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COLLABORATION AND LICENSE AGREEMENT
Dated as of
September 1, 1998
By and Among
THE DOW CHEMICAL COMPANY
DOW AGROSCIENCES LLC
AND
BIOSOURCE TECHNOLOGIES, INC.
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TABLE OF CONTENTS
1. DEFINITIONS..............................................................2
2. SCOPE AND STRUCTURE OF THE COLLABORATION................................12
3. GRANTS OF RIGHTS........................................................12
4. CONDUCT OF PARTIES DURING THE RESEARCH COLLABORATION....................20
5. DISCOVERY, DEVELOPMENT AND MARKETING EFFORTS............................26
6. PAYMENTS................................................................28
7. INTELLECTUAL PROPERTY...................................................43
8. RESEARCH MATERIALS......................................................53
9. CONFIDENTIALITY.........................................................54
10. REPRESENTATIONS, WARRANTIES AND COVENANTS...............................56
11. INDEMNITY...............................................................60
12. TERM AND TERMINATION....................................................62
13. PROVISIONS FOR INSOLVENCY...............................................66
14. MISCELLANEOUS...........................................................67
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COLLABORATION AND LICENSE AGREEMENT
THIS COLLABORATION AND LICENSE AGREEMENT (the "Agreement") is dated
as of September 1, 1998 (the "Effective Date") and is made by and among
BIOSOURCE TECHNOLOGIES, INC., a corporation having its principal place of
business at 3333 Vaca Valley Parkway, Vacaville, California 95688 ("Biosource"),
THE DOW CHEMICAL COMPANY, a Delaware corporation having its principal place of
business at 2030 Willard H. Dow Center, Midland, Michigan 48674 ("TDCC"), and
DOW AGROSCIENCES LLC, a Delaware limited liability company having its principal
place of business at 9330 Zionsville Road, Indianapolis, Indiana 46268 ("DAS").
Biosource, TDCC and DAS are sometimes referred to herein individually as a
"party" and collectively as the "parties".
R E C I T A L S
WHEREAS, Biosource has developed technologies relating to the
identification and characterization of genetic materials, and has developed or
acquired certain rights, technologies, data and materials potentially useful in
the development of products.
WHEREAS, TDCC and DAS desire to obtain access and rights to
Biosource's technologies, and Biosource is willing to provide such access and
grant such rights, on the terms and for the purposes set forth in this
Agreement.
WHEREAS, DAS has developed technologies related to the development,
selection and manufacture of plants.
WHEREAS, Biosource desires to obtain access and rights to DAS's
technologies, and DAS is willing to provide such access and grant such rights,
on the terms and for the purposes set forth in this Agreement.
WHEREAS, TDCC possesses analytical expertise useful to support the
collaborative activities of DAS and Biosource contemplated in this Agreement.
WHEREAS, Biosource, DAS and TDCC desire to collaborate in the fields
defined below on the terms set forth in this Agreement.
NOW, THEREFORE, Biosource, TDCC and DAS agree as follows:
1. DEFINITIONS
For purposes of this Agreement, unless otherwise specifically stated in
this Agreement, the terms defined in this Article 1 shall have the meanings
specified below:
1.1 "Affiliate" means any corporation or other entity which directly or
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indirectly controls, is controlled by or is under common control with a party to
this Agreement. A corporation or other entity shall be regarded as in control of
another corporation or entity if it owns or directly or indirectly controls more
than fifty percent (50%) of the outstanding voting stock or other ownership
interest of the other corporation or entity, or if it possesses, directly or
indirectly, the power to manage, direct or cause the direction of the management
and policies of the corporation or other entity or the power to elect or appoint
fifty percent (50%) or more of the members of the governing body of the
corporation or other entity. Any such other relationship as in fact results in
actual control over the management, business and affairs of a corporation or
other entity shall also be deemed to constitute control. Except to the extent
explicitly provided otherwise herein, for purposes of this Agreement, members of
(i) DAS and DAS Affiliates shall not be considered to be Affiliates of members
of (ii) TDCC and Affiliates of TDCC (other than DAS and DAS Affiliates), and
members of (ii) above shall not be considered to be Affiliates of members of (i)
above. In addition, for purposes of this Agreement, Mycogen shall not be
considered to be an Affiliate of TDCC, or a DAS Affiliate, unless and until the
parties agree in writing or as provided in Section 14.15, provided, however, in
either case Mycogen itself must accept the obligations of an Affiliate
hereunder.
1.2 "Agricultural Value-Added" means, in respect of Products that
constitute seed or agrochemicals, as applicable (i) the incremental value-added
or measurable Trait premium associated with a Product Trait, net of additional
costs associated with the manufacture of the Product, when a party sells such
Product directly, and (ii) the revenue received by a party from licensees or
sublicensees which is attributable to the value-added or measurable Trait
premium associated with a Product Trait. Calculation of Agricultural Value-Added
is more specifically described in Exhibit B.
1.3 "Alliance Gene" means any nucleotide sequence or fragment thereof
that encodes for a Trait in plants, either alone or in conjunction with other
encoding sequences, and including antisense or co-suppression use thereof, which
is discovered, designed, selected, identified or modified in the course of the
Research Collaboration, but excluding the genes, nucleotide sequences or
fragments therefrom of Photorhabdus, Xenorhabdus, Bacillus thuringiensis, and
Saccharopolyspora spinosa or those covered by or derived by use of Demeter
Technology, provided that these excluded genes, nucleotide sequences and
fragments were identified without use of Discovery Technology Owned by
Biosource.
1.4 "Annual Research Plan" means the plan to be developed by Biosource
and approved by the Research Committee for each Contract Year, as described in
Section 4.5.4. A summary of the Annual Research Plan being considered by the
parties for the first Contract Year during the Research Collaboration is set
forth in Schedule I hereto.
1.5 "Biosource Agricultural Cumulative Investment" means the total
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cumulative amount of: (i) all expenses incurred and capital dedicated by
Biosource and its Affiliates during the term of this Agreement (including, but
not limited to internal expenses and capital, all payments to TDCC under this
Agreement, and amounts paid to Third Parties for research or other services, but
excluding the cost of sponsored research described in Section 6.3.1 and all
other expenses of Biosource reimbursed by TDCC), to support the discovery,
development, commercialization and manufacture of Biosource Products comprising
agrochemicals or seed, excluding Biosource Products in the Nicotiana Field and
the Pharmaceutical Field); (ii) reduced by the cumulative Value-Added by
distinct Traits derived from one or more Alliance Genes in Biosource Products
that constitute seed; and (iii) the remainder compounded on an annual basis by
the Biosource Cost of Capital.
1.6 "Biosource Cost of Capital" means, as of any date of determination,
the same rate as the TDCC Cost of Capital, established pursuant to Section 1.43.
1.7 "Biosource Crops" means plants grown for forestry and ornamental
horticulture purposes.
1.8 "Biosource Field" means the Pharmaceutical Field; the Nicotiana
Field; all uses of all Biosource Crops (provided that TDCC has not exercised the
option in Section 3.9); and all organisms in the Pharmaceutical Field and the
Nicotiana Field; provided, however, that the "Biosource Field" shall not include
the use of Alliance Genes in TDCC Crops other than for use in the Pharmaceutical
Field.
1.9 "Biosource Industrial Cumulative Investment" means the total
cumulative amount of: (i) all expenses incurred and capital dedicated by
Biosource and its Affiliates during the term of this Agreement (including, but
not limited to internal expenses and capital, all payments to TDCC under this
Agreement, and amounts paid to Third Parties for research or other services, but
excluding the cost of sponsored research described in Section 6.3.1 and all
other expenses of Biosource reimbursed by TDCC), to the discovery, development,
commercialization and/or manufacture of Biosource Products that constitute
Industrial Products (excluding Biosource Products in the Nicotiana Field and the
Pharmaceutical Field); (ii) reduced by the cumulative Value-Added by distinct
Traits derived from one or more Alliance Genes in such Biosource Products; and
(iii) the remainder compounded on an annual basis by the Biosource Cost of
Capital.
1.10 "Biosource Patent Rights" means Patent Rights that cover Technology
which are Owned by Biosource, or licensed by Biosource from Third Parties or its
Affiliates, but only to the extent that transfer or sublicensing is permitted by
agreements with such Third Parties or Affiliates as of the Effective Date or
during the term of this Agreement. For the purposes of this Agreement, the
Patent Rights of Affiliates of Biosource shall be deemed to be Owned by
Biosource, where the Affiliate has granted to Biosource an interest in such
Patent Rights which allows Biosource to treat the Patent
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Rights as it treats its own Patent Rights under this Agreement. Biosource Patent
Rights as of the Effective Date are set forth in Exhibit A.
1.11 "Biosource Product" means a Product in the Biosource Field the
discovery or development of which uses Discovery Technology Owned by DAS, or
Product Technology.
1.12 "Biosource Seed Products" shall have the meaning set forth in
Section 6.5.2.1 hereof.
1.13 "Confidential Information" means information, which is not subject
to an exception in Section 9.2, and relates to one or more of the following:
Annual Research Plan; Biosource Patent Rights; Biosource Product; DAS Patent
Rights; Development Candidate; Discovery Technology; Transient Transformation
Technology Improvements; Overall Research Plan; Product Technology; Production
Technology; TDCC Patent Rights; Technology; Transient Transformation Technology;
Viral Vector Technology; patent strategies; business strategies and
relationships; surveys; forecasts; marketing research; product concepts;
targets; product development processes; any other information and data which may
be made available by another party pursuant to this Agreement and deemed by the
disclosing party to be confidential.
1.14 "Contract Year" means each twelve (12) month period starting on (i)
the Effective Date in the case of the first Contract Year and (ii) the
anniversary of the Effective Date for each subsequent Contract Year.
1.15 "DAS Affiliates" means any corporation or other entity which DAS
directly or indirectly controls. A corporation or other entity shall be regarded
as being controlled by DAS if DAS owns or directly or indirectly controls more
than fifty percent (50%) of the outstanding voting stock or other ownership
interest of the other corporation or entity, or if DAS possesses, directly or
indirectly, the power to manage, direct or cause the direction of the management
and policies of the corporation or other entity or the power to elect or appoint
fifty percent (50%) or more of the members of the governing body of the
corporation or other entity. Any such other relationship as in fact results in
actual control over the management, business and affairs of a corporation or
other entity shall also be deemed to constitute control.
1.16 "DAS Patent Rights" means Patent Rights that cover Technology which
are Owned by DAS, or licensed by DAS from Third Parties or the DAS Affiliates
but only to the extent that transfer or sublicensing is permitted by agreements
with such Third Parties or DAS Affiliates, as of the Effective Date or during
the term of this Agreement. For the purposes of this Agreement, the Patent
Rights of a DAS Affiliate shall be deemed to be Owned by DAS, where such
Affiliate has granted to DAS an interest in such Patent Rights which allows DAS
to treat the Patent Rights as it treats its own under this Agreement. DAS Patent
Rights as of the Effective Date are set forth in
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Schedule II.
1.17 "Demeter Genes" means any genes, nucleotide sequences, proteins or
fragments thereof which are discovered, designed, selected, identified or
modified using Demeter Technology during or prior to the term of the Research
Collaboration and are notified to Biosource by TDCC as "Demeter Genes" as
provided in Section 3.18.
1.18 "Demeter Technology" means (i) genes, nucleotide sequences, proteins
or fragments thereof which are Owned by Demeter Biotechnologies Ltd. or are
licensed to Mycogen by Demeter Biotechnologies Ltd.; and (ii) genes, nucleotide
sequences, proteins or fragments thereof, which are discovered or developed
using anti-microbial technology Owned by Demeter Biotechnologies Ltd. or
licensed to Mycogen, including that covered by U.S. Patent Nos. 5,597,946,
5,597,945; Australian Patent No. 611,859; Canadian Patent No. 1,321,157;
European Patent No. 0 330 655; and Application Nos. U.S. 08/444,762, U.S.
