shall mutually
agree upon a press release to announce the execution of this
IE R&D Agreement, together with a corresponding Q&A outline
for use in responding to inquiries about the IE R&D Agreement;
thereafter, the LLC and DIVERSA may each disclose to Third
Parties the information contained in such press release and
Q&A outline without the need for further approval by another
Party. The financial terms of this IE R&D Agreement shall not
be publicly disclosed, except to the extent mutually agreed to
in writing or to the extent required by any Securities and
Exchange Commission filings or regulations, but all financial
terms must be redacted prior to submission.
6.4.2 In addition, DIVERSA may
(i) make public statements regarding Licensed Enzymes by
announcing in general terms the achievement of
results, following consultation with DOW and the LLC,
and with the prior written consent of DOW and the
LLC, and
(ii) without the prior consent of DOW or the LLC, make
public statements, without identifying DOW or the
LLC, regarding the overall success rate(s) achieved
by and/or for its customers with the use of its
technology, including a general description of
activities undertaken in connection with the R&D
Program under this IE R&D Agreement, and success of
such activities.
6.4.3 The LLC is free to make public statements, press releases, and
the like, with respect to Licensed Enzymes and Licensed
Products.
6.5 Publication.
A Party wishing to publish or otherwise publicly disclose its Research
Results shall first submit a draft of the proposed manuscripts
simultaneously to all members of the RMC for review by the other Party
at least 60 days prior to any submission for publication or other
public disclosure. To avoid loss of patent rights as a result of
premature public disclosure of patentable information, the reviewing
Party shall notify the submitting Party in writing within 30 days after
receipt of such proposed disclosure whether the reviewing Party desires
that a patent application be filed on any invention disclosed in such
proposed disclosure. In the event that the reviewing Party desires such
filing, the submitting Party shall withhold publication or disclosure
of such proposed disclosure until the earlier of (i) the date a patent
application is filed thereon, or (ii) the date the Parties determine
after consultation that no patentable invention exists, or (iii) 90
days after receipt by the submitting Party of the reviewing Party's
written notice of the reviewing Party's desire to file such patent
application. If the proposed disclosure contains Confidential
Information of the reviewing Party that is subject to nondisclosure
obligations under this Article 6, the submitting Party agrees to remove
such Confidential Information upon request of the reviewing Party.
Page 15 of 24
<PAGE>
Article 7. INTELLECTUAL PROPERTY RIGHTS
7.1 Disclosure of Inventions.
Each Party shall promptly inform the RMC of all Research Results
relevant to the progress of each Work Plan towards its pre-agreed
goals, in accordance with a procedure established by the RMC.
7.2 Ownership.
All intellectual property rights, which are in possession of either
Party as of the Signature Date, shall remain in the possession of that
Party. No license is implied to any intellectual property rights unless
specifically granted herein or by the LLC License.
Inventorship during the Research Term shall be determined in accordance
with United States patent law and ownership of any inventions arising
during this IE R&D Agreement shall be by assignment to the employer of
the inventor. If the Parties can not agree on inventorship or ownership
of an invention, then a neutral patent attorney acceptable to both
Parties shall make the determination, with each Party equally sharing
the costs.
Article 8. FILING, PROSECUTION AND MAINTENANCE OF PATENT RIGHTS
8.1 Filing and Prosecution of Patents. DIVERSA will be responsible, at its
sole expense, for the patent filing, prosecution and maintenance of its
inventions under Appendix B. Inventions, patent applications, and
patents listed on Appendix B-1 shall be available, upon designation in
accordance with Section 2.2 herein, as a Licensed Enzyme or Licensed
Product under the LLC License. Inventions, patent applications, and
patents listed on Appendix B-2 shall be available, if necessary, for
the Approved Fields as a grant for either a hold harmless from
prosecution to the LLC or as a non-exclusive license for a Licensed
Enzyme or Licensed Product under the terms of the LLC License.
