SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): JULY 20, 1999
AGRITOPE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
000-23531
(Commission File No.)
93-0820945
(IRS Employer Identification No.)
16160 SW UPPER BOONES FERRY ROAD
PORTLAND, OREGON 97224
(Address of principal executive offices) (Zip Code)
(503) 670-7702
(Registrant's telephone number, including area code)
<PAGE>
ITEM 5. OTHER EVENTS
On July 20, 1999, Agritope, Inc. ("Agritope") and Rhone-Poulenc Agro, a
division of Rhone-Poulenc, S.A. ("RP Ag"), announced their formation of
Agrinomics LLC ("Agrinomics"). Agrinomics has begun a research, development and
commercialization program in the field of agricultural functional genomics.
Agritope and RP Ag each own a 50% interest in Agrinomics.
Agrinomics intends to identify, develop and commercialize novel genes
which may be discovered under a gene discovery program involving genetically
modified plant seed. RP Ag will make capital contributions to Agrinomics in cash
totaling $20 million over a five-year period, $5 million of which it has already
contributed. RP Ag will also provide Agrinomics access to high technology
equipment and support and perform research work for it. Agritope will contribute
to Agrinomics gene discovery technology, genetically modified seed, technical
expertise and research work.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits.
EXHIBIT NO. DESCRIPTION
------------------- ---------------------------------------------------
10.1* Limited Liability Company Agreement of Agrinomics
LLC, dated as of July 1, 1999, among Agritope,
ACTTAG, Inc., a Delaware corporation ("ACTTAG"),
and RP Ag
10.2* Research and Management Contract, dated as of
July 1, 1999, between Agritope and Agrinomics
10.3* Assignment and Assumption Agreement and Bill of
Sale, dated as of July 15, 1999, between ACTTAG and
Agrinomics
10.4* Research Contract and License Agreement, dated as
of July 1, 1999, between RP Ag and Agrinomics
10.5* Research, License and Option Agreement, dated as of
October 23, 1998, as amended and restated as of
July 14, 1999, between The Salk Institute for
Biological Studies, a California nonprofit public
benefit corporation, and Agritope
10.6* Assignment and Assumption Agreement and Bill of
Sale, dated as of July 15, 1999, between ACTTAG and
Agritope
10.7* Research and Option to License Agreement, dated as
of January 21, 1999, between the University Court
of the University of Edinburgh, and Agritope
- --------------------
*Confidential Treatment Requested; the omitted material has been separately
filed with the Securities Exchange Commission.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, hereunto duly authorized.
AGRITOPE, INC.
By: /s/ Gilbert N. Miller
----------------------------
Gilbert N. Miller
Executive Vice President and
Chief Financial Officer
Dated: August 12, 1999
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
------------------- ---------------------------------------------------
10.1* Limited Liability Company Agreement of Agrinomics
LLC, dated as of July 1, 1999, among Agritope,
ACTTAG, Inc., a Delaware corporation ("ACTTAG"),
and RP Ag
10.2* Research and Management Contract, dated as of
July 1, 1999, between Agritope and Agrinomics
10.3* Assignment and Assumption Agreement and Bill of
Sale, dated as of July 15, 1999, between ACTTAG and
Agrinomics
10.4* Research Contract and License Agreement, dated as
of July 1, 1999, between RP Ag and Agrinomics
10.5* Research, License and Option Agreement, dated as of
October 23, 1998, as amended and restated as of
July 14, 1999, between The Salk Institute for
Biological Studies, a California nonprofit public
benefit corporation, and Agritope
10.6* Assignment and Assumption Agreement and Bill of
Sale, dated as of July 15, 1999, between ACTTAG and
Agritope
10.7* Research and Option to License Agreement, dated as
of January 21, 1999, between the University Court
of the University of Edinburgh, and Agritope
- --------------------
*Confidential Treatment Requested; the omitted material has been separately
filed with the Securities Exchange Commission.
EXHIBIT 10.1
(REDACTED)
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
AGRINOMICS LLC
AMONG
ACTTAG, INC.,
AGRITOPE, INC.
AND
RHONE-POULENC AG COMPANY INC.
DATED AS OF JULY 1, 1999
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
AGRINOMICS LLC
THIS LIMITED LIABILITY COMPANY AGREEMENT of AGRINOMICS LLC (the
"Company") is made and shall be effective as of the 1st day of July, 1999 (the
"Effective Date"), by and among ACTTAG, INC., a Delaware corporation ("ACTTAG,
Inc.") that is a wholly-owned subsidiary of AGRITOPE, INC., a Delaware
corporation ("Agritope", ACTTAG, Inc.'s "Parent"), Agritope, and RHONE-POULENC
AG COMPANY INC., a New York corporation ("RP Ag Co.") that is a wholly-owned
subsidiary of RHONE-POULENC AGRO S.A. ("Rhone-Poulenc Agro", RP Ag Co.'s
"Parent").
RECITALS
A. Agritope has instituted a functional genomics program to be
conducted under the name the "ACTTAG(TM) Gene Discovery Program." Agritope has
formed ACTTAG, Inc. by the contribution to it of all of Agritope's rights,
interests and obligations in, to and under certain preliminary agreements
related to the ACTTAG(TM) Gene Discovery Program as more fully described herein,
and certain existing collections of biological materials relating hereto as more
fully described in the Operating Plan and more particularly in Exhibit A hereto
(the "Existing Agritope Collection").
B. Rhone-Poulenc Agro desires to help support the ACTTAG(TM) Gene
Discovery Program and to participate therein.
C. ACTTAG, Inc. and RP Ag Co. desire to form AGRINOMICS LLC, as a
Delaware limited liability company, and to be its initial Members upon the terms
and conditions set forth herein. The Company will receive from ACTTAG, Inc. all
of ACTTAG, Inc.'s rights, interests and obligations in, to and under such
preliminary agreements, as well as the Existing Agritope Collection, contributed
to ACTTAG, Inc. by Agritope. Agritope is a party to this Agreement only for
purposes of Article 8, Article 9, and Sections 10.1(c), 10.4(b) and 15.15; it is
not a Member of the Company.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and intending to be legally bound, ACTTAG, Inc., Agritope and RP Ag Co.
hereby agree as follows:
AGRINOMICS LLC 1 Limited Liability Company Agreement
<PAGE>
ARTICLE 1
DEFINITIONS; INTERPRETATION
1.1 CERTAIN DEFINITIONS
In addition to the capitalized terms defined above, and to other
capitalized terms explicitly defined elsewhere in this Agreement, the following
capitalized terms used herein shall have the following meanings:
"ACT" means the Delaware Limited Liability Company Act, as provided in
Title 6, Chapter 18 of the Delaware Code, ss. 101 et. Seq., as amended from time
to time.
"ADJUSTED CAPITAL ACCOUNT" means, with respect to a Member, the balance
in such Member's Capital Account as of the end of the relevant taxable year of
the Company, after giving effect to the following adjustments: (a) increase such
Capital Account by any amounts which the Member is obligated to restore or is
treated as being obligated to restore pursuant to Regulation Sections
1.704-2(g)(1) and 1.704-2(i)(5); and (b) decrease such Capital Account by the
items described in Regulation Sections 1.704-l(b)(2)(ii)(d)(4), (5) and (6).
"ADJUSTED DEFICIT" means, with respect to any Member, the deficit
balance, if any, in such Member's Capital Account as of the end of the taxable
year of the Company, after giving effect to the following adjustments:
(a) The Capital Account shall be increased by any amounts that such
Member is obligated to restore pursuant to any provision of this Agreement or is
deemed to be obligated to restore pursuant to the next to last sentence of
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and
(b) The Capital Account shall be decreased by the items described in
Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and
1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Deficit is intended to comply with
the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
"AFFILIATE" means, with respect to any Person, another Person that,
directly or indirectly, through one or more intermediaries, Controls, or is
Controlled by, or is under common Control with, such Person; provided, however,
that for purposes of Sections 10.2, 10.3, and 10.4, "Affiliate" shall mean only
an Affiliate (as above defined) that directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such Person where "control" and "controlled" for such purposes means the
ownership of more than 50% of the share capital or voting rights of a Person.
AGRINOMICS LLC 2 Limited Liability Company Agreement
<PAGE>
"AGREEMENT" means this Limited Liability Company Agreement of
AGRINOMICS LLC (including all Exhibits referenced herein), as amended, restated
or supplemented from time to time.
"AGRITOPE RESEARCH CONTRACTS" means: (a) the Research and Management
Contract between the Company and Agritope, in the form of Exhibit B hereto (the
"Agritope Research and Management Contract"), and (b) any other agreement
whereby Agritope or its Affiliates will perform research services for or with
the Company.
"ALLIANCE PARTY(IES)" means those third parties with which the Company
may from time to time enter into research contracts, subscription contracts,
license agreements, testing or certification agreements, marketing or
distribution agreements, or other agreements as contemplated under Section
2.5.2(d) or in the Operating Plan. In addition to each Member's role under its
respective Research Contract, the Members and their Affiliates will be eligible
to be Alliance Parties.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" means the Assignment and
Assumption Agreement and Bill of Sale substantially in the form of Exhibit C
hereto, whereby ACTTAG, Inc. will assign and transfer to the Company, and the
Company will assume and agree to perform, all of Agritope's rights, interests,
and obligations in, to, and under the Salk ACTTAG Research Agreement and the
University of Edinburgh ACTTAG Research Agreement, and whereby ACTTAG, Inc. will
sell and transfer to the Company all right, title and interest in and to the
Existing Agritope Collection, as contributed by Agritope to ACTTAG, Inc. [ * ].
"BANKRUPTCY" means, with respect to a Person, including without
limitation, a Parent, a Member or the Company, the occurrence of any of the
following: (a) the filing of a voluntary petition for relief under the U.S. or
French bankruptcy laws or an admission by such Person of such Person's inability
to pay its debts as they become due, (b) the making by such Person of a general
assignment for the benefit of creditors, (c) in the case of the filing of an
involuntary petition in bankruptcy against such Person, the filing of an answer
admitting the material allegations thereof or consenting to the entry of an
order for relief, or a default in answering the petition, (d) the entry of an
order for relief under the U.S. or French bankruptcy laws against such Person,
or (e) the entry of an order, judgment or decree of any court adjudicating such
Person bankrupt or appointing a trustee or receiver for such Person's assets.
The foregoing definition of "Bankruptcy" is intended to replace and shall
supersede and replace the definition of "Bankruptcy" set forth in Sections
18-101 (1) and 18-304 of the Act.
"BOARD" means the Board of Managers of the Company established in
accordance with Section 6.1. Each Member of the Board of Managers of the Company
is hereby designated as a "Manager" within the meaning of the Act.
"BUDGET" means the then-applicable budget for the Company prepared and
adopted in accordance with Section 6.9, or the Initial Budget, as the case may
be.
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
AGRINOMICS LLC 3 Limited Liability Company Agreement
<PAGE>
"CAPITAL ACCOUNT" means the capital account to be determined and
maintained for each Member pursuant to Section 3.9 throughout the existence of
the Company in accordance with the capital accounting rules set forth in
Regulations Section 1.704-1(b). The provisions of this Agreement relating to the
maintenance of Capital Accounts shall be interpreted and applied in a manner
consistent with such Section of the Regulations.
"CAPITAL CONTRIBUTION" means, with respect to any Member, the amount of
money and the initial Gross Asset Value of any property (other than money)
contributed to the Company with respect to the Interest held by such Member,
including all Initial Capital Contributions and Additional Capital
Contributions.
"CHANGE OF CONTROL" means the acquisition, directly or indirectly,
beneficially or of record, by any one person or group (as "group" is defined in
Section 13(d)(3) of the Securities Exchange Act of 1934) that is, or that
includes, any company in the field of crop protection, seeds and crop
improvement (including, without limitation, plant biotechnologies) or an
Affiliate of any such company, of shares or options or other rights to purchase
shares representing in the aggregate 50% or more of the aggregate voting power
represented by the issued and outstanding capital stock of either Party or its
Parent, or any of its controlling Affiliates in any tier, or any Transferee
pursuant to Section 10.2 hereunder.
"CLOSING DATE" means the date of the Closing as described in Section
3.4 below.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, or any corresponding provision or provisions of any succeeding law, and
any reference to a Section of the Code shall be deemed to include a reference to
any successor provision thereto as well as any Regulations promulgated under
such Section or successor provision.
"COMPANY MINIMUM GAIN" has the meaning of "partnership minimum gain"
set forth in Regulations Sections 1.704-2(b)(2) and 1.704-2(d).
"CONTROL," "CONTROLS" "IS CONTROLLED BY" mean (subject to the proviso
in the definition of "Affiliate" above) the possession, directly or indirectly,
of 50% of more of the share capital or voting rights of a Person.
"DEPRECIATION" means, for each Fiscal Year, an amount equal to the
depreciation, amortization or other cost recovery deduction allowable with
respect to an asset for such Fiscal Year, except that if the Gross Asset Value
of an asset differs from its adjusted basis for federal income tax purposes as
the beginning of such Fiscal Year, Depreciation shall be an amount which bears
the same ratio to such beginning Gross Asset Value as the federal income tax
depreciation, amortization or other cost recovery deduction for such Fiscal Year
bears to such beginning adjusted tax basis; PROVIDED, HOWEVER, that if the
adjusted basis for federal income tax purposes of an asset at the beginning of
such Fiscal Year is zero, Depreciation shall be determined with reference to
such beginning Gross Asset Value using any reasonable method selected by the
Board.
AGRINOMICS LLC 4 Limited Liability Company Agreement
<PAGE>
"FISCAL YEAR" means (a) the period commencing on the date the Company
was formed and ending on September 30, 1999, (b) any subsequent 12-month period
commencing on October 1 and ending on September 30, or (c) any portion of the
period described in clause (b) for which the Company is required to close its
books and allocate Profits, Losses, and other items of Company income, gain,
loss or deduction pursuant to Article 4.
"GROSS ASSET VALUE" means, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
(a) The initial Gross Asset Value of any asset contributed by
a Member to the Company shall be the gross fair market value of such asset (i)
in the case of any asset contributed pursuant to Sections 3.1 through 3.6
hereof, as provided in such Sections, and (ii) with respect to any other
contributed asset, as determined by the contributing Member and the Board;
(b) The Gross Asset Values of Company assets shall be adjusted
to equal their respective gross fair market values, as determined by the Board,
as of the following times: (i) the acquisition of an additional Interest by any
new or existing Member in exchange for more than a DE MINIMIS Capital
Contribution; (ii) the distribution by the Company to a Member of more than a DE
MINIMIS amount of Property as consideration for an Interest; and (iii) the
liquidation of the Company within the meaning of Regulations Section
1.704-1(b)(2)(ii)(G); PROVIDED, HOWEVER, that the adjustments pursuant to
clauses (i) and (ii) above shall be made only if the Board reasonably determines
that such adjustments are necessary or appropriate to reflect the relative
economic interests of the Members in the Company;
(c) The Gross Asset Value of any Company asset distributed to
any Member shall be adjusted to equal the gross fair market value of such asset
on the date of distribution as determined by the distributee and the Board; and
(d) The Gross Asset Values of Company assets shall be
increased (or decreased) to reflect any adjustments to the adjusted basis of
such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to
the extent that such adjustments are taken into account in determining Capital
Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(M) and Section 3.7
hereof; PROVIDED, HOWEVER, that the Gross Asset Values shall not be adjusted
pursuant to this clause (d) to the extent the Board determines that an
adjustment pursuant to clause (b) hereof is necessary or appropriate in
connection with a transaction that would otherwise result in an adjustment
pursuant to this clause (d).
If the Gross Asset Value of an asset has been determined or adjusted
pursuant to clause (a), clause (b) or clause (d) hereof, such Gross Asset Value
shall thereafter be used for purposes of calculating Depreciation with respect
to such asset for purposes of determining Profits and Losses.
AGRINOMICS LLC 5 Limited Liability Company Agreement
<PAGE>
"INITIAL BUDGET" means the Budget for the Company for the period from
the date of this Agreement to September 30, 2000, which shall be prepared by the
Company's CEO and approved by the Board prior to the Closing Date, which will be
attached hereto as Exhibit D.
"INITIAL CAPITAL CONTRIBUTIONS" means, with respect to each Member, the
Capital Contributions made by such Member pursuant to Section 3.1 or 3.2,
respectively, reduced by the amount of any liabilities of such Member assumed by
the Company in connection with such Capital Contribution or that are secured by
any property contributed by such Member as a part of such Capital Contribution.
"INITIAL OPERATING PLAN" means the operating plan for the Company,
which is attached hereto as Exhibit E.
"INTEREST" means a limited liability company interest in the Company
representing a Member's share of Profits and Losses of the Company and such
Member's right to receive distribution of the Company's assets in accordance
with the provisions of this Agreement and the Act, and including some or all of
the Capital Contributions made by a Member pursuant to Article 3, including any
and all benefits to which the holder of such an Interest may be entitled as
provided in this Agreement, together with all obligations of such Member to
comply with the terms and provisions of this Agreement.
"IRS" means the U.S. Internal Revenue Service.
"LIQUIDATING AGENT" shall refer to the Board or such other Person
designated by the Board as a liquidating trustee of the Company to conduct and
supervise the winding up and liquidation of the Company in accordance with
Section 5.3 and Article 11.
"MARKETING PROGRAM" means the commercial exploitation of the Company's
Property and rights derived from the Research Program.
"MEMBER NONRECOURSE DEBT" has the meaning of "partner nonrecourse debt"
set forth in Regulations Section 1.704-2(b)(4).
"MEMBER NONRECOURSE DEBT MINIMUM GAIN" means an amount, with respect to
each Member Nonrecourse Debt, equal to the Company Minimum Gain that would
result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability
determined in accordance with Regulations Section 1.704-2(i)(3).
"MEMBERS" means ACTTAG, Inc. and/or RP Ag Co. as the parties to this
Agreement and includes any Person admitted as an additional Member or
substituted Member pursuant to the provisions of this Agreement, and, solely to
the extent provided in Section 10.5, any Non-Admitted Member as defined in that
Section. For purposes of the Act, the Members shall constitute one (1) class or
group of Members.
AGRINOMICS LLC 6 Limited Liability Company Agreement
<PAGE>
"NET CASH FLOW" means, with respect to any Fiscal Year, the Profits or
Losses of the Company for such Fiscal Year DECREASED by (a) principal payments
to creditors (including Members in their capacity as creditors) of the Company
during such Fiscal Year, (b) capitalized expenditures incurred by the Company
during such Fiscal Year, (c) any amounts added to operating reserves during such
Fiscal Year, and (d) deductible expenditures paid for during the Fiscal Year to
the extent accrued and deducted in a prior Fiscal Year, and INCREASED by (i) any
deductions for federal income tax purposes for such Fiscal Year to the extent
such deductions do not involve the expenditure of cash by the Company during
such Fiscal Year (excluding any loss recognized for federal income tax purposes
on the sale, transfer or other disposition of any asset of the Company and taken
into account in determining Profits or Losses), (ii) any amounts withdrawn from
operating reserves during such Fiscal Year, (iii) the cash proceeds of any loans
made to the Company during the Fiscal Year, except to the extent the applicable
loan documents restrict the use of such proceeds, (iv) any cash Capital
Contributions made to the Company during the Fiscal Year, and (v) any proceeds
from the sale, transfer or other disposition of any assets of the Company
(excluding (A) such proceeds to the extent attributable to any gain recognized
on the disposition of such assets for federal income tax purposes and included
in Profits and (B) any proceeds from the sale, transfer or other disposition of
such assets in connection with a liquidation and dissolution of the Company).
"NONRECOURSE DEDUCTIONS" has the meaning set forth in Regulations
Section 1.704-2(b)(1).
"NONRECOURSE LIABILITY" has the meaning set forth in Regulations
Section 1.704-2(b)(3).
"OPERATING PLAN" means the then-applicable operating plan for the
Company, covering the Research Program and the Marketing Program, as prepared
and adopted in accordance with Section 6.9, or the Initial Operating Plan, as
the case may be.
"PARTIES" means all the parties to this Agreement and "Party" means any
one of them.
"PERCENTAGE INTEREST" means fifty percent (50%) with respect to ACTTAG,
Inc. and fifty percent (50%) with respect to RP Ag Co.
"PERSON" means any individual, corporation, partnership, limited
liability company, trust, association or other entity or organization, including
any governmental or political subdivision or any agency or instrumentality
thereof.
"PROFITS" and "LOSSES" mean the net taxable income and net tax loss of
the Company computed for each Fiscal Year or other relevant period, as
determined in accordance with Code Section 703(a) (for this purpose, all items
of income, gain, loss, or deduction required to be stated separately pursuant to
Code Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments:
AGRINOMICS LLC 7 Limited Liability Company Agreement
<PAGE>
(a) Any income of the Company that is exempt from federal
income tax and not otherwise taken into account in computing Profits and Losses
pursuant to this clause (a) shall be added to such taxable income or loss;
(b) Any expenditures of the Company described in Code Section
705(a)(2)(B) (including expenditures treated as described in Code Section
705(a)(2)(B) under Regulations Section 1.704-1(b)(2)(iv)(i)), and not otherwise
taken into account in computing Profits and Losses pursuant to this definition,
shall be subtracted from such taxable income or loss;
(c) In the event the Gross Asset Value of any Company asset is
adjusted pursuant to the terms of this Agreement, the amount of such adjustment
shall be taken into account as gain or loss from the disposition of such asset
for purposes of computing Profits and Losses with respect to Regulation Section
1.704-1(b)(2);
(d) Gain or loss resulting from any disposition of property
with respect to which gain or loss is recognized for federal income tax purposes
shall be computed pursuant to Regulation Sections 1.704-1(b)(2)(F) and
1.704-1(b)(2)(G) by reference to the Gross Asset Value of the Property disposed
of, notwithstanding that the adjusted tax basis of such Property differs from
its Gross Asset Value;
(e) In lieu of the depreciation, amortization and other cost
recovery deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such Fiscal Year, computed in
accordance with the terms hereof pursuant to Regulation Section 1.704;
(f) To the extent an adjustment to the adjusted tax basis of
any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is
required pursuant to Regulations Section 1.704-1(b)(2)(iv)(M)(4) to be taken
into account in determining Capital Accounts as a result of a distribution other
than in liquidation of the Member's interest, the amount of such adjustment
shall be treated as an item of gain (if the adjustment increases the basis of
the asset) or loss (if the adjustment decreases the basis of the asset) from the
disposition of the asset and shall be taken into account for purposes of
computing Profits or Losses; and
(g) Notwithstanding any other provisions of this Agreement,
any items that are specially allocated by the Company pursuant to Section 4.2
shall not be taken into account in computing Profits or Losses. The amount of
the items of Company income, gain, loss or deduction available to be specially
allocated pursuant to Section 4.2 shall be determined by applying rules
analogous to those set forth in this definition of Profits and Losses.
"PROPERTY" means all real and personal property acquired by the
Company, and any improvements thereto, and shall include tangible and intangible
property and intellectual properties.
AGRINOMICS LLC 8 Limited Liability Company Agreement
<PAGE>
"REGULATIONS" means the income tax regulations promulgated under the
Code, as such regulations are amended from time to time (including corresponding
provisions of succeeding regulations).
"RESEARCH CONTRACT(S)" means one or more (as the context requires) of
the Agritope Research Contracts, the RP Ag Co. Research Contracts, the Salk
ACTTAG Research Agreement, the University of Edinburgh ACTTAG Research
Agreement, and contracts entered by the Company with any of the Alliance
Parties.
"RESEARCH PROGRAM" means the plant functional genomics program, also
called the "ACTTAG(TM) Gene Discovery Program," to be conducted and coordinated
by the Company at multiple research sites and involving the activation tagging
of large numbers of Arabidopsis plants in an attempt to create seeds and plants
in which one or more genes are overexpressed; screening to identify phenotypic
traits of interest in such plants; the isolation, sequencing and gene rescue of
the associated genotypes; and related activities, all as is more fully described
in the Operating Plan.
"RP AG CO. RESEARCH CONTRACTS" means: (a) the Research Contract and
License Agreement between the Company and RP Ag Co., in the form of Exhibit F
hereto (the "RP Ag Co. Research Contract and License Agreement"); and (b) any
other agreement whereby RP Ag Co. or its Affiliates will perform research
services for or with the Company.
"SALK ACTTAG RESEARCH AGREEMENT" means that certain Research, License
and Option Agreement dated as of October 23, 1998, by and between The Salk
Institute for Biological Sciences ("Salk") and Agritope, as amended prior to
Closing to the satisfaction of the Members.
"TRANSFER" means any sale, assignment, gift, hypothecation, pledge or
other disposition, directly or indirectly, whether voluntary or by operation of
law (including a merger or consolidation).
"UNIVERSITY OF EDINBURGH ACTTAG RESEARCH AGREEMENT" means that certain
Research and Option to License Agreement dated as of January 21, 1999, by and
between the University Court of the University of Edinburgh ("University of
Edinburgh") and Agritope.
"WINDING UP YEAR" means the U.S. taxable year of the Company in which
all of its assets are disposed of, or the Company liquidates (whichever occurs
first), and the immediately preceding taxable year if the disposition or
liquidation occurs prior to the due date (without regard to extensions) for
filing the Company's federal income tax return for the year immediately
preceding the year of disposition or liquidation.
1.2 INTERPRETATION
(a) Reference to a given Article, Section, Subsection, Exhibit or
Schedule is a reference to an Article, Section, Subsection, Exhibit or Schedule
AGRINOMICS LLC 9 Limited Liability Company Agreement
<PAGE>
of this Agreement, unless otherwise specified. The terms "hereof," "herein,"
"hereto," "hereunder" and "herewith" refer to this Agreement as a whole.
(b) Except where otherwise expressly provided or unless the context
otherwise necessarily requires: (i) references to a given law or rule are
references to that law or rule as amended or modified as of the date on which
the reference is made, (ii) reference to a given agreement or instrument is a
reference to that agreement or instrument as originally executed, and as
modified, amended, supplemented and restated through the date as of which
reference is made to that agreement or instrument, and (iii) accounting terms
have the meanings given to them by generally accepted accounting principles in
the United States, applied on a consistent basis by the accounting entity to
which they refer ("GAAP").
(c) The singular includes the plural and the masculine includes the
feminine and neuter, and vice versa. "Includes" or "including" means "including,
without limitation."
(d) Headings set forth in this Agreement are used for convenience only
and are not to be considered in construing or interpreting this Agreement.
ARTICLE 2.
GENERAL PROVISIONS
2.1 NAME
The name of the Company shall be "AGRINOMICS LLC". All business of the
Company shall be conducted under such name and under such variations thereof as
the Board deems necessary or appropriate to comply with the requirements of law
in any jurisdiction in which the Company may elect to do business.
2.2 PRINCIPAL PLACE OF BUSINESS; REGISTERED OFFICE AND AGENT
(a) The address and principal place of business of the Company shall be
16160 SW Upper Boones Ferry Rd., Portland, OR 97224, USA, or at such other place
as the Board may from time to time determine.
(b) The registered office of the Company in the State of Delaware is
located at 1209 Orange Street, Wilmington, County of Newcastle, DE 19801. The
registered agent of the Company to accept service of process is The Corporation
Trust Company, whose address is 1209 Orange Street, Wilmington, County of
Newcastle, DE 19801.
2.3 FORMATION OF COMPANY; CERTIFICATE
(a) The Members hereby agree to form the Company as a limited
liability company under and pursuant to the provisions of the Act and agree that
the rights, duties and liabilities of the Members shall be as provided in the
Act, except as otherwise provided herein.
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(b) This Agreement is effective upon the execution of this
Agreement or a counterpart of this Agreement by each of Agritope, ACTTAG, Inc.
and RP AG Co. Upon the later of such execution or the filing of the Certificate
of Formation of the Company (the "Certificate"), each of ACTTAG, Inc. and RP AG
Co. shall automatically be admitted as Members of the Company.
(c) The name and mailing address of each Member, the agreed
value of the amount contributed to the Company and the Percentage Interest of
each Member shall be as listed on Exhibit G attached hereto. The Board shall be
required to update Exhibit G from time to time as necessary to accurately
reflect the information therein. Any amendment or revision to Exhibit G made in
accordance with this Agreement shall not be deemed an amendment to this
Agreement. Any reference in this Agreement to Exhibit G shall be deemed to be a
reference to such Exhibit G as amended and in effect from time to time.
(d) Roger M. Tolbert, as an authorized person, within the
meaning of the Act, shall execute, deliver and file the Certificate with the
Secretary of State of the State of Delaware. Upon the filing of the Certificate
with the Secretary of State of the State of Delaware, his powers as an
authorized person shall cease and each Manager of the Company shall thereafter
be designated as an authorized person within the meaning of the Act.
2.4 TERM
The term of the Company shall commence upon the filing of the
Certificate with the Secretary of State of the State of Delaware and the term
shall continue until dissolved in accordance with Article 11. The existence of
the Company as a separate legal entity shall continue until the cancellation of
the Certificate as provided in the Act.
2.5 PURPOSE
2.5.1 GENERAL
The purpose of the Company is to conduct, coordinate and implement the
Research Program and the Marketing Program and to engage in such activities that
are necessary, desirable, advisable, convenient, incidental or appropriate to
the foregoing. The Company shall not engage in any other business or activity
without the written agreement of all Members.
2.5.2 ACTIVITIES
The Company shall provide, directly or through contracts with others,
the full range of services and products required to fulfill its purpose,
including, without limitation, the following:
(a) engaging RP Ag Co. under the RP Ag Co. Research Contract and
License Agreement to perform the research services, and to provide for the
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Company's benefit the facilities, personnel, capabilities, resources, patent
application assistance and management services, and rights therein described,
and the Company shall take all necessary and appropriate steps to cooperate with
RP Ag Co. with respect thereto and shall perform the Company's obligations under
the RP Ag Co. Research Contracts;
(b) engaging Agritope under the Agritope Research and Management
Contract to perform for the Company the management services and the research
services, and to provide for the Company's benefit the facilities, personnel,
capabilities, resources, patent application assistance, and rights therein
described, and the Company shall take all necessary and appropriate steps to
cooperate with Agritope with respect thereto and shall perform the Company's
obligations under the Agritope Research and Management Contract;
(c) contracting with one or more third parties to provide to the
Company other facilities, services (professional and otherwise), personnel,
capabilities, resources and rights as called for under the Operating Plan or as
otherwise recommended by the Company's CEO and approved by the Board (or as
shall be determined by the CEO in his or her discretion in those instances in
which such an acquisition does not exceed US$100,000 in value during any
calendar quarter and is, together with any related or contemporaneous
expenditure, consistent with the Company's Budget), but subject in any event to
the Agritope Research and Management Contract;
(d) contracting with the Member(s) and one or more Alliance Parties
with respect to the performance of specific research projects directed to genes
and crops of particular interest to the respective Alliance Parties and for the
grant of certain commercialization or other rights therein or otherwise with
respect to rights in the results of the Research Program within the scope of
such defined areas of interest on a subscription basis or otherwise, in return
for support, license fees, subscription fees, milestones, royalties,
cross-licenses, resources, facilities, and/or other considerations from the
Member(s) and such Alliance Parties as may be approved in each instance by the
Board on the recommendation of the CEO or his or her designee; provided,
however, that the Company will give first consideration to its Members and their
Affiliates, in preference to third parties, when seeking parties to any such
agreements, unless the circumstances clearly require otherwise or such
preference or first consideration would violate any agreement of the Company;
(e) contracting with one or more manufacturers, growers, packers,
processors, mills, licensees, distributors, or other third parties (whether or
not they are also Alliance Parties) in connection with the testing,
certification, commercialization, marketing, sale, and other exploitation of the
Company's Property and rights derived from the Research Program consistent with
the Operating Plan or as otherwise approved by the Board; and
(f) conducting or causing to be conducted such other activities or
projects as may be consistent with the Operating Plan, or as may otherwise be
approved by the Board.
(g) The Company may enter into and perform those agreements listed in
Exhibit H without any further act, vote or approval of any Member, Manager, or
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other Person, notwithstanding any other provision of this Agreement, the Act or
other applicable law, rule or regulation.
