EXHIBIT 10.20
COLLABORATION AGREEMENT
Confidential treatment has been requested regarding
certain portions of this Agreement.
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COLLABORATION AGREEMENT
This COLLABORATION AGREEMENT (the "Agreement") dated as of December 13, 1995 is
made by and between Agrigenetics, Inc., a Delaware corporation doing business as
Mycogen Plant Sciences and having offices at 5501 Oberlin Drive, San Diego,
California 92121 ("MPS"), and Pioneer Hi-Bred International, Inc., 700 Capital
Square, 400 Locust Street, Des Moines, Iowa 50309 ("Pioneer").
WHEREAS, Mycogen Corporation, the parent company of MPS ("Mycogen"), has
developed technology relating to genes encoding insecticidal, miticidal and
nematocidal proteins of Bacillus thuringiensis ("Bt") and other Bacillus species
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and owns or controls certain technology and patent rights granted or pending
relating to said genes and proteins and the introduction and expression in
plants of natural and synthetic genes, full length and truncated, and synthetic
gene technology including synthetic genes and methods for making said genes;
WHEREAS, Mycogen has exclusively licensed all of its Bt and other Bacillus
species technology and patent rights to MPS for use in plants, which includes
the right to sublicense, develop, make, have made, use, cultivate, market,
distribute and sell plants and planting seed;
WHEREAS, MPS also has developed technology relating to genes encoding
insecticidal, miticidal and nematocidal proteins of Bt and other Bacillus
species and also owns or controls certain technology and patent rights granted
or pending relating to said genes and proteins and the introduction and
expression in plants of natural, synthetic or modified genes, full length and
truncated, and synthetic or modified gene technology, including synthetic or
modified genes and methods for making said genes;
WHEREAS, MPS has capabilities particular to the development of Bacillus species
that may possess useful insecticidal, miticidal and nematocidal traits for
plants and Pioneer desires to engage MPS to conduct research and development on
genes derived from Bacillus species encoding insecticidal, miticidal and
nematocidal proteins;
WHEREAS, Pioneer has developed technology and owns or controls certain
technology relating to the introduction and expression in plants of genes
encoding insecticidal proteins of Bacillus species and to plant breeding and
genetic; and
WHEREAS, MPS and Pioneer desire to form a collaboration with their respective
technology and patent rights related to transforming plants with Bt genes and
other genes encoding insecticidal, miticidal and nematocidal proteins from
Bacillus species ("BIP") effective against mites, insects and nematodes.
The collaboration involves the following four essential components:
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1. Combine all current and future BIP genes and enabling technology and patent
rights of both parties under joint Pioneer/MPS research programs in corn
research and research and development programs in soybean, sunflower,
sorghum, wheat and canola for genetically engineered insect, mite and
nematode resistance traits thru transformation with BIP genes to control
certain pests of each crop.
2. Create an environment and structure under the joint Pioneer/MPS research
and development programs to allow the MPS and Pioneer scientists, breeders
and other technical personnel to work together closely so as to best
utilize the technical talent, ingenuity and core competencies of both
companies.
3. Provide each of MPS and Pioneer with the commercial rights to the BIP
insect, mite and nematode resistance traits developed under the Pioneer/MPS
joint research and development programs for each party to breed such traits
into their respective crop parent lines and to produce and sell their own
hybrids and varieties containing such traits. With the sole exception of
the BIP trait, no commercial rights to proprietary germ plasm (in whole or
in part) are granted to either party.
4. Provide MPS with the exclusive right to license all BIP insect, mite and
nematode resistance traits developed under the Pioneer/MPS joint research
and development programs to third parties, subject to certain restrictions
on when one or more third party licensees can commercialize crops
containing such traits.
NOW, THEREFORE, the parties hereby agree as follows.
ARTICLE 1
DEFINITIONS
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The following terms as used in this Agreement will have the meanings as defined
with respect to each such term:
Affiliate. The term "Affiliate" means (1) with respect to MPS, any parent
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corporation of MPS (including Mycogen), or any partnership, joint venture or
subsidiary in which MPS or such parent corporation has a fifty percent or
greater ownership interest and (2) with respect to Pioneer, any partnership,
joint venture or subsidiary in which Pioneer has a fifty percent or greater
ownership interest.
BIP Genes. The term "BIP Genes" means both MPS BIP Genes and Pioneer BIP Genes.
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BIP Transformation Event. The term "BIP Transformation Event" means (i) each
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transgenic plant or transgenic plant tissue that expresses insecticidal,
miticidal and nematocidil proteins from a specific transgenic construct
consisting of one or more BIP Genes directly transformed into such plant or
plant tissue and (ii) all progeny plants from such transformed plant or plant
tissue that contain the same BIP transgenic construct.
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Business Committee. The term "Business Committee" means the committee
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consisting at all times of two (2) representatives of MPS and two (2)
representatives of Pioneer, which is responsible for certain supervisory and
administrative functions as set forth under Section 2.3 of this Agreement.
Combined Technology and Patent Rights. The term "Combined Technology and Patent
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Rights" means any and all of (i) the MPS BIP Genes and MPS Enabling Technology;
(ii) the Pioneer BIP Genes and Pioneer Enabling Technology, (iii) Joint Enabling
Technology, and (iv) any and all patent rights including issued and pending U.S.
and foreign patents (including without limitation, any divisionals,
continuations, continuations in part, extensions and re-issues thereof)
currently owned or in the future acquired by MPS or Pioneer, and rights to U.S.
and foreign patents and patent applications currently or in the future licensed
or sublicensed to MPS or Pioneer with respect to which either party has the
right to grant sublicenses, which patent rights cover, with respect to MPS, MPS
BIP Genes, MPS Enabling Technology and Joint Enabling Technology and with
respect to Pioneer, Pioneer BIP Genes, Pioneer Enabling Technology and Joint
Enabling Technology.
Confidential Information. The term "Confidential Information" means any and all
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proprietary information (including, without limitation, information related to
technical, business and intellectual property matters), know-how, data, trade
secrets and biological and other physical materials owned or held by either
party to this Agreement which such party maintains as confidential.
Corn Research Programs. The term "Corn Research Programs" means the research
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programs jointly conducted by MPS and Pioneer as contemplated by Article 5 of
this Agreement.
Europe. The term "Europe" means Western Europe (as defined below) and all other
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European countries (including the former Soviet Republics) located between
Western Europe and Russia.
Western Europe. The term "Western Europe" means the United Kingdom, Ireland,
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France, Belgium, Netherlands, Denmark, Germany, Luxembourg, France, Spain,
Portugal, Italy, Switzerland and Austria.
Insect Resistant BIP Crops. The term "Insect Resistant BIP Crops" means any and
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all Target Crops (and planting seeds for such crops) containing one or more BIP
Transformation Events jointly developed by Pioneer and MPS under the R&D
Programs contemplated by this Agreement and covered by an approval or an
application for approval from appropriate regulatory authorities for breeding,
production and commercialization of crops containing such BIP Transformation
Event. Insect, mite and nematode resistance is included under this definition
of "Insect Resistant BIP Crops".
Joint Enabling Technology. The term "Joint Enabling Technology" means trade
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secrets, know-how, technology, and other proprietary information, whether or not
patented, which are jointly invented or discovered by (i) MPS or any of its
Affiliates and (ii) Pioneer or any of its Affiliates in connection with the
collaboration under this Agreement.
MPS BIP Genes. The term "MPS BIP Genes" means any and all natural and synthetic
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genes, full length or truncated, chimeric or hybrid, encoding BIP (and genetic
materials derived therefrom) responsible for insect, mite and nematode
resistance, and any patents covering such genes, having possible applications in
developing BIP Transformation Events under this Agreement, now owned
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by MPS or its Affiliate(s) or available for use by or used by such entities
under license or agreement with third parties (which use hereunder is not
restricted under such license or agreement) or developed or acquired during the
term of this Agreement by MPS or its Affiliate(s). If acquired from a third
party then the foregoing BIP genes (and genetic materials derived therefrom)
will not be included in the definition of MPS BIP Genes if the agreement with
the third party restricts such use, provided that MPS or its Affiliate(s) will
use its reasonable efforts in accordance with its good faith business judgment
to provide that the agreement with the third party does not include such
restrictions.
MPS Enabling Technology. The term "MPS Enabling Technology" means trade
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secrets, know-how, technology, and other proprietary information, whether or not
patented, and all patents, now owned by MPS or available for use by or used by
MPS under license or agreement with third parties (which use hereunder is not
restricted under such license or agreement), for developing BIP Transformation
Events and for making, using and selling Insect Resistant BIP Crops containing
one or more BIP Transformation Events, which trade secrets, know-how,
technology, other proprietary information and patents are reasonably necessary
to develop BIP Transformation Events under the R&D Programs and ultimately to
make, use and sell Insect Resistant BIP Crops pursuant to this Agreement. MPS
Enabling Technology also includes advances, enhancements, improvements or
discoveries that MPS owns or becomes entitled to use during the term of this
Agreement, whether or not such are discovered or developed as a result of
research undertaken pursuant to this Agreement, that are reasonably necessary to
develop BIP Transformation Events under the R&D Programs and to make, use and
sell Insect Resistant BIP Crops pursuant to this Agreement. MPS Enabling
Technology excludes any trade secrets, know-how, technology, other proprietary
information and patents, the application of which as contemplated by this
Agreement is restricted under a written agreement between MPS and any
independent third party, provided that MPS will exert its reasonable efforts in
accordance with its good faith business judgment to provide that such agreement
with the third party does not include such restrictions. MPS Enabling
Technology includes, without limitation, trade secrets, know-how, technology,
and other proprietary information and patents related to selectable markers,
promoters, enhancers, matrix attachment regions (MARs), nuclear scaffold
attachment regions (SARs), terminators, synthetic gene construction, plant
transformation, plant tissue regeneration and plant conversions. The foregoing
does not include MPS proprietary germplasm owned or exclusively licensed by MPS.