8.2 Cooperation. Each Party shall use reasonable efforts to obtain patent
coverage that is as broad as possible to cover all potential commercial
applications thereof. The Parties and DOW agree to cooperate in the
decisions on where, when and how to file patent applications under
Appendix B-1 to maximize the patent portfolio available for Licensed
Enzymes and Licensed Products.
Article 9. LEGAL ACTION
9.1 Actual or Threatened Infringement.
In the event either Party becomes aware anywhere in the world of any
actual or threatened commercially material infringement or unauthorized
possession, knowledge or use of any DIVERSA Patent Rights
(collectively, an "infringement"), that Party shall, within sixty (60)
days, notify the other Party and provide it with all available details
to the extent it is legally permitted to do so. The Parties will meet
to discuss the appropriate course of action, and may collaborate in
pursuing such course or action.
The Parties shall notify the Board of Directors of such information and
their course of action.
9.2 Defense of Claims Asserted by Third Parties Against the LLC. The LLC
shall indemnify DIVERSA for the development, manufacture, use,
handling, storage, sale, or other disposition of the Licensed Products
by the LLC or its Affiliates during the Agreement Term.
Page 16 of 24
<PAGE>
9.3 Defense of Claims Asserted by Third Parties Against DIVERSA.
DIVERSA shall indemnify the LLC for the development, use, handling,
storage, or other disposition of the Licensed Enzyme by DIVERSA or its
Affiliates during the Agreement Term.
9.4 Notice.
The LLC or DIVERSA shall notify the other in accord with Section 14.1
of any suits or claims or proceedings brought against it with regard to
the patents listed on Appendices B-1 and B-2 or under Sections 9.2 or
9.3.
Article 10. TERMINATION AND DISENGAGEMENT
10.1 Term.
This IE R&D Agreement shall be effective as of the Signature Date and,
unless otherwise terminated earlier pursuant to the LLC Agreement and
shall continue in full force and effect until the end of the Agreement
Term.
If DIVERSA and LLC do not receive written notice that DOW elects to
extend the Research Term pursuant to Section 2.1.1(h), the Parties
agree to negotiate in good faith an orderly wind-down of the research
performed and funding paid following the end of the Initial Term.
10.2 Change of Control.
The Parties shall have the right to terminate this IE R&D Agreement
upon a Change of Control of DIVERSA in the manner described in the LLC
Agreement, which is incorporated herein by reference.
10.3 Material Breach.
In the event that either Party commits a material breach of any
obligations under this IE R&D Agreement and such Party fails to (a)
remedy that breach within ninety (90) days after receiving written
notice thereof from the non-breaching Party, (b) to commence dispute
resolution under Article 13 within ninety (90) days after receiving
written notice thereof from the non-breaching Party, then the
non-breaching Party shall begin dispute resolution under Article 13.
Material Breach includes failure to make any payments when due.
10.4 Effect of Termination; Accrued Obligations.
Termination of this IE R&D Agreement for any reason shall not release
any Party hereto from any liability which, at the time of such
termination, has already accrued to the other Party or which is
attributable to a period prior to such termination, nor preclude either
Party from pursuing any rights and remedies it may have hereunder or at
law or in equity which accrued or are based upon any event occurring
prior to such termination.
10.5 Surviving Provisions.
On termination of this IE R&D Agreement: the obligations of
confidentiality set forth in Sections 6.1 and 6.2 shall survive for the
time stated therein; export control compliance set forth in Section
14.13 shall survive; the indemnification obligations set forth in
Article 12 and Third Party infringement claims set forth in Section 2.4
and Article 9 shall survive as to all claims or actions arising from
events which occurred before termination. Article 13 shall survive
termination of this IE R&D Agreement so long as any disputes arising
prior to such termination exist. Section 7.2 of this IE R&D Agreement
shall survive the expiration or termination of this IE R&D Agreement
for any reason.