2.5.3 ACTIVITIES OUTSIDE THE SCOPE OF THE COMPANY'S ACTIVITIES
The Members may engage in or possess an interest in other business
ventures of any nature or description, independently or with others, whether
presently existing or hereafter created, other than (a) for the purpose of
conducting the Research Program or any plant functional genomics program
involving the activation tagging of Arabidopsis plants using the technology
developed under ACTTAG TM Gene Discovery Program or (b) for the purpose of
conducting the Marketing Program or any commercial exploitation of Property or
rights derived from the Research Program or any plant functional genomics
program involving the activation tagging of Arabidopsis plants using the
technology developed under ACTTAGTM Gene Discovery Program.
2.6 TITLE TO COMPANY PROPERTY
All Property owned by the Company shall be the property of the Company
as an entity, and no Member, individually, shall have any ownership interest in
any such Property.
2.7 PUBLICITY
Neither the Company nor any Member may issue any public statement or
press release regarding the Company or its business without the prior consent of
all Members, except as required by law or an order from any competent
governmental authority (provided that in the event of any such required
disclosure, the disclosing Member or the Company shall give all Members advance
notice of such disclosure in accordance with Section 2.8(b)).
2.8 CONFIDENTIALITY
(a) Subject to the controlling effect of any contrary provisions in any
Research Contract, each Member and its Parent agrees: (i) to take all reasonable
precautions and to use its best efforts to maintain the confidentiality of all
Confidential Information (as defined below) that such Member and its Parent (the
"Recipient") obtains in respect to any other Member or the Company (the
"Disclosing Party"); and (ii) not to use or disclose such Confidential
Information to any third parties other than the Recipient's Affiliates that are
similarly bound to protect the same or otherwise with the written approval of
the Disclosing Party or as permitted by Section 2.8(b). For purposes of this
Section 2.8, "Confidential Information" means all proprietary or confidential
information owned or provided by a Disclosing Party other than information that
the Recipient or its Affiliate can prove (A) was previously known to the
Recipient or any of its Affiliates (other than from a Disclosing Party or an
Affiliate thereof), or (B) is available or, without the fault of the Recipient
or any of its Affiliates (other than the Company), becomes available to the
general public, or (C) is lawfully received by the Recipient from a third party
that, to the Recipient's knowledge, is not bound by any similar obligation of
confidentiality. The disclosure of Confidential Information shall not constitute
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any grant of license or any other rights nor generate any business arrangements
unless specifically set forth herein or in another agreement.
(b) A Recipient may disclose Confidential Information to appropriate
regulatory authorities, attorneys, accountants and pursuant to any order of a
court, administrative agency or other governmental authority and may take any
lawful action that it deems necessary to protect its interests or the interests
of its Affiliates under, or to enforce compliance with the terms and conditions
of, this Agreement; provided, HOWEVER, that in the event that it appears that a
Recipient may become legally compelled to disclose any Confidential Information,
it will promptly consult with the Disclosing Party as to the reasons for such
disclosure and will afford the Disclosing Party a reasonable opportunity to
obtain a protective order as to such information and will use reasonable efforts
to obtain reliable assurance that the information disclosed will be treated
confidentially.
2.9 FAILURE TO OBSERVE FORMALITIES
To the fullest extent permitted by law, a failure to observe any
formalities or requirements of this Agreement, the Certificate or the Act shall
not be grounds for imposing or otherwise adversely affecting personal liability
on the Members or Managers for liabilities of the Company or otherwise.
2.10 LIABILITY OF MEMBERS AND MANAGERS TO THIRD PARTIES
Except as otherwise provided in the Act, no Member or Manager shall be
personally liable for any debt, obligation or liability of the Company, whether
arising in contract, tort or otherwise, solely by reason of being a Member or
acting as a Manager of the Company.
ARTICLE 3
CAPITAL CONTRIBUTIONS; CONDITIONS PRECEDENT TO CLOSING
3.1 ACTTAG, INC.'S INITIAL CAPITAL CONTRIBUTIONS
(a) As its Initial Capital Contribution:
(i) ACTTAG, Inc. shall, pursuant to the Assignment and
Assumption Agreement, transfer to the Company all of ACTTAG, Inc.'s rights,
interests, and obligations in, to, and under the Salk ACTTAG Research Agreement
and the University of Edinburgh ACTTAG Research Agreement, as contributed to
ACTTAG, Inc. by Agritope; and
(ii) ACTTAG, Inc. shall transfer to the Company all ownership
and other rights and title, including, without limitation, all intellectual
property rights, in and to the Existing Agritope Collection, as contributed to
ACTTAG, Inc. by Agritope.
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3.2 RP AG CO.'S CAPITAL CONTRIBUTIONS
RP Ag Co.'s Capital Contribution shall consist of the following: (a) RP Ag Co.
shall pay the Company at Closing an Initial Capital Contribution of US$5,000,000
in cash or other readily available funds (representing sums anticipated to be
devoted to the Research Program over the four-quarter period from July 1, 1999
through June 30, 2000), and (b) RP Ag Co. hereby agrees to make Additional
Contributions pursuant to Section 3.6.
3.3 FAIR MARKET VALUE OF CONTRIBUTIONS
(a) The aggregate Gross Asset Value for ACTTAG, Inc.'s Initial Capital
Contributions is US$20,000,000.
(b) The aggregate Gross Asset Value for RP Ag Co.'s Capital
Contributions is US$20,000,000.
(c) While each Member or its Affiliate(s) will provide certain services
to the Company under one or more Research Contracts, each will be paid for such
services to the extent provided for in the applicable Research Contract. To the
extent such payment is not so provided for, each Member intends that it will not
be separately compensated for any services, technologies, rights or properties.
Except for Additional Capital Contributions to be made in cash by RP Ag Co.
under Section 3.6, neither Member shall receive any additional interest or share
of the capital of the Company, nor any credit to its Capital Account, for any
services, technologies, rights or properties that are provided or made available
to the Company by a Member or its Affiliates or that may be used for the
Company's purposes or to its benefit, whether or not the same are explicitly to
be paid for under or in connection with any Research Contract.
3.4 CLOSING
Subject to the satisfaction or waiver of the conditions precedent
stated herein, the closing hereunder (the "Closing") shall occur on the Closing
Date at such time and place as may be mutually agreed upon by the parties. At
the Closing, each party shall deliver such documents, instruments and materials
as are called for by this Agreement or as may be reasonably required in order to
carry out the provisions and purposes hereof.
3.5 CONDITIONS PRECEDENT TO THE CLOSING
All the obligations of any Member under this Agreement are subject to
the fulfillment, at or prior to the Closing Date, of each of the conditions set
forth below in this Section. Each Member shall use best efforts to procure that
all such conditions are fulfilled at or prior to the Closing Date, provided,
however that neither Member nor its Parent will prior to the Closing Date modify
or amend any of the third-party agreements described in the following conditions
to which such Member or its Parent is a party, or will waive any of its rights
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relating thereto, without the prior written consent of the other Member, which
consent shall not be unreasonably withheld.
(a) Each Member will have completed its due diligence and business
review and such review shall have been satisfactory to such Member in its sole
discretion.
(b) Neither Member shall have discovered any material error,
misstatement or omission in the representations and warranties made by the other
party in Article 8, it being agreed that either Member may require at Closing
that it receive one or more written certifications and reaffirmations of such
representations and warranties made by the other party.
(c) Subject to waiver of this condition in whole or in part by the
other Member, each Member shall have performed and complied with all terms,
covenants and conditions required by this Agreement prior to the Closing Date.
(d) No suit, action or proceeding against any Member shall be pending
or threatened before any court or governmental agency in which such suit, action
or proceeding seeks to restrain or prohibit or to obtain damages or other relief
in connection with this Agreement or the transactions contemplated hereby.
(e) Subject to waiver of this condition in whole or in part by the
other Member, each Member shall have delivered to the other Member such other
instruments and documents as may be reasonably necessary to effectuate the
transactions contemplated by this Agreement.
(f) All necessary notifications and filings, including the filing of
the Certificate with the Secretary of State of the State of Delaware, required
to be made in or with respect to any relevant country will have been made and
all necessary governmental approvals, if any, shall have been received and the
prescribed waiting periods will have expired or been terminated. No governmental
entity shall have indicated its objection to, or its intent to challenge as
violative of any federal, state or foreign laws, any of the transactions
contemplated by this Agreement or any related documents. In the event a
governmental entity places a condition on its approval of the transaction as
contemplated by this Agreement or any related documents that has a material
effect on the proposed business of the Company, the Members shall attempt to
negotiate a mutually agreeable modification to this Agreement.
(g) Agritope and the Company shall have entered into, and duly executed
and delivered, the Agritope Research and Management Contract.
(h) The transfer to ACTTAG, Inc. of Agritope's rights, interests, and
obligations in, to, and under the Salk ACTTAG Research Agreement and the
University of Edinburgh ACTTAG Research Agreement and the Existing Agritope
Collection shall have validly taken place, with no adverse effects on any of
these rights, interests and obligations by reason of such transfer, and RP Ag
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Co. shall have received evidence to its satisfaction of such valid transfer
without any adverse effects.
(i) ACTTAG, Inc. and the Company shall have entered into, and duly
executed and delivered, the Assignment and Assumption Agreement and RP Ag Co.
shall have received evidence to its satisfaction that such Agreement has validly
been entered into with no adverse effect on any rights, interests and
obligations in, to and under the contracts and other assets, including without
limitation the Salk ACTTAG Research Agreement and the University of Edinburgh
ACTTAG Research Agreement and the Existing Agritope Collection.
(j) Subject to waiver of this condition in whole or in part by ACTTAG,
Inc., RP Ag Co. and the Company shall have entered into, and duly executed and
delivered, the RP Ag Co. Research Contract and License Agreement.
(k) Subject to waiver of this condition in whole or in part by ACTTAG,
Inc., RP Ag Co. shall have paid to the Company, in readily available funds, RP
Ag Co.'s Initial Capital Contribution, designated in Section 3.2.
3.6 ADDITIONAL CAPITAL CONTRIBUTIONS
In addition to its Initial Capital Contribution pursuant to Section
3.2, RP Ag Co. or its transferee pursuant to Section 10 shall make additional
contributions (the "Additional Capital Contributions") to the capital of the
Company as follows:
(a) RP Ag Co. agrees to pay the Company Additional Capital
Contributions in cash or other readily available funds as follows :
- payable on the first day of July 2000, the sum of $US5,000,000;
- payable on the first day of July 2001, the sum of $US4,000,000;
- payable on the first days of July 2002 and July 2003, the sum
of $US3,000,000 on each such day.
(b) Upon any dissolution of the Company, and subject to the provisions
of Section 12.1, RP Ag Co. shall make an Additional Capital Contribution equal
to the amount, if any, by which the total of the cash contributed by RP Ag Co.
at Closing plus the sums contributed by RP Ag Co. under Section 3.6(a) is less
than US$20,000,000.
3.7 NO BENEFIT TO CREDITORS
The provisions of this Agreement, including Article 3, are intended to
benefit the Members and, to the fullest extent permitted by law, shall not be
construed as conferring any benefit upon any creditor of the Company (and no
such creditor of the Company shall be a third-party beneficiary of this
Agreement) and the Members shall not have any duty or obligation to any creditor
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of the Company to make any contribution to the Company or to issue any call for
capital pursuant to this Agreement.
3.8 NO WITHDRAWAL OF CAPITAL; NO INTEREST ON CAPITAL
Except as specifically provided in this Agreement, no Member shall have
the right to withdraw all or any part of its Capital Contribution from the
Company, nor shall any Member have any right to demand and receive Property or
cash of the Company as a return of its Capital Contribution. No Member shall
have the right to receive interest on its Capital Contribution or its Capital
Account.
3.9 MAINTENANCE OF CAPITAL ACCOUNTS
A Capital Account shall be established and maintained for each Member
in accordance with Section 1.704-1(b) of the Treasury Regulations or any
successor provisions:
(a) Upon the Transfer of all or part of an interest in the Company, the
Capital Account of the transferor that is attributable to the transferred
interest in the Company shall carry over to the transferee Member in accordance
with the provisions of Regulations Section 1.704-1(b)(2)(iv)(L), except as
otherwise required to satisfy Regulations Section 1.704-1(b) in connection with
a termination of the Company under Code Section 708(b)(1)(B).
(b) In determining the amount of any liability for purposes of
maintaining Capital Accounts for the Members, there shall be taken into account
Code Section 752(c) and any other applicable provisions of the Code and the
Regulations.
In the event the Board shall determine that it is prudent to modify the manner
in which the Capital Accounts, or any debits or credits thereto (including,
without limitation, debits or credits relating to liabilities that are secured
by contributed or distributed property or that are assumed by the Company or the
Members), are computed in order to comply with the Code and the Regulations, the
Board may make such modification consistent with the principles of Regulation
Section 1.704-1(b)(2)(Q).
3.10 ADDITIONAL MEMBERS
The Company may, with Board approval, admit additional Persons as
Members in the Company having such rights, obligations and an Interest as agreed
upon by the Board and the newly-admitted Member. The additional Member shall
make a Capital Contribution to the Company in an amount and pursuant to such
terms as agreed upon by the Board and the newly-admitted Member. The Company
shall revalue the Gross Asset Value of the Company assets to the extent that the
Board, established by Board approval, considers it necessary to preserve the
economic interests of the Members. This Agreement shall be amended to the extent
necessary to reflect the admission of the additional Member and such Member's
agreement to be bound by the terms reflected herein.
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ARTICLE 4
ALLOCATIONS
4.1 ALLOCATION OF PROFITS AND LOSSES
After giving effect to the special allocations set forth in Section
4.2, Profits and Losses for any Fiscal Year shall be allocated among the Members
in proportion to their respective Percentage Interests.
4.2 SPECIAL ALLOCATIONS
The following special allocations shall be made in the following order
and priority:
4.2.1 MINIMUM GAIN CHARGEBACK
Except as otherwise provided in Regulations Section 1.704-2(f),
notwithstanding any other provision of this Article 4, if there is a net
decrease in Company Minimum Gain during any Fiscal Year, each Member shall be
specially allocated items of Company income and gain for such Fiscal Year (and
if necessary subsequent Fiscal Years) in an amount equal to such Member's share
of the net decrease in Company Minimum Gain, determined in accordance with
Regulations Section 1.704-2(g). Allocations pursuant to the previous sentence
shall be made in proportion to the respective amounts required to be allocated
to each Member pursuant thereto. The items to be so allocated shall be
determined in accordance with Regulations Sections 1.704-2(f)(6) and
1.704-2(j)(2). This Section 4.2.1 is intended to comply with the minimum gain
chargeback requirement in Regulations Section 1.704-2(f) and shall be
interpreted consistently therewith.
4.2.2 MEMBER MINIMUM GAIN CHARGEBACK
Except as otherwise provided in Regulations Section 1.704-2(i)(4),
notwithstanding any other provision of this Article 4, if there is a net
decrease in Member Nonrecourse Debt Minimum Gain attributable to a Member
Nonrecourse Debt during any Fiscal Year, each Member who has a share of the
Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse
Debt, determined in accordance with Regulations Section 1.704-2(i)(5), shall be
specially allocated items of Company income and gain for such Fiscal Year (and,
if necessary, subsequent Fiscal Years) in an amount equal to such Member's share
of the net decrease in Member Nonrecourse Debt Minimum Gain attributable to such
Member Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Member
pursuant thereto. The items to be so allocated shall be determined in accordance
with Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section 4.2.2 is
intended to comply with the minimum gain chargeback requirement in Regulations
Section 1.704-2(i)(4) and shall be interpreted consistently therewith.
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4.2.3 QUALIFIED INCOME OFFSET
In the event any Member unexpectedly receives any adjustments,
allocations or distributions described in Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Company income and gain shall be
specially allocated to each such Member in an amount and manner sufficient to
eliminate, to the extent required by the Regulations, the Adjusted Deficit of
such Member as quickly as possible, provided that an allocation pursuant to this
Section 4.2.3 shall be made only if and to the extent that such Member would
have an Adjusted Deficit after all other allocations provided for in Article 4
have been tentatively made as if this Section 4.2.3 were not in this Agreement.
4.2.4 NONRECOURSE DEDUCTIONS
Nonrecourse Deductions for any Fiscal Year shall be specially allocated
among the Members in proportion to their Percentage Interests.
4.2.5 MEMBER NONRECOURSE DEDUCTIONS
Any Member Nonrecourse Deductions for any Fiscal Year shall be
specially allocated to the Member who bears the economic risk of loss with
respect to the Nonrecourse Debt to which such Member Nonrecourse Deductions are
attributable in accordance with Regulations Section 1.704-2(i)(1).
4.2.6 CODE SECTION 754 ADJUSTMENTS
To the extent an adjustment to the adjusted tax basis of any Company
asset pursuant to Code Section 734(b) or Code Sections 743(b) is required
pursuant to Regulations Section 1.704-1(b)(2)(iv)(M)(2) or Section
1.704-1(b)(2)(iv)(M)(4) to be taken into account in determining Capital Accounts
as a result of a distribution to a Member in complete liquidation of its
Interest, the amount of such adjustment to Capital Accounts shall be treated as
an item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases the basis of the asset) and such gain or loss shall be
specially allocated to the Members in accordance with their interests in the
Company in the event Regulations Section 1.704-1(b)(2)(iv)(M)(2) applies, or to
the Member to whom such distribution was made in the event Regulations Section
1.704-1(b)(2)(iv)(M)(4) applies.
4.3 CORRECTIVE ALLOCATIONS
The allocations set forth in Sections 4.2.1, 4.2.2, 4.2.4, and 4.2.5
(the "Regulatory Allocations") are intended to comply with Regulations Sections
1.704-1 and 1.704-2. It is the intent of the Members that, to the extent
possible, all Regulatory Allocations shall be offset either with other
Regulatory Allocations or with special allocations of items of Company income,
gain, loss or deduction pursuant to this Section 4.3. Therefore, notwithstanding
any other provisions of this Article 4 (other than the Regulatory Allocations),
the Board shall make such offsetting special allocations of Company income,
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gain, loss or deduction in whatever manner it determines appropriate so that,
after such offsetting allocations are made, each Member's Capital Account
balance is, to the extent possible, equal to the Capital Account balance such
Member would have had if the Regulatory Allocations were not part of this
Agreement and all Company items were allocated pursuant to Section 4.1. In
exercising its discretion under this Section 4.3, the Board shall take into
account future Regulatory Allocations under Sections 4.2.1 and 4.2.2 that,
although not yet made, are likely to offset other Regulatory Allocations
previously made under Sections 4.2.4 and 4.2.5.
4.4 CODE SECTION 704(C) ALLOCATIONS
In accordance with Code Section 704(c) and the Regulations thereunder,
income, gain, loss and deduction with respect to any property contributed to the
capital of the Company shall be allocated among the Members, solely for federal
income tax purposes, so as to take account of any variation between the adjusted
basis of the property to the Company for federal income tax purposes and its
initial Gross Asset Value (computed in accordance with this Agreement). The
manner in which such types of income, gain, loss and deduction are allocated
shall be made in a manner consistent with the traditional method of making Code
Section 704(c) allocations as provided in Regulations Section 1.704-3(b).
In the event the Gross Asset Value of any Company asset is adjusted
pursuant to the terms of this Agreement, subsequent allocations of income, gain,
loss and deduction with respect to such asset shall take into account any
variation between the adjusted basis of such asset for federal income tax
purposes and its Gross Asset Value in a manner consistent with the traditional
method of making Code Section 704(c) allocations as provided in Regulations
Section 1.704-3(b).
4.5 OTHER ALLOCATION RULES
(a) For purposes of determining the Profits, Losses or any other items
allocable to any period, Profits, Losses and any such other items shall be
determined on a daily, monthly or other basis, as determined by the Board using
any permissible method under Code Section 706 and the Regulations thereunder.
(b) Except as otherwise provided in Section 4.4 with respect to
allocations pursuant to Code Section 704(c), for federal income tax purposes,
all items of Company income, gain, loss or deduction shall be made in a manner
that is consistent with the allocation of Profits and Losses pursuant to this
Article 4. The Members are aware of the income tax consequences of the
allocations of this Article 4 and hereby agree to be bound by the provisions of
this Article 4 in reporting their allocable shares of Company income and loss
for income tax purposes.
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ARTICLE 5
DISTRIBUTIONS OF NET CASH FLOW AND DISTRIBUTIONS IN LIQUIDATION
5.1 TIMING OF DISTRIBUTIONS
Net Cash Flow for each Fiscal Year shall be distributed to the Members
in accordance with the priorities in Section 5.2 at such times and in such
amounts (if any) as determined by the Board in its sole discretion; provided,
however, that:
(a) No distribution shall be made if it would render the Company
insolvent or compromise its
ability to operate;
(b) The Board shall not authorize the distribution of any Property in
kind except upon dissolution or liquidation of the Company; and
(c) Subject to (a) and (b) above in this section, amounts equal to the
effective federal, state and local income taxes (based on the highest applicable
rates in the applicable year) that would be payable by a corporation recognizing
the taxable income allocated to each of the Members shall be timely distributed
to each Member prior to the due date for the payment of such taxes, unless both
Members waive all or part of such distribution in any one or more years.
5.2 PRIORITY OF DISTRIBUTIONS
Net Cash Flow shall be distributed between the Members in proportion to
their respective Percentage Interests.
5.3 DISTRIBUTIONS IN LIQUIDATION
(a) Upon dissolution of the Company and the liquidation of the assets
of the Company pursuant to Article 11, the Liquidating Agent shall wind up the
affairs of the Company and liquidate the assets as promptly as is consistent
with obtaining fair value therefor and cause the remaining assets of the
Company, including proceeds of sales or other dispositions in liquidation of
assets, to be applied in accordance with the following priorities:
(i) First, to payment of the debts and obligations of the
Company to its creditors (other than a Member), including sales commissions and
other expenses incident to any sale of the assets of the Company, including the
establishment of such reserves as the Liquidating Agent may deem reasonably
necessary for any unliquidated contingent, conditional or unmatured liabilities
or obligations of the Company;
(iii) Second, to the payment in full of loans (including for
this purpose, accrued interest thereon through the date of payment) to the
Company by the Members, pro rata, according to the relative amount of such
unpaid loans (including for this purpose, accrued interest thereon through the
date of payment); and
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(iv) Third, to the Members having positive Capital Accounts
pro rata in accordance with their relative positive Capital Accounts (as
determined after taking into account all Capital Account adjustments for the
Company's Fiscal Year during which such liquidation occurs), until all such
positive Capital Accounts are reduced to zero.
(v) Fourth, remaining assets, if any, among the Members in
proportion to their respective Percentage Interests.
The reserves established pursuant to clause (i) of this Section 5.3(a) shall be
paid over by the Liquidating Agent to a bank or other financial institution to
be held in escrow for the purpose of paying unliquidated, contingent,
conditional or unmatured liabilities or obligations and, at the expiration of
such period as the Liquidating Agent deems advisable, such reserves shall be
distributed to the Members or their assigns in the priority set forth in clauses
(iii) and (iv) of this Section 5.3(a). Distributions to the Members pursuant to
this Section 5.3(a) shall be made within the time period prescribed by
Regulations Section l.704-l(b)(2)(ii)(B).
(b) In the event the Liquidating Agent determines that an immediate
sale of part or all of the Company assets would cause undue loss to the Members,
the Liquidating Agent, in order to avoid such loss, may either (i) defer
liquidation of any assets of the Company for a reasonable time, except those
assets necessary to satisfy Company debts and obligations, or (ii) distribute
the assets in kind to the Members. In winding up the Company's affairs, every
effort shall be made to dispose of the assets of the Company in an orderly
manner, having regard to the liquidity, divisibility and marketability of the
Company's assets and consistent with the considerations set forth in this
Section 5.3. If the Liquidating Agent determines that it would be imprudent to
dispose of any non-cash assets of the Company, such assets may be distributed in
kind to the Members, in lieu of cash, proportionately to their rights to receive
cash distributions hereunder; provided, that the Liquidating Agent shall in its
sole discretion determine the relative share of the Members of each kind of
those assets that are to be distributed in kind. In addition, in connection with
the winding up of the Company, each of the Members shall be entitled to make an
offer to acquire the assets of the Company and such offer may be accepted by the
Liquidating Agent on behalf of the Company if such offer is consistent with
obtaining fair value for the assets of the Company. If any assets of the Company
are to be distributed in kind, such assets shall be valued and shall be deemed
sold at their fair market value and any gain or loss deemed realized shall be
allocated to the Capital Accounts of the Members for purposes of applying this
Section 5.3 as if such gain or loss had actually been fully realized. For U.S.
federal income tax purposes, the tax consequences of any in-kind distribution
during the life of or on liquidation of the Company pursuant to this Section 5.3
or otherwise shall be governed by Sections 732(a) and (b) of the Code and the
Regulations promulgated thereunder.
5.4 DEFICIT CAPITAL ACCOUNTS
Except as may otherwise be required by law or any other agreement to
the contrary, notwithstanding anything to the contrary contained in this
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Agreement, to the extent that any Member has a deficit Capital Account balance
upon dissolution of the Company, that deficit shall not be an asset of the
Company and that Member shall not be obligated to contribute that amount to the
Company to bring the balance of that Member's Capital Account to zero.
5.5 WAIVER OF PARTITION
No Member, either directly or indirectly, shall take any action to
require partition of the Company or any of its assets or properties.
Notwithstanding any provisions of applicable law to the contrary, each Member
(and its successors and assigns) hereby irrevocably waives any and all right to
maintain any action for partition or to compel any sale with respect to its
Company Interest, or with respect to any assets or properties of the Company,
except as expressly provided in this Agreement.
ARTICLE 6
MANAGEMENT AND OPERATION
6.1 THE BOARD OF MANAGERS
6.1.1 CONSTITUTION AND POWERS OF THE BOARD
The overall management and control of the Company shall be governed by
a Board of Managers composed of four Managers (the "Managers"). Except as
otherwise provided in Section 10.5, each Member shall appoint two Managers.
ACTTAG, Inc. hereby appoints Adolph J. Ferro and Gilbert N. Miller as its
initial Managers. RP Ag Co. hereby appoints Georges Freyssinet and Alain Dini as
its initial Managers. The Members may appoint alternates to serve as temporary
replacements for their respective Managers. The alternates shall have all the
powers of the Managers in the temporary absence or inability of the Managers to
attend or serve. Except as approved by the Board or permitted by this Agreement,
and notwithstanding the last sentence of Section 18-402 of the Act, neither
Member shall have any right or authority to bind the Company or take any action
on behalf of the Company. Each Member may remove its designated Manager(s) from
the Board at any time, with or without cause. Except as provided for in this
Agreement, and notwithstanding the last sentence of Section 18-402 of the Act, a
Manager may not bind the Company.
6.1.2 MEETINGS OF THE BOARD
The Board shall meet at least once every quarter. In addition, the
Board shall meet upon the request of any Manager made to the Company's CEO.
Managers may participate in meetings in person or by telephone. Meetings shall
be held at such place and time as agreed to by the Board. The CEO shall provide
at least ten business days' advance written notice of each meeting of the Board
to each Manager, unless a Manager not receiving advance notice waives the
advance notice requirement, either in writing or by attendance at the meeting
without entering into the minutes of the meeting a protest as to the lack of
notice, and provided further that notice given to one Manager appointed by a
Member shall constitute notice to both Managers appointed by that Member. A
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minimum quorum of Managers entitled to conduct the business of the Board shall
consist of at least two Managers, at least one of whom must have been appointed
by each Member. Records of proceedings of the Board shall be prepared by the CEO
or his or her designee and shall be subject to the approval of the Board.
6.1.3 VOTING
Each Member shall be entitled to two Board votes, which may be
allocated in any manner among the Member's Managers. One or more Managers of a
Member attending a Board meeting or taking any action contemplated by the last
sentence of this Section 6.1.3 shall be entitled to vote all two Board votes of
a Member. The Board shall act upon the unanimous vote of all Managers attending
a duly convened meeting of the Board and entitled to vote on the matter under
consideration in accordance with Section 6.1.2, and such vote shall constitute
"approval" or proper "action" or the "decision" of the Board. The Board also may
take any action permitted to be taken at a meeting of the Board by written
consent joined in by all the Managers or by Managers authorized to vote all four
of the total votes.
6.2 MATTERS REQUIRING BOARD APPROVAL
All decisions and actions for and on behalf of the Company shall
require approval by the Board, except those matters delegated to the CEO or
another executive of the Company pursuant to this Agreement, the Operating Plan,
or otherwise directed or delegated by Board resolution.
6.3 DAY-TO-DAY MANAGEMENT BY CEO
The initial Chief Executive Officer of the Company (the "CEO") shall be
Adolph J. Ferro, the Chief Executive Officer of ACTTAG, Inc. Subject to the
restrictions set forth in this Agreement and to the direction of the Board, the
CEO shall act on behalf of the Company in all matters affecting day-to-day
management and supervision of the Company and its business affairs, shall
implement the Budget and the Operating Plan and shall cause the Company to
fulfill all of its contractual obligations. All matters of policy relating to
the Company and its business affairs shall be determined by the Board for
implementation by the CEO, and the CEO shall have no authority to make such
policy determinations. The CEO is authorized and empowered to implement and act
in accordance with resolutions adopted by the Board. The CEO shall be appointed
by the Board from among the Managers to a one-year term of office; provided,
however that the Board may remove the CEO and appoint a replacement CEO from
among the Managers at any time for any or no reason.
6.4 SCIENTIFIC MANAGEMENT COMMITTEE AND SCIENTIFIC ADVISORY COMMITTEE
6.4.1 SCIENTIFIC MANAGEMENT COMMITTEE
The Board shall establish a "Scientific Management Committee" to advise
the Board on scientific and research issues, techniques, problem solving and
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goals, all as relevant to the Research Program. The Board shall define the goals
and tasks of the Scientific Management Committee and establish rules for
compensation (if any), expense reimbursement, and proprietary rights with
respect to the members thereof. Members of the Scientific Management Committee
will serve at the pleasure of the Board. The initial members of the Scientific
Management Committee will be Ry Wagner and Stephanie Clendennen (nominated by
ACTTAG, Inc.) and Rick Derose and Vincent Wingate (nominated by RP Ag Co.). The
initial chair of the Scientific Management Committee is Ry Wagner, who is
appointed to a one-year term of office; provided, however that the Board may
remove the chair of the Scientific Management Committee and appoint a
replacement at any time for any or no reason. Members of the Board will receive
notice of, and an invitation to attend, all meetings of the Scientific
Management Committee.
6.4.2 SCIENTIFIC ADVISORY COMMITTEE
The Board shall establish a "Scientific Advisory Committee" to render
non-binding advice to the Company on scientific and research issues, techniques,
problem solving and goals, all as relevant to the Research Program. The Board
shall define the goals and tasks of the Scientific Advisory Committee and
establish rules for compensation (if any), expense reimbursement, and
proprietary rights with respect to the members thereof. Members of the
Scientific Advisory Committee will serve at the pleasure of the Board. The
Scientific Advisory Committee will consist of the members of the Scientific
Management Committee, together, initially, with Terry Thomas from Texas A&M,
Detlef Weigel from Salk, and additional members, including if appropriate
scientific personnel from the University of Edinburgh, and one or more other
Alliance Parties, may be invited to join the Scientific Advisory Committee as
may be recommended from time to time by the Scientific Management Committee,
with the approval of the Board. The initial chair of the Scientific Advisory
Committee is Terry Thomas, who is appointed to a one-year term of office;
provided, however that the Board may remove the chair of the Scientific Advisory
Committee and appoint a replacement at any time for any or no reason. Members of
the Board will receive notice of, and an invitation to attend, all meetings of
the Scientific Advisory Committee.
6.5 PATENT COMMITTEE
The Board shall establish a "Patent Committee" to consult periodically
and as needed in relation to the Company's patent strategies filings,
prosecution and maintenance activities. The Patent Committee will consist of one
representative of each Member from the Board and one representative of each
Member from the Scientific Management Committee, as well as representatives from
the Members' patent departments or counsel, as shall be designated from time to
time by the Board. The Board shall establish rules for compensation (if any),
expense reimbursement, and proprietary rights with respect to the members of the
Patent Committee. Members of the Patent Committee will serve thereon at the
pleasure of the Board.
