Collaborative Research and License Agreement - Pioneer Hi-Bred International Inc. and Maxygen Inc.
COLLABORATIVE RESEARCH AND LICENSE AGREEMENT
BETWEEN
PIONEER HI-BRED INTERNATIONAL, INC.
AND
MAXYGEN, INC.
December 23, 1998
* CERTAIN INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AND THE NON-
PUBLIC INFORMATION HAS BEEN FILED SEPARATELY WITH THE SEC. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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COLLABORATIVE RESEARCH AND LICENSE AGREEMENT
THIS COLLABORATIVE RESEARCH AND LICENSE AGREEMENT (the "Agreement") is
entered into as of December 23, 1998, by and between PIONEER HI-BRED
INTERNATIONAL, INC., a corporation organized and existing under the laws of the
State of Iowa at 800 Capital Square, 400 Locust Street, Des Moines, Iowa 50309
("PIONEER") and MAXYGEN, INC., a corporation organized and existing under the
laws of the State of Delaware, located at 3410 Central Expressway, Santa Clara,
California 95051 ("MAXYGEN").
WHEREAS, MAXYGEN has expertise in the rearrangement of DNA to produce and
discover genes utilizing proprietary technologies; and
WHEREAS, PIONEER has expertise in the breeding and development of
proprietary crop species; and
WHEREAS, PIONEER and MAXYGEN wish to enter into this Agreement in order to
perform research together to discover and develop new genes that can be used by
PIONEER to produce improved seeds and agricultural products; and
WHEREAS, MAXYGEN will perform research on projects funded and supported by
PIONEER in order to discover and develop such genes and will license the results
of such research to PIONEER for the purpose of the development, manufacture and
sale of products by PIONEER. MAXYGEN will also modify and adapt the MAXYGEN
Intellectual Property
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as set forth herein in order to facilitate the R&D Program and will work with
PIONEER to develop and modify screening methods for each project as needed; and
WHEREAS, PIONEER will perform research to develop products and technology
based on the research results discovered by MAXYGEN and/or PIONEER and will
grant to MAXYGEN a license to the results of such research for the purpose of
the development, testing, manufacture and sale of products by MAXYGEN.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and for other good and valuable consideration, the parties hereby agree as
follows:
SECTION 1. DEFINITIONS.
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1.1 "Affiliate" means any corporation, firm, limited liability company,
partnership or other entity that directly or indirectly controls or is
controlled by or is under common control with a party to this Agreement.
Notwithstanding the actual control exercised by PIONEER, Optimum Quality Grains,
L.L.C., is to be considered an Affiliate of PIONEER. As used in this Section,
"control" means ownership, directly or through one or more Affiliates, of 50
percent or more of the shares of stock entitled to vote for the election of
directors, in the case of a corporation, or 50 percent or more of the equity
interests in the case of any other type of legal entity, status as a general
partner
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in any partnership, or any other arrangement whereby a party controls or has the
right to control the Board of Directors or equivalent governing body of a
corporation or other entity, or if such level of ownership or control is
prohibited in any country, any entity owned or controlled by or owning or
controlling at the maximum control or ownership right permitted in the country
where such entity exists.
1.2 "Agent" means any corporation or other entity through which PIONEER or
MAXYGEN or one or more of their respective Affiliates produces, markets, or
sells PIONEER or MAXYGEN Licensed Products, as the case may be.
1.3 "Benchmark Product" shall mean a product that (i) does not contain a
Shuffled Gene and (ii) is not made or identified using any MAXYGEN Intellectual
Property or Joint Intellectual Property (including without limitation, any
method or process included therein), but which is otherwise identical to a
PIONEER Licensed Product (or if no such product exists, substantially similar to
a PIONEER Licensed Product) and is available in the same geographic market and
time period. A Benchmark Product shall be a commercial product sold by PIONEER
or its Affiliates or Agents; provided, if PIONEER or its Affiliates or Agents do
not sell such a Benchmark Product, then the most comparable product sold by a
third party in the applicable geographic market during the applicable time
period shall be used as the Benchmark Product. By way of
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illustration, and without limitation, the Benchmark Product for a PIONEER
Licensed Product which contained one or more Shuffled Genes would be an
otherwise comparable product not containing any Shuffled Genes.
1.4 "Confidential Information" means the Work Plans, and all information,
including, but not limited to, Know-How, biological materials (including the
PIONEER Material(s) and MAXYGEN Material(s)), and data, scientific, technical,
or non-technical, business plans, and marketing and sales information disclosed
by one party to the other hereunder or under the Confidentiality Agreement
between MAXYGEN and PIONEER and E.I. duPont de Nemours and Company dated
November 4, 1997, or under the Amendment to the Confidentiality Agreement
between MAXYGEN, E.I. duPont de Nemours and Company and PIONEER dated July 27,
1998, for the purposes of the R&D Program, or to fulfill obligations under this
Agreement, whether disclosed or provided in oral, written, graphic, photographic
or any other form, except to the extent that such information:
(i) as of the date of disclosure is known to the receiving
party or its Affiliates, as shown by written documentation, other than by virtue
of a prior confidential disclosure from the disclosing party to the receiving
party or its Affiliates;
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(ii) as of the date of disclosure is in, or subsequently
enters, the public domain, through no fault or omission of the receiving party;
or
(iii) as of the date of disclosure or thereafter is obtained
from a third party free from any obligation of confidentiality; or
(iv) after the date of disclosure or thereafter is developed by
the receiving party independent of the disclosure as shown by written
documentation.
1.5 "Controls" or "Controlled" means, with respect to intellectual
property, possession (other than by virtue of this Agreement and the licenses
granted herein) of the ability to grant licenses or sublicenses to the other
party hereto without violating the terms of any agreement or other arrangement
with, or the rights of, any agreement with a third party.
1.6 "Effective Date" means December 23, 1998.
1.7 "Enabling Technology" means such specific tools, technologies and/or
methods relating to [*******] as the parties may agree in writing to have
MAXYGEN develop in the R&D Program in accordance with an agreed upon written
Work Plan, to facilitate the development of PIONEER Licensed Products, in each
case, which is designated by written agreement by the parties as Enabling
Technology.
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1.8 "FTE" means the equivalent of one full year of work on a full time
basis by a scientist or other professional possessing skills and experience
necessary to carry out the R&D Program by MAXYGEN, determined in accordance with
MAXYGEN's normal policies and procedures.
1.9 "Gene" means any gene selected for Shuffling in the R&D Program by the
RDSC pursuant to (P)2.1D(a).
1.10 "Gene Library" means, with respect to a particular Gene, the complete
collection of Gene Variants produced from the Shuffling of such Gene in
connection with the R&D Program.
1.11 "Gene Variant" means any altered form of a Gene made in connection
with the R&D Program which is the result of Shuffling.
1.12 [*******]
1.13 [*******]
1.14 [*******]
1.15 "Intellectual Property" means all Patent Rights and Know-How. It is
understood that Intellectual Property does not include any intellectual property
owned or Controlled by MAXYGEN relating to the practice of Shuffling Technology.
It is further understood that Intellectual Property does not include any
intellectual property owned or Controlled by MAXYGEN or PIONEER as of the
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Effective Date or developed outside of and not in connection with the R&D
Program.
(a) "MAXYGEN Intellectual Property" means MAXYGEN Patent Rights
and MAXYGEN Know-How.
(b) "PIONEER Intellectual Property" means PIONEER Patent Rights
and PIONEER Know-How.
(c) "Joint Intellectual Property" means Joint Patent Rights and
Joint Know-How.
1.16 "Jointly Developed" or "Jointly Invented" means any item developed or
invented by both parties. If the item developed or invented is a patentable
invention, such invention is jointly developed if both parties' employees or
consultants are considered inventors under 35 U.S.C. (S)1 et. seq., and as
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interpreted by the U.S. Patent and Trademark Office and the United States
courts.
1.17 "Know-How" means all Research Results and all non-patented inventions,
improvements, discoveries, data, instructions, processes, formulas, information
(including, without limitation, chemical, physical and analytical, safety,
manufacturing and quality control data and information) and trade secrets
created, discovered, or developed during the Research Term and in connection
with the R&D Program. It is understood that Know-How does not include any (i)
Shuffling Technology or (ii) inventions within the Patent Rights.
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(a) "MAXYGEN Know-How" means Know-How owned or Controlled by
MAXYGEN or created, discovered, or developed solely by MAXYGEN in the R&D
Program.
(b) "PIONEER Know-How" means Know-How owned or Controlled by
PIONEER or created, discovered or developed solely by PIONEER in the R&D
Program.
(c) "Joint Know-How" means Know-How which is created,
discovered, or developed jointly by both parties in the R&D Program.
1.18 "Licensed Product" means a PIONEER Licensed Product or MAXYGEN
Licensed Product.
1.19 "MAXYGEN Crops" means [*******].
1.20 "MAXYGEN Licensed Product" means any product that is, or is derived
from:
(i) Plant cells, Plant parts, Plants or seeds of a MAXYGEN
Crop, which (a) [*******] or (b) is identified or produced utilizing PIONEER
Intellectual Property or Joint Intellectual Property; or
(ii) Plant cells, Plant parts, Plants or seeds of a PIONEER
Crop, which (a) incorporates or is made through the use of Research Materials
permitted pursuant to (P)2.1F(f), or (b) is
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identified or produced utilizing PIONEER Intellectual Property or Joint
Intellectual Property; or
(iii) any other product that (a) [*******] which Plant or
organism is not a PIONEER Crop or MAXYGEN Crop, and products derived from such a
Plant or other organism, or (b) is identified or produced utilizing PIONEER
Intellectual Property or Joint Intellectual Property.
It is understood and agreed that a MAXYGEN Licensed Product includes,
without limitation, (i) a Plant, (ii) macro, micro, and molecular parts of a
Plant, including, without limitation, seeds and DNA contained therein, and (iii)
extracts from a Plant, whether in unprocessed or processed form, including
[*******] in each case, that is or is from a MAXYGEN Crop in (i), above, or a
PIONEER Crop in (ii), above.
1.21 "Net Sales" means, for a particular PIONEER Licensed Product, the
gross monies or the monetary equivalent of all other consideration in any form,
whether or not invoiced, billed by or due to PIONEER or its Affiliates, or
Sublicensees for the use, sale, lease or transfer of such PIONEER Licensed
Product(s); less qualifying costs directly attributable to such use, sale,
lease, or transfer, to the extent actually allowed and borne by PIONEER. Such
qualifying costs shall be limited to [*******] costs for the following:
(i)credits or refunds, not exceeding the original or customary billing or
invoice amount, for such claims or returns,
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(ii) packaging, (iii) returnable containers, (iv) prepaid transportation
insurance premiums, (v) prepaid outbound transportation expenses, (vi)
discounts, in amounts customary in the trade, for quantity purchases, cash
payments, prompt payments, wholesalers, and distributors, and (vii) taxes,
including sales, use, excise, import, export, and other taxes or duties
(excluding taxes on income), separately billed or invoiced, and borne by
PIONEER, imposed by a government agency with the authority to do so on such use,
sale, lease or transfer. All sales of PIONEER Licensed Products shall be
recorded in U.S. dollars and recognized per U.S. Generally Accepted Accounting
Principles (GAAP), consistently applied. A PIONEER Licensed Product used, sold,
leased, or transferred by gift or for consideration other than money shall be
deemed to have a monetary value of the higher of [*******]. In the event that
any PIONEER Licensed Product(s) are sold, leased or transferred between PIONEER
and one of its Affiliates, Sublicensees, or Agents or between two of its
Affiliates, Sublicensees, or Agents or any PIONEER Licensed Product is used by
PIONEER or one of its Affiliates, Sublicensees, or Agents, the money or monetary
equivalent of such PIONEER Licensed Product(s) shall be the higher of [*******].
PIONEER Licensed Product(s) used in testing, clinical or feeding trials, or as
marketing samples to develop or promote the PIONEER Licensed Product(s) shall
not be included as PIONEER Licensed Product(s)
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used, sold, leased, or transferred; provided the PIONEER Licensed Product(s) are
supplied to the user at no cost.
For purposes of determining Net Sales, sales of PIONEER Licensed
Products shall not be discounted due to any product "bundling" unless PIONEER
and its Affiliates, Agents and Sublicensees do not offer the PIONEER Licensed
Product outside of a "bundle". In the case of discounts on "bundles" of products
or services which include PIONEER Licensed Products, PIONEER may with notice to
MAXYGEN calculate the Net Sales for the applicable PIONEER Licensed Product by
discounting the bona fide list price of a PIONEER Licensed Product by no more
than the average percentage discount of all products of PIONEER and/or its
Affiliates, Agents or Sublicensees in a particular "bundle", calculated as
follows:
Average percentage
discount on a = (1 - A/B) x 100
particular "bundle"
where A equals the total discounted price of a particular "bundle" of products,
and B equals the sum of the undiscounted bona fide list prices of each unit of
every product in such "bundle". PIONEER shall provide MAXYGEN documentation,
reasonably acceptable to MAXYGEN, establishing such average discount with
respect to each "bundle".
1.22 "Patent Rights" means (i) all patents and patent applications that
claim an invention conceived and reduced to practice by MAXYGEN and/or PIONEER
during the Research Term and in
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connection with the R&D Program or conceived in connection with the R&D Program
and reduced to practice within twelve (12) months after the end of the Research
Term, and (ii) any divisions, continuations, continuations-in-part, and patents
that issue therefrom, reissues, reexaminations, extensions or other governmental
actions that extend any of the subject matter of the patent applications or
patents in (i) above, and any substitutions, confirmations, registrations or
revalidations of any of the foregoing, in each case, which is owned or
Controlled, in whole or part, by license, assignment or otherwise by MAXYGEN or
PIONEER during the term of this Agreement.
(a) "MAXYGEN Patent Rights" means Patent Rights owned or
Controlled solely by MAXYGEN.
(b) "PIONEER Patent Rights" means Patent Rights owned or
Controlled solely by PIONEER.
(c) "Joint Patent Rights" shall mean Patent Rights owned or
Controlled by both PIONEER and MAXYGEN.
1.23 [*******]
1.24 "PIONEER Crop" means [*******].
1.25 "PIONEER Material" or "MAXYGEN Material" means the tangible assays or
biological materials, and protocols for using the same, provided by PIONEER or
MAXYGEN, respectively, to the
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other in order so that the recipient can perform its obligations under the R&D
Program. All improvements to such assays, and derivatives and progeny of any
such biological materials, whether made by the recipient or the provider, shall
be considered to be owned by the provider of the original materials. By way of
illustration and without limitation, improvements to an assay provided by
PIONEER to MAXYGEN, whether made by MAXYGEN or PIONEER, would be considered
PIONEER Materials and owned by PIONEER.
1.26 "PIONEER Licensed Product" means any product that is, or is derived
from, Plant cells, Plant parts, Plants or seeds of a PIONEER Crop that: (a)
[*******], or (b) is identified or produced utilizing MAXYGEN Intellectual
Property or Joint Intellectual Property. It is understood and agreed that a
PIONEER Licensed Product includes, without limitation, (i) a Plant, (ii) macro,
micro, and molecular parts of a Plant, including, without limitation, seeds and
DNA contained therein, and (iii) extracts from a Plant, whether in unprocessed
or processed form, including [*******] in each case, that is or is from such a
PIONEER Crop.