North America. The term "North America" means the United States, Canada, and
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Mexico.
Pioneer BIP Genes. The term "Pioneer BIP Genes" means any and all natural and
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synthetic genes, full length or truncated, chimeric or hybrid, encoding BIP (and
genetic materials derived therefrom) responsible for insect, mite and nematode
resistance, and any patents covering such genes, having possible applications in
developing BIP Transformation Events under this Agreement, now owned by Pioneer
or its Affiliate(s) or available for use by or used by such entities under
license or agreement with third parties (which use hereunder is not restricted
under such license or agreement) or developed or acquired during the term of
this Agreement by Pioneer or its Affiliate(s). If acquired from a third party
then the foregoing BIP genes (and genetic materials derived therefrom) will not
be included in the definition of Pioneer BIP Genes if the agreement with the
third party restricts such use, provided that Pioneer or its Affiliate(s) will
use its reasonable efforts in accordance with its good faith business judgment
to provide that the agreement with the third party does not include such
restrictions.
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Pioneer Enabling Technology. The term "Pioneer Enabling Technology" means trade
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secrets, know-how, technology, and other proprietary information, whether or not
patented, and all patents, now owned by Pioneer or available for use by or used
by Pioneer under license or agreement with third parties (which use hereunder is
not restricted under such license or agreement), for developing BIP
Transformation Events and for making, using and selling Insect Resistant BIP
Crops containing one or more BIP Transformation Events, which trade secrets,
know-how, technology, other proprietary information and patents are reasonably
necessary to develop BIP Transformation Events under the R&D Programs and
ultimately to make, use and sell Insect Resistant BIP Crops pursuant to this
Agreement. Pioneer Enabling Technology also includes advances, enhancements,
improvements or discoveries that Pioneer owns or becomes entitled to use during
the term of this Agreement, whether or not such are discovered or developed as a
result of research undertaken pursuant to this Agreement, that are reasonably
necessary to develop BIP Transformation Events under the R&D Programs and to
make, use and sell Insect Resistant BIP Crops pursuant to this Agreement.
Pioneer Enabling Technology excludes any trade secrets, know-how, technology,
other proprietary information and patents, the application of which as
contemplated by this Agreement is restricted under a written agreement between
Pioneer and any independent third party, provided that Pioneer will exert its
reasonable efforts in accordance with its good faith business judgment to
provide that such agreement with the third party does not include such
restrictions. Pioneer Enabling Technology includes, without limitation, trade
secrets, know-how, technology, and other proprietary information and patents
related to selectable markers, promoters, enhancers, matrix attachment regions
(MARs), nuclear scaffold attachment regions (SARs), terminators, synthetic gene
construction, plant transformation, plant tissue regeneration and plant
conversions. The foregoing does not include Pioneer proprietary germplasm owned
or exclusively licensed by Pioneer.
R&D Programs. The term "R&D Programs" means any and all of the research and
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development programs jointly conducted by MPS and Pioneer as contemplated by
Article 2 of this Agreement to develop BIP Transformation Events in the Target
Crops for the purpose of enabling each of MPS and Pioneer to develop and
commercialize Insect Resistant BIP Crops pursuant to the licenses granted under
Article 4.
Research Committee. The term "Research Committee" means the committee
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consisting at all times of two (2) representatives of MPS and two (2)
representatives of Pioneer, which is responsible for certain supervisory and
administrative functions as set forth under Section 2.2 of this Agreement.
Target Crops. The term "Target Crops" means any and all varieties of soybean,
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sunflower, sorghum, wheat and canola. Pursuant to Section 2.13 of this
Agreement, the parties may in the future add additional crops to the list of
Target Crops covered by this Agreement. Also, upon the parties granting one
another licenses with respect to corn as contemplated by Section 5.4 of this
Agreement, corn will be added as a Target Crop.
ARTICLE 2
R&D PROGRAMS
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2.1 R&D Programs. MPS and Pioneer will conduct a number of research and
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development programs to develop BIP Transformation Events responsible for
resistance against target
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pests selected by the parties in each Target Crop. Each party will utilize
its research, development, engineering and other capabilities as set forth
under each R&D Program to develop BIP Transformation Events for each Target
Crop and will use diligent efforts to successfully complete each R&D
Program within the time frame set forth for each such program.
Each current and future R&D Program will be administered as set forth under
this Article 2 by the Research Committee with respect to technical issues
and by the Business Committee with respect to resource and funding issues.
The parties will conduct each R&D Program in such a manner so as to create
an environment for the MPS and Pioneer scientists, breeders and other
technical personnel to work together closely to best utilize the technical
talent, ingenuity and core competencies of both companies.
2.2 The Research Committee. The principal function of the Research Committee
----------------------
is to administer the research and development activities of each R&D
Program. The Research Committee has the authority and responsibility to:
1. Define and evaluate (i) the technical challenges and chance of success
of any potential new R&D Program, (ii) the responsibility of each
party under any potential new R&D Program, and (iii) the resources
needed to pursue any potential new R&D Program.
2. Recommend to the Business Committee the initiation of new R&D Programs
and the responsibilities of each party under such programs.
3. Prior to the formation of any R&D Program and during the course of all
R&D Programs, evaluate and review the need for any third party
technology rights to complete any R&D Program and the royalties or
license fees due to any such third party for such rights.
4. Oversee and assess all technical developments and progress against
objectives of each R&D Program.
5. As programs advance, evaluate and assess resources needed to complete
each part of any R&D program.
6. Direct all research and implement strategies to address technical
challenges.
7. Direct the filing and prosecution of patent applications covering any
joint invention and discoveries pursuant to Section 7.2 of this
Agreement.
8. Interface with, and make recommendations to, the Business Committee.
9. Provide regular quarterly reports to the Business Committee addressing
progress against goals and any significant developments and issues
under each R&D Program.
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10. Designate subcommittees by crop and delegate to such subcommittees any
and all authority of the Research Committee related to the R&D
Program(s) for each such crop. All subcommittees will have an equal
number of representatives from both MPS and Pioneer.
Notwithstanding the authority and responsibilities of the Research
Committee as enumerated above, the Research Committee has no authority with
respect to budgetary matters involving any R&D Program, nor does the
Research Committee have the authority to modify or rescind the obligations
of the parties for any part of any R&D Program as set forth on the schedule
attached to this Agreement describing each R&D Program and the obligations
of the parties thereunder.
All decisions of the Research Committee will require unanimity, except with
respect to issues that involve the manner in which resources or strategies
are employed under a particular part of an R&D Program, in which case the
party responsible for such part of the program will have the ultimate
decision making authority after considering the input from the Research
Committee. Each representative of each party on the Research Committee has
one vote with respect to all matters decided by such committee.
The Research Committee will meet on a quarterly basis at places and times
to be scheduled by the parties. In addition to such regular quarterly
meetings, either party can convene a special meeting at anytime reasonably
convenient to both parties upon 14 days prior written notice setting forth
the matters to be discussed and the date of the meeting. Any special
meeting so called will be held at the principal offices of the party who
did not call the meeting so as to provide the most convenient place to
meet.
2.3 The Business Committee. The principal function of the Business Committee
----------------------
is to provide general administration of the relationship between MPS and
Pioneer with respect to this Agreement and of the resources needed to
complete each R&D Program. The Business Committee has the authority and
responsibility to:
1. Based on input and recommendations from the Research Committee,
approve initiation of any new R&D Programs and the assignment of
responsibilities of each party under such programs.
2. Make all go and no-go decisions at each critical decision point of a
program based on input and recommendations of the Research Committee,
including, without limitation, rescinding any R&D Program or any part
of any program.
3. Make all decisions relative to making significant changes to resources
employed under any part of a program.
All decisions by the Business Committee will require unanimity. Each
representative of each party on the Business Committee has one vote with
respect to all matters decided by such committee.
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The Business Committee will meet on a semi-annual basis at places and times
to be scheduled by the parties. In addition to such regular semi-annual
meetings, either party can convene a special meeting at any time reasonably
convenient to both parties upon 14 days prior written notice setting forth
the matters to be discussed and the date for such meeting. Any special
meeting so called will be held at the principal offices of the party who
did not call the meeting so as to provide the most convenient place to
meet.
2.4 Current R&D Programs. The parties agree to conduct the following R&D
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Programs:
1. As the primary trait, soybean resistant to cyst nematodes. As a
secondary trait linked to the primary trait, soybeans resistant to
certain insect pests;
2. As the primary trait, canola resistant to flea beetle. As a secondary
trait linked to the primary trait, canola resistant to certain insect
pests;
3. As the primary trait, sunflower resistant to headmoth. As a secondary
trait linked to the primary trait, sunflowers resistant to certain
insect pests;
4. As a preliminary feasibility study only, sorghum resistant to
greenbug; and
5. As a preliminary feasibility study only, wheat resistant to Hessian
fly.