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6.6 OTHER OFFICERS AND COMMITTEES
The Board may, but is not required to, establish officers of the
Company and prescribe the duties of such officers. The officers of the Company
shall be chosen by, and shall serve at the pleasure of, the Board, and shall
hold their respective offices until their resignation, removal, or other
disqualification from service in a manner determined by the Board, or until
their respective successors shall be elected. The Board may, but is not required
to, establish such other teams or committees composed of representatives from
the Members or otherwise and delegate to such teams or committees such
authority, duties and responsibilities as it deems appropriate. Except as
otherwise provided herein, the officers shall have such powers and duties in the
management of the Company as may be prescribed in a resolution by the Board and,
to the extent not so provided, as generally pertain to their respective offices
as if the Company were a corporation governed by the General Corporation Law of
the State of Delaware, subject to the control of the Board. The Board may
require any officer, agent or employee to give security for the faithful
performance of his or her duties. Each officer shall hold office until his or
her successor is elected and qualified or until his or her earlier resignation
or removal. Any officer may resign at any time upon written notice to the
Company. The Board may remove any officer with or without cause at any time. Any
number of offices may be held by the same person. Any vacancy occurring in an
office of the Company by death, resignation, removal or otherwise may be filled
for the unexpired portion of the term by the Board at any regular or special
meeting of the Board.
6.7 DEVOTION OF TIME
Neither the CEO nor any other Manager is obligated to devote all of his
or her time or business efforts to the affairs of the Company. The CEO and each
of the other Managers shall devote whatever time, effort and skill as he or she
deems appropriate for the operation of the Company.
6.8 PERFORMANCE OF DUTIES
Each Manager including the CEO shall perform his or her managerial
duties in good faith, in a manner he or she reasonably believes to be in the
best interests of the Company and its Members, and with such care, including
reasonable inquiry, as an ordinarily prudent person in a like position would use
under similar circumstances. In performing his or her duties, the Managers shall
be entitled to rely on information, opinions, reports, or statements, including
financial statements and other financial data, of the following persons or
groups, unless they have knowledge concerning the matter in question that would
cause such reliance to be unwarranted and provided that the Manager acts in good
faith and after reasonable inquiry when the need therefor is indicated by the
circumstances:
(a) one or more officers, employees or other agents of the Company or a
Member whom the Manager reasonably believes to be reliable and competent in the
matters presented; or
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(b) any attorney, independent accountant or other person as to matters
that the Manager reasonably believes to be within such person's professional or
expert competence.
6.9 BUDGETS AND OPERATING PLANS
6.9.1 ADOPTION
On or before August 1 of each year, the Board shall consider and adopt
(a) a written budget setting forth in reasonable detail the anticipated receipts
and expenditures of the Company for the coming Fiscal Year, and the amount and
kind of expenditures (if any) in addition to those anticipated that may be made
on behalf of the Company without further action by the Board, and (b) a
five-year Operating Plan setting forth in detail the planned activities and
objectives for the Company for the coming Fiscal Year and the following four
years. The initial drafts of each Budget and Operating Plan shall be prepared by
the CEO and submitted to the Board a reasonable time prior the Board meeting at
which it is to be considered.
6.9.2 IMPLEMENTATION
Subject to Section 6.2: (a) the Budget and the Operating Plan shall be
implemented by the CEO; and (b) the CEO, on behalf of the Company, shall be
authorized to make the expenditures and incur the obligations provided for in
the Budget and shall be authorized to engage in the activities set forth in the
Operating Plan.
6.10 REPORTING
Within 45 days after the end of each calendar quarter and within 60
days after the end of each year, the CEO shall prepare and submit to the Board a
report describing in reasonable detail the operations and financial results of
the Company for such period and presenting a comparison of such operations and
financial results with the Budget and the Operating Plan for such period and
year-to-date, including a discussion of significant departures from the Budget
or from the objectives in the Operating Plan. The CEO shall further prepare and
submit to the Board such other periodic reports as the Board may request from
time to time. The CEO shall promptly notify the Board of any material
information concerning new or significant developments with respect to the
Company's business or operations and, upon the request of any Manager, shall
promptly submit to the Board such other information as may be requested.
6.11 INDEPENDENT ENTERPRISE
The Members agree to cause the Company at all times to be conducted as
an independent enterprise for profit. Except as otherwise agreed to by the
Members in writing or provided herein, all commercial transactions between the
Company and a Member (or a Member's Affiliate) shall be conducted on an
arm's-length basis with neither granting to the other terms or conditions more
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favorable than would be accorded unrelated third parties, except as the Members
may otherwise agree in writing prior to such transactions.
6.12 DUTIES OF MEMBERS
Each Member, in connection with the business and affairs of the
Company, and in exercising such Member's discretion under this Agreement, shall
to the fullest extent permitted by Section 18-1101(c) of the Act, be entitled to
consider such interests and factors as such Member desires, including its own
interest and the interest of its Affiliates, and shall have no duty or
obligation to give any consideration to any interest of, or factors affecting,
the Company or any other Member.
6.13 FIDUCIARY DUTIES OF MANAGER
To the fullest extent permitted by law, including Section 18-1101(c) of
the Act, each Manager shall be deemed an agent of the Member that designated
such Manager and shall have no duty (fiduciary or otherwise) to the Company or
to any other Member. Each Member, by execution of this Agreement, agrees to,
consents to, and acknowledges the delegation of powers and authority to the
Managers, and to actions and decisions of the Managers within the scope of the
Managers' authority as provided herein.
ARTICLE 7
LIABILITY, EXCULPATION AND INDEMNIFICATION
7.1 COMPENSATION OF MEMBERS
Except as may be specifically provided in this Agreement, the Agritope
Research Contracts, the RP Ag Co. Research Contracts, or in any other written
agreement binding on the Company, no Member shall receive any salary, fee or
draw for services rendered to or on behalf of the Company.
7.2 LIABILITY
Except as otherwise provided by the Act, the debts, obligations and
liabilities of the Company, whether arising in contract, tort or otherwise,
shall be solely the debts, obligations and liabilities of the Company, and no
Covered Person shall be obligated personally for any such debt, obligation or
liability of the Company solely by reason of being a Covered Person. "Covered
Person" means any Member, any Affiliate of a Member, or any Manager, or any
officers, directors, shareholders, partners, employees, representatives or
agents of a Member or their respective Affiliates, or any employee or agent of
the Company or its Affiliates.
7.3 EXCULPATION
(a) No Covered Person shall be liable to the Company or any other
Covered Person for any loss, damage or claim incurred by reason of any act or
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omission performed or omitted by such Covered Person in good faith on behalf of
the Company and in a manner reasonably believed to be within the scope of
authority conferred on such Covered Person by this Agreement, except that a
Covered Person shall be liable for any such loss, damage or claim incurred by
reason of such Covered Person's gross negligence or willful misconduct.
(b) A Covered Person shall be fully protected in relying in good faith
upon the records of the Company and upon such information, opinions, reports or
statements presented to the Company by any Person as to matters the Covered
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Company, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which distributions to
Members might properly be paid.
7.4 DUTIES AND LIABILITIES OF COVERED PERSONS
(a) To the extent that, at law or in equity, a Covered Person has
duties (including fiduciary duties) and liabilities relating thereto to the
Company or to any other Covered Person, a Covered Person acting under this
Agreement shall not be liable to the Company or to any other Covered Person for
its good faith reliance on the provisions of this Agreement. The provisions of
this Agreement, to the extent that they restrict the duties and liabilities of a
Covered Person otherwise existing at law or in equity, are agreed by the parties
hereto to replace such other duties and liabilities of such Covered Person.
(b) Unless otherwise expressly provided herein, (i) whenever a conflict
of interest exists or arises between Covered Persons, or (ii) whenever this
Agreement or any other agreement contemplated herein or therein provides that a
Covered Person shall act in a manner that is, or provides terms that are, fair
and reasonable to the Company or any Member, the Covered Person shall resolve
such conflict of interest, taking such action or providing such terms,
considering in each case the relative interest of each party (including its own
interest) to such conflict, agreement, transaction or situation and the benefits
and burdens relating to such interests, any customary or accepted industry
practices, and any applicable generally accepted accounting practices or
principles. In the absence of bad faith by the Covered Person, the resolution,
action or term so made, taken or provided by the Covered Person shall not
constitute a breach of this Agreement or any other agreement contemplated herein
or of any duty or obligation of the Covered Person at law or in equity or
otherwise.
(c) Whenever in this Agreement a Covered Person is permitted or
required to make a decision (i) in its "discretion" or under a grant of similar
authority or latitude, the Covered Person shall be entitled to consider such
interests and factors as it desires, including its own interests, and shall have
no duty or obligation to give any consideration to any interest of or factors
affecting the Company or any other Person, or (ii) in its "good faith" or under
another express standard, the Covered Person shall act under such express
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standard and shall not be subject to any other or different standard imposed by
this Agreement or other applicable law.
7.5 INDEMNIFICATION
To the fullest extent permitted by applicable law, a Covered Person
shall be entitled to indemnification from the Company for any loss, damage or
claim incurred by such Covered Person by reason of any act or omission performed
or omitted by such Covered Person in good faith on behalf of the Company and in
a manner reasonably believed to be within the scope of authority conferred on
such Covered Person by this Agreement, except that no Covered Person shall be
entitled to be indemnified in respect of any loss, damage or claim incurred by
such Covered Person by reason of gross negligence or willful misconduct with
respect to such acts or omissions; provided, however, that any indemnity under
this Section 7.5 shall be provided out of and to the extent of Company assets
only, and no Covered Person shall have any personal liability on account
thereof.
7.6 EXPENSES
To the fullest extent permitted by applicable law, expenses (including
legal fees) incurred by a Covered Person in defending any claim, demand, action,
suit or proceeding shall, from time to time, be advanced by the Company prior to
the final disposition of such claim, demand, action, suit or proceeding upon
receipt by the Company of an undertaking by or on behalf of the Covered Person
to repay such amount if it shall be determined that the Covered Person is not
entitled to be indemnified as authorized in Section 7.5.
7.7 INSURANCE
The Company may purchase and maintain insurance, to the extent and in
such amounts as the Board shall, in its sole discretion, deem reasonable, on
behalf of Covered Persons and such other Persons as the Board shall determine,
against any liability that may be asserted against or expenses that may be
incurred by any such Person in connection with the activities of the Company or
such indemnities, regardless of whether the Company would have the power to
indemnify such Person against such liability under the provisions of this
Agreement. The Board and the Company may enter into indemnity contracts with
Covered Persons and adopt written procedures pursuant to which arrangements are
made for the advancement of expenses and the funding of obligations under
Section 7.6 and containing such other procedures regarding indemnification as
are appropriate.
7.8 OUTSIDE BUSINESSES
Except as provided in Section 2.5.3 of this Agreement, any Member or
Affiliate thereof may engage in or possess an interest in other business
ventures of any nature or description, independently or with others, similar or
dissimilar to the business of the Company, and the Company and the Members and
their Affiliates shall have no rights by virtue of this Agreement in and to such
independent ventures or the income or profits derived therefrom, and the pursuit
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of any such venture, even if competitive with the business of the Company, shall
not be deemed wrongful or improper.
ARTICLE 8
REPRESENTATIONS, WARRANTIES AND COVENANTS
8.1 IN GENERAL
As of the date hereof, and at Closing Date, each of the Members and
Agritope hereby make each of the representations and warranties applicable to
such Member as set forth in Section 8.2, and such warranties and representations
shall survive the execution of this Agreement and the closing.
8.2 REPRESENTATIONS AND WARRANTIES
Each Member hereby represents and warrants that:
8.2.1 ORGANIZATION AND EXISTENCE
Such Member is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its formation and
governance.
8.2.2 POWER AND AUTHORITY
Such Member has the full power and authority to execute, deliver and
perform this Agreement, and to own and lease its properties and to carry on its
business as now conducted and as contemplated hereby.
8.2.3 AUTHORIZATION AND ENFORCEABILITY
The execution and delivery of this Agreement by such Member and the
carrying out by such Member of the transactions contemplated hereby have been
duly authorized by all requisite corporate actions and this Agreement has been
duly executed and delivered by such Member and constitutes the legal, valid and
binding obligation of such Member, enforceable against it in accordance with the
terms hereof, subject as to enforceability of remedies, to limitations imposed
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the enforcement of creditors' rights generally and
general principles of equity.
8.2.4 NO GOVERNMENTAL CONSENTS
No authorization, consent or approval of, notice to or filing with, any
governmental authority, is required for the execution, delivery and performance
by such Member of this Agreement.
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8.2.5 NO CONFLICT OR BREACH
None of the execution, delivery and performance by such Member of this
Agreement, the compliance with the terms and provisions hereof, and the carrying
out of the transactions contemplated hereby, conflicts or will conflict with or
will result in a breach or violation of any of the terms, conditions or
provisions of any law, governmental rule or regulation or the charter documents,
as amended, or bylaws, as amended, of such Member or any order, writ,
injunction, judgment or decree of any court of governmental authority against
such Member or by which it or any of its proprieties is bound, or any loan
agreement, indenture, mortgage, note, resolution, bond, or contract or other
agreement or instrument to which such Member is a party or by which it or any of
its properties is bound, or constitutes or will constitute a default thereunder
or will result in the imposition of any lien upon any of its properties.
8.2.6 NO PROCEEDINGS
There are no suits or proceedings pending, or to the knowledge of such
Member, threatened in any court or before any regulatory commission, board or
other governmental administrative agency against or affecting such Member that
could have a material adverse effect on the business or operations of such
Member, financial or otherwise, or on its ability to fulfill its obligations
hereunder.
8.2.7 EXISTENCE OF VALID PERMITS
To the best knowledge of ACTTAG, Inc. and Agritope, all licenses,
permits, franchises, orders or approvals of any public authority (the
"Permits"), if any, including under environmental laws, necessary to the conduct
of its activities under the ACTTAG Gene Discovery Program through the Closing,
are in full force and effect and no proceedings are pending or threatened, to
revoke or limit any such Permit and no such Permit is non-transferable or will
require the consent of any public authority in order to validly transfer it to
the Company.
8.2.8 TRANSFER OF CONTRACTS; INTELLECTUAL PROPERTY
(i) ACTTAG, Inc. and its Parent have the right to transfer or license
to the Company all rights, interests and obligations to be transferred or
licensed under this Agreement, the Assignment and Assumption Agreement and the
Agritope Research Contracts; and none of such rights, interests and obligations
shall be adversely affected by the execution, delivery or performance of this
Agreement, the Assignment and Assumption Agreement or any of the Research
Contracts.
(ii) The Assignment and Assumption Agreement, as well as the Existing
Agritope Collection, taken together contain a true, complete and correct list
and description of all the contracts and agreements, whether written or oral,
and materials obtained or used to date by Agritope or ACTTAG, Inc. to conduct
the ACTTAGTM Gene Discovery Program. It is understood that the Company intends
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to use such contracts and agreements as part of its conduct of the Research
Program (collectively, the "Contracts" under this clause (ii)).
Each Contract is a valid, binding and enforceable agreement.
ACTTAG, Inc. and its Parent have fulfilled all material obligations required
pursuant to the Contracts to have been performed by them prior to the Closing
Date and ACTTAG, Inc. and its Parent have no reason to believe that the Company,
the Members and/or their Affiliates, as the case may be, will not be able to
exercise, when applicable, all of their rights under the Contracts.
ACTTAG, Inc. and its Parent are not in breach of or default under any Contract
and are not aware of any breach or default by another party to the Contracts,
and no event has occurred which with the passage of time or giving of notice or
both would constitute such a default, result in a loss of rights or result in
the creation of any lien, charge or encumbrance, thereunder or pursuant thereto.
(iii) To the knowledge of ACTTAG, Inc. and its Parent, ACTTAG, Inc. and
its Affiliates own, or are licensed to use, or otherwise have the right to use
all patents, trademarks, service marks, trade names, logos, franchises, and
copyrights, and all applications for any of the foregoing, and all technology,
inventions, collections of biological materials, trade secrets, know-how,
computer software and processes used in the conduct of ACTTAGTM Gene Discovery
Program as now or heretofore conducted by Agritope and ACTTAG, Inc. (it being
understood that the Company intends to use such items as part of its conduct of
the Research Program). To the knowledge of ACTTAG, Inc. or its Parent, none of
the technology, rights or other services, products or activities to be
contributed by the Member to the Company would, as so performed or provided, or
as used or to be further used as contemplated, infringe any intellectual
property right of any person or entity or would be the object of any competing
claim of right to use or own. Each Member will promptly inform the other of any
such knowledge that it may obtain during the term of the Company. EXCEPT AS SET
FORTH HEREIN, NEITHER MEMBER MAKES ANY WARRANTIES HEREUNDER, AS TO RESEARCH
SUCCESS, MERCHANTABILITY OR NONINFRINGEMENT, AND THE MEMBERS HEREBY DISCLAIM ANY
IMPLIED WARRANTIES AND ANY WARRANTIES ARISING BY TRADE USAGE OR COURSE OF
PERFORMANCE .
8.2.9 COVENANTS
Agritope and ACTTAG, Inc. shall, between the date of signature of this
Agreement and the Closing Date: (i) do all things necessary to obtain, preserve,
and keep in full force and effect the rights, licenses, permits and intellectual
property material to the rights, property (including intellectual property),
contracts, obligations, interests and assets to be contributed to the Company
pursuant to the Assignment and Assumption Agreement ; (ii) shall maintain,
preserve and keep in good order and condition all property to be contributed to
the Company pursuant to the Assignment and Assumption Agreement ; (iii) not
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modify or amend any Contract, or waive any rights relating thereto, without the
prior written approval of RP Ag Co.
8.3 INDEMNITIES
8.3.1 INDEMNIFICATION
Each Party shall indemnify the Company and (only to the extent a Party
or its Affiliates suffers damage separate from that of the Company) each Party
and its Affiliates, and their officers, directors, employees and representatives
for, and shall hold them harmless from, any and all damages, losses,
obligations, liabilities, claims, costs and expenses, including, without
limitation, attorney's fees, court costs, interests and penalties (collectively
"Liabilities") asserted against or incurred or sustained by any of them relating
to or arising out of (i) any inaccuracy as of the Closing Date of any
representation, or breach of any of the warranties or representations, or (ii)
any failure to comply with any of its covenants or agreements contained in this
Agreement or in the Research Contracts to which it is party.
8.3.2 INDEMNIFICATION PROCEDURE
(a) Upon obtaining knowledge thereof, a Person who may be entitled to
indemnification hereunder (the "INDEMNITEE") shall promptly give the party who
may be obligated to provide such indemnification (the "INDEMNITOR") written
notice of any Liability which the Indemnitee has determined has given or could
give rise to a claim for indemnification hereunder (a "NOTICE OF CLAIM"),
provided that the failure to give such notice shall not relieve the Indemnitor
of its indemnity obligation hereunder except to the extent that such failure
substantially prejudices its defense of such Liability. A Notice of Claim shall
specify in reasonable detail the nature and all known particulars related to a
Liability. The Indemnitor shall perform its indemnification obligations in
respect of a Liability described in a Notice of Claim, as the case may be,
within 30 days after the Indemnitor shall have received such Notice of Claim;
provided, however, such obligation shall be suspended so long as the Indemnitor
is in good faith performing its obligations under Section 8.3.2(b) hereof with
respect to such Liability.
(b) The Indemnitor shall have the right and obligation at its own cost
and expense, to cure, remediate, mitigate, remedy or otherwise handle any event
or circumstance which gives rise to a Liability in respect of which a Notice of
Claim has been given. Such right and obligation shall include, without
limitation, the sole and exclusive right, at its sole cost and expense, to
defend, contest or otherwise oppose any third party claim, demand, suit, action
or proceeding related to such event or circumstance with legal counsel selected
by it. Such proceeding shall be prosecuted diligently by the Indemnitor to a
final conclusion or compromised or settled at the discretion of the Indemnitor,
provided however that the Indemnitor may not enter into any such compromise or
settlement which involves equitable relief against the Indemnitee unless the
Indemnitee consents thereto, which consent shall not be unreasonably withheld,
and provided further that the Indemnitor may not enter into any such compromise
or settlement that does not include as an unconditional term thereof, the giving
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by each claimant or plaintiff to each Indemnitee of a release from all liability
in respect of such claim. The Indemnitor shall promptly inform the Indemnitee of
all material developments related to any such event or circumstance.
Notwithstanding anything contained herein to the contrary, the Indemnitee shall
have the right, but not the obligation, to participate, but not control, at its
own cost and expense, in the defense, contest or other opposition of any such
third party claim, demand, suit, action or proceeding through legal counsel
selected by it, provided however that the Indemnitor shall bear the reasonable
costs of the counsel for the Indemnitee if counsel for the Indemnitor shall have
reasonably determined that such counsel may not properly represent both the
Indemnitor and the Indemnitee. So long as the Indemnitor is in good faith
performing its obligations under this Section 8.3.2, the Indemnitee shall at all
times, at the Indemnitor's cost and expense, cooperate in all reasonable ways
with the Indemnitor in connection with contesting the third party claim. If the
Indemnitor fails to perform its obligations under this Section 8.3.2, then the
Indemnitee shall have the right, but not the obligation, to take the actions
which the Indemnitor would have had the right to take in connection with the
performance of such obligations and, if the Indemnitee is entitled to
indemnification hereunder in respect of the event or circumstance as to which
the Indemnitee takes such actions, then the Indemnitor shall, in addition to
indemnifying Indemnitee for the Liability, indemnify the Indemnitee for all of
the legal, accounting and other costs, fees and expenses reasonably and actually
incurred in connection therewith, provided however that an Indemnitor shall not
be required to indemnify an Indemnitee for any amount paid or payable by such
Indemnitee in the settlement of any such third party claim agreed to without the
consent of the Indemnitor (which shall not be unreasonably withheld or delayed).
(c) Notwithstanding anything contained herein to the contrary, an
Indemnitor shall not have any Liability unless and until the aggregate amount of
all liabilities for which such Indemnitor is responsible exceeds $25,000, in
which event the Indemnitor is responsible for all of the liabilities.
ARTICLE 9
DISPUTE RESOLUTION
9.1 DISPUTE RESOLUTION BY SENIOR OFFICERS
In the event a dispute arises between the Members regarding the
application or interpretation of any provision of this Agreement (or between a
Member and Agritope, as to the application or interpretation of Article 8,
Article 9, or Sections 10.1(c), 10.4(b) and 15.15), the business or affairs of
the Company or regarding any management decision for which Board approval is
required but has not been obtained, the dispute shall be submitted for
good-faith negotiation for a period of 90 days by the respective chief executive
officers of the Members (or Agritope, as the case may be). Prior to the end of
such 90-day period, no Member shall initiate any other remedies with respect to
such dispute. In any event, any dispute or difference relating to the strategy
of the Company shall not be subject to arbitration or litigation and each Member
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may in its sole discretion approve or reject any decision for which Board
approval is required in this regard.
9.2 ARBITRATION OF DISPUTES
If the parties fail to reach agreement with respect to a dispute or
difference (other than as to a question relating to patent validity, which the
Members intend will be decided in litigation and not in arbitration, or
decisions relating to the strategy of the Company which the Members may approve
or reject in their sole discretion as provided for in Section 9.1), between the
parties arising out of or in connection with this Agreement, the dispute or
difference will, to the fullest extent permitted by law, be determined by
arbitration in New York City, in accordance with the Commercial Arbitration
Rules of the American Arbitration Association by an independent and impartial
arbitrator, who (unless the parties agree otherwise) shall have had both
training and experience as an arbitrator of corporate partnership or LLC matters
and who shall be, and for at least ten years shall have been, a partner,
shareholder or member in a highly respected law firm headquartered in the United
States. The arbitrator may decide any issue as to whether, or as to the extent
to which, any dispute is subject to the arbitration and other dispute resolution
provisions in this Agreement. The arbitrator must base the award on the
provisions of this Agreement and must render the award in a writing which must
include an explanation of the reasons for such award. Any arbitration pursuant
to this section will be governed by the substantive laws of Delaware applicable
to contracts made and to be performed in that state, without regard to conflicts
of law rules, and by the arbitration law of the Federal Arbitration Act (9
U.S.C. ss.1 et seq.). Judgment upon the award rendered by the arbitrator may be
entered by any court having jurisdiction thereof. The statute of limitations of
Delaware applicable to the commencement of a lawsuit will apply to the
commencement of an arbitration under this Section. All fees, costs and expenses
of the arbitrator, and all other costs and expenses of the arbitration, will be
shared equally by the parties to this Agreement unless such parties agree
otherwise or unless the arbitrator in the award assesses such costs and expenses
against one of such parties or allocates such costs and expenses other than
equally between such parties. Notwithstanding the foregoing, either party may,
on good cause shown, seek a temporary restraining order and/or a preliminary
injunction from a court of competent jurisdiction, to be effective pending the
institution of the arbitration process and the deliberation and award of the
arbitrator.
ARTICLE 10
TRANSFERS OF COMPANY INTERESTS
10.1 RESTRICTIONS ON TRANSFER
(a) Except as otherwise permitted by this Agreement, neither Member
shall Transfer all or any portion of its Interest without the prior written
consent of the other Member.
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(b) Neither Member shall transfer, or attempt to transfer, its Interest
in violation of the Securities Act of 1933 or any other applicable federal or
state law.
(c) In the event of a Change of Control as to a Member, such Member
(the "Change Member") shall deliver a written notice to the other Member (the
"Option Member") within fifteen (15) days of the closing of the Change of
Control, stating that the transaction has occurred and describing such
transaction in reasonable detail. In that event, the Option Member shall then
have the option, which it may exercise within its sole discretion, to demand
that the Change Member formally and in writing state a price for the Change
Member's entire Interest in the Company (the "Strike Price"). The Option Member
shall notify the Change Member of its decision at any time within sixty (60)
days after receipt of notice of Change of Control from the Change Member. If the
Option Member gives no such notice of such a demand, it will be deemed to have
waived its option as to that Change of Control, and in that event all terms and
conditions of this Agreement and the Research Contracts with the Members or
their Affiliates shall remain in full force and effect as if such Change of
Control had not occurred. If the Option Member makes such a demand within such
60 days, then the Change Member shall either (i) make such a formal statement of
the Strike Price; or (ii) decline or otherwise fail to make such a formal
statement of the Strike Price within thirty (30) days following the demand by
the Option Member, in which event the Strike Price shall equal the fair market
value at that time of the Change Member's entire Interest in the Company, in the
opinion of one investment banking firm (the "Investment Banker") chosen by the
Option Member from the following list: Merrill Lynch, Goldman Sachs, J.P.
Morgan, Salomon Smith Barney, or a successor firm to any of the foregoing, and
the Strike Price shall be determined by the Investment Banker within 30 days.
The cost of obtaining such an opinion shall be borne by the Change Member.
Following such formal statement, or such determination, of the Strike Price, the
Option Member will have the option of: (1) requiring the Change Member (which
will have no right to refuse) to sell the Change Member's Interest to the Option
Member at the Strike Price; (2) requiring the Change Member (which will have no
right to refuse) to buy the Option Member's entire Interest at the Strike Price;
or (3) retaining the status quo, with no purchase or sale of any Interest. The
Option Member will have thirty (30) days following the Change Member's formal
statement of the Strike Price (or the determination of the Strike Price by the
Investment Banker, if applicable) in which to elect which of these three courses
it will take. If the Option Member makes no such election in such 30 days, it
will be deemed to have elected to retain the status quo as stated in course (3).
If the Option Member elects to buy the Change Member's Interest, the Option
Member will have the option of leaving the Change Member's Research Contracts in
effect or terminating them. If the Option Member elects to sell its Interest to
the Change Member, the Option Member will have the option of leaving its own
Research Contracts in effect or terminating them. If the Option Member elects
the status quo following the statement or determination of the Strike Price,
this Agreement and the Change Member's Research Contracts will stay in effect,
and the Option Member will have the option of terminating its own Research
Contracts, or leaving them in effect. The closing of the sale (if any) of the
Interest of the Option Member to the Change Member or of the Change Member to
the Option Member, as the case may be, shall occur within forty-five (45) days
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following any election by the Option Member that such a sale will occur. The
Strike Price will be payable in cash at the closing. Such a sale shall be on
terms that include closing conditions, representations, warranties and covenants
customary in transactions under such circumstances.
10.2 PERMITTED TRANSFERS
Notwithstanding provisions of Section 10.1 above, and subject to the
conditions and restrictions set forth in Section 10.3, a Member may at any time
Transfer (any such Transfer being referred to in this Agreement as a "Permitted
Transfer") all or any portion of its Interest if and only if such sale is to:
(a) any other Member or an Affiliate of another Member, (b) any Affiliate of the
transferor, (c) the transferor's administrator or trustee to whom such Interest
is transferred involuntarily by operation of law, (d) to a third party in a
Waived Transfer (as defined in Section 10.4(a)), (e) [ * ] or (f) through a
merger or consolidation that effects a Change of Control, subject to the other
Member's rights as Option Member under Section 10.1(c). [ * ].
10.3 CONDITIONS TO PERMITTED TRANSFERS
A Permitted Transfer shall not be treated as valid unless and until the
following conditions are satisfied:
10.3.1 REQUIRED DOCUMENTATION
Except in the case of a Transfer involuntarily by operation of law, the
transferee becomes a Party to this Agreement as a Member and the transferor and
transferee shall execute and deliver to the Company such documents and
instruments of conveyance as may be necessary or appropriate in the opinion of
counsel to the Company to effect such Transfer and to confirm the agreement of
the transferee to be bound by the provisions of this Agreement, including this
Article 10. In the case of a Transfer of Interests involuntarily by operation of
law, the Transfer shall be confirmed by presentation to the Company of legal
evidence of such Transfer, in form and substance satisfactory to counsel to the
Company.
10.3.2 REIMBURSEMENT OF COSTS
In all cases, the Company shall be reimbursed by the transferor and/or
transferee for all costs and expenses that it reasonably incurs in connection
with such Transfer.
10.3.3 LEGAL OPINIONS
Except in the case of a Transfer involuntarily by operation of law, the
transferor shall furnish to the Company an opinion of counsel, which counsel and
opinion shall be reasonably satisfactory to the nontransferring Member, that (a)
the Transfer will not cause the Company to terminate for federal income tax
purposes and that such Transfer will not cause the application of the rules of
Code Sections 168(g)(1)(B) and 168(h) (generally referred to as the "tax exempt
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
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entity leasing rules") or similar rules to apply to the Company, the Property,
the Members or their Affiliates; (b) such Transfer will not cause the Company to
become taxable as a corporation for federal income tax purposes, and (c) such
Transfer will not cause adverse tax consequences to the non-transferring Member.
10.3.4 TAX INFORMATION
The transferor and transferee shall furnish the Company with the
transferee's taxpayer identification number, sufficient information to determine
the transferee's initial tax basis in the Interest transferred, and any other
information reasonably necessary to permit the Company to file all required
federal and state tax returns and other legally required information statements
or returns.
10.4 RIGHTS OF FIRST REFUSAL
(a) After June 30, 2004, if a Member (the "Selling Member") desires to
make an offer to Transfer its Interest to a third party that is neither a Member
nor an Affiliate of the Selling Member, or to accept an offer from such a third
party to purchase all or any part of its Interest, it shall so notify the other
Member (the "Rights Member") of such desire prior to making or accepting such
offer, as the case may be, on a binding basis, along with a written description
(the "Transfer Notice") of the principal terms and conditions (including the
proportion of the Interest desired to be sold, the price, the payment terms, and
the closing schedule) and the identity of the proposed buyer (the "Proposed
Buyer"). Prior to such date, no Transfer which is not otherwise a Permitted
Transfer as set forth in Section 10.2 shall be permitted unless specifically
consented to in writing by the other Member. The Rights Member shall have a
period of thirty (30) days following receipt of a Transfer Notice to elect to
purchase the Interest of the Selling Member (or the designated portion thereof
so desired to be sold by the Selling Member) on the same terms and conditions
described in the Transfer Notice, in lieu of the sale to the Proposed Buyer. If
any of the purchase price described in the Transfer Notice is proposed to be
paid in property or services other than cash or cash equivalents, the Rights
Member shall be entitled, at its sole discretion, should it elect to purchase
such Interest or portion of an Interest from the Selling Member, either to pay
such portion of the price in substantially similar form or to substitute for
such non-cash portion of the price an equivalent value in cash or cash
equivalents. If the Rights Member declines to purchase such Interest (or
portion) of the Selling Member, or makes no election within such 30-day period
(in which case it will be deemed to have declined at the end of such 30-day
period to make such purchase), the Selling Member shall be entitled to sell its
Interest to the Proposed Buyer or an Affiliate of the Proposed Buyer on the
terms and conditions stated in the Transfer Notice, in a sale to be closed
within the one hundred twenty (120) days immediately following such waiver (or
deemed waiver) by the Rights Member to purchase. In that event, such sale shall
be considered a "Waived Transfer" hereunder. Any other Transfer, including,
without limitation, to a different buyer, on different terms or conditions, or
closed following such 120-day period, shall not be made unless the Selling
Member has first given another Transfer Notice and afforded the Rights Member
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another opportunity to elect to purchase such Interest (or portion thereof)
under such subsequent Transfer Notice as described above in this section.