1.27 "PIONEER Product Technology" means such specific technologies, tools,
assays and/or methods as the parties may agree in writing to have MAXYGEN
develop in the R&D Program in accordance with an agreed upon written Work Plan,
to facilitate PIONEER's development and testing of PIONEER Licensed Products, in
each case, which is designated in writing by the RDSC as PIONEER Product
Technology pursuant to (P)2.2A.
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1.28 "Plant" means a monocotyledonous or dicotyledonous plant that may or
may not currently represent a commercial crop, excluding any organisms that are
not monocots or dicots, whether unicellular or multicellular, and whether or not
such organism can perform photosynthesis.
1.29 "Product Premium" means with respect to a particular PIONEER Licensed
Product, the difference between the Product Price of the PIONEER Licensed
Product and the Product Price of the applicable Benchmark Product in the same
geographic market and time period. It is understood and agreed that the Product
Premium shall also include any other consideration (e.g., technology access
fees, up-front payments, and licensing fees) which PIONEER and its Affiliates,
Agents and Sublicensees receive for the sale of a PIONEER Licensed Product as
compared to the applicable Benchmark Product.
1.30 "Product Price" means average, actual price of a PIONEER Licensed
Product or Benchmark Product, as the case may be, sold in a particular
geographic market during a particular time period.
1.31 "R&D Program" means the research and development program to be
conducted by MAXYGEN and PIONEER pursuant to Section 2 and as described in the
Work Plan.
1.32 "R&D Steering Committee" or "RDSC" means the committee created
pursuant to Section 2 hereof.
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1.33 "Research Data" means all data, inventions, and any other information
obtained, developed, conceived and reduced to practice, or derived in the course
of performance of the R&D Program.
1.34 "Research Materials" mean all tangible property, including without
limitation, assays, invented, obtained, discovered, developed, or derived, or
the function or utility of which is discovered or determined, in the course of
performance of the R&D Program. It is understood and agreed that the Research
Materials shall not include any PIONEER Materials or MAXYGEN Materials, and that
any assay and/or biological materials developed solely by PIONEER or solely by
MAXYGEN for use in the R&D Program shall be deemed to be PIONEER Materials or
MAXYGEN Materials, respectively. It is understood and agreed that all Gene
Variants shall be Research Materials.
1.35 "Research Results" means all Research Data and Research Materials
collectively, including without limitation, all Enabling Technology.
A. "MAXYGEN Research Results" means Research Results invented or
developed solely by MAXYGEN.
B. "PIONEER Research Results" means Research Results invented or
developed solely by PIONEER.
C. "Joint Research Results" means Research Results invented or
developed jointly by both parties.
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1.36 "Research Term" shall mean the period commencing on the Effective Date
and, unless extended by written agreement of the parties pursuant to (P)2.1E(b)
or sooner terminated as provided herein, terminating on the fifth anniversary of
the Effective Date.
1.37 "Shuffle," "Shuffled" and "Shuffling" mean the recombination and/or
rearrangement and/or mutation of genetic material for the creation of genetic
diversity using intellectual property and/or tangible property owned or
Controlled by MAXYGEN.
1.38 "Shuffled Gene" means (i) any Gene Variant that meets the applicable
activity criteria established by the RDSC, which PIONEER selects to commercially
develop, and which the RDSC designates pursuant to (P)2.1D(f), (ii) any PIONEER
SGD, and (iii) any MAXYGEN SGD.
1.39 "Shuffled Gene Derivative" means any modified form of a Shuffled Gene,
which modification is developed from or made to the Shuffled Gene by any means,
including without limitation, any codon modified variant, splice variant,
mutation, derivative or variant of a Shuffled Gene, and any fragment(s) of the
preceding.
(a) "MAXYGEN Shuffled Gene Derivative" or "MAXYGEN SGD" means a
Shuffled Gene Derivative which modification is developed or made by MAXYGEN or
its Affiliates or Sublicensees.
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(b) "PIONEER Shuffled Gene Derivative" or "PIONEER SGD" means a
Shuffled Gene Derivative which modification is developed or made by PIONEER or
its Affiliates or Sublicensees.
1.40 "Shuffling Technology" means techniques, methodologies, processes,
materials and/or instrumentation useful for Shuffling, and generally applicable
screening techniques, methodologies, or processes of using the resulting genetic
material to identify potential usefulness. It is understood and agreed that
specific assays developed for screening Gene Variants for a particular
biological or chemical activity are not included in Shuffling Technology.
1.41 "Sublicensee" means an entity to whom PIONEER or MAXYGEN, as the case
may be, has granted a license or sublicense to make, have made, import, use,
sell, offer for sale, or otherwise exploit Licensed Products.
1.42 "Sublicense Payments" shall mean all consideration (other than pass-
through royalties on Net Sales of PIONEER Licensed Products by Sublicensees due
to MAXYGEN pursuant to (P)4.3A)received by PIONEER or MAXYGEN, as the case may
be, and their respective Affiliates and Agents from Sublicensees in respect of
any grant of rights to propagate, use or sell or otherwise distribute Licensed
Products (including, without limitation, technology access fees, milestone fees,
payments for the sale of or right to sell Licensed Products, and license and/or
sublicense fees, whether such consideration is in cash, payment in kind,
exchange or another form). Notwithstanding the above, Sublicense Payments shall
not
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include any amounts received by MAXYGEN or PIONEER, as the case may be, from a
third party for [*******].
1.43 "Trait" means a characteristic of a PIONEER Crop associated with one
or more genes sourced from any organism in any manner, that is manipulated or
tracked by PIONEER or its Affiliates or Sublicensees as part of the PIONEER
Licensed Product development process.
1.44 "Trait Categories" means, as shown in Appendix B, the areas of
interest from which the projects to be conducted pursuant to the R&D Program
will be selected and for which licenses under this Agreement will be granted.
In particular, the areas include, for the PIONEER Crops: [*******].
1.45 "Work Plan" means a written plan approved by the R&D Steering
Committee describing the activities to be carried out during each 12 month
period of the R&D Program, as modified from time to time by the parties. The
Work Plan for the twelve (12) month period starting on the Effective Date is
attached hereto as Appendix A.
1.46 The listed Appendices are:
A. Appendix A - Work Plan for 1998-1999; and
B. Appendix B - Trait Categories in PIONEER Crops.
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SECTION 2. R&D PROGRAM.
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2.1 Implementation of the R&D Program.
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A. Basic Provisions of Program.
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(a) The primary objective of the R&D Program shall be the
development of genes encoding enhanced or new Traits for PIONEER Crops within
the applicable Trait Categories in order to develop new PIONEER Licensed
Products. MAXYGEN and PIONEER shall use their reasonable efforts to conduct the
research activities set forth in the Work Plan, and to provide PIONEER Materials
and MAXYGEN Materials as set forth therein.
(b) In carrying out the R&D Program, MAXYGEN shall devote
an average of [*******] FTEs per year for each of the five years of the
Research Term ("Staffing Level"), and PIONEER shall pay MAXYGEN for the services
of such FTEs as set forth herein. At the request of PIONEER, MAXYGEN will in
good faith consider and discuss proposed increases or decreases to the Staffing
Level; provided, however, that the Staffing Level shall remain at [*******]
FTEs, unless the parties, in their sole discretion, agree in writing to
different staffing levels. Any increase or decrease to the Staffing Level agreed
to by the parties shall be reflected in the relevant Work Plan and budget
associated with such Work Plan.
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(c) MAXYGEN and PIONEER shall each use reasonable efforts
to perform such tasks as are set forth to be performed by the respective party
in the relevant Work Plan, and to provide such facilities, materials, equipment,
and assay methods, as are necessary to perform the research activities set forth
in the Work Plans.
(d) It is understood and agreed that MAXYGEN shall not be
obligated to utilize on average per year more than [*******] FTEs in the R&D
Program. It is further understood that PIONEER shall be responsible for the
expense of its own research activities in the R&D Program that are not performed
at MAXYGEN.
B. Collaborative Efforts and Reports.
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(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 RDSC 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 RDSC quarterly written reports within
30 days after the end of each quarterly period, describing the progress of its
activities in connection with the R&D Program in reasonable detail, including:
(i) a detailed accounting of the FTEs used, (ii) a reasonably detailed synopsis
of the screening and testing of Gene Variants and Shuffled Genes, and the
development of Shuffled Genes and PIONEER Licensed Products, and (iii) a
description of
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Intellectual Property arising from the R&D Program. It is understood and agreed
that reports regarding the development and commercialization of PIONEER Licensed
Products outside the scope of the R&D Program shall be subject to (P)5.3 below,
and that reports regarding the development and commercialization of MAXYGEN
Licensed Products outside the scope of the R&D Program shall be subject to
(P)5.4 below.
(b) MAXYGEN and PIONEER shall cooperate in the performance of the R&D
Program and, subject to any confidentiality obligations to third parties, shall
exchange information and materials 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 agreed times, have defined purposes, be of agreed limited duration
and be scheduled in advance. The requesting party will bear the travel and
lodging costs of any such personnel. 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.
(c) During the Research Program and for a period of three (3) years
thereafter, MAXYGEN and PIONEER shall maintain
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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; provided, that laboratory notebooks relating to activities conducted
during and in connection with the R&D Program shall be retained, at a minimum,
for the term of the Agreement. Each party shall use reasonable efforts to
provide to the other pertinent Research Data generated by or on behalf of such
party in connection with the R&D Program as the other party may reasonably
request. Such Research Data shall include, without limitation: all results
obtained as a result of activities conducted pursuant to (P)2.1D(d) and (e), and
all results with respect to (i) any Gene Variants which had activity meeting the
applicable criteria established by the RDSC, (ii) all results of all assays in
which Gene Variants or protein pools, as the case may be, demonstrated such
activity, and (iii) the levels of such activity. It is understood that nothing
herein shall require, or be construed to require, MAXYGEN to disclose to PIONEER
any Shuffling Technology, except to the extent necessary for filing patent
applications claiming Shuffled Genes.
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C. Work Plans.
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(a) For each 12-month period during the Research Term after the
period covered by the initial Work Plan of Appendix A, a Work Plan shall be
prepared by MAXYGEN and PIONEER and approved by the RDSC no later than 60 days
before the end of the then current 12-month period. Absent agreement by the
parties, MAXYGEN and PIONEER shall continue to conduct research activities
within the scope of the projects set forth in the previous Work Plan, within the
bounds of the then currently available FTEs.
(b) Each Work Plan shall, without limitation, set forth specific,
jointly-defined research and development objectives, research projects within
applicable Trait Categories for PIONEER Crops, research projects relating to
Enabling Technology and/or PIONEER Product Technology and resource allocations,
and shall be designed to facilitate the earliest practical development and
identification of new Shuffled Genes associated with applicable Trait Categories
for PIONEER Crops.
(c) The RDSC shall have the authority to redirect the activities
to be conducted in the R&D Program within and among the Trait Categories, and to
reallocate the FTEs in support of such activities.
(d) If the RDSC is unable to agree as to the terms of a Work Plan
for any given 12-month period by the date provided
-23-
<PAGE>
in subsection (a), above, then the matter shall be addressed as provided in
Section 13, below.
(e) MAXYGEN shall have no obligation to conduct any research in
the R&D Program in any Trait Category or PIONEER Crop except as expressly
described in (P)2.6A or (P)2.6B below.
D. Activities.
----------
(a) Selection of Genes for Shuffling. Either party may propose
--------------------------------
genes to be Shuffled in the R&D Program, and the final selection of the Genes
which will be Shuffled will be made by the RDSC. PIONEER may also propose the
Shuffling of genes that PIONEER has licensed from a third party which PIONEER
does not have the right to sublicense to MAXYGEN for the development and
commercialization of MAXYGEN Licensed Products. At such time as either party
proposes a gene for Shuffling, it shall inform the RDSC, to the extent it is
able to do so without breaching any confidentiality obligations, of all rights
which it has to use and sublicense such gene, and any restrictions or
limitations thereon, and any information of which it is aware with respect to
third party patent applications or patents which may relate to the use of the
gene in the R&D Program and/or the development or commercialization of Licensed
Products; provided, neither party shall have any obligation to provide the RDSC
with any document which would result in a breach of the attorney/client
privilege with respect thereto. The RDSC shall have the sole authority to
-24-
<PAGE>
select the Genes which will be Shuffled in the R&D Program. While the RDSC may
consider [*******] for both PIONEER and MAXYGEN, the primary criteria that the
RDSC shall use to select Genes for Shuffling shall be [*******]. It is
understood and agreed that where there is more than one gene which could be
Shuffled for a particular purpose, unless there are material issues relating to
[*******], the RDSC shall select for Shuffling a Gene for which the proposing
party has the right to sublicense. It is further understood and agreed that the
RDSC shall use all reasonable efforts to identify and select for Shuffling in
each Trait Category at least [*******]. Unless otherwise agreed in writing, the
RDSC shall accept or decline to accept a proposed gene as a Gene within ninety
(90) days of date of receipt of the information described above. If the RDSC
cannot agree on a particular Gene, the matter shall be resolved as provided for
in Section 13.1A.
(b) [*******] for Shuffled Genes. At such time as the RDSC selects a
----------------------------
Gene to be Shuffled in the R&D Program or within thirty (30) days thereafter,
the RDSC shall prepare a written description of [*******] which a Gene Variant
therefrom must meet to be considered for designation as a Shuffled Gene. Such
[*******] shall in all cases reflect a reasonable commercial level of activity
relevant for PIONEER Licensed Products and may be amended from time-to-time by
the RDSC.
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<PAGE>
(c) Preparation of Gene Libraries and Protein Pools. MAXYGEN shall
-----------------------------------------------
use its Shuffling Technology to prepare libraries of Gene Variants, and prepare
crude or purified protein pools from expression of such libraries as set forth
in the Work Plan.
(d) Screening. Except in those cases where MAXYGEN provides PIONEER
---------
[*******], for screening by PIONEER, MAXYGEN shall initially screen the Gene
Variant libraries as set forth in the Work Plan. PIONEER shall be responsible
for screening to identify optimized function in the applicable PIONEER Crop.
(e) Gene Variant Pools. In the event that MAXYGEN provides to PIONEER
------------------
pools of Gene Variants for screening by PIONEER, PIONEER agrees that,
notwithstanding any other provision of this Agreement, that PIONEER will not:
(i) transfer such Gene Variants to any third party (except PIONEER shall have
the license rights set forth in (P)3.1B with regard to Gene Variants which
become Shuffled Genes); (ii) sequence any Gene Variant provided to PIONEER
(except PIONEER shall have the license rights set forth in (P)3.1B with regard
to Gene Variants which become Shuffled Genes); or (iii) use the Gene Variants
except for screening in connection with the R&D Program during the Research Term
(except PIONEER shall have the license rights set forth in (P)3.1B with regard
to Gene Variants which become Shuffled Genes). Notwithstanding the above, if
PIONEER wishes to conduct or have conducted any of the prohibited
-26-
<PAGE>
activities in (i)-(iii) above in order to facilitate the conduct of the R&D
Program (e.g., to sequence Gene Variants in order to facilitate the transfer of
such Gene Variant(s) into another construct for enhanced expression), then
PIONEER shall notify the RDSC, providing a written description of the activities
it wishes to undertake and an explanation why it wishes to undertake such
activities. [*******] shall have the authority to authorize PIONEER to conduct
any or all of the foregoing for a particular purpose, and shall provide any such
authorization in writing. At the end of the Research Term, PIONEER shall
promptly return to MAXYGEN any remaining Gene Variants (i.e., those which have
not been designated Shuffled Genes), and provide MAXYGEN written confirmation
that all such Gene Variants have been returned. In the event of any conflict
between this (P)2.1D(e) and any other provision of this Agreement, the terms of
this (P)2.1D(e) shall govern.
