Project Agreement - Dow Chemical Co. and Diversa Corp.
PROJECT AGREEMENT
BETWEEN
THE DOW CHEMICAL COMPANY
AND
DIVERSA CORPORATION
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
ARTICLE TITLE PAGE
--------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
1 Definitions 2
--------------------------------------------------------------------------------------------------------------------
2 R&D Program 5
--------------------------------------------------------------------------------------------------------------------
3 Grant of Rights 10
--------------------------------------------------------------------------------------------------------------------
4 Payments 12
--------------------------------------------------------------------------------------------------------------------
5 License; Development Reports 14
--------------------------------------------------------------------------------------------------------------------
6 Confidential Information 15
--------------------------------------------------------------------------------------------------------------------
7 Intellectual Property Rights 17
--------------------------------------------------------------------------------------------------------------------
8 Provisions Concerning The Filing, 18
Prosecution And Maintenance Of
Patent Rights
--------------------------------------------------------------------------------------------------------------------
9 Legal Action 19
--------------------------------------------------------------------------------------------------------------------
10 Termination And Disengagement 22
--------------------------------------------------------------------------------------------------------------------
11 Representations And Warranties 23
--------------------------------------------------------------------------------------------------------------------
12 Indemnification 24
--------------------------------------------------------------------------------------------------------------------
13 Dispute Resolution 25
--------------------------------------------------------------------------------------------------------------------
14 Miscellaneous 25
--------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
APPENDIX TITLE
----------------------------------------------------------------------------
<S> <C>
A-1 Schedule of DIVERSA Patent Rights
developed under this Project Agreement
----------------------------------------------------------------------------
A-2 Schedule of background DIVERSA Patent
Rights (predating this Project
Agreement but needed for the Project
Field)
----------------------------------------------------------------------------
B-1 Schedule of TDCC Patent Rights
developed under this Project Agreement
----------------------------------------------------------------------------
B-2 Schedule of background TDCC Patent
Rights (predating this Project
Agreement but needed for the Project
Field)
----------------------------------------------------------------------------
C List of Licensed Enzyme and Project
Field
----------------------------------------------------------------------------
D-1 MTA for an Institute
----------------------------------------------------------------------------
D-2 MTA for a Toll Manufacturer
----------------------------------------------------------------------------
D-3 MTA for a Customer
----------------------------------------------------------------------------
E Work Plans
----------------------------------------------------------------------------
F Schedule of Licensed Patents from
DIVERSA Patent Rights for a Licensed
Product (subset of all of Appendix A-1)
----------------------------------------------------------------------------
G Intellectual Property Chart
----------------------------------------------------------------------------
H Project Field Classification for
Milestone Payments
----------------------------------------------------------------------------
</TABLE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
EXHIBIT TITLE SOURCE
--------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
1 CDA Copy attached to MCA as Exhibit 1
--------------------------------------------------------------------------------------------------------------------
2 MCA Copy attached to this Project
Agreement
--------------------------------------------------------------------------------------------------------------------
3 License Template Attached to this Project Agreement
--------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
PROJECT AGREEMENT
This Project Agreement (including the Appendices and Exhibits hereto, the
"Agreement") by and between THE DOW CHEMICAL COMPANY, a corporation duly formed
and existing under the laws of Delaware, having a place of business at 2030 Dow
Center, Midland, Michigan 48674, United States of America ("TDCC" or a "Party"),
and DIVERSA CORPORATION, a corporation duly formed and existing under the laws
of Delaware, having a place of business at 4955 Directors Place, San Diego,
California 92121, United States of America ("DIVERSA" or a "Party"), is made and
entered into as of the Effective Date.
R E C I T A L S
A. DIVERSA has discovered and developed enzymes and has expertise in the
rearrangement of DNA to produce and discover genes utilizing proprietary
technologies for the rapid discovery, development and optimization of
enzymes. TDCC has a contract manufacturing business for preparing
pharmaceutical products for the pharmaceutical industry.
B. TDCC and DIVERSA have entered into a Master Collaboration Agreement,
effective September 1, 2000, ("MCA") for the discovery, development,
manufacture, marketing and sale of Licensed Products, Intermediates and API
products and services for [***].
C. TDCC and DIVERSA wish to enter into this Agreement in order to perform
research for the Project Agreements contemplated in the MCA. These
molecules may be further developed as intermediates/products by TDCC.
D. DIVERSA will perform research on projects funded and supported by TDCC in
order to [***].
E. DIVERSA represents that it has Patent Rights and Know-How that pertain to
this Agreement.
F. TDCC is desirous of obtaining, and DIVERSA wishes to grant, a worldwide
license to [***].
G. TDCC will perform research to [***] discovered by DIVERSA and/or TDCC.
H. TDCC and DIVERSA intend to provide an integrated, full-service offering of
Licensed Enzymes, integrated chemical and biological processing
capabilities and [***] Licensed Products to Customers. This service and
Licensed Products may be offered as early as [***]. This Agreement is a
portion of the effort to meet this intent of the Parties.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
the Parties hereby acknowledge, the Parties hereby agree as follows:
Article 1. DEFINITIONS
When used in this Agreement, the following terms shall have the meanings set out
below, unless the context requires otherwise. The singular shall be interpreted
as including the plural and vice versa, unless the context clearly indicates
otherwise.
1.1 "Affiliate" means the same as in the MCA.
---------
-1-
<PAGE>
1.2 "Agreement Term" means the period beginning on the Effective Date and
--------------
ending on the date that is [***] months from the expiration or termination
of the Research Term or the date that this Agreement is otherwise
terminated as provided herein.
1.3 "API" means the same as in the MCA.
---
1.4 "CDA" means the same as in the MCA, and a copy of which is attached hereto
---
as Exhibit 1.
1.5 "Change of Control" means the same as in the MCA, but, for purposes of
-----------------
this Agreement and as part of such definition, Field shall also include
this Project Field.
1.6 "Confidential Information" means tangible materials that are not
------------------------
commercially available in the form supplied to the other Party and also as
defined in the MCA.
1.7 "Consultant" means a non-Affiliate person who is under confidentiality to
----------
and paid by a Party to act or advise on that Party's behalf under this
Agreement.
1.8 "Controls" or "Controlled" means, with respect to intellectual property,
-------- ----------
possession (other than by virtue of this Agreement or the MCA) of the
ability to grant licenses or sublicenses to the other Party hereto or to
its Sublicensee without violating the terms of any agreement or other
arrangement with any Third Party and to the knowledge and belief of the
granting Party without violating the rights of a Third Party.
1.9 "Customers" means the same as in the MCA.
---------
1.10 "DIVERSA" means Diversa Corporation, having a place of business at San
-------
Diego, California.
1.11 "DIVERSA Know-How" means the same as in the MCA.
----------------
1.12 "DIVERSA Intellectual Property" means DIVERSA Patent Rights and DIVERSA
-----------------------------
Know-How and Joint Patent Rights.
1.13 "DIVERSA Patent Rights" means the same as in the MCA. All patents and
---------------------
patent applications subject to this definition are listed on Appendix A-1
or A-2 or will be included on Appendix A-1 or A-2 attached to this
Agreement by the expiration of the Research Term. When a Licensed Product
is designated, then a subset of these DIVERSA Patent Rights relevant to
that Licensed Product shall be listed on Appendix F, which listing shall
be included in a resulting License, if any.
1.14 "DIVERSA Research Results" means Research Results invented or discovered
------------------------
solely by, or on behalf of, DIVERSA.
1.15 "Effective Date" means September 1, 2000.
--------------
1.16 "Enzyme" means [***].
------
1.17 "FTE" means the same as in the MCA.
---
1.18 "Intermediate" means the same as in the MCA.
------------
1.19 "Jointly Developed or Jointly Invented" means if the item developed or
-------------------------------------
invented results from efforts between each Parties' employees or
Consultants under this Agreement such that (a) Joint Know-How or Joint
Research Results occurs or (b) a patentable invention occurs, such
invention is jointly developed or invented if both Parties' employees or
Consultants are considered inventors under 35 U.S.C. et seq. and 37 C.F.R.
et seq., as interpreted by the U.S. Patent and Trademark Office and the
United States Federal Courts.
1.20 "Joint Intellectual Property" means Joint Patent Rights and Joint Know-
---------------------------
How.
-----------------------------
* CONFIDENTIAL TREATMENT REQUESTED
-2-
<PAGE>
1.21 "Joint Know-How" means know-how that is Jointly Developed or Jointly
--------------
Invented.