08/453,436; Japanese SHO 62-504491; European 89900103.6 and 93113536.2; or any
provisional, continuation, divisional or continuation-in-part applications; as
well as any patents issued thereon and any reissue or reexamination of such
patents; and patent applications filed in and patents issued by countries other
than the United States and patents of additions and other counterparts of
patents and patent applications in such countries.
1.19 "Discovery Technology" means Technology, Transient Transformation
Technology and Research Materials, including the use of Nicotiana, which is used
for the discovery, design, selection, identification or modification of
nucleotide sequence function, and any improvements thereto discovered or
developed in the course of the Research Collaboration; provided, however, that
Discovery Technology shall not be considered to be Product Technology or
Production Technology.
1.20 "Event of Default" shall have the meanings set forth in Section 12.2
hereof.
1.21 "FDA" means the United States Food and Drug Administration, or the
foreign equivalent for the country in which a particular Product is offered for
sale.
1.22 "First Commercial Sale" of a Product means the first for profit sale
for use or consumption by the general public of a Product.
1.23 "Industrial Products" means all Products including, but not limited
to, synthetic fiber; cosmetics; industrial compounds; industrial antimicrobial
compounds; Nutraceuticals; vitamins; animal health Products; food; feed; natural
and synthetic fiber; chemicals and materials; provided, however, that
agrochemicals, seed, and products (lower case) in the Nicotiana Field and
products (lower case) in the
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Pharmaceutical Field shall not be considered Industrial Products. Industrial
Products may include Products subject to compliance with FDA or USDA
regulations, but do not include Products subject to registration under FDA or
USDA regulations in effect as of the Effective Date for the country in which the
Product is offered for sale, as interpreted by administrative and judicial
decisions, whenever made.
1.24 "Mycogen" means Mycogen Corporation, a California corporation.
1.25 "Net Sales" means the total of: (a) the gross invoice price for
Products sold by a party, less the reasonable and customary accrual-basis
deductions from such gross amounts for: (i) normal and customary trade, cash and
other discounts, allowances and credits; (ii) credits or allowances actually
granted for damaged goods, returns or rejections of Products, consistent with
such party's established policies, and government mandated retroactive price
reductions; and (iii) freight, postage, shipping, customs duties and insurance
charges which are included in the gross invoice amount; and (b) royalties paid
to Third Parties and, in the case of TDCC, to Biosource, and, in the case of
Biosource, to TDCC. In the case of a transfer of Products by: (x) Biosource or
one of its Affiliates to another Affiliate of Biosource; or (y) TDCC, one of its
Affiliates, DAS or a DAS Affiliate to another entity in this same group, Net
Sales shall be determined based on the invoiced sales price for Products upon
the initial transfer to a Third Party customer, less the deductions allowed
under this Section. Every other commercial use or disposition of Products by
Biosource, its Affiliates, TDCC, its Affiliates, DAS, or DAS Affiliates in
barter or other non-monetary commercial transactions, but excluding any sampling
of Products, shall be considered a sale of the Products at the weighted average
Net Sales price for such Products during the preceding quarter in the same
country.
1.26 "Nicotiana Field" means all uses of Nicotiana plants, plant cells,
seeds or seedlings (collectively "Nicotiana") in the Pharmaceutical Field or as
a production host. Nicotiana Field shall not include use of Nicotiana for
cigarettes, cigars, pipe tobacco, chewing tobacco and snuff, and seeds/seedlings
for the production thereof.
1.27 "Non-Agricultural Value-Added" means, in respect of Industrial
Products, as applicable: (a) (i) incremental Net Sales attributable to one or
more measurable Traits used in the production of such Products; (ii) less any
increase in the cost of manufacturing (including depreciation) attributable to
such Traits used in the production of such Products; (iii) less any increase in
selling, general, administrative, research and development costs attributable to
such Traits used in the production of such Products; and (iv) less the cost of
capital spent on assets deployed in the production of such Products; and (b) the
revenue received by a party from licensees or sublicensees which is attributable
to one or more measurable Traits used in the production of Products. Calculation
of Non-Agricultural Value-Added is more specifically described in Exhibit B.
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1.28 "Nutraceutical" means biological or chemical materials for use by
humans and animals which are sold accompanied by only nutritional (and not
medical) claims and therefore would not be subject to registration as a
pharmaceutical by the FDA in the country in which the material is offered for
sale under regulations in effect as of the Effective Date, as interpreted by
administrative and judicial decisions, whenever made.
1.29 "Other Inventions" means an invention developed or discovered solely
or jointly by the parties in the course of the Research Collaboration that is
not Discovery Technology, Product Technology, Production Technology, Viral
Vector Technology, Transient Transformation Technology, and does not use or
express Alliance Genes.
1.30 "Overall Research Plan" means the research plan to be agreed upon by
the Research Committee pursuant to Section 4.5.4 (a) and approved by the
Steering Committee pursuant to Section 4.6.4 (a) hereof. A summary of the
Overall Research Plan contemplated as of the Effective Date is set forth in
Schedule I.
1.31 "Owned" means owned or controlled by the person or entity to whom
ownership is attributed in the context, or licensed by such person or entity
from Third Parties or its Affiliates but only to the extent that transfer or
sublicensing is permitted by agreements with such Third Parties or Affiliates as
of the Effective Date or during the term of the Agreement. For the purposes of
this Agreement, unless stated otherwise, Technology of Affiliates shall be
deemed to be Owned by a person or entity, where the Affiliate has granted the
person or entity an interest in such Technology which allows such person or
entity to treat the Technology as a party treats its own Technology under this
Agreement.
1.32 "Patent Rights" means any United States patent application,
including provisionals, and any divisional, continuation, or
continuation-in-part of such patent application (to the extent the claims are
directed to subject matter specifically described therein), as well as any
patent issued thereon and any reissue or reexamination of such patent, and
patent applications filed in and patents issued by countries other than the
United States and patents of additions and other counterparts of patents and
patent applications in such countries.
1.33 "Pharmaceutical Field" means all uses and all biological materials
and chemical compounds active for the treatment, mitigation, diagnosis or
prevention of disease states and conditions in humans and animals; provided,
however, that the Pharmaceutical Field shall include active material and
compounds for animal uses only which are: (i) Products that are subject to
registration under FDA or USDA regulations in effect as of the Effective Date
for the country in which a particular Product is offered for sale, as
interpreted by administrative and judicial decisions, whenever made, and (ii)
antimicrobial peptide products; and provided, further, that the Pharmaceutical
Field
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shall not include Nutraceuticals nor animal feed Products (other than an animal
feed Product which itself is used as an oral vaccine) that is not subject to
registration under FDA or USDA regulations in effect as of the Effective Date
for the country in which a particular Product is offered for sale, as
interpreted by administrative and judicial decisions, whenever made.
1.34 "Product" means any seed; seedling; plant; plant cell; agrochemical;
industrial chemical; vitamin; Nutraceutical; feed; food; natural or synthetic
fiber; pharmaceutical; animal health products; product, compound, substance or
composition related to or made from plants or produced by microorganisms or
other means; or for the treatment of plants; and which incorporates or is
produced utilizing Product Technology.
1.35 "Product Technology" means (i) Alliance Genes, and protein, protein
fragments, and amino acids sequences encoded therefrom, useful for producing
Products, which are discovered, developed, designed, selected, identified or
modified in the course of the Research Collaboration; or (ii) genes or any
nucleotide sequence or fragment thereof that encodes for a Trait in plants,
either alone or in conjunction with other encoding sequences, and including
antisense or co-suppression use thereof, and protein, protein fragments and
amino acid sequences encoded therefrom, which are discovered, developed,
designed, selected, identified or modified after the end of the Research
Collaboration by TDCC or its permitted sublicensees through the use of Discovery
Technology, or improvements thereon, Owned by Biosource and licensed to TDCC
hereunder. Product Technology does not include: (a) genes, nucleotide sequences,
proteins or fragments thereof discovered, designed, selected, identified or
modified using Demeter Technology; or (b) genes, nucleotide sequences or
fragments thereof of Photorhabdus, Xenorhabdus, Bacillus thuringiensis, and
Saccharopolyspora spinosa which are discovered, designed, selected, identified
or modified using Discovery Technology Owned by Biosource or Transient
Transformation Technology Owned by Biosource. Product Technology shall not be
considered to be Discovery Technology, Production Technology or Transient
Transformation Technology.
1.36 "Production Technology" means Technology (including, but not limited
to, promoters, introns, selectable markers, 3' ends, and nucleotide sequences
and fragments thereof for transformation and expression of genes in plants) and
Research Material, in each case, useful for the development, selection or
manufacture of any plant, plant cell, seed, seedling, plant variety, or hybrid;
and any improvements thereto discovered or developed in the course of the
Research Collaboration; provided, however, that Production Technology shall not
be considered to be Product Technology, Discovery Technology or Transient
Transformation Technology.
1.37 "Provider" shall have the meaning set forth in Section 8.1.
1.38 "Recipient" shall have the meaning set forth in Section 8.1.
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1.39 "Research Collaboration" means the work to be performed by
Biosource, TDCC and/or DAS pursuant to terms of this Agreement in accordance
with the Overall Research Plan and each Annual Research Plan to determine the
function of nucleotide sequences causing Traits in vascular plants. The first
day of the Research Collaboration shall be the Effective Date and it will
continue until terminated pursuant to Article 12.
1.40 "Research Materials" means, biological materials useful in the
Research Collaboration, including but not limited to, plasmids; vectors; cDNA,
proteins, nucleotide sequences, amino acid sequences, and in each case fragments
thereof; and infective RNA; and libraries containing the same.
1.41 "Research Services" means the research services provided by
Biosource to TDCC and DAS under the Overall Research Plan and each Annual
Research Plan.
1.42 "TDCC Agricultural Cumulative Investment" means the total cumulative
amount of: (i) all expenses incurred and capital dedicated by TDCC, its
Affiliates, DAS and the DAS Affiliates during the term of this Agreement
(including, but not limited to internal expenses and capital, all payments to
Biosource under this Agreement, and amounts paid to Third Parties for research
or other services), to support the discovery, development, commercialization and
manufacture of TDCC Products comprising agrochemicals or seed; (ii) reduced by
the cumulative Agricultural Value-Added by distinct Traits derived from one or
more Alliance Genes in TDCC Products that constitute agrochemicals and seed; and
(iii) the remainder compounded on an annual basis by the TDCC Cost of Capital.
1.43 "TDCC Cost of Capital" means, as of the Effective Date, ten and
75/100 percent (10.75%); provided, however, that thereafter the TDCC Cost of
Capital shall be reviewed annually and adjusted, up or down, effective as of the
first day of the following calendar year, to reflect an increase or decrease of
more than one percent (1%) in TDCC's weighted average cost of capital in the
preceding calendar year, as determined and used by TDCC in its financial
planning. TDCC shall notify Biosource of any change in the TDCC Cost of Capital.
1.44 "TDCC Crops" means all plants (including Nicotiana as a plant and
not a production host) other than (i) Biosource Crops, subject however to
Section 3.9, or (ii) Nicotiana as used in the Nicotiana Field.
1.45 "TDCC Field" means (i) all uses of TDCC Crops, for seed, seedlings,
plants, plant cells, agrochemicals, Industrial Products, vitamins,
Nutraceuticals, feed, food, fiber uses, and animal health Products, where animal
health Products are limited to Products that are subject to the United States
Environmental Protection Agency regulations and/or compliance with, but not
registration under, FDA or USDA regulations in effect as of the Effective Date
for the country in which the Product is
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offered for sale, as interpreted by administrative and judicial decisions,
whenever made, and exclude animal health Products in the Pharmaceutical Field;
(ii) the use of Product Technology in TDCC Crops; and (iii) the use of Product
Technology and Production Technology for the production of Products; provided,
however, that the TDCC Field shall not be considered to include uses in the
Biosource Field.