An outline of each R&D Program and the assignment of responsibilities to
each party for certain parts of each R&D Program are set forth on separate
schedules for each program, which schedules collectively are attached to
this Agreement as Schedule 2.4.
2.5 Initiation of New R&D Programs. Either party at any time prior to the
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tenth anniversary of this Agreement can request an evaluation to initiate a
new R&D Program, provided that such potential new R&D Program reasonably
can be completed on or before the tenth anniversary of this Agreement. The
request first is made to the Business Committee, which, if receptive to the
request, will direct the Research Committee to define and evaluate all
aspects of the proposed program.
The Research Committee will present to the Business Committee its
recommendation on the proposed program: (i) who does what; (ii) the
resources needed; (iii) the probability of success; (iv) the anticipated
development schedule; (v) critical decision points and milestones along the
development schedule; and (vi) an estimated time frame for completing the
program. Based on the recommendation of the Research Committee, the
Business Committee will approve or reject the proposed program or resubmit
the proposed program to the Research Committee with suggested revisions for
re-evaluation.
Neither party will be obligated to conduct a new R&D Program that
reasonably cannot be completed on or before the tenth anniversary of this
Agreement if the parties use the same level of diligent efforts as applied
by the parties under then completed and ongoing programs. This Agreement
intends to obligate the parties to develop BIP Transformation Event(s)
under R&D Programs initiated and substantially completed during the first
ten years of this Agreement. However, notwithstanding the foregoing, once
the parties agree to
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commence any R&D Program and a description of the program and the
responsibilities of the parties are set forth on Schedule 2.4 of this
Agreement, all obligations of the parties under this Agreement to complete
successfully such R&D Program remain in full force and effect after the
tenth anniversary of this Agreement and continuing thereafter until such
time as such R&D Program successfully concludes or the Business Committee
decides to terminate the program.
If one party wants to pursue the proposed R&D Program but the other party
does not, the party who does not want to pursue the program can defer
initiation of the proposed R&D Program for 18 months after the Business
Committee concludes that the parties cannot agree to initiate the proposed
program. Upon expiration of this 18 month "stand-down" period, the party
wanting to pursue the R&D Program can reintroduce the proposal. If the
other party continues not to want to pursue the program, the party wanting
to pursue the program will be free to do so on its own and, as necessary,
by funding certain activities needed to be done by the other party. The
party who declined participation in the program must perform any and all
activities that the participating party technically, or for the purpose of
obtaining intellectual property rights, cannot perform, provided that the
participating party funds all such activities performed by the non-
participating partner.
The party who declined participation will have the ability to preserve its
commercial rights under this Agreement for any BIP Transformation Events
that may come out of that particular R&D Program by (i) reimbursing the
participating party for 100% of the costs and expenses of such program plus
25% of such costs within two years of initiation of such program and (ii)
committing to participate in any remaining development work as established
under the program as originally recommended to the Business Committee by
the Research Committee. If the non-participating party does not reimburse
the sponsoring party for 100% of the costs and expenses incurred under such
program, plus 25%, within the two year period, the non-participating party
loses all commercial rights to the BIP Transformation Events developed
under that program.
In the event that Pioneer is the non-participating party, then (i) Pioneer
loses all rights under this Agreement with respect to any BIP
Transformation Event(s) developed under such program and (ii) MPS is free
to develop and commercialize such BIP Transformation Event(s) (whether
alone or with third parties) as it decides in its sole discretion without
any limitation whatsoever under Article 4 this Agreement on the activities
of MPS (including licensing to any third parties) with respect to such BIP
Transformation Event(s).
In the event that MPS is the non-participating party, then (i) MPS loses
all rights under this Agreement with respect to any BIP Transformation
Event(s) developed under such program and (ii) Pioneer is free to develop
and commercialize such BIP Transformation Event(s) subject to the
limitations on sub-licensing imposed on Pioneer under Article 4 of this
Agreement on the activities of Pioneer with respect to such BIP
Transformation Event(s).
The party who declined participation in the program must perform any and
all activities that the participating party technically, or for the purpose
of obtaining intellectual property rights, cannot perform, provided that
the participating party funds all such activities performed by the non-
participating partner.
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An example of the initiation of a new R&D Program and an example of the
consequence of not participating in such program are set forth on Schedule
2.5 of this Agreement.
In the event that upon considering the initiation of a new R&D Program, MPS
and Pioneer determine that a patent then issued to a third party is
necessary to develop BIP Transformation Events under such prospective R&D
Program or to permit both MPS and Pioneer to commercialize Insect Resistant
BIP Crops using any BIP Transformation Events developed under such
prospective R&D Program, neither MPS nor Pioneer will be obligated in any
way to commence such prospective R&D Program until a license to such third
party patent is obtained for both MPS and Pioneer. Section 2.8 below
addresses the circumstance of a third party patent issuing after
commencement of any R&D Program.
2.6 Assignment of Responsibilities Under Each R&D Program. The Research
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Committee initially will delineate which party should be responsible for
specific parts of any program based on the technical capabilities of the
parties. The Research Committee's recommendation based on technical
capabilities will be presented to the Business Committee for review and
assessment based on resources and costs. The Business Committee may shift
responsibilities for specific parts of any R&D Program before approval of
the program. Once an R&D Program has been approved by the Business
Committee, then each party will be committed to perform its part of the
program within the levels of effort originally anticipated by the Research
Committee and reviewed and approved by the Business Committee.
2.7 Decisions Under the R&D Programs at Critical Decision Points. As
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development work under any R&D Program reaches or encounters critical
decision points, the Research Committee will make recommendations on the
best technical way to proceed or to solve a particular problem. If
substantial additional resources are needed (substantially in excess of the
expectations when the program was originally designed), then approval of
the Business Committee will be needed. All issues first are addressed by
the Research Committee based on technical needs and solutions. Based on
the recommendations of the Research Committee, the Business Committee
endorses the recommendations by approving the resources needed to advance
the program.
2.8 Consequences if a Party Fails to Meet Its Responsibilities Under a Program.
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Upon initiation of any R&D Program, a detailed description of the program
will be set forth on a schedule and attached to this Agreement as part of
Schedule 2.4.
Such descriptions, as set forth on Schedule 2.4 (together with (i) the
obligation of either party to provide the other party with BIP
Transformation Event(s) pursuant to Section 2.10 and (ii) the obligation of
Pioneer to provide MPS with lines converted with BIP Transformation Events
pursuant to Section 2.11), will delineate the commitment by each party to
perform certain parts of any R&D Program. Unless the Business Committee
decides to drop or defer an R&D Program or part of an R&D Program, failure
to perform any part of any R&D Program (together with (i) the obligation of
either party to provide the other party with BIP Transformation Event(s)
pursuant to Section 2.10 and (ii) the obligation of Pioneer to provide MPS
with lines converted with BIP Transformation Events pursuant to Section
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2.11) by either party (after notice from the other party and a 90 day cure
period) will result in loss of commercial rights by the non-performing
party to the BIP Transformation Events intended to be developed by that
program. If the parties otherwise agree in writing to a plan to cure any
such failure to perform, which plan may require more then the 90 day cure
period to implement, then the cure does not necessarily have to occur
within 90 days.
Failure to perform under this Section 2.8 shall mean a technical failure to
perform and not a legal failure to perform -- such as the inability of
Pioneer or MPS to obtain additional licenses from third parties as provided
for in Section 7.5.
In the event that Pioneer is the non-performing party, then (i) Pioneer
loses all rights under this Agreement with respect to any BIP
Transformation Event(s) developed under such program and (ii) MPS is free
to develop and commercialize such BIP Transformation Event(s) (whether
alone or with third parties) as it decides in its sole discretion without
any limitation whatsoever under Article 4 this Agreement on the activities
of MPS (including licensing to any third parties) with respect to such BIP
Transformation Event(s).
In the event that MPS is the non-performing party, then (i) MPS loses all
rights under this Agreement with respect to any BIP Transformation Event(s)
developed under such program and (ii) Pioneer is free to develop and
commercialize such BIP Transformation Event(s) subject to the limitations
on sub-licensing imposed on Pioneer under Article 4 of this Agreement on
the activities of Pioneer with respect to such BIP Transformation Event(s).
The party who declined participation in the program must perform any and
all activities that the participating party technically, or for the purpose
of obtaining intellectual property rights, cannot perform, provided that
the participating party funds all such activities performed by the non-
participating partner.
In the event that after the parties begin an R&D Program a patent issues to
a third party that is necessary for MPS and Pioneer to develop BIP
Transformation Events under such R&D Program or to commercialize Insect
Resistant BIP Crops using any BIP Transformation Events developed under
such R&D Program, failure by either MPS or Pioneer to obtain rights under
such third party patent for both MPS and Pioneer will not be considered a
failure to perform any part of the R&D Program by either MPS or Pioneer or,
except for the obligation of both MPS and Pioneer under Section 7.5 to use
good faith efforts to obtain rights under such third party patent for both
MPS and Pioneer, a breach of this Agreement. Notwithstanding the
foregoing, each of MPS and Pioneer will remain obligated to perform any and
all parts of the R&D Program assigned to such party as set forth on
Schedule 2.4 to the extent that the performance of any such part of the R&D
Program by either MPS, or as the case may be, Pioneer will not infringe
such third party patent.