1.22 "Joint Patent Rights" means patent rights that are Jointly Developed or
-------------------
Jointed Invented by both Parties in the course of the performance of this
Agreement and if both Parties' employees or Consultants are considered
inventors under 35 U.S.C. et seq. and 37 C.F.R. et seq., as interpreted by
the U.S. Patent and Trademark Office and the United States Federal Courts.
1.23 "Joint Research Results" means Research Results that are Jointly Developed
----------------------
or Jointly Invented.
1.24 "License" means a license agreement for a Licensed Enzyme in a Project
-------
Field between TDCC and DIVERSA resulting from work under this Agreement.
With respect to each Project Field, such License shall be signed, [***]
and may include DIVERSA Patent Rights, TDCC Patent Rights and Joint Patent
Rights that are licensed in accord with the [***]. There may be more than
one License under this Agreement. A template for this License shall be
attached hereto as Exhibit 3, within ninety (90) days from the Signature
Date, and made a part hereof.
1.25 "Licensed Enzyme" means any Enzyme that is developed under this Agreement
---------------
and then commercialized for use in a Project Field. The Licensed Enzyme
and Project Field shall be designated on and listed in Appendix C attached
thereto and made a part thereof.
1.26 "Licensed Product" means (a) any product containing or consisting of a
----------------
Licensed Enzyme or (b) any process for making an [***].
1.27 "Licensed Patents" means the same as in the MCA. These Licensed Patents
----------------
shall be determined for license in accord with the Intellectual Property
Chart in Appendix G.
1.28 "Material" means the original, tangible materials, other than Enzymes,
--------
provided by TDCC or DIVERSA to the other Party in order that the recipient
Party can perform its obligations under the R&D Program and any samples
developed during the R&D Program that are exchanged by the Parties.
1.29 "MCA" means the Master Collaboration Agreement between the Parties,
---
effective September 1, 2000, a copy of which is attached hereto as Exhibit
2. All references in this Agreement to any portion of or attachments to
the MCA are incorporated herein by reference.
1.30 "MTA" means a material transfer agreement for exchange of any Licensed
---
Enzyme (with or without DIVERSA Know-How or TDCC Know-How) to any Third
Party by DIVERSA or TDCC, a copy of which is attached hereto as Appendix D
for transfer between TDCC or DIVERSA and a Third Party. Appendix D-1 is
for an Institute; Appendix D-2 is for a Toll Manufacturer; and Appendix D-
3 is for a Customer. Any MTA shall be used only under the terms of this
Agreement. Any information concerning Enzymes, Licensed Enzymes or
Materials transferred between TDCC and DIVERSA that would be deemed
Confidential Information hereunder (i.e., information provided under the
confidentiality provisions of this Agreement) shall not require a MTA.
1.31 "Patent Rights" means the same as in the MCA.
-------------
1.32 "Project Field" means a specific application area within the discovery,
-------------
development, manufacture, marketing and sale of Licensed Products and
services for [***].
1.33 "Project Manager" means a commercial person and/or a research person
---------------
designated by each Party to monitor and direct the Work Plans and terms of
performance under this Agreement.
1.34 "Purpose" means the same as in the MCA.
-------
1.35 "R&D Program" means the research and development program to be conducted
-----------
during the Research Term by DIVERSA and TDCC pursuant to Article 2 hereof,
as more fully described in the Work Plans.
1.36 "Research Data" means all data, sequences and any other information
-------------
obtained or developed in the course of performance of the R&D Program.
1.37 "Research Results" means Research Data, Enzymes and Materials.
----------------
-3-
<PAGE>
1.38 "Research Term" means the period commencing on the Effective Date and,
-------------
unless extended by written agreement of the Parties or sooner terminated
as provided herein, terminating on the [***] anniversary of the Effective
Date as determined by the Work Plan.
1.39 "Responsible Party" shall have the meaning set forth in Section 8.1.2.
-----------------
1.40 "Signature Date" means the date of last signature to this Agreement.
--------------
1.41 "Staffing Level" shall have the meaning set forth in the Work Plans.
--------------
1.42 "Sublicensee" means the same as in the MCA.
-----------
1.43 "TDCC" means The Dow Chemical Company, having a place of business at
----
Midland, Michigan.
1.44 "TDCC Intellectual Property" means TDCC Patent Rights and TDCC Know-How
--------------------------
and Joint Patent Rights.
1.45 "TDCC Know-How" means the same as in the MCA.
-------------
1.46 "TDCC Patent Rights" means the same as in the MCA. All patents and patent
------------------
applications subject to this definition are listed on Appendix B-1 or B-2
or will be included on Appendix B-1 or B-2 attached to this Agreement by
the expiration of the Research Term.
1.47 "Territory" means the same as in the MCA.
---------
1.48 "Third Party" means the same as in the MCA.
-----------
1.49 "Work Plans" mean the written plans drafted, presented, and approved by
----------
the Project Managers defining the activities to be carried out for, and
the budget for, each project within the Project Field during the R&D
Program, as more specifically detailed [***].
1.50 "Work Plan Decision Date" means a key decision point date indicated in a
-----------------------
Work Plan for each Project Field where the Parties will evaluate the
status of the R&D Program for each such Project Field with respect to the
current Work Plan Performance Milestone associated with such Project
Field.
1.51 "Work Plan Performance Milestone" means a specific development objective
-------------------------------
as stated for each Project Field in a Work Plan.
Article 2. R&D PROGRAM
2.1 Implementation of the R&D Program.
----------------------------------
2.1.1 Basic Provisions of Program.
(a) The primary objective of the R&D Program shall be the
identification and development of Enzymes as Licensed
Enzymes providing enhanced or new properties useful in the
Project Field.
(b) DIVERSA and TDCC shall use their reasonable good faith
efforts to conduct the research activities set forth in the
Work Plans, and to provide Materials and Enzymes as set
forth therein. Both Parties shall employ the best methods
they know which are legally available to them to perform the
Work Plans.
(c) In carrying out the R&D Program, in accord with the Work
Plans, DIVERSA shall devote such number of FTEs during the
Research Term ("Staffing Level") as specified in the Work
Plans, as such Work Plans are amended hereunder from time to
time, and as set forth herein, and TDCC shall pay DIVERSA
for the
---------------------------
* CONFIDENTIAL TREATMENT REQUESTED
-4-
<PAGE>
services of such FTEs as set forth herein. [***]
Notwithstanding the foregoing or anything contained herein
to the contrary, DIVERSA shall not be obligated to devote
more FTEs within any Project Field within the Work Plans
than is budgeted and paid for in advance of such Work Plans
by TDCC pursuant to Section 4.4.2, regardless of whether the
objectives of the Project Field and/or Work Plans are
achieved at all or within the periods expected from the Work
Plans.
(d) DIVERSA and TDCC shall use commercially reasonable efforts
to perform the tasks set forth in the Work Plans, and to
provide the facilities, materials and equipment necessary to
perform the research activities set forth in the Work Plans.
(e) DIVERSA and TDCC shall perform all work in accordance with
the Work Plans, and if it is deemed necessary by a Party, as
mutually agreed upon by the Parties, use the services of a
Third Party to achieve the requirements of the Work Plan.
DIVERSA or TDCC shall do so at its expense without
jeopardizing its obligations under this Agreement.
2.1.2 Collaborative Efforts and Reports.
---------------------------------
(a) The Parties agree that the successful execution of the R&D
Program will require the collaborative use of both Parties'
areas of expertise. The Parties shall keep the Project
Managers fully informed about the status of the portions of
the R&D Program they respectively perform. Without limiting
the foregoing, each Party shall furnish to the Project
Managers semi-annual written reports within 30 days after
the end of each calendar quarter, beginning with the quarter
ending March 31, 2001 including all work done from the
Effective Date, and thereafter by each calendar quarter,
describing the progress of its activities in connection with
the R&D Program in reasonable detail, including at least:
[***]The reports described in this Section 2.1.2 (a) shall
describe [***]. All reports and information provided under
this Section 2.1.2 (a) shall be deemed Confidential
Information of the Party which provided the information.
(b) DIVERSA and TDCC shall cooperate in the performance of the
R&D Program and, subject to any confidentiality obligations
to Third Parties or legal restrictions, shall exchange
information and Materials and Enzymes as necessary to carry
out the R&D Program pursuant to the provisions of this
Agreement. Each Party will attempt to accommodate any
reasonable request of the other Party to send or receive
personnel for purposes of discussing the R&D Program. Such
visits and access will be at mutually agreed times, have
defined purposes, be of agreed limited duration, and be
scheduled in advance. Each Party shall bear all expenses of
their respective personnel related to these visits. It is
understood that any such visiting personnel may be subject
to reasonable restrictions to protect intellectual property
outside the R&D Program and the rights of Third Parties,
which may include sequestration from research projects
outside of the R&D Program. All personnel shall abide by the
required rules for any Third Party visiting that Party's
site, including, but not limited to, security, safety,
personal injury, alcohol use and other matters.