(f) Selection of Shuffled Genes. [*******] PIONEER may notify MAXYGEN
---------------------------
that PIONEER wishes to have designated as Shuffled Genes one or more of the Gene
Variants which meet the [*******] established by the RDSC, with notice to the
RDSC identifying the particular Gene Variant(s). The RDSC shall have the sole
authority to determine which Gene Variants shall be designated as Shuffled
Gene(s), and shall make all such designations in writing, however, the RDSC
shall not unreasonably withhold the designation of Gene Variants as Shuffled
Genes as requested by PIONEER.
-27-
<PAGE>
(g) Transfer of Clones; Limited Use. Following the selection of a
-------------------------------
Shuffled Gene, MAXYGEN shall transfer to PIONEER a DNA clone containing the
applicable Shuffled Gene. Except in connection with the practice of the rights
granted PIONEER in (P)3.1B and as clarified in (P)3.1D(a), PIONEER shall not
without the express prior written consent of MAXYGEN, (i) transfer any of the
Shuffled Genes or protein pools or DNA clones supplied to PIONEER to any
Affiliate, Sublicensee or third party, (ii) sequence any Shuffled Gene or
protein(s) provided by MAXYGEN, or (iii) permit any other person or entity to
obtain or use any of the protein pools or DNA clones supplied to PIONEER for any
purpose.
E. Additional Research Activities.
------------------------------
(a) In the event that prior to the end of the Research Term, the
parties agree that the FTEs involved in the R&D Program cannot be productively
used to conduct research on the Trait Categories, then PIONEER shall have the
right to propose to MAXYGEN additional research activities to be conducted in
connection with the R&D Program in new trait categories. If MAXYGEN does not
have prior obligations to a third party with respect to such research
activities, or have a prior intention to conduct activities relating to the
proposed activities on its own behalf or with a third party, it shall notify
PIONEER, and in such case, the parties shall negotiate in good faith the terms
on which such research activities could be conducted in connection with the R&D
Program. Such research activities will only be initiated if the parties reach
written agreement on the terms
-28-
<PAGE>
thereof, including without limitation, milestone payments and royalties on
resulting products.
(b) If it appears that one or more research projects regarding the
Shuffling of Genes in the Trait Categories will not be completed by the end of
the Research Term and the RDSC agrees that such research projects are near
completion, PIONEER may with notice to MAXYGEN at least sixty (60) days prior to
the end of the Research Term extend the Research Term with respect to such
research projects for a period of [*******], or such other period as PIONEER and
MAXYGEN may agree in writing (the "Extension Period"). In any such event,
PIONEER shall provide FTE funding for such projects during the Extension Period
equal to the average level of FTE support provided in the R&D Program for such
research projects in the six (6) month period prior to the [*******] anniversary
of the Effective Date, such funding to be paid to MAXYGEN on the [*******]
anniversary of the Effective Date.
F. Research Results. Research Results shall be treated as described
----------------
below:
(a) Gene Variants. The treatment of Research Results which are Gene
-------------
Variants shall depend on whether the Gene which is Shuffled to produce the
applicable Gene Variant(s) is (x) [*******] ("a PIONEER Gene"), or (y) is
[*******] (a "Non-PIONEER Gene").
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<PAGE>
(i) If [*******], then MAXYGEN may not use the Gene Variants
resulting from such Shuffling for any purpose except the conduct of the R&D
Program (except such Gene Variants which become Shuffled Genes), without the
prior written consent of PIONEER.
(ii) If [*******], then MAXYGEN shall not use the Gene Variants
resulting from such Shuffling for any purpose except the conduct of the R&D
Program (except such Gene Variants which become Shuffled Genes), for a period of
[*******] (the "Non-Use Period"). Notwithstanding the above, at the suggestion
of a third party, during the Non-Use Period, MAXYGEN may [*******], in
connection with research conducted with or on behalf of a third party. It is
understood and agreed that, subject to subparagraph (iii) below, MAXYGEN shall
be free to Shuffle any one or more genes not Shuffled in the R&D Program on its
own behalf or on behalf of a third party outside the R&D Program, subject to the
limitations in (P)2.6A.
(iii) Notwithstanding (ii) above, during the R&D Program, PIONEER
may propose to the RDSC the Shuffling in the R&D Program of [*******]. In such
event, PIONEER shall present to the RDSC a detailed written explanation why
[*******]. If the RDSC agrees, then the RDSC shall describe in writing the set
of all other similar Non-PIONEER Genes (the "Non-PIONEER Gene Set") which relate
to the PIONEER proposal, and, except in connection with the
-30-
<PAGE>
R&D Program, MAXYGEN shall not conduct any Shuffling of [*******] during the
applicable Non-Use Period. Any Gene Variants resulting from the Shuffling of
any Genes in the Non-PIONEER Genes shall be treated as provided in (ii) above.
(iv) PIONEER shall not have any right to use any of the Gene
Variants (except such Gene Variants which become Shuffled Genes) for any use
outside the R&D Program.
(v) The identities of all Genes Shuffled in the R&D Program is
Confidential Information of PIONEER, which shall not be disclosed except
pursuant to Sections 6 or 7 below, or as otherwise agreed by PIONEER and
MAXYGEN.
(b) Shuffled Genes. Gene Variants which have become Shuffled Genes
--------------
shall be subject to the exclusive licenses set forth in (P)3.1B and (P)3.2B, and
neither MAXYGEN nor PIONEER shall disclose or use such Shuffled Genes except
pursuant to such licenses.
(c) Enabling Technology. Except for use in connection with the R&D
-------------------
Program or as expressly permitted pursuant to the licenses in (P)3.1B and C and
3.2B and C, PIONEER or MAXYGEN shall not have any right to use or disclose
Enabling Technology to any third party.
-31-
<PAGE>
(d) PIONEER Product Technology. Except for use in connection with the
--------------------------
R&D Program, MAXYGEN shall have no right to use or disclose any PIONEER Product
Technology to any third party.
(e) Shuffling Technology. Except disclosure to MAXYGEN in connection
--------------------
with the R&D Program or to the extent necessary to file patent applications
claiming Shuffled Gene(s), PIONEER shall have no right to use or disclose any
Shuffling Technology to any third party.
(f) Research Materials. Except as set forth in (P)2.1F(a) through
------------------
(e) above, all Research Materials shall be treated as follows. Ownership of such
Research Materials shall depend on whether PIONEER or MAXYGEN or the parties
jointly made, conceived and/or reduced to practice, or otherwise developed such
Research Materials. Except for use in connection with the R&D Program or as
expressly permitted pursuant to the licenses in (P)3.1B and (P)3.2B, PIONEER or
MAXYGEN, as the case may be, shall have the sole right to use and disclose as it
deems appropriate, any Research Materials made, conceived and reduced to
practice or otherwise developed solely by its respective employees and
consultants. Any such Research Materials made, conceived and/or reduced to
practice or otherwise developed jointly by employees and/or consultants of
MAXYGEN and PIONEER may be used and disclosed by either party outside the R&D
Program, pursuant to the licenses granted in (P)3.1B and (P)3.2B.
(g) Research Results.
----------------
(i) Research Results that relate directly and/or specifically
to Gene Variants, Shuffled Genes, Research
-32-
<PAGE>
Materials subject to (f) above which are solely owned by one party, PIONEER
Product Technology and/or Enabling Technology, shall not be used except in
connection with the R&D Program and as expressly permitted pursuant to the
licenses in (P)3.1B and 3.2B. All such Research Results shall be treated as
Confidential Information of the party(ies) making such Research Results and
shall not be disclosed except as otherwise expressly provided in this Agreement.
(ii) Research Results not subject to subparagraph (g)(i) above
may be disclosed and used by either party without accounting to the other party
hereto.
2.2 R&D Steering Committee.
----------------------
A. Establishment and Functions of RDSC.
-----------------------------------
(a) MAXYGEN and PIONEER hereby agree to the establishment of the
RDSC. The RDSC will act on behalf of the two companies and will be responsible
for the planning and monitoring of the R&D Program and for setting forth
specific research and development objectives, selecting research projects within
applicable Trait Categories for PIONEER Crops, and determining resource
allocation for the R&D Program.
(b) The RDSC shall be responsible for approving the conduct of
any research relating to (i) any Enabling Technology pursuant to (P)2.7, and
(ii) any PIONEER Product Technology. The RDSC will identify the research
activities that constitute the
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<PAGE>
development of Enabling Technology and PIONEER Product Technology. In each case,
the RDSC will prepare written project descriptions setting forth the specific
starting materials and goals for research relating to Enabling Technology and
PIONEER Product Technology, and include descriptions of such activities as
appropriate in the Work Plans.
(c) In planning and monitoring the R&D Program, the RDSC shall
assign tasks and responsibilities taking into account each party's respective
specific capabilities and expertise in order to avoid duplication and enhance
efficiency and synergies.
B. RDSC Membership.
---------------
(a) MAXYGEN and PIONEER shall each appoint, in its sole
discretion, three members to the RDSC, including a Co-Chair designated by
PIONEER and a Co-Chair designated by MAXYGEN. Substitutes or alternates for the
Co-Chairs or other RDSC members may be appointed at any time by notice to the
other party.
(b) MAXYGEN shall, in consultation with PIONEER, appoint a full-
time Project Coordinator, who is one FTE. This Project Coordinator shall be a
MAXYGEN member of the RDSC or shall otherwise participate in RDSC meetings on
behalf of MAXYGEN.
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<PAGE>
C. Meetings.
--------
The RDSC shall meet at least quarterly, with such meetings alternating
between Santa Clara, California and Des Moines, Iowa, unless the parties agree
otherwise. The first such meeting shall be held in Santa Clara, California
within thirty (30) days after the Effective Date. Any additional meetings shall
be held at places and on dates selected by the Co-Chairs of the RDSC. RDSC
members may agree that participation in any such meeting will be in person, by
telephone, or by televideo conference. In addition, the RDSC may act without a
formal meeting by a written memorandum signed by the Co-Chairs of the RDSC.
Subject to the obligations set forth in Section 5, representatives of each party
may, in addition to the members of the RDSC and the MAXYGEN Project Coordinator,
attend RDSC meetings as nonvoting observers at the invitation of either party
only with the prior approval of the other party, which consent shall not be
unreasonably withheld.
D. Minutes.
-------
The RDSC shall keep accurate minutes of its meetings that record all
decisions and all actions recommended or taken. Draft minutes shall be
delivered to the Co-Chairs of the RDSC within 20 days after each meeting. The
party hosting the meeting shall be responsible for the preparation and
circulation of the draft minutes. Draft minutes shall be edited by the Co-
Chairs and shall be issued in final form only with their approval and agreement
as
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<PAGE>
evidenced by their signatures on the minutes. Minutes of the RDSC meetings shall
be Confidential Information.
E. Quorum; Voting; Decisions.
-------------------------
At each RDSC meeting, at least two members appointed by each party
shall constitute a quorum and decisions shall be made by unanimous vote. If the
RDSC is unable to reach agreement on any matter, it shall be referred for
resolution to the Chief Executive Officer of MAXYGEN and the Vice President &
Director, Trait and Technology Development of PIONEER, or their respective
successors. Such persons shall meet promptly in person or by telephone and
endeavor to reach agreement. If such persons are unable to unanimously resolve
any dispute, such dispute shall be settled pursuant to Section 13 below.
F. Expenses.
--------
MAXYGEN and PIONEER shall each bear all expenses of their respective
RDSC members related to their participation on the RDSC and attendance at RDSC
meetings.
2.3 Third Party Licenses.
--------------------
A. Responsibility.
--------------
(i) In the event that it is necessary for MAXYGEN to
acquire any third party license specifically for the conduct of the R&D Program,
PIONEER will be responsible for the
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<PAGE>
payment of any amounts due to third parties for the license of intellectual
property necessary solely for the performance of the R&D Program and the costs
of negotiating and preparing any such license. Notwithstanding the above, it is
understood that MAXYGEN shall be responsible for all payments due to third
parties for the acquisition of licenses to intellectual property necessary for
the practice of Shuffling Technology per se and the costs of negotiating and
--- --
preparing such licenses.
(ii) If PIONEER is not able to grant to MAXYGEN a
sublicense to any Gene(s) which are Shuffled in the R&D Program for use in
development or commercialization of MAXYGEN Licensed Products, MAXYGEN will be
responsible for acquiring licenses to such Genes as needed for its own
commercialization activities. Notwithstanding the above, with respect to any
gene(s) to which PIONEER obtains license rights from a third party after the
Effective Date, which gene(s) PIONEER wishes to Shuffle in the R&D Program,
PIONEER shall use reasonable efforts to acquire from such other third party the
right to sublicense such Gene and Shuffled Genes based thereon to MAXYGEN for
use pursuant to (P)3.2B. Other than the rights granted in Section 3, PIONEER
will be responsible for acquiring, at its own expense, its own licenses to all
other technologies needed for development and commercialization of PIONEER
Licensed Products and MAXYGEN will be responsible for acquiring, at its own
expense, its own licenses to all other technologies needed for development and
commercialization of
-37-
<PAGE>
MAXYGEN Licensed Products. With respect to any gene(s) licensed from a third
party, PIONEER shall use reasonable efforts to acquire the right to sublicense,
without additional payments, provided if PIONEER is unable to acquire such
sublicense rights without additional charge, MAXYGEN shall be responsible for
paying any amounts due to acquire and practice such sublicenses.
B. Infringement Claims. In the event that during the Research Term
-------------------
PIONEER or MAXYGEN receives a written notice of an allegation of actual or
possible patent infringement from a third party based on the use of a particular
Gene which has been or is planned to be Shuffled in the conduct of the R&D
Program, such party shall promptly notify the other providing an explanation of
the circumstances.
2.4 Capital Expenditures. In the event that the conduct of the R&D
--------------------
Program can be facilitated by the purchase of specialized capital equipment, the
RDSC shall determine whether such equipment shall be purchased. If the RDSC
approves any such purchase, PIONEER will purchase or pay to MAXYGEN the full
cost (including costs for taxes, shipping, etc.) for such purchases and PIONEER
shall own such equipment. MAXYGEN shall have no obligation to purchase any such
equipment unless PIONEER provides reimbursement therefore. Unless otherwise
agreed, any capital equipment purchased under this paragraph 2.4 shall be
subject to the following: (i) any such equipment may not be used outside the R&D
Program, (ii) individual items of equipment may not cost less than
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<PAGE>
$5,000, and (iii) budgets for equipment must be presented by the RDSC to
PIONEER on or before March 30 of the applicable year.
2.5 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 (e.g., patent prosecution,
publication review) that will occur after the expiration of the Research Term
which would otherwise be addressed by the RDSC.
2.6 Research Exclusivity.
--------------------
A. During the Research Term, MAXYGEN will not collaborate with any
entity nor undertake any research activities not for the direct benefit of
PIONEER with the intent of using Shuffling Technology to [*******] ("the
Exclusive Trait Areas").