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<PAGE>
Article 11. REPRESENTATIONS AND WARRANTIES
11.1 Mutual Representations.
DIVERSA and the LLC each represents and warrants as follows:
11.1.1 Organization.
It is a corporation or company duly organized, validly
existing and is in good standing under the laws of Delaware
(its state of incorporation or organization), is qualified to
do business and in good standing as a foreign corporation in
each jurisdiction in which the performance of its obligations
hereunder requires such qualification and has all requisite
power and authority, corporate or otherwise, to conduct its
business as now being conducted, to own, lease and operate its
properties and to execute, deliver and perform this IE R&D
Agreement.
11.1.2 Authorization.
The execution, delivery and performance by it of this IE R&D
Agreement have been duly authorized by all necessary corporate
action and do not and will not: (a) require any consent or
approval of its stockholders or (b) violate any provision of
any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award presently in effect having
applicability to it or any provision of its charter documents.
11.1.3 Binding Agreement.
This IE R&D Agreement is a legal, valid and binding obligation
of it, enforceable against it in accordance with its terms and
conditions.
11.1.4 Warranty Disclaimer.
The Parties acknowledge that the research activities
contemplated under the IE R&D Agreement are experimental, and
that the R&D Program may not be successful. EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED IN THIS IE R&D AGREEMENT AND ITS
ATTACHED AND REFERENCED AGREEMENTS, NEITHER PARTY MAKES ANY
REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED,
WITH RESPECT TO ANY CONFIDENTIAL INFORMATION, PATENT RIGHTS,
KNOW-HOW, ENZYMES, LICENSED ENZYMES, LICENSED PRODUCTS,
MATERIALS OR OTHER TECHNOLOGY, GOODS, SERVICES, RIGHTS OR
OTHER SUBJECT MATTER OF THIS IE R&D AGREEMENT AND HEREBY
DISCLAIMS ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, NON-INFRINGEMENT, OR VALIDITY OF
TECHNOLOGY OR PATENT CLAIMS, ISSUED OR PENDING, WITH RESPECT
TO ANY AND ALL OF THE FOREGOING.
11.1.5 Limited Liability.
EXCEPT AS EXPRESSLY PROVIDED HEREIN, NEITHER DIVERSA NOR THE
LLC WILL BE LIABLE TO THE OTHER PARTY WITH RESPECT TO ANY
SUBJECT MATTER OF THIS IE R&D AGREEMENT UNDER ANY CONTRACT,
NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE
THEORY FOR (a) ANY SPECIAL, INDIRECT, INCIDENTAL,
CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST PROFITS OR (b) COST
OF PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY OR SERVICES.
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<PAGE>
Article 12. INDEMNIFICATION
12.1 Indemnification.
Neither Party shall indemnify the other Party nor its Affiliates, or
respective officers, directors, employees and agents and its respective
successors, heirs and assigns ("Indemnitees") except for Sections 9.2
and 9.3, its respective gross negligence, or failure to perform using
its reasonable best efforts under the Work Plans. This paragraph does
not limit either Party's other remedies available to it under the law.
12.2 Procedure.
A Party that intends to claim indemnification under this Article 12
(the "Indemnitee") shall promptly notify the other Party (the
"Indemnitor") in writing of any loss, claim, damage, liability or
action in respect of which the Indemnitee or any of its Affiliates or
their directors, officers, employees, agents, consultants or counsel
intend to claim such indemnification, and the Indemnitor shall have the
right to participate in, and, to the extent the Indemnitor so desires,
to assume the defense thereof with counsel of its own choice.
The indemnity agreement in this Article 12 shall not apply to amounts
paid in settlement of any loss, claim, damage, liability or action if
such settlement is made without the consent of the Indemnitor, which
consent shall not be withheld unreasonably. The failure to deliver
written notice to the Indemnitor within a reasonable time after the
commencement of any such action, if prejudicial to its ability to
defend such action, shall relieve such Indemnitor of any liability to
the Indemnitee under this Article 12.