2.9 Consequences If Substantial Additional Resources Are Needed But One Party
-------------------------------------------------------------------------
Does Not Want to Provide Additional Resources. In the event that
---------------------------------------------
substantial additional resources (substantially in excess of the resources
initially anticipated by the Research Committee) need to be devoted by a
party to complete a specific part of an R&D Program, then the Business
Committee will be responsible for resolving any inequities that may result
from the extra effort. If the Business Committee cannot resolve any such
inequities, then the
84
unaffected party will have the right (but not the obligation) to undertake
or fund the additional work (or provide the personnel to perform the
additional work), provided that the party receiving such funds or
assistance must reimburse the sponsoring party for such additional funds or
assistance plus 25% in order for the party receiving the funds or
assistance to maintain its commercial rights in such R&D Program under this
Agreement. The reimbursement plus 25% is due immediately upon completion of
the additional work and, if not paid, will make such party a "non-
participating party" with respect to that specific R&D Program.
In the event that either MPS or Pioneer is the non-participating party,
then (i) the non-participating party loses all rights under this Agreement
with respect to any BIP Transformation Event(s) developed under such part
of the program and (ii) the participating party who continues the program
is free to develop and commercialize such BIP Transformation Event(s),
subject to the provisions of Article 4 of this Agreement on the activities
of the participating party with respect to such BIP Transformation
Event(s).
The non-participating party in the affected program must perform any and
all activities that the participating party technically, or legally cannot
perform, provided that the participating party funds all such activities
performed by the non-participating party.
An example of the consequences of providing or not providing additional
resources is set forth on Schedule 2.9.
2.10 Access to BIP Transformation Events. Either party will have the right to
-----------------------------------
receive BIP Transformation Events from each R&D Program in such generation
of backcrossed inbreds as set forth on Schedule 2.4 for each R&D Program.
The party responsible for transforming inbred lines of any Target Crop with
BIP genetic constructs under any R&D Program will supply the other party,
upon request of such other party, with the BIP Transformation Event(s) in
the specified, or later generation, of backcrossed inbreds. The receiving
party will be able to utilize such transformed inbreds to conduct
conversions of parent line materials with the subject BIP-Transformation
Event(s).
2.11 Line Conversions By Pioneer for MPS. With respect to each BIP
-----------------------------------
Transformation Event, Pioneer will convert such number of MPS lines as set
forth in the R&D Programs and the Corn Research Programs. MPS will supply
Pioneer with the lines that MPS desires to have converted. Pioneer will
convert such lines on behalf of MPS with the same diligence and within the
same time frame that Pioneer uses in converting its own lines.
Breeders for MPS will be permitted to participate in and to track all such
conversions of MPS lines by Pioneer. MPS will be entitled to all data
generated by Pioneer with respect to such conversions.
2.12 Adding Other Proprietary Genetic Traits Under Any R&D Program. Upon mutual
-------------------------------------------------------------
agreement of the parties by action of the Business Committee, either party
may include a proprietary genetic trait (other than BIP based insect
resistance) under any R&D Program, which trait may be coupled or stacked
with the BIP based insect resistance trait comprising any BIP
Transformation Event. Such proprietary genetic traits (other than BIP
based insect
85
resistance) may include, without limitation, genes responsible for disease
resistance or for particular oil or nutritional characteristics.
In the event that MPS and Pioneer elect to couple or stack any Pioneer
proprietary genetic trait (other than a Pioneer BIP Gene) with any BIP Gene
in connection with transforming a Target Crop under any R&D Program, so
that the resulting transformed events impart to the Target Crop both BIP-
based insect resistance and another identifiable agronomic trait, then MPS
will not have the right under Section 4.3 to grant sublicenses to any third
parties (other than MPS Affiliates) to any such trait coupled or stacked
with any BIP Transformation Event without Pioneer's prior written approval
and payment to Pioneer from any permitted third party sublicensees of
compensation acceptable to Pioneer.
2.13 Adding Other Crops Under This Agreement. Upon the request of either party,
---------------------------------------
both parties agree to discuss in good faith adding other crops to the list
of Target Crops covered by this Agreement; provided, however, that the
grant of any rights by MPS to Pioneer with respect to such other crops to
MPS BIP Genes or to MPS Enabling Technology will be subject to any licenses
that MPS may grant to third parties with respect to such other crops.
Nothing under this Section 2.13 prevents MPS from granting an exclusive
license to any crop other than corn and the Target Crops to any third party
covering MPS BIP Genes and MPS Enabling Technology. MPS will notify
Pioneer if and when MPS begins actively to seek licensing MPS BIP Genes and
MPS Enabling Technology in any such other crops.
ARTICLE 3
REGISTRATION OF BIP TRANSFORMATION EVENTS
-----------------------------------------
3.1 Registration of BIP Transformation Events in North America. MPS and
----------------------------------------------------------
Pioneer agree to consult with each other as to how they can best use their
collective resources to cooperate and generate all data necessary to obtain
regulatory approvals in North America. Each of MPS and Pioneer will
develop data according to their specific areas of expertise. MPS will
provide information, including characterization of the BIP Genes and gene
products, toxicology and impacts on non-target species. Pioneer will
provide information, including molecular characterizations of BIP
Transformation Events, BIP Gene expression in the field, nutritional
equivalence and agronomic performance of BIP Transformation Events. MPS
will be responsible for preparing all [information and related] data
packages necessary to file any and all applications for approval from all
regulatory authorities in North America to field test, produce and
commercialize Insect Resistant BIP Crops containing one or more BIP
Transformation Events. MPS will take the lead on behalf of MPS and Pioneer
to interact with all such regulatory authorities and will coordinate all
such interactions with Pioneer so that Pioneer representatives can
participate in every aspect of the regulatory process.
Using the information and related data packages and regulatory submissions
prepared by MPS, each of Pioneer and MPS will apply for and obtain their
own authorizations to conduct field tests, experimental use permits and
full registrations in their own names in North America for each BIP
Transformation Event.
MPS and Pioneer will share on an equal fifty-fifty basis any and all out of
pocket expenses, including without limitation, toxicology studies,
consultant fees and expenses, registration
86
fees and travel expenses incurred by MPS and Pioneer in connection with
preparing all information and related data packages necessary for the
parties to file for regulatory approval of all BIP Transformation Events in
North America. MPS and Pioneer will consult on the choice of consultants
and contract laboratories.
3.2 Registration of BIP Transformation Events Outside of North America. For
------------------------------------------------------------------
the purpose of obtaining approval from any regulatory authorities in any
country outside of North America where either MPS or Pioneer desired to
commercialize Insect Resistant BIP Crops, each of MPS and Pioneer will have
immediate and unrestricted access to, and the right to reference and use,
any and all information, including any data included in any regulatory
package prepared by MPS for registration of any BIP Transformation Event in
North America.
In the event that additional data or information is required for any
regulatory approvals outside of North America, each of Pioneer and MPS will
be responsible for preparing such additional data or information at their
cost for their own use, provided that the parties will consult with each
other as to how they can best use their collective resources to coordinate
regulatory approvals for both MPS and Pioneer in any country.
3.3 Rights of Reference to Regulatory Packages for Registering Non-Target
---------------------------------------------------------------------
Crops. For the purpose of obtaining approval from any regulatory
-----
authorities in any country for any transgenic event or crop developed by
Pioneer or MPS outside of any R&D Program, each of MPS and Pioneer will
have access to, and the right to reference and use, any information,
including any data included in any regulatory package prepared by MPS for
registration of any BIP Transformation Event in North America.
ARTICLE 4
GRANT OF RIGHTS
---------------
4.1 Grant of Research Licenses for Purposes of Conducting the R&D Programs.
----------------------------------------------------------------------
Each party hereby grants to the other party a non-exclusive license to any
and all MPS BIP Genes and MPS Enabling Technology and, correspondingly, to
any and all Pioneer BIP Genes and Pioneer Enabling Technology solely for
the purpose of, and solely to the extent necessary for, enabling each party
to conduct its assigned research and development activities under each R&D
Program.
4.2 MPS Grant of Commercial License to Pioneer. Subject to the terms and
------------------------------------------
conditions of this Agreement, MPS hereby grants to Pioneer a perpetual,
world-wide, non-exclusive license, with no right to grant sublicenses
except to Affiliates of Pioneer (without the right of such Affiliates to
grant further sublicenses), to any and all MPS BIP Genes, MPS Enabling
Technology and Joint Enabling Technology that are part of any and all BIP
Transformation Event(s) developed under any and all of the R&D Programs
solely to the extent necessary for the use, production and sale by Pioneer
of Insect Resistant BIP Crops containing such BIP Transformation Event(s);
provided that:
(i) the license granted to Pioneer hereunder will be royalty free with
respect to the sale by Pioneer and Pioneer Affiliates of Insect Resistant
BIP Crops in North America; and
87
(ii) the license granted to Pioneer hereunder will be subject to a prepaid
royalty by Pioneer and Pioneer Affiliates to MPS pursuant to Section 4.4 of
this Agreement with respect to the sale by Pioneer and Pioneer Affiliates
of Insect Resistant BIP Crops outside of North America.