B. During the Research Term, MAXYGEN will conduct non-exclusive
research in connection with the R&D Program in the following Trait Categories:
[*******].
C. It is understood and agreed that, subject to its obligation to
conduct research pursuant to (P)2.6B, MAXYGEN may conduct research on its own
behalf and with third parties with respect to any gene and/or Plant, except with
regard to the Exclusive Trait Areas for which PIONEER retains exclusivity,
including without limitation, research with respect to the Trait Categories and
PIONEER Crops subject to (P)2.6B.
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<PAGE>
2.7 Enabling Technology.
-------------------
A. The parties anticipate that the development of products within
the Trait Categories may be significantly enhanced by the application of
Shuffling Technology in the area of Enabling Technology. Unless mutually agreed
in writing, application of Shuffling Technology for development of Enabling
Technology will only be undertaken pursuant to the R&D Program and relating to
at least one Trait Category upon mutual agreement of the parties and inclusion
in the Work Plan. It is understood that any effort to develop Enabling
Technology shall be undertaken on a case-by-case basis, based on a written
project description which describes the specific starting materials and goals
and the successful outcome(s).
B. At such time as a party proposes that a project be conducted for
the development of Enabling Technology, it shall inform, to the extent it is
able to do so without breaching any confidentiality obligations, the RDSC of all
rights which it has with respect to the underlying technology on which such
Enabling Technology will be based or will require, including without limitation,
any rights it has to use and sublicense such underlying technology, and any
restrictions or limitations thereon, and any information of which it is aware
with respect to third party patent applications or patents which may relate to
the use of the proposed Enabling Technology in the R&D Program and/or for the
development
-40-
<PAGE>
or commercialization of Licensed Products; provided, neither party shall have
any obligation to provide the RDSC with any document which would result in a
breach of the attorney/client privilege with respect thereto. The RDSC shall
have the sole authority to authorize the conduct and scope of projects in the
R&D Program intended to produce Enabling Technology. If the RDSC cannot agree on
a particular Enabling Technology project, the matter shall be resolved as
provided for in (P)13.1A.
C. Prior to such time as the RDSC approves the conduct of research
relating to any Enabling Technology, the parties shall negotiate in good faith
the rights, if any, which (i) PIONEER shall have to use such Enabling Technology
other than [*******], and/or (ii) MAXYGEN shall have to use such Enabling
Technology other than [*******]. In the event the parties fail to reach
agreement on such rights, the only rights that PIONEER and MAXYGEN shall have to
use the applicable Enabling Technology are those set forth in (P)3.1C and
(P)3.2C below, respectively.
D. Prior to commencing research with respect to any Enabling
Technology, the parties shall agree on an appropriate royalty or other value
capture mechanism therefore.
2.8 Rice. Immediately following the execution of this Agreement, and
----
until July 1, 1999, unless MAXYGEN earlier enters into an agreement with a third
party regarding the use of Shuffling Technology with respect to rice for those
projects which PIONEER
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<PAGE>
wishes to conduct with MAXYGEN, MAXYGEN and PIONEER will negotiate in good faith
the terms of a further agreement regarding the use of Shuffling Technology for
agreed research projects with respect to rice, and corresponding license rights.
It is understood and agreed that neither party shall be obligated to enter into
any such agreement, and that MAXYGEN shall be free to enter into an agreement
with a third party with respect to rice at any time prior to or after July 1,
1999.
2.9 Shuffling Technology. During the Research Term, MAXYGEN shall use
--------------------
reasonable efforts to continue to develop and improve its Shuffling Technology;
provided, however, PIONEER acknowledges that technology development is
inherently an uncertain activity and agrees that MAXYGEN shall not have breached
its commitment under this paragraph in the event that any third party develops
or invents methods or technology relating to the creation of genetic diversity.
SECTION 3. LICENSE RIGHTS.
--------------------------
3.1 To PIONEER.
----------
A. Research License. Subject to the terms and conditions of this
----------------
Agreement, MAXYGEN agrees to grant, and hereby grants to PIONEER a non-
exclusive, nontransferable, non-sublicensable, royalty-free, worldwide license
under MAXYGEN's
-42-
<PAGE>
interest in the Intellectual Property and MAXYGEN Materials solely to conduct
the R&D Program.
B. Commercial Licenses.
-------------------
(a) Subject to the terms and conditions of this Agreement,
MAXYGEN agrees to grant, and hereby grants, to PIONEER, worldwide, royalty-
bearing licenses, with the right to sublicense as set forth in (P)3.1(B)(b)
below, under MAXYGEN's interest in the Intellectual Property (whether solely or
jointly owned by MAXYGEN) as follows:
(i) an exclusive license to make, have made, and use
Shuffled Genes (excluding any MAXYGEN SGD) and Enabling Technology together with
Shuffled Genes (excluding any MAXYGEN SGD), in each case, in the PIONEER Crops,
to develop, make, have made, use, import, offer for sale, sell, and have sold
PIONEER Licensed Products; and
(ii) a non-exclusive license to make, have made, and use
Research Results subject to (P)2.1F(f) and (g) in the PIONEER Crops, to develop,
make, have made, use, import, offer for sale, sell, and have sold PIONEER
Licensed Products.
(b) Sublicenses. PIONEER shall have the right to sublicense
-----------
the rights granted in (P)3.1B(a) with respect to the PIONEER Crops and Trait
Categories for which it has licenses as set forth in (P)3.1B(a). Following the
execution of any sublicense, PIONEER shall provide to MAXYGEN the
-43-
<PAGE>
identity of the Sublicensee and a description of the PIONEER Licensed Products
and rights sublicensed to the Sublicensee and the territory of such sublicense.
Each sublicense granted by PIONEER shall be consistent with all the terms and
conditions of this Agreement, and subordinate thereto, and PIONEER shall remain
responsible to MAXYGEN for the financial obligations arising under this
Agreement based upon the activities of each such Sublicensee. No Sublicensee may
grant further sublicenses of such rights, or assign such sublicense, without
MAXYGEN's prior written consent. Upon termination of this Agreement, or of any
license to PIONEER hereunder, for any reason, any applicable sublicenses granted
by PIONEER hereunder shall survive, subject to the terms and conditions hereof.
C. Enabling Technology.
-------------------
(i) It is understood that the license set forth in
(P)3.1B includes a license, with the right to grant sublicenses, to make, have
made and use the Enabling Technology to develop, make, have made, use, offer for
sale, sell and have sold PIONEER Licensed Products incorporating Shuffled Genes
(excluding MAXYGEN SGD) in the applicable Trait Categories in the PIONEER Crops
in accordance with such license, but does not include a license to [*******]
(ii) In the event that PIONEER and MAXYGEN mutually
agree in writing pursuant to (P)2.7D upon an appropriate
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<PAGE>
royalty or other value capture mechanism for other uses of Enabling Technology
by PIONEER [*******], MAXYGEN will grant to PIONEER a nonexclusive, royalty-
bearing, worldwide license for such uses of the applicable Enabling Technology.
D. No Other Products.
-----------------
(a) It is understood and agreed that pursuant to the
licenses granted in (P)3.1B that PIONEER may conduct such activities (e.g., the
sequencing and mutagenesis of Shuffled Genes) as it reasonably deems appropriate
to develop Shuffled Genes including PIONEER SGDs (but excluding MAXYGEN SGDs)
and PIONEER Licensed Products based thereon.
(b) Except in connection with the development or
commercialization of PIONEER Licensed Products, PIONEER and its Affiliates and
Sublicensees shall not develop or commercialize, or authorize the development or
commercialization of, any gene (or genetic element) which is based on or derived
from any Gene Variant, Shuffled Gene (or Enabling Technology, as the case may
be), or any Plant or product derived therefrom which contains or is made with
the use of such a gene (or genetic element), regardless of whether such gene (or
genetic element) is made or obtained through synthesis, or mutation of a
starting gene (or genetic element). Except in connection with the development or
commercialization of PIONEER Licensed Products, PIONEER will not itself, or
through any third party, use any MAXYGEN Intellectual
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Property, Joint Intellectual Property and/or Research Results or structure-
function data relating to any Gene Variants, including without limitation,
consensus sequences or structural motifs, to reverse engineer, reconstruct,
synthesize or otherwise modify or copy any Gene Variant or Shuffled Gene or any
other gene or product with similar biological activities, or to attempt the
same.
(c) If a dispute arises between the parties which the
parties are unable to resolve regarding whether or not a product sold by PIONEER
or its Affiliates or Agents or Sublicensees is a PIONEER Licensed Product, the
dispute shall be settled by binding arbitration pursuant to (P)13.2 herein;
provided, however, PIONEER shall bear the burden of proof in establishing that
such product is not a PIONEER Licensed Product subject to this Agreement.
3.2 To MAXYGEN.
----------
A. Research License. Subject to the terms and conditions of this
----------------
Agreement, PIONEER agrees to grant, and hereby grants, to MAXYGEN (i) a non-
exclusive, nontransferable, non-sublicensable, royalty-free, worldwide license
under PIONEER's interest in the Intellectual Property and PIONEER Materials, and
(ii) a non-exclusive, nontransferable, non-sublicensable, royalty-free,
worldwide license under any patents, trade secrets and other intellectual
property owned or Controlled by PIONEER that are
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<PAGE>
necessary or useful for the conduct of the R&D Program, in each case, solely to
conduct the R&D Program.
B. Commercial License.
------------------
(a) Subject to the terms and conditions of this Agreement,
PIONEER agrees to grant, and hereby grants, to MAXYGEN, a worldwide, royalty-
bearing license under PIONEER's interest in the Intellectual Property (whether
solely or jointly owned by PIONEER), as follows:
(i) an exclusive license to make, have made, and use
Shuffled Genes (excluding any PIONEER SGD) and Enabling Technology together with
Shuffled Genes (excluding any PIONEER SGD) in each case, in MAXYGEN Crops, to
develop, make, have made, propagate, have propagated, use, import, offer for
sale, sell and have sold MAXYGEN Licensed Products, including the right to grant
sublicenses; and
(ii) a non-exclusive license to make, have made, and use
Research Results subject to (P)2.1F(f) and (g) in MAXYGEN Crops, to develop,
make, have made, use, import, offer for sale, sell and have sold MAXYGEN
Licensed Products, including the right to grant sublicenses.
(b) Subject to the terms and conditions of this Agreement,
PIONEER agrees to grant, and hereby grants, to MAXYGEN, a worldwide, royalty-
bearing license under PIONEER's interest in
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<PAGE>
the Intellectual Property (whether solely or jointly owned by PIONEER) as
follows:
(i) an exclusive license to make, have made, sell,
offer to sell, import and use Shuffled Genes (excluding PIONEER SGDs) in Plants
other than PIONEER Crops and MAXYGEN Crops, and for uses other than in Plants,
and to develop, make, have made, use, import, offer for sale, sell and have sold
MAXYGEN Licensed Products derived therefrom, including the right to grant
sublicenses; and
(ii) a non-exclusive license to make, have made, sell,
offer to sell, import and use Research Results subject to (P)2.1F(f) and (g) in
Plants other than PIONEER Crops and MAXYGEN Crops, and for uses other than in
Plants, and to develop, make, have made, use, import, offer for sale, sell and
have sold MAXYGEN Licensed Products derived therefrom, including the right to
grant sublicenses.
(c) It is understood that the license to MAXYGEN set forth
in (P)3.2B(a) does not convey any license to use Shuffled Genes or PIONEER SGDs
or MAXYGEN SGDs (i) [*******] or (ii) [*******]. It is further understood that
MAXYGEN shall not have the right to use or license any Shuffled Gene or any
PIONEER SGD or any MAXYGEN SGD which is Jointly Developed in the R&D Program to
any third party for use in [*******], so long as [*******], but shall have the
right to [*******]
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(d) Sublicenses. MAXYGEN shall have the right to sublicense
-----------
the rights granted in (P)3.2B(a) and (b). Following the execution of any
sublicense, MAXYGEN shall provide to PIONEER the identity of the Sublicensee and
a description of the MAXYGEN Licensed Products and rights sublicensed to the
Sublicensee and the territory of such sublicense. Each sublicense granted by
MAXYGEN shall be consistent with all the terms and conditions of this Agreement,
and subordinate thereto, and MAXYGEN shall remain responsible to PIONEER for the
financial obligations arising under this Agreement based upon the activities of
each such Sublicensee. No Sublicensee may grant further sublicenses of such
rights, or assign such sublicense, without PIONEER's prior written consent. Upon
termination of this Agreement, or of any licenses granted to MAXYGEN hereunder,
for any reason, any applicable sublicenses granted by MAXYGEN hereunder shall
survive, subject to terms and conditions herein.
C. Enabling Technology.
-------------------
(i) It is understood that the licenses set forth in
(P)3.2B(a) include a license, with the right to grant and authorize sublicenses,
under PIONEER's interest in the Enabling Technology to make, have made, sell,
have sold, import, use, and have used MAXYGEN Licensed Products incorporating
Enabling Technology, together with Shuffled Genes (excluding [*******]) in
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<PAGE>
the MAXYGEN Crops in accordance with such license, but does not include a
license to [*******]
(ii) In the event that PIONEER and MAXYGEN mutually
agree in writing pursuant to (P)2.7D upon an appropriate royalty or other value
capture mechanism for other uses of Enabling Technology by MAXYGEN [*******],
PIONEER will grant to MAXYGEN a nonexclusive, royalty-bearing, worldwide license
for such uses of the applicable Enabling Technology.
3.3 Third Party Rights.
------------------
A. Overlapping Rights. It is understood that MAXYGEN is in the
------------------
business of Shuffling DNA on behalf of third parties, and that MAXYGEN will
grant such third parties rights after the Effective Date to acquire licenses for
genes derived from Shuffling that are similar to PIONEER's rights under this
Section 3. Notwithstanding the licenses granted PIONEER above, it is possible
that a third party may acquire rights from MAXYGEN with respect to one or more
genes of which MAXYGEN is a sole or joint owner; accordingly, MAXYGEN's grant of
rights in this Section 3 is limited to the extent that (i) a third party (either
alone or jointly with MAXYGEN) has filed a patent application with respect to
such gene prior to the filing by PIONEER (either alone or jointly with MAXYGEN)
of a patent application with respect to such a gene or (ii) MAXYGEN has, prior
to identification of the nucleotide sequence of a gene in the R&D Program
granted a third party a
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<PAGE>
license or other rights with respect to such a gene, and subject to any such
grant of rights to a third party.
B. Limited Liability. It is understood and agreed that, even if
-----------------
MAXYGEN complies with its obligations under this Agreement, genes derived
through Shuffling activities that are provided to third parties in the course of
MAXYGEN's other business activities may result in third party patent
applications and patents, including patent applications and patents owned by
such third parties, or owned jointly by MAXYGEN and such third parties, which
could conflict with patent applications and patents owned by PIONEER, or jointly
owned by PIONEER and MAXYGEN hereunder. MAXYGEN will use its reasonable efforts
to avoid such conflict and, unless PIONEER is damaged as a proximate result of a
material breach by MAXYGEN of the terms of (P)2.6 or any of the representations
and warranties in Section 11, then MAXYGEN shall have no liability under this
Agreement with respect to any such conflict.
3.4 Assignments. Each party shall have the further right to assign its
-----------
rights in the licenses granted herein (or any part thereof) to one or more of
its Affiliates; provided, however, that the party making such assignment shall
be responsible for the obligations of such Affiliates.