-----------------------------
* CONFIDENTIAL TREATMENT REQUESTED
-5-
<PAGE>
(c) During the Research Term and for a period required to meet
all regulatory requirements, DIVERSA and TDCC shall maintain
records of the R&D Program (or cause such records to be
maintained) in sufficient detail and good scientific manner
as will properly reflect all work done in the R&D Program
and results achieved in the performance of the R&D Program.
Each Party shall allow the other Party to have reasonable
access to all pertinent Research Data generated by or on
behalf of such Party with respect to each Licensed Enzyme.
This retention of records may be extended if there is a
legal proceeding pending (i.e., court action, or U.S.
interference or opposition involving the Party's
Intellectual Property) where those records are reasonably
required and a written request with the reason is provided
to the Party. Each Party shall disclose to the other Party
such Confidential Information to enable patent protection
for the Enzymes and Licensed Enzymes to be obtained. Should
Trade Secrets be concerned, the Parties shall discuss the
best protection for the Licensed Product.
2.1.3 Work Plans.
----------
(a) The Work Plans intended to implement the R&D Program are
attached hereto as Appendix E. The Work Plans set forth
specific, jointly-defined research activities with respect
to [***]. At each [***] with respect to a particular
Project Field, the Parties will [***] and determine [***].
[***]
[***]
[***]
(b) Subject to Section 4.4, TDCC shall have the right to [***].
Further, subject to approval by DIVERSA, which may be given
or withheld in DIVERSA's sole and absolute discretion, but
shall be given good faith consideration, TDCC shall have
the right to [***]. It is understood that the [***] may
result in [***]. If [***] is not [***] by its corresponding
[***], it is understood that this decision may result in
reduction [***] with respect to such Project Field after
[***].
(c) The Work Plans may be modified by the Parties as described
herein, provided that a written copy of each revised Work
Plan, which clearly shows such proposed modifications, is
agreed to in writing by each of the Project Managers and
signed by the Parties, which shall be supplied to each
Party as an amendment to Appendix E. If the Parties are
unable to agree as to the modification terms of a Work
Plan, then the matter shall be addressed as provided in
Article 13 below. Notwithstanding the above, TDCC shall be
responsible for all FTE payments as described in Section
4.4.
(d) [***] shall be clearly identified for transfer to TDCC
under the terms of this Agreement, which permits TDCC to
obtain possession of these Materials, Enzymes and Licensed
Enzymes, subject to the terms of this Agreement.
2.1.4 Disclosures.
-----------
If DIVERSA or TDCC wishes to disclose any Research Results to a
Third Party on a confidential basis (not for publication), it shall
first submit a description of the proposed disclosure directly to
all Project Managers for review at least [***] prior to any such
disclosure. Within [***] of receipt of such description, the Project
Managers shall notify DIVERSA or TDCC, as the case may be, of their
approval or denial of such disclosure, provided such approval shall
not be unreasonably withheld. Failure to provide such notice within
the [***] period shall be deemed to be consent to the proposed
disclosure.
-6-
--------------------------
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
Notwithstanding the foregoing, DIVERSA may provide [***] under
confidentiality terms at least as strict as this Agreement to a
Third Party without the consent of the Project Managers or TDCC for
use [***]. DIVERSA shall not [***]. TDCC may provide any Licensed
Enzyme using the applicable MTA of Appendix D, to any Third Party
without the consent of the Project Managers or DIVERSA if used
within the Project Field; provided, however, that [***].
2.1.5 Project Field Termination.
-------------------------
In the event that research activities for a Project Field
defined in the Work Plans are terminated or suspended as
provided for in this Agreement, TDCC agrees [***]. Further,
TDCC agrees [***]. If the Parties [***], then the matter shall
be addressed as provided in Article 13 below.
2.2 Functions of the Project Managers.
---------------------------------
2.2.1 TDCC and DIVERSA hereby agree to establish Project Managers that
will act on behalf of both Parties to develop, plan, coordinate,
supervise and direct the research work defined in the Work Plans.
The Project Managers shall act in an advisory capacity to the
Parties. Responsibilities of the Project Managers shall include, but
shall not be limited to, the following:
(i) Role to the Parties. When advising the Parties, the research
-------------------
Project Managers shall, among other things, [***]. The
commercial Project Manager shall [***]. For any given Party
there may be one or two Project Manager(s) to fill these
objectives.
(ii) Design and Development of Work Plans. The Project Managers
------------------------------------
shall take into account the desires and directions of the
Parties on the Work Plans undertaken pursuant to this
Agreement. The design and development of the Work Plans by the
Project Managers will be based on, but not limited to, [***].
(iii) Determination of Licensed Enzyme and License. The Project
Managers shall notify both Parties when an Enzyme shall be
designated as a Licensed Enzyme and that a License should be
negotiated in accord with Exhibit 3.
2.2.2 Project Managers for TDCC and DIVERSA.
-------------------------------------
TDCC and DIVERSA each shall appoint, in its sole discretion, one
commercial Project Manager and one Research Project Manager for this
Agreement. The Project Managers may differ for different Work Plans.
[***] when a new Project Manager is appointed by a Party in
substitution of a current Project Manager or as an addition for a
different Work Plan, each Party shall promptly notify the other
Party of their Project Managers in accord with Section 14.1.
2.2.3 Meetings.
--------
The Project Managers shall meet, as necessary and in the Project
Managers' discretion, to develop, plan, coordinate and communicate
the status of the research work defined in the Work Plans. The
meetings shall be held at places and on dates selected by the
Project Managers. The Project Managers may participate in any such
meeting in person, by telephone or by videoconference. Other
representatives of the Parties or Consultants shall be permitted to
participate in these meetings with the prior consent of all of the
Project Managers.
________________________
* CONFIDENTIAL TREATMENT REQUESTED
-7-
<PAGE>
2.2.4 Minutes.
-------
The Project Managers shall keep minutes of their meetings that
record all decisions and all actions recommended or taken. The Party
not hosting the meeting shall be responsible for the preparation of
the meeting agenda and shall be responsible for the preparation and
circulation of the draft minutes. Draft minutes shall be delivered
by mail, electronic mail or facsimile to each Project Manager within
[***] after each meeting. Any intellectual property issues that may
need attention will be highlighted and forwarded to each Party's
Patent Coordinator. Draft minutes shall be edited by all the Project
Managers and shall be issued in final form only with their approval
and agreement as evidenced by their signature on the minutes. A copy
of the signed minutes shall be retained in each Party's files for at
least [***] after termination of this Agreement.
2.2.5 Expenses.
--------
DIVERSA and TDCC shall each bear all expenses of their respective
Project Managers related to their participation and attendance at
Project Managers meetings.
2.3 Third Party Licenses/Infringement of Third Party Patent Rights.
--------------------------------------------------------------
2.3.1 Third Party Licenses. If either Party receives written notice of an
--------------------
allegation of possible patent infringement from a Third Party, then
that Party shall so notify the Patent Coordinators and the Parties.
The Parties shall resolve the issue, including determining whether
or not to obtain a Third Party License.
2.3.2 Third Party Infringement. If either Party believes that performing
------------------------
a given task in the Work Plans may cause them to infringe a patent
of a Third Party, that Party may refuse to perform the task and
suggest an alternative, non-infringing method. The Parties shall be
informed and decide whether to seek a license.
2.4 Post Research Term Cooperation.
------------------------------
At least three (3) months prior to the expiration of the Research Term, the
Parties shall meet to agree on mechanisms for coordinating and managing
activities (including, but not limited to, patent prosecution and
publication review) that will occur after the expiration of the Research
Term which would otherwise be addressed by the Project Managers. Any
patent applications included in a Party's Intellectual Property or Joint
Intellectual Property which have not been filed shall be filed in the first
instance during the Agreement Term, and both Parties shall cooperate with
respect to all issues and formal papers. It is expected that if a License
is signed, it will be in accord with the terms stated in the License
attached hereto as Exhibit 3, and all patents covering a Party's Patent
Rights reasonably related to the items to be licensed thereunder shall be
filed by the signature to the License. Cooperation for Patent Rights
issues by the Parties is expected until all patents have issued and any
extensions of patent term obtained. It may occur that patents covering
such Patent Rights will not be filed by the date of execution of the
License if the Customer desires that the License be signed during a Work
Plan that is not completed. In such event, patents covering such Patent
Rights shall be filed as soon as possible and added to the License.