The MPS Enabling Technology and Joint Enabling Technology are licensed to
Pioneer to be used as only a part of a BIP Transformation Event, and are
not licensed for use as a separate component or process other than with a
BIP Event.
Pioneer and its Affiliates have the right under the license granted by MPS
to Pioneer under this Section 4.2 to permit distributors, agents and
resellers to distribute and sell Insect Resistant BIP Crops in branded bags
of Pioneer or Pioneer Affiliates using such proprietary packaging and
displaying such Pioneer or Pioneer Affiliate brand name identification with
the same prominence and position as used and displayed by Pioneer or by any
Pioneer Affiliate in the ordinary course of its business. Such proprietary
packaging displaying the brand name identification of Pioneer or Pioneer
Affiliate also may display the name, logo or trademark of any distributor,
agent or re-seller that distributes or sells Pioneer planting seed.
4.3 Pioneer Grant of Commercial License to MPS. Subject to the terms and
------------------------------------------
conditions of this Agreement, Pioneer hereby grants to MPS a perpetual,
worldwide, royalty free, non-exclusive license, with the right as set forth
below to grant sublicenses, to any and all Pioneer BIP Genes, Pioneer
Enabling Technology and Joint Enabling Technology that are part of any and
all BIP Transformation Event(s) developed under any and all of the R&D
Programs solely to the extent necessary for the use, production and sale by
MPS and its sublicensees of Insect Resistant BIP Crops containing such BIP
Transformation Event(s). The Pioneer Enabling Technology and Joint
Enabling Technology are licensed to MPS to be used as only a part of a BIP
Transformation Event, and are not licensed for use as a separate component
or process other than with a BIP Transformation Event.
Pioneer shall provide MPS with access to BIP Transformation Events in the
form of F1 seed containing Pioneer proprietary germplasm. MPS shall make
four backcrosses using MPS inbreds/varieties as the recurrent parent and
then shall use such Pioneer germplasm only as a source of the gene or
vector and MPS shall not knowingly make an effort to recover any
unassociated part of the genome of the non-recurrent parent of the Pioneer
germplasm.
MPS may grant sublicenses under this Section 4.3 to (1) Affiliates of MPS
(without the right of such Affiliates to grant further sublicenses), (2)
SVO Specialty Products, Inc., a Delaware Corporation ("SVO") pursuant to
that certain Technology and Development Agreement dated January 1, 1995
between SVO and MPS, as amended December 13, 1995, and (3) only to one
third party (without the right of such third party to grant further
sublicenses except to Affiliates of such third party) in each of (a) North
America, (b) Europe and (c) the rest of the world with respect to each BIP
Transformation Event in each Insect Resistant BIP Crop, provided that each
such third party will have no right or license to commercialize an Insect
Resistant BIP Crop containing such BIP Transformation Event until such time
that Pioneer is able to commercialize such Insect Resistant BIP Crop
containing such BIP Transformation Event in the same geographic region
(North America, Europe or, as the case may be, the rest of the world) as
the MPS licensee. MPS may grant additional sublicense to any other third
88
parties (without the right of such third parties to grant further
sublicenses except to their respective Affiliates) in each jurisdiction
identified above to each BIP Transformation Event in each Insect Resistant
BIP Crop provided that such additional third parties will have no right or
license to commercialize Insect Resistant BIP Crops containing such BIP
Transformation Event until the second calendar year after the calendar year
in which Pioneer shall have entered its "RC1" stage (RC1 being a common
designation used within Pioneer for the first recognized year of commercial
sales), of such Insect Resistant BIP Crop containing such BIP
Transformation Event in the jurisdiction (North American, Europe or, as the
case may be, the rest of the world) where the third party licensee(s)
desire to commercialize such Insect Resistant BIP Crop.
An example of the right of MPS to grant sublicenses to third parties under
this Section 4.3 is set forth on Schedule 4.3.
MPS and its Affiliates have the right under the license granted by Pioneer
to MPS under this Section 4.3 to permit distributors, agents and resellers
to distribute and sell Insect Resistant BIP Crops in branded bags of MPS or
MPS Affiliates using such proprietary packaging and displaying such MPS or
MPS Affiliate brand name identification with the same prominence and
position as used and displayed by MPS or any MPS Affiliate in the ordinary
course of its business. Such proprietary packaging displaying the brand
name identification of MPS or MPS Affiliate also may display the name, logo
or trademark of any distributor, agent or re-seller that distributes or
sells MPS planting seed. For the purposes of this Section 4.3, the terms
"distributors", "agents" and "resellers" shall not be deemed to include
third party seed companies that distribute seed in their own branded bags.
4.4 Royalty Payment by Pioneer for Sales Outside of North America. In the
-------------------------------------------------------------
event that Pioneer or any Pioneer Affiliate desires to produce and sell
outside of North America any Insect Resistant BIP Crop containing one or
more BIP Transformation Events developed under any R&D Program, which
planting seed will be advertised or otherwise promoted by Pioneer or a
Pioneer Affiliate as having insect, mite or nematode resistance resulting
from such BIP Transformation Event, then as a condition precedent to
selling such planting seed in any country outside of North America, Pioneer
must pay to MPS a one time, prepaid royalty. Such one-time pre-paid
royalty shall be equal to [CERTAIN CONFIDENTIAL INFORMATION HAS BEEN
REDACTED FROM THIS LINE OF THIS DOCUMENT SUBMITTED FOR PUBLIC RECORD AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES & EXCHANGE COMMISSION.] of
projected Net Sales over a ten year period of such Insect Resistant BIP
Crop by Pioneer and Pioneer Affiliates which planting seed will be
advertised or otherwise promoted by Pioneer or a Pioneer Affiliate as
having insect, mite or nematode resistance resulting from such BIP
Transformation Event in each such country.
MPS and Pioneer will retain a mutually acceptable marketing firm to analyze
such Net Sales potential for the planting seed described above. With
reference to such analysis, the parties will negotiate in good faith a
prepaid royalty amount. Such royalty amount will be paid by Pioneer to MPS
prior to, and as a condition precedent to, Pioneer or any Pioneer Affiliate
commercializing any Insect Resistant BIP Crop that is the subject of such
royalty payment to MPS in such country.
89
4.5 License Payments and Royalties to Third Parties. In the event that the
-----------------------------------------------
sale by either MPS (and its sublicensees) or by Pioneer of any Insect
Resistant BIP Crops having one or more BIP Transformation Events developed
under any R&D Program require the payment to any third party of a license
or royalty fee for such third party's technology rights that may be part of
any such BIP Transformation Event(s) in any Insect Resistant BIP Crops,
then the party selling such Insect Resistant BIP Crop(s) will be
responsible for the calculation, administration and payment of any such
license or royalty fee to the third party technology licensor.
4.6 MPS Will Not Provide its BIP Gene Library to Third Parties for Target
---------------------------------------------------------------------
Crops. Except with respect to (i) the grant of licenses by MPS to third
-----
parties to BIP Transformation Events developed under R&D Programs as
permitted under Section 4.3, and (ii) fulfillment by MPS of any obligation
to provide MPS BIP genes to Ciba-Geigy Limited and Ciba-Geigy Corporation
(collectively, "Ciba") under that certain Agreement for Exchange of Insect
Control Technology and Patent Rights dated as of July 14, 1993 by and among
MPS and Ciba (the "MPS/Ciba Agreement), MPS will not provide, until the
tenth anniversary of this Agreement, any of its BIP genes, natural or
synthetic, full length or truncated, encoding BIP (and genetic material
derived therefrom) to any third party for the purpose of enabling such
third party to develop BIP based insect resistance in corn or any Target
Crops. In the event Pioneer does not participate in an R&D Program or fails
to perform its parts of any R&D Program, MPS may grant licenses to third
parties for BIP Genes specific to the R&D Program, or parts thereof, in
which Pioneer did not participate or in which Pioneer failed to perform.
In the event that MPS provides any MPS BIP genes to Ciba under the
MPS/Ciba Agreement and Ciba/MPS develop insect resistance traits in corn
using such MPS BIP genes, then MPS will forfeit any right under this
Agreement to grant a license to third parties (other than to Affiliates of
MPS) to commercialize insect resistant corn containing a competing BIP
Transformation Event that may be developed by Pioneer and MPS under this
Agreement until the second calendar year after the calendar year in which
Pioneer shall have entered its "RC1" stage of insect resistant corn
containing such competing BIP Transformation Event in each jurisdiction
(North America, Europe or, as the case may be, the rest of the world) where
the third party licensee(s) desire to commercialize corn containing such
competing BIP Transformation Event.
4.7 No Licenses Granted Outside of the R&D Programs and the Commercialization
-------------------------------------------------------------------------
of Insect Resistant BIP Crops. Notwithstanding the foregoing and except
-----------------------------
for the licenses granted under Section 5.3 of this Agreement, no licenses
are granted (i) by MPS to Pioneer with respect to MPS BIP Genes or MPS
Enabling Technology or (ii) by Pioneer to MPS with respect to Pioneer BIP
Genes or Pioneer Enabling Technology for any use or activities outside of
the research and development activities under R&D Programs or for the
commercialization of Insect Resistant BIP Crops containing BIP
Transformation Events developed under the R&D Programs. No other licenses
are intended to be granted under this Agreement by either party to the
other with respect to any other technology or intellectual property rights
owned by such party.