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<PAGE>
3.5 Retained Rights.
---------------
A. MAXYGEN. MAXYGEN shall retain all rights under its interest in
-------
the Shuffling Technology assigned to MAXYGEN pursuant to (P)7.3, and in the
MAXYGEN Intellectual Property and Joint Intellectual Property that are not
expressly granted to PIONEER in (P)3.1A, and to any intellectual property and/or
tangible materials developed by it or on its behalf after the Research Term or
outside the scope of this Agreement. It is understood that MAXYGEN may, among
other things, grant to third parties (i) licenses under its interest in such
Intellectual Property for the use of Shuffled Genes (excluding PIONEER SGDs) in
MAXYGEN Crops and other plants, and (ii) licenses under its interest in
intellectual property developed outside the R&D Program for any use; provided,
however, that during the term of this Agreement, MAXYGEN shall not grant any
license under such Intellectual Property which conflicts with the licenses
granted to PIONEER herein. Notwithstanding the exclusive licenses granted to
PIONEER in (P)3.1A, MAXYGEN shall retain the right to use all Shuffled Genes for
its own research purposes (i.e., to develop, improve and validate its technology
and intellectual property).
B. PIONEER. PIONEER shall retain all rights under its interest in
-------
the PIONEER Product Technology assigned to PIONEER pursuant to (P)7.3, and in
the PIONEER Intellectual Property and Joint Intellectual Property that are not
expressly granted to MAXYGEN in (P)3.1B, and to any intellectual property and/or
tangible materials developed by it or on its behalf after the Research Term
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<PAGE>
or outside the scope of this Agreement. It is understood that PIONEER may, among
other things, grant to third parties licenses under its interest in such
Intellectual Property for the use of Shuffled Genes (excluding MAXYGEN SGDs) to
which it retains license rights in the PIONEER Crops; provided, however, that
during the term of this Agreement, PIONEER shall not grant any license under
such Intellectual Property which conflicts with the licenses granted to MAXYGEN
herein. It is understood and agreed that nothing in this Agreement grants (or
shall be construed to grant) to PIONEER any licenses to intellectual property or
materials developed by or on behalf of third parties outside of the R&D Program.
3.6 Other Rights.
------------
A. MAXYGEN Covenant. In furtherance of the licenses granted to
----------------
PIONEER in (P)3.1B, MAXYGEN agrees that, to the extent necessary for PIONEER to
practice the license granted in (P)3.1B, for so long as PIONEER is not in
default with respect to any payment due to MAXYGEN hereunder by more than thirty
(30) days, MAXYGEN shall not bring any claim or action against PIONEER, or its
Affiliates or Sublicensees, based on or asserting that the making, using,
selling, importing or offering for sale or import of a PIONEER Licensed Product
in accordance with the license set forth in (P)3.1, infringes any claim of a
U.S. or foreign patent relating directly and/or specifically to [*******] that
is owned or Controlled by MAXYGEN during the term of this Agreement; provided,
however, if any amounts are due from MAXYGEN to third parties as a result of the
practice of such third party patent rights by PIONEER and its Affiliates and
Sublicensees pursuant to the foregoing covenant, PIONEER or its
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<PAGE>
Affiliates or Sublicensees shall pay to MAXYGEN or the third party, as agreed by
PIONEER and MAXYGEN, any amounts due to such third party; provided it is
understood that MAXYGEN shall be solely responsible for any amounts due to third
parties for the practice of the Shuffling Technology per se. This covenant does
--- --
not extend to any infringement by PIONEER or its Affiliates or Sublicensees of a
claim of a U.S. or foreign patent owned or Controlled by MAXYGEN outside the
scope of the specific covenant described above [*******].
B. PIONEER Covenant. In furtherance of the licenses granted to
----------------
MAXYGEN in (P)3.2, PIONEER agrees that, to the extent necessary for MAXYGEN to
practice the license granted in (P)3.2B, for so long as MAXYGEN is not in
default with respect to any payment due to PIONEER hereunder by more than thirty
(30) days, PIONEER shall not bring any claim or action against MAXYGEN, or its
Affiliates or Sublicensees, based on or asserting that the manufacture, use,
sale, offer for sale or import of a MAXYGEN Licensed Product in accordance with
the license set forth in (P)3.2 infringes any claim of a U.S. or foreign patent
directly and/or specifically relating to [*******] that is owned or Controlled
by PIONEER during the term of this Agreement; provided, however, if any amounts
are due from PIONEER to third parties as a result of the foregoing covenant,
MAXYGEN or its Affiliates or Sublicensees shall pay to PIONEER or the third
party, as agreed by MAXYGEN and PIONEER, any amounts due to such third party as
a result of the practice of such third party patent rights by MAXYGEN and its
Affiliates and Sublicensees. This covenant does not extend to any infringement
by MAXYGEN or its Affiliates or Sublicensees of a claim of a U.S. or foreign
patent
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<PAGE>
owned or Controlled by PIONEER outside the scope of the specific covenant
described above [*******].
SECTION 4. PAYMENTS.
--------------------
4.1 Payments Due Upon Execution of this Agreement. Within [*******]
---------------------------------------------
days after the Effective Date, PIONEER shall pay to MAXYGEN a non-refundable
license fee of [*******].
4.2 Equity Investment. In conjunction with the execution of this
-----------------
Agreement, PIONEER will enter into a Stock Purchase Agreement of even date
herewith.
4.3 Royalties to MAXYGEN.
--------------------
A. PIONEER Licensed Products. In consideration of the licenses
-------------------------
granted above, PIONEER shall pay to MAXYGEN a royalty on Net Sales of PIONEER
Licensed Products (except PIONEER Licensed Products subject to (P)4.3B below) at
the rate of:
(a) Where the Product Premium of the PIONEER Licensed
Product ranges from [*******] to [*******] compared to the applicable Benchmark
Product in the same geographic area, [*******] percent of Net Sales of the
applicable PIONEER Licensed Product.
(b) Where the Product Premium of the PIONEER Licensed
Product ranges from [*******] to [*******] compared to the applicable Benchmark
Product, [*******] percent of Net Sales of the applicable PIONEER Licensed
Product.
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<PAGE>
(c) Where the Product Premium of the PIONEER Licensed
Product is [*******] compared to the applicable Benchmark Product, [*******]
percent of Net Sales of the applicable PIONEER Licensed Product.
(d) In cases where PIONEER and its Agents, Affiliates and
Sublicensees do not sell a Benchmark Product corresponding to a particular
PIONEER Licensed Product, and believe that the applicable Product Price of the
Benchmark Product is lower than the Product Price of a comparable Benchmark
Product sold by PIONEER would be due to generally higher PIONEER prices, then
PIONEER may notify MAXYGEN and provide a written explanation of its position. In
such event, the parties shall determine in good faith the Product Price of the
applicable Benchmark Product which will be used to determine the applicable
Price Premium; provided, however, such royalty shall be no less than [*******]
of Net Sales of the applicable PIONEER Licensed Product. In the event that the
parties are unable to agree on the royalty due, such matter shall be submitted
by either party to binding arbitration pursuant to Section 13.
(e) In cases where there is no Benchmark Product because no
comparable product exists, the parties shall determine in good faith the royalty
rate which will be applied prior to commercialization of the applicable PIONEER
Licensed Product; provided, however, such royalty shall be in the range of
[*******]
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<PAGE>
to [*******] of Net Sales of the applicable PIONEER Licensed Product. In the
event that the parties are unable to agree on the royalty due, such matter shall
be submitted by either party to binding arbitration pursuant to Section 13.
(f) In any country where there are no Patent Rights covering the
applicable PIONEER Licensed Product, if a competitor of PIONEER is marketing a
product in commercially material quantities as a result of an unauthorized use
of MAXYGEN Shuffling Technology, which product would be within the definition of
a PIONEER Licensed Product if marketed by PIONEER, then PIONEER shall notify
MAXYGEN providing a written description of the product and the identity of the
party who is making and selling such product. MAXYGEN shall use such reasonable
efforts to inform PIONEER within ninety (90) days of receipt of such
information, whether it believes such product was made via an unauthorized use
of Shuffling Technology. If such product was made with the unauthorized use of
Shuffling Technology, then PIONEER's royalty obligations hereunder in such
country for the corresponding PIONEER Licensed Product with respect to sales
thereof occurring in such country after the date of PIONEER's notice to MAXYGEN
shall be reduced by [*******] for so long as commercially material sales of such
other product continue in such country.
(g) Notwithstanding the foregoing provisions of this (P)4.3, no
royalties shall be due to MAXYGEN with regard to
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PIONEER Licensed Products which do not incorporate and are not made with
[*******], and are identified or produced using only [*******].
B. [*******]. The royalty paid to MAXYGEN for any PIONEER Licensed
Product based on or a Shuffled Gene imparting [*******] and the value capture
strategy which will be the basis for payments to MAXYGEN will be determined in
good faith by MAXYGEN and PIONEER prior to commercialization of the first
applicable PIONEER Licensed Product; provided, however, such royalty shall be no
less than [*******] of Net Sales of the applicable PIONEER Licensed Product. In
the event that the parties are unable to agree on the royalty due, such matter
shall be submitted by either party to binding arbitration pursuant to Section
13.
C. Royalty Offset. [*******] percent [*******] of all milestone
--------------
payments paid by PIONEER to MAXYGEN pursuant to (P)4.4 below, are creditable
against the royalties due under (P)4.3 on PIONEER Licensed Products that contain
a Shuffled Gene within the same Trait Category for which the applicable
milestone payment was made. The milestone payments may offset up to a maximum of
[*******] percent [*******] of the royalties due to MAXYGEN from PIONEER with
respect to the applicable PIONEER Licensed Product(s) per year. All unexpended
milestone payment credits are to be carried forward and applied against
royalties until the full credit is taken by PIONEER.
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D. Enabling Technology - Payments.
------------------------------
(a) [*******].
(b) PIONEER shall pay to MAXYGEN additional amounts, to be
determined in good faith by MAXYGEN and PIONEER prior to MAXYGEN granting a
license, as set forth in (P)3.1 (C), for PIONEER Licensed Products which do not
contain a Shuffled Gene, but are, or incorporate, or are identified, or made
with the use of Enabling Technology. Unless otherwise agreed, such payments
shall be agreed by the parties at such time as the work plan for the research on
the applicable Enabling Technology is established; provided, such royalty shall
be no more than [*******] of Net Sales of the applicable PIONEER Licensed
Product. In the event that the parties are unable to agree on the royalty due
(or other value capture mechanism) for a particular PIONEER Licensed Product
and/or use of Enabling Technology within one hundred and twenty (120) days after
first negotiating such royalty, such matter may be submitted by either party to
binding arbitration pursuant to Section 13.
E. Sublicense Payments.
-------------------
(a) In addition to royalties due pursuant to (P)4.3.A on Net
Sales by Sublicensees, PIONEER shall pay to MAXYGEN [*******] of any and all
Sublicense Payments collected by PIONEER pursuant to this Agreement from any
Agent or Sublicensee.
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(b) If PIONEER or its Affiliates wishes to grant a third party a
sublicense under the MAXYGEN's interest in the MAXYGEN Intellectual Property or
Joint Intellectual Property, or rights under the MAXYGEN's interest in the
MAXYGEN Intellectual Property or Joint Intellectual Property with regard to a
PIONEER Licensed Product, in exchange for any consideration in a form other than
cash or a cash equivalent (e.g., a license under other intellectual property
owned or Controlled by PIONEER), then PIONEER shall notify MAXYGEN and the fair
market value of the non-cash consideration received by PIONEER and its
Affiliates for such rights or product, as the case may be, shall be agreed by
PIONEER and MAXYGEN, or if the parties are unable to agree on such fair market
value, either party may submit such matter to arbitration pursuant to Section 13
below, in order to determine the fair market value of such consideration.
4.4 Milestone Payments.
------------------
A. Payments to MAXYGEN for [*******]. In addition to the other
---------------------------------
payments contemplated herein, PIONEER shall pay to MAXYGEN the following
amounts, in each case within 30 days following the occurrence of the specific
event. The full payment amounts set forth below shall only be paid with respect
to [*******] to reach the applicable milestone. The specific events are:
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(i) Once PIONEER (i) obtains successful test results at a
level agreed upon by the parties in the Work Plan, [*******] that are based in
whole or in part on such Shuffled Gene, or (b) elects to pursue further
development of a plant or seed based in whole or part on a Shuffled Gene after
[*******], [*******]; and
(ii) Upon [*******] regulatory approval in any country that
allows commercial sale of PIONEER Licensed Product, [*******]; and
(iii) Upon [*******] commercial sale in any country of
PIONEER Licensed Product, [*******].
B. Payments to MAXYGEN for [*******]. Should PIONEER achieve any of
---------------------------------
the milestone events in (P)4.4A with respect to [*******] containing a Shuffled
Gene [*******], after PIONEER has paid the applicable milestone payment for
[*******] containing a Shuffled Gene expressing a Trait [*******] in accordance
with (P)4.4A, PIONEER shall pay MAXYGEN additional milestone payments at
[*******] set forth in subparagraph 3.2C(a) above. [*******].
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4.5 Payments to PIONEER.
-------------------
A. Direct Sales of MAXYGEN Licensed Products.
-----------------------------------------
(i) At the present time, it is not foreseen that MAXYGEN
shall be selling MAXYGEN Licensed Products that are developed, made or sold as a
part of MAXYGEN's day-to-day business, and that MAXYGEN shall be sublicensing
under the licenses granted in this Agreement. However, if during the life of
this Agreement, MAXYGEN or its successor company shall exercise the licenses
granted in a means other than by sublicensing to third parties, MAXYGEN or its
successor company shall enter into negotiations in good faith with PIONEER to
establish a royalty rate for MAXYGEN Licensed Products made from the use of
Shuffled Genes to be paid to PIONEER in consideration of the licenses granted
above. MAXYGEN shall inform PIONEER of its intent to sell MAXYGEN Licensed
Products at least 6 months prior to its sale of the first such product, in order
to allow time to negotiate the royalty rate that shall be due on Net Sales. Such
royalty rate shall be based on Product Premiums as set forth in (P)4.3A, and in
no event shall the royalty rate applied to MAXYGEN Licensed Products and due to
PIONEER exceed the royalty rate applied to PIONEER Licensed Products and due to
MAXYGEN in (P)4.3A.
(ii) Notwithstanding the foregoing (P)4.5A(i), no royalties
shall be due to PIONEER with regard to MAXYGEN Licensed
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Products which do not incorporate and are not made with [*******], and are
identified or produced using only [*******].
B. Sublicense Payments.
-------------------
MAXYGEN shall pay to PIONEER [*******] of any and all Sublicense
Payments collected by MAXYGEN pursuant to this Agreement from any Sublicensee
for the use of Shuffled Genes or [*******].
C. Non-PIONEER Genes. Notwithstanding (P)4.5A and B above, no
-----------------
royalties or Sublicense Payments shall be due to PIONEER with regard to MAXYGEN
Licensed Products which incorporate or are made with the use of [*******], or
are identified or produced using only [*******].