(b) After June 30, 2001, in the case that Agritope shall retain more
than 50% of the stock of ACTTAG, Inc., and otherwise, after June 30, 2004, if
ACTTAG, Inc. desires to issue capital stock in ACTTAG, Inc. to a third party
that is not Agritope or an Affiliate of Agritope or ACTTAG, Inc., or if Agritope
desires to make an offer to Transfer any of its outstanding capital stock in
ACTTAG, Inc. to such a third party or to accept an offer from such a third party
to purchase all or any part of such outstanding stock, ACTTAG, Inc. or Agritope,
as the case may be, shall so notify RP Ag Co. of such desire prior to making or
accepting such offer, as the case may be, on a binding basis, along with a
written description (the "Stock Notice") of the principal terms and conditions
(including the number of shares desired to be issued or sold, the price, the
payment terms, and the closing schedule) and the identity of the proposed buyer
(the "Proposed Buyer" under this clause (b)). Prior to such date, no such
issuance or sale shall be permitted without the consent of RP Ag Co. RP Ag Co.
shall have a period of thirty (30) days following receipt of a Stock Notice to
elect to purchase the shares proposed to be issued or sold on the same terms and
conditions described in the Stock Notice, in lieu of the sale to the Proposed
Buyer. If any of the purchase price described in Stock Notice is proposed to be
paid in property or services other than cash or cash equivalents, RP Ag Co.
shall be entitled, at its sole discretion, should it elect to purchase such
shares, either to pay such portion of the price in substantially similar form or
to substitute for such non-cash portion of the price an equivalent value in cash
or cash equivalents. If RP Ag Co. declines to purchase such shares in ACTTAG,
Inc., or makes no election within such 30-day period (in which case it will be
deemed to have declined at the end of such 30-day period to make such purchase),
ACTTAG, Inc. or Agritope shall be entitled to issue or to sell, as the case may
be, such shares to the Proposed Buyer or an Affiliate of the Proposed Buyer on
substantially the terms and conditions stated in the Stock Notice, in a
transaction to be closed within the one hundred twenty (120) days immediately
following such waiver (or deemed waiver) by RP Ag Co. of its right to purchase.
Any other issuance or sale of shares in ACTTAG, Inc., whether to a different
buyer, on different terms or conditions, or closed following such 120-day
period, shall not be made unless ACTTAG, Inc. or Agritope, as the case may be,
has first given another Stock Notice and afforded RP Ag Co. another opportunity
to elect to purchase the shares covered by such subsequent Stock Notice as
described above in this section.
10.5 PROHIBITED TRANSFERS
(a) Any purported Transfer of an Interest that is not a Permitted
Transfer or that is not consented to by the other Member pursuant to Section
10.1 shall be null and void and of no force or effect whatever; provided that,
if the Company is required under mandatory statutory provisions or judicial
order to recognize a Transfer that is not a Permitted Transfer (or if the
Company, in its sole discretion, elects to recognize a Transfer that is not a
Permitted Transfer), the Interest transferred shall be strictly limited to the
transferor's rights to allocations and distributions as provided by this
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Agreement with respect to the transferred Interest, which allocations and
distributions may be applied (without limiting any other legal or equity rights
of the Company) to satisfy any debts, obligations or liabilities for damages
that the transferor or transferee of such Interest may have to the Company, and
the transferee shall, to the fullest extent permitted by law, have no right to
receive any information or accounting of the affairs of the Company, shall not
be entitled to inspect the books or records of the Company, and shall not have
any of the rights of a Member under the Act or this Agreement. Accordingly, to
the fullest extent permitted by law, the transferee shall have no authority to
act for or to bind the Company, to inspect the Company's books, to vote as a
Member under this Agreement, or otherwise to be treated as a Member. In such
case, the parties engaging or attempting to engage in such Transfer shall be
liable to indemnify and hold harmless the Company and the nontransferring Member
from all cost, liability and damage that any of such indemnified parties may
incur (including, without limitation, incremental tax liabilities, reasonable
lawyers' fees and expenses) as a direct result of such Transfer or attempted
Transfer and efforts to enforce the indemnity granted hereby.
(b) Any Person who acquires an Interest, including the transferee in a
Permitted Transfer, and who is not admitted as a substituted Member pursuant to
Section 10.3 (a "Non-Admitted Member"), shall, to the fullest extent permitted
by law, be entitled only to allocations and distributions with respect to such
acquired Interest in accordance with this Agreement and shall have no right of
any information or accounting of the affairs of the Company, shall not be
entitled to inspect the books or records of the Company and shall not have any
of the rights of a Member under the Act or this Agreement. Accordingly, the
assignee, to the fullest extent permitted by law, shall have no authority to act
for or bind the Company, to inspect the Company's books, to vote as a Member
under this Agreement, or otherwise to be treated as a Member.
10.6 SPECIFIC PERFORMANCE
Each of the Members acknowledges that the rights and obligations
provided by this Article 10 are of unique value to it and the payment of
monetary damages could not adequately compensate the other Members for any
breach of the obligations set forth in this Article 10. Accordingly, the rights
of the Members set forth in this Article 10 shall be specifically enforceable in
accordance with their terms.
ARTICLE 11
DISSOLUTION AND WINDING UP
11.1 GENERAL
(a) The Company shall be dissolved and its affairs shall be wound up:
(i) in the event of the Bankruptcy or dissolution of ACTTAG,
Inc.'s Parent or ACTTAG, Inc., upon the written election by RP Ag Co., in its
sole and absolute discretion, within ninety (90) days of such Bankruptcy, to
dissolve the Company;
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(ii) in the event of the Bankruptcy or dissolution of RP Ag
Co.'s Parent or RP Ag Co., upon the written election by ACTTAG, Inc., in its
sole and absolute discretion, within ninety (90) days of such Bankruptcy, to
dissolve the Company;
(iii) upon an election to dissolve the Company made by the
Electing Member pursuant to Section 12.2(a) or by ACTTAG, Inc. pursuant to
Section 12.2(b);
(iv) upon the unanimous written consent of the Members;
(v) the passage of ninety (90) days after the sale or other
disposition of all or substantially all of the assets of the Company; or
(vi) upon the entry of a decree of judicial dissolution
pursuant to Section 18-802 of the Delaware Act.
(b) Except as set forth in Section 12, the occurrence of the
Bankruptcy or dissolution of a Member shall not cause a Member to cease to be a
member of the Company, and, except as expressly provided in Section 11.1(a)(i)
or (ii), upon the occurrence of such an event, the business of the Company shall
be continued without dissolution.
(c) The Company shall terminate when all assets of the Company, after
payment of or due provision for all debts, liabilities and obligations of the
Company, shall have been distributed to the Members in the manner provided for
in this Article 11 and Section 5.3, and the Certificate shall have been canceled
in the manner required by the Act.
11.2 WINDING UP AND LIQUIDATION
Upon the dissolution of the Company, the Company shall promptly wind up
its affairs and liquidate and distribute its assets in accordance with Section
5.3 and this Section 11.2, unless the Members unanimously elect otherwise. The
winding up of the Company's affairs and the liquidation of the Company's assets
shall be conducted and supervised by the Liquidating Agent. The Liquidating
Agent shall have all of the rights and powers with respect to the assets and
liabilities of the Company, in connection with the winding up and liquidation of
the Company, that the Members have with respect to the assets and liabilities of
the Company during the term of the Company, and the Liquidating Agent is hereby
expressly authorized and empowered to execute any and all documents necessary or
desirable to effectuate the winding up and liquidation of the Company and the
transfer of any Property of the Company.
11.3 PRIORITY ON LIQUIDATION
The Liquidating Agent shall liquidate the assets of the Company as
promptly as practicable. The proceeds of such liquidation shall be applied
pursuant to Section 5.3.
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ARTICLE 12
PRIOR TERMINATION
12.1 TERMINATION EVENTS
(a) Subject to the provisions of Section 11 above, in the event of the
Bankruptcy or dissolution of either Member or its Parent, the other Member may,
in its sole and absolute discretion, require such Member to resign and cease to
be a Member, at its option and without prejudice to any of its other legal or
equitable rights or remedies, by giving notice to such Member;
(b) If either Member or its Parent materially breaches any of the
terms, conditions or agreements contained in this Agreement or in any Research
Contract to which it is a party to be kept, observed or performed by it, the
other Member may require such Member to resign and cease to be a Member, at its
option and without prejudice to any of its other legal or equitable rights or
remedies, by giving the Member who committed the material breach ninety (90)
days' notice in writing, unless the notified Member within such 90-day period
shall have cured the breach. Neither Member or its Parent will be considered in
breach of this Agreement or such a Research Contract for purposes of the
termination remedy stated herein during any period in which there is a good
faith dispute between the Members as to the existence of such breach. If the
Members are, despite negotiations at the highest levels of their respective
managements over a period of at least ninety days, unable to resolve any good
faith dispute between them as to the existence of such breach, such dispute may
at the election of either Member be resolved in accordance with Article 9; and
(c) If prior to July 1, 2001, the Company shall not [ * ], then RP Ag
Co. may, in its sole and absolute discretion, at or at any time on or after July
1, 2001 (but prior to the time, if any, at which the Company shall have [ * ]),
elect to (i) resign and cease to be a Member and (ii) terminate the Research
Contracts to which it or its Parent (as the case may be) is a party (an "RP Ag
Co. Termination"). In that event, RP Ag Co. will not be required to make any
further Additional Capital Contribution of cash that has not previously become
due as described in Section 3.6(a) (where any contribution that would have
become due on the date of resignation shall not be considered to have become
previously due), with no other right for indemnification or compensation
whatsoever for the Company, ACTTAG, Inc. or its Affiliates.
12.2 EFFECTS OF TERMINATION
(a) In the event of the Bankruptcy or dissolution of a Member or its
Parent or material breach pursuant to clause (a) or clause (b) of Section 12.1,
the other Member (the "Electing Member") may, in its sole discretion, elect to
take any one of the following three courses of action: (i) to continue the
business of the Company and purchase the Interest of the other Member pursuant
to the procedure set forth in Section 12.2(c) below; (ii) to continue the
business of the Company with the other Member continuing as a Non-Admitted
Member as described in Section 10.5; or (iii) to declare that the Company will
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
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be dissolved and liquidated as provided in Article 11. If the Electing Member
makes no such election by written notice to the other Member within sixty (60)
days of such event, the Electing Member will be deemed to have elected to take
the course of action described in clause (ii). If the Electing Member elects or
is deemed to elect to take the course of action described in clause (ii) above,
it will have the further option, exercisable at any time thereafter, of leaving
its own Research Contracts in effect or terminating them.
(b) In the event of an RP Ag Co. Termination, ACTTAG, Inc. may elect to
take either one of the following courses of action: (i) to continue the business
of the Company and purchase RP Ag Co.'s Interest pursuant to the procedure set
forth in Section 12.2(c) below; or (ii) to declare that the Company will be
dissolved and liquidated as provided in Article 11. If ACTTAG, Inc. makes no
such election by written notice to RP Ag Co. within sixty (60) days of such
event, ACTTAG, Inc. will be deemed to have elected to take the course of action
described in clause (ii).
(c) If the Electing Member elects to purchase the Interest of the
other Member under Section 12.2(a), or if ACTTAG, Inc. elects to purchase RP Ag
Co.'s Interest pursuant to Section 12.2(b), the purchase price for such Interest
shall be determined by the mutual agreement of the buyer and the seller;
provided, however, that if no such mutual agreement is reached within sixty (60)
days following such election, the purchase price shall be finally determined to
be the fair market value of the Interest to be sold, in the opinion of one
investment banking firm chosen by the buyer from the following list: Merrill
Lynch, Goldman Sachs, J.P. Morgan, Salomon Smith Barney, or a successor firm to
any of the foregoing. The cost of obtaining such an opinion shall be borne by
the seller of the Interest, and may be deducted from the sales proceeds. The
purchase price will be payable in cash at the closing, which shall occur within
forty-five (45) days following the later of the determination of the purchase
price and the buyer's election to purchase such Interest. Such a sale shall be
on terms that include closing conditions, representations, warranties and
covenants customary in transactions under such circumstances. In such case, both
Members' Research Contracts will be terminated.
ARTICLE 13
ACCOUNTING AND REPORTS
13.1 BOOKS AND RECORDS
(a) The Board shall implement standard procedures with respect to
accounting, financial reporting and management information, including, without
limitation, statements reflecting Company distributions of Net Cash Flow,
earnings, Profits and Losses, residual value of Company Property and taxable
income.
(b) At all times during the term of the Company, the Board shall keep
or cause to be kept books of accounts at the principal office of the Company in
which shall be entered fully and accurately each transaction of the Company.
Each Member and its representatives shall have access to such books, records and
documents during reasonable business hours and may inspect and make copies of
AGRINOMICS LLC 45 Limited Liability Company Agreement
<PAGE>
any of them. The Board may delegate to a third party or Member the duty to
maintain and oversee the preparation of such records and books of account.
(c) In addition to its record-keeping requirements as provided herein,
the Board shall maintain records, as required, to demonstrate compliance with
United States Foreign Corrupt Practices Act requirements, including lists
reflecting the Company's use of agents.
13.2 BANK ACCOUNTS
The Company will maintain accounts for the deposit and disbursement of
all funds of the Company at such banks as the Board shall approve. All funds of
the Company will be deposited promptly in such accounts. The funds of the
Company shall not be commingled with the funds of any other Person and the Board
and the CEO shall not employ, or permit any other Person to employ, such funds
in any manner except for the benefit of the Company. All bank accounts and other
depository accounts shall be opened in the name of the Company.
13.3 ACCOUNTING METHOD
The Company shall adopt the accrual method of accounting for financial
reporting and federal and state income tax purposes. The financial reports of
the Company shall be prepared on an accrual basis in accordance with GAAP.
13.4 FISCAL YEAR
The Company shall use the Fiscal Year as both its fiscal year for
financial reporting and its taxable year for federal and state income tax
purposes, unless the Code or state law requires use of a different taxable year.
13.5 REPORTS; TAX RETURNS
Copies of all accounts, reports and other writings pertaining to the
business of the Company furnished by a Member or the Company to any Member or
regulatory agency shall contemporaneously be delivered to all Members. Copies of
all reports, notices and other writings pertaining to the Company furnished to a
Member by the accountants for the Company shall promptly be delivered to all the
Members. Within 90 days after the end of each Fiscal Year, the CEO shall cause
to be delivered to each Member a report of financial activities of the Company,
including, without limitation, (a) a balance sheet reflecting the Company's
financial position as of the end of such Fiscal Year, (b) supporting profit and
loss statements, and (c) a statement of change in financial position of the
Company for such year. The Board shall cause, at the Company's expense, a
regular annual audit of the books and records of the Company at the end of each
Fiscal Year by the Company's outside auditors and the delivery to each Member
within 120 days after the end of each Fiscal Year the audited financial
statements for such Fiscal Year and any audit report issued to the Company in
AGRINOMICS LLC 46 Limited Liability Company Agreement
<PAGE>
connection with such audit. The CEO shall cause to be prepared and filed, on the
Company's behalf and at the Company's expense, all federal, state and other tax
returns required to be filed, and shall submit the same to the Members for
review and approval not less than 30 days prior to the respective due dates for
such returns (including any extensions thereof), but, with respect to the
Company's federal income tax information return, in no event later than 45 days
prior to the due date for such return (including any extensions thereof).
13.6 REQUIRED GOVERNMENTAL FILINGS
The CEO shall cause the Company to file, on or before the dates the
same may be due, giving effect to extensions obtained, all reports, returns and
applications that may be required by any governmental or quasi-governmental body
having jurisdiction.
13.7 TAX MATTERS MEMBER
(a) ACTTAG, Inc. shall be the "tax matters partner" (the "Tax Matters
Member") for the Company within the meaning of Code Section 6231(a)(7).
(b) The Tax Matters Member shall notify and provide copies to the other
Members within 5 business days (or as soon as reasonably practicable thereafter)
of any communication received from any governmental authority regarding any
proposed or existing audit, administrative or judicial proceeding, request for
information, preliminary discussion or any other formal or informal
communication regarding any tax matters pertaining to the Company or any Member.
In addition to and not in limitation of the foregoing, the Tax Matters Member
shall request, pursuant to Code Section 6223, that the other Members receive
notice from the IRS regarding any proceedings or adjustments. The Tax Matters
Member shall consult with the other Members concerning all tax matters and shall
not take any action in connection with any audit or proceeding, or enter into
any agreement with the IRS, that may adversely affect the other Members without
their express prior written consent.
13.8 AUDITOR
Unless the Board otherwise determines, the Company shall engage the
firm of Arthur Andersen LLP as the Company's outside accountants and auditors.
ARTICLE 14
REGULATORY MATTERS
14.1 POLITICAL CONTRIBUTIONS
The Company shall not spend any of its funds to make direct or indirect
contributions to political candidates, nor make gifts or provide honoraria to
elective or appointive governmental officials without prior Board approval. The
Company shall timely report to the Board the making of such contributions, gifts
or honoraria. All such contributions, gifts or honoraria shall be made in
accordance with applicable laws and regulations.
AGRINOMICS LLC 47 Limited Liability Company Agreement
<PAGE>
14.2 COMPLIANCE WITH REGULATIONS
The Company shall comply with all applicable laws, regulations and
orders of any governmental or regulatory authority. Each Member and its
Affiliates, in connection with their duties and activities with the Company and
its projects, shall comply with all laws, regulations and orders of any
governmental or regulatory authority applicable to such Person, including,
without limitation, the United States Foreign Corrupt Practices Act. Each Member
shall indemnify and hold harmless the Company and the other Member and its
Affiliates from any costs incurred by them as a result of the failure of a
Member or its Affiliates to comply with such applicable laws, regulations or
orders.
ARTICLE 15
GENERAL PROVISIONS
15.1 NOTICES
Any notice, request, instruction or other document to be given
hereunder by a Member to another Member hereto shall be in writing, delivered in
person, or mailed by certified or registered mail, return receipt requested, or
transmitted by facsimile transmission with electronic confirmation of receipt to
the addressee's address or facsimile number set forth below (or such other
address or facsimile number as the party changing its address specifies in a
notice to the other parties):
ACTTAG, Inc.
16160 SW Upper Boones Ferry Rd.
Portland, OR 97224, USA
Attention: Adolph J. Ferro, Chief Executive Officer
Facsimile: (503) 670-7703
with a copy to:
Perkins Coie LLP
411 -108th Avenue NE, Suite 1800
Bellevue, WA 98004, USA
Attention: Roger M. Tolbert, Esq.
Facsimile: (425) 453-7350
and
Rhone-Poulenc Ag Company Inc.
2 T.W. Alexander Drive
Research Triangle Park
North Carolina 27709 - USA
Attention: General Counsel
Facsimile: (919) 549-2500
AGRINOMICS LLC 48 Limited Liability Company Agreement
<PAGE>
with a copy to:
Rhone-Poulenc Agro S.A.
14-20, rue Pierre Baizet
69 623 Lyon, FRANCE
Attention: General Counsel
Facsimile: (04) 72 85 29 81
Notices shall be deemed to have been given on the date of service, if served
personally on the party to whom notice is to be given , or on the first day
after transmission by facsimile transmission, if transmitted by facsimile as set
forth above, or on the fifth day after mailing, if mailed as set forth above.
15.2 CONSEQUENTIAL DAMAGES; AFFILIATES
Except for damages resulting from breaches of Section 2.8 or Section
14.2, no Member or its Affiliates shall be liable to the Company or to any other
Member or its Affiliates for any indirect, incidental, special or consequential
damages relating to a breach or an alleged breach of this Agreement, including,
but not limited to, loss of revenue, cost of capital or loss of business
reputation or opportunity whether such liability arises out of contract, tort
(including negligence), strict liability or otherwise. If an Affiliate of a
Member does not comply with the provisions of this Agreement that apply to
Affiliates, then such Member shall be deemed to be in violation of such
provisions.
15.3 WAIVER
No waiver of any breach of the terms of this Agreement shall be
effective unless such waiver is in writing and signed by the Member against whom
such waiver is claimed. No waiver of any breach shall be deemed to be a waiver
of any other or subsequent breach.
15.4 SEVERABILITY
If any provision of this Agreement shall be held to be invalid, illegal
or unenforceable, such provision shall be enforced to the maximum extent
permitted by law and the parties' fundamental intentions hereunder, and the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
15.5 FURTHER ASSURANCES
Each Member shall execute such deeds, assignments, endorsements,
evidences of transfer and other instruments and documents and shall give further
assurances as shall be necessary to perform its obligations hereunder and shall
execute such estoppel and other documents as are reasonably requested by any
other Member regarding the status of the Company.
AGRINOMICS LLC 49 Limited Liability Company Agreement
<PAGE>
15.6 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without regard to the choice of law
provisions of the State of Delaware or any other jurisdiction to the contrary.
15.7 COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument.
15.8 LIMITATION ON RIGHTS OF OTHERS
This Agreement is entered into among the Members for the exclusive
benefit of the Company, its Members, and their successors and permitted assigns.
This Agreement is not intended for the benefit of any creditor of the Company or
any other Person. Except to the extent provided by applicable statute, and then
only to that extent, no creditor or third party shall have any rights under this
Agreement or under any other agreement between the Company and any Member with
respect to any contribution to the Company or otherwise.
15.9 SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the
Members and their respective successors and permitted assigns.
15.10 ENTIRE AGREEMENT; AMENDMENT
This Agreement constitutes the entire agreement among the Members with
respect to the subject matter hereof and supersedes all prior agreements and
understandings, whether oral or written, between the Members (and their
Affiliates) with respect to the subject matter hereof. This Agreement may be
amended only in writing signed by all of the Members.
15.11 EXPENSES
Except as otherwise provided herein or agreed to in writing by the
Members or their Affiliates, each Member shall bear its own costs and expenses,
including legal fees, associated with carrying on its business as a Member
hereof.
15.12 CONSTRUCTION
This Agreement has been submitted to the scrutiny of, and has been
negotiated by, all parties hereto and their counsel, and shall be given a fair
and reasonable interpretation in accordance with the terms hereof, without
consideration or weight being given to its having been drafted by any party
hereto or its counsel.
AGRINOMICS LLC 50 Limited Liability Company Agreement
<PAGE>
15.13 DISCLAIMER OF AGENCY
This Agreement does not create any entity or relationship beyond the
scope set forth herein, and except as otherwise expressly provided herein, this
Agreement shall not constitute any Member the legal representative or agent of
the other, nor shall any Member or any Affiliate of a Member have the right or
authority to assume, create or incur any liability or obligation, express or
implied, against, in the name of or on behalf of any other Member, its
Affiliates, the Company or its Affiliates.
15.14 CURRENCY OF PAYMENT
Payments to be made by or to any party hereunder shall be both
denominated and payable in U.S. dollars, unless otherwise determined by the
respective parties to be in another freely exchangeable currency denominated in
U.S. dollars at the applicable exchange rate for the last business day of each
quarter as quoted by Reuters telerate page EFX= at 12 :00PM USA East Coast
time).
15.15 GUARANTY BY AGRITOPE
Agritope hereby unconditionally and irrevocably guarantees to RP Ag Co.
the performance of, and compliance with, the agreements, covenants and
obligations contained in this Agreement or in any Agritope Research Contracts by
ACTTAG, Inc. or any of its Affiliates. RP Ag Co. may therefore at its sole
discretion directly proceed against Agritope for any default or failure to
perform or observe by ACTTAG, Inc. or any of its Affiliates their agreements,
covenants and obligations contained thereunder, and provided further that
Agritope and ACTTAG, Inc. shall be jointly and severally liable for any default
or failure to perform under this Agreement and any Agritope Research Contracts.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ACTTAG, INC.
By: /s/Adolph J. Ferro
Name: Adolph J. Ferro
Title: President
AGRINOMICS LLC 51 Limited Liability Company Agreement
<PAGE>
RHONE-POULENC AG COMPANY INC.
By: /s/P. Housset
Name: Pascal Housset
Title: Director
AGRITOPE, INC.
By: /s/Adolph J. Ferro
Name: Adolph J. Ferro
Title: CEO
Date: 7/15/99
AGRINOMICS LLC 52 Limited Liability Company Agreement
<PAGE>
EXHIBIT LIST
EXHIBIT A: EXISTING AGRITOPE COLLECTION
EXHIBIT B: AGRITOPE RESEARCH AND MANAGEMENT CONTRACT
EXHIBIT C: ASSIGNMENT AND ASSUMPTION AGREEMENT AND BILL OF SALE
EXHIBIT D: INITIAL BUDGET
EXHIBIT E: INITIAL OPERATING PLAN
EXHIBIT F: RP AG CO. RESEARCH CONTRACT AND LICENSE AGREEMENT
EXHIBIT G: NAME AND MAILING ADDRESS OF EACH MEMBER;
VALUE OF CONTRIBUTIONS, AND PERCENTAGE INTERESTS
EXHIBIT H: APPROVED AGREEMENTS
AGRINOMICS LLC 1 Limited Liability Company Agreement
<PAGE>
EXHIBIT A: EXISTING AGRITOPE COLLECTION
[ * ]
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
AGRINOMICS LLC 2 Limited Liability Company Agreement
<PAGE>
EXHIBIT G: NAME AND MAILING ADDRESS OF EACH MEMBER;
VALUE OF CONTRIBUTIONS, AND PERCENTAGE INTERESTS
NAME AND ADDRESS VALUE OF CONTRIBUTION PERCENTAGE INTEREST
- ----------------- --------------------- -------------------
ACTTAG, Inc. US$20,000,000 50%
16160 SW Upper Boones
Ferry Rd.
Portland, OR 97224, USA
Rhone-Poulenc Ag US$20,000,000 50%
Company Inc.
2 T.W. Alexander Drive
Research Triangle Park
North Carolina 27709 - USA
AGRINOMICS LLC 3 Limited Liability Company Agreement
<PAGE>
EXHIBIT H: APPROVED AGREEMENTS
Research and Management Contract between the Company and Agritope, substantially
in the form of Exhibit B to this LLC Agreement.
Research Contract and License Agreement between the Company and RP Ag Co.,
substantially in the form of Exhibit F to this LLC Agreement.
Assignment and Assumption Agreement and Bill of Sale between the Company and
ACTTAG, Inc., substantially in the form of Exhibit C to this LLC Agreement.
Research, License and Option Agreement dated as of October 23, 1998, by and
between The Salk Institute for Biological Sciences and Agritope, as amended, and
as assigned by Agritope to ACTTAG, Inc. and by ACTTAG, Inc. to the Company.
Research and Option to License Agreement dated as of January 21, 1999, by and
between the University Court of the University of Edinburgh and Agritope, as
assigned by Agritope to ACTTAG, Inc. and by ACTTAG, Inc. to the Company.
AGRINOMICS LLC 4 Limited Liability Company Agreement
EXHIBIT 10.2
(REDACTED)
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
<PAGE>
RESEARCH AND MANAGEMENT CONTRACT
This Research and Management Contract (the "Agreement") is entered into
as of July 1, 1999, by and between Agritope, Inc., a Delaware corporation
("Agritope"), and Agrinomics LLC, a limited liability company organized and
existing under the laws of Delaware (the "Agrinomics").
RECITALS
A. Agrinomics has been formed pursuant to the certain Limited
Liability Company Agreement dated as of July 1, 1999 (the "LLC Agreement"),
among Agritope, ACTTAG Inc., a wholly-owned subsidiary of Agritope ("ACTTAG"),
and Rhone-Poulenc Ag Company Inc. ("RP Ag Co."), to conduct and coordinate a
plant functional genomics program (the "Research Program") involving the
activation tagging of large numbers of Arabidopsis plants in an attempt to
create seeds and plants in which one or more genes are overexpressed; screening
to identify phenotypic traits of interest in such plants; the isolation,
sequencing and gene rescue of the associated genotypes; confirmation of
phenotypes using such genes; and related activities, all as is more fully
described in Agrinomics' Operating Plan as adopted and amended from time to time
by the Members of Agrinomics (the "Operating Plan"). Agrinomics expects to
exploit the results of the Research Program commercially as is more fully
described in the Operating Plan. Terms used herein and defined in the LLC
Agreement shall have the meanings specified in the LLC Agreement unless
otherwise stated herein.
B. Agritope has the ability, personnel and facilities required to
provide various management and administrative services required by Agrinomics in
connection with the operation of Agrinomics' business. Agritope also has
extensive experience, facilities, technologies, and personnel that the parties
believe will be useful in the conduct of the Research Program. The agreements
forming Agrinomics, and the Operating Plan, contemplate that Agritope and its
Affiliates will have certain marketing and commercialization rights in defined
fields of application for certain discoveries made in the Research Program.
C. Each of Agritope and Agrinomics desires that Agritope render
(or cause to be rendered by third parties) certain research and administrative
services to Agrinomics, at the request of Agrinomics, in accordance with the
Operating Plan and this Agreement.
AGREEMENT
1. DEFINITIONS
1.1 "ADMINISTRATIVE SERVICES" means all general administrative and
management services conducted by Agritope pursuant to the Operating Plan and
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consistent with any of Agrinomics' specific instruction to Agritope including,
but not limited to, the following:
(a) coordinating, conducting, and otherwise assisting with: (i)
the identification of third parties with which Agrinomics may
from time to time enter into research contracts, subscription
contracts, license agreements, testing or certification
agreements, marketing or distribution agreements, or other
agreements as contemplated in the Operating Plan (the
"Alliance Parties"), and (ii) the negotiation (subject to
approval by the Board of Managers of Agrinomics) and
administration of agreements, and operations under agreements,
with Alliance Parties;
(b) accounting services including the establishment and
maintenance of appropriate accounting books and records,
preparation of appropriate financial statements and schedules,
and maintenance of Agrinomics' books of account and records;
(c) cash management services, including monitoring and collecting
accounts receivable, and monitoring and paying Agrinomics
payables from and out of cash and collections;
(d) electronic data processing services, including without
limitation, payroll, accounting services, and internal audit,
planning and financial services;
(e) assistance in obtaining appropriate fidelity, product
liability, public and personal liability, property damage,
workers' compensation and other applicable insurance;
(f) assistance in obtaining professional services such as legal
counsel, auditors, appraisers, experts and otherwise, and
coordinating the provision thereof for the benefit of
Agrinomics; and
(g) such other services and assistance as Agritope considers to be
in the best interests of Agrinomics.
1.2 "AFFILIATE" means a person or entity that, directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with Agritope. For purposes of this definition, the
term "control" means the possession, directly or indirectly, of 50% or more of
the share capital or voting rights. For the purposes of this Agreement only,
Agritope and Agrinomics will not be considered Affiliates of each other.
1.3 "AGRINOMICS PROGRAM PATENTS" means, other than the Agritope
Program Patents, Agrinomics' rights and interests, whether owned or licensed, in
and to the exploitation of United States and foreign patents and patent
applications,
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<PAGE>
if any, including without limitation those rights and interests of Agrinomics
developed by it or acquired by it under any or all of the current or future
Research Contracts defined in the LLC Agreement, in each case covering or
disclosing any aspect or part of the Agrinomics Program Technology. As used in
this Agreement, "patent(s)" includes without limitation utility patents, whether
for articles, compounds, plants, plant materials or products, processes,
methods, or other patentable subject matter; plant variety protection
certificates and rights under the Plant Variety Protection Act of 1970, as
amended; plant patents under the Plant Patent Act of 1930, as amended; design
patents; utility model rights; and all similar legally-protectible rights or
properties in any nation or jurisdiction.