1.46 "TDCC Industrial Cumulative Investment" means the total cumulative
amount: (i) of all expenses and capital dedicated by TDCC, its Affiliates, DAS
and the DAS Affiliates during the term of this Agreement (including, but not
limited to internal expenses and capital, all payments to Biosource under this
Agreement, and amounts paid to Third Parties for research or other services), to
the discovery, development, commercialization and/or manufacture of TDCC
Products that constitute Industrial Products and all other Products not captured
in the definition of Agricultural Cumulative Investment; (ii) reduced by the
cumulative Non-Agricultural Value-Added by distinct Traits derived from one or
more Alliance Genes in such TDCC Products; and (iii) the remainder compounded on
an annual basis by the TDCC Cost of Capital.
1.47 "TDCC Patent Rights" means Patent Rights that cover Technology which
are Owned by TDCC, or licensed by TDCC from Third Parties or its Affiliates but
only to the extent that transfer or sublicensing is permitted by agreements with
such Third Parties or Affiliates as of the Effective Date or during the term of
this Agreement. For the purposes of this Agreement, the Patent Rights of
Affiliates of TDCC shall be deemed to be Owned by TDCC, where the Affiliate has
granted to TDCC an interest in such Patent Rights which allows TDCC to treat the
Patent Rights as it treats its own under this Agreement. TDCC Patent Rights as
of the Effective Date are set forth in Schedule III.
1.48 "TDCC Product" means a Product in the TDCC Field the discovery or
development of which uses Discovery Technology Owned by Biosource or Product
Technology.
1.49 "TDCC Seed Product" shall have the meaning set forth in Section
6.4.2.2.
1.50 "Technology" means any development, idea, design, concept,
technique, process, invention, nucleotide sequence, protein, protein fragment,
discovery, procedure, technical information, know-how, data, nucleotide sequence
data, data base, biological material, robotics, software, bioinformation,
formula, expertise, methods, systems, programs, or trade secrets whether or not
patentable, which relate to the Biosource Field, TDCC Field, other fields of use
of Alliance Genes as described in Section 3.6 and/or Other Inventions.
1.51 "Third Party" or "Third Parties" means any entity or entities other
than Biosource, its Affiliates, TDCC, its Affiliates, DAS and the DAS
Affiliates.
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1.52 "Title 11" has the meaning set forth in Section 13.1.
1.53 "Trait" means any detectable, phenotypic property of a plant
including altered phenotypic properties detected in a vascular plant, caused by
one or more nucleotide sequences.
1.54 "Transient Transformation Technology" means (i) all Research
Materials and other Technology useful for the enhancement or enablement of
transient gene expression; (ii) any use or application of Viral Vector
Technology; and (iii) any improvements discovered thereto in the course of the
Research Collaboration; provided, however, Transient Transformation Technology
shall not be considered to be Product Technology or Production Technology.
1.55 "Transient Transformation Technology Improvements" means an
improvement, enhancement and/or modification to Transient Transformation
Technology Owned by Biosource or its Affiliates.
1.56 "USDA" means the United Stated Department of Agriculture, or the
foreign equivalent for the country in which any Product is offered for sale.
1.57 "Valid Claim" means a claim of a patent application or a patent
which has not been held and no equivalent of which has been held permanently
revoked, unenforceable or invalid by a final decision of a court or other
governmental agency of competent jurisdiction in any country.
1.58 "Viral Vector Technology" means all Technology Owned by Biosource
contained in Biosource Patents Rights, as more fully described in Exhibit A,
know-how, Research Material and other Technology Owned by Biosource related to
such Patent Rights, and any improvements thereto.
2. SCOPE AND STRUCTURE OF THE COLLABORATION
2.1 General. Biosource, TDCC and DAS wish to enter into a collaborative
research program to determine the function of nucleotide sequences causing
Traits in TDCC Crops and develop Products based upon such Traits, as well as
expression of Products in microorganisms and genetically altered microorganisms.
During the term of the Research Collaboration: (i) TDCC shall fund specified
research in accordance with the Overall Research Plan and Annual Research Plans;
(ii) Biosource shall provide agreed Research Services and grant to TDCC
exclusive rights in the TDCC Field to use Discovery Technology Owned by
Biosource for TDCC Products; and (iii) DAS shall participate in the Research
Collaboration in consideration of rights DAS is to be granted by TDCC under
terms of a separate written agreement to develop, use, have used, make, have
made, distribute for sale, sell, offer to sell, use, practice, import and export
specified TDCC Products; all as more specifically described hereinafter.
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2.2 Other Collaborations. Biosource agrees that, during the term of the
Research Collaboration, it will not enter into nor allow its Affiliates to enter
into, any collaboration in the TDCC Field with a Third Party without the written
approval of TDCC. TDCC and DAS acknowledge that Biosource is currently engaged
in certain cooperative research with Third Parties related to Transient
Transformation Technology, which research is outside the TDCC Field.
3. GRANTS OF RIGHTS
3.1 Grants of Discovery Technology Rights to TDCC. Subject to the terms
and conditions of this Agreement, Biosource hereby grants to TDCC and TDCC
accepts worldwide rights in the TDCC Field, with such rights during the term of
the Research Collaboration being exclusive and including the right to grant
sublicenses during the term of the Research Collaboration, to Discovery
Technology Owned by Biosource, and Biosource Patent Rights covering same to
discover and develop TDCC Products or Product Technology. From and after the
expiration of the Research Collaboration, the rights granted to TDCC in the TDCC
Field as set forth in this Section 3.1 to Discovery Technology Owned by
Biosource and related Biosource Patent Rights shall thereafter continue but will
be perpetual, non-exclusive, except for uses in the discovery of genes or
fragments thereof from Photorhabdus, Xenorhabdus, Bacillus thuringiensis, and
Saccharopolyspora spinosa and Demeter Genes which rights shall continue to be
exclusive even after the expiration of the Research Collaboration, and
worldwide; provided, however, that any TDCC Product discovered or developed by
exercise of such rights shall be subject to the milestone and royalty provisions
of Article 6. Once the rights become non-exclusive, TDCC may not thereafter
grant sublicenses in such Discovery Technology rights to a Third Party, except
that the rights and obligations of any sublicenses granted during the Research
Collaboration shall continue and TDCC may also thereafter sublicense its
Affiliates, DAS and DAS Affiliates, and TDCC and parties licensed or sublicensed
by TDCC may use Third Party contract services in the exercise of the rights
granted in this Section 3.1.
3.2 Grant of Production Technology Rights to TDCC. Subject to the terms
and conditions of this Agreement, Biosource hereby grants to TDCC and TDCC
accepts worldwide rights in the TDCC Field, with such rights during the term of
the Research Collaboration being exclusive and including the right to sublicense
during the term of the Research Collaboration, to Production Technology Owned by
Biosource and Biosource Patent Rights covering same, to develop, have developed,
use, have used, make, have made, distribute for sale, sell, offer to sell,
practice, import and export TDCC Products or Production Technology. From and
after the expiration of the Research Collaboration, the rights granted to TDCC
in the TDCC Field to Production Technology Owned by Biosource in the TDCC Field
and related Biosource Patent Rights as set forth in this Section 3.2 shall
thereafter continue but will be perpetual, non-exclusive, except for uses of
Production Technology for inoculation or introduction of genes or fragments
thereof from Photorhabdus, Xenorhabdus, Bacillus thuringiensis,
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and Saccharopolyspora spinosa and Demeter Genes into monocot and dicot plants
which rights shall continue to be exclusive even after the expiration of the
Research Collaboration, royalty-free and worldwide. Once the rights become
non-exclusive, TDCC may not thereafter grant sublicenses in such Production
Technology rights to a Third Party, except that the rights and obligations of
any sublicenses granted during the Research Collaboration shall continue and
TDCC may also thereafter sublicense its Affiliates, DAS and DAS Affiliates, and
TDCC and parties licensed or sublicensed by TDCC may use Third Party contract
services in the exercise of the rights granted in this Section 3.2.
3.3 Grant of Product Technology to TDCC. Subject to the terms and
conditions of this Agreement, Biosource hereby grants to TDCC and TDCC accepts
exclusive, worldwide rights in the TDCC Field, with the right to sublicense, to
Product Technology Owned by Biosource, and Biosource Patent Rights covering
same, to develop, have developed, use, have used, make, have made, distribute
for sale, sell, offer to sell, practice, import and export TDCC Products during
the term of the Research Collaboration. From and after the expiration of the
Research Collaboration, the rights granted to TDCC in the TDCC Field to Product
Technology Owned by Biosource and related Biosource Patent Rights as set forth
in this Section 3.3 shall be perpetual, worldwide and exclusive in the TDCC
Field, with the right to sublicense any entity; provided, however, that any TDCC
Product developed, discovered or manufactured pursuant to such exclusive license
shall be subject to the milestone and royalty provisions of Article 6.
3.4 Grant of Production Technology Rights to Biosource. Subject to the
terms and conditions of this Agreement: (i) DAS hereby grants to Biosource and
Biosource accepts non-exclusive, worldwide rights, in the Biosource Field,
without the right to sublicense except to Biosource Affiliates and as set forth
in clause (b) below, to Production Technology Owned by DAS as set forth on
Schedule II, and DAS Patent Rights covering same; and (ii) TDCC hereby grants to
Biosource and Biosource accepts non-exclusive, worldwide rights in the Biosource
Field, without the right to sublicense except to Biosource Affiliates and as set
forth in clause (b) below, to Production Technology Owned by TDCC which is
discovered or developed in the course of the Research Collaboration and TDCC
Patent Rights covering same; in each case so that Biosource may develop, have
developed, make, have made, use, have used, distribute for sale, sell, offer to
sell, practice, import and export products (lower case); provided, however,
that: (a) the licenses granted under this Section 3.4 to Production Technology
shall be limited to (x) uses in the Pharmaceutical Field, and (y) in the case of
the Nicotiana Field, but outside the Pharmaceutical Field, uses of Production
Technology to enhance Nicotiana as a production host for Products or products
(lower case) that are outside the defined scope of TDCC Crops and TDCC Products,
and uses outside the Pharmaceutical Field which do not compete with those in the
TDCC Field, and (b) Biosource may sublicense to any entity Production Technology
Owned by TDCC or DAS solely when the Production Technology is in a transgenic
plant or seed but no
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license is granted under this Section 3.4 to use or sublicense use of the target
gene to encode for a TDCC Product or products (lower case) the use of which
competes with those of TDCC, its Affiliates, DAS, DAS Affiliates or permitted
sublicensees in the TDCC Field. Except as provided in clause (b) above,
Biosource may not sublicense such rights to a Third Party, but Biosource may
sublicense its Affiliates and may use Third Party contract services in the
exercise of the rights granted in this Section 3.4.
3.5 Grant of Product Technology Rights to Biosource. Subject to the
terms and conditions of this Agreement, TDCC hereby grants to Biosource and
Biosource accepts exclusive, worldwide rights in the Biosource Field, with right
to sublicense, to Product Technology Owned by TDCC which is discovered and
developed in the course of the Research Collaboration and TDCC Patent Rights
covering same, to develop, have developed, use, have used, make, have made,
distribute for sale, sell, offer to sell, practice, import and export Products;
provided, however, that the rights granted under this Section 3.5 to Product
Technology shall be limited to: (x) uses in the Pharmaceutical Field, and (y) in
the case of the Nicotiana Field, but outside the Pharmaceutical Field, uses of
Product Technology to enhance Nicotiana as a production host for Products that
are outside the defined scope of TDCC Crops and TDCC Products, and uses outside
the Pharmaceutical Field which do not compete with those in the TDCC Field. From
and after the expiration of the Research Collaboration, the rights set forth in
this Section 3.5 with respect to Product Technology Owned by TDCC and related
TDCC Patent Rights shall thereafter continue but will be perpetual, exclusive
and worldwide in the Biosource Field, and include the right to sublicense any
entity; provided, however, that any Biosource Product discovered, developed or
manufactured by exercise of such exclusive rights, other than Biosource Products
to be used in the Pharmaceutical Field or in the Nicotiana Field, shall be
subject to the royalty provisions of Article 6.