ARTICLE 5
RESEARCH PROGRAMS IN CORN
-------------------------
90
5.1 Research Program in Corn. The MPS/Ciba Agreement restricts until,
------------------------
approximately, the end of 1998 with respect to all countries of the world
except Italy and France (and possibly later in the case of Italy and
France) the ability of MPS to grant licenses to third parties under certain
patent rights owned by MPS for the purpose of engaging in certain
commercial activities involving corn transformed with genetic material
derived from BIP.
Subject to the limitations imposed under the MPS/Ciba Agreement, MPS and
Pioneer will conduct three research programs, which are set forth in detail
on Schedule 5.1, to investigate and evaluate certain BIP Genes and BIP
transformation events utilizing such BIP Genes for resistance in corn
plants to (i) corn rootworm (the Diabrotica sp.), (ii) lepidopteran pests,
such as European corn borer and cutworm (Ostrinias nebialis and Agrotis
ipsilon) and (iii) certain storage grain pests to be identified by the
parties (collectively, the "Corn Research Programs").
5.2 Responsibilities of the Parties. Each party will be responsible for such
-------------------------------
parts of the Corn Research Programs as set forth on Schedule 5.1. The Corn
Research Programs will be administered by the Research Committee and the
Business Committee in the same manner as the administration by such
committees of the R&D Programs under Article 2 of this Agreement, provided
that both committees will ensure (with advice of legal counsel) that for
the applicable restricted period under the MPS/Ciba Agreement the parties
will not engage in commercial activities restricted under the MPS/Ciba
Agreement in any country where such activities would require a license
under MPS patents issued in such country and covered by the MPS/Ciba
Agreement, which license to such MPS patents is restricted under the
MPS/Ciba Agreement from being granted by MPS to any third party for such
commercial activities until after expiration of the applicable restrictive
period under the MPS/Ciba Agreement.
5.3 Grant of Research Licenses for Purposes of Conducting the Corn Research
-----------------------------------------------------------------------
Programs. Each party hereby grants to the other party a non-exclusive
--------
license to any and all MPS BIP Genes and MPS Enabling Technology and,
correspondingly, to any and all Pioneer BIP Genes and Pioneer Enabling
Technology solely for the purpose of, and solely to the extent necessary
for, enabling each party to conduct its assigned research activities under
the Corn Research Programs.
5.4 Future Grant of License. At the earliest possible date permitted under the
-----------------------
MPS/Ciba Agreement, MPS will grant to Pioneer identical license rights in
corn as those granted to Pioneer under Article 4 applicable to Target
Crops.
Concurrently with such grant of license by MPS to Pioneer, Pioneer will
grant identical license rights in corn as those granted to MPS under
Article 4 applicable to Target Crops.
Upon the grant of the licenses described above from each party to the other
party, (i) MPS and Pioneer no longer will be restricted under this Article
5 from pursuing commercial activities with respect to BIP-based insect,
mite and nematode resistance traits in corn in countries where MPS patents
covered by the MPS/Ciba Agreement have issued and (ii) all provisions of
this Agreement will apply to the activities of the parties with respect to
any and
91
all BIP transformation events created and being evaluated under the Corn
Research Programs.
92
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
------------------------------
Each party to this Agreement, only with respect to itself, hereby represents and
warrants to the other party as follows:
6.1 Due Authorization. Each party has all requisite corporate power and
-----------------
authority to execute and deliver this Agreement and to consummate the
transactions contemplated herein and to perform its obligations hereunder.
The execution, delivery and performance of this Agreement, including,
without limitation, the grant of the licenses and the right to grant
sublicenses hereunder, has been duly and validly authorized by proper
corporate action and constitutes a valid and legally binding agreement of
such party, without requiring the consent of any third party or
governmental authority.
6.2 Good Title to Patents. Each party has good title (either as the owner or
---------------------
as a licensee) to patent rights that it owns as of the date of this
Agreement comprising part of the Combined Technology and Patent Rights,
with the right to grant the licenses granted under Article 2 and Section
5.3. Neither party makes any representation or warranty that the practice
or use of any of its technology and patent rights comprising part of the
Combined Technology and Patent Rights will not infringe or interfere with
property rights belonging to any third party. In this regard, each party
represents and warrants that it has to the best of its knowledge provided
full disclosure of information related to its patent rights to the other
party, and the parties acknowledge that each of them has had the
opportunity to conduct a due diligence investigation of the foregoing to
its own satisfaction.
6.3 No Conflicting Agreements. Neither party has entered into any
-------------------------
understanding or agreement with any third party that will in any way
conflict with any right granted, or obligation arising, under this
Agreement.
ARTICLE 7
PATENT PROSECUTION, DEFENSE AND ENFORCEMENT, ADDITIONAL LICENSES
----------------------------------------------------------------
7.1 Patent Prosecution and Defense. Each party, at its own expense, will
------------------------------
diligently prosecute in good faith its patents and patent applications
comprising its part of the Combined Technology and Patent Rights in all
jurisdictions where such patents and patent applications currently are
filed and, with respect to future patent applications where such party
decides to file future patent applications in order to obtain granted
claims in such jurisdictions covering the BIP Transformation Events under
such patents and patent applications and the development and
commercialization of Insect Resistant BIP Crops. Each party also will use
diligent efforts to maintain all licenses to the technology and patent
rights sublicensed by such party to the other party under this Agreement.
In the event that any of the patents or patent applications comprising the
Combined Technology and Patent Rights become the subject of an interference
or opposition or the validity of which is challenged under any proceeding
in the patent office or before any interference, opposition or other
administrative board in any particular jurisdiction, each
93
party will diligently defend in good faith its own such patent(s) or patent
application(s) in order to obtain or maintain claims in such jurisdictions
covering the BIP Transformation Events under such patent(s) or patent
application(s) and the development and commercialization of Insect
Resistant BIP Crops.
7.2 Joint Inventions and Discoveries. Pioneer and MPS will jointly own all
--------------------------------
joint inventions and discoveries, including, without limitation, Joint
Enabling Technology, jointly invented or discovered by the parties during
the course of this Agreement. The Research Committee will be responsible
for establishing a process for identifying joint inventions or discoveries
for informing the inventors that no publication of such invention or
discovery shall be made without advance written approval from the Committee
and for prosecuting patent applications in any and all jurisdictions
related thereto. The Business Committee will decide upon the jurisdictions
in which each such application will be filed. The cost and expense of
filing and prosecuting any such patent applications and of maintaining
issued patents will be shared on an equal fifty-fifty basis by MPS and
Pioneer.
In the event that one party desires to file and prosecute a patent
application covering Joint Enabling Technology in a particular country and
the other party does not, the party desiring to file such patent
application may do so at its own expense. If the declining party desires
to maintain joint ownership of the Joint Enabling Technology in such
country covered by such patent application, then the declining party must
reimburse the filing party for 100% of all cost and expenses of preparing,
filing and prosecuting such patent application plus 25% thereof on or prior
to the second anniversary of the filing of such patent application. If the
declining party does not reimburse such costs and expenses, plus 25%
thereof, on or before such second anniversary date, then the declining
party hereby forfeits any and all rights to such Joint Enabling Technology
covered by such patent application except to the extent necessary to
commercialize Insect Resistant BIP Crops pursuant to the licenses granted
under Article 4.
Notwithstanding the foregoing, in the event that either MPS or Pioneer
determines in good faith that any such joint invention or discovery,
including, without limitation, any Joint Enabling Technology, should be
held as a trade secret, then neither party will file or prosecute any
patents with respect to such invention or discovery.
7.3 Periodic Updates. At least once every six months, the parties will review
----------------
the status and foreseeable significant developments of all patents and
patent applications comprising the Combined Technology and Patent Rights
with respect to obtaining or maintaining claims covering BIP Transformation
Events and the development and commercialization of Insect Resistant BIP
Crops. Concurrently with such review, the parties will evaluate and
discuss the issuance of patents and any foreseeable significant
developments of patent applications held by third parties that might impact
the ability of Pioneer and MPS to develop and commercialize Insect
Resistant BIP Crops.
7.4 Patent Enforcement. In the event that a third party is misappropriating
------------------
technology or infringing any patent(s) comprising the Combined Technology
and Patent Rights by developing, breeding, transforming, registering,
producing, distributing, advertising, marketing or selling or transgenic
crop containing BIP, then the parties will consult with one
94
another regarding enforcement of such technology or patent rights. In this
respect, the parties will consider the nature and extent of the
misappropriation or infringement, the strength of such technology or patent
rights with respect thereto, the enforcement of narrower and more specific
technology or patent rights prior to the enforcement of broader and more
basic technology or patent rights comprising the Combined Technology and
Patent Rights, and the existence of facts or circumstances that would weigh
against enforcement of such rights.