2.5 [***].
Each Party hereby agrees [***]; provided that the obligations set forth in
this sentence with respect to a [***] shall [***], except that [***].
-----------------------
* CONFIDENTIAL TREATMENT REQUESTED
-8-
<PAGE>
Article 3. GRANT OF RIGHTS
3.1 To TDCC.
-------
3.1.1 Subject to the terms and conditions of this Agreement and the MCA,
DIVERSA hereby grants to TDCC [***]. Additionally, DIVERSA grants
TDCC [***]. Notwithstanding this provision, TDCC may [***]. TDCC
must [***] before [***].
3.1.2 When an Enzyme is designated as a Licensed Enzyme, then [***].
3.2 To DIVERSA.
--- ----------
3.2.1 Subject to the terms and conditions of this Agreement and the MCA,
TDCC hereby grants to DIVERSA [***].
3.2.2 TDCC shall grant DIVERSA [***].
3.3 Assignment.
----------
3.3.1 TDCC.
----
TDCC shall [***].
3.3.2 DIVERSA.
-------
DIVERSA shall [***].
3.4 Retained Rights.
----------------
3.4.1 DIVERSA.
-------
(a) DIVERSA shall retain all right, title and interest in and to
[***].
(b) DIVERSA may [***].
(c) Notwithstanding the license granted to TDCC in Section 3.1,
DIVERSA shall [***].
3.4.2 TDCC.
----
TDCC shall retain all right, title and interest in and to [***].
3.4.3 Joint Patent Rights.
-------------------
The rights to the Joint Intellectual Property shall be in accord
with the Intellectual Property Chart in Appendix G.
Article 4. PAYMENTS
4.1 Technology Development.
----------------------
[***]
4.2 Exclusivity Fees.
----------------
[***]
4.3 Payments.
--------
All payments under Sections 4.1 and 4.2 shall be in accord with the MCA.
All payments due under this Agreement shall be made in accord with the
respective sections of Article 4 by bank wire transfer in immediately
available funds to a bank account designated in writing to TDCC by
---------------------
* CONFIDENTIAL TREATMENT REQUESTED
-9-
<PAGE>
DIVERSA. In the event that the due date of any payment subject to this
Article 4 hereof is a Saturday, Sunday or national holiday, such payment
may be paid on the following business day. Any late payments shall bear
interest to the extent permitted by applicable law at the prime rate (as
reported by the Bank of America, San Francisco, California, or its
successor), on the date such payment is due plus an additional [***],
calculated on the number of days such payment is delinquent. The rights
provided in this Section 4.3 shall in no way limit any other remedies
available to DIVERSA hereunder.
4.4 FTE Payments.
------------
4.4.1 In addition to the other payments due pursuant to this Article 4,
TDCC shall pay to DIVERSA:
(a) a noncontingent and nonrefundable amount of [***] per FTE for
all FTEs for the Project Field as specified in the Work Plans
from the Effective Date [***]; and
(b) for [***] a noncontingent and nonrefundable amount per FTE
equal to DIVERSA's then applicable FTE rate ("Standard FTE
Rate") in effect on [***].
(c) It is expressly agreed by the Parties that [***]. Unless agreed
to in writing by DIVERSA, which agreement may be given or
withheld in DIVERSA's sole and absolute discretion, TDCC will
[***]. Therefore, [***]. So long as the FTE commitment stated
in this Section 4.4 is paid, TDCC [***].
(d) Notwithstanding Section 2.1.1(c), [***].
(e) It is further understood that the Standard FTE Rate is
scheduled to increase to [***] beginning [***], which shall
only go into effect for TDCC after [***]. DIVERSA agrees that
[***]. If the Parties mutually agree to extend [***] for a
Project Field, then the FTE rate in effect prior to that
extension shall continue to apply until [***].
4.4.2 Payments due pursuant to the above Section 4.4.1 shall be made in
advance, on or before the first day of each calendar quarter, with
the first and last payments prorated in the event that the Effective
Date is not the first day of a calendar quarter. Should payment be
due on a Saturday, Sunday or national holiday, such payment may be
paid on the following business day. In the event that the Parties
agree to a different Staffing Level for any given calendar quarter,
the payment set forth in this Section 4.4 shall be prorated
accordingly based on the Standard FTE Rate then applicable. Any
change in the amount of the FTE payment due in a quarter shall be
reported to TDCC by DIVERSA in writing [***]. Notwithstanding the
foregoing, within [***]following the Signature Date, TDCC shall pay
to DIVERSA a noncontingent and nonrefundable amount of [***].
4.5 Milestone Payments
------------------
With respect to each Project Field, TDCC shall pay DIVERSA on the first
occurrence of the following events:
(a) New Product: A fixed sum in US dollars upon [***]; or
----------- --
(b) Existing Commercial Product: A fixed sum in US dollars upon [***].
---------------------------
For each Project Field in the Work Plans, Appendix H shall define whether
the Project Field is a New Product or an Existing Commercial Product and the
corresponding amount of each milestone payment under this Section 4.5. The
amount of each milestone payment hereunder shall be determined prior to DIVERSA
completing its commitment under a Project Field as defined in the Work Plans.
The amount of each milestone payment shall be added as an amendment to
---------------------------
* CONFIDENTIAL TREATMENT REQUESTED
-10-
<PAGE>
Appendix H. Notwithstanding anything to the contrary contained herein, (i)
TDCC's rights hereunder to license an Enzyme with respect to a Project Field
corresponding to an Existing Commercial Product shall be subject to TDCC's
payment to DIVERSA of the applicable milestone under this Section 4.5 and (ii)
any License of an Enzyme with respect to a Project Field corresponding to a New
Product shall expressly provide for the payment of the milestone specified in
this Section 4.5. [***].
Article 5. LICENSE; DEVELOPMENT REPORTS
5.1 License.
-------
Subject to Section 4.5, the Parties have agreed to enter into a License to
[***]. DIVERSA hereby represents:
(a) that it is willing and able to grant to TDCC [***], and
(b) that to the best of its knowledge, [***].
With respect to each Project Field, TDCC shall [***]. If TDCC fails to
e[***], then [***]. The [***] day time period can only be extended by
mutual written consent of the Parties.
5.2 Retained Rights by TDCC.
------------------------
TDCC may [***], provided [***]. If TDCC desires that a Third Party assist
TDCC in such research, it shall be in accordance with Sections 3.1, 3.3 and
3.4.
5.2 Reports.
-------
Additionally, where legally possible, each Party shall inform the other
Party of the Customers and Sublicensees that are interested in the Licensed
Enzymes and Project Field.
Article 6. CONFIDENTIAL INFORMATION
6.1 Confidentiality.
---------------
6.1.1 General.
-------
(a) DIVERSA and TDCC each recognize that the other Party's
Confidential Information constitutes highly valuable and
proprietary confidential information. Subject to the terms and
conditions of Article 8, DIVERSA and TDCC agree that, except
as required by applicable law, rule or regulation (including
the filing and prosecution of patent applications) or judicial
or administrative order, during the Agreement Term and for
five (5) years thereafter, unless these terms are modified by
the License, after the expiration of the Agreement Term:
(i) each Party will keep confidential and will cause its
employees, consultants, and Affiliates, to keep
confidential, all Confidential Information of the other
Party that is disclosed to it, or to any of its employees or
consultants, under or in connection with this Agreement; and
--------------------------
* CONFIDENTIAL TREATMENT REQUESTED
-11-
<PAGE>
(ii) neither Party nor any of its respective employees,
consultants or Affiliates shall use Confidential Information
of the other Party for any purpose whatsoever, except as
expressly permitted in this Agreement.
(b) Notwithstanding subsection (a) above:
(i) either Party may disclose the other Party's
Confidential Information to the extent reasonably necessary
in prosecuting or defending litigation, complying with
applicable governmental regulations or court orders or
otherwise submitting information to tax or other
governmental authorities; provided that, if a Party is
required to make any such disclosure of the other Party's
Confidential Information, it will give reasonable advance
notice to the other Party of such disclosure and will use
reasonable efforts to secure confidential treatment of such
Confidential Information (whether through protective orders
or otherwise); and
(ii) the Parties will reasonably cooperate with each other
in the making of reasonable disclosures of Confidential
Information to actual and potential agents, investment
bankers, investors and potential investors of each Party;
provided, however, that such disclosures shall be critically
required for an investment objective, notice shall be
provided to the Party who owns the Confidential Information
to protect its rights, and disclosure shall only be made
under the terms of a confidentiality agreement providing
protections no less stringent than those contained herein.