3.6 Other Fields of Use of Alliance Genes. Biosource hereby grants to
TDCC and TDCC accepts exclusive, perpetual, royalty-bearing worldwide rights,
with the right to sublicense any entity, in any fields of use of Alliance Genes,
other than those in the Pharmaceutical Field, the Nicotiana Field, the TDCC
Field and in Biosource Crops, to develop, have developed, use, have used, make,
have made, distribute for sale, sell, offer to sell, practice, import and export
products (lower case) and services. TDCC and Biosource shall enter into good
faith negotiations when such other uses are identified to determine a royalty
rate and other license terms taking into account the value of the opportunity
and the risk and investment involved.
3.7 Technology from TDCC. Except as specifically provided in Sections
3.4 and 3.5, during the term of the Research Collaboration and thereafter,
neither TDCC nor DAS are obligated to provide Biosource with any Technology to
use in the Research Collaboration or otherwise. TDCC and DAS will not provide
other Technology for use by Biosource in the Research Collaboration, until
Biosource, TDCC and DAS shall have consulted as appropriate to clarify the
rights and obligations
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of Biosource. If it is determined that Biosource does not have rights under
Sections 3.4 or 3.5 to use Technology which is of interest to Biosource, TDCC or
DAS, whichever owns the Technology, may at its sole discretion propose to
Biosource an offer in writing of terms and conditions for grant of a right to
use such Technology. Biosource shall have thirty (30) days to provide written
notice to the offeror of its acceptance of the offer, unless otherwise stated in
the offer or agreed to in writing. If the offeror does not receive written
notice from Biosource on or before the close of the period during which the
offer is open for acceptance agreeing to the terms of such offer, the offer
shall be considered withdrawn and Biosource shall have no right to use such
other Technology. If other Technology Owned by TDCC or DAS is provided to
Biosource in the course of the Research Collaboration without consultation as
provided above, then Biosource shall have a perpetual, non-sublicensible,
non-exclusive, worldwide right to use such Technology in the Biosource Field to
develop, have developed, make, have made, use, have used, distribute for sale,
sell, offer to sell, practice, import and export Products, with such right to be
royalty-free except as provided in Section 3.5. Notwithstanding the foregoing,
any rights granted under this Section 3.7 shall be limited to: (x) uses in the
Pharmaceutical Field, and (y) in the case of the Nicotiana Field, but outside
the Pharmaceutical Field, uses of Production Technology to enhance Nicotiana as
a production host for Products that are outside the defined scope of TDCC Crops
and TDCC Products and uses outside the Pharmaceutical Field which do not compete
with those in the TDCC Field. No rights are granted by this Section 3.4 in any
technology (lower case) which is not Owned by TDCC or DAS nor in Transient
Transformation Technology or viral vector technology (lower case) developed or
discovered by TDCC or DAS independent of the Viral Vector Technology.
3.8 Offer of Rights.
3.8.1 First Offer of Rights for Non-Ethical Antimicrobial Peptides for
Animal Use. In addition to other rights granted under this Article 3, during the
term of the Research Collaboration, but in no event less than three (3) years
from the Effective Date, prior to Biosource transferring any rights to a Third
Party, Biosource shall offer to TDCC in writing the first opportunity to
negotiate for worldwide rights: (i) for the development, manufacture, use, sale
or importation of antimicrobial peptide Products in the Pharmaceutical Field
that are not subject to registration under the FDA or USDA regulations in effect
as of the Effective Date for the country in which the Product is offered for
sale, as interpreted by administrative and judicial decisions, whenever made,
and which are intended for external application on and around animals: (ii) to
Other Inventions Owned by Biosource for uses outside the Biosource Field and not
otherwise subject to a grant of rights to TDCC; or (iii) to inventions for uses
outside the Biosource Field discovered or developed outside the Research
Collaboration that are Owned by Biosource. The parties agree to negotiate in
good faith for a period of ninety (90) days beginning upon delivery of
notification to TDCC (the "Offer Period"). If the negotiations do not result in
an acceptance of the offer during the Offer Period, then Biosource shall be free
to dispose of its interest in rights offered to TDCC provided that Biosource
obtains terms therefor at least as favorable as those last offered by TDCC.
3.8.2 First Right to Negotiate for Exclusivity for Other Inventions which
are Jointly Made During the Research Collaboration. In addition to other rights
granted to TDCC under this Article 3, during the term of the Research
Collaboration, but in no event less than three (3) years from the Effective
Date, prior to Biosource transferring any of its rights to Other Inventions to a
Third Party, Biosource shall offer to TDCC in writing the first opportunity to
negotiate for exclusive, worldwide rights to any or all uses of such Other
Inventions in the TDCC Field under commercially reasonable terms and conditions
to be negotiated by the parties in good faith. If the parties are unable after
good faith negotiations to arrive at agreement on commercially reasonable terms
and conditions, then Biosource shall be free to dispose of its interest in the
rights offered to TDCC provided that Biosource obtains terms therefor at least
as favorable as those last offered by TDCC.
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<PAGE> 18
[*]
3.8.3 Five Year Right to Negotiate for Exclusivity with Respect to
Improvements in Transient Transformation Technology. From the Effective Date
until five (5) years after the termination of the Research Collaboration, prior
to Biosource transferring any of its rights to a Third Party, Biosource shall
offer to DAS in writing the first opportunity to negotiate for exclusive,
royalty-bearing worldwide right in the TDCC Field to improvements made to
Transient Transformation Technology which allow Transient Transformation
Technology to be used in the [*]. If DAS and Biosource are unable after good
faith negotiations to arrive at agreement on commercially reasonable terms and
conditions, then Biosource shall be free to dispose of its interest in such
improvements offered to DAS, provided that Biosource does not: (i) grant rights
to a Third Party to use the improvements to discover genes or fragments thereof
from [*] nor (ii) provide any confidential information of DAS or TDCC (including
information developed in the course of the Research Collaboration) to a Third
Party pertaining to use of improvements with [*].
3.9 Option to Biosource Crops. TDCC shall have an option, exercisable
by: (i) written notice delivered to Biosource within twelve (12) months of the
Effective Date, to expand the definition of TDCC Crops to include Biosource
Crops; and (ii) payment to Biosource of $5,000,000 (five million U.S. dollars)
by TDCC either concurrent with or reasonably promptly after such notice.
Notwithstanding the foregoing, if the milestones described in Exhibit C have not
been fully achieved by Biosource by the end of the first Contract Year during
the Research Collaboration, TDCC's option to incorporate the Biosource Crops
into the TDCC Crops shall continue
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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<PAGE> 19
for twenty-four months from the Effective Date. If TDCC exercises the option
under this Section 3.9, the Biosource Crops shall become exclusively part of the
TDCC Crops and shall be removed from the Biosource Field for all purposes under
this Agreement. In the event TDCC does not timely exercise the option including
payment for same, Biosource shall retain all rights to the Biosource Crops
granted pursuant to this Agreement.
3.10 No Grant of Other Technology or Patent Rights. Except as otherwise
expressly provided in this Agreement, under no circumstances shall a party
hereto, as a result of this Agreement, obtain any ownership interest in or other
right to any technology, intellectual property or Patent Rights of the other
party, including items owned, controlled or developed by the other party, or
transferred by the other party to said party. For avoidance of doubt, nothing in
this Agreement shall be construed to transfer any right or interest in any
technology, intellectual property rights or Patent Rights in which Mycogen has
or shall have an ownership interest without the prior written consent of
Mycogen.
3.11 Nontransferable. Except as expressly provided in this Agreement, the
rights and obligations granted hereunder shall be nontransferable without the
written consent of the party granting such license.
3.12 Database and Library Rights. The Parties acknowledge and agree that:
(i) Biosource Discovery Technology licensed under Section 3.1 may comprise
databases and libraries of biological materials or chemical compounds; and (ii)
the scope of rights granted to TDCC pursuant to Section 3.1 with respect to TDCC
Products shall include Products that are developed through the use of such
databases and/or comprise or are derived from biological materials or chemical
compounds contained in such databases or libraries. TDCC and DAS shall not have
the right to distribute for sale, sell or offer to sell, Research Materials or
chemicals contained in such databases or libraries of Biosource, except in the
exercise of rights granted under terms of this Agreement, nor use in the
Biosource Field such Research Materials, chemicals, databases and/or libraries.
The Parties acknowledge and agree that: (a) TDCC or DAS may provide Biosource
with Research Materials or chemical compounds contained in databases and
libraries in the course of the Research Collaboration; and (b) Biosource shall
not have the right to distribute for sale, sell or offer to sell Research
Materials or chemicals contained in such databases or libraries of TDCC or DAS,
except in the exercise of rights granted under terms of this Agreement, nor use
in the TDCC Field such Research Materials, chemicals, databases and/or
libraries. After the termination of the Research Collaboration, there is no
obligation under terms of this Agreement for a party to provide continuing
access to Research Materials Owned by such party.
3.13 After Termination of the Research Collaboration.
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3.13.1 Grant-back by TDCC and DAS of Improvements to Transient
Transformation Technology. Subject to the terms and conditions of this
Agreement, TDCC and DAS shall grant back to Biosource exclusive, worldwide,
royalty-free rights for uses in the Biosource Field to improvements (excluding
Research Materials) to Transient Transformation Technology Owned by Biosource,
where such improvements are Owned by TDCC or DAS and discovered by TDCC or DAS
during the Research Collaboration or during a period of five (5) years after the
Research Collaboration ends; provided, however, TDCC and DAS shall each own such
improvements as it may discover (except as provided in Section 7.1.1(d)) and
each reserves the sole right to use in the TDCC Field such improvements to
Transient Transformation Technology as it may discover both for its own use as
well as use by its sublicensees. Further, Biosource shall have the right to
sublicense use of such improvements in the Biosource Field to any entity,
provided that such sublicensee agrees to grant to Biosource the right to extend
to TDCC rights in improvements Owned by the sublicensee in Transient
Transformation Technology Owned by Biosource as provided in Section 3.13.3.
3.13.2 Grant-back of Improvements of Biosource to Production
Technology. Subject to the terms and conditions of this Agreement, Biosource and
its Affiliates shall grant back to TDCC exclusive, worldwide, royalty-free
rights for uses in the TDCC Field to improvements to Production Technology Owned
by TDCC or DAS, where such improvements are Owned by Biosource or its Affiliates
and discovered during the Research Collaboration or during a period of five (5)
years after the Research Collaboration ends; provided, however, Biosource shall
own such improvements it discovers (except as provided in Section 7.1.1(b)) and
reserves the sole right to use in the Biosource Field such improvements to
Production Technology for its own use as well as use by its sublicensees.
Further, TDCC shall have the right to sublicense use of such improvements in the
TDCC Field to any entity.
3.13.3 Grant of License to TDCC of Improvements to Transient
Transformation Technology. If during the period from the Effective Date until
five (5) years after termination of the Research Collaboration, Biosource or an
entity sublicensed by Biosource with respect to rights granted back by TDCC or
DAS pursuant to Section 3.13.1, should develop any improvements to Transient
Transformation Technology Owned by Biosource, excluding Biosource Research
Materials. Biosource shall disclose to TDCC and grant rights in such
improvements Owned by Biosource or received from sublicensees to TDCC for use in
the TDCC Field, on a non-exclusive, worldwide, royalty-free basis, with rights
to sublicense only Affiliates, DAS or DAS Affiliates, except for rights in
improvements Owned by Biosource for uses in the discovery of genes or fragments
thereof [*], which rights shall be exclusive.
3.14 Different Categories of Technology. Discovery Technology, Product
Technology and Production Technology are each defined to encompass mutually
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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<PAGE> 21
exclusive subject matter. Schedule IV presents examples of Technology within
each category as an aid to interpretation. The examples in Schedule IV are for
illustrative purposes only and shall not evidence the intent of the parties in a
particular factual situation not expressly stated therein. The Research
Committee, created in Section 4.5, shall provide additional exemplification as
deemed useful. Schedule IV and additional exemplification by the Research
Committee shall be considered in resolution of any dispute as to the relative
scope of Discovery Technology, Product Technology and Production Technology.