4.6 Royalty Term. The royalties due hereunder shall be payable on a
------------
country-by-country and Licensed Product-by-Licensed Product basis in each
country until the date which is: (i) the expiration of the last to expire of the
patents within the Patent Rights licensed from the other party hereto covering
the applicable Licensed Product, or the manufacture, use or sale of the Licensed
Product in such country, or (ii) if there are never any Patent Rights covering
the applicable Licensed Product or the manufacture, use or sale of such Licensed
Product in a particular country, until [*******] years following the first
commercial sale of such Licensed Product in such country.
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4.7 Timing. Royalty payments on sales of Licensed Products made during
------
each party's fiscal quarter by each of the parties and any fees due from their
Sublicensees sales, shall be due to the other party within 30 days after
the end of each fiscal quarter, at which time a written report showing total
sales of Licensed Products made by a party hereto and its Affiliates, Agents and
Sublicensees stated separately for each, and the calculation of Net Sales based
thereon, including details on deductions for all qualified costs set forth in
(P)1.21, stated separately on a country-by-country and Licensed Product-by-
Licensed Product basis, accompanied by sufficient information to enable the
licensor to verify the accuracy of the royalty calculations made by PIONEER, and
a detailed explanation of the methodology used to determine the royalty payment,
by Licensed Product. Notwithstanding the above, if PIONEER is unable to meet the
foregoing obligation to provide quarterly reports and royalty payments, and
requests the right to make semi-annual or annual royalty payments, the parties
agree to discuss in good faith such a request.
4.8 Currency. Royalties due hereunder shall be paid in U.S. Dollars. As to
--------
sales occurring in a currency other than U.S. Dollars, the amount due shall
first be calculated in the currency in which sale occurred and then converted to
U.S. Dollars at the closing selling rate for U.S. Dollars, as quoted in the Wall
Street Journal for the last business day of the fiscal quarter for which royalty
payments are due.
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4.9 Payment Method; Late Payments. All payments due under this Agreement
-----------------------------
shall be made by bank wire transfer in immediately available funds to a bank
account designated by the party to which such royalties are due. In the event
that the due date of any payment subject to Section 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 two percent (2%) (on an annualized basis), calculated on the number
of days such payment is delinquent. The rights provided in this Section 4.9
shall in no way limit any other remedies available to the party to which such
royalties are due.
4.10 Records; Inspection. The parties shall keep, and shall require their
-------------------
Sublicensees to keep, for four years from the date of each payment of royalties
hereunder, complete and accurate records of sales of Licensed Products by it and
its Affiliates, Agents and Sublicensees in sufficient detail to allow the
accruing royalties to be determined accurately. Both parties shall have the
right during such four year period, but no more than twice every year, to
appoint an independent certified public accountant reasonably acceptable to the
other party to audit such records, during normal business hours and upon
reasonable advance notice, solely for the purpose of verifying the accuracy of
the royalty
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calculation made. Such inspection shall be at the auditing party's sole expense
unless it reveals an underpayment by the other party of at least [*******]
percent [*******] of the amount due, in which case the reasonable costs of such
inspection shall be reimbursed by the audited party together with payment for
any unpaid amounts that are discovered shall be paid promptly, together with
interest thereon from the date such payments were due at the prime rate (as
reported by the Bank of America, San Francisco, California (or its successor),
plus an additional two percent (2%) on an annualized basis.
4.11 Tax Matters. All royalty amounts and other payments required to be
-----------
paid by MAXYGEN or PIONEER to the other pursuant to this Agreement shall be paid
with deduction for withholding for or on account of any taxes (other than taxes
imposed on or measured by net income) or similar governmental charge imposed by
a jurisdiction other than the United States ("Withholding Taxes"). The party
paying such taxes shall provide the other party a certificate evidencing payment
of any Withholding Taxes hereunder.
4.12 Technology Enhancement Funding. In addition to the other payments to
------------------------------
MAXYGEN provided herein, PIONEER will pay to MAXYGEN non-refundable technology
enhancement funding of [*******] per year for each year of the R&D Program
(including any extension thereof), to perform research to further enhance the
Shuffling Technology. Such payments shall be used by MAXYGEN to [*******]. The
first
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such payment shall be due within [*******] days of the Effective Date, and each
additional annual payment shall be due on the successive anniversaries of such
date.
4.13 FTE Payments.
------------
A. In addition to the payment due pursuant to the other paragraphs
of this Section 4, PIONEER will pay to MAXYGEN, for the [*******] FTEs set forth
in (P)2.1A(b), a non-refundable amount of [*******] per year during [*******] of
the Research Term, commencing as of the Effective Date.
B. Payments due pursuant to (P)4.13 above 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. In the event that the parties agree to a different Staffing
Level for any given calendar quarter as set forth in (P)2.1A(b), the payment set
forth in this (P)4.13 shall be pro-rated accordingly based on a level of funding
of [*******] per year per FTE.
4.14 PIONEER Activities. PIONEER shall fund its own activities under the
------------------
R&D Program.
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SECTION 5. COMMERCIALIZATION.
-----------------------------
5.1 Due Diligence. PIONEER shall actively pursue commercialization of
-------------
each Shuffled Gene with commercially reasonable diligence with the same level of
efforts it makes with its own intellectual property of comparable commercial
potential and patent protection and include:
(a) [*******] within [*******] years of the date of delivery
of the applicable Shuffled Gene to PIONEER. This [*******] year limitation only
applies if any necessary and effective assays developed by MAXYGEN and/or
PIONEER for measuring efficacy of the Shuffled Gene are available at the date of
delivery of the applicable Shuffled Gene. If such assays are not available at
the date of delivery of the Shuffled Gene, the start of the [*******] year
limitation will not begin until the assays are available. This diligence
activity shall be satisfied when [*******]; and
(b) [*******] within [*******] years of initial demonstration
of [*******] in the first PIONEER Crop containing the applicable Shuffled Gene
(assuming [*******] continue to demonstrate the commercial level of efficacy).
If reasonable freedom-to-operate concerns arise during this period regarding the
Shuffled Gene and/or the other construct components involved [*******], and
PIONEER must substitute other construct components, then the start of the
[*******] year limitation will begin when the
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new constructs are created. This diligence obligation shall be satisfied when
[*******]; and
(c) [*******] within [*******] years of [*******] (assuming
[*******] continue to demonstrate the commercial level of efficacy). The
ultimate number of individual hybrids or varieties carrying the applicable
Shuffled Gene will vary considerably depending upon the Trait and the breadth of
geographies where markets exist. This diligence obligation is determined to be
met when [*******]; and
(d) [*******] within [*******] years of first [*******] (assuming
[*******] continue to demonstrate the commercial level of efficacy). It is
recognized and accepted that the time to [*******] may vary widely among PIONEER
Licensed Products, depending upon the Trait and PIONEER Crop, and that [*******]
are continuing to change. If [*******] change during the [*******] year
limitation, then the term to meet this diligence obligation shall be reasonably
extended, as agreed by the parties, to reflect the change in the [*******]. This
diligence obligation is determined to be met when [*******]; and
(e) [*******] within [*******] years of [*******] (assuming
[*******] continue to demonstrate the commercial level of efficacy).
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It is recognized and accepted that the efficacy of each Shuffled Gene will
typically be tested and demonstrated in the field in one PIONEER Crop before
PIONEER may wish to begin developing the Shuffled Gene in additional PIONEER
Crops. Therefore, the commercialization due diligence targets identified above
will not start for additional PIONEER Crops until selected events containing the
specific Shuffled Gene are [*******] in the first PIONEER Crop.
5.2 Lack of Diligence/Reversion Rights. The rights and licenses granted to
----------------------------------
PIONEER herein with respect to Shuffled Genes shall terminate on a PIONEER Crop
by Trait basis (as defined in (P)10.1) and such rights will revert to MAXYGEN
if:
(a) PIONEER fails to satisfy any of the diligence obligations in
paragraph 5.1 above with respect to any [*******]; and
(b) PIONEER discontinues development and sale of [*******].
5.3 PIONEER Development Reports. PIONEER shall keep MAXYGEN apprised of
---------------------------
the status of the development and commercialization of each Shuffled Gene and
PIONEER Licensed Product by providing MAXYGEN with a written report within
thirty (30) days after the end of each calendar half-year detailing such
activities with respect to each applicable Shuffled Gene and PIONEER Licensed
Product during the term of this Agreement, and at MAXYGEN's request, once per
year the director of PIONEER's development activities with regard to any
particular PIONEER Licensed Product shall meet with MAXYGEN to discuss the
status and stage of such development. The
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reports described in this (P)5.3 shall describe all Shuffled Genes that have
been put into PIONEER Crops or tested in [*******], and all PIONEER Licensed
Products for which PIONEER has sought or obtained regulatory approval, or which
PIONEER has licensed to a Sublicensee for development or commercialization and
shall also contain sufficient other information to allow MAXYGEN to monitor
PIONEER's compliance with this Agreement, including without limitation,
PIONEER's obligations with respect to the accomplishment of the milestones set
forth in (P)4.4. All reports and information provided under this (P)5.3 shall be
deemed Confidential Information of PIONEER.
5.4 MAXYGEN Development Reports. MAXYGEN shall keep PIONEER apprised of
---------------------------
the status of the development and commercialization of each Shuffled Gene and
MAXYGEN Licensed Product by providing PIONEER with a written report within
thirty (30) days after the end of each calendar year detailing such activities
with respect to each applicable Shuffled Gene and MAXYGEN Licensed Product
during the term of this Agreement. All reports and information provided under
this (P)5.4 shall be deemed Confidential Information of MAXYGEN.
5.5 Technology Enhancement Funding Reporting. Within 60 days of the
----------------------------------------
Effective Date and on each anniversary of the Effective Date during the period
in which PIONEER is providing to MAXYGEN technology enhancement funding, MAXYGEN
will provide to PIONEER a
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written summary indicating the activities relating to Shuffling Technology it
intends to fund in the course of the next year with funding paid pursuant to
(P)4.12. In addition, within 60 days after the first anniversary of the
Effective Date and on each anniversary of the Effective Date thereafter during
the period in which PIONEER is providing to MAXYGEN technology enhancement
funding, MAXYGEN will provide to PIONEER a written summary indicating the
results of the MAXYGEN research funded from the technology enhancement funding
and how such results are being applied to the R&D Program.
SECTION 6. TREATMENT OF CONFIDENTIAL INFORMATION.
-----------------------------------------------------
6.1 Confidentiality.
---------------
A. General.
-------
(a) MAXYGEN and PIONEER each recognize that the other party's
Confidential Information constitutes highly valuable and proprietary
confidential information. For the purposes hereof, PIONEER Material is PIONEER
Confidential Information and MAXYGEN Material is MAXYGEN Confidential
Information. Subject to the terms and conditions of Section 8, MAXYGEN and
PIONEER each agree that, except as required by applicable law or regulation
(including the filing and prosecution of patent applications) or judicial or
administrative order, during the term of this Agreement and for five years
thereafter:
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(i) it will keep confidential, and will cause its employees,
consultants, Affiliates, licensees and sublicenses to keep confidential, all
Confidential Information of the other party that is disclosed to it, or to any
of its employees, consultants, Affiliates and Agents, under or in connection
with this Agreement; and
(ii) neither it nor any of its respective employees, consultants,
Affiliates or Agents 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 its Sublicensees or academic collaborators or subcontractors, to
the extent reasonably necessary in granting permitted sublicenses or otherwise
exercising license rights expressly granted to it under the terms of this
Agreement and the rights set forth in (P)2.1F, provided that prior to any such
disclosure such entities execute a written confidentiality agreement providing
protections similar to those contained herein;
(ii) 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
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<PAGE>
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, other than pursuant to a confidentiality agreement, it will give
reasonable advance notice to the other party of such disclosure and, will use
its reasonable efforts to secure confidential treatment of such Confidential
Information (whether through protective orders or otherwise); and
(iii) 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 only be made under the
terms of a confidentiality agreement providing protections similar to those
contained herein.
B. Restricted Access.
-----------------
(a) Disclosure of a party's Confidential Information to any of
the officers, employees, consultants or Agents of the other 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 not to use such Confidential
Information except as expressly permitted by this Agreement.
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(b) Following termination or expiration of the term of this
Agreement, each party will return all the Confidential Information disclosed to
it by the other party pursuant to this Agreement, including all copies and
extracts of documents, within 60 days of the request of the disclosing party;
provided that a party may retain Confidential Information of the other party
relating to any license or right to use Intellectual Property that survives such
termination and one copy of all other Confidential Information may be retained
in confidential and inactive archives solely for the purpose of establishing the
contents thereof and to determine the continuing obligations of each party.
C. Employee Confidentiality Agreements.
-----------------------------------
MAXYGEN and PIONEER each represent that all of its employees and all
of the employees of its Affiliates, and any consultants to such party or its
Affiliates, 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 to which its employees and consultants (and those of
its Affiliates) are obligated.
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,
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<PAGE>
that either party may make such a disclosure to the extent required by law and
that either party may make a disclosure of the existence and terms of this
Agreement to its attorneys, advisers, investors, prospective investors, lenders
and other financing sources, and to strategic partners or licensees for Licensed
Products under circumstances that reasonably ensure the confidentiality thereof.
Notwithstanding the foregoing, the parties may agree upon a press release to
announce the execution of this Agreement, together with a corresponding Q&A
outline for use in responding to inquiries about the Agreement; thereafter,
PIONEER and MAXYGEN may each disclose to third parties the information contained
in such press release and Q&A without the need for further approval by the
other. In addition, MAXYGEN may, following consultation with PIONEER and with
the prior written consent of PIONEER, (i) make public statements regarding
PIONEER Licensed Products by announcing the achievement of milestones and fees
therefor, and (ii) make public statements regarding the overall success rate(s)
achieved by and/or for its customers with the use of its technology, including a
general description of activities undertaken in connection with the R&D Program,
and success of such activities, provided it may not disclose PIONEER's identity;
provided, if PIONEER has not approved a particular proposed disclosure within
thirty (30) days of submission by MAXYGEN of such proposed disclosure, then
MAXYGEN shall be free to make the proposed disclosure. Once a particular
disclosure has been made, MAXYGEN shall be free to make further
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disclosures which do not materially differ therefrom without any further review
from PIONEER. PIONEER is free to make public statements, press releases, and the
like, with respect to PIONEER Licensed Products.
6.3 Publication. A party wishing to publish or otherwise publicly
-----------
disclose the Research Results shall first submit a draft of the proposed
manuscripts to the RDSC for review at least ninety (90) days prior to any
submission for publication or other public disclosure. To avoid loss of patent
rights as a result of premature public disclosure of patentable information, the
RDSC shall notify the submitting party in writing within thirty (30) days after
receipt of such a proposed disclosure whether either party desires to file a
patent application on any invention disclosed in such proposed disclosure. In
the event that the reviewing party desires to file such a patent application,
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. Further, if the proposed disclosure contains
Confidential Information of the reviewing party that is subject to nondisclosure
obligations under this Section 6, the submitting party agrees to remove such
Confidential Information upon request of the reviewing party.
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SECTION 7. INTELLECTUAL PROPERTY RIGHTS.
--------------------------------------------
7.1 Disclosure of Inventions. Each party shall promptly inform the
------------------------
RDSC of all Research Results relevant to consideration of the progress of each
project towards its pre-agreed goals, in accordance with a procedure established
by the RDSC; provided, MAXYGEN shall have no obligation to disclose any
Shuffling Technology to the RDSC or PIONEER, except to the extent necessary in
patent filings claiming Shuffled Genes.