1.4 "AGRINOMICS PROGRAM TECHNOLOGY" means, other than the Agritope
Program Technology, any and all deliverables, services, intellectual properties,
rights, and contributions from any person or entity under the Research Program,
and all related information, technical or otherwise, and protein sequences, gene
constructs, data, techniques, manuals, instructions, samples, germplasm,
inventions, development processes, assays, improvements, and specifications
developed directly by Agrinomics in the course of the Research Program or to be
provided to it under any or all of the current or future Research Contracts
defined in the LLC Agreement (including without limitation the Existing Agritope
Collection as defined in the LLC Agreement), and all intellectual property
rights therein and thereto, to the extent owned by Agrinomics or to be licensed
or to be owned by Agrinomics under such Research Contracts.
1.5 "AGRITOPE PROGRAM PATENTS" means Agritope's and Agritope's
Affiliates' rights and interests in United States and foreign patents and patent
applications, if any, arising from work or activities conducted as part of the
Research Services or otherwise covering any invention, discovery or improvement
made or acquired by or for Agritope or its Affiliates (whether solely or jointly
with others) in the course of the Research Services or in connection with the
conduct of the Research Program, including without limitation those rights and
interests of Agritope and its Affiliates to be transferred hereunder to
Agrinomics.
1.6 "AGRITOPE PROGRAM TECHNOLOGY" means any and all deliverables,
services, intellectual properties, rights and contributions provided or agreed
to be provided by Agritope under the Research Program and all related
information, technical or otherwise, including, but not limited to that
comprised in the Agritope Collection (to the extent to be developed hereunder
under the Research Services as defined below and not already contributed by
Agritope to the capital of Agrinomics under the LLC Agreement), formulae,
protein sequences, gene constructs, data, techniques, manuals, instructions,
samples, germplasm, inventions, development processes, assays, improvements, and
specifications to be developed by Agritope directly in the course of the
Research Program, and all intellectual property rights therein and thereto.
1.7 "BACKGROUND PATENTS" means, other than the Agritope Program
Patents, Agritope's and its Affiliates' rights under United States and foreign
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<PAGE>
patents and patent applications, if any, in each case covering or disclosing any
of the Background Technology or any inventions that are otherwise related to or
useful for the development or exploitation of the Collections, the Program
Technology, or any Program Product, and all rights therein and thereto, to the
extent the same are owned by Agritope or its Affiliates or available for its or
their use or sublicensing without fee, royalty or encumbrance, as listed in
Schedule 2 in accordance with Section 3.2 below.
1.8 "BACKGROUND TECHNOLOGY" means, other than the Agritope Program
Technology, all information, technical or otherwise, including, but not limited
to, that comprised in formulae, protein sequences, gene constructs, data,
techniques, manuals, instructions, samples, germplasm, inventions, development
processes, assays, improvements, and specifications, delivered or disclosed by
Agritope or its Affiliates to Agrinomics prior to the date of this Agreement
with regard to the Research Program or disclosed by Agritope or its Affiliates
to Agrinomics hereafter during the period of the Research Program and in the
course of the Research Services, that is or may be related to or useful in the
Research Program or for the development or commercial exploitation of any
Program Technology or any Program Product, and all intellectual property rights
therein and thereto, to the extent the same are owned by Agritope or its
Affiliates or available for its or their use or sublicensing without fee,
royalty or encumbrance, as listed in Schedule 2 in accordance with Section 3.2
below.
1.9 "COSTS" means any direct and indirect cost and expense
incurred by Agritope in performing the Services hereunder, which are
attributable to its activities under this Agreement, including, but not limited
to:
(a) that part of the payroll costs (including any overtime, extra
compensation, payroll taxes and the cost of maintaining
employees' benefit plans) of Agritope's employees which is
properly and reasonably attributable to the performance of the
Services;
(b) that part of Agritope's rent and other charges associated with
offices, greenhouses, and other facilities utilized by
Agritope's personnel which is properly and reasonably
attributable to the performance of the Services;
(c) materials, supplies, usage of equipment and vehicles, and
similar items, to the extent the same will be devoted to the
Research Program, as is consistent with the Operating Plan;
(d) all filing, renewal, and other fees associated with any
permits, regulatory filings or other government authorizations
to the extent required for the conduct by Agritope of the
Services, and all costs of preparation of applications and
supporting studies related thereto; and
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<PAGE>
(e) that part of Agritope's overhead and general office expenses
which is properly and reasonably attributable to the
performance of the Services;
it being understood and agreed that Agritope and Agrinomics will from
time to time as appropriate agree in writing upon the principles to be
used in the allocation of costs of Agritope under this Agreement.
1.10 "FEE" shall have the meaning given it in Section 6.1 hereof.
1.11 [ * ]
1.12 "OTHER SERVICES" means such other services as the parties may
mutually agree upon from time to time.
1.13 "PROGRAM PATENTS" means the Agrinomics Program Patents and the
Agritope Program Patents.
1.14 "PROGRAM PRODUCTS" means products, processes and technologies
the relevant manufacture, use, sale, offer for sale, development or
import/export of which if done by third parties would in the applicable
jurisdiction infringe upon a claim of a Program Patent, or the discovery or
isolation of which was made from or using the Agritope Collection, as defined
below in Section 1.17(f), or the conception, discovery, isolation, or
development of which was enabled in a material way by the use of any Program
Technology.
1.15 "PROGRAM TECHNOLOGY" means the Agrinomics Program Technology
and the Agritope Program Technology.
1.16 [ * ]
1.17 "RESEARCH SERVICES" means the research projects, services, and
licenses described in more detail in the Operating Plan as services to be
provided by Agritope to Agrinomics. The parties anticipate that the Operating
Plan will be amended and supplemented by Agrinomics from time to time, but it is
agreed that no change to the Research Services called for from Agritope under
this Agreement shall be made without Agritope's prior consent, which will not be
unreasonably withheld or delayed. Subject to the preceding sentence, the
Research Services will be performed pursuant to the Operating Plan and
Agrinomics' specific instructions, and will include, but will not be limited to,
the following:
(a) on-going consultation as to the formulation, amendment and
supplementation of the Operating Plan, including without
limitation, providing certain services from certain Agritope
employees for service on Agrinomics' Scientific Advisory
Committee and making recommendations to such Scientific
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
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Advisory Committee and to Agrinomics' Board of Managers with
respect thereto;
(b) coordination and management of Agrinomics' relationships with
The Salk Institute for Biological Sciences ("Salk") to the
extent related to and arising under the Research Program and
that certain Research, License and Option Agreement dated as
of October 23, 1998, by and between Salk and Agritope, as such
contract may be amended (the "Salk ACTTAG Research
Agreement");
(c) coordination and management of Agrinomics' relationships with
the University Court of the University of Edinburgh
("University of Edinburgh") to the extent related to and
arising under that certain Research and Option to License
Agreement dated as of January 21, 1999, by and between the
University of Edinburgh and Agritope, as such contract may be
amended (the "University of Edinburgh ACTTAG Research
Agreement");
(d) on-going consultation as to the formulation, amendment and
supplementation of the Research Plan under the Salk ACTTAG
Research Agreement;
(e) on-going consultation as to the formulation, amendment and
supplementation of the Research Plan under the University of
Edinburgh ACTTAG Research Agreement;
(f) the creation at Agritope's facilities of a collection of
Arabidopsis plants and seeds that have been modified using the
ACTTAG(TM) Gene Discovery technologies (the "Agritope
Collection"), which shall be separate from the other
"Collections" which are defined in each of the Salk ACTTAG
Research Agreement (the "Salk Collection") and the University
of Edinburgh ACTTAG Research Agreement (the "University of
Edinburgh Collection"), including without limitation the
following principal tasks related thereto:
[ * ]
(g) Agritope will, to the extent contemplated in Operating Plan,
perform the following principal tasks with respect to each of
the Salk Collection, the University of Edinburgh Collection,
and the Agritope Collections (referred to collectively as the
"Collections"), other than that which is done by Salk or the
University of Edinburgh as to their respective Collections:
[ * ]
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
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(h) on-going coordination of the Research Services described
herein with other services to be provided to Agrinomics by RP
Ag Co. and the Alliance Parties;
(i) rendering assistance and consultation in relation to
Agrinomics' patent strategies, filings, prosecution and
maintenance activities, in coordination with Agrinomics'
Patent Committee, including without limitation, providing
certain services from certain Agritope employees for service
on Agrinomics' Patent Committee; and
(j) such other research services and assistance as Agritope
considers to be in the best interests of Agrinomics.
1.18 [ * ]
1.19 "SERVICES" means Administrative, Research and Other Services.
1.20 "TERM" means the period of this Agreement as determined under
Article 8 hereof, during which the Services will be performed.
2. AGREEMENT TO PERFORM SERVICES; DUTY OF COOPERATION
Agritope, directly or through one or more of its Affiliates, or through
third parties subject to the prior written consent of Agrinomics, hereby agrees
during the Term to provide, or cause to be provided by third parties, the
Services; provided, however, that Agritope reserves the right to decline to
render or cause to be rendered Services in any case where Agritope, in its
judgment, does not have adequate facilities, personnel or resources to perform
or cause to be performed the Services, or where providing the Services would
violate Agritope policies or relevant law. Agritope will exert commercially
reasonable efforts to obtain any and all permits or regulatory filings or other
government authorizations for the conduct by it of the Services hereunder.
Agrinomics shall assist Agritope in all such efforts and otherwise shall provide
Agritope with sufficient information and assistance as reasonably requested by
Agritope to enable Agritope to provide or cause to be provided the Services.
3. PROJECT TECHNOLOGY AND LICENSES
3.1 RIGHTS IN PROGRAM TECHNOLOGY AND PROGRAM PATENTS
(a) All ownership, copyright, patent, trade secrecy, and other
rights and title in and to all Program Technology and Program
Patents shall be owned solely by Agrinomics. Agritope hereby
transfers and assigns to Agrinomics all of the foregoing,
whether now existing or hereafter coming into existence.
Agritope will assist Agrinomics as requested during and after
the term of this Agreement to further evidence and perfect
Agrinomics' rights in such property, including without
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
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limitation, securing appropriate agreements from its
Affiliates and contractors, executing additional instruments
of conveyance, and assisting Agrinomics with applications for
patents, copyright registrations, or other registrations.
Agrinomics may by written notice to Agritope from time to time
decline to accept any Agritope Program Patents as such
hereunder, either entirely or on a country-by-country basis,
from that time forward, and in that event such declined patent
or application shall not be part of the Agritope Program
Patents, but shall be considered part of the Background
Patents.
(b) Agrinomics hereby grants to Agritope and its Affiliates a
nonexclusive, royalty-free, worldwide license, with no right
to sublicense, to use and to exercise the Program Technology
and the Program Patents for research purposes during and in
support of the Research Program.
(c) Agrinomics hereby grants to Agritope and its Affiliates a
nonexclusive, royalty-free, worldwide license, with no right
to sublicense, to use and to exercise the Agritope Program
Technology (but not any of the Program Patents, unless under a
separate agreement entered pursuant to Section 4 or otherwise)
other than the Agritope Collection itself for internal
research purposes.
(d) The Research Contract between Agrinomics and RP Ag Co.
provides that RP Ag Co. shall grant to Agritope the exclusive
right to enter into one or more exclusive implementation and
worldwide Commercialization Agreements as defined therein with
respect to the exploitation of any Program Technology and/or
Program Patents in [ * ] in one or more of the [ * ].
(e) Agrinomics hereby grants to Agritope and its Affiliates [ * ]
option [ * ] to obtain, pursuant to Section 4 below, a
royalty-bearing, worldwide license under the Program
Technology and the Program Patents, to make, have made, use,
sell, offer for sale, develop, and import/export any Program
Product that is not [ * ] or subject to Section 3.1(d) in any
or all of the [ * ].
(f) [ * ]
3.2 LICENSES TO BACKGROUND TECHNOLOGY AND BACKGROUND PATENTS
(a) Schedule 2 hereto contains a complete list and description of
all Background Patents and Background Technology, as currently
anticipated by Agritope. Agritope shall promptly (and at least
annually) supplement such list and description throughout the
Term by written notices to Agrinomics if and when any
additional Background Patents or Background Technology not
previously so listed and described is used or applied, or is
proposed to be used or applied, by Agritope or its Affiliates,
at their sole discretion, in performing the Research Services
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
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or otherwise in connection with the Research Program. For the
avoidance of doubt, no Background Patents or Background
Technology shall be withdrawn from Schedule 2 without prior
written consent of Agrinomics.
(b) Agritope will retain all ownership, copyright, trade secrecy,
and other rights and title in and to all Background Technology
and Background Patents [ * ], subject only to the express
licenses granted herein.
(c) Agritope hereby grants to Agrinomics a nonexclusive,
royalty-free, worldwide license, with right to sublicense, to
use and to exercise the Background Technology and the
Background Patents [ * ] for research purposes during and in
support of the Research Program.
(d) Agritope hereby grants to Agrinomics a nonexclusive,
royalty-free, worldwide license, with right to sublicense,
under the Background Technology and the Background Patents, to
make, have made, use, sell, offer for sale, develop and
export/import any and all Program Products; provided, however,
that no right or license is granted to Agrinomics to exploit
commercially [ * ].
4. LICENSES AND COMMERCIALIZATION AGREEMENTS IN [ * ]
The specific terms, conditions, royalty rates or formulas, payment
terms, audit rights, and other aspects of the licenses, if any, under Section
3.1(e) above with respect to Program Products in [ * ] shall be determined under
mutual written Commercialization Agreements that shall be entered between
Agritope and Agrinomics prior to the conduct of any marketing or
commercialization activities under any such licenses. The parties acknowledge
and agree that, if and to the extent that it would be in the best interests of
Agrinomics to retain (and to have the right to license to other entities) rights
or licenses described in Section 3.1(e) in particular territories or in
particular products or applications, Agritope and Agrinomics will attempt in
good faith to agree that Agritope will not obtain licenses under Section 3.1(e)
in those territories, products, or applications. If the parties do not reach
agreement within ninety days starting from the first date of notification by
Agritope to Agrinomics (which notification shall occur within the [ * ] option
period stated in Section 3.1(e)) of Agritope's exercise of its option under
Section 3.1(e) with respect to a Program Product for implementation or
commercialization in a particular application in [ * ] (the "Notice Date" with
respect thereto), as to whether and to what extent there will be a license to
Agritope in particular territories, products, or applications for such Program
Product, then the provisions of such an agreement will be determined by binding
arbitration conducted in accordance with Section 10 below. If, in connection
with the negotiation of a Commercialization Agreement (to the extent there will
be a grant of a license to Agritope under Section 3.1(e)), the parties are not
in agreement on all the terms, including without limitation the scope and nature
of any exclusive rights thereunder, royalty rates, or other terms, within [ * ]
starting from the applicable Notice Date, then the provisions of such
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
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Commercialization Agreement will be determined by binding arbitration conducted
in accordance with Section 10 below, which arbitration shall as to any
Commercialization Agreement be guided by and consistent with the terms set forth
below in Section 4 (i) - (vii). The arbitrations referred to in the preceding
two sentences as to a particular Program Product may be conducted as a single
proceeding.
(i) If exclusive marketing rights under the Commercialization
Agreements are desired by Agritope, then Agritope or its
Affiliate or sublicensee would provide a marketing plan to
Agrinomics [ * ]. Based on this information, Agrinomics and
Agritope would negotiate in good faith to determine
geographical regions in which Agritope would have exclusive or
nonexclusive marketing rights with rights to sublicense.
Agrinomics would give Agritope exclusivity in [ * ], and
Agritope will be granted nonexclusive rights in other regions.
Any exclusive marketing rights granted for a particular
geographical region would become nonexclusive in the event
that Agritope and its sublicensees do not achieve and maintain
a substantial market share in such geographical region. The
definition of [ * ] would be determined by such arbitration,
if it is not otherwise mutually agreed to by Agrinomics and
Agritope on a case-by-case basis for each such Program
Product.
(ii) Agritope and its Affiliates shall grant to Agrinomics and its
Affiliates a nonexclusive, worldwide and perpetual license,
with right to sublicense, to make, have made, use, sell, offer
for sale, develop and import/export, in any crop or
application, any and all improvements on any Program Product
and/or Program Technology made by Agritope or its Affiliates
or sublicensees during the term of each such license. Such
license will be royalty-bearing, at a rate to be determined by
mutual agreement of Agritope and Agrinomics. If such mutual
agreement is not reached prior to the first commercial launch
by Agrinomics or its sublicensee of any product pursuant to
such sublicense, then such royalty rate shall be determined by
the arbitration referred to hereinabove, if it is not
otherwise mutually agreed to Agrinomics and Agritope on a
case-by-case basis.
(iii) Agritope and its Affiliates shall not grant any sublicenses
under any such license without the prior written consent of
Agrinomics, which consent shall not be unreasonably withheld
with respect to any such license to the extent the license to
Agritope is exclusive, it being agreed that consent to any
sublicensing of any such license to Agritope that is
nonexclusive may be withheld in Agrinomics' sole discretion.
Any such sublicense must, without limitation, provide that
Agrinomics shall have a royalty-free, nonexclusive, worldwide
and perpetual license, with right to sublicense, to make, have
made, use, sell, offer for sale, and import any or all
improvements made by the sublicensee during the term of such
sublicense.
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
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(iv) Royalties to be paid by Agritope to Agrinomics with respect to
fees or other consideration paid to Agritope or its Affiliates
by any sublicensee under any such license (other than fees or
consideration measured by sales of Program Products made by
the sublicensee and covered by net sales royalties pursuant to
the Commercialization Agreement) in return for the grant of
such sublicense, shall be [ * ].
(v) All royalties shall be paid quarterly, within [ * ] after the
end of the calendar quarter, in US Dollars, to Agrinomics'
account in Portland, Oregon.
(vi) Agritope shall keep, and shall cause its Affiliates and
sublicensees to keep, for at least five years, full and
accurate books and records in sufficient detail so that sums
due Agrinomics hereunder can be properly calculated. Agritope
shall permit, and shall cause its Affiliates and sublicensees
to permit, representatives of Agrinomics to examine its books
and records at reasonable times and intervals for the purpose
of verifying the accuracy of the written statements submitted
by Agritope and its Affiliates and sums paid or payable
hereunder. Such examination shall be made at the expense of
Agrinomics, except that if such examination discloses a
discrepancy of five percent (5%) or more in the amount of
royalties and other payments due to Agrinomics, then Agritope
shall reimburse Agrinomics for the costs of such examination.
(vii) Such licenses shall survive the expiration or termination of
the Term of this Agreement and shall be effective for the
longer of the duration of any applicable licensed patents, or
[ * ] following the date of the Commercialization Agreement
for the applicable Program Product. Following such term, such
licenses shall become fully-paid, worldwide and nonexclusive.
5. ACCOUNTS, BOOKS AND RECORDS
5.1 ACCOUNTS. Agritope shall maintain one or more segregated bank
accounts (the "Accounts") for the benefit of Agrinomics and in Agrinomics' name.
Agritope shall deposit directly into the Accounts any payments to Agrinomics, or
other funds belonging to Agrinomics, it receives.
5.2 COLLECTIONS AND PAYMENTS. Agritope shall have the right to
collect and remit money on Agrinomics' behalf and to settle claims in favor of
or against Agrinomics if the amount in controversy is less than $100,000.
Agritope shall be authorized to pay, on a current basis, the ordinary operating
expenses of Agrinomics not to exceed $100,000 per item.
5.3 PERIODIC REPORTS. Within thirty days after the start of each
calendar quarter during the Term, Agritope shall provide Agrinomics with a
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
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report listing all receipts into and disbursements from the Accounts for the
previous quarter. Agritope shall provide Agrinomics with copies of all bank
statements for the Accounts, and all funds in the Accounts shall be held by
Agritope in trust for Agrinomics.
5.4 BOOKS AND RECORDS. Agritope agrees to maintain adequate books
and records regarding the provision of Services under this Agreement, including
accounting for the Costs, with appropriate supporting documentation. Agrinomics
shall have, upon not less than forty-eight (48) hours prior written notice to
Agritope, access during normal business hours, to the books and records of
Agritope relating to the Services. Agrinomics shall have the right to review
such books and records and copy same at its own cost and expense.
5.5 AUDIT RIGHTS. Agrinomics shall have the right to audit
Agritope's books and records once every twelve months for the purpose of
confirming the Costs for the previous twelve month period. Agrinomics shall give
reasonable notice of its intent to audit, and the parties will attempt to
schedule such audit so as not to unreasonably interfere with the conduct of
Agritope's operations. Agrinomics agrees to notify Agritope within 30 days
should Agrinomics believe that all or any portion of an invoice or credit memo
is not supported by the audit, and the parties agree to meet promptly to resolve
any Cost which Agrinomics believes is not supported by the audit. Any such audit
shall be at the expense of Agrinomics, unless the inspection or audit reveals,
with respect to the period under audit, that the Costs have been overstated, or
royalties have been understated, by more than 5%, in which event Agritope shall
pay or reimburse Agrinomics for the reasonable expenses of such inspection or
audit, in addition to Agrinomics' other remedies for such overpayment or
underpayment.
6. FEES
6.1 IN GENERAL. Except as is otherwise provided with respect to
specific tasks or Services in the Operating Plan, Agrinomics shall pay or cause
to be paid to Agritope, as the exclusive compensation to Agritope for Services
to be performed by it hereunder, a fee (the "Fee") equal to the Costs.
6.2 BUDGETS; FEE PAYMENTS. Agrinomics shall pay Agritope the sum
of one-fourth of the applicable portion of the annual business plan budget per
quarter with a true-up for actual costs before the closing of Agritope's books
at year-end, on or before the first business day of each quarter, as an
estimated total Fee for all Services to be rendered to Agrinomics during such
quarter. Such quarterly payment shall be adjusted by mutual written agreement of
Agrinomics and Agritope as changes are made to Agrinomics' budget or the
Operating Plan, or otherwise as needed in light of experience of the parties
under this Agreement or any anticipated substantial change in the Services or
Costs thereof. Within 45 days after the end of each calendar quarter, or as near
thereto as practicable, Agritope shall compute and advise Agrinomics by invoice
or credit memo of the actual total amount payable hereunder for Services in
respect of such quarter. The parties shall make the proper adjustments to make
the amounts paid for Services during such quarter equal the Fees actually
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payable therefor, either by Agrinomics' paying any shortfall within ten days
following the end of such 45-day period, or by Agritope's giving Agrinomics a
credit against any subsequent payment in the amount of any prior overpayment.
7. CONFIDENTIALITY
7.1 PROTECTION OF INFORMATION. Each of Agritope and Agrinomics
agrees: (i) to take all reasonable precautions and to use its best efforts to
maintain the confidentiality of all Confidential Information (as defined below)
that such party (the "Recipient") obtains in respect to the other (the
"Disclosing Party"); and (ii) not to use or disclose such Confidential
Information to any third parties other than the Recipient's Affiliates that are
similarly bound to protect the same or otherwise with the written approval of
the Disclosing Party or as permitted by Section 7.2. "Confidential Information"
means all proprietary or confidential information owned or provided by a
Disclosing Party other than information that (A) was previously known to the
Recipient or any of its Affiliates (other than from a Disclosing Party or an
Affiliate thereof), or (B) is available or, without the fault of the Recipient
or any of its Affiliates (other than Agrinomics), becomes available to the
general public, or (C) is lawfully received by the Recipient from a third party
that, to the Recipient's knowledge, is not bound by any similar obligation of
confidentiality. The disclosure of Confidential Information shall not constitute
any grant of license or any other rights nor generate any business arrangements
unless specifically set forth herein or in another agreement.
7.2 CERTAIN DISCLOSURES. A Recipient may disclose Confidential
Information to appropriate regulatory authorities, attorneys, accountants and
pursuant to any order of a court, administrative agency or other governmental
authority and may take any lawful action that it deems necessary to protect its
interests or the interests of its Affiliates under, or to enforce compliance
with the terms and conditions of, this Agreement; PROVIDED, HOWEVER, that in the
event that it appears that a Recipient may become legally compelled to disclose
any Confidential Information, it will promptly consult with the Disclosing Party
as to the reasons for such disclosure and will afford the Disclosing Party a
reasonable opportunity to obtain a protective order as to such information and
will use reasonable efforts to obtain reliable assurance that the information
disclosed will be treated confidentially.
8. STATUS AND LIABILITIES OF THE PARTIES
8.1 NO AGENCY. Nothing herein contained shall make Agritope an
agent, general representative or employee of Agrinomics for any purpose, and
Agritope shall render the Services and perform its other obligations hereunder
as an independent contractor on a non-exclusive basis. Agritope shall not have
the power to bind Agrinomics unless and except as, in respect of any specific
matters, it is hereafter expressly authorized to do so in writing by Agrinomics.
8.2 DUTY OF GOOD FAITH. Agritope agrees to perform the Services
contemplated by the terms of this Agreement diligently and in good faith.
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Agritope shall not have liability for any act done or omitted to be done in the
performance of the Services unless done or omitted to be done as a result of
Agritope's gross negligence or willful misconduct.
8.3 INDEMNIFICATION. Agrinomics shall indemnify and defend
Agritope and its Affiliates (other than Agrinomics), licensees and permitted
assigns, and their respective directors, officers, and employees and agents (the
"Indemnified Parties") from and against (i) any and all claims of any employee
of Agrinomics relating to his or her employment, including claims of breach of
expenses or implied contract, benefits, wrongful termination, discrimination or
harassment, except to the extent such claims are the result of any action of
Agritope or its employees, acting in their capacity as such employees; (ii) any
and all claims of any third party arising from any of Agritope's actions or
omissions to act, within the scope of this Agreement, including without
limitation as to environmental matters; and (iii) any costs or expenses
(including reasonable attorneys' fees and costs) incurred by the Indemnified
Parties relating to such claims. Notwithstanding the foregoing, Agrinomics shall
have no liability for any claims, costs or expenses to the extent caused by
Agritope's gross negligence or willful misconduct, or Agritope's breach of its
agreements hereunder, and Agritope shall indemnify and defend Agrinomics and its
Affiliates (other than Agritope and its Affiliates), licensees and permitted
assigns, and their respective directors, officers, and employees and agents from
and against any claim arising by reason of such gross negligence, willful
misconduct or breach of its agreements hereunder, including without limitation
as to environmental matters.
8.4 NO WARRANTIES. Each party affirms that it has no actual
knowledge that any of the technology, rights or other services, products or
activities to be performed, licensed or provided by it under or in connection
with this Agreement would, as so performed or provided, or as used or further
distributed as contemplated, infringe any intellectual property right of any
person or entity. Each party will promptly inform the other of any such
knowledge that it may obtain during the term of this Agreement. EXCEPT AS FORTH
HEREIN, NEITHER PARTY MAKES ANY WARRANTIES HEREUNDER, WHETHER OF RESEARCH
SUCCESS, MERCHANTABILITY OR NONINFRINGEMENT, AND AGRITOPE AND AGRINOMICS HEREBY
DISCLAIM ANY IMPLIED WARRANTIES AND ANY WARRANTIES ARISING BY TRADE USAGE OR
COURSE OF PERFORMANCE.
8.5 NO CONSEQUENTIAL OR INCIDENTAL DAMAGES. In no event shall
either party have any liability to the other or to any third-party whomsoever
for consequential or incidental damages. Specifically, Agritope shall have no
liability for any consequential or incidental damages, whether arising from its
own acts or failures to act, or from services provided or failed to be provided
by third-party providers, except to the extent such damages involve harm to
persons or physical property and arise directly from Agritope's gross negligence
or willful misconduct. Agrinomics agrees that the remuneration to be paid to
Agritope hereunder for the Services contemplated herein reflect these
limitations of liability and disclaimers of warranties.
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9. TERM AND TERMINATION
9.1 TERM. The Term shall commence on the Closing Date under the
LLC Agreement, and shall expire on the earliest of: (a) the termination of the
LLC Agreement; (b) a termination hereof at the election of a Member pursuant to
a right to do so as described in the LLC Agreement; (c) June 30, 2004; or (d)
the date of termination otherwise specified in this Article 9. In the event of
an expiration of the Term pursuant to subsection (c) above, the Term shall
automatically renew as of July 1, 2004, and as of every October 1 thereafter for
a term that shall expire the following September 30, subject to the termination
provisions otherwise specified in this Article 9.
9.2 NON-RENEWAL. Either party to this Agreement may either (i)
terminate the Term effective at the end of the then-current Term, or (ii)
require renegotiation, with no obligation of either party to enter into an
agreement, of this Agreement, effective at the end of the then-current Term, by
giving written notice to the other party sixty (60) days in advance of the end
of the then-current Term. Once notice under this Section 9.2 has been given,
this Agreement will not automatically renew under Section 9.1.
9.3 TERMINATION FOR DEFAULT. If either party materially breaches
any of the terms, conditions or agreements contained in this Agreement to be
kept, observed or performed by it, the other party may terminate this Agreement,
at its option and without prejudice to any of its other legal or equitable
rights or remedies, by giving the party who committed the breach ninety (90)
days' notice in writing, unless the notified party within such 90-day period
shall have cured the breach. Neither party will be considered in breach of this
Agreement for purposes of the termination remedy stated herein during any period
in which there is a good faith dispute between the parties as to the existence
of such breach. If the parties are, despite negotiations at the highest levels
of their respective managements over a period of at least ninety days, unable to
resolve any good faith dispute between them as to the existence of such breach,
such dispute may at the election of either party be resolved in accordance with
Section 10.
9.4 EFFECT OF TERMINATION OR EXPIRATION. Any termination or
expiration of the Term will not affect any rights or obligations which have
arisen prior to the date of such termination. Except for a termination due to
the uncured default of Agrinomics, Agrinomics' licenses granted under Section
3.2(c) and 3.2(d) will survive any termination or expiration of the Term. Except
for a termination due to the uncured default of Agritope, Agritope's licenses
under clauses (a) and (c) - (f) of Section 3.1 and Section 4 will survive any
termination or expiration of the Term; provided, however, that Agritope's
licenses under clauses (c) - (f) of Section 3.1 (and its rights under Section 4
with respect thereto) will not apply to any Program Product containing protein
sequences, gene constructs, data, techniques, manuals, instructions, samples,
germplasm, inventions, development processes, assays, or improvements, first
discovered following the end of the Term. The provisions of Sections 5.4 and 5.5
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and Articles 7, 9, 10, and 11 will survive any termination or expiration of the
Term.
10. ARBITRATION OF DISPUTES
If the parties fail to reach agreement with respect to a dispute or
difference (other than as to a question relating to patent validity, which the
parties intend will be decided in litigation and not in arbitration), between
the parties arising out of or in connection with this Agreement, the dispute or
difference will be determined by arbitration in New York City, in accordance
with the Commercial Arbitration Rules of the American Arbitration Association by
an independent and impartial arbitrator, who (unless the parties agree
otherwise) shall have had both training and experience as an arbitrator of
agricultural technology licensing matters, including biotechnology, and who
shall be, and for at least ten years shall have been, a partner, shareholder or
member in a highly respected law firm headquartered in the United States. The
arbitrator may decide any issue as to whether, or as to the extent to which, any
dispute is subject to the arbitration and other dispute resolution provisions in
this Agreement. The arbitrator must base the award on the provisions of this
Agreement and must render the award in a writing which must include an
explanation of the reasons for such award. Any arbitration pursuant to this
section will be governed by the substantive laws of Delaware applicable to
contracts made and to be performed in that state, without regard to conflicts of
law rules, and by the arbitration law of the Federal Arbitration Act (9 U.S.C.
ss.1 et seq.). Judgment upon the award rendered by the arbitrator may be entered
by any court having jurisdiction thereof. The statute of limitations of Delaware
applicable to the commencement of a lawsuit will apply to the commencement of an
arbitration under this Section. All fees, costs and expenses of the arbitrator,
and all other costs and expenses of the arbitration, will be shared equally by
the parties to this Agreement unless such parties agree otherwise or unless the
arbitrator in the award assesses such costs and expenses against one of such
parties or allocates such costs and expenses other than equally between such
parties. Notwithstanding the foregoing, either party may, on good cause shown,
seek a temporary restraining order and/or a preliminary injunction from a court
of competent jurisdiction, to be effective pending the institution of the
arbitration process and the deliberation and award of the arbitrator.