3.15 TDCC Sublicenses. Any of the rights which TDCC sublicenses to
Affiliates, DAS, DAS Affiliates in Sections 3.1, 3.2, 3.3, 3.6, 3.8.1, 3.8.2,
3.9 and 3.13.2 may be further sublicensed by such sublicensees to Third Parties
to the same extent as TDCC is free to sublicense such Third Parties.
3.16 Covenant Not to Sue. TDCC and DAS each agree that it shall not bring
any suit or legal proceeding against Biosource for infringement of Patent Rights
Owned by TDCC or DAS as of the Effective Date due to a use by Biosource of
Transient Transformation Technology Owned by Biosource for: (i) uses in the
Pharmaceutical Field; (ii) in the case of the Nicotiana Field, but outside the
Pharmaceutical Field, uses to enhance Nicotiana as a production host for
Products that are outside the defined scope of TDCC Crops and TDCC Products, and
uses outside the Pharmaceutical Field which do not compete with those in the
TDCC Field; and (iii) use by Biosource in the course of the Research
Collaboration. Any entity in which more than fifty percent (50%) of the equity
interest is owned or directly or indirectly controlled by TDCC, which is
sublicensed Discovery Technology Owned by Biosource, as is permitted in Section
3.1, or granted an assignment of rights by TDCC to use Discovery Technology
Owned by Biosource, as is permitted under Section 14.2, shall be required as a
condition of such sublicense or assignment to agree not to bring any suit or
legal proceeding against Biosource for infringement of Patent Rights Owned by
the sublicensee or by the assignee in the circumstances in which TDCC and DAS
have agreed in this Section 3.16 not to bring suit. Nothing in this Section 3.16
shall be construed to obligate TDCC or DAS not to bring any suit or legal
proceeding against a permitted sublicensee, assignee or a successor in interest
of Biosource.
3.17 Rights in Respective Fields. The grants in this Article 3 shall be
construed consistent with the principles that, unless expressly provided: (i)
the grant of rights to TDCC does not include uses of Products in the
Pharmaceutical Field or Nicotiana Field nor uses of Transient Transformation
Technology Owned by Biosource other than uses permitted pursuant to Sections
3.1, 3.13.1 or 3.13.3; and (ii) the grant of rights to Biosource does not
include uses in the TDCC Field nor any use with Photorhabdus, Xenorhabdus,
Bacillus thuringiensis, and Saccharopolyspora spinosa or Demeter Genes. However,
nothing herein shall be construed to preclude manufacture, sale or use by TDCC,
its permitted sublicensees or its customers of a Product in the TDCC Field
together with a pharmaceutical composition, which is not a Product. For
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example, TDCC is free to make, use and sell a feed Product in a blend with
conventional pharmaceutical products (lower case). Further, nothing herein shall
be construed to preclude manufacture, sale or use by TDCC of an Industrial
Product or TDCC Seed Product which requires compliance with FDA or USDA
regulations, but is not subject to registration under FDA or USDA regulations in
effect as of the Effective Date for the country in which a particular Product is
offered for sale, as interpreted by administrative and judicial decisions,
whenever made.
3.18 Rights with respect to Demeter Genes. Rights and obligations as to
specific Demeter Genes under this Article 3 shall only arise after notification
to Biosource by TDCC in writing of specific Demeter Genes with the final
notification to be made reasonably promptly following the end of the Research
Collaboration. Exclusive rights granted to TDCC under Sections 3.1, 3.2, 3.8.3
and 3.13.3 with respect to any Demeter Genes upon notification of same shall be
subject to prior rights properly granted by Biosource to a Third Party with
respect to use of Discovery Technology, Production Technology or improvements in
Transient Transformation Technology.
4. CONDUCT OF PARTIES DURING THE RESEARCH COLLABORATION
4.1 Obligations of the Parties.
4.1.1 Reasonable Efforts. Each of the parties agrees to use its
commercially reasonable efforts to achieve the objectives of the Research
Collaboration and to perform its obligations under the Overall Research Plan and
each Annual Research Plan in a timely manner. Until the Overall Research Plan
and the Annual Research Plan for the applicable Contract Year are approved by
the Steering Committee as provided herein, the parties shall in good faith
proceed as outlined in the summary of the Overall Research Plan and Annual
Research Plan for the first Contract Year, as set forth in Schedule I hereto.
4.1.2 Deliveries by Biosource and TDCC and DAS. During the term of the
Research Collaboration and subject to the rights granted hereunder, Biosource
will timely disclose to TDCC and DAS, the Discovery Technology, Production
Technology, and Product Technology that is Owned by Biosource as is reasonably
required to perform the work in accordance with the Overall Research Plan and
Annual Research Plans. In particular, within sixty (60) days of the Effective
Date, Biosource shall disclose to TDCC the information listed in Schedule VI.
During the term of the Research Collaboration and subject to the rights granted
hereunder, DAS will timely disclose to Biosource the Production Technology and
Product Technology Owned by DAS as defined in Schedule I, and TDCC will deliver
Product Technology that is Owned by TDCC, as is reasonably required to perform
the work in accordance the Overall Research Plan and Annual Research Plans.
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4.2 Access to Data, Information Exchange and Reports. Each party will
have reasonable access to raw data of the other parties generated in the course
of the Research Collaboration including, but not limited to, screening results,
comparative sequence data, gene expression and protein expression data,
molecular genetic methodologies and technologies, protein purification data and
biochemical assay data. Any disagreement as to whether such access is
appropriate in respect of specific information sought by a party pursuant to
this Section 4.2 shall be referred to the Research Committee for determination.
During the term of the Research Collaboration, each party on a quarterly basis
shall provide the other parties with a written report describing the reporting
party's progress with respect to the Research Collaboration and development of
Products by the reporting party or sublicensees which utilize or are enabled by
Technology developed or discovered in the course of the Research Collaboration.
In addition, TDCC and DAS shall have the right to have representatives monitor
any and all work by Biosource related to the Research Collaboration.
4.3 Term of Research Collaboration. Except as otherwise provided in
Section 12.1, the term of the Research Collaboration shall continue for a term
of three (3) Contract Years. During each Contract Year, Biosource will provide
the required scientist man-years of effort for the Research Collaboration in
accordance with the applicable Annual Research Plan. Any number of scientist
man-years of effort dedicated to the Research Collaboration in excess of the
maximum or below the minimum with respect to the Annual Research Plan for a
given Contract Year shall be subject to the approval of the Research Committee.
4.4 Availability of Employees. Each party agrees to make its employees
involved in the Research Collaboration reasonably available during normal
business hours at their places of employment to consult on issues arising during
the course of the Research Collaboration.
4.5 Research Committee.
4.5.1 Creation of Research Committee. The parties hereby create a Research
Committee which shall continue for the duration of the Research Collaboration
and which shall consist of four (4) members, two (2) of which shall be
designated by TDCC and two (2) of which shall be designated by Biosource. The
initial members of the Research Committee designated by Biosource are Guy
della-Cioppa and David McGee and designated by TDCC are Katherine Armstrong and
W.H. (Kerr) Anderson. If any member of the Research Committee dies, resigns, or
becomes incapacitated, the party which designated such member shall designate
his or her successor (whose term shall commence immediately), and any party may
withdraw the designation of any of its members of the Research Committee and
designate a replacement (whose term shall commence immediately) at any time by
giving notice of the withdrawal and replacement to the other party. The
chairperson of the Research Committee shall be designated annually for each
calendar year during the Research Collaboration on an alternating
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basis between Biosource and TDCC. The member party not designating the
chairperson shall designate one of its representatives as secretary to the
Research Committee for such year.
4.5.2 Meetings of the Research Committee. Regular meetings of the Research
Committee during the term of the Research Collaboration shall be held within
forty-five (45) days after the end of each calendar quarter at such times and
places as the members of the Research Committee shall from time to time agree.
Special meetings of the Research Committee may be called by Biosource or TDCC on
ten (10) days written notice to the other member party unless notice is waived
by the member parties. All meetings shall alternate between the offices of TDCC
and Biosource unless the member parties otherwise agree. The chairperson shall
be responsible for sending notice of meetings to all members. In the event a
Research Committee member is unable to attend a meeting of the Research
Committee, such Research Committee member may designate an alternate member who
will serve solely for that Research Committee meeting.
4.5.3 Decisions of Research Committee. A quorum of the Research Committee
shall be present at any meeting of the Research Committee if at least one
representative of each member party is present at such meeting in person or by
telephone. If a quorum exists at any meeting, the unanimous consent of all
members of the Research Committee present at such meeting is required to take
any action on behalf of the Research Committee. Neither member party shall act
or purport to act on behalf of the other member party.
4.5.4 Responsibilities of Research Committee. The Research Committee shall
be responsible for the conduct and progress of the Research Collaboration
activities, including, without limitation:
(a) within sixty (60) days after the Effective Date, developing
based upon the summary set forth in Schedule I, the Overall
Research Plan for the research and development to be conducted
by the parties during the term of the Research Collaboration,
which plan shall establish (i) the scope of the Research
Collaboration; (ii) the research objectives, work plan
activities and time schedules with respect to identification
of novel and essential plant traits and genomic targets; and
(iii) the responsibilities of each party with respect to the
work to be performed under the Research Collaboration. The
members of the Research Committee designated by Biosource
shall not unreasonably withhold approval of an Overall
Research Plan satisfactory to TDCC, which is consistent with
the summary in Schedule I. The Overall Research Plan may be
revised and updated from time to time as unanimously agreed
upon by the Research Committee;
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(b) within sixty (60) days after the Effective Date, developing
based upon the summary set forth in Schedule I, a written plan
and budget for the specific activities to be conducted in
connection with the Research Collaboration during the
remainder of the first Contract Year (i.e., the "Annual
Research Plan"). Thereafter, by April 1 of each Contract Year
during the term of the Research Collaboration beginning with
April 1, 1999, Biosource shall submit to the Research
Committee a written proposed Annual Research Plan for the
following Contract Year consistent with the Overall Research
Plan. The Research Committee shall review each such proposal
as soon as practicable, and make such revisions to the
proposal as are appropriate to achieve the objectives and
schedule of the Overall Research Plan. The Research Committee
shall submit to the Steering Committee for approval no later
than June 1 of such year the final proposed Annual Research
Plan for the next succeeding Contract Year;
(c) coordinating all technical aspects of the Research
Collaboration;
(d) reporting to the Steering Committee on the achievement of the
milestones established pursuant to Section 6.2(a) ; and
(e) adopt standards and guidelines to ensure that the parties and
those working on research and development activities in
furtherance of this Agreement keep and maintain appropriate
laboratory notebooks and other records of their activities.
4.5.5 Research Committee Reports. Within ten (10) days following each
meeting of the Research Committee held pursuant to Section 4.5.2, the secretary
of the Research Committee shall prepare and send to each party a written report
of actions taken at the meeting in such form and containing such detail as shall
be determined by the Research Committee.
4.5.6 Deadlock. In the event that the Research Committee cannot reach
agreement with respect to any matter that is subject to its decision-making
authority, then the matter shall be referred to the Steering Committee for
resolution.
4.6 Steering Committee.
4.6.1 Creation of Steering Committee. The parties hereby also create a
Steering Committee which shall remain in effect for the duration of the Research
Collaboration and which shall consist of six (6) members, three (3) of which
shall be designated by TDCC and three (3) of which shall be designated by
Biosource. The initial members of the Steering Committee designated by Biosource
are John W. Maki, Robert L. Erwin and John J. O"Malley, and designated by TDCC
are Bill Tolbert,
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Ronald Meeusen and William Dowd. If any member of the Steering Committee dies,
resigns, or becomes incapacitated, the member party which designated such member
shall designate his or her successor (whose term shall commence immediately),
and either member party may withdraw the designation of any of its members of
the Steering Committee and designate a replacement (whose term shall commence
immediately) at any time by giving notice of the withdrawal and replacement to
the other member party. The chairperson of the Steering Committee shall be
designated annually for each Contract Year on an alternating basis between
Biosource and TDCC. Biosource and TDCC shall alternate the appointment of the
secretary of the Steering Committee in the Contract Years in which they do not
have the right to designate the chairperson.