6.1.2 Restricted Access.
-----------------
(a) Disclosure of a Party's Confidential Information to any of the
officers, employees, Consultants or agents of the other Party
shall be made only if and to the extent necessary to carry out
rights and responsibilities under this Agreement, shall be
limited to the maximum extent possible, consistent with such
rights and responsibilities, and shall only be made to persons
who are bound to maintain the confidentiality thereof and who
agree not to use such Confidential Information except as
expressly permitted by this Agreement. If TDCC discloses any
DIVERSA Confidential Information to TDCC's Affiliates, it shall
do so under these same terms and conditions of this Section
6.1.2.
(b) Each Party shall use at least the same standard of care, but no
less than a reasonable standard of care for this industry, as it
uses to protect its own Confidential Information to ensure that
its Affiliates, employees, agents, Consultants and other
representatives do not disclose or make any unauthorized use of
Confidential Information of the other Party. Each Party shall
promptly notify the other Party of any unauthorized use or
disclosure of Confidential Information of the other Party.
(c) Within [***] following termination or expiration of this
Agreement Term, each Party will return to the other Party, or
destroy, upon the written request of the other Party, all
Confidential Information disclosed to it by the other Party
pursuant to this Agreement, including all copies and extracts of
documents; provided that a Party may retain Confidential
Information of the other Party relating to any License or right
to use Licensed Patent Rights that survives such termination,
and one copy of all other Confidential Information may be
retained in confidential and inactive archives
--------------------
* CONFIDENTIAL TREATEMNT REQUESTED
-12-
<PAGE>
solely for the purpose of establishing the contents thereof and
to determine the continuing obligations of each Party.
6.1.3 Employee Confidentiality Agreements.
-----------------------------------
DIVERSA and TDCC each represent that all of its employees and any
Consultants participating in the R&D Program or who shall otherwise
have access to Confidential Information of the other Party are bound
by written agreements to maintain such information in confidence and
not to use such information except as expressly permitted herein.
Each Party agrees to enforce confidentiality obligations by which
its employees and Consultants are bound.
6.2 Publicity.
---------
Except as expressly provided herein, neither Party may disclose the
existence or terms of this Agreement without the prior written consent of
the other Party; provided, however, that either Party may make such
disclosure to the extent required by law and that either Party may make a
disclosure of the existence of this Agreement to its attorneys, advisers,
investors, prospective investors, lenders and other financing sources,
under circumstances that reasonably ensure the confidentiality thereof.
Notwithstanding the foregoing, the Parties shall mutually agree upon:
(a) A press release to announce the execution of this Agreement which
includes mutually agreed upon financial terms, such as funding and
sharing terms, together with a corresponding Q&A outline for use in
responding to inquiries about the Agreement; thereafter, TDCC and
DIVERSA may each disclose to Third Parties the information contained
in such press release and Q&A outline without the need for further
approval by the other Party. Either Party may disclose information
regarding this Agreement to the extent required by any Securities and
Exchange Commission filings or regulations, but all financial terms
must be redacted prior to submission.
(b) In addition, DIVERSA may (i) make public statements regarding Licensed
Enzymes by announcing in general terms [***], following consultation
with TDCC and with the prior written consent of TDCC, and (ii) without
the prior consent of TDCC, make public statements, without identifying
TDCC, [***].
(c) Subject to the applicable terms of the MCA and this Agreement, if any,
governing disclosures related to Licensed Enzymes, TDCC is free to
make public statements, press releases, and the like, with respect to
Licensed Enzymes and Licensed Products.
6.3 Publication.
-----------
A Party wishing to publish or otherwise publicly disclose its Research
Results shall first submit a draft of the proposed manuscripts
simultaneously to all Project Managers for review by the other Party at
least [***] prior to any submission for publication or other public
disclosure. To avoid loss of patent rights as a result of premature public
disclosure of patentable information, the reviewing Party shall notify the
submitting Party in writing within [***] after receipt of such proposed
disclosure whether the reviewing Party desires that a patent application be
filed on any invention disclosed in such proposed disclosure. In the event
that the reviewing Party desires such filing, the submitting Party shall
withhold publication or disclosure of such proposed disclosure until the
earlier of (i) the date a patent application is filed thereon, or (ii) the
date the Parties determine after consultation that no patentable invention
exists, or (iii) [***] after receipt by the submitting Party of the
reviewing Party's written notice of the reviewing Party's desire to file
such patent application. If the proposed disclosure contains Confidential
Information of the reviewing Party that is subject to nondisclosure
obligations under this Article 6, the submitting Party agrees to remove
such Confidential Information upon request of the reviewing Party.
-13-
----------------------------
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
Article 7. INTELLECTUAL PROPERTY RIGHTS
7.1 Disclosure of Inventions.
------------------------
Each Party shall promptly inform the Project Managers of all Research
Results relevant to the progress of the Work Plans towards its pre-agreed
goals.
7.2 Ownership.
---------
All intellectual property rights, which are in possession of either Party
as of the Effective Date, shall remain in the possession of that Party.
Ownership of inventions conceived of during the course of the collaboration
in the Project Field will be as follows:
7.2.1 DIVERSA Intellectual Property Rights.
------------------------------------
DIVERSA shall have sole and exclusive ownership of all right, title
and interest on a worldwide basis in and to [***].
7.2.2 TDCC Intellectual Property Rights.
---------------------------------
TDCC shall have sole and exclusive ownership of all right, title and
interest on a worldwide basis in and to [***].
7.2.3 Joint Intellectual Property Rights.
----------------------------------
TDCC and DIVERSA shall jointly own all Joint Research Results.
7.2.4 Inventions Relating to Licensed Enzymes or Licensed Products.
-------------------------------------------------------------
Notwithstanding the foregoing, the Parties shall own their
respective patent rights for Licensed Products and Licensed Patent
Rights as agreed to by the Parties at the time an Enzyme becomes a
Licensed Enzyme. As of the date hereof, the Parties agree that
[***].
7.2.5 Trade Secrets.
-------------
If any Trade Secrets are developed, they shall remain the property
of the Party that developed it. Such Trade Secrets may not be
disclosed to the other Party.
7.3 Patent Coordinators.
-------------------
DIVERSA and TDCC shall each appoint a patent coordinator ("Patent
Coordinator") who shall serve as such Party's primary liaison with the
other Party on matters relating to ownership of Inventions, inventorship,
patent filing, prosecution, maintenance and enforcement. Each Party may
replace its Patent Coordinator at any time by written notice in writing to
the other Party. The initial Patent Coordinator from DIVERSA is [***] and
from TDCC is [***].
7.4 Inventorship.
------------
Except as specifically provided above, ownership of Inventions and
inventorship shall be determined by the Patent Coordinators in accordance
with United States patent law and using the[***], subject to Section 7.2.4.
If the Patent Coordinators can not agree on inventorship or ownership of
Inventions, then a neutral patent attorney, acceptable to both Parties,
shall make the determination, with each Party equally sharing the costs.
7.5 Deposits.
--------
Should deposits of a Licensed Enzyme be desired by either Party to support
the filing of a patent application, both Parties agree to cooperate to
enable and obtain such deposit. Ownership of and costs for the deposit
shall be borne by the Party responsible in accordance with Article 8.
[***]
---------------------------
* CONFIDENTIAL TREATMENT REQUESTED
-14-
<PAGE>
Article 8. PROVISIONS CONCERNING THE FILING, PROSECUTION
AND MAINTENANCE OF PATENT RIGHTS
The following provisions relate to the filing, prosecution and maintenance
of Licensed Patent Rights or DIVERSA Patent Rights or TDCC Patent Rights subject
to License rights under this Agreement.
8.1 Filing and Prosecution of Patents.
---------------------------------
8.1.1 Primary Responsibilities.
------------------------
In consultation with the Patent Coordinators, the Project Managers
will coordinate the determination of what patents will be filed on
Research Results resulting from the R&D Program. Unless the Project
Managers agree otherwise in writing, the Parties shall have the
following responsibilities for patent filing, prosecution and
maintenance (including the defense of interferences, oppositions and
similar proceedings) (collectively, "Patent Activities"):
(a) TDCC Inventions. TDCC will be responsible, at its sole
---------------
expense, for Patent Activities with respect to Licensed Patent
Rights made solely by TDCC.
(b) DIVERSA Inventions. DIVERSA will be responsible, at its sole
------------------
expense, for Patent Activities with respect to Inventions made
solely by DIVERSA.