11. GENERAL PROVISIONS
11.1 SEVERABILITY. If any provision of this Agreement shall be held
to be invalid, illegal or unenforceable, such provision shall be enforced to the
maximum extent permitted by law and the parties' fundamental intentions
hereunder, and the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
11.2 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties and supersedes all prior agreements, proposals, or
understandings, whether written or oral, other than the LLC Agreement and the
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<PAGE>
agreements referenced therein. No amendment of this Agreement shall be effective
unless set forth in writing and signed by authorized agents of both parties. No
waiver or consent to any departure by Agrinomics or Agritope from performance
under this Agreement shall be effective unless set forth in writing and signed
by an authorized agent of the party to be bound, nor shall any such waiver or
consent be construed beyond its explicit terms to imply any subsequent or other
instance of such performance.
11.3 ASSIGNMENT. The Services provided hereunder and/or any rights
and/or duties associated therewith may not be assigned or transferred by
Agritope without the prior written consent of Agrinomics, which consent will not
be unreasonably withheld or delayed; provided, however, that an assignment to an
Affiliate of Agritope will not require the consent of Agrinomics. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns.
11.4 FORCE MAJEURE. This Agreement shall not be terminated as a
result of any failure of a party to perform any of its obligations hereunder if
such failure is due to circumstances beyond its control (an "Event of Force
Majeure"), including, but not limited to, any requisition by any government
authority, act of war, strike, boycott, lockout, picket, riot, sabotage, civil
commotion, insurrection, epidemic, disease, act of God, fire, flood, accident,
explosion, earthquake, storm, failure of public utilities or common carriers,
mechanical failure, embargo, or prohibition imposed by any governmental body or
agency having authority over the party, provided, that at such time as an Event
of Force Majeure no longer exists, the respective obligations of the parties
hereto shall be reinstated and this Agreement shall continue in full force and
effect. The party affected by any Event of Force Majeure shall give prompt
written notice thereof to the other party hereto and each party each shall use
good faith efforts to minimize the duration and consequences of, and to
eliminate, any such Event of Force Majeure.
11.5 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the choice of law provisions of the State of Delaware or any other
jurisdiction to the contrary.
11.6 NOTICES. Any notice, request, instruction or other document to
be given hereunder shall be in writing, delivered in person, or mailed by
certified or registered mail, return receipt requested, or transmitted by
facsimile transmission with electronic confirmation of receipt to the
addressee's address or facsimile number set forth below (or such other address
or facsimile number as the party changing its address specifies in a notice to
the other parties):
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<PAGE>
To Agritope:
Agritope, Inc.
16160 SW Upper Boones Ferry Rd.
Portland, OR 97224, USA
Attention: Adolph J. Ferro, Chief Executive Officer
Facsimile: (503) 670-7703
with a copy to:
Perkins Coie LLP
411 -108th Avenue NE, Suite 1800
Bellevue, WA 98004, USA
Attention: Roger M. Tolbert, Esq.
Facsimile: (425) 453-7350
To Agrinomics:
Agrinomics LLC
16160 SW Upper Boones Ferry Rd.
Portland, OR 97224, USA
Attention: Adolph J. Ferro, Chief Executive Officer
Facsimile: (503) 670-7703
and with copies to:
Rhone-Poulenc Ag Company Inc.
2 T.W. Alexander Drive
Research Triangle Park
North Carolina 27709, USA
Attention: General Counsel
Facsimile: (919) 549-2500
Rhone-Poulenc Agro S.A.
14-20, rue Pierre Baizet
69 623 Lyon, FRANCE
Attention: General Counsel
Facsimile: (04) 72 85 29 81
Notices shall be deemed to have been given on the date of service, if served
personally on the party to whom notice is to be given , or on the first day
after transmission by facsimile transmission, if transmitted by facsimile as set
forth above, or on the fifth day after mailing, if mailed as set forth above.
11.7 HEADINGS. The headings of the sections of this Agreement have
been set forth for use of reference only and shall not be used to construe or
interpret the terms and conditions of this Agreement.
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<PAGE>
11.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
11.9 CONSTRUCTION. This Agreement has been submitted to the
scrutiny of, and has been negotiated by, all parties hereto and their counsel,
and shall be given a fair and reasonable interpretation in accordance with the
terms hereof, without consideration or weight being given to its having been
drafted by any party hereto or its counsel.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
AGRITOPE, INC.
By: /s/Adolph J. Ferro
Name: Adolph J. Ferro
Title: CEO
AGRINOMICS LLC
By: /s/Adolph J. Ferro
Name: Adolph J. Ferro
Title: CEO
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<PAGE>
SCHEDULE 1: [ * ]
-----------------
[ * ]
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
-21-
<PAGE>
SCHEDULE 2: BACKGROUND PATENTS AND BACKGROUND TECHNOLOGY
--------------------------------------------------------
[ * ]
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
EXHIBIT 10.3
(REDACTED)
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
<PAGE>
ASSIGNMENT AND ASSUMPTION AGREEMENT
AND BILL OF SALE
This Agreement and Bill of Sale, dated as of July 15, 1999, is
made by and between ACTTAG, Inc., a Delaware corporation ("ACTTAG"), and
Agrinomics LLC, a limited liability company organized and existing under the
laws of Delaware (the "Agrinomics"). ACTTAG and Agrinomics hereby agree as
follows:
1. ASSIGNMENT. As a contribution to the capital of Agrinomics
and in consideration for the issuance to ACTTAG of an interest in Agrinomics,
ACTTAG hereby: (i) assigns to Agrinomics, and Agrinomics hereby accepts, all of
ACTTAG's right, title and interest in the contracts listed in the attached
Schedule 1 (the "Contracts"); (ii) assigns, transfers, conveys and delivers to
Agrinomics, all of ACTTAG's right, title and interest in and to the biological
materials described in the attached Schedule 2 hereto (the "Existing Agritope
Collection"); and (iii) assigns, transfers, conveys and delivers to Agrinomics,
as the successor to that portion of Agritope's and ACTTAG's business to which
the trademarks "AGRINOMICS" and "ACTTAG" (the "Marks") pertain, all of ACTTAG's
right, title and interest in and to such Marks and any goodwill associated
therewith and all pending trademark applications with respect thereto. Schedule
1 and Schedule 2 are incorporated herein by this reference.
2. ASSUMPTION. Agrinomics hereby assumes all of the
obligations to be performed by ACTTAG under the Contracts after the date of this
Agreement and Bill of Sale (the "Assumed Obligations"). Agrinomics shall fully
and timely perform all of the Assumed Obligations in accordance with the
applicable Contracts.
3. DELIVERY. ACTTAG shall deliver to Agrinomics the Existing
Agritope Collection and a copy of ACTTAG's records (and the records in ACTTAG's
possession) pertaining to any of the Contracts or any of the Marks (including,
without limitation, copies of the Contracts, any amendments to the Contracts,
any reports and other documentation delivered under the Contracts, and any
correspondence with the other party to the Contracts to the extent relating to
the Contracts).
4. WARRANTY. ACTTAG warrants that all of its right, title and
interest in the Existing Agritope Collection, the Contracts, and the Marks are
assigned to Agrinomics pursuant to this Agreement and Bill of Sale free and
clear of any and all mortgages, deeds of trust, security interests and other
liens arising by, through or under ACTTAG. ACTTAG shall defend Agrinomics'
right, title and interest in the Existing Agritope Collection, the Contracts,
and the Marks against any such mortgage, deed of trust, security interest or
other lien.
5. DISCLAIMER. Except as may be explicitly stated in the LLC
Agreement establishing Agrinomics and in that certain Research and Management
Contract between Agritope and Agrinomics dated as of July 1, 1999, ACTTAG DOES
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NOT MAKE ANY WARRANTY (WHETHER OF MERCHANTABILITY, FITNESS, NON-INFRINGEMENT OR
OTHERWISE) WITH REGARD TO THE CONDITION, NATURE, PERFORMANCE, CAPACITY,
RESPONSIVENESS, QUALITY, SUITABILITY, FITNESS, SOURCE OR CHARACTERISTICS OF THE
EXISTING AGRITOPE COLLECTION, THE MARKS, OR OF ANY FACILITY, COLLECTIONS,
EQUIPMENT, SOFTWARE, SERVICES, GOODS OR OTHER ITEMS SUBJECT TO ANY OF THE
CONTRACTS. Agrinomics acknowledges that it has reviewed, understands and agrees
to all of the provisions of each Contract.
6. INDEMNITY BY ACTTAG AND AGRITOPE. ACTTAG shall defend and
indemnify, and has obtained the agreement of Agritope to defend and indemnify,
Agrinomics and its Members (other than ACTTAG) and their affiliates and their
officers, directors, shareholders, employees representatives, and agents, from
and against any and all claims that may arise out of any breach of or default
under any of the Contracts by ACTTAG or Agritope prior to the date of this
Agreement and Bill of Sale. Further, ACTTAG shall pay or reimburse, and has
obtained the agreement of Agritope to pay or reimburse, any and all costs,
expenses and attorneys' fees reasonably incurred by Agrinomics and its Members
(other than ACTTAG) and their affiliates and their officers, directors,
shareholders, employees representatives, and agents, in connection with the
defense, settlement or satisfaction of any such claim. However, ACTTAG's and
Agritope's obligations under this paragraph are conditioned upon Agrinomics' or
such parties': giving ACTTAG and Agritope prompt written notice of the claim;
cooperating with ACTTAG and Agritope in connection with ACTTAG's and Agritope's
defense, compromise, settlement and satisfaction of the claim; and not
compromising, settling or satisfying the claim without the prior written consent
of ACTTAG and Agritope, which consent shall not be unreasonably withheld.
7. INDEMNITY BY AGRINOMICS. Agrinomics shall defend and
indemnify ACTTAG and Agritope and their affiliates and their officers,
directors, shareholders, employees representatives, and agents from and against
any and all claims that may arise out of any breach of or default under any of
the Contracts by Agrinomics after the date of this Agreement and Bill of Sale.
Further, Agrinomics shall pay or reimburse any and all costs, expenses and
attorneys' fees reasonably incurred by ACTTAG or Agritope and their affiliates
and their officers, directors, shareholders, employees representatives, and
agents in connection with the defense, settlement or satisfaction of any such
claim. However, Agrinomics' obligations under this paragraph are conditioned
upon ACTTAG's and Agritope's or such parties': giving Agrinomics prompt written
notice of the claim; cooperating with Agrinomics in connection with Agrinomics'
defense, compromise, settlement and satisfaction of the claim; and not
compromising, settling or satisfying the claim without the prior written consent
of Agrinomics, which consent shall not be unreasonably withheld.
8. GOVERNING LAW; DISPUTES. This Agreement and Bill of Sale
shall be governed by and construed in accordance with the laws of the State of
Delaware, without regard to the choice of law provisions of the State of
Delaware or any other jurisdiction to the contrary. If the parties fail to reach
agreement with respect to a dispute or difference (other than as to a question
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<PAGE>
relating to patent validity, which the parties intend will be decided in
litigation and not in arbitration), between the parties arising out of or in
connection with this Agreement and Bill of Sale, the dispute or difference will,
to the fullest extent permitted by law, be determined by arbitration in New York
City, in accordance with the Commercial Arbitration Rules of the American
Arbitration Association by an independent and impartial arbitrator, who (unless
the parties agree otherwise) shall have had both training and experience as an
arbitrator of agricultural technology licensing matters, including
biotechnology, and who shall be, and for at least ten years shall have been, a
partner, shareholder or member in a highly respected law firm headquartered in
the United States. The arbitrator may decide any issue as to whether, or as to
the extent to which, any dispute is subject to the arbitration and other dispute
resolution provisions in this Agreement and Bill of Sale. The arbitrator must
base the award on the provisions of this Agreement and Bill of Sale and must
render the award in a writing which must include an explanation of the reasons
for such award. Any arbitration pursuant to this section will be governed by the
substantive laws of Delaware applicable to contracts made and to be performed in
that state, without regard to conflicts of law rules, and by the arbitration law
of the Federal Arbitration Act (9 U.S.C. ss.1 et seq.). Judgment upon the award
rendered by the arbitrator may be entered by any court having jurisdiction
thereof. The statute of limitations of Delaware applicable to the commencement
of a lawsuit will apply to the commencement of an arbitration under this
Section. All fees, costs and expenses of the arbitrator, and all other costs and
expenses of the arbitration, will be shared equally by the parties to this
Agreement and Bill of Sale unless such parties agree otherwise or unless the
arbitrator in the award assesses such costs and expenses against one of such
parties or allocates such costs and expenses other than equally between such
parties. Notwithstanding the foregoing, either party may, on good cause shown,
seek a temporary restraining order and/or a preliminary injunction from a court
of competent jurisdiction, to be effective pending the institution of the
arbitration process and the deliberation and award of the arbitrator.
9. ENTIRE AGREEMENT. This Agreement and Bill of Sale is made
pursuant to that certain Limited Liability Company Agreement between ACTTAG and
Rhone-Poulenc Ag Company dated as of July 1, 1999. This Agreement and Bill of
Sale, together with such LLC Agreement and the agreements referenced therein,
constitutes the entire agreement, and supersedes any and all prior agreements,
between the parties with respect to the Existing Agritope Collection, the
Contracts, and the Marks.
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<PAGE>
IN WITNESS WHEREOF, the parties have entered into this
Agreement and Bill of Sale as of the date first set forth above, and Agritope
has agreed to and signed this Agreement and Bill of Sale as to those portions of
the above that relate to Agritope's obligations.
ACTTAG, INC.: AGRINOMICS LLC:
- ------------ --------------
By: /s/Adoph J. Ferro By: /s/Adolph J. Ferro
Title: Adolph J. Ferro, President Title: Adolph J. Ferro, CEO
AGRITOPE, INC.:
- --------------
By: /s/Adoph J. Ferro
Title: Adolph J. Ferro, CEO
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<PAGE>
SCHEDULE 1: ASSIGNED CONTRACTS
------------------------------
1. That certain Research, License and Option Agreement dated as of
October 23, 1998, by and between The Salk Institute for Biological Sciences and
Agritope, Inc., as amended and as assigned to ACTTAG by Agritope, Inc.
2. That certain Research and Option to License Agreement dated as of
January 21, 1999, by and between the University Court of the University of
Edinburgh and Agritope, Inc., as assigned to ACTTAG by Agritope, Inc.
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<PAGE>
SCHEDULE 2: DESCRIPTION OF EXISTING AGRITOPE COLLECTION
-------------------------------------------------------
[ * ]
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
-7-
EXHIBIT 10.4
(REDACTED)
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
-1-
<PAGE>
RESEARCH CONTRACT AND LICENSE AGREEMENT
This Research Contract and License Agreement (the "Agreement") is
entered into as of July 1, 1999, by and between Rhone-Poulenc Ag Company Inc.
("RP Ag Co."), an incorporated company organized and existing under the laws of
New York and wholly-owned subsidiary of Rhone-Poulenc Agro S.A. ("Rhone-Poulenc
Agro"), and Agrinomics LLC ("Agrinomics"), a limited liability company organized
and existing under the laws of Delaware.
RECITALS
A. Agrinomics has been formed pursuant to that certain Limited
Liability Company Agreement dated as of July 1, 1999 (the "LLC Agreement"),
among Agritope, Inc. ("Agritope"), ACTTAG Inc. ("ACTTAG"), a wholly-owned
subsidiary of Agritope, and RP Ag Co., to conduct and coordinate a plant
functional genomics program (the "Research Program") involving the activation
tagging of large numbers of Arabidopsis plants in an attempt to create seeds and
plants in which one or more genes are overexpressed; screening to identify
phenotypic traits of interest in such plants; the isolation, sequencing and gene
rescue of the associated genotypes; confirmation of phenotypes using such genes;
and related activities, all as is more fully described in the Operating Plan of
Agrinomics as adopted and amended from time to time by the Members of Agrinomics
(the "Operating Plan"). Agrinomics expects to exploit the results of the
Research Program commercially as is more fully described in the Operating Plan.
Terms used herein and defined in the LLC Agreement shall have the meanings
specified in the LLC Agreement unless otherwise stated herein.
B. Agrinomics expects to exploit the results of the Research Program
commercially as is more fully described from time to time in the Operating Plan.
The agreements forming Agrinomics, and the Operating Plan, contemplate that RP
Ag Co. and its Affiliates will have certain marketing and commercialization
rights in defined fields of application for certain discoveries made in the
Research Program.
C. RP Ag Co. and its Affiliates have extensive experience, facilities,
technologies, and personnel that the parties believe will be useful in the
conduct of the Research Program.
D. Each of RP Ag Co. and Agrinomics desires that RP Ag Co. render (or
cause to be rendered by third parties) certain research services to Agrinomics,
at the request of Agrinomics, in accordance with the Operating Plan and this
Agreement.
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<PAGE>
AGREEMENT
1. DEFINITIONS
1.1 "AFFILIATE" means a person or entity that, directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with RP Ag Co. For purposes of this definition, the
term "control" means the possession, directly or indirectly, of 50% or more of
the share capital or voting rights. For the purposes of this Agreement only, RP
Ag Co. and Agrinomics will not be considered Affiliates of each other.
1.2 "AGRINOMICS PROGRAM PATENTS" means, other than the RP Ag Co.
Program Patents, Agrinomics' rights and interests, whether owned or licensed, in
and to the exploitation of United States and foreign patents and patent
applications, if any, including without limitation those rights and interests of
Agrinomics developed by it or acquired by it under any or all of the current or
future Research Contracts defined in the LLC Agreement, in each case covering or
disclosing any aspect or part of the Agrinomics Program Technology. As used in
this Agreement, "patent(s)" includes without limitation utility patents, whether
for articles, compounds, plants, plant materials or products, processes,
methods, or other patentable subject matter; plant variety protection
certificates and rights under the Plant Variety Protection Act of 1970, as
amended; plant patents under the Plant Patent Act of 1930, as amended; design
patents; utility model rights; and all similar legally-protectible rights or
properties in any nation or jurisdiction.
1.3 "AGRINOMICS PROGRAM TECHNOLOGY" means, other than the RP Ag
Co. Program Technology, any and all deliverables, services, intellectual
properties, rights, and contributions from any person or entity under the
Research Program, and all related information, technical or otherwise, and
protein sequences, gene constructs, data, techniques, manuals, instructions,
samples, germplasm, inventions, development processes, assays, improvements, and
specifications developed directly by Agrinomics in the course of the Research
Program or to be provided to it under any or all of the current or future
Research Contracts defined in the LLC Agreement, and all intellectual property
rights therein and thereto, to the extent owned by Agrinomics or to be licensed
or to be owned by Agrinomics under such Research Contracts.
1.4 [ * ]
1.5 "BACKGROUND PATENTS" means, other than the RP Ag Co. Program
Patents, RP Ag Co.'s and its Affiliates' rights under United States and foreign
patents and patent applications, if any, in each case covering or disclosing any
of the Background Technology or any inventions that are otherwise related to or
useful for the development or exploitation of the Program Technology, or any
Program Product, and all rights therein and thereto, to the extent the same are
owned by RP Ag Co. or its Affiliates or available for its or their use or
sublicensing without fee, royalty or encumbrance, as listed in Schedule 2 in
accordance with Section 3.2 below.
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE>
1.6 "BACKGROUND TECHNOLOGY" means, other than the RP Ag Co.
Program Technology, all information, technical or otherwise, including, but not
limited to, that comprised in formulae, protein sequences, gene constructs,
data, techniques, manuals, instructions, samples, germplasm, inventions,
development processes, assays, improvements, and specifications, delivered or
disclosed by RP Ag Co. or its Affiliates to Agrinomics prior to the date of this
Agreement with regard to the Research Program or disclosed by RP Ag Co. or its
Affiliates to Agrinomics hereafter during the period of the Research Program and
in the course of the Research Services, that is or may be related to or useful
in the Research Program or for the development or commercial exploitation of any
Program Technology or any Program Product, and all intellectual property rights
therein and thereto, to the extent the same are owned by RP Ag Co. or its
Affiliates or available for its or their use or sublicensing without fee,
royalty or encumbrance, as listed in Schedule 2 in accordance with Section 3.2
below.
1.7 "COSTS" means any direct and indirect cost and expense
incurred by RP Ag Co. in performing the Research Services hereunder, which are
attributable to its activities under this Agreement, including, but not limited
to:
(a) that part of the payroll costs (including any overtime, extra
compensation, payroll taxes and the cost of maintaining
employees' benefit plans) of RP Ag Co. and/or its Affiliates'
employees which is properly and reasonably attributable to the
performance of the Research Services; and
(b) that part of RP Ag Co.'s rent and other charges associated
with offices, greenhouses, and other facilities utilized by RP
Ag Co.'s personnel which is properly and reasonably
attributable to the performance of the Research Services;
(c) materials, supplies, usage of equipment and vehicles, and
similar items, to the extent the same will be devoted to the
Research Program, as is consistent with the Operating Plan;
(d) all filing, renewal, and other fees associated with any
permits, regulatory filings or other government authorizations
to the extent required for the conduct by RP Ag Co. and/or its
Affiliates of the Research Services, and all costs of
preparation of applications and supporting studies related
thereto; and
(e) that part of RP Ag Co.'s overhead and general office expenses
which is properly and reasonably attributable to the
performance of the Research Services; it being understood and
agreed that RP Ag Co. and Agrinomics will from time to time as
appropriate agree in writing upon the principles to be used in
the allocation of costs of RP Ag Co. under this Agreement.
-4-
<PAGE>
1.8 "EXCLUSIVITY PERIOD" means that period that is determined on a
country by country basis for each Program Product and that extends until there
are no longer any Program Patents in that country applicable to the making,
using, selling, offering for sale, developing or importing/exporting of the
relevant Program Product, or, if later, until all Program Technology relevant to
the applicable Program Product or its development has been disclosed without
restriction to the public (but in the case of countries in the European Union
where there are no longer any Program Patents based at least in part on
technology existing as of the Effective Date, the Exclusivity Period applicable
to the relevant Program Product will not extend longer in such country than ten
years from the first commercial sale thereof in any country in the European
Union). Restrictions on passive marketing (i.e., merely accepting unsolicited
orders) of a Program Product in the European Union will not (unless otherwise
permitted under applicable law) last more than five years from the first
commercial sale thereof in any country in the European Union.
1.9 The "FIELDS" described herein are, and are defined as:
[ * ]
1.10 [ * ]
1.11 "PROGRAM PATENTS" means the Agrinomics Program Patents and the
RP Ag Co. Program Patents.
1.12 "PROGRAM PRODUCTS" means products, processes and technologies
the relevant manufacture, use, sale, offer for sale, development or
import/export of which if done by third parties would in the applicable
jurisdiction infringe upon a claim of a Program Patent, or the conception,
discovery, isolation, or development of which was enabled in a material way by
the use of any Program Technology.
1.13 "PROGRAM TECHNOLOGY" means the Agrinomics Program Technology
and the RP Ag Co. Program Technology.
1.14 [ * ]
1.15 "RESEARCH SERVICES" means the research projects, services, and
licenses described in more detail in the Operating Plan as services to be
provided by RP Ag Co. and/or its Affiliates (as the case may be) to Agrinomics.
The parties anticipate that the Operating Plan will be amended and supplemented
by Agrinomics from time to time, but it is agreed that no change to the Research
Services called for from RP Ag Co. and/or its Affiliates under this Agreement
shall be made without RP Ag Co.'s and/or its Affiliates' prior written consent,
which will not be unreasonably withheld or delayed. Subject to the Operating
Plan and the preceding sentence, the Research Services will include, but will
not be limited to, the following:
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE>
(a) on-going consultation as to the formulation, amendment and
supplementation of the Operating Plan, including without
limitation, providing certain services from certain RP Ag Co.
employees for service on Agrinomics' Scientific Advisory
Committee and making recommendations to such Scientific
Advisory Committee and to Agrinomics' Board of Managers with
respect thereto;
(b) RP Ag Co. and/or its Affiliates (as the case may be) will
perform and/or provide the following principal tasks,
technologies and capabilities, as more fully described in the
Operating Plan with respect to all activities in the Research
Program (i.e., as applicable to or useful for the RP Ag Co.
Fields and otherwise):
[ * ]
(c) on-going coordination, as reasonably requested by Agrinomics
from time to time, of the Research Services described herein
with other services to be provided to Agrinomics by Agritope
and any third parties with which Agrinomics may from time to
time enter into research contracts, subscription contracts,
license agreements, testing or certification agreements,
marketing or distribution agreements, or other agreements as
contemplated in the Operating Plan (the "Alliance Parties");
and
(d) rendering assistance and consultation in relation to
Agrinomics' patent strategies filings, prosecution and
maintenance activities, in coordination with Agrinomics'
Patent Committee, including without limitation, providing
certain services from certain RP Ag Co. employees for service
on Agrinomics' Patent Committee.
1.16 [ * ]
1.17 "RP AG CO. PROGRAM PATENTS" means RP Ag Co.'s and its
Affiliates' rights and interests in United States and foreign patents and patent
applications, if any, arising from work or activities conducted as part of the
Research Services or otherwise covering any invention, discovery or improvement
made or acquired by or for RP Ag Co. or its Affiliates (whether solely or
jointly with others) in the course of the Research Services or in connection
with the conduct of the Research Program, including without limitation those
rights and interests of RP Ag Co. and its Affiliates to be transferred hereunder
to Agrinomics.
1.18 "RP AG CO. PROGRAM TECHNOLOGY" means any and all deliverables,
services, intellectual properties, rights, and contributions provided or agreed
to be provided by RP Ag Co. under the Research Program, and protein sequences,
gene constructs, data, techniques, manuals, instructions, samples, germplasm,
inventions, development processes, assays, improvements, and specifications to
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE>
be developed by RP Ag Co. directly in the course of the Research Program, and
all intellectual property rights therein and thereto.
1.19 [ * ]
1.20 "TERM" means the period of this Agreement as determined under
Article 8 hereof, during which the Research Services will be performed.
2. AGREEMENT TO PERFORM RESEARCH SERVICES; DUTY OF COOPERATION
RP Ag Co., directly or through one or more of its Affiliates, or
through third parties subject to the prior written consent of Agrinomics, hereby
agrees during the Term to provide, or cause to be provided by third parties, the
Research Services; provided, however, that RP Ag Co. reserves the right to
decline to render or cause to be rendered Research Services in any case where RP
Ag Co., in its judgment, does not have adequate facilities, personnel or
resources to perform or cause to be performed the Research Services, or where
providing the Research Services would violate RP Ag Co. policies or relevant
law. RP Ag Co. will exert commercially reasonable efforts to obtain any and all
permits or regulatory filings or other government authorizations for the conduct
by it of the Services hereunder. Agrinomics shall assist RP Ag Co. in all such
efforts and otherwise shall provide RP Ag Co. with sufficient information and
assistance as reasonably requested by RP Ag Co. to enable RP Ag Co. to provide
or cause to be provided the Research Services.
3. PROGRAM TECHNOLOGY/PATENTS AND LICENSES
3.1 RIGHTS IN PROGRAM TECHNOLOGY AND PROGRAM PATENTS
(a) All ownership, copyright, patent, trade secrecy, and other
rights and title in and to all Program Technology and Program
Patents shall be owned solely by Agrinomics. RP Ag Co. hereby
transfers and assigns to Agrinomics all of the foregoing,
whether now existing or hereafter coming into existence,
subject to the rights of third parties. RP Ag Co. will assist
Agrinomics as requested during and after the term of this
Agreement to further evidence and perfect Agrinomics' rights
in such property, including without limitation, securing
appropriate agreements from its Affiliates and contractors,
executing additional instruments of conveyance, and assisting
Agrinomics with applications for patents, copyright
registrations, or other registrations. Agrinomics may by
written notice to RP Ag Co. from time to time decline to
accept any RP Ag Co. Program Patents as such hereunder, either
entirely or on a country-by-country basis, from that time
forward, and in that event such declined patent or application
shall not be part of the RP Ag Co. Program Patents, but shall
be considered part of the Background Patents.
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
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(b) Agrinomics hereby grants to RP Ag Co. and its Affiliates a
nonexclusive, royalty-free, worldwide license, with no right
to sublicense, to use and to exercise the Program Technology
and the Program Patents for research purposes during and in
support of the Research Program.
(c) Agrinomics hereby grants to RP Ag Co. a worldwide license,
with right to sublicense, under the Program Technology and the
Program Patents and as described in Section 4.1(a) below, to
make, have made, use, sell, offer for sale, develop, and
import/export any and all Program Products within [ * ]. This
license under this Section 3.1(c) shall be exclusive during
the Exclusivity Period to the extent that [ * ] and otherwise
shall be nonexclusive. Notwithstanding the foregoing,
Agrinomics and RP Ag Co. hereby agree that, [ * ] RP Ag Co.
hereby grants to Agritope, as a third-party beneficiary, the
right to enter into one or more exclusive (where such rights
of RP Ag Co. are exclusive hereunder, and otherwise
nonexclusive) implementation and worldwide commercialization
agreements, as described in Section 4.1(b) below, with respect
to the exploitation of any Program Technology and/or Program
Patents in the [ * ] in one or more of [ * ]. If in any
particular instance, Agritope declines its right to obtain any
such license, [ * ] or shall not respond prior to the end of
that time period, the rights for that Program Product in that
crop in [ * ] shall revert to RP Ag Co. pursuant to this
Section 3.1(c).
(d) Agrinomics hereby grants to RP Ag Co. and its Affiliates:
(i) [ * ] option [ * ] to obtain, pursuant to Section 4.2
below, a royalty-bearing, worldwide license under the
Program Technology and the Program Patents, to make,
have made, use, sell, offer for sale, develop, and
import/export any [ * ]; and
(ii) [ * ] option [ * ] to negotiate with Agrinomics to
obtain a license, under terms and with a scope to be
determined as provided in Section 4.3 below, to make,
have made, use, sell, offer for sale, develop, and
import/export any Program Product that [ * ].
(e) Agrinomics hereby agrees to afford RP Ag Co. and its
Affiliates a right of first negotiation and, if applicable as
described below, a right of first refusal, to contract with
Agrinomics to conduct any Agrinomics project directed to the
implementation or commercialization within the [ * ] of any
novel genes owned by Agrinomics and discovered by Agrinomics
or its Affiliates or contractors directly in the course of the
Research Program; provided, however that these rights shall
not apply to any project directed to any [ * ].
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE>
(i) Pursuant to such right of first negotiation,
Agrinomics shall notify RP Ag Co. of any decision by
Agrinomics during the Term to conduct any
implementation or commercialization project covered
by RP Ag Co.'s rights under this clause (e). Such
decision is acknowledged to be that of Agrinomics to
make in its sole discretion. Agrinomics shall
negotiate in good faith with RP Ag Co. and only with
RP Ag Co., for a period of [ * ] following such
notification in order to reach agreement on RP Ag
Co.'s or its Affiliates' conducting such project.
Such an agreement, if reached, may include a
commercialization agreement with respect any Program
Product that may result from such project, or it may
provide that a commercialization agreement therefor
would be entered later, pursuant to Section 4.2.
(ii) If, despite such good faith efforts, such an
agreement is not reached in the negotiation period,
RP Ag Co. shall be afforded a further period of [ * ]
during which it would have a right of first refusal
to accept any deal for such a implementation or
commercialization project in the same gene in the
[ * ] offered by Agrinomics to any other person or
entity on terms that are, taken as a whole, more
beneficial to such other person or entity than the
best terms Agrinomics had offered to RP Ag Co. during
the negotiation period (that is, if Agrinomics so
offers any such deals in such period). If no such
more favorable deals are offered, or if offered, RP
Ag Co. declines to agree to perform them [ * ], then
Agrinomics shall be free to enter into one or more
agreements with third parties for the conduct of such
projects. [ * ]
(f) Agrinomics hereby grants to RP Ag Co. and its Affiliates a
nonexclusive, royalty-free, worldwide license, with no right
to sublicense, to use and to exercise the RP Ag Co. Program
Technology (but not any of the Program Patents, unless
otherwise stated in this Agreement or under a separate
agreement) for internal research purposes;
(g) [ * ]
3.2 LICENSES TO BACKGROUND TECHNOLOGY AND BACKGROUND PATENTS
(a) Schedule 2 hereto contains a complete list and description of
all Background Patents and Background Technology, as currently
anticipated by RP Ag Co. RP Ag Co. shall promptly (and at
least annually) supplement such list and description
throughout the Term by written notices to Agrinomics if and
when any additional Background Patents or Background
Technology not previously so listed and described is used or
applied, or is proposed to be used or applied, by RP Ag Co. or
its Affiliates, at their sole discretion, in performing the
Research Services or otherwise in connection with the Research
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
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Program. For the avoidance of doubt, no Background Patents or
Background Technology shall be withdrawn from Schedule 2
without prior written consent of Agrinomics.