4.6.2 Meetings of the Steering Committee. Regular meetings of the Steering
Committee shall be held prior to October 31 of each Contract Year at such times
and places as the members of the Steering Committee shall from time to time
agree. Special meetings of the Steering Committee may be called by either member
party on fifteen (15) days written notice to the other party unless notice is
waived by the parties. All meetings shall alternate between the offices of
Biosource and TDCC unless the member parties otherwise agree. In the event a
Steering Committee member is unable to attend a meeting of the Steering
Committee, such Steering Committee member may designate an alternate member who
will serve solely for that Steering Committee meeting.
4.6.3 Decisions of the Steering Committee. Unless otherwise specifically
designated as a responsibility of the Research Committee pursuant to Section
4.5.4, all decisions regarding the contractual and financial relationship
created by this Agreement shall be made by the Steering Committee acting in
accordance with this Agreement or by agents duly authorized in writing by the
Steering Committee. A quorum of the Steering Committee shall be present at any
meeting of the Steering Committee if Bill Tolbert and Robert L. Erwin, or a
replacement designated by a member party for each named individual not
attending, are present at such meeting in person or by telephone. If a quorum
exists at any meeting, the unanimous consent of all members of the Steering
Committee present at such meeting is required to take any action on behalf of
the Steering Committee, except as provided in Section 4.6.6. Neither member
party shall act or purport to act on behalf of the other party.
4.6.4 Responsibility of Steering Committee. The Steering Committee shall
be responsible for approving long-term objectives for, and evaluating the
progress of the Research Collaboration, including without limitation:
(a) reviewing and approving the Overall Research Plan, the Annual
Research Plan, and the intellectual property protection
strategy;
(b) reviewing and approving significant contracts with Third
Parties
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participating in the Research Collaboration;
(c) reviewing and approving the achievement of the milestones
established pursuant to Section 6.2(a); and
(d) reviewing and assessing each party's discovery, development
and marketing efforts pursuant to Article 5.
4.6.5 Steering Committee Reports. Within ten (10) days following each
meeting of the Steering Committee held pursuant to Section 4.6.2, the secretary
of the Steering Committee shall prepare and send to the members of the Steering
Committee a detailed written report of actions taken at the meeting in such form
and containing such detail as shall be determined by the Steering Committee.
4.6.6 Deadlock. In the event that the Steering Committee cannot reach
agreement within sixty (60) days as to any matter that is subject to its
decision-making authority, then, subject to the last sentence of this Section
4.6.6, TDCC shall cast the deciding vote in good faith on matters related to
conduct of the Research Collaboration other than those relating to: (i) the
interpretation of this Agreement and the amount of any payments due hereunder,
(ii) intellectual property ownership and the rights granted under Article 3, or
(iii) the scope of either party's freedom to commercialize Products in their
respective fields. Unresolved disputes related to (i), (ii) or (iii) above shall
be referred to dispute resolution in accordance with the procedures set forth in
Section 14.6, unless there is unanimous consent by members of the Steering
Committee. TDCC shall also have the deciding vote on the Annual Research Plan
and Overall Research Plan, so long as the activities, budget and objectives are
consistent with the summary in Schedule I.
4.7 Joint Patent Committee. To review inventions made in the course of
the Research Collaboration, a joint committee comprising one (1) named
representative of each of Biosource, TDCC and DAS (the "Joint Patent Committee")
shall be appointed and shall meet as needed. A party may change its
representative to the Joint Patent Committee at any time by notice to the other
parties. Additional members of the Joint Patent Committee may be appointed on an
ad hoc basis upon the mutual consent of the parties. The Joint Patent Committee
shall coordinate the intellectual property protection strategy of the parties
related to Technology developed in the course of the Research Collaboration to
minimize conflict and avoid to the extent feasible compromising intellectual
property positions through publication, destruction of novelty, obviousness and
the like, without incurring undue delay in efforts to commercially exploit the
Technology. The Joint Patent Committee shall determine whether data and
information may be published consistent with the protection of intellectual
property of the parties under terms of this Agreement. Consent to publication
shall not be unreasonably withheld by a party. If the parties cannot unanimously
agree about a party's right to publish or the contents of a publication,
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publication shall be deferred for a reasonable period so as not to jeopardize
the intellectual property rights of any party. If the parties can not agree as
to how to coordinate their respective strategies for the protection of
intellectual property, the Steering Committee shall review the issues and make a
determination as to how to resolve the differences among the parties.
5. DISCOVERY, DEVELOPMENT AND MARKETING EFFORTS
5.1 Discovery and Development Efforts by TDCC and DAS.
5.1.1 TDCC, at its own expense, shall use commercially reasonable efforts,
which in its sound business judgment can be profitably implemented, to (i) use
Discovery Technology licensed to TDCC by Biosource hereunder to discover and
develop Products in the TDCC Field and identify candidates for development, and
(ii) use Production Technology and Product Technology licensed to TDCC by
Biosource hereunder to develop and commercialize Products, either directly or
through Affiliates, DAS or permitted sublicensees. Such activities by TDCC shall
include:
(a) Utilizing its knowledge of industrial chemical markets,
especially of specialty chemicals and polymer markets, to
identify suitable product concepts and market opportunities to
direct the activities in the Research Collaboration;
(b) Providing analytical support where appropriate during the
Research Collaboration in the design, development and
operation of high throughput screens to select genes affecting
plant biochemistry or metabolism;
(c) Providing contract analytical services to DAS in support of
the Research Collaboration where appropriate; and
(d) Providing consultation in the design, implementation and
operation of automated extraction and analytical screens as
determined in the Annual Research Plan.
5.1.2 DAS, at its own expense, shall use commercially reasonable efforts,
which in its sound business judgment can be profitably implemented, to assist
TDCC to (i) use Discovery Technology licensed by Biosource hereunder to discover
and develop Products in the TDCC Field and identify candidates for development,
and (ii) use Production Technology and Product Technology licensed to TDCC by
Biosource hereunder to develop and commercialize Products, as may be sublicensed
or assigned to DAS by TDCC. Such activities shall include the following:
(a) Utilizing its knowledge of plant markets, in particular the
agricultural chemical and seed markets to identify suitable
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product concepts and market opportunities to provide guidance
for the activities in the Research Collaboration;
(b) Identifying, in conjunction with Biosource, appropriate gene
sources for candidates to develop as Products;
(c) Identifying and developing cost-effective screens for plant
traits (and genes);
(d) Utilizing internal screens to test Alliance Genes with
Transient Transformation Technology (vectors in particular)
from Biosource; and
(e) Developing or acquiring, in conjunction with Biosource, a
bioinformatics system capable of archiving and analyzing the
data on gene sequences and biological functions developed
during the Research Collaboration, and which will facilitate
efficient sharing of the gene sequence data and screening
results among DAS, TDCC and Biosource.
5.1.3 Investment Commitment. TDCC, its Affiliates (including Mycogen for
purpose of this paragraph only), DAS and the DAS Affiliates will at a minimum
achieve a combined funding level of on average $35,000,000 (thirty-five million
U.S. dollars) or more per Contract Year during the Research Collaboration
(subject to ramp-up during the first Contract Year), to support the discovery,
development and commercialization of genetically modified plants and products
(lower case) derived therefrom.
5.2 Marketing and Distribution Efforts by TDCC. TDCC, shall have
exclusive worldwide rights to market and distribute the TDCC Products. TDCC and
its permitted sublicensees and assignees shall at their own expense access their
respective marketing channels and use commercially reasonable efforts to obtain
regulatory approvals and to launch, promote, market and sell TDCC Products.
5.3 Discovery and Development Efforts by Biosource. Biosource agrees to
use diligent efforts during the term of the Research Collaboration to use
Discovery Technology, Production Technology and Product Technology Owned by
Biosource and Technology provided to Biosource by TDCC or by DAS to timely
achieve objectives and results established in the Overall Research Plan and
Annual Research Plan. Such efforts shall include, without limitation, the
following:
(a) Devoting the required number of personnel with requisite
experience and expertise, methodologies, know-how and other
capabilities to create or access high quality cDNA libraries;
or microbial libraries for gene discovery;
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(b) Automating certain Technology Owned by Biosource to rapidly
test genes of unknown function in plants using Discovery
Technology to identify the specific gene functions with the
objective of achieving or exceeding the milestones set forth
in Exhibit C on a sustained basis;
(c) Research directed towards developing Viral Vector Technology
capable of expressing genes in seed and reproductive tissues,
and developing the capability of expressing genes in monocots
via transfection;
(d) Acquiring or developing in conjunction with DAS a
bioinformatics system capable of archiving and analyzing the
data on gene sequences and biological functions developed
during the Research Collaboration, which will facilitate
efficient exchange of gene sequence data and screening results
among DAS, TDCC and Biosource; and
(e) Developing and implementing procedures for rapidly identifying
gene sequences which show biological activity in Biosource or
DAS screens (comparable to industry standards).
5.4 Marketing and Distribution Efforts by Biosource. Biosource and its
permitted sublicensees and assignees shall at their own expense access their
respective marketing channels and use commercially reasonable efforts to obtain
regulatory approvals and to launch, promote, market and sell Biosource Products.
6. PAYMENTS
6.1 Technology Access Fees. TDCC shall pay to Biosource a technology
access fee of $10,000,000 (ten million U.S. dollars) upon the Effective Date.
Within sixty (60) days after the beginning of each of the fourth, fifth, sixth
and seventh Contract Year during the Research Collaboration, TDCC shall pay to
Biosource an annual technology access fee of $5,000,000 (five million U.S.
dollars). Within sixty (60) days after the beginning of the eighth and each
subsequent Contract Year during the Research Collaboration, TDCC shall pay to
Biosource an annual technology access fee of $10,000,000 (ten million U.S.
dollars). All such technology access fees are non-refundable, except the fee
shall be refundable in the event that the Agreement is rescinded as provided in
Section 12.5.4. For avoidance of doubt, no technology access fee shall be due
under this Section 6.1 for any period after the Research Collaboration ends.
6.2 Milestone Payments. TDCC shall pay to Biosource the milestone
payments described below as and when the corresponding milestones are achieved
in the course of the Research Collaboration.
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(a) TDCC shall pay Biosource up to $20,000,000 (twenty million
U.S. dollars), upon the achievement by Biosource of the
milestones described in Exhibit C hereto during the first
Contract Year of the Research Collaboration, and up to
$5,000,000 (five million U.S. dollars) per Contract Year upon
the achievement by Biosource of additional milestones to be
established by the Research Committee and approved by the
Steering Committee as part of the Annual Research Plan for
each of the second and the third Contract Years of the
Research Collaboration.
(b) Biosource will notify the Research Committee upon the
accomplishment of the milestones described in Exhibit C. The
Research Committee will promptly report such accomplishment to
the Steering Committee for consideration and approval. The
Steering Committee shall notify TDCC upon such approval and
TDCC shall make the corresponding milestone payments within
sixty (60) days after such notification. If the milestones
described in "A" of Item I in Exhibit C are not achieved
during the first Contract Year during the Research
Collaboration, then TDCC may elect, in its sole discretion, to
terminate the Research Collaboration on thirty (30) days
notice. If the milestones described in "B, C and D" of Item I
in Exhibit C are not achieved during the first Contract Year,
the Research Committee shall determine whether the milestones
should be modified. If Biosource fails to achieve the original
milestones described in Item I, B, C and D in Exhibit C, or
modified milestones (if any), by the end of the first eighteen
(18) months after the Effective Date, then TDCC may elect, in
its sole discretion, to terminate the Research Collaboration
on thirty (30) days notice. TDCC may, in its discretion and at
TDCC's expense, require Biosource to engage in an orderly
winding down of Research Services upon notice of Termination
under this Section 6.2(b), so as to finish works in progress
and complete transfer of Technology developed during the
Research Collaboration.