If the parties agree that the technology or patent rights comprising the
Combined Technology and Patent Rights should be sufficient to stop the
infringing activity or collect damages or compel the misappropriating or
infringing party to seek a license from either party, then the parties will
consider whether they want to act in concert in an enforcement action. If
either party does not want to engage in a joint enforcement action, then
either party will be free to enforce or, to the extent not otherwise
prohibited under Article 2 of this Agreement, license its own technology
and patents with respect to such infringing third party. If the parties
decide to act in concert in an enforcement action, then the parties will
agree upon (i) retention of legal counsel; (ii) who controls the action;
(iii) sharing of legal and other expenses; (iv) settlement authority and
(v) sharing of damages or other award.
7.5 Additional Licenses. In the event that additional licenses from third
-------------------
parties become necessary to use the BIP Transformation Events to develop
and commercialize Insect Resistant BIP Crops as contemplated by this
Agreement, then the parties will consult as to the best way to obtain such
licenses for the benefit of both MPS and Pioneer and jointly negotiate for
such licenses. In the event that the parties, acting jointly, are unable
to obtain such licenses for the benefit of both MPS and Pioneer, each party
will be free to obtain a license for its own benefit (and not for the
benefit of the other party) for the development and commercialization of
Insect Resistant BIP Crops using the BIP Transformation Events.
ARTICLE 8
FUNDING BY PIONEER
------------------
In addition to Pioneer's commitment to perform its parts of each R&D Program as
set forth under Article 2 and its parts of each Corn Research Program as set
forth under Article 5, Pioneer will pay to MPS a lump sum equal to $10 million
contemporaneously with the execution and delivery of this Agreement by the
parties, and an additional lump sum of $11 million due upon the expiration of
the restriction on the ability of MPS to grant Pioneer a commercial license for
corn under the MPS/Ciba Agreement as described under Article 5. The payments are
for the research and development of BIP Transformation Events derived from
Bacillus species encoding insecticidal, miticidal and nematocidal proteins to be
performed in the future by MPS under the R&D Programs as initially set forth on
Schedule 2.4 and under the Corn Research Programs as set forth on Schedule 5.1.
ARTICLE 9
CONFIDENTIALITY
---------------
For a period of five (5) years from the termination of this Agreement, each
party will keep confidential any and all Confidential Information (not otherwise
excluded from the confidentiality and non-use obligation of this Article 9 as
set forth below) received from the other party in
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connection with the performance of this Agreement and will not disclose it to
third parties or use it for any purpose other than pursuant to this Agreement,
without the prior written consent of the disclosing party.
The confidentiality and non-use obligation of this Article 9 will not apply to
information and other items listed under the definition of Confidential
Information:
(a) which is public knowledge at the time of disclosure, or which after
disclosure becomes public knowledge in any way except through the wrongful
act of the party so disclosing it;
(b) which the receiving party is able to prove was in its possession at the
time of disclosure by the disclosing party and which had not been obtained
from the latter, either directly or indirectly;
(c) whose disclosure is compelled by administrative or judicial order; or
(d) which either party received from a third party having the legal right to
disclose such information.
The provisions of this Article 9 will survive any termination of this Agreement.
In the event that MPS determines that Confidential Information received from
Pioneer or any Pioneer Affiliate needs to be disclosed to regulatory authorities
for the sale or use of Insect Resistant BIP Crops or to a third party in
connection with the grant of a license to any BIP Transformation Event to such
third party pursuant to Section 4.3, then disclosure may be made to such third
party only upon Pioneer's prior written consent, which may not be unreasonably
withheld, and only if such third party agrees to be bound by terms of
confidentiality equivalent to those specified with this Article 9.
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ARTICLE 10
TERM AND TERMINATION
--------------------
Unless earlier terminated by the written agreement of both Pioneer and MPS, this
Agreement will become effective on the date first written above and will expire
when both Pioneer and MPS cease selling Insect Resistant BIP Crops containing
BIP Transformation Events.
ARTICLE 11
INDEMNIFICATION
---------------
11.1 Indemnification. Except with respect to claims for patent infringement,
---------------
each party ("party A") agrees to protect and indemnify the other party
("party B") and its Affiliates (collectively "Indemnitees") and hold the
Indemnitees harmless from and against any and all costs, expenses, causes
of action and damages, including reasonable attorneys* fees (collectively,
"Indemnified Claims"), including, without limitation, those brought or
asserted by any party or governmental authority relating to environmental,
health or safety matters for personal injury or property damage, which
arise from or in connection with any activity involving Insect Resistant
BIP Crops containing BIP Transformation Events by such party ("party A") or
its Affiliates or the growing, use, purchase or consumption of any plants
or products of any kind utilizing or derived from Insect Resistant BIP
Crops containing BIP Transformation Events sold by such party ("party A")
or its Affiliates, except to the extent caused by the negligence or
misconduct of the Indemnitee, or from the breach of any of the
Representations and Warranties set out in Article 6.
11.2 Notice. Promptly after receipt by an Indemnitee of notice of the
------
commencement of any action or the presentation or other assertion of any
Indemnified Claim that could result in an indemnification claim pursuant
hereto, the Indemnitee will give prompt notice thereof to the indemnifying
party and the indemnifying party will be entitled to assume the defense
thereof. If the indemnifying party elects to assume the defense of any
Indemnified Claim, such election will be deemed to be the consent of the
indemnifying party to having the subject matter of such action be an
Indemnified Claim for purposes of Section 11.1, subject to the exception
noted therein. The indemnified party may, at all times, with counsel of
its own choice and at its own expense, participate in the defense of any
Indemnified Claim. A failure or delay by the Indemnitee to give notice of
an Indemnified Claim will not release or limit the indemnifying party's
obligations hereunder except to the extent that the indemnifying party has
been prejudiced by such failure or delay.
11.3 Settlements. Whether or not the indemnifying party elects to assume the
-----------
defense of any Indemnified Claim, it will not be liable for any compromise
or settlement of any such action or claim effected without its consent,
which will not be unreasonably withheld. The parties agree to cooperate to
the fullest extent possible in connection with any claim for which
indemnification is or may be sought under this Agreement.
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ARTICLE 12
MISCELLANEOUS
-------------
12.1 Severability. In the event that one or more provisions of this
------------
Agreement should be, or become, illegal, invalid or unenforceable, then the
parties will substitute legal, valid and enforceable provisions for such
illegal, invalid ones. The substituted provisions will be drafted so that
in their economic effect they so closely resemble the illegal, invalid or
unenforceable provisions that it can be reasonably assumed that the parties
would have contracted on the basis of those new provisions. In the event
that such provisions cannot be drafted, the illegality, invalidity or
unenforceability of one or more of the provisions of this Agreement will
not affect the validity or enforceability of this Agreement as a whole,
unless the affected provisions are of such essential importance to this
Agreement that it can be reasonably assumed that the parties would not have
entered into this Agreement without such provisions.
12.2 No Implied Waivers. Failure of either party to this Agreement to insist
------------------
upon strict observance of or compliance with all its terms and conditions
in one or more instances will not be deemed to be a waiver of its rights to
insist upon such observance or compliance in the future.
12.3 Modifications and Amendments. No alteration, amendment, or supplement to
----------------------------
this Agreement will be of any force or effect unless in writing and signed
by the party bound thereby.
12.4 Entire Agreement. This Agreement constitutes the entire understanding
----------------
between the parties and neither party will be obligated by any condition or
representation other than those expressly stated herein or as may be
subsequently agreed to by the parties hereto in writing.
12.5 No Agency or Partnership. Nothing in this Agreement will be deemed to
------------------------
constitute a partnership, agency, employer-employee or joint venture
relationship between the parties. All activities by the parties hereunder,
including but not limited to the duties described herein, will be performed
by them as independent contractors. Neither party will incur any
obligation or make any commitments for or on behalf of the other party.
12.6 No Assignments. This Agreement will inure to the benefit of and be
--------------
binding upon the parties hereto, their respective Affiliates as permitted
hereunder and their respective successors and assigns. Other than to
successors of either party, no party will assign this Agreement or any
rights or obligations hereunder (other than to (i) the respective
Affiliates of each party as permitted under Article 4 and (ii) with respect
to the grant of licenses by MPS to third parties as set forth under Section
4.3) without the prior written consent of the other party.
12.7 Force Majeure. No liability will result from the delay in performance or
-------------
nonperformance, in whole or in part, if it has been made impracticable by
compliance in good faith with any applicable government or judicial
regulation or order whether or not it later proves to be invalid, or by the
occurrence of a contingency the nonoccurrence of which was a basic
assumption on which this Agreement was made, including, but not limited to,
acts of God,
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fire, flood, accident, riot, sabotage, war, insurrection, earthquake,
strike, labor trouble or shortage, or embargo. Upon the occurrence of such
delay, the delayed party shall promptly notify the other and the period of
performance shall be extended to compensate for said delay.
12.8 Headings. The headings of the Articles and Sections of this Agreement are
--------
for convenience only and will not change the substantive provisions of this
Agreement.
12.9 Notices. Any notices permitted or required by this Agreement will be
-------
deemed to be effective upon receipt when sent by telex, telecopier or
postage prepaid certified mail if sent:
(a) In the case of Pioneer to:
Pioneer Hi-Bred International, Inc.
700 Capital Square
400 Locust Street
Des Moines, IA 50309
Attention: Dr. Richard McConnell
Fax: 515/248-4844
with a copy sent to Daniel Cornelison, Esq.