(c) Joint Intellectual Property. In the case of Joint Intellectual
---------------------------
Property and Joint Patent Rights not otherwise covered in
Section 8.1.1, Patent Activities shall be conducted by outside
counsel, reasonably acceptable to both Parties, with equal
control and joint responsibility for costs incurred in
connection with the applicable Patent Activities. The Parties
shall be free to agree not to patent Joint Intellectual
Property and/or retain such Joint Intellectual Property as a
trade secret.
(d) Intellectual Property [***]. TDCC and DIVERSA shall make
----------------------
reasonable efforts to License the Licensed Patent Rights to the
other in accord with [***]. The effort to commercialize
Licensed Products should be encouraged and protected to the
best extent possible for the Parties to provide for protection
for the Customers and Sublicensees.
8.1.2 Cooperation.
-----------
In each case in Section 8.1.1 above, the Party responsible for
Patent Activities for the applicable patent applications (the
"Responsible Party") shall use reasonable efforts to obtain patent
coverage that is as broad as possible to cover all potential
commercial applications thereof. Each Party shall be kept informed
of all substantive matters relating to the preparation and
prosecution of all patent applications under the Joint Patent
Rights. Additionally, TDCC and DIVERSA agree to confer with regard
to their patent filing activities under Section 8.1.1 (a) - (c) to
ensure that concurrent filing of patents and discussion on prior art
occur and any Joint Inventions are mutually determined and defined
as to the scope as deemed necessary by the Patent Coordinators.
Coordinate filing to maximize protection.
8.2 Elective Termination of Rights.
------------------------------
If at any time the Responsible Party does not wish to file any patent
application or wishes to discontinue the prosecution or maintenance of any
Patent Rights claiming any Licensed Enzyme
----------------------------------
* CONFIDENTIAL TREATMENT REQUESTED
-15-
<PAGE>
or Licensed Product filed in any country, it shall promptly give notice of
such intention to the other Party. The latter shall have the right, but not
the obligation, to assume responsibility for the filing, prosecution or
maintenance of any such Patent Rights on a country-by-country basis at its
own expense, by giving notice to the Responsible Party of such intention
within [***]. No assignment of Patent Rights shall be made to the other
Party unless specifically agreed to under appropriate negotiated terms and
conditions. In any such case, the Party declining such responsibilities
shall not grant any Third Party a license under its interest in the
applicable Patent Rights in the applicable country or countries and may not
practice the applicable Patent Rights for any commercial use (but may
practice, royalty free such Patent Rights for research use) without the
prior written consent of the other Party. The other Party will bear the
costs of Patent Activities with respect to all Patent Rights for which it
has assumed responsibility pursuant to this Section 8.2. The Parties may
elect to publish rather than file for patent protection or may abandon
filed patent rights by mutual written consent.
Article 9. LEGAL ACTION
9.1 Actual or Threatened Infringement.
---------------------------------
9.1.1 Notice.
------
In the event either Party becomes aware of any actual or threatened
commercially material infringement or unauthorized possession
anywhere in the world, knowledge or use of any Patent Rights
(collectively, an "Infringement"), that Party shall, within [***],
notify the other Party and provide it with all available details to
the extent it is legally permitted to do so. The Parties will meet
to discuss the appropriate course of action, and may collaborate in
pursuing such course or action.
9.1.2 Primary Responsibility.
----------------------
(a) Notwithstanding the foregoing, if the Parties do not otherwise
agree on a course of action, TDCC shall have primary
responsibility for the prosecution, prevention or termination
of any Infringement of TDCC Patent Rights hereunder, at TDCC's
expense and with the sharing of recoveries as specified below.
(b) DIVERSA shall have primary responsibility for the prosecution,
prevention or termination of any Infringement of DIVERSA Patent
Rights, at DIVERSA's expense and with the sharing of recoveries
as specified below.
If either Party which has primary responsibility as described in (a)
or (b) above determines that it is necessary or desirable for the
other Party to join any such suit, action or proceeding, the other
Party shall execute all papers and perform such other acts as may be
reasonably required in the circumstances, at the expense of the
Party which has primary responsibility.
9.1.3 Jointly-Owned Patents.
---------------------
In the event of an Infringement of Joint Patent Rights, the Parties
shall agree which Party will have the rights and responsibilities of
abating such Infringement, and how the expenses and any recovery
thereof shall be shared. In this event, the responsible Party shall
use patent counsel reasonably acceptable to the other Party, and
shall keep the other Party fully informed as to the status of such
matters. In the event only one Party wishes to pursue such
proceeding, it shall have the right to proceed alone, at its
expense, and may retain any recovery, and the other Party agrees, at
the request and expense of
-------------------------------
* CONFIDENTIAL TREATMENT REQUESTED
-16-
<PAGE>
the Party initiating such action, to cooperate and join in any
proceedings in the event that a Third Party asserts that the co-
owner of such Joint Invention is necessary or indispensable to such
proceedings.
9.1.4 Costs.
-----
TDCC shall bear the cost of any proceeding or suit under this
Section 9.1 brought by TDCC; and DIVERSA shall bear the cost of any
such proceeding or suit brought by DIVERSA. In each such case, the
Responsible Party shall have the right [***].
9.1.5 Separate Counsel.
----------------
Each Party shall always have the right to be represented by counsel
of its own selection and at its own expense in any suit instituted
under this Section 9.1 by the other Party for an Infringement.
9.1.6 Standing.
--------
If either Party lacks standing and the other Party has standing to
bring any such suit, action or proceeding as specified above, then
the Responsible Party may request the other Party to do so at the
Responsible Party's expense. The Party with standing is under no
obligation to comply with such request, but rather is free to refuse
such request.
9.1.7 Cooperation.
-----------
In any action under this Section 9.1, each Party shall fully
cooperate with and assist the other Party as reasonably requested.
No suit regarding DIVERSA Intellectual Property or Joint
Intellectual Property may be settled by TDCC without DIVERSA's prior
written consent. No suit regarding TDCC Intellectual Property or
Joint Intellectual Property may be settled by DIVERSA without TDCC's
prior written consent.
9.2 Defense of Claims Asserted by Third Parties Against TDCC.
--------------------------------------------------------
TDCC shall defend, indemnify and hold DIVERSA and its Affiliates, and their
respective agents, directors, officers, and employees harmless from and
against any and all losses, liabilities, claims, demands, damages, costs,
expenses or money judgments (including reasonable attorneys' fees and
expenses) incurred by or rendered against any of them for personal injury,
sickness, disease or death or property damage which arise out of:
(a) the development, manufacturing, testing, handling, storage, use,
promotion, sale or distribution of Licensed Products by TDCC or its
Affiliates, except for those instances for which DIVERSA, and not
TDCC, performs any of these functions; or
(b) the breach by TDCC of any of its representations, warranties or
covenants contained in this Agreement; or
(c) the intentional misconduct or gross negligence of TDCC;
provided, however, that DIVERSA shall give TDCC notice in writing in accord
with Article 14 as soon as practicable of any such claim or lawsuit and
shall permit TDCC to undertake the defense thereof at TDCC's expense.
However,
(i) DIVERSA will cooperate in such defense by providing access to
witnesses and evidence available to it. DIVERSA shall have the
right, at its expense, to participate in any defense to the
extent that in its judgment, DIVERSA may be prejudiced thereby;
and
(ii) In any claim or suit in which DIVERSA seeks indemnification by
TDCC, DIVERSA shall not settle, offer to settle or admit
liability or damages in any such claim or suit without the prior
written consent of TDCC.
--------------------------------
* CONFIDENTIAL TREATMENT REQUESTED
-17-
<PAGE>
9.3. Defense of Claims Asserted by Third Parties Against DIVERSA.
-----------------------------------------------------------
DIVERSA shall indemnify and hold TDCC, its agents, directors, officers,
employees and Affiliates harmless from and against any and all
liabilities, claims, demands, damages, costs, expenses or money judgments
(including reasonable attorneys' fees and expenses) incurred by or
rendered against any of them for personal injury, sickness, disease or
death or property damage which directly arise out of:
(a) the intentional misconduct or negligence of DIVERSA; or
(b) the breach by DIVERSA of its representations, warranties or
covenants contained in this Agreement; or
(c) any activity carried out with Enzymes or Licensed Enzyme by
DIVERSA or its Affiliates other than through TDCC and its
Affiliates under this Agreement;
provided, however, that TDCC shall give DIVERSA notice in writing in
accord with Article 14 as soon as practicable of any such claim or lawsuit
and shall permit DIVERSA to undertake the defense thereof (including the
right to settle the claim solely for monetary consideration) at DIVERSA's
expense. However,
(i) TDCC will cooperate in such defense by providing access to
witnesses and evidence available to it. TDCC shall have the
right, at its expense, to participate in any defense to the
extent that in its judgment, TDCC may be prejudiced thereby; and
(ii) in any claim or suit in which TDCC seeks indemnification by
DIVERSA, TDCC shall not settle, offer to settle or admit
liability or damages in any such claim or suit without the prior
written consent of DIVERSA.