(b) RP Ag Co. will retain all ownership, copyright, trade secrecy,
and other rights and title in and to all Background Technology
and Background Patents [ * ], subject only to the express
licenses granted herein.
(c) RP Ag Co. hereby grants to Agrinomics a nonexclusive,
royalty-free, worldwide license, with right to sublicense, to
use and to exercise the Background Technology and the
Background Patents (including without limitation [ * ]) for
research purposes during and in support of the Research
Program.
(d) Subject to RP Ag Co. rights under Section 3.1 above, RP Ag Co.
hereby grants to Agrinomics a nonexclusive, royalty-free,
worldwide license, with right to sublicense, under the
Background Technology and the Background Patents, to make,
have made, use, sell, offer for sale, and import any and all
Program Products; provided, however, that no right or license
is granted to Agrinomics to exploit commercially [ * ].
4. LICENSES AND COMMERCIALIZATION AGREEMENTS
4.1 EXCLUSIVE LICENSES IN THE [ * ]
(a) The parties hereby agree that all licenses in [ * ] as and to
the extent stated in Section 3.1(c). The specific terms,
conditions, royalty rates or formulas, payment terms, audit
rights, and other aspects of the exclusive licenses hereunder
(apart from the worldwide exclusivity PER SE which is
automatically granted, as and to the extent stated in Section
3.1(c)) in [ * ] shall be determined by mutual written
agreements (the "Commercialization Agreements") to be entered
between Agrinomics and RP Ag Co. prior to the conduct of any
marketing or commercialization activities under such licenses.
If, in connection with the negotiation of a Commercialization
Agreement, the parties are not in agreement on all the terms,
including without limitation, royalty rates, or other terms,
within [ * ] starting from the date of notification by RP Ag
Co. of its intent to enter into a Commercialization Agreement,
then the provisions of the Commercialization Agreement as to
such terms will be determined by binding arbitration conducted
in accordance with Section 9 below. [ * ] then, in
consideration for such rights granted to Agrinomics, RP Ag Co.
and its Affiliates [ * ].
(b) The specific terms, conditions, royalty rates or formulas,
payment terms, audit rights, and other aspects of Agritope's
exclusive licenses, to the extent stated in Section 3.1(c), in
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE>
[ * ] shall be determined by mutual written agreements (the
"Commercialization Agreements") to be entered between Agritope
and RP Ag Co. prior to the conduct of any marketing or
commercialization activities under such licenses. If, in
connection with the negotiation of a Commercialization
Agreement, Agritope and RP Ag Co. are not in agreement on all
the terms, including without limitation, royalty rates, or
other terms, within [ * ] starting from the date of
notification by RP Ag Co. to Agritope of its intent to enter
into a Commercialization Agreement with respect to [ * ], then
the provisions of the Commercialization Agreement as to such
terms will be determined by binding arbitration conducted
between RP Ag Co. and Agritope under an arbitration agreement
on substantially the terms set forth in Section 9 below. [ * ]
4.2 RIGHT TO OBTAIN LICENSES FOR [ * ]
The specific terms, conditions, royalty rates or formulas, payment
terms, audit rights, and other aspects of the licenses under Section 3.1(d)(i)
above with respect to [ * ] shall be determined under mutual written
Commercialization Agreements to be entered between RP Ag Co. and Agrinomics
prior to the conduct of any marketing or commercialization activities under such
licenses. If, in connection with the negotiation of a Commercialization
Agreement, the parties are not in agreement on all the terms, including without
limitation, the scope and nature of any exclusive rights thereunder, royalty
rates, or other terms, within [ * ] starting from the first date of notification
by RP Ag Co. to Agrinomics (which notification shall occur within the [ * ]
option period stated in Section 3.1(d)(i)) of its desire to enter into such a
Commercialization Agreement with respect to a particular [ * ] in a particular
application (the "Notice Date" with respect thereto), then the provisions of
such Commercialization Agreement will be determined by binding arbitration
conducted in accordance with Section 9 below, which arbitration shall be guided
by and consistent with the following terms:
(i) If exclusive marketing rights under the Commercialization
Agreements are desired by RP Ag Co., then RP Ag Co. or its
Affiliate or sublicensee would provide a marketing plan to
Agrinomics, [ * ]. Based on this information, Agrinomics and
RP Ag Co. would negotiate in good faith to determine
geographical regions in which RP Ag Co. would have exclusive
or nonexclusive marketing rights with rights to sublicense.
Agrinomics would give RP Ag Co. exclusivity in [ * ], and RP
Ag Co. will be granted nonexclusive rights in other regions.
Any exclusive marketing rights granted for a particular
geographical region would become nonexclusive in the event
that RP Ag Co. and its sublicensees do not achieve and
maintain a substantial market share in such geographical
region. The definition of [ * ] would be determined by such
arbitration, if it is not otherwise mutually agreed to by
Agrinomics and RP Ag Co. on a case-by-case basis for each such
[ * ].
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE>
(ii) RP Ag Co. and its Affiliates shall grant to Agrinomics and its
Affiliates a nonexclusive, worldwide and perpetual license,
with right to sublicense, to make, have made, use, sell, offer
for sale, develop and import/export, in any crop or
application, any and all improvements on any Program Product
and/or Program Technology made by RP Ag Co. or its Affiliates
or sublicensees during the term of each such license. Such
license will be royalty-bearing, at a rate to be determined by
mutual agreement of RP Ag Co. and Agrinomics. If such mutual
agreement is not reached prior to the first commercial launch
by Agrinomics or its sublicensee of any product pursuant to
such sublicense, then such royalty rate shall be determined by
the arbitration referred to hereinabove, if it is not
otherwise mutually agreed to Agrinomics and RP Ag Co. on a
case-by-case basis.
(iii) RP Ag Co. and its Affiliates shall not grant any sublicenses
under any such license without the prior written consent of
Agrinomics, which consent shall not be unreasonably withheld
with respect to any such license to the extent the license to
RP Ag Co. is exclusive, it being agreed that consent to any
sublicensing of any such license to RP Ag Co. that is
nonexclusive may be withheld in Agrinomics' sole discretion.
Any such sublicense must, without limitation, provide that
Agrinomics shall have a royalty-free, nonexclusive, worldwide
and perpetual license, with right to sublicense, to make, have
made, use, sell, offer for sale, and import any or all
improvements made by the sublicensee during the term of such
sublicense.
(iv) Royalties to be paid by RP Ag Co. to Agrinomics with respect
to fees or other consideration paid to RP Ag Co. or its
Affiliates by any sublicensee under any such license (other
than fees or consideration measured by sales of [ * ] made by
the sublicensee and covered by net sales royalties pursuant to
the Commercialization Agreement) in return for the grant of
such sublicense, shall be [ * ].
(v) All royalties shall be paid quarterly, within [ * ] after the
end of the calendar quarter, in US Dollars, to Agrinomics'
account in Portland, Oregon.
(vi) RP Ag Co. shall keep, and shall cause its Affiliates and
sublicensees to keep, for at least five years, full and
accurate books and records in sufficient detail so that sums
due Agrinomics hereunder can be properly calculated. RP Ag Co.
shall permit, and shall cause its Affiliates and sublicensees
to permit, representatives of Agrinomics to examine its books
and records at reasonable times and intervals for the purpose
of verifying the accuracy of the written statements submitted
by RP Ag Co. and its Affiliates and sums paid or payable
hereunder. Such examination shall be made at the expense of
Agrinomics, except that if such examination discloses a
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE>
discrepancy of five percent (5%) or more in the amount of
royalties and other payments due to Agrinomics, then RP Ag Co.
shall reimburse Agrinomics for the costs of such examination.
(vii) Such licenses shall survive the expiration or termination of
the Term of this Agreement and shall be effective for the
longer of the duration of any applicable licensed patents, or
[ * ] following the date of the Commercialization Agreement
for the applicable [ * ]. Following such term, such licenses
shall become fully-paid, worldwide and nonexclusive.
4.3 RIGHT TO NEGOTIATE LICENSES FOR OTHER PROGRAM PRODUCTS
The specific terms, conditions, royalty rates or formulas, payment
terms, audit rights, and other aspects of the licenses, if any, under Section
3.1(d)(ii) above with respect to Program Products that are not [ * ] shall be
determined under mutual written Commercialization Agreements that may be entered
between RP Ag Co. and Agrinomics prior to the conduct of any marketing or
commercialization activities under any such licenses. The parties acknowledge
and agree that, if and to the extent that it would be in the best interests of
Agrinomics to retain (and to have the right to license to other entities) rights
or licenses described in Section 3.1(d)(ii) in particular territories or in
particular products or applications, RP Ag Co. and Agrinomics will attempt in
good faith to agree that RP Ag Co. will not obtain licenses under Section
3.1(d)(ii) in those territories, products, or applications. If the parties do
not reach agreement within [ * ] starting from the first date of notification by
RP Ag Co. to Agrinomics (which notification shall occur within the [ * ] option
period stated in Section 3.1(d)(ii)) of RP Ag Co.'s exercise of its option under
Section 3.1(d)(ii) with respect to a Program Product for implementation or
commercialization in a particular application (the "Notice Date" with respect
thereto), as to whether and to what extent there will be a license to RP Ag Co.
in particular territories, products, or applications for such Program Product,
then the provisions of such an agreement will be determined by binding
arbitration conducted in accordance with Section 9 below. If, in connection with
the negotiation of a Commercialization Agreement (to the extent there will be a
grant of a license to RP Ag Co. under Section 3.1(d)(ii)), the parties are not
in agreement on all the terms, including without limitation the scope and nature
of any exclusive rights thereunder, royalty rates, or other terms, within [ * ]
starting from the applicable Notice Date, then the provisions of such
Commercialization Agreement will be determined by binding arbitration conducted
in accordance with Section 9 below, which arbitration shall as to any
Commercialization Agreement be guided by and consistent with the terms set forth
in Section 4.2 (i) - (vii). The arbitrations referred to in the preceding two
sentences as to a particular Program Product may be conducted as a single
proceeding.
5. FEES AND CAPITAL COSTS
5.1 IN GENERAL. Except as is otherwise provided with respect to
specific tasks or Services in the Operating Plan, Agrinomics shall pay or cause
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE>
to be paid to RP Ag Co., as the exclusive compensation to RP Ag Co. for Research
Services to be performed by it hereunder, a fee (the "Fee") equal to the Costs.
5.2 BUDGETS; FEE PAYMENTS. Agrinomics shall pay RP Ag Co. the sum of
one-fourth of the applicable portion of the annual business plan budget per
quarter with a true-up for actual costs before the closing of RP Ag Co.'s books
at year-end, on or before the first business day of each quarter, as an
estimated total Fee for all Research Services to be rendered to Agrinomics
during such quarter. Such quarterly payment shall be adjusted by mutual written
agreement of Agrinomics and RP Ag Co. as changes are made to Agrinomics' budget
or the Operating Plan, or otherwise as needed in light of experience of the
parties under this Agreement or any anticipated substantial change in the
Research Services or Costs thereof. Within 45 days after the end of each
calendar quarter, or as near thereto as practicable, RP Ag Co. shall compute and
advise Agrinomics by invoice or credit memo of the actual total amount payable
hereunder for Research Services in respect of such quarter. The parties shall
make the proper adjustments to make the amounts paid for Research Services
during such quarter equal the Fees actually payable therefor, either by
Agrinomics' paying any shortfall within ten days following the end of such
45-day period, or by RP Ag Co.'s giving Agrinomics a credit against any
subsequent payment in the amount of any prior overpayment.
5.3 BOOKS AND RECORDS. RP Ag Co. agrees to maintain adequate books and
records regarding the provision of Research Services under this Agreement,
including accounting for the Costs, with appropriate supporting documentation.
Agrinomics shall have, upon not less than forty-eight (48) hours prior written
notice to RP Ag Co., access during normal business hours, to the books and
records of RP Ag Co. relating to the Research Services. Agrinomics shall have
the right to review such books and records and copy same at its own cost and
expense.
5.4 AUDIT RIGHTS. Agrinomics shall have the right to audit RP Ag Co.'s
books and records once every twelve months for the purpose of confirming the
Costs for the previous twelve month period. Agrinomics shall give reasonable
notice of its intent to audit, and the parties will attempt to schedule such
audit so as not to unreasonably interfere with the conduct of RP Ag Co.'s
operations. Agrinomics agrees to notify RP Ag Co. within 30 days should
Agrinomics believe that all or any portion of an invoice or credit memo is not
supported by the audit, and the parties agree to meet promptly to resolve any
Cost which Agrinomics believes is not supported by the audit. Any such audit
shall be at the expense of Agrinomics, unless the inspection or audit reveals,
with respect to the period under audit, that the Costs have been overstated, or
royalties have been understated, by more than 5%, in which event RP Ag Co. shall
pay or reimburse Agrinomics for the reasonable expenses of such inspection or
audit, in addition to Agrinomics' other remedies for such overpayment or
underpayment.
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6. CONFIDENTIALITY
6.1 PROTECTION OF INFORMATION. Each of RP Ag Co. and Agrinomics agrees:
(i) to take all reasonable precautions and to use its best efforts to maintain
the confidentiality of all Confidential Information (as defined below) that such
party (the "Recipient") obtains in respect to the other (the "Disclosing
Party"); and (ii) not to use or disclose such Confidential Information to any
third parties other than the Recipient's Affiliates that are similarly bound to
protect the same or otherwise with the written approval of the Disclosing Party
or as permitted by Section 6.2. "Confidential Information" means all proprietary
or confidential information owned or provided by a Disclosing Party other than
information that (A) was previously known to the Recipient or any of its
Affiliates (other than from a Disclosing Party or an Affiliate thereof), or (B)
is available or, without the fault of the Recipient or any of its Affiliates
(other than Agrinomics), becomes available to the general public, or (C) is
lawfully received by the Recipient from a third party that, to the Recipient's
knowledge, is not bound by any similar obligation of confidentiality. The
disclosure of Confidential Information shall not constitute any grant of license
or any other rights nor generate any business arrangements unless specifically
set forth herein or in another agreement.
6.2 CERTAIN DISCLOSURES. A Recipient may disclose Confidential
Information to appropriate regulatory authorities, attorneys, accountants and
pursuant to any order of a court, administrative agency or other governmental
authority and may take any lawful action that it deems necessary to protect its
interests or the interests of its Affiliates under, or to enforce compliance
with the terms and conditions of, this Agreement; PROVIDED, HOWEVER, that in the
event that it appears that a Recipient may become legally compelled to disclose
any Confidential Information, it will promptly consult with the Disclosing Party
as to the reasons for such disclosure and will afford the Disclosing Party a
reasonable opportunity to obtain a protective order as to such information and
will use reasonable efforts to obtain reliable assurance that the information
disclosed will be treated confidentially.
7. STATUS AND LIABILITIES OF THE PARTIES
7.1 NO AGENCY. Nothing herein contained shall make RP Ag Co. an agent,
general representative or employee of Agrinomics for any purpose, and RP Ag Co.
shall render the Research Services and perform its other obligations hereunder
as an independent contractor on a non-exclusive basis. RP Ag Co. shall not have
the power to bind Agrinomics unless and except as, in respect of any specific
matters, it is hereafter expressly authorized to do so in writing by Agrinomics.
7.2 DUTY OF GOOD FAITH. RP Ag Co. agrees to perform the Research
Services contemplated by the terms of this Agreement diligently and in good
faith. RP Ag Co. shall not have liability for any act done or omitted to be done
in the performance of the Research Services unless done or omitted to be done as
a result of RP Ag Co.'s gross negligence or willful misconduct.
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7.3 INDEMNIFICATION. Agrinomics shall indemnify and defend RP Ag Co.
and its Affiliates (other than Agrinomics), licensees and permitted assigns, and
their respective directors, officers, and employees and agents (the "Indemnified
Parties") from and against (i) any and all claims of any employee of Agrinomics
relating to his or her employment, including claims of breach of expenses or
implied contract, benefits, wrongful termination, discrimination or harassment,
except to the extent such claims are the result of any action of RP Ag Co. or
its employees, acting in their capacity as such employees; (ii) any and all
claims of any third party arising from any of RP Ag Co.'s actions or omissions
to act, within the scope of this Agreement, including without limitation as to
environmental matters; and (iii) any costs or expenses (including reasonable
attorneys' fees and costs) incurred by the Indemnified Parties relating to such
claims. Notwithstanding the foregoing, Agrinomics shall have no liability for
any claims, costs or expenses to the extent caused by RP Ag Co.'s gross
negligence or willful misconduct, or RP Ag Co.'s breach of its agreements
hereunder, and RP Ag. Co. shall indemnify and defend Agrinomics and its
Affiliates (other than RP Ag Co. and its Affiliates), licensees and permitted
assigns, and their respective directors, officers, and employees and agents from
and against any claim arising by reason of such gross negligence, willful
misconduct or breach of its agreements hereunder, including without limitation
as to environmental matters.
7.4 NO WARRANTIES. Each party affirms that it has no actual knowledge
that any of the technology, rights or other services, products or activities to
be performed, licensed or provided by it under or in connection with this
Agreement would, as so performed or provided, or as used or further distributed
as contemplated, infringe any intellectual property right of any person or
entity. Each party will promptly inform the other of any such knowledge that it
may obtain during the term of this Agreement. EXCEPT AS FORTH HEREIN, NEITHER
PARTY MAKES ANY WARRANTIES HEREUNDER, WHETHER OF RESEARCH SUCCESS,
MERCHANTABILITY OR NONINFRINGEMENT, AND RP AG CO. AND AGRINOMICS HEREBY DISCLAIM
ANY IMPLIED WARRANTIES AND ANY WARRANTIES ARISING BY TRADE USAGE OR COURSE OF
PERFORMANCE.
7.5 NO CONSEQUENTIAL OR INCIDENTAL DAMAGES. In no event shall either
party have any liability to the other or to any third-party whomsoever for
consequential or incidental damages. Specifically, RP Ag Co. shall have no
liability for any consequential or incidental damages, whether arising from its
own acts or failures to act, or from services provided or failed to be provided
by third-party providers, except to the extent such damages involve harm to
persons or physical property and arise directly from RP Ag Co.'s gross
negligence or willful misconduct. Agrinomics agrees that the remuneration to be
paid to RP Ag Co. hereunder for the Research Services contemplated herein
reflects these limitations of liability and disclaimers of warranties.
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8. TERM AND TERMINATION
8.1 TERM. The Term shall commence on the Closing Date under the LLC
Agreement, and shall expire on the earliest of: (a) the termination of the LLC
Agreement, (b) a termination hereof at the election of a Member pursuant to a
right to do so as described in the LLC Agreement; (c) June 30, 2004, or (d) the
date of termination otherwise specified in this Article 8. In the event of an
expiration of the Term pursuant to subsection (c) above, the Term shall
automatically renew as of July 1, 2004, and as of every October 1 thereafter for
a term that shall expire the following September 30, subject to the termination
provisions otherwise specified in this Article 8.
8.2 NON-RENEWAL. Either party to this Agreement may either (i)
terminate the Term effective at the end of the then-current Term, or (ii)
require renegotiation of this Agreement, with no obligation of either party to
enter into an agreement, effective at the end of the then-current Term, by
giving written notice to the other party sixty (60) days in advance of the end
of the then-current Term. Once notice under this Section 8.2 has been given,
this Agreement will not automatically renew under Section 8.1.
8.3 TERMINATION FOR DEFAULT. If either party materially breaches any of
the terms, conditions or agreements contained in this Agreement to be kept,
observed or performed by it, the other party may terminate this Agreement, at
its option and without prejudice to any of its other legal or equitable rights
or remedies, by giving the party who committed the breach ninety (90) days'
notice in writing, unless the notified party within such 90-day period shall
have cured the breach. Neither party will be considered in breach of this
Agreement for purposes of the termination remedy stated herein during any period
in which there is a good faith dispute between the parties as to the existence
of such breach. If the parties are, despite negotiations at the highest levels
of their respective managements over a period of at least ninety days, unable to
resolve any good faith dispute between them as to the existence of such breach,
such dispute may at the election of either party be resolved in accordance with
Section 9.
8.4 EFFECT OF TERMINATION OR EXPIRATION. Any termination or expiration
of the Term will not affect any rights or obligations which have arisen prior to
the date of such termination. Except for a termination due to the uncured
default of Agrinomics, Agrinomics' licenses granted under Section 3.2 will
survive any termination or expiration of the Term. Except for a termination due
to the uncured default of RP Ag Co., RP Ag Co.'s licenses (and all related
sublicenses) granted under clauses (a) and (c) - (g) of Section 3.1 and Section
4 will survive any termination or expiration of the Term; provided, however,
that RP Ag Co.'s licenses under clauses (c) - (g) of Section 3.1 (and its rights
under Section 4 with respect thereto) will not apply to any Program Product
containing protein sequences, gene constructs, data, techniques, manuals,
instructions, samples, germplasm, inventions, development processes, assays, or
improvements, first discovered following the end of the Term. The provisions of
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Articles 6, 7, 8, 9, and 10 will survive any termination or expiration of the
Term.
9. ARBITRATION OF DISPUTES
If the parties fail to reach agreement with respect to a dispute or
difference (other than as to a question relating to patent validity, which the
parties intend will be decided in litigation and not in arbitration), between
the parties arising out of or in connection with this Agreement, the dispute or
difference will be determined by arbitration in New York City, in accordance
with the Commercial Arbitration Rules of the American Arbitration Association by
an independent and impartial arbitrator, who (unless the parties agree
otherwise) shall have had both training and experience as an arbitrator of
agricultural technology licensing matters, including biotechnology, and who
shall be, and for at least ten years shall have been, a partner, shareholder or
member in a highly respected law firm headquartered in the United States. The
arbitrator may decide any issue as to whether, or as to the extent to which, any
dispute is subject to the arbitration and other dispute resolution provisions in
this Agreement. The arbitrator must base the award on the provisions of this
Agreement and must render the award in a writing which must include an
explanation of the reasons for such award. Any arbitration pursuant to this
section will be governed by the substantive laws of Delaware applicable to
contracts made and to be performed in that state, without regard to conflicts of
law rules, and by the arbitration law of the Federal Arbitration Act (9 U.S.C.
ss.1 et seq.). Judgment upon the award rendered by the arbitrator may be entered
by any court having jurisdiction thereof. The statute of limitations of Delaware
applicable to the commencement of a lawsuit will apply to the commencement of an
arbitration under this Section. All fees, costs and expenses of the arbitrator,
and all other costs and expenses of the arbitration, will be shared equally by
the parties to this Agreement unless such parties agree otherwise or unless the
arbitrator in the award assesses such costs and expenses against one of such
parties or allocates such costs and expenses other than equally between such
parties. Notwithstanding the foregoing, either party may, on good cause shown,
seek a temporary restraining order and/or a preliminary injunction from a court
of competent jurisdiction, to be effective pending the institution of the
arbitration process and the deliberation and award of the arbitrator.
10. GENERAL PROVISIONS
10.1 SEVERABILITY. If any provision of this Agreement shall be held to
be invalid, illegal or unenforceable, such provision shall be enforced to the
maximum extent permitted by law and the parties' fundamental intentions
hereunder, and the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
10.2 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties and supersedes all prior agreements, proposals, or
understandings, whether written or oral, other than the LLC Agreement and the
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<PAGE>
agreements referenced therein. No amendment of this Agreement shall be effective
unless set forth in writing and signed by authorized agents of both parties. No
waiver or consent to any departure by Agrinomics or RP Ag Co. from performance
under this Agreement shall be effective unless set forth in writing and signed
by an authorized agent of the party to be bound, nor shall any such waiver or
consent be construed beyond its explicit terms to imply any subsequent or other
instance of such performance.
10.3 ASSIGNMENT. This Agreement and the Research Services provided
hereunder and/or any rights and/or duties associated therewith may not be
assigned or transferred by RP Ag Co. without the prior written consent of
Agrinomics, which consent will not be unreasonably withheld or delayed;
provided, however, that an assignment to an Affiliate of RP Ag Co. [ * ] will
not require the consent of Agrinomics. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
permitted assigns.
10.4 FORCE MAJEURE. This Agreement shall not be terminated as a result
of any failure of a party to perform any of its obligations hereunder if such
failure is due to circumstances beyond its control (an "Event of Force
Majeure"), including, but not limited to, any requisition by any government
authority, act of war, strike, boycott, lockout, picket, riot, sabotage, civil
commotion, insurrection, epidemic, disease, act of God, fire, flood, accident,
explosion, earthquake, storm, failure of public utilities or common carriers,
mechanical failure, embargo, or prohibition imposed by any governmental body or
agency having authority over the party, provided, that at such time as an Event
of Force Majeure no longer exists, the respective obligations of the parties
hereto shall be reinstated and this Agreement shall continue in full force and
effect. The party affected by any Event of Force Majeure shall give prompt
written notice thereof to the other party hereto and each party each shall use
good faith efforts to minimize the duration and consequences of, and to
eliminate, any such Event of Force Majeure.
10.5 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without regard to the
choice of law provisions of the State of Delaware or any other jurisdiction to
the contrary.
10.6 NOTICES. Any notice, request, instruction or other document to be
given hereunder shall be in writing, delivered in person, or mailed by certified
or registered mail, return receipt requested, or transmitted by facsimile
transmission with electronic confirmation of receipt to the addressee's address
or facsimile number set forth below (or such other address or facsimile number
as the party changing its address specifies in a notice to the other parties):
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE>
To RP Ag Co.:
Rhone-Poulenc Ag Company Inc.
2 T.W. Alexander Drive
Research Triangle Park
North Carolina 27709, USA
Attention: General Counsel
Facsimile: (919) 549-2500
with a copy to:
Rhone-Poulenc Agro S.A.
14-20, rue Pierre Baizet
69 623 Lyon, FRANCE
Attention: General Counsel
Facsimile: (04) 72 85 29 81
To Agrinomics:
Agrinomics LLC
16160 SW Upper Boones Ferry Rd.
Portland, OR 97224, USA
Attention: Adolph J. Ferro, Chief Executive Officer
Facsimile: (503) 670-7703
and with a copy to:
Perkins Coie LLP
411 -108th Avenue NE, Suite 1800
Bellevue, WA 98004, USA
Attention: Roger M. Tolbert, Esq.
Facsimile: (425) 453-7350
Notices shall be deemed to have been given on the date of service, if served
personally on the party to whom notice is to be given , or on the first day
after transmission by facsimile transmission, if transmitted by facsimile as set
forth above, or on the fifth day after mailing, if mailed as set forth above.
10.7 HEADINGS. The headings of the sections of this Agreement have been
set forth for use of reference only and shall not be used to construe or
interpret the terms and conditions of this Agreement.
10.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
10.9 CONSTRUCTION. This Agreement has been submitted to the scrutiny
of, and has been negotiated by, all parties hereto and their counsel, and shall
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<PAGE>
be given a fair and reasonable interpretation in accordance with the terms
hereof, without consideration or weight being given to its having been drafted
by any party hereto or its counsel.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
RHONE-POULENC AG COMPANY INC.
By: /s/P. Housset
Name: Pascal Housset
Title: Director
AGRINOMICS LLC
By: /s/Adolph J. Ferro
Name: Adolph J. Ferro
Title: CEO
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<PAGE>
SCHEDULE 1: [ * ]
- -----------------
[ * ]
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE>
SCHEDULE 2: BACKGROUND PATENTS AND BACKGROUND TECHNOLOGY
--------------------------------------------------------
[ * ]
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
-25-
EXHIBIT 10.5
(REDACTED)
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
13 July 99 Page 1
<PAGE>
RESEARCH, LICENSE AND OPTION AGREEMENT
THIS AGREEMENT is entered into as of the 23rd day of October, 1998 (the
"Effective Date"), and has been amended and restated as of the 14th day of July,
1999 (the "Amendment Date"), by and between The Salk Institute for Biological
Studies, a nonprofit public benefit corporation organized under the laws of the
State of California ("Salk"), and Agritope, Inc., a Delaware corporation
("Agritope").
A. Salk has developed, and intends further to develop, and owns
all right, title and interest in and to a Collection defined herein.
B. Agritope is experienced in the management of large scale
research programs and in genetic studies and techniques likely to be useful in
the screening and analysis of the Collection. Agritope believes that useful
information may be derived from the Collection, which may aid in the discovery
or development of commercializable products, and desires to help support and to
participate with Salk in a research program for that purpose.
C. Salk desires Agritope's support and participation in such a
research program, and is willing to grant Agritope certain licenses and options
to obtain licenses to Salk rights in connection therewith and with the potential
commercialization of such products.
D. Salk and Agritope desire to clarify their relationship and to
update this Agreement as of the Amendment Date, in consideration of their mutual
agreements reflected herein.
NOW, THEREFORE, the parties hereby agree as follows:
1. DEFINITIONS.
1.1 "ACTIVATION TAGGING" shall mean a gene identification strategy
[ * ] and subsequently applied to whole plants in the Salk
Institute Plant Biology Laboratory, and as more fully
described in the additional references in Schedule 1.1 to this
Agreement, in which ubiquitously and highly active
transcriptional enhancers or other activators are inserted at
random sites of the genome using transferred DNA (T-DNA) of
AGROBACTERIUM TUMEFACIENS, and similar strategies and
techniques in ARABIDOPSIS plants, irrespective of the
particular vectors, markers, enhancers or activators used.
1.2 "AFFILIATE" of Agritope shall mean any entity that, directly
or indirectly, owns and controls the voting of at least 50% of
the voting capital shares of Agritope (a "Parent" entity) or
of any Parent entity in any tier (which are thereby also
"Parent" entities and therefore Affiliates hereunder), or at
least 50% of the voting capital shares (or equivalent control)
of which is, directly or indirectly, owned, and the voting of
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
13 July 99 Page 2
<PAGE>
which is controlled, by Agritope, its Parent, any other Parent
entity, or any other Affiliate of Agritope.
1.3 "AGRITOPE'S SHARE" shall mean that percentage of the
out-of-pocket expenses of Salk incurred in connection with the
preparation, filing, prosecution up to and through appeal from
a final rejection by a patent examiner, and maintenance of the
applicable patent applications and patents, including the
reasonable fees and expenses of attorneys and patent agents,
filing fees and maintenance fees, and the filing of
applications under the Patent Cooperation Treaty, but
excluding costs associated with any patent infringement
actions; provided, however that such out-of-pocket expenses
shall not include:
(a) any extension fees paid or payable following the
fifth anniversary of the Effective Date;
(b) more than $15,000 total in post-filing prosecution
costs associated with an application, including
continuations from an initial parent application
without Agritope's agreement in advance that such
expenses are desirable and necessary business
expenses; or
(c) fees in connection with any interference proceedings
in any patent office or in a court of law, without
Agritope's agreement in advance that such expenses
are desirable and necessary business expenses.
Agritope's Share shall be 100% as to patent applications and
patents that are Salk Program Patents. Agritope's Share shall
be 100% as to patent applications and patents that are Listed
Salk Background Patents that are not licensed by Salk to any
third party. Agritope's Share shall be a prorata percentage,
shared fairly with the other Salk licensees, as to patent
applications and patents that are Listed Salk Background
Patents that are licensed by Salk to any third party. Where
Salk is required to file continuations-in-part or divisional
patent applications: (i) each such continuation-in-part and
divisional application shall be treated as a separate
application for purposes of this definition of Agritope's
Share, and for purposes of clause (b) above, the total
post-filing prosecution costs associated with the parent
application will be added to such costs for the
continuation-in-part or divisional application based thereon
which has the highest post-filing prosecution costs of all
continuations-in-part and divisional applications associated
with that parent application; and (ii) each such
continuation-in-part and divisional application shall be
treated as a separate application for purposes of determining
which applications will remain among the Listed Salk
Background Patents under Section 1.20 or among the Salk
Program Patents under Section 1.21, pursuant to Agritope's
rights described in those sections.