(b) In the case of MPS to:
Mycogen Plant Sciences
5501 Oberlin Drive
San Diego, California 92121
Attention: President
Fax: 619/453-0142
with a copy sent to the General Counsel
or at such other address as each such party may designate in writing.
IN WITNESS WHEREOF, the parties hereby execute and deliver this Agreement as of
the date first written above.
AGRIGENETICS, INC. PIONEER HI-BRED INTERNATIONAL, INC.
d/b/a MYCOGEN PLANT SCIENCES
By: /s/ Jerry Caulder By: /s/ Chuck Johnson
----------------- ------------------------------
Title: President Title: President & Chief Executive Officer
-------------- -----------------------------------
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SCHEDULE 2.4: PIONEER / MYCOGEN BIP CROP PROGRAMS
2.4.1 SOYBEAN PROGRAMS
[THIS SCHEDULE, WHICH CONTAINS CONFIDENTIAL INFORMATION, HAS BEEN DELETED FROM
THE COLLABORATION AGREEMENT SUBMITTED FOR PUBLIC RECORD. THE CONFIDENTIAL
INFORMATION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]
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SCHEDULE 2.5
------------
Example - initiation of a New R & D Program; Consequence for Non-Participation
- ------------------------------------------------------------------------------
Example - In the year 2000, Pioneer desires to initiate a new R&D Program for a
particular pest of tropical corn. Since corn is a Target Crop covered by the
Agreement, Pioneer can request the initiation of a new R&D Program for the
desired target pest in tropical corn ("Tropical Corn Pest Program").
Pioneer presents a preliminary proposal for such a program to the Business
Committee. The Business Committee directs the Research Committee to define and
evaluate all aspects of the proposed program, including (i) who does what; (ii)
the resources needed; (iii) the probability of success; (iv) the anticipated
development schedule; (v) critical decision points and milestones along the
development schedule; and (vi) (an estimated time frame for completing the
program. The evaluation by the Research Committee is based on the best
utilization of each party's technical capabilities and expertise and not on the
budgetary burden that may fall on either party.
Based on the evaluation of the Research Committee, MPS decides that it does not
have the resources at that time to support its parts of the proposed Tropical
Corn Pest Program. Unless Pioneer and MPS can agree through the Business
Committee on how to reallocate the responsibilities or otherwise help MPS, MPS
can defer initiation of the program as configured by the Research Committee for
18 months. In this example, MPS defers initiation of the program for 18 months
after the Business committee concludes that the parties cannot agree to initiate
the proposed program.
Eighteen months later, Pioneer reintroduces to the Business Committee the
proposed Tropical Corn Pest Program. At that time, with some modifications, MPS
is prepared to perform its parts of the program. The Research Committee
completes detailed description of the Tropical Corn Pest Program, which is
attached to this Agreement as part of Schedule 2.4, thus obligating each part to
perform its parts of the program pursuant to this Agreement.
Suppose, however, that after such 18 month "stand down" period, MPS still is not
prepared to participate in the proposed Tropical Corn Pest Program. In such
event, Pioneer can elect to fund 100% of the program, in which case MPS will be
obligated to perform any and all activities that Pioneer technically, or for the
purpose of obtaining intellectual property rights, cannot perform, provided that
Pioneer funds all such activities performed by MPS. Alternatively, Pioneer can
decide to perform all parts of the program on its own.
Regardless of whether Pioneer decides to perform all parts of the Tropical Corn
Pest Program or whether MPS performs its parts with funding from Pioneer, the
progress of the program (including, without limitation the cost of the program)
is monitored by the Research Committee and the Business Committee in the same
detail as any other R&D Program.
At any time within the first two years of the Tropical Corn Pest Program, MPS
can elect to participate in the program and receive all rights as set forth
under this Agreement with respect to any BIP Transformation Events developed
under such program. MPS can elect to participate in the
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Program by (i) reimbursing Pioneer for 100% of the costs and expenses incurred
by Pioneer in performing and or funding all parts of the program plus 25% and
(ii) committing to conducting all remaining parts of the Tropical Corn Pest
Program originally assigned to MPS by the Research Committee when the program
originally was structured.
If MPS does not elect to participate in the Tropical Corn Pest Program within
such two year period, then MPS has no rights under Article 4 of this Agreement
to any BIP Transformation Events developed under such program. If such two year
period expires without MPS electing to participate in the Tropical Corn Pest
Program, then MPS ceases to have any right through the Research Committee or the
Business Committee to monitor or otherwise be appraised of the progress of such
program. In such event, Pioneer is free to develop and commercialize the BIP
Transformation Event(s) targeted under the Tropical Corn Pest Program, subject
to the limitations imposed on Pioneer under Article 4 of this Agreement on the
activities of Pioneer with respect to BIP Transformation Events.
If the case had been that Pioneer was the party electing not to participate,
then Pioneer would cease to have any rights under Article 4 to any BIP
Transformation Event(s) developed under such program. In such event, MPS would
be free to develop and commercialize such BIP Transformation Events(s), alone
and with third parties, as MPS decides in its sole discretion without any
limitation whatsoever under Article 4 on the activities of MPS (including
licensing to any third parties) with respect to such BIP Transformation
Event(s). The same consequence would result if Pioneer failed to perform
conversion of MPS parent lines with the subject BIP Transformation Event(s)
pursuant to Section 2.11.
In the event that upon considering the initiation of a this new R&D Program, MPS
and Pioneer determine that a patent then issued to a third party is necessary
to develop BIP Transformation Events under such prospective R&D Program or to
permit both MPS and Pioneer to commercialize Insect Resistant BIP Crops using
any BIP Transformation Events developed under such prospective R&D Program,
neither MPS nor Pioneer will be obligated in any way to commence such
prospective R&D Program until a license to such third party patent is obtained
for both MPS and Pioneer.
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SCHEDULE 2.9
------------
Example - Substantial Additional Resources Needed Under an R&D Program;
- -----------------------------------------------------------------------
Consequences for Non-Participation
- ----------------------------------
Example - A particular R&D Program suffers a set back at the stage of
transforming a particular BIP genetic construct into the Target Crop of
interest. The Research Committee determines that the best viable solution is to
increase the transformation effort by 500%.
Under the program, Pioneer is responsible for transformation work. Pioneer is
skeptical of the probability of success of increasing the transformation effort
and declines to do the work. The Business Committee is not successful in
reaching a compromise.
MPS elects to fund the work. Pioneer then is obligated to do the work with MPS
funding.
After $1 million of additional transformation effort, success is achieved.
Immediately upon completion of such additional transformation work, Pioneer must
reimburse MPS the $1 million of costs incurred plus 25% (an additional $250,000)
in order for Pioneer to maintain its rights under Article 4 to any BIP
Transformation Events developed under that program.
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SCHEDULE 4.3
------------
Example - MPS Right to Grant Sublicenses to Third Parties
- ---------------------------------------------------------
Example - Under two separate R&D Programs, the parties successfully develop two
BIP Transformation Events - one responsible for resistant to flea beetle in
canola (the "Flea Beetle Event") and one responsible for resistant to cyst
nematodes in soybeans (the "Nematode Event").
With respect to these two BIP Transformation Events, MPS has the right to grant
the following licenses to third parties (in addition to licenses to MPS
Affiliates):
1. Flea Beetle Event: MPS can grant a license to party A in North America,
-----------------
party B in Europe, and party C in the rest of world and give each such party the
Flea Beetle Event sufficiently far in advance so that each such party can
commercialize transgenic canola containing the Flea Beetle Event in each
jurisdiction (North America, Europe and the rest of the world) at the same time
as Pioneer.
All other licenses granted in each jurisdiction to other third parties must
prohibit such parties from commercializing transgenic canola containing the Flea
Beetle Event until 24 months after the calendar year in which Pioneer reaches
its RC1 stage of transgenic canola containing the Flea Beetle Event. MPS can
provide the Flea Beetle Event to such other third parties in advance of such 24
month lead-time to enable any such other third party to convert its parent
lines, receive governmental registrations and produce commercial hybrids to be
ready for sale immediately upon expiration of such 24 month lead-time.
In addition, after the 24 month lead time, MPS will be allowed to distribute the
transgenic canola containing the Flea Beetle Event through third party seed
companies that are also distributors of Mycogen branded bagged seed products.
2. Nematode Event: MPS has the same licensing rights as described above,
--------------
except that MPS can first license party X in North America (instead of party A),
party Y in Europe (instead of party B), and party Z in the rest of the world
(instead of party C) so that each of X, Y, and Z can commercialize transgenic
soybeans containing the Nematode event in their respective jurisdictions at the
same time as Pioneer. Different parties can receive the Nematode Event than the
parties that receive the Flea Beetle Event.
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SCHEDULE 5.1: PIONEER / MYCOGEN BIP RESEARCH PROGRAMS IN CORN
** TO BE PERFORMED ON MAINLAND USA **
[THIS SCHEDULE, WHICH CONTAINS CONFIDENTIAL INFORMATION, HAS BEEN DELETED FROM
THE COLLABORATION AGREEMENT SUBMITTED FOR PUBLIC RECORD. THE CONFIDENTIAL
INFORMATION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]
107