9.4 Notice.
------
TDCC or DIVERSA shall notify the other in accord with Section 14.1 of any
suits or claims or proceedings brought against it under Section 9.2 or 9.3,
respectively.
Article 10. TERMINATION AND DISENGAGEMENT
10.1 Term.
----
The term of this Agreement, together with all Project Fields, will
commence as of the Effective Date and will continue until the end of the
Agreement Term. The Parties will commence negotiations [***] prior to the
end of the Research Term to extend the Agreement Term - if the Work Plan
requires more time to be completed - on mutually acceptable terms, and
complete such negotiations prior to the end of the Agreement Term;
provided, however, that neither Party shall be obligated to extend the
Agreement Term if mutually acceptable terms are not agreed to prior to the
end of the Agreement Term. This Agreement may be terminated at any time
upon mutual written agreement of the Parties or unilaterally by TDCC on
[***] written notice to DIVERSA, provided that TDCC pays DIVERSA for FTEs
as specified by the Work Plans (i.e., for all FTEs with respect to each
Project Field as specified in the Work Plans until [***]) and this
Agreement. Thus, TDCC may terminate this Agreement in its entirety or
separately for each Project Field so long as the FTE payment due [***] has
been met in accord with Section 4.4.
10.2 Change of Control.
-----------------
The Parties shall have the right to terminate this Agreement upon the
occurrence of a Change of Control of either Party during the term of this
Agreement by providing written notice of termination to the other Party
within [***] following receipt of written notice of the occurrence of such
Change of Control. In the event that the Party does not terminate this
Agreement under this Section 10.2, this Agreement will be binding upon the
Party subject to the Change of Control, or any successor to such Party.
Notwithstanding this paragraph, this Agreement may be terminated and all
Licenses be retained.
-18-
---------------------------
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
10.3 Material Breach.
---------------
In the event that a Party commits a material breach of any of its
obligations under this Agreement, and such Party fails (i) to remedy that
breach within [***] after receiving written notice thereof from the other
Party or (ii) to commence dispute resolution under this Agreement within
[***] after receiving written notice of that breach from the non-breaching
Party, the non-breaching Party may immediately terminate this Agreement,
upon written notice to the breaching Party. Notwithstanding any material
breach of this Agreement, any existing Licenses are to be retained in
effect, unless terminated under the provisions of each License.
10.4 Breach of Payment Obligations.
-----------------------------
In the event that TDCC fails to make timely payment of any amounts due
under this Agreement, within [***] after demand therefor, DIVERSA may
terminate this Agreement upon prior written notice, unless TDCC cures such
breach by paying all past-due amounts, together with all interest accrued
thereon, if any, within such [***] notice period, provided that TDCC shall
be entitled to use such cure provision no more than [***] for this
Agreement.
10.5 Bankruptcy.
----------
10.5.1 If either Party (the "Insolvent Party") files for protection under
bankruptcy laws, makes an assignment for the benefit of creditors,
appoints or suffers appointment of a receiver or trustee over its
property, files a voluntary petition under any bankruptcy or
insolvency act or has any such petition filed against it which is
not discharged within of the filing thereof, then the other Party
may, at its sole election upon notice to the Insolvent Party,
terminate this Agreement by written notice to such Party.
10.5.2 All rights and licenses granted under or pursuant to this
Agreement shall be deemed to be, for purposes of Section 365(n) of
the U.S. Bankruptcy Code, licenses or rights to "intellectual
property" as defined under Section 101(52) of the U.S. Bankruptcy
Code. The Parties agree that each Party, as a licensee of such
rights under this Agreement, shall retain and may fully exercise
all of its rights and elections under the U.S. Bankruptcy Code,
subject to performance by the licensee of its preexisting
obligations under this Agreement.
10.6 Effect of Termination; Accrued Obligations.
------------------------------------------
10.6.1 Accrued Obligations.
-------------------
Termination of this Agreement for any reason shall not release
any Party hereto from any liability which, at the time of such
termination, has already accrued to the other Party or which is
attributable to a period prior to such termination, nor preclude
either Party from pursuing any rights and remedies it may have
hereunder or at law or in equity which accrued or are based upon
any event occurring prior to such termination.
10.6.2 Licenses.
---------
In the event this Agreement terminates pursuant to this Section
10, then the R&D Program shall immediately terminate, all
payments due by TDCC to DIVERSA shall immediately terminate
except for payments to DIVERSA for DIVERSA FTEs as specified in
the Work Plans (i.e., for all FTEs with respect to each Project
Field as specified in the Work Plans until [***]) and this
Agreement, and the Licenses granted to either Party in Article 3
shall continue (to provide assurance for the Customers and
Sublicensees).
--------------------------
* CONFIDENTIAL TREATMENT REQUESTED
-19-
<PAGE>
10.7 Surviving Provisions after Termination of this Agreement.
--------------------------------------------------------
Articles 12 and 14 and Sections 6.1, 6.2, 6.3, 7.2, 7.4, 7.5, 10.5, 11.1.4
and 11.1.5 of this Agreement and any executed Licenses shall survive the
expiration or termination of this Agreement for any reason.
Article 11. REPRESENTATIONS AND WARRANTIES
11.1 Mutual Representations.
----------------------
DIVERSA and TDCC each represents and warrants as follows:
11.1.1 Organization.
------------
It is a corporation duly organized, validly existing and is in
good standing under the laws of the jurisdiction of its
incorporation, is qualified to do business and in good standing as
a foreign corporation in each jurisdiction in which the
performance of its obligations hereunder requires such
qualification and has all requisite power and authority, corporate
or otherwise, to conduct its business as now being conducted, to
own, lease and operate its properties and to execute, deliver and
perform this Agreement.
11.1.2 Authorization.
-------------
The execution, delivery and performance by it of this Agreement
have been duly authorized by all necessary corporate action and do
not and will not: (a) require any consent or approval of its
stockholders or (b) violate any provision of any law, rule,
regulation, order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to
it or any provision of its charter documents.
11.1.3 Binding Agreement.
-----------------
This Agreement is a legal, valid and binding obligation of it,
enforceable against it in accordance with its terms and
conditions.
11.1.4 Warranty Disclaimer.
-------------------
The Parties acknowledge that the research activities contemplated
hereunder are experimental, and that the R&D Program may not be
successful. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
Agreement, NEITHER Party MAKES ANY REPRESENTATION OR WARRANTY OF
ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO ANY Confidential
Information, Patent Rights, DIVERSA Know-How, TDCC Know-How
Enzymes, Licensed Enzymes, Licensed Products, Intermediates, APIs,
OR OTHER TECHNOLOGY, GOODS, SERVICES, RIGHTS OR OTHER SUBJECT
MATTER OF THIS Agreement AND HEREBY DISCLAIMS ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-
INFRINGEMENT, OR VALIDITY OF TECHNOLOGY OR PATENT CLAIMS, ISSUED
OR PENDING, WITH RESPECT TO ANY AND ALL OF THE FOREGOING.
11.1.5 Limited Liability.
-----------------
EXCEPT AS EXPRESSLY PROVIDED HEREIN, NEITHER DIVERSA NOR TDCC WILL
BE LIABLE TO THE OTHER Party WITH RESPECT TO ANY SUBJECT MATTER OF
THIS Agreement UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR
OTHER LEGAL OR EQUITABLE THEORY FOR (i) ANY SPECIAL, INDIRECT,
INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST PROFITS OR
(ii) COST OF PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY OR
SERVICES.
-20-
<PAGE>
Article 12. INDEMNIFICATION
12.1 Indemnification.
----------------
Neither Party shall indemnify the other Party nor its Affiliates, or
respective officers, directors, employees and agents and its respective
successors, heirs and assigns ("Indemnitees") except for Sections 9.2 and
9.3, its respective gross negligence, or failure to perform using its
reasonable best efforts under the Work Plans. This paragraph does not
limit either Party's other remedies available to it under the laws.
12.2 Procedure.
---------
12.2.1 A Party that intends to claim indemnification under this Article
12 (the "Indemnitee") shall promptly notify the other Party (the
"Indemnitor") in writing of any loss, claim, damage, liability or
action in respect of which the Indemnitee or any of its Affiliates
or their directors, officers, employees, agents, consultants or
counsel intend to claim such indemnification, and the Indemnitor
shall have the right to participate in, and, to the extent the
Indemnitor so desires, to assume the defense thereof with counsel
of its own choice.