7.2 Ownership.
---------
A. MAXYGEN Intellectual Property Rights.
------------------------------------
MAXYGEN shall have sole and exclusive ownership of all right, title
and interest on a worldwide basis in and to any Research Results developed or
invented solely by employees or consultants of MAXYGEN.
B. PIONEER Intellectual Property Rights.
------------------------------------
PIONEER shall have sole and exclusive ownership of all right, title
and interest on a worldwide basis in and to any Research Results developed or
invented solely by employees or consultants of PIONEER.
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C. Joint Intellectual Property Rights.
----------------------------------
PIONEER and MAXYGEN shall jointly own all Joint Research Results.
D. PIONEER Materials. PIONEER shall remain the sole owner of all
-----------------
PIONEER Materials.
E. MAXYGEN Materials. MAXYGEN shall remain the sole owner of all
-----------------
MAXYGEN Materials.
7.3 Assignment of Shuffling Technology and PIONEER Product Technology.
-----------------------------------------------------------------
A. Notwithstanding (P)7.2, PIONEER agrees to assign, and hereby
assigns, to MAXYGEN all right, title and interest in Joint Intellectual Property
and PIONEER Intellectual Property claiming Shuffling Technology.
B. Notwithstanding (P)7.2, MAXYGEN agrees to assign, and hereby
assigns, to PIONEER all right, title and interest in Joint Intellectual Property
and MAXYGEN Intellectual Property claiming PIONEER Product Technology.
C. MAXYGEN and PIONEER agree to timely execute such documents as are
necessary to result in (i) MAXYGEN's sole ownership of patent applications and
patents claiming Shuffling Technology as set forth in (P)7.3A and (ii) PIONEER's
sole ownership
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of patent applications and patents claiming PIONEER Product Technology as set
forth in (P)7.3B.
7.4 Inventorship. Inventorship of patentable inventions shall be
------------
determined by the Patent Coordinators by applying the standards embodied in
United States patent law.
SECTION 8. PROVISIONS CONCERNING THE FILING, PROSECUTION
------------------------------------------------------------
AND MAINTENANCE OF PATENT RIGHTS.
---------------------------------
The following provisions relate to the filing, prosecution and maintenance
of Patent Rights claiming inventions made in connection with the R&D Program.
8.1 Filing of Patents.
-----------------
A. Primary Responsibilities. In consultation with the Patent
------------------------
Coordinators, the RDSC will coordinate the determination of what patents will be
filed on Research Results. Unless the RDSC agrees 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) DNA Shuffling. MAXYGEN will be responsible, at its sole
-------------
expense, for Patent Activities for all inventions made by MAXYGEN or PIONEER or
jointly by the parties in connection with the R&D Program relating to Shuffling
Technology.
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(b) Plant Transformation, PIONEER Product Testing and Product
---------------------------------------------------------
Development. PIONEER will be responsible, at its sole expense, for Patent
-----------
Activities with respect to all inventions made by MAXYGEN or PIONEER or jointly
by the parties in connection with the R&D Program relating to PIONEER Product
Technology, methods of plant transformation, PIONEER product testing and
development of PIONEER Licensed Products.
(c) Gene Libraries. MAXYGEN will be responsible, at its sole expense,
--------------
for Patent Activities with respect to inventions made solely by MAXYGEN in
connection with the R&D Program relating to the Gene Libraries produced by
Shuffling. PIONEER will be responsible, at its sole expense, for Patent
Activities with respect to inventions made solely by PIONEER (if any) relating
to the Gene Libraries produced by Shuffling. In the case of joint inventions
made in connection with the R&D Program relating to the Gene Libraries, Patent
Activities shall be conducted by outside counsel acceptable to both parties with
equal control and joint responsibility for costs incurred in connection with the
applicable Patent Activities.
(d) Shuffled Genes, Proteins Encoded by such Genes, Transgenic Plants
-----------------------------------------------------------------
Containing Shuffled Genes, and Uses Thereof. PIONEER will be responsible, at
-------------------------------------------
its sole expense, for Patent Activities with respect to inventions made by
MAXYGEN or PIONEER or jointly by the parties in connection with the R&D Program
relating
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to Shuffled Genes (excluding MAXYGEN SGDs), proteins encoded by Shuffled Genes
(excluding MAXYGEN SGDs), transgenic plants containing Shuffled Genes (excluding
MAXYGEN SGDs), and uses thereof in the PIONEER Crops; however, if a patent
application or patent solely claims uses of such Shuffled Genes (other than
PIONEER SGDs), proteins, or transgenic plants outside of PIONEER Crops, then
MAXYGEN will be responsible, at its sole expense, for such Patent Activities.
(e) Screening Assays and Inventions not Covered in Other Groups.
-----------------------------------------------------------
PIONEER will be responsible, at its sole expense, for Patent Activities with
respect to inventions made solely by PIONEER in connection with the R&D Program
relating to screening assays and inventions not otherwise covered in the
subsections of (P)8.1A above. MAXYGEN will be responsible, at its sole expense,
for Patent Activities with respect to inventions made solely by MAXYGEN in
connection with the R&D Program relating to screening assays and inventions not
covered in this (P)8.1A above. In the case of joint inventions made in
connection with the R&D Program relating to screening assays and inventions not
covered in (P)8.1(A) above, Patent Activities shall be conducted by outside
counsel acceptable to both parties with equal control and joint responsibility
for costs incurred in connection with the applicable Patent Activities.
B. Cooperation. In each case above, the party responsible for
-----------
Patent Activities for the applicable patent
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applications shall use reasonable efforts to obtain patent coverage that is as
broad as possible to cover all potential commercial applications thereof, and
shall assure that the other party will have the opportunity to provide
meaningful and substantive review and comment with respect thereto. Except as
otherwise expressly provided herein, applications filed on joint inventions
shall be written and filed by outside counsel acceptable to both parties, but
under the control of the responsible party. Each party shall be kept informed of
all substantive matters relating to the preparation and prosecution of all
patent applications claiming or disclosing inventions made in connection with
the R&D Program. Each party shall promptly provide the other with copies of all
patent prosecution and maintenance documentation and correspondence so that the
other shall be currently and promptly informed of the continuing prosecution and
maintenance of patent applications and patents claiming or disclosing inventions
made in connection with the R&D Program. Each party shall have the right to
review and comment upon such documentation and correspondence, as well as all
specifications, claims and responses to office actions prior to their submission
to the relevant government patent office.
C. Elective Termination of Prosecution and Maintenance of Patent
-------------------------------------------------------------
Rights. If at any time the party responsible for Patent Activities pursuant to
------
(P)8.1A above (the "Responsible Party") does not wish to file or wishes to
discontinue the prosecution or maintenance of any Jointly Invented Patent Rights
claiming
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<PAGE>
inventions made in connection with the R&D Program filed in any country, on a
country-by-country basis, 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 prosecution of any such Patent Rights in the applicable
country at its own expense, by giving notice to the Responsible Party of such
intention within 30 days.
8.2 Expenses. Except as otherwise expressly provided above, the
--------
Responsible Party will bear the costs of Patent Activities with respect to all
Patent Rights for which it has responsibility pursuant to (P)8.1.
8.3 Patent Coordinators. MAXYGEN and PIONEER 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 patent filing, prosecution,
maintenance and enforcement. Each party may replace its Patent Coordinator at
any time by notice in writing to the other party. The initial Patent Coordinator
from MAXYGEN is [*******] and from PIONEER is [*******].
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SECTION 9. LEGAL ACTION.
--------------------------
9.1 Actual or Threatened Infringement.
---------------------------------
A. Notice. In the event either party becomes aware of any actual or
------
threatened commercially material infringement or use of any Patent Rights
(collectively, an "Infringement"), that party shall promptly notify the other
party and provide it with full details. The parties will meet to discuss the
appropriate course of action, and may collaborate in pursuing such course or
action.
B. Primary Responsibility. Notwithstanding the foregoing, if the
----------------------
parties do not otherwise agree on a course of action, PIONEER shall have primary
responsibility for the prosecution, prevention or termination of any
Infringement of PIONEER's sole Patent Rights hereunder, at PIONEER's expense and
with the sharing of recoveries as specified below and MAXYGEN shall have primary
responsibility for the prosecution, prevention or termination of any
Infringement of MAXYGEN's Patent Rights, at MAXYGEN's expense and with the
sharing of recoveries as specified below. If either party which has primary
responsibility as described above determines that it is necessary or desirable
for the other to join any such suit, action or proceeding, the second party
shall execute all papers and perform such other acts as may be reasonably
required in the circumstances, at the responsible party's expense.
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<PAGE>
C. Jointly-Owned Patents. In the event of an Infringement of Patent
---------------------
Rights owned jointly by MAXYGEN and PIONEER, the parties shall agree which party
will have the rights and responsibilities of abating such an Infringement, and
how the expenses of abating any such Infringement shall be shared. In the event
the responsible party becomes involved in any action or proceeding relating to
the applicable Patent Rights, 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 in such proceeding, it shall have the right to proceed alone, at its
expense, and may retain any recovery, subject to (P)9.1D below, and the other
party agrees, at the request and expense of 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.
D. Costs. PIONEER shall bear the cost of any proceeding or suit
-----
under this (P)9.1 brought by PIONEER and MAXYGEN shall bear the cost of any such
proceeding or suit brought by MAXYGEN. In each such case, the responsible party
shall have the right first to reimburse itself out of any sums recovered in such
suit or in its settlement for all reasonable costs and expenses, including
reasonable attorney's fees, related to such suit or settlement. The remainder is
next to be used to reimburse the other
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<PAGE>
party for its costs and expenses so incurred. Any remaining amounts or any non-
monetary recovery shall be kept by the responsible party.
E. 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 by the other party for an Infringement.
F. 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.
G. Cooperation. In any action under this (P)9.1, each party shall
-----------
fully cooperate with and assist the other as reasonably requested. No suit
regarding MAXYGEN or Joint Intellectual Property may be settled by PIONEER
without MAXYGEN's consent. No suit regarding PIONEER or Joint Intellectual
Property may be settled by MAXYGEN without PIONEER's consent. With respect to
Joint Intellectual Property, no suit shall be settled by either party without
the other party's consent, which consent shall not be unreasonably withheld.
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<PAGE>
9.2 Defense of Claims Asserted by Third Parties.
-------------------------------------------
A. Infringement Claims Against MAXYGEN. If any action, suit or
-----------------------------------
proceeding is brought against MAXYGEN or any officer, director, employee,
Affiliate or Agent of MAXYGEN alleging the infringement of intellectual property
rights of a third party by reason of (i) the making or use of any Gene or Gene
Variants in the conduct of the R&D Program (except to the extent covered by
(P)9.2B(i)), or (ii) the discovery, development, manufacture, use, sale,
importation or offer for sale of a PIONEER Licensed Product by PIONEER or its
Affiliates, Agents or Sublicensees, PIONEER shall indemnify, defend and hold
harmless MAXYGEN and its officers, directors, employees, Affiliates and agents
from all liabilities arising out of or in connection with any such action, suit
or proceeding. MAXYGEN shall have the right to separate counsel at its own
expense in any such action, suit or proceeding. The parties will cooperate with
each other in the defense of any such suit, action or proceeding. PIONEER shall
not compromise, settle or otherwise dispose of any such suit, action or
proceeding without MAXYGEN's prior consent, provided that MAXYGEN shall not
unreasonably withhold its consent to any settlement which does not have a
material adverse effect on MAXYGEN or MAXYGEN's business.
B. Infringement Claims Against PIONEER. If any action, suit or
-----------------------------------
proceeding is brought against PIONEER or any officer, director, employee,
Affiliate or agent of PIONEER alleging the
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<PAGE>
infringement of intellectual property rights of a third party by reason of (i)
the use of Shuffling Technology in the conduct of the R&D Program or in the
development and commercialization of a PIONEER Licensed Product; and (ii) the
discovery, development, manufacture, use, sale, importation or offer for sale of
an MAXYGEN Licensed Product by MAXYGEN or its Affiliates, agents or
Sublicensees, MAXYGEN shall indemnify, defend and hold harmless PIONEER and its
officers, directors, employees, Affiliates and agents from all liabilities
arising out of or in connection with any such action, suit or proceeding.
PIONEER shall have the right to separate counsel at its own expense in any such
action, suit or proceeding. The parties will cooperate with each other in the
defense of any such suit, action or proceeding. MAXYGEN shall not compromise,
litigate, settle or otherwise dispose of any such suit, action or proceeding
without PIONEER's advice and prior consent, provided that PIONEER shall not
unreasonably withhold its consent to any settlement which does not have a
material adverse effect on PIONEER or PIONEER's business.
C. Notice. In the event a suit or proceeding subject to this (P)9.2
------
is brought against either party that party shall promptly notify the other party
and provide it with details.
SECTION 10. TERMINATION AND DISENGAGEMENT.
--------------------------------------------
10.1 Term. This Agreement shall be effective as of the Effective Date and,
----
unless otherwise terminated earlier pursuant to
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<PAGE>
the other provisions of this Section 10, shall continue in full force and effect
on a Licensed Product-by-Licensed Product and country-by-country basis until the
date that is the later of: (i) PIONEER has completed its payment obligations for
the R&D Program, or (ii) both PIONEER and MAXYGEN have completed all royalty
obligations due under any license acquired hereunder in such country.
10.2 Material Breach.
---------------
A. In the event either party has materially breached or defaulted in
the performance of any of its obligations hereunder, the other party may
terminate the licenses granted to the other party with respect to the applicable
Licensed Products on a Crop-and-Trait Category by Crop-and-Trait Category
("Crop-and-Trait Specific") basis [*******] or, in cases where Crop-and-Trait
Category basis does not apply, on a Licensed Product-by-Licensed Product basis.
If more than one Licensed Product is being commercially developed or exploited
by the breaching party or its Affiliates or Sublicensees hereunder, and a breach
only relates to a particular Licensed Product, the other party shall be entitled
to terminate the licenses only with respect to the applicable Licensed Product.
A material breach of this Agreement by a party shall be deemed to have occurred:
(a) upon the failure of a party to pay, when due, any amount due
hereunder to the other party, effective thirty (30)
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days after receiving notice from the non-breaching party of such failure to pay;
or
(b) upon the material breach by a party of the provisions of
Section 5 effective sixty (60) days after receiving notice from the non-
breaching party of such breach; or
(c) upon breach of any material obligation or condition by a
party, effective sixty (60) days after receiving written notice from the non-
breaching party of such breach.
B. The foregoing notwithstanding, if the default or breach is cured
or shown to be non-existent within the 30-day or 60-day notice period described
above, the notice shall be deemed automatically withdrawn and of no effect.
10.3 Bankruptcy.
----------
A. 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 petition under any bankruptcy or insolvency act or has any such petition
filed against it which is not discharged within 60 days of the filing thereof,
then the other party may, at its sole election upon notice to the Insolvent
Party, terminate the entire Agreement by notice to such party.
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B. 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.
C. Notwithstanding Section B. above, the parties agree that under
this Agreement PIONEER has not been granted and shall not receive any right or
license to practice any Shuffling Technology, and the provisions of (P)10.3B
above do not apply to any intellectual property and materials relating thereto.