At the Indemnitor's request, the Indemnitee under this Article 12, and
its employees and agents, shall cooperate fully with the Indemnitor and
its legal representatives in the investigation and defense of any
action, claim or liability covered by this indemnification and provide
full information with respect thereto.
Article 13. DISPUTE RESOLUTION
13.1 Informal Dispute Resolution.
13.1.1 Senior Officials.
The Parties recognize that a bona fide dispute as to certain
matters may from time to time arise during the Agreement Term,
which relates to either Party's rights or obligations
hereunder. In the event of the occurrence of such a dispute,
either Party may, by written notice to the other Party, have
such dispute referred to the Chief Executive Officer of
DIVERSA and the Chairman of the Board of Directors, or their
successors or counterparts, for resolution by good faith
negotiations ,within sixty (60) days after such notice is
received, at a mutually convenient location or by telephonic
or video conferencing.
13.1.2 Interim Conduct.
If the Parties are unable to reach agreement with respect to a
Work Plan pursuant to Section 13.1.1, then such dispute if it
relates to a Work Plan shall be referred first to the RMC and
then the Board of Directors, if still unresolved it shall be
resolved as described in Section 13.2 below. Any disputes
other than a Work Plan that are still unresolved after Section
13.1 shall be resolved according to Section 13.2 below.
13.2 Arbitration.
Any dispute under this IE R&D Agreement, except one that arises with
respect to determination of the projects or other disputed matters,
which is not settled by mutual consent pursuant to
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<PAGE>
Section 13.1, shall be finally settled by binding arbitration,
conducted in accordance with the Commercial Arbitration Rules of the
American Arbitration Association (or such rules as are appropriate to
the dispute) by three (3) independent, neutral arbitrators having at
least 15 years of experience in the areas of the contested issues and
appointed in accordance with said rules. Each Party shall select one
arbitrator with the two arbitrators selecting the third. The procedures
or rules for the arbitration may be modified by mutual consent of the
Parties, including having mediation rather than arbitration conducted.
Any arbitration shall be in English held in Chicago, Illinois. The
arbitrators shall determine what discovery shall be permitted,
consistent with the goal of limiting the cost and time that the Parties
must expend for discovery; provided, however, that the arbitrators
shall permit such discovery, as they deem necessary to permit an
equitable resolution of the dispute. Any written evidence originally in
a language other than English shall be submitted in English translation
accompanied by the original or a true copy thereof. Except as otherwise
expressly provided in this IE R&D Agreement, the costs of the
arbitration, including administrative and arbitrator fees, shall be
shared equally by the Parties and each Party shall bear its own costs
and attorneys' and witness' fees incurred in connection with the
arbitration.
A disputed performance or suspended performance(s) pending the
resolution of the arbitration must be completed within a reasonable
time period following the final decision of the arbitrators.
Any arbitration subject to this Article 13 shall be completed within
one year from the filing of notice of a request for such arbitration
and a written decision with reasons therefore provided to the Parties.
Any decision shall be deemed confidential and not disclosed to any
Third Party. Should a Party believe that reporting the decision is
required by governmental regulation, then the Parties shall mutually
agree as to the content of such report.
Any decision which requires a monetary payment shall require such
payment to be payable in United States dollars, free of any tax or
other deduction.
The Parties agree that the decision shall be the sole, exclusive and
binding remedy between them regarding any and all disputes,
controversies, claims and counterclaims presented to the arbitrators.
If a decision is not complied with by a Party, then any award or
decision may be entered in a court of competent jurisdiction for a
judicial recognition of the decision and an order of enforcement.
Article 14. MISCELLANEOUS
14.1 Notices.
All notices (including, but not limited to, legal matters and copies of
the signed RMC minutes) shall be in writing mailed via certified mail,
return receipt requested, or overnight express mail, courier providing
evidence of delivery, addressed as follows, or to such other address as
may be designated by notice so given from time to time:
If to LLC: NEW VENTURE LLC
10665 Sorrento Valley Road
San Diego, California 92121
Attention:
If to DIVERSA: DIVERSA CORPORATION
10665 Sorrento Valley Road
San Diego, California 92121
Attention: Chief Executive Officer
Notices shall be deemed given as of the date received.