(c) TDCC shall pay Biosource the following milestone payments set
forth in this Section 6.2(c) with respect to each distinct
Trait of a TDCC Product, with only one milestone payment due
for each Trait regardless of the number of plant species in
which the Trait is expressed. No milestone payments will be
paid to Biosource for an incremental improvement (i.e., a
change that does not change the phenotypic property) made to a
Trait for which Biosource has previously received a milestone
payment under this Section 6.2(c). Nor will there be a
milestone payment due for the
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application or issuance of a registration of a Trait where the
Trait has been previously registered, but must be registered
again due to a molecular change not related to the Alliance
Genes, or if the change is a modification to the Alliance
Genes where such modification does not change the phenotypic
property of the Trait. There will be no more than one
milestone payment due for authorization of each commercial
facility to produce Industrial Products and no more than one
milestone payment due for First Commercial Sale of any or all
Industrial Products from each such commercial facility. In the
event that a TDCC Product may both be sold as a seed and as an
Industrial Product, no more than one payment of one million
U.S. dollars ($1,000,000) will be due for the milestones
described in both Sections 6.2(c)(i) & (iii) and no more than
one payment of one million U.S. dollars ($1,000,000) will be
due for the milestones described in both Sections 6.2(c)(ii)
&(iv) for such TDCC Product.
Milestone Payment
(i) Submission of first registration $1,000,000
application by TDCC, one of its
Affiliates, DAS or a DAS Affiliate for
each distinct Trait derived from one or
more Alliance Genes in a Product to be
sold as Seed.
(ii) Granting of the registration pursuant $1,000,000
to application described in (i) above for
a Product to be sold as Seed.
(iii) Authorization of construction of a $1,000,000
dedicated commercial facility to produce
Industrial Products from one or more
Alliance Genes with a projected sales
value of at least ten million U.S. dollars
($10,000,000) per year.
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(iv) First Commercial Sale of Industrial $1,000,000
Products from operation of the facility
described in (iii) above.
(d) TDCC will promptly notify Biosource through the Steering
Committee upon the accomplishment of each of the foregoing
milestones described in Section 6.2(c) and, within sixty (60)
days following the accomplishment of each milestone, TDCC
shall make the corresponding milestone payment.
6.3 Research Funding.
6.3.1 Funding During the Research Collaboration Term. During the term of
the Research Collaboration, TDCC will sponsor research to be carried out by
Biosource in accordance with the Overall Research Plan and applicable Annual
Research Plan subject to a sponsored research budget developed by the Research
Committee and approved by the Steering Committee not less than sixty (60) days
prior to the beginning of each Contract Year during the Research Collaboration.
Sponsored research funding shall cover Biosource's actual costs of performing
such sponsored research, including costs set forth in Schedule V, which costs
shall be reasonable and no greater than costs Biosource incurs for similar
activity outside the scope of the Research Collaboration. The costs in Schedule
V are for illustrative purposes only. Sponsored research funding shall be used
by Biosource only for activities related to the Annual Research Plan and Overall
Research Plan and shall not be used for purposes related to the Pharmaceutical
Field or Nicotiana Field without the prior written consent of TDCC. Capital
items and expenditures shall be reflected solely through depreciation
attributable to such items, assuming straight line depreciation. Each party
shall be responsible for costs it incurs in developing or acquiring a
bioinformatics system, unless otherwise agreed in writing by the parties.
Sponsored research expenses will be determined in accordance with generally
accepted accounting principles (GAAP) consistently applied. The parties expect
that Biosource will incur expenditures of approximately $12,000,000 (twelve
million U.S. dollars) per Contract Year during the Research Collaboration
(subject to ramp-up during the first Contract Year) on such sponsored research.
On or before the 15th day of each month of each Contract Year during the
Research Collaboration, TDCC will pay Biosource an amount equal to the expenses
budgeted for that month under the sponsored research budget, less any cumulative
amounts overpaid
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and not yet offset for previous periods. Within thirty (30) days following the
end of each calendar quarter, Biosource shall provide to TDCC: (i) a detailed
written accounting of the amount actually expended for research sponsored by
TDCC pursuant to this Section 6.3.1 during such quarter; (ii) an invoice for any
amount due in excess of that previously paid by TDCC for such quarter or a
credit for cumulative amounts overpaid and not yet offset for previous periods;
and (iii) an updated forecast for expenditures to be incurred for Research
Services during the current quarter; the following quarter and the current
calendar year. After receipt of each quarterly invoice, TDCC shall pay to
Biosource any reimbursement due for costs properly incurred in excess of
previous payments within sixty (60) days after receipt of the invoice. In no
event, however, shall TDCC be obligated to pay any amount in excess of
$12,000,000 (twelve million U.S. dollars) per Contract Year during the Research
Collaboration for sponsored research under this Section 6.3.1, unless an Annual
Research Plan contemplating a higher level of payments has been approved by the
Steering Committee or TDCC has approved such expenditures in accordance with
Section 6.3.3. In the event of any overpayment to Biosource, TDCC shall be
entitled to a reduction in future payments under this Section 6.3.1 until any
amounts it has previously overpaid have been completely offset.
6.3.2 Funding For Third Party Research. During the term of the Research
Collaboration, TDCC intends to spend on average $3,000,000 (three million U.S.
dollars) per calendar year to fund sponsored research to be carried out by Third
Parties related to the development of applications in the TDCC Field and TDCC
Products. TDCC shall consult with the Research Committee in selecting such
research to sponsor, but TDCC shall not be obligated to sponsor research by
Third Parties unless TDCC believes it will substantially promote development of
commercially promising applications. Potential Third Party recipients of such
funding may be brought to the attention of the Research Committee by any party.
TDCC shall determine which party is in the better position to provide oversight
of the Third Party conducting the research and may elect to sponsor research
indirectly through Biosource. TDCC, DAS and Biosource may each impose reasonable
restrictions on the provision of Technology Owned by a party to Third Parties
for the purpose of protecting proprietary rights therein including rights
granted under this Agreement.
6.3.3 Additional Expenditures. In the event that the scope, scale or
direction of the Research Collaboration as described in the Overall Research
Plan or the applicable Annual Research Plan changes after being approved by the
Research Committee and Steering Committee, any additional expenditures
reasonably required to be made by Biosource to support the Research
Collaboration shall be funded by TDCC; provided, that all such changes in the
scope, scale or direction of the Research Collaboration which may trigger
additional funding by TDCC and the maximum amount of any such additional
expenditures shall be approved in advance by TDCC.
6.4 Royalties Payable by TDCC.
6.4.1 General. Following the First Commercial Sale of any TDCC Product as
set forth in Section 6.4.2., TDCC will pay, on a quarterly basis, a royalty in
the amounts set forth below based on applicable sales of TDCC Products.
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6.4.2 Royalties on TDCC Products. In consideration of the licenses and
other rights granted to TDCC, TDCC shall pay to Biosource a royalty based on (i)
a percentage of the Net Sales of TDCC Products and/or (ii) a percentage of the
value added to such TDCC Products, as follows:
6.4.2.1 Agrochemicals. TDCC will pay Biosource 2.5% of the increase
in Net Sales of an agrochemical product (lower case) resulting from a new use of
such product (lower case) that is enabled by Product Technology. An example
would be a new crop use for an existing herbicide as a result of a new
herbicide-tolerant Trait in a TDCC Product. In the event that the increase in
Net Sales of an agrochemical product resulting from such a new use proves
difficult to determine accurately, TDCC and Biosource shall negotiate in good
faith to select an alternative basis for the calculation of royalty due under
this Section 6.4.2.1, which both parties deem will yield a royalty of a
commensurate amount.
6.4.2.2 Seed. Royalties on TDCC Products that constitute seed sold
through TDCC, its Affiliates, DAS and the DAS Affiliates ("TDCC Seed Products")
shall be determined as follows:
(a) Exclusive. TDCC will pay Biosource (i) 2.5% of Net Sales of
TDCC Seed Products sold exclusively through TDCC, its
Affiliates, DAS and the DAS Affiliates, plus (ii) 7.5% of
Agricultural Value-Added by a distinct Trait in such TDCC
Seed Products, where such distinct Trait is either derived
from one or more Alliance Genes or discovered or developed
by exercise of TDCC post-Research Collaboration rights as
further provided in Sections 3.1 and 3.3 hereof, until the
total Agricultural Value-Added by the Trait in such TDCC
Seed Products exceeds $100,000,000 (one hundred million U.S.
dollars) in any calendar year, and (iii) 17.5% of the
Agricultural Value-Added in excess, if any, of $100,000,000
(one hundred million U.S. dollars) in that year.
(b) Non-Exclusive. TDCC will pay Biosource: (i) 7.5% of
Agricultural Value-Added by a distinct Trait in TDCC Seed
Products sold non-exclusively through TDCC, its Affiliates,
DAS and the DAS Affiliates, where such distinct Trait is
either derived from one or more Alliance Genes or discovered
or developed by exercise of TDCC post-Research Collaboration
rights as further provided in Sections 3.1 and 3.3 hereof,
until the total Agricultural Value-Added by the Trait in
such TDCC Seed Products exceeds $100,000,000 (one hundred
million U.S. dollars)
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in any calendar year, plus (ii) 17.5% of the Agricultural
Value-Added in excess, if any, of $100,000,000 (one hundred
million U.S. dollars) in that year.
(c) TDCC Agricultural Cumulative Investment Recovered.
Notwithstanding clauses (a)(ii)&(iii) and (b)(i)&(ii) of
this Section 6.4.2.2, at any time the TDCC Agricultural
Cumulative Investment is $0 or a negative number as of the
end of the latest quarter for which financial statements of
TDCC and DAS are available, TDCC will pay Biosource 17.5% of
Agricultural Value-Added by all distinct Traits in TDCC Seed
Products, where such distinct Traits are either derived from
one or more Alliance Genes or discovered or developed by
exercise of TDCC post-Research Collaboration rights as
further provided in Sections 3.1 and 3.3 hereof, instead of
the amounts in clauses (a)(ii)&(iii) and (b)(i)&(ii) of
Section 6.4.2.2.
6.4.2.3 Industrial Products.
(a) TDCC will pay Biosource 1% of Net Sales of TDCC Products
that constitute Industrial Products sold by TDCC, its
Affiliates, DAS and the DAS Affiliates at any time the TDCC
Industrial Cumulative Investment is greater than $0 as of
the end of the latest quarter for which financial statements
of TDCC and DAS are available.
(b) In the event that the TDCC Industrial Cumulative Investment
is $0 or a negative number as of the end of the latest
quarter for which financial statements of TDCC and DAS are
available, TDCC will pay Biosource the greater of: (i) 1% of
Net Sales of TDCC Products that constitute Industrial
Products; or (ii) 7.5% of Non-Agricultural Value-Added by a
distinct Trait in such TDCC Industrial Products, where such
distinct Trait is either derived from one or more Alliance
Genes or discovered or developed by exercise of TDCC
post-Research Collaboration rights as further provided in
Sections 3.1 and 3.3 hereof, until the total
Non-Agricultural Value-Added by the Trait exceeds
$100,000,000 (one hundred million U.S. dollars) in any
calendar year, plus, 17.5% of the Non-Agricultural
Value-Added in excess, if any, of
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$100,000,000 (one hundred million U.S. dollars) in that
year.
6.4.2.4 TDCC Product Technology. The royalty rates described in
Sections 6.4.2.1, through 6.4.2.3 shall be reduced by fifty
percent (50%) for: (i) any TDCC Products that use Technology
Owned or acquired from a Third Party by TDCC, its
Affiliates, DAS or the DAS Affiliates and which is related
to Demeter Technology, Photorhabdus, Xenorhabdus, Bacillus
thuringiensis, and Saccharopolyspora spinosa; or (ii) any
TDCC Products the manufacture, sale or use of which are not
covered by either TDCC Patent Rights, that claim inventions
discovered in the course of Research Collaboration or
exercise of post-Research Collaboration rights granted in
Sections 3.1 or 3.3 hereof, or Biosource Patent Rights.