10.4 Limited Cause Termination.
-------------------------
A. If PIONEER or MAXYGEN or a third party does not demonstrate that
Shuffled Genes or other genes created or developed through the use of MAXYGEN
Shuffling Technology can be [*******], as shown by [*******], within thirty-six
(36) months after the Effective Date, PIONEER shall have the right to terminate
this Agreement on six (6) months notice to MAXYGEN; provided that such notice
shall be deemed automatically withdrawn if MAXYGEN makes such a demonstration
prior to the effective date of such termination. All payments due to MAXYGEN on
or before the effective date of
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termination shall be paid by PIONEER prior to early termination under this
clause.
B. If prior to the end of the Research Term all research activities
to be conducted in the R&D Program have been successfully completed or
terminated by written agreement of the parties, and PIONEER and MAXYGEN are
unable to agree on new research activities in new trait categories to be
conducted in the R&D Program and the terms thereof as provided in (P)2.1E(a),
then PIONEER shall have the right to terminate the R&D Program on six (6) months
notice to MAXYGEN. All payments due to MAXYGEN on or before the effective date
of termination shall be paid by PIONEER prior to early termination under this
clause.
10.5 Effect of Termination.
---------------------
A. 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.
B. Return of Confidential Information and Materials. Upon any
------------------------------------------------
termination of this Agreement, PIONEER and MAXYGEN shall
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promptly return to the other party all Confidential Information received from
the other party hereto (except one copy of which may be retained by legal
counsel for archival purposes and ensuring compliance with Section 6) and other
pertinent obligations under this Agreement, and all PIONEER Materials and
MAXYGEN Materials shall be returned to the owner thereof.
C. Licenses.
--------
(i) In the event that PIONEER terminates the licenses to
MAXYGEN for a MAXYGEN Licensed Product pursuant to (P)10.2, the licenses granted
to MAXYGEN in Section 3 shall terminate solely with respect to such MAXYGEN
Licensed Product, and the licenses to MAXYGEN with respect to other MAXYGEN
Licensed Products shall remain in full force and effect, subject to all
applicable terms and conditions of this Agreement.
(ii) In the event that MAXYGEN terminates the licenses to
PIONEER for a PIONEER Licensed Product, or for a PIONEER Crop and Trait
Category, pursuant to (P)10.2, the licenses granted to PIONEER in Section 3
shall terminate solely with respect to such PIONEER Licensed Product, or PIONEER
Crop and Trait Category, as the case may be, and the licenses to PIONEER with
respect to other PIONEER Licensed Products, or other PIONEER Crops and Trait
Categories, as the case may be, shall remain in full force and effect, subject
to all applicable terms and conditions of this Agreement.
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(iii) In the event PIONEER terminates the Agreement pursuant
to (P)10.3(A), the licenses granted to MAXYGEN in Section 3 shall terminate.
(iv) In the event MAXYGEN terminates the Agreement pursuant
to (P)10.3(A), the licenses granted to PIONEER in Section 3 shall terminate.
(v) In the event that PIONEER terminates the Agreement
pursuant to (P)10.4A, all licenses granted to PIONEER and MAXYGEN in Section 3
shall terminate.
(vi) Except as expressly provided in this (P)10.5(C), in
the event of any termination of one or more licenses (but not the entire
Agreement) under (P)10.2 or (P)10.3, the remaining licenses granted pursuant to
(P)3.1 and (P)3.2, and the covenants in (P)3.6B solely to the extent they relate
to the surviving licenses, shall remain in effect.
10.6 Surviving Provisions. Paragraphs 2.1B(c), 2.1F, 2.5, 3.3, 3.4, 3.5,
--------------------
4.7, 4.9, 4.10, 4.11, 10.5 and 10.6, and Sections 6, 7, 8, 9, 11, 12, 13 and 14
of this Agreement shall survive the expiration or termination of this Agreement
for any reason.
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SECTION 11. REPRESENTATIONS AND WARRANTIES.
---------------------------------------------
11.1 Mutual Representations. MAXYGEN and PIONEER each represents and
----------------------
warrants as follows:
A. Organization.
------------
It is a corporation duly organized, validly existing and is in good
standing under the laws of the jurisdiction first set forth above, 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.
B. 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.
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C. Binding Agreement.
-----------------
This Agreement is a legal, valid and binding obligation of it
enforceable against it in accordance with its terms and conditions.
D. Inventor's Assignment of Rights.
-------------------------------
It requires that every employee and consultant that is an inventor of
a patentable invention is under an obligation to assign their rights to it, and
that it actively requires the signing of such assignment.
E. 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 AND EXTENDS NO WARRANTY OF ANY KIND WITH
RESPECT TO ANY CONFIDENTIAL INFORMATION, PATENT RIGHTS, KNOW-HOW, SHUFFLING
TECHNOLOGY, SHUFFLED GENES, LICENSED PRODUCTS, OR OTHER TECHNOLOGY, GOODS,
SERVICES, RIGHTS OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND HEREBY DISCLAIMS
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-
INFRINGEMENT, AND VALIDITY OF TECHNOLOGY OR PATENT CLAIMS, ISSUED OR PENDING,
WITH RESPECT TO ANY AND ALL OF THE FOREGOING.
F. Limited Liability. EXCEPT AS EXPRESSLY PROVIDED HEREIN, NEITHER
-----------------
MAXYGEN NOR PIONEER WILL BE LIABLE TO THE OTHER
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WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT UNDER ANY CONTRACT,
NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR (i) ANY
INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST PROFITS OR (ii)
COST OF PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY OR SERVICES.
SECTION 12. ADDITIONAL INDEMNIFICATION.
-----------------------------------------
12.1 Indemnification of MAXYGEN by PIONEER. PIONEER shall indemnify,
-------------------------------------
defend and hold harmless MAXYGEN, its Affiliates and their respective directors,
officers, employees, and Agents and their respective successors, heirs and
assigns (the "MAXYGEN Indemnitees"), against any liability, damage, loss or
expense (including reasonable attorneys' fees and expenses of litigation)
incurred by or imposed upon the MAXYGEN Indemnitees, or any of them, in
connection with any claims, suits, actions, demands or judgments of third
parties (except those subject to (P)9.2A, which shall be governed by the terms
thereof), including without limitation personal injury and product liability
matters (except to the extent such claims, suits, actions, demands or judgments
result from a willful material breach of this Agreement, gross negligence or
willful misconduct on the part of a MAXYGEN Indemnitee) arising directly out of
or in connection with (i) any actions of PIONEER in the performance of the R&D
Program, or (ii) the development, testing, production, manufacture, promotion,
import, sale or use by any person of any PIONEER Licensed Product manufactured
or sold by
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PIONEER or by an Affiliate, licensee, Sublicensee, distributor or Agent of
PIONEER.
12.2 Indemnification of PIONEER by MAXYGEN. MAXYGEN shall indemnify,
-------------------------------------
defend and hold harmless PIONEER, its Affiliates and their respective directors,
officers, employees, and Agents and their respective successors, heirs and
assigns (the "PIONEER Indemnitees"), against any liability, damage, loss or
expense (including reasonable attorneys' fees and expenses of litigation)
incurred by or imposed upon the PIONEER Indemnitees, or any of them, in
connection with any claims, suits, actions, demands or judgments of third
parties (except those subject to (P)9.2B, which shall be governed by the terms
thereof), including, without limitation, personal injury and product liability
matters (except to the extent such claims, suits, actions, demands or judgments
result from a willful material breach of this Agreement, gross negligence or
willful misconduct on the part of a PIONEER Indemnitee) arising out of or in
connection with (i) any actions of MAXYGEN in the performance of the R&D
Program, or (ii) the development, testing, production, manufacture, promotion,
import, sale or use by any person of any MAXYGEN Licensed Product manufactured
or sold by MAXYGEN or by an Affiliate, agent, licensee, Sublicensee, distributor
or Agent of MAXYGEN.
12.3 Procedure. A party (the "Indemnitee") that intends to claim
---------
indemnification under this Section 12 shall promptly notify
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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,
Sublicensees 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 mutually satisfactory to the parties. The
indemnity agreement in this Section 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 Section 12. At the Indemnitor's request, the
Indemnitee under this Section 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.
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<PAGE>
SECTION 13. DISPUTE RESOLUTION.
---------------------------------
13.1 Informal Dispute Resolution.
---------------------------
A. Senior Officials. The parties recognize that a bona fide dispute
----------------
as to certain matters may from time to time arise during the term of this
Agreement which relates to either party's rights or obligations hereunder. In
the event of the occurrence of such a dispute, either party may, by notice to
the other party, have such dispute referred to the Chief Executive Officer of
MAXYGEN and the Vice President, Trait and Technology Development of PIONEER, or
their successors or counterparts, for resolution by good faith negotiations
within 30 days after such notice is received.
B. Interim Conduct. If the parties are unable to reach agreement
---------------
with respect to the next Work Plan as provided above, they shall continue to
work at the Staffing Level then prevailing, in a manner consistent with and in
furtherance of the then current Work Plan, notwithstanding the expiration of the
then-current Work Plan. If the parties are unable to reach any agreement with
respect to a Work Plan by the expiration of the then-current Work Plan pursuant
to (P)13.1(A) above, then such dispute shall be resolved as described in (P)13.2
below. In addition, any dispute relating to the financial obligations of either
party to the other shall be subject to (P)13.2 below.
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<PAGE>
13.2 Arbitration. Any dispute under this Agreement relating to the Work
-----------
Plans or the conduct of R&D Program or the payments due under this Agreement
and/or the financial obligations of the parties hereunder, which is not settled
by mutual consent pursuant to (P)13.1 above, shall be finally settled by binding
arbitration, conducted in accordance with the Commercial Arbitration Rules of
the American Arbitration Association by three (3) independent, neutral
arbitrators appointed in accordance with said rules; provided, unless otherwise
agreed by the parties any dispute relating to the establishment of a royalty
rate to be arbitrated pursuant to (P)4.3A, (P)4.3B or (P)4.3E shall be resolved
by a single independent, neutral arbitrator. Any arbitration shall be held in
San Francisco, California. The arbitrators shall determine what discovery shall
be permitted, consistent with the goal of limiting the cost and time which the
parties must expend for discovery; provided the arbitrators shall permit such
discovery as they deem necessary to permit an equitable resolution of the
dispute. Any written evidence originally in a language other than English shall
be submitted in English translation accompanied by the original or a true copy
thereof. Except as otherwise expressly provided in this Agreement, the costs of
the arbitration, including administrative and arbitrator(s)' fees, shall be
shared equally by the parties and each party shall bear its own costs and
attorneys' and witness' fees incurred in connection with the arbitration. A
disputed performance or suspended performances pending the
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resolution of the arbitration must be completed within a reasonable time period
following the final decision of the arbitrator(s). The arbitrators shall be
directed that any arbitration subject to this Section shall be completed within
one (1) year from the filing of notice of a request for such arbitration. The
arbitration proceedings and the decision shall not be made public without the
joint consent of the parties and each party shall maintain the confidentiality
of such proceedings and decision unless otherwise permitted by the other party.
Any decision which requires a monetary payment shall require such payment to be
payable in United States dollars, free of any tax or other deduction. The
parties agree that the decision shall be the sole, exclusive and binding remedy
between them regarding any and all disputes, controversies, claims and
counterclaims presented to the arbitrators. Any award may be entered in a court
of competent jurisdiction for a judicial recognition of the decision and an
order of enforcement.
SECTION 14. MISCELLANEOUS.
----------------------------
14.1 Notices. All notices 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:
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If to PIONEER: PIONEER HI-BRED INTERNATIONAL, INC.
7300 NW 62/nd/ Avenue
Johnson, Iowa 50131-1004
Attention: Vice President, Trait and
Technology Development
with a copy to:
PIONEER HI-BRED INTERNATIONAL, INC.
800 Capital Square
400 Locust Street
Des Moines, Iowa 50309-234
Attention: General Counsel
If to MAXYGEN: MAXYGEN, INC.
3410 Central Expressway
Santa Clara, California 95051
Attention: Chief Executive Officer
Notices shall be deemed given as of the date received.
14.2 Governing Law and Jurisdiction. This Agreement, and any arbitration
------------------------------
relating hereto, shall be governed by and construed in accordance with the laws
of the State of California, without regard to the application of principles of
conflicts of law.
14.3 Venue. The exclusive venue of any dispute arising out of or in
-----
connection with the performance of or any breach of this Agreement which is not
subject to arbitration pursuant to (P)13.2, shall be the state courts or U.S.
district court located in or for MAXYGEN's principal place of business, and the
parties hereby irrevocably consent to the personal jurisdiction of such courts.
Notwithstanding the above, this (P)14.3 shall be terminated and have no further
force and effect if MAXYGEN is acquired by or merges with a third party having
assets of Five hundred million U.S. dollars ($500,000,000) or more prior to the
merger with or acquisition of MAXYGEN.
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14.4 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.
14.5 Headings. Section and subsection headings are inserted for
--------
convenience of reference only and do not form a part of this Agreement.
14.6 Counterparts. This Agreement may be executed simultaneously in two or
------------
more counterparts, each of which shall be deemed an original.
14.7 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. 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.
14.8 No Agency or Partnership. Nothing contained in this Agreement shall
------------------------
give either party the right to bind the other, or
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be deemed to constitute the parties as agents for the other or as partners with
each other or any third party.
14.9 Assignment and Successors. Except as expressly provided herein, this
-------------------------
Agreement may not be assigned by either party without the consent of the other,
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, to any purchaser 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 into such
successor corporation.
14.10 Force Majeure. Neither PIONEER nor MAXYGEN shall be liable 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 causes beyond the reasonable control of
PIONEER or MAXYGEN, as the case may be, and notice of such prevention of
performance promptly provided by the nonperforming party to the other party.
Such excuse shall be continued so long as the condition constituting force
majeure continues and the nonperforming 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.
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14.11 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.
14.12 Integration: Severability. This Agreement is the sole agreement
-------------------------
with respect to the subject matter hereof and supersedes all other agreements
and understandings between the parties with respect to same, including but not
limited to the Confidentiality Agreement between MAXYGEN and PIONEER dated July
27, 1998. 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.
14.13 Approvals. Each party shall be responsible, at its expense, for
---------
obtaining any approvals from the governmental entities which may be required
under applicable law for the development, growth or sale of Licensed Products
sold by it or on its behalf.
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14.14 Export Controls. This Agreement is made subject to any
---------------
restrictions concerning the export of Licensed Products or Research Results or
Intellectual Property ("Technology") from the United States that may be imposed
upon or related to either party to this Agreement from time to time by the
Government of the United States. Neither party will export, directly or
indirectly, any Technology to any countries 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 license or
written approval to do so from the Department of Commerce or other agency of the
United States Government when required by applicable statute or regulation.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
this 23/rd/ day of December, 1998 by their duly authorized representatives.
PIONEER HI-BRED INTERNATIONAL, INC.
By: /s/ Anthony Cavalieri
---------------------
Anthony Cavalieri
Vice President
MAXYGEN, INC.
By: /s/ Russell Howard
------------------
Russell Howard
President and CEO
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APPENDIX A
----------
[*******]
[Appendix A contains the initial work plan for this Agreement, which details the
specific projects to be undertaken in the R&D Program, timelines for the
specified research activities, and technical information related to the conduct
of the specified research.]
<PAGE>
APPENDIX B
----------
[*******]
[Appendix B identifies the specific crops and trait categories that are the
subject of this Agreement.]