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<PAGE>
If the notice relates to scientific matters, such as the RMC, a Work
Plan, or a project, the notice for the Parties is to be supplied and
received in the manner described above but sent to:
If to LLC: LLC
Attention:
If to DIVERSA: DIVERSA CORPORATION.
10665 Sorrento Valley Road
San Diego, California 92121
Attention: Jay M. Short, Ph.D.
14.2 Governing Law and Jurisdiction.
This IE R&D Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without regard to the
application of principles of conflicts of law.
14.3 Binding Effect.
This IE R&D Agreement shall be binding upon and inure to the benefit of
the Parties and their respective legal representatives, successors and
permitted assigns.
14.4 Headings.
Section and subsection headings are inserted for convenience of
reference only and do not form a part of this IE R&D Agreement.
14.5 Counterparts.
This IE R&D Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
14.6 Amendment; Waiver.
This IE R&D Agreement may be amended, modified, superseded or canceled,
and any of the terms may be waived, only by a written instrument
executed by each Party or, in the case of waiver, by the Party or
Parties waiving compliance. Nevertheless, Appendix A may be amended by
the signature of the chairperson of the RMC to a revised Appendix,
which must then be supplied to the persons for notice under Section
14.1, Appendices D and G may be amended by signature of the chair of
the RMC and approval by the Board of Directors and Appendices B-1 and
B-2 may be amended by the signatures of both patent coordinators. The
delay or failure of any Party at any time or times to require
performance of any provisions shall in no manner affect the rights at a
later time to enforce the same. No waiver by any Party of any condition
or of the breach of any term contained in this IE R&D Agreement,
whether by conduct, or otherwise, in any one or more instances, shall
be deemed to be, or considered as, a further or continuing waiver of
any such condition or of the breach of such term or any other term of
this IE R&D Agreement.
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14.7 No Agency or Partnership.
Nothing contained in this IE R&D Agreement shall give either Party the
right to bind the other Party, or be deemed to constitute either Party
as an agent for the other Party or as a partner with the other Party or
any Third Party.
14.8 Assignment and Successors.
Except as expressly provided herein, this IE R&D Agreement may not be
assigned by either Party without the prior written consent of the other
Party, except that each Party may, without such consent, assign this IE
R&D Agreement and the rights, obligations and interests of such Party,
in whole or in part, to any of its Affiliates in accord with Article 3.
If any Change of Control of a Party occurs and an assignment to such
purchaser or other transferee of all or substantially all of its assets
in the line of business to which this IE R&D Agreement pertains, or to
any successor corporation resulting from any merger or consolidation of
such Party with or into another entity, then the terms for Change of
Control in the LLC Agreement control, including the possibility of
immediate termination of this IE R&D Agreement or the buy out by DOW of
DIVERSA's interest in the LLC. In the event of any merger or
consolidation by a Party into another entity, such Party shall promptly
notify the other Party in writing of such merger or consolidation and
the obligations under this IE R&D Agreement shall be maintained and
performed by the successor entity unless modified in accord with
Section 14.6.
14.9 Force Majeure.
Neither the LLC nor DIVERSA shall be liable to the other Party for
failure of or delay in performing obligations set forth in this IE R&D
Agreement, and neither shall be deemed in breach of its obligations, if
such failure or delay is due to natural disasters or any other cause
beyond the reasonable control of a Party, and notice of such prevention
of performance is promptly provided by the non-performing Party to the
other Party. Such excuse shall be continued so long as the condition
constituting force majeure continues and the non-performing Party takes
reasonable efforts to remove the condition. In event of such force
majeure, the Party affected thereby shall use reasonable efforts to
cure or overcome the same and resume performance of its obligations
hereunder.