12.2.2 The indemnity agreement in this Article 12 shall not apply to
amounts paid in settlement of any loss, claim, damage, liability
or action if such settlement is made without the consent of the
Indemnitor, which consent shall not be withheld unreasonably. The
failure to deliver written notice to the Indemnitor within a
reasonable time after the commencement of any such action, if
prejudicial to its ability to defend such action, shall relieve
such Indemnitor of any liability to the Indemnitee under this
Article 12.
12.2.3 At the Indemnitor's request, the Indemnitee under this Article 12,
and its employees and agents, shall cooperate fully with the
Indemnitor and its legal representatives in the investigation and
defense of any action, claim or liability covered by this
indemnification and provide full information with respect thereto.
Article 13. DISPUTE RESOLUTION
13.1 Informal Dispute Resolution.
---------------------------
The Parties recognize that a bona fide dispute as to certain matters may
from time to time arise during the Agreement Term, which relates to either
Party's rights or obligations hereunder. In the event of the occurrence of
such a dispute, either Party may, by written notice to the other Party,
have such dispute referred to the Chief Executive Officer of DIVERSA and
the President in charge of Specialties of TDCC, or their successors or
counterparts, for resolution by good faith negotiations within [***] after
such notice is received at a mutually convenient location or by telephonic
or video conferencing.
If the dispute is not resolved by the good faith efforts under the above
paragraph, then either Party may terminate this Agreement, but not
Licenses, in accord with Article 10.
Article 14. MISCELLANEOUS
14.1 Notices.
-------
All notices (including, but not limited to legal matters) shall be in
writing mailed via certified mail, return receipt requested, or overnight
express mail, courier providing evidence of delivery, addressed as
follows, or to such other address as may be designated by notice so given
from time to time:
-21-
<PAGE>
<TABLE>
<CAPTION>
<C> <S>
If to TDCC: THE DOW CHEMICAL COMPANY
[***]
Midland, Michigan 48674
Attention: [***]
If to DIVERSA: DIVERSA CORPORATION
4955 Directors Place
San Diego, California 92121
Attention: Patrick McCroskey
</TABLE>
If the notice relates to scientific matters, such as a Work Plan, or a project,
the notice for the Parties is to be supplied and received in the manner
described above but sent to:
<TABLE>
<CAPTION>
<C> <S>
If to TDCC: THE DOW CHEMICAL COMPANY
[***]
Midland, Michigan 48674
Attention: [***]
If to DIVERSA: DIVERSA CORPORATION.
4955 Directors Place
San Diego, California 92121
Attention: Mary Perez
</TABLE>
Notices shall be deemed given as of the date received. Any Party may change its
designated address or contact person by notice to the other Party in the manner
provided in this Section.
14.2 Governing Law and Jurisdiction.
------------------------------
This Agreement shall be governed by and construed in accordance with the
laws of the State of [***], without regard to the application of principles
of conflicts of law.
14.3 Binding Effect.
--------------
This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective legal representatives, successors and
permitted assigns.
14.4 Headings.
--------
Section and subsection headings are inserted for convenience of reference
only and do not form a part of this Agreement.
14.5 Counterparts.
------------
---------------------------
* CONFIDENTIAL TREATMENT REQUESTED
-22-
<PAGE>
This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original.
14.6 Amendment; Waiver.
-----------------
This Agreement may be amended, modified, superseded or canceled, and any
of the terms may be waived, only by a written instrument executed by each
Party or, in the case of waiver, by the Party or Parties waiving
compliance. Nevertheless, Appendices C and D may be amended by the
signatures of both Patent Coordinators listed in Section 7.3. The delay or
failure of any Party at any time or times to require performance of any
provisions shall in no manner affect the rights at a later time to enforce
the same. No waiver by any Party of any condition or of the breach of any
term contained in this Agreement, whether by conduct, or otherwise, in any
one or more instances, shall be deemed to be, or considered as, a further
or continuing waiver of any such condition or of the breach of such term
or any other term of this Agreement.
14.7 No Agency or Partnership.
------------------------
Nothing contained in this Agreement shall give either Party the right to
bind the other Party, or be deemed to constitute either Party as an agent
for the other Party or as a partner with the other Party or any Third
Party.
14.8 Assignment and Successors.
-------------------------
Except as expressly provided herein, this Agreement may not be assigned by
either Party without the prior written consent of the other Party, except
that each Party may, without such consent, assign this Agreement and the
rights, obligations and interests of such Party, in whole or in part, to
any of its Affiliates in accord with Section 3.3, to any purchaser or
other transferee of all or substantially all of its assets in the line of
business to which this Agreement pertains, or to any successor corporation
resulting from any merger or consolidation of such Party with or into
another entity, subject, however, in the case of DIVERSA to the
restriction set forth in Section 3.3.2. In the event of any merger or
consolidation by a Party into another entity, such Party shall promptly
notify the other Party in writing of such merger or consolidation and the
obligations under this Agreement shall be maintained and performed by the
successor entity unless modified in accord with Section 14.6.
14.9 Force Majeure.
-------------
Neither TDCC nor DIVERSA shall be liable to the other Party for failure of
or delay in performing obligations set forth in this Agreement, and
neither shall be deemed in breach of its obligations, if such failure or
delay is due to natural disasters or any other cause beyond the reasonable
control of a Party, and notice of such prevention of performance is
promptly provided by the non-performing Party to the other Party. Such
excuse shall be continued so long as the condition constituting force
majeure continues and the non-performing Party takes reasonable efforts to
remove the condition. In event of such force majeure, the Party affected
thereby shall use reasonable efforts to cure or overcome the same and
resume performance of its obligations hereunder.
14.10 Interpretation.
--------------
The Parties hereto acknowledge and agree that: (i) each Party and its
counsel reviewed and negotiated the terms and provisions of this Agreement
and have contributed to its revision; (ii) the rule of construction to the
effect that any ambiguities are resolved against the drafting Party shall
not be employed in the interpretation of this Agreement; and (iii) the
terms and provisions of this Agreement shall be construed fairly as to all
Parties hereto and not in a favor of or against any Party, regardless of
which Party was generally responsible for the preparation of this
Agreement.
14.11 Integration: Severability.
-------------------------
This Agreement (including the Appendices and Exhibits attached hereto) and
the MCA set forth all of the agreements and understandings between the
Parties with respect to the subject matter of
-23-
<PAGE>
this Agreement and supersede all other agreements and understandings
between the Parties with respect to the same.
If any provision of this Agreement is or becomes invalid or is ruled
invalid by any court of competent jurisdiction or is deemed
unenforceable, it is the intention of the Parties that the remainder of
this Agreement shall not be affected. If possible, the invalid provision
shall be replaced with a valid provision, which meets the intent of the
Parties.
14.12 Approvals.
---------
14.12.1 TDCC shall be responsible, at its expense, for obtaining any
approvals from governmental entities which may be required under
applicable law for the development of Licensed Products, and
shall use its best efforts to obtain all necessary approvals as
soon as reasonable.
14.12.2 DIVERSA shall be responsible, at its expense, for obtaining any
approvals from governmental entities which may be required under
applicable law for the shipment of Licensed Enzymes to TDCC to
perform its obligations under the R&D Program.
14.13 Export Controls.
---------------
This Agreement is made subject to any restrictions concerning the export
of Licensed Products, Research Results or either Party's Intellectual
Property (collectively, "Technology") from the United States that may be
imposed upon either Party from time to time by laws or regulations of
the United States. Neither Party will export, directly or indirectly,
any Technology to any country for which the United States government or
any agency thereof at the time of export requires an export license or
other governmental approval, without first obtaining the written consent
to do so from the Department of Commerce, Bureau of Export
Administration, or other agency of the United States government when
required by applicable statute or regulation.
-24-
<PAGE>
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
in duplicate originals, or in separate counterparts, and/or by facsimile as of
the last signature date below, by their duly authorized representatives.
THE DOW CHEMICAL COMPANY
Date: 11/30/00 By: [***]
-------------------------------- ---------------------------------
[***]
DIVERSA CORPORATION
Date: 11/30/00 By: /s/ Jay M. Short
-------------------------------- ---------------------------------
Jay M. Short, Ph.D.
Chief Executive Officer
Appendix Enc.:
--------------
[***]
-25-
[***]
-------------------------------
* CONFIDENTIAL TREATMENT REQUESTED