6.4.3 Access Fees From Third Parties. TDCC shall pay to Biosource fifty
percent (50%) of any Technology access fees, royalties and other consideration
(but excluding any royalties or other fee paid for any Products which are
included in Agricultural Value-Added or Non-Agricultural Value-Added and reduced
by costs as set forth hereinafter) received by TDCC from any Third Party in
consideration of any permitted uses of Discovery Technology Owned by Biosource
licensed to TDCC and sublicensed by TDCC to the Third Party during the Research
Collaboration pursuant to Section 3.1. Such Technology access fees shall not be
considered in determining Agricultural Value Added or Non-Agricultural
Value-Added. In the event that Discovery Technology Owned by Biosource is
sublicensed together with Technology Owned by TDCC or DAS or part of the
consideration is non-monetary, e.g., a cross-license, the fair market value of
the Discovery Technology Owned by Biosource which is sublicensed shall be
determined and used as the basis for payment to Biosource. The access fees or
royalties shall be reduced by any costs of TDCC incurred in granting the rights
to the Third Party prior to determining the amount to be paid to Biosource.
6.4.4 Royalty Reports, Exchange Rates. During the term of this Agreement
following the First Commercial Sale of any TDCC Product or receipt of any
Technology access fees subject to Section 6.4.3, TDCC shall within ninety (90)
days after each calendar quarter pay estimated royalties on the Net Sales of the
TDCC Product and Biosource's share of any Technology access fee. A royalty
report shall accompany the estimated royalty payment and payment of any
Technology access fee under Section 6.4.3. Such royalty report will include a
list of the TDCC Products covered, the dates of the First Commercial Sales of
TDCC Products, and the basis for any Technology access fee. The report shall
indicate how estimated royalties were calculated including: (i) the gross sales
of the TDCC Products sold by TDCC, its Affiliates, DAS and the DAS Affiliates,
and the calculation of Net Sales, Agricultural Value-Added, Non-Agricultural
Value-Added and recovery of Agricultural Cumulative Investment and/or Industrial
Cumulative Investment attributable to such gross sales; (ii) the sublicense
payments received by TDCC; (iii) the royalties and other payments payable in
United States dollars which shall have accrued hereunder in respect of such
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sales and sublicense payments; (iv) withholding taxes, if any, required by law
to be deducted in respect of such royalties and sublicense payments; and (v) the
exchange rates used in determining the amount of United States dollars payable
hereunder. Royalties payable on Net Sales in countries other than the United
States shall be calculated by multiplying the appropriate royalty rate times the
Net Sales in each currency in which they are made and converting the resulting
amount into United States dollars at the rates of exchange used by TDCC for
reporting such sales for United States financial statement purposes. As soon as
practical after the end of each calendar year during the term of this Agreement,
TDCC shall make a full accounting of actual royalties due Biosource for such
calendar year. If the actual royalties owed to Biosource for such calendar year
exceed the estimated royalties paid for such calendar year, then TDCC shall pay
the difference to Biosource within thirty (30) days of the date that the full
accounting is completed. If the actual royalties owed to Biosource for such
calendar year are less than the estimated royalties paid to Biosource for such
calendar year, then such overpayment shall either be credited against future
estimated royalties to be paid by TDCC or shall be reimbursed to TDCC, whichever
is acceptable to TDCC at such time. In the event that there is no payment
adjustment, a statement setting forth that fact shall be supplied to Biosource.
6.4.5 Audits. TDCC shall permit an independent certified public accountant
selected by Biosource and acceptable to TDCC, which acceptance shall not be
unreasonably withheld, to have access during normal business hours to such
records of TDCC as may be reasonably necessary to verify the accuracy of royalty
reports as described in Section 6.4.4. An audit may be conducted for the
previous two (2) fiscal years. The audit shall not be conducted for an
incomplete fiscal year where only estimated royalties have been paid. Biosource
and TDCC shall use commercially reasonable efforts to schedule all such
verifications within forty-five (45) days after Biosource makes its written
request for the audit. All such verifications shall be conducted at Biosource's
expense and not more than once in each calendar year. Subject to TDCC's rights
to dispute amounts payable under Section 14.6, in the event Biosource's
independent certified public accountant concludes that additional royalties were
owed to Biosource during such period, the additional royalty shall be paid by
TDCC within sixty (60) days after the date Biosource delivers to TDCC such
independent certified public accountant's written report so concluding. In the
event Biosource's independent certified public accountant concludes that there
was an overpayment of royalties to Biosource during such period, the overpayment
less the reasonable fees and expenses charged by such representative shall be
repaid by Biosource within sixty (60) days after the date Biosource received
such independent certified public accountant's written report so concluding. The
fees charged by such independent certified public accountant shall be paid by
Biosource unless the audit discloses an underpayment of the royalties payable by
TDCC for the audited period of more than five percent (5%), in which case TDCC
shall pay the reasonable fees and expenses charged by such representative. TDCC
shall include in each Third Party sublicense granted by it pursuant to this
Agreement a provision requiring the
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sublicensee to keep and maintain records of sales made pursuant to such
sublicense and to grant access to such records by an independent certified
public accountant to the same extent required of TDCC under this Agreement.
Biosource agrees that all information subject to review under this Section 6.4.5
or under any sublicense agreement is confidential and that Biosource shall cause
its independent certified public accountant to enter into a confidentiality
agreement with TDCC or a sublicensee, where appropriate, obligating such
accountant to retain all such information in confidence. Biosource's independent
certified public accountant shall only report to Biosource as to the computation
of the royalties and other payments due to Biosource under this Agreement and
shall not disclose to Biosource any other information of TDCC or its
sublicensees.
6.4.6 Expiration of TDCC Royalty Obligation. TDCC's obligation to pay
royalties under this Agreement to Biosource in respect of a TDCC Product, shall
cease: (i) if manufacture, sale or use of the TDCC Product is not covered by
Patent Rights as provided in part (ii) of this Section 6.4.6, on the last day of
a calendar quarter in which falls the tenth (10th) anniversary of the First
Commercial Sale of any TDCC Product, directly or indirectly, by TDCC, one of its
Affiliates, DAS or a DAS Affiliate anywhere in the world, or (ii) if the
manufacture, sale or use of the TDCC Product is covered in the country where
such activity occurs by either TDCC Patent Rights, which claim inventions
discovered in the course of Research Collaboration or in the exercise of
post-Research Collaboration rights granted in Sections 3.1 or 3.3 hereof, or
Biosource Patent Rights, upon the occurrence of any of the following: (a) the
expiration of the last Valid Claim of the aforementioned Patent Rights covering
the TDCC Product in that country that can reasonably be expected to deliver
Agricultural Value-Added or Non-Agricultural Value-Added to TDCC or DAS, (b)
when the remaining Valid Claims of the aforementioned Patent Rights covering the
TDCC Product in that country will no longer deliver significant Agricultural
Value-Added or Non-Agricultural Value-Added to TDCC or DAS, or (c) when the
remaining Valid Claims of such the aforementioned Patent Rights covering the
TDCC Product in that country are likely to be held invalid or unenforceable.
6.4.7 Adjustment of Royalty Rates. The royalty rates and duration of
royalty payments by TDCC under Sections 6.4.1 to 6.4.6 are believed fair and
reasonable as of the Effective Date. However, in the event Third Parties are
able to offer products (lower case) competing with TDCC Products which make it
difficult for TDCC to achieve the returns it requires to justify investment in
development and commercialization of TDCC Products, TDCC and Biosource shall
re-negotiate in good faith the royalties and milestone payments due under
Article 6. In addition, in the event Biosource offers any Third Party overall
more favorable terms for a license of Discovery Technology for use in Products
in the TDCC Field than that granted to TDCC, Biosource shall promptly offer TDCC
a license on terms at least as favorable.
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6.5 Royalties Payable by Biosource.
6.5.1 General. Following the First Commercial Sale of any Biosource
Product as set forth in Section 6.5.2, Biosource will pay, on a quarterly basis,
a royalty in the amounts set forth below based on applicable sales of Biosource
Products, provided, however, that no royalty shall be payable on Products in the
Pharmaceutical Field or the Nicotiana Field.
6.5.2 Royalties on Biosource Products. In consideration of the licenses
and other rights granted to Biosource, Biosource shall pay to TDCC a royalty on
Biosource Products based on (i) a percentage of the Net Sales of such Biosource
Products, and/or (ii) a percentage of the value added to such Biosource
Products, as follows; provided, however, that no royalty shall be payable on
Products in the Pharmaceutical Field or the Nicotiana Field:
6.5.2.1 Seed. Royalties on Biosource Products that constitute seed
("Biosource Seed Products") shall be determined as follows:
(a) Exclusive. Biosource will pay TDCC (i) 2.5% of Net Sales of
Biosource Seed Products sold exclusively through Biosource
and its Affiliates, plus (ii) 7.5% of Agricultural
Value-Added by a distinct Trait in such Biosource Seed
Products, where such distinct Trait is either derived from
one or more Alliance Genes or developed or manufactured by
exercise of rights granted to Biosource in Section 3.5
hereof, until the total Agricultural Value-Added by the
Trait in such Biosource Seed Products exceeds $100,000,000
(one U.S. dollars) in any calendar year, and (iii) 17.5% of
the Agricultural Value-Added in excess, if any, of
$100,000,000 (one hundred million U.S. dollars) in that
year.
(b) Non-Exclusive. Biosource will pay TDCC: (i) 7.5% of
Agricultural Value-Added by a distinct Trait in Biosource
Seed Products sold non-exclusively through Biosource and its
Affiliates, where such distinct Trait is either derived from
one or more Alliance Genes or developed or manufactured by
exercise of rights granted to Biosource in Section 3.5
hereof, until the total Agricultural Value-Added by the
Trait in such Biosource Seed Products exceeds $100,000,000
(one hundred million U.S. dollars) in any calendar year,
plus (ii) 17.5% of the Agricultural Value-Added in excess,
if any, of $100,000,000 (one hundred million U.S. dollars)
in that year.
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(c) Biosource Agricultural Cumulative Investment Recovered.
Notwithstanding clauses (a)(ii)&(iii) and (b)(i)&(ii) of
this Section 6.5.2.1, at any time the Biosource
Agricultural Cumulative Investment is $0 or a negative
number as of the end of the latest quarter for which
financial statements of Biosource are available, Biosource
will pay TDCC 17.5% of Agricultural Value-Added by all
distinct Traits in Biosource Seed Products, which Traits
are either derived from one or more Alliance Genes or
developed or manufactured by exercise of rights granted to
Biosource in Section 3.5 hereof, instead of the amounts in
clauses (a)(ii)&(iii) and (b)(i)&(ii) of this Section
6.5.2.1.
6.5.2.2 Industrial Products.
(a) Biosource will pay TDCC 1% of Net Sales of Biosource
Products that constitute Industrial Products sold by
Biosource or its Affiliates, at any time the Biosource
Industrial Cumulative Investment is greater than $0 as of
the end of the latest quarter for which financial statements
of Biosource are available.
(b) In the event that the Biosource Industrial Cumulative
Investment is $0 or a negative number as of the end of the
latest quarter for which financial statements of Biosource
are available, Biosource will pay TDCC the greater of: (i)
1% of Net Sales of Biosource Products that constitute
Industrial Products, or (ii) 7.5% of Non-Agricultural
Value-Added by a distinct Trait in such Biosource Industrial
Products, where such Trait is either derived from one or
more Alliance Genes or is developed or manufactured by
exercise of rights granted to Biosource in Section 3.5
hereof, until the total Non-Agricultural Value Added by the
Trait in such Biosource Industrial Products exceeds
$100,000,000 (one hundred million U.S. dollars) in any
calendar year, plus 17.5% of the Non-Agricultural
Value-Added in excess, if any, of $100,000,000 (one hundred
million U.S. dollars) in that year.
6.5.2.3 Agrochemicals. No royalty is set for agrochemical product
sales resulting from a new use of such product (lower case) that is enabled by
Product Technology or exercise of rights granted to Biosource under Section 3.5,
because it is not contemplated that Biosource or its Affiliates shall make such
sales. In the event that Biosource desires such a license, TDCC and Biosource
shall negotiate in good faith to
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determine a royalty and other terms for such a license. |