14.10 Interpretation.
The Parties hereto acknowledge and agree that: (i) each Party and its
counsel reviewed and negotiated the terms and provisions of this IE R&D
Agreement and have contributed to its revision; (ii) the rule of
construction to the effect that any ambiguities are resolved against
the drafting Party shall not be employed in the interpretation of this
IE R&D Agreement; and (iii) the terms and provisions of this IE R&D
Agreement shall be construed fairly as to all Parties hereto and not in
favor of or against any Party, regardless of which Party was generally
responsible for the preparation of this IE R&D Agreement.
14.11 Integration: Severability.
This IE R&D Agreement (including the Appendices attached hereto)
together with the Confidentiality and Transfer Agreement executed
between the LLC, DIVERSA and DOW, the LLC License and the LLC
Agreement, all having the same effective date, sets forth all of the
agreements and understandings between the Parties with respect to the
subject matter hereof and supersedes all other agreements and
understandings between the Parties with respect to the same.
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If any provision of this IE R&D Agreement is or becomes invalid or is
ruled invalid by any court of competent jurisdiction or is deemed
unenforceable, it is the intention of the Parties that the remainder of
this IE R&D Agreement shall not be affected. If possible, the invalid
provision shall be replaced with a valid provision, which meets the
intent of the Parties.
14.12 Approvals.
The LLC shall be responsible, at its expense, for obtaining any
approvals from governmental entities which may be required under
applicable law for the development of Licensed Products, and shall use
its best efforts to obtain all necessary approvals as soon as
reasonable. DIVERSA shall be responsible, at its expense, for obtaining
any approvals from governmental entities which may be required under
applicable law for the shipment of Licensed Enzymes to the LLC, or to
DOW on behalf of the LLC, to perform its obligations under the R&D
Program.
14.13 Export Controls and Compliance with Laws.
This IE R&D Agreement is made subject to any restrictions concerning
the export of Licensed Products, Research Results or Intellectual
Property (collectively, "Technology") from the United States that may
be imposed upon either Party from time to time by laws or regulations
of the United States. Neither Party will export, directly or
indirectly, any Technology to any country for which the United States
government or any agency thereof at the time of export requires an
export license or other governmental approval, without first obtaining
the written consent to do so from the Department of Commerce, Bureau of
Export Administration, or other agency of the United States government
when required by applicable statute or regulation. The Parties agree to
comply with all local and state laws and regulations as well as any
applicable treaties, such as the Chemical and Biological Warfare
Treaty, that may regulate the Licensed Enzyme or License Product.
14.14 LLC Consent.
The LLC hereby consents to be bound by the recited provisions of the
LLC Agreement in this IE R&D Agreement.
IN WITNESS WHEREOF, the Parties have caused this IE R&D Agreement to be
executed in duplicate as of the last signature date below, by their duly
authorized representatives. This IE R&D Agreement may be signed in separate
counterparts by facsimile. This IE R&D Agreement is intended to be signed
concurrently with the LLC License and shall not be effective until the LLC
License has also been executed by both Parties.
LLC
Date: June 29, 2000 By: /s/ Fernand Kaufmann
------------------------------ ---------------------------------
Fernand Kaufmann
Member, Board of Directors
DIVERSA CORPORATION
Date: June 29, 2000 By: /s/ Jay M. Short, Ph.D.
------------------------------ ---------------------------------
Jay M. Short, Ph.D.
Chief Executive Officer
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Enclosures:
Appendix A1: Work Plans
Appendix A-2: RC Membership
Appendix B-1: DIVERSA Patent Rights during the IE R&D Agreement Term under the
Work Plans
Appendix B-2: DIVERSA Patent Rights that predate this IE R&D Agreement
Appendix C: LLC License
Appendix D: Work Plan Procedures
Appendix E: Material Transfer Agreement
Appendix F: Licensed Enzymes
Appendix G: Research Project Flow Chart
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*CONFIDENTIAL TREATMENT REQUESTED