13 July 99 Page 3
<PAGE>
1.4 "COLLECTION" shall mean: (i) the collection of ARABIDOPSIS
plants, and associated germplasm, seeds, and/or gene
constructs that are direct derivatives from the original
Collection, and (ii) any other collection of plants, and
associated germplasm, seeds, and/or gene constructs developed
or to be developed in the laboratory of Salk's Program
Coordinator through the generation of a large number of T1
lines (where [ * ] such lines is understood to be a large
number for this purpose) are generated using Activation
Tagging or any other transgenic insertional technique(s), [ *
].
1.5 "CONFIDENTIAL TECHNOLOGY" shall mean all technology and
related information that is, at the relevant time hereunder,
required to be protected as confidential pursuant to Section 8
hereof.
1.6 "DEVELOPMENT COSTS" shall mean the sum of all direct and
indirect costs incurred by Agritope (whether or not separately
funded in whole or part by third parties) from the beginning
of the Research Program and any preparatory stages in
establishing, funding, planning, and managing the Research
Program, in creating and obtaining rights in and to any
Licensed Product or the use or marketing thereof, and in
seeking certification (regulatory and otherwise) for Licensed
Products. Without limiting the generality of the foregoing,
the Development Costs will include: (i) all sums paid or
payable by Agritope to Salk in connection with or in support
of the Research Program (other than Royalties hereunder)
including the option and license fees hereunder; (ii) all
patent filing, prosecution and maintenance costs associated
with Salk Program Patents, Salk Background Patents, and/or any
Agritope or other patents directed to or covering any Licensed
Products; (iii) Agritope's fully-burdened costs of internal or
other third-party research and development and field trials,
market analyses, test marketing, and other tests or trials of
Licensed Products; and (iv) any and all milestones and
licensee fees payable to any third party to the extent
required to obtain rights to make, use, sell, offer for sale,
or import/export any Licensed Product. Development Costs shall
be derived from Agritope's financial statements which shall be
prepared in accordance with generally accepted accounting
principles in the U.S. ("US GAAP") and with Agritope's
customary accounting policies and practices for its programs
and products.
1.7 "EXCLUSIVITY PERIOD" shall mean that period during the License
Period that is determined on a country by country basis for
each Licensed Product and that extends from the Effective Date
until there are no longer any Salk Program Patents in that
country applicable to the making, using, selling, offering for
sale developing or importing/exporting of the relevant
Licensed Product, or, if later, until all of Salk's
Confidential Technology relevant to the applicable Licensed
Product or its development has been disclosed without
restriction to the public (but in the case of countries in the
European Union where there are no longer any Salk Program
Patents based at least in part on technology existing as of
the Effective Date, the Exclusivity Period applicable to the
relevant Licensed Product will not extend longer in such
country than ten years from the first commercial sale thereof
in any country in the European Union). Restrictions on passive
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
13 July 99 Page 4
<PAGE>
marketing (i.e., merely accepting unsolicited orders) of a
Licensed Product by Salk in the European Union will not
(unless otherwise permitted under applicable law) last more
than five years from the first commercial sale thereof in any
country in the European Union.
1.8 "FIELDS OF USE" shall mean any and all plants and processes
involving plants, including without limitation whole plants,
propagation and production, cultivation, breeding, genetic or
other modification, all plant tissues, seeds, and all related
articles, activities and processes.
1.9 "JOINT INVENTIONS" shall mean any inventions or technology
that is, under the then prevailing U.S. rules and
interpretations, jointly conceived or reduced to practice by
or for Salk and Agritope.
1.10 "LICENSED PATENTS" shall mean the Salk Program Patents and the
Salk Background Patents.
1.11 "LICENSE PERIOD" shall mean, as to each Licensed Product in
each county in the world, the period from the Option Exercise
through the last to occur of the following (but not after the
expiration or termination of this Agreement as provided
herein):
(a) the [ * ] of the commercial launch of such Licensed
Product;
(b) the expiration of the Exclusivity Period applicable
to such Licensed Product in such county.
1.12 "LICENSED PRODUCTS" shall mean:
(a) products, processes and technologies the relevant
manufacture, use, sale, offer for sale, or import of
which would in the applicable jurisdiction, in the
absence of the licenses granted under this Agreement,
infringe upon a claim of an issued and unexpired Salk
Program Patent that (i) as not been held
unenforceable, unpatentable or invalid by a decision
of a court or governmental body of competent
jurisdiction, where such decision is unappealable or
unappealed within the time allowed for appeal; (ii)
has not been rendered unenforceable through
disclaimer or otherwise; and (iii) has not been lost
through an interference, reexamination or reissue
("Program Patent Licensed Products"); and
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
13 July 99 Page 5
<PAGE>
(b) products, processes and technologies not described in
clause (a) in this section:
(i) that incorporate or use any gene or sequence
the function, activity or use of which is
first discovered as a direct result of work
performed in the Research Program and the
relevant manufacture, use, sale, offer for
sale, or import of which would in the
applicable jurisdiction, in the absence of
the licenses granted under this Agreement,
infringe upon a claim of an issued and
unexpired Salk Background Patent that (A) as
not been held unenforceable, unpatentable or
invalid by a decision of a court or
governmental body of competent jurisdiction,
where such decision is unappealable or
unappealed within the time allowed for
appeal; (B) has not been rendered
unenforceable through disclaimer or
otherwise; and (C) has not been lost through
an interference, reexamination or reissue
(referred to herein as the "Background
Licensed Products"); or
(ii) whether not separately covered by Salk
Background Patents or by patents of Agritope
or others, the discovery or isolation of
which was made from or using physical
materials provided to Agritope by Salk as
part of the Collection (referred to herein
as the "Collection Licensed Products"); or
(iii) the conception, discovery, isolation, or
development of which by Agritope or its
Affiliates or sublicensees was enabled in a
material way by the use of any Salk Program
Technology or Salk Background Technology,
other than Background Licensed Products or
Collection Licensed Products (referred to
herein as "Derivative Licensed Products").
o It is understood that the rights of the
parties in and to the use of the previously discovered genes
and sequences specifically covered by that certain Option to
License and Research Support Agreement dated February 25,
1997, as amended, between Salk and Agritope's predecessor
(Epitope, Inc.) and as assigned to Agritope (the "1997 Option
and Research Agreement [ * ] Further, it is understood that
[ * ].
1.13 "NET INCOME" shall mean that portion of Agritope's earnings
before interest and income tax ("EBIT") derived in the
applicable period from engaging in the development,
certification (regulatory and otherwise), patenting,
manufacture, promotion, marketing and sale of Licensed
Product(s). Net Income shall be derived from financial
statements prepared in accordance with US GAAP and with
Agritope's customary accounting policies and practices for its
products.
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
13 July 99 Page 6
<PAGE>
1.14 "NET SALES" shall mean payments received by Agritope to the
extent pertaining to net sales of a Program Patent Licensed
Product or a Background Licensed Product or a Collection
Licensed Product by Agritope. The calculation of Net Sales
shall include amounts specifically identifiable to such
Licensed Product and amounts allocated to the Licensed
Product, it being understood that amounts which are not
specifically identifiable to the Licensed Product by virtue of
their being identifiable to a group of products that includes
the Licensed Product shall be allocated thereto in a
consistent and equitable manner which will equitably reflect
the contribution of the Licensed Product to such Net Sales.
Amounts to be included in the calculation of Net Sales shall
be those representing the gross amount received, less:
(a) quantity and/or normal and customary cash discounts
allowed or taken;
(b) credits, free goods, rebates and/or adjustments
allowed to or taken by bona fide arms' length
purchasers by reason of rejections, returns,
retroactive price reductions, or volume purchasing
discounts; and
(c) allowances for freight, taxes and insurance.
1.15 "PROGRAM COORDINATOR(S)" shall mean the individual at Agritope
and the individual at Salk that are given the primary
responsibility to coordinate and to facilitate the respective
parties' activities under the Research Program. Salk's initial
Program Coordinator is Detlef Weigel, Ph.D., and Agritope's
initial Program Coordinator is D. Ry Meeks-Wagner, Ph.D. The
parties may replace their respective Program Coordinators from
time to time as the need arises due to departures of personnel
or the like, provided that the replacement is reasonably
acceptable to the other party. Dr. Weigel and other
researchers funded by this program at the Salk are sometimes
collectively referred to herein as the "Salk Researchers."
1.16 "RECOVERY POINT" shall mean a point in time when Agritope has
recognized aggregate Net Income equal to the total Development
Costs at that time. Where a Recovery Point is reached prior to
the end of the Research Program, but subsequent additional
Development Costs are incurred during the Research Program in
excess of the aggregate Net Income (if any) recognized by
Agritope since that Recovery Point, the "Recovery Point" will
thenceforward not be considered reached for purposes of
Section 5.2, unless and until such aggregate Net Income since
the prior Recovery Point exceeds the total additional
Development Costs incurred since such prior Recovery Point.
1.17 "RESEARCH PROGRAM" shall mean the program of work, testing,
and other research and development to be conducted by the Salk
Researchers in the laboratory of Salk's Program Coordinator
and by Agritope or its Affiliates, from and based on the
13 July 99 Page 7
<PAGE>
Collection. The Research Program is defined and delineated in
the Research Plan attached to this Agreement as Exhibit C (the
"Research Plan").
1.18 "ROYALTIES" shall mean the royalties (including Sublicensing
Fees and sales-based royalties) payable to Salk pursuant to
Section 5 hereof.
1.19 "SALK BACKGROUND TECHNOLOGY" shall mean, other than the Salk
Program Technology, all information, technical or otherwise,
including, but not limited to, that comprised in formulae,
protein sequences, gene constructs, data, techniques, manuals,
instructions, samples, or inventions, development processes,
assays, improvements, and specifications, delivered or
disclosed by Salk to Agritope prior to the date of this
Agreement or hereafter during or with respect to the Research
Program that is or may be related to or useful in the Research
Program or otherwise for the development or exploitation of
any of the Salk Program Technology or any Licensed Product,
and all intellectual property rights therein and thereto.
1.20 "SALK BACKGROUND PATENTS" shall mean, other than the Salk
Program Patents, Salk's rights under United States and foreign
patents, if any, obtained and in force during the term of this
Agreement, and United States and foreign patent applications,
in each case covering or disclosing any of the Salk Background
Technology supplied to Agritope before, on or after the
Effective Date or any inventions that are otherwise related to
or useful for the development or exploitation of any of the
Salk Background Technology, the Collection, the Salk Program
Technology, or any Licensed Product. Salk has identified to
Agritope, and Agritope has accepted as such, certain Salk
Background Patents, as listed in Exhibit A hereto on a
country-by-country basis (the "Listed Salk Background
Patents"). Salk may from time to time during the License
Period by notice to Agritope propose to add other Salk
Background Patents (whether covering additional inventions or
as to filings in different countries) to the Listed Salk
Background Patents. If Agritope declines to accept any such
proposed additional Listed Salk Background Patents within
ninety days from such notice by Salk, such proposed Listed
Salk Background Patent (on a country-by-country basis), from
that time forward, will no longer be a Salk Background Patent
hereunder, provided, however, that if Agritope declines to
accept such a proposed Listed Salk Background Patent in any
country or countries and subsequently Salk on its own account
elects to support the patent costs described in Section 1.3
with respect thereto, then Salk shall so inform Agritope and
Agritope shall be entitled to another opportunity to accept
such proposal to add the same to the Listed Salk Background
Patents, which acceptance by Agritope will require that
Agritope bear Agritope's Share with respect thereto, effective
from the date Agritope first declined such proposal to add the
same to the Listed Salk Background Patents. This second
opportunity for Agritope to accept a proposal to add a Salk
Background Patent shall not apply in cases where another
licensee of Salk elects to support fully said patent costs. If
Agritope is afforded such a second opportunity to accept a
proposal to add a particular Salk Background Patent, and
13 July 99 Page 8
<PAGE>
Agritope declines to do so as stated above within ninety days
after being so afforded such opportunity, then Salk may at its
discretion and at its expense continue to prosecute such Salk
Background Patent to issuance, it being agreed that if any
such patent is issued thereon, such patent shall not be
included in the Salk Background Patents under this Agreement,
and Salk may use, license or exploit the same free of any
obligation to Agritope under this Agreement with respect
thereto.
1.21 "SALK PROGRAM PATENTS" shall mean Salk's rights under United
States and foreign patents, if any, obtained and in force
during the term of this Agreement, and United States and
foreign patent applications, in each case covering or
disclosing any aspect or part of the Collection or the
development or use thereof or any of Salk's improvements,
modifications, alterations, or enhancements to the Collection
or with respect to the development or use thereof or to
Activation Tagging arising from and as a direct result of work
conducted as part of the Research Program, and any inventions
that are made or acquired in whole or in part by Salk during
and in the course of and as a direct result of the Research
Program, including any gene or sequence the function, activity
or use of which is first discovered as a direct result of work
performed in the Research Program. Agritope may by notice to
Salk from time to time decline to accept any Salk Program
Patents as such hereunder, either entirely or on a
country-by-country basis, from that time forward; provided,
however, that if Agritope declines to accept a Salk Program
Patent in any country or countries and subsequently Salk on
its own account elects to support the patent costs described
in Section 1.3 with respect thereto, then Salk shall so inform
Agritope and Agritope shall be entitled to another opportunity
to accept the same as part of the Salk Program Patents, which
acceptance by Agritope will require that Agritope: (i) bear
Agritope's Share with respect thereto, effective from the date
Agritope first declined to accept the same as part of the Salk
Program Patents; and (ii) agree that Agritope's license
thereto hereunder in such country or countries shall be
nonexclusive, notwithstanding any exclusive grants under
Sections 3.3 and 3.4. This second opportunity for Agritope to
accept a proposal to add a Salk Program Patent shall not apply
in cases where another licensee of Salk elects to support
fully said patent costs. If Agritope is afforded such a second
opportunity to accept a proposal to add a particular Salk
Program Patent, and Agritope declines to do so as stated above
within ninety days after being so afforded such opportunity,
then Salk may at its discretion and at its expense continue to
prosecute such Salk Program Patent to issuance, it being
agreed that if any such patent is issued thereon, such patent
13 July 99 Page 9
<PAGE>
shall not be included in the Salk Program Patents or the Salk
Background Patents under this Agreement, and Salk may use,
license or exploit the same free of any obligation to Agritope
under this Agreement with respect thereto.
1.22 "SALK PROGRAM TECHNOLOGY" shall mean, as applicable from the
context, any and all deliverables, services and contributions
from Salk under or arising from and as a direct result of the
Research Program, other than the physical materials of the
Collection itself, and all related information, technical or
otherwise, including, but not limited to, that comprised in
formulae, protein sequences, gene constructs, data,
techniques, manuals, instructions, samples, or inventions,
development processes, assays, improvements, and
specifications developed by Salk in the laboratory of Salk's
Program Coordinator as a direct result of the Research Program
or as a direct result of Salk's other use of the Collection or
Salk's exercise for research purposes of any rights under Salk
Program Patents or Salk Program Technology (except as to Salk
Program Technology that is then licensed nonexclusively as
provided in Section 6.3), as described in Sections 3.2, 3.3,
or 3.4, and all intellectual property rights therein and
thereto.
1.23 "SUBLICENSING FEES" shall mean the consideration received by
Agritope in return for the grant of any sublicense by it of
any rights under any of the Licensed Patents or Salk Program
Technology, but excluding: [ * ] The calculation of
Sublicensing Fees shall include amounts specifically
identifiable to the rights sublicensed and amounts allocated
to such rights, it being understood that amounts which are not
specifically identifiable to the sublicensed rights by virtue
of their being identifiable to a group of products or services
that includes the sublicensed rights shall be allocated
thereto in a consistent and equitable manner which will
equitably reflect the contribution of the sublicensed rights
to such Sublicensing Fees.
2. RESEARCH PROGRAM.
2.1 Salk and Agritope shall cooperatively and in good faith engage
in and conduct the Research Program. The conduct of the
Research Program shall be coordinated on a regular basis by
the parties' Program Coordinators, in consultation with each
other. The Program Coordinators will be guided by the Research
Plan. Any material changes to the Research Plan will require
the written approval of both parties.
2.2 Following a planning phase (Phase I), the Research Program
will be conducted as described in the Research Plan. Phase I
will begin at the Effective Date and will extend until
Agritope notifies Salk that Agritope elects to proceed with
subsequent phases of the Research Program (the "Option
Exercise"), or Agritope notifies Salk that the Research
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
13 July 99 Page 10
<PAGE>
Program will be terminated, or the first anniversary of the
Effective Date, whichever occurs first. During Phase I:
(a) the parties will develop the Research Plan;
(b) Salk will maintain and preserve its existing
Collection and may expand it where it may do
so without substantial commitment of
resources; and
(c) Agritope and the laboratory of Salk's
Program Coordinator at Salk will consult and
cooperate with each other as requested in
the performance of the above tasks.
2.3 Agritope shall have right to terminate the Research Program at
its election at any time by giving Salk at least 180 days
prior written notice of such termination. Any payments coming
due to Salk pursuant to Section 4.2 or 4.3 prior to the
effective date of such termination shall be made when due,
notwithstanding that such notice of termination may have been
given. Except as provided in Section 7.3, Salk shall have the
right to terminate the Research Program if and only if Salk is
unable to continue to perform its tasks hereunder due to
causes beyond its reasonable control, such as serious damage
to or destruction of the laboratory of Salk's Program
Coordinator, or the death, disability or resignation of Salk's
Program Coordinator. No termination under this section will
terminate any licenses granted hereunder to Agritope. Salk's
obligations to submit final documentation and communication to
Agritope of the results of all Salk Research Program
activities through the effective date of the termination, and
Salk's obligations to deliver all seed of primary
transformants in existence as of such termination, shall
survive any such termination.
2.4 If Agritope fails to make the Option Exercise on or prior to
the first anniversary of the Effective Date, Agritope will be
deemed to have elected to terminate the Research Program, and
this will also effect a termination of this Agreement.
3. OPTION GRANT; OWNERSHIP AND LICENSES.
3.1 Except as otherwise explicitly licensed or transferred as
provided herein, each party will, as between it and the other
party hereto, retain ownership of any and all inventions,
copyrights, trade secrets, patent rights and other technology
and rights to the extent conceived or developed by its
personnel or contractors (other than the other party hereto),
and the parties shall co-own all Joint Inventions. Neither
party makes any grants by implication, estoppel, or otherwise,
except as provided herein.
13 July 99 Page 11
<PAGE>
3.2 Subject to Section 10.2, Salk hereby agrees that with respect
to the subject matter of the Research Program, it will work
exclusively and solely with Agritope from the Effective Date
and throughout the Research Program, other than with respect
to Salk's own work with the Collection in the laboratory of
Salk's Program Coordinator as described herein in the course
of the Research Program, and it will not, without the prior
written consent of Agritope: (i) provide the original
Collection or the Collection developed or to be developed in
the Research Program or any portion thereof or any access
thereto to any third party; (ii) contract with any third party
to generate or to assist on a substantial and on-going basis
with the generation of other Collections; or (iii) make any
grants of rights in any Salk Program Patents, or (except as to
Salk Program Technology that is then licensed nonexclusively
as provided in Section 6.3) in any Salk Program Technology.
3.3 Subject to Section 10.2, Salk hereby grants to Agritope a
worldwide license, with right to sublicense, to use and to
exercise the Licensed Patents, the Salk Program Technology and
the Salk Background Technology for research purposes during
and in support of the Research Program. Such license is sole
and exclusive as to the Salk Program Patents and (except as to
Salk Program Technology that is then licensed nonexclusively
as provided in Section 6.3) the Salk Program Technology,
except for Salk's own exercise of such rights for research
purposes.
3.4 Subject to Section 10.2, Salk hereby grants to Agritope a
worldwide license, with right to sublicense, under the
Licensed Patents, the Salk Program Technology, and the Salk
Background Technology to make, have made, use, sell, offer for
sale, and import/export any and all Licensed Products during
the License Period in the Fields of Use. Except for Salk's own
exercise of such rights for research purposes, such license
shall be sole and exclusive as to the Salk Program Patents and
(except as to Salk Program Technology that is then licensed
nonexclusively as provided in Section 6.3) the Salk Program
Technology in the relevant nations during the Exclusivity
Periods applicable to the relevant Licensed Product, and
otherwise shall be nonexclusive.
3.5 Subject to Section 10.2, Salk hereby grants to Agritope the
right of first negotiation to obtain any rights sought to be
granted by Salk in or with respect to any research,
development, implementation or commercialization of or using
any Other Products and Technologies (as defined below). "Other
Products and Technologies" shall mean any products, processes
or technologies (including without limitation genes and/or
gene sequences and knowledge as to gene functions), other than
Salk Program Technology and Licensed Products, which are first
discovered in the laboratory of Salk's Program Coordinator
(whether or not by Salk Researchers) during the period from
the Amendment Date through the end of the Research Program in
13 July 99 Page 12
<PAGE>
whole or in part through the use of any Activation Tagging
technology that exists and is available to the parties as of
the Amendment Date [ * ] or that is subsequently developed
during the Research Period jointly by any of the personnel in
the laboratory of Salk's Program Coordinator, on the one hand,
and by any of Agritope's or its Affiliates' personnel, on the
other. Pursuant to such right of first negotiation, Salk shall
notify Agritope in confidence, as provided in Section 8
hereof, of any desire or decision by Salk during the License
Term to grant any such rights in or to any Other Products and
Technologies, together with such detail about such rights and
the relevant Other Products and Technologies as appear to Salk
to be appropriate to enable Agritope to evaluate the same, and
as may be reasonably requested by Agritope for such purpose.
Salk shall negotiate in good faith with Agritope and only with
Agritope, for a period of up to [ * ] following such
notification in order to reach agreement on Agritope's
obtaining such rights. If and to the extent that any Other
Products and Technologies would be covered by any of
Agritope's rights or preferences under the 1997 Option and
Research Agreement, the provisions of this Section 3.5, shall
govern over those of the 1997 Option and Research Agreement,
to the extent of any inconsistency.
4. OPTION FEE; RESEARCH PROGRAM FUNDING.
4.1 Agritope shall pay Salk $10,000 within thirty days following
the Effective Date, as a nonrefundable fee for Salk's
agreements under Sections 3.2 and 3.3 and for Agritope's
option to elect to give the Option Exercise.
4.2 At such time, after the Option Exercise, as Salk has obtained
all the required governmental or other permits or
authorizations to begin construction of the greenhouse
facilities described in the Research Plan (the "Greenhouse"),
Salk shall so notify Agritope. Agritope will, within twenty
days thereafter, pay to Salk the sum of $200,000, to be used
by Salk toward the costs of the Greenhouse, it being
understood that such sum may not entirely cover all such
costs. Salk agrees to exert all reasonable efforts to obtain
such permits and authorizations within 60 days following the
Option Exercise.
4.3 At such time, after the Option Exercise, as Salk has
substantially completed construction of the Greenhouse, Salk
shall so notify Agritope. Salk agrees to exert all reasonable
efforts to substantially complete such construction within 140
days following the Option Exercise. Beginning on the first day
of the first calendar quarter following the substantial
completion of the construction of the Greenhouse, Agritope
shall pay Salk, on the first day of each calendar quarter
during the Research Program, one-fourth of the annual budget
for that year of the Research Program (which years will run
from the date of substantial completion of the construction of
the Greenhouse), as described in Exhibit B hereto, as amended
on the Amendment Date (the "Research Program Budget"), and
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
13 July 99 Page 13
<PAGE>
continuing until the twentieth such quarterly payment is made,
or until the entire budgeted amount set forth in the Research
Program Budget has been so paid, whichever first occurs;
provided, however, that Agritope may withhold any such
quarterly payment if Salk falls behind the schedule in the
Research Plan for the fulfillment of Salk's tasks (other than
for reasons beyond Salk's reasonable ability to control),
until Salk brings its performance back into compliance with
such schedule.
4.4 The parties may, by mutual written agreement from time to
time, alter the Research Program Budget to reflect and to
adjust for changes in the currently-contemplated level, type
or timing of Salk activities under the Research Program.
4.5 Except for the payments described above in this Section 4,
each of the parties shall bear all of its own costs and
expenses of the conduct of the Research Program and the
performance of its tasks thereunder.
5. COMMERCIALIZATION; ROYALTIES.
5.1 During the License Term following the successful development
and testing of a crop pursuant to the Research Program,
Agritope shall commercialize or authorize the
commercialization of such crop if and as it deems to be likely
to justify its efforts to do so. In recognition of Agritope's
support of and participation in the Research Program, Agritope
will not be required to achieve, and it makes no express or
implied representation or agreement that it will exert any
particular level of efforts to achieve, any Royalties or other
returns for Salk beyond the fees and payments described in
Section 4.
5.2 Agritope hereby agrees to pay to Salk the following Royalties
during the License Period:
5.2.1 [ * ] of:
(a) any and all [ * ]; and
(b) any other Sublicensing Fees, but only to the
extent that such fees are received after the
Recovery Point is reached; and
5.2.2 With respect to any and all Net Sales derived from
Licensed Products:
(a) [ * ] of such Net Sales derived from Program
Patent Licensed Products; or
(b) [ * ] of such Net Sales derived from Background
Licensed Products or Collection Licensed
Products; and
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
13 July 99 Page 14
<PAGE>
(c) [ * ] with respect any sales of Derivative
Licensed Products.
5.2.3 In the calculation of Royalties, only one application
of such percentage shall be made to the Net Sales of
that Licensed Product, regardless of how many
Licensed Patents may be applicable thereto. Where a
Licensed Product would meet the criteria described in
both of subsections [ * ] of Section 5.2.2, only one
such subsection will be applicable to the
determination of the Royalties payable hereunder, and
it shall be the subsection that would call for the
higher Royalty.
5.3 All Royalties shall be due quarterly within 60 days following
the end of each calendar quarter in respect of Sublicensing
Fees and Net Sales received in such calendar quarter. Each
such payment shall be accompanied by a statement of
Sublicensing Fees and Net Sales for the quarter and the
calculation of Royalties payable hereunder. All Royalties will
bear interest at the rate of 1% per month or the maximum legal
rate, whichever is less, from the date due through the date of
payment, but this provision shall not be used by Agritope as
an excuse for late payment. Agritope shall keep complete, true
and accurate records for the purpose of showing the derivation
of all Royalties payable to Salk under this Agreement. Salk or
its representatives shall have the right to inspect, copy, and
audit such records at any time during reasonable business
hours upon notice to Agritope. Information gathered during any
such inspection or audit shall be held in confidence by Salk,
except to the extent any of the exceptions stated in
paragraphs (a) - (f) of Section 8.4 apply thereto. Any such
audit shall be at the expense of Salk, unless the inspection
or audit reveals that, with respect to the period under audit,
less than 90% of the Royalties due to Salk hereunder have been
paid, in which event Agritope shall pay or reimburse Salk for
the reasonable expenses of such inspection or audit, in
addition to Salk's other remedies for such underpayment.
5.4 All monies due hereunder shall be paid in United States
Dollars to Salk in San Diego, California, USA. The rate of
exchange to be used shall be the average commercial rate of
exchange for the 30 days preceding the date of payment for the
conversion of local currency to United States Dollars as
published by The Wall Street Journal (or if it ceases to be
published, a comparable publication to be agreed upon by the
parties) or, for those countries for which such average
exchange rate is not published by The Wall Street Journal, the
exchange rate fixed on the fifth day prior to the date of
payment as promulgated by the appropriate United States
governmental agency as mutually agreed upon by the parties.
5.5 All monies payable to Salk as stated herein shall be grossed
up, such that Agritope will bear the effect of any required
taxes, exchange fees, or withholdings.
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
13 July 99 Page 15
<PAGE>
6. PATENT PROSECUTION AND MAINTENANCE.
6.1 Except as provided in Section 6.2 and 6.3, Salk shall at all
times control the preparation, filing, prosecution and
maintenance of any Salk Background Patents and Salk Program
Patents. Agritope will reimburse Salk for Agritope's Share of
Salk's reasonable expenses incurred after the Effective Date
directly in connection with such activities as to the Listed
Salk Background Patents and as to the Salk Program Patents;
provided, however, that if Salk licenses any Listed Salk
Background Patents to any third party subsequently to
Agritope's having paid any of Agritope's Share hereunder with
respect thereto, Salk shall credit, to any another payment
that may be, or that may thereafter become, owing by Agritope
to Salk under this or any other agreement, an amount equal to
such other licensee(s)' prorata share of the expenses
described in Section 1.3, as if Agritope and such other
licensee(s) had been licensees of such Listed Salk Background
Patent from the first date that such Agritope Share began to
accrue hereunder.
6.2 Throughout the Research Program and thereafter (with respect
to Salk Program Technology), the parties' Program Coordinators
will consult periodically and as requested with respect to
which aspects, if any, of the Salk Program Technology may
appropriately be the subject of one or more patent
applications. The parties will be guided by the principle,
except where either of them demonstrates that such a patent
application would be materially harmful to its legitimate
interests, that the maximum available patent protection will
be sought for the Salk Program Technology.
6.3 Subject to Section 10.2, if at any time Salk elects not to
file a patent application (whether as to all countries, or as
to any particular countries) claiming any Salk Program
Technology, or if Salk decides to abandon any pending
application or issued patent in any country which claims any
of Salk Program Patents, it shall provide adequate prior
notice to Agritope and give Agritope the opportunity to file,
prosecute or maintain such application or patent at Agritope's
expense; provided, however, that this section will not apply
to any inventions as to which Salk has then already given
Agritope at least one notice pursuant to Section 1.20 or 1.21,
along with the opportunity under those sections for Agritope
to support Salk's prosecution activities as stated in those
sections. If none of Salk, a federal agency (pursuant to
Section 10.2) or Agritope has applied for a patent in any
country or jurisdiction (including without limitation
provisional patent applications) with respect to an aspect of
the Salk Program Technology (despite having been given the
opportunity to do so under this section) prior to a mutual
determination by the Program Coordinators pursuant to Section
6.2 that no such application would be warranted as to such
aspect of the Salk Program Technology, or within nine months
after the first disclosure by Salk to Agritope of such aspect
13 July 99 Page 16
<PAGE>
of the Salk Program Technology (whichever occurs first), then
the licenses to Agritope hereunder to that aspect of the Salk
Program Technology shall thereafter be nonexclusive,
notwithstanding anything herein to the contrary. If Agritope,
despite having been given opportunity to file, prosecute
and/or maintain (as applicable) any pending application or
issued patent in any country which claims any of Salk Program
Patents under this section, fails to do so, with the result
that such Salk Program Patent terminates or is rejected or
denied (in any case beyond any opportunity for further appeal
or reconsideration), then the subject matter of such former
Salk Program Patent shall thereafter, to that extent and in
that country, become part of the Salk Program Technology that
is not also a Salk Program Patent, and the licenses to
Agritope hereunder to that aspect of the Salk Program
Technology in such country shall thereafter be nonexclusive,
notwithstanding anything herein to the contrary.
6.4 Salk shall use its good faith efforts to provide Agritope with
an opportunity to review and comment on the text of each
patent application with respect to Salk Program Patents before
filing, and shall supply Agritope with a copy of such patent
application as filed, together with notice of its filing date
and serial number. Each party shall cooperate with the other
party, execute all lawful papers and instruments and make all
rightful oaths and declarations as may be necessary in the
preparation, prosecution and maintenance of all applications
and patents described in this Section.
7. TERM AND TERMINATION.
7.1 The term of this Agreement shall begin on the Effective Date
and shall, unless earlier terminated as provided herein,
continue until the end of the last remaining License Period.
If the term of this Agreement is not so terminated prior to
such expiration (whether or not the Research Program is
terminated prior to its conclusion pursuant to Section 2.3),
any and all then-remaining licenses to Agritope hereunder
shall, upon and after such expiration, become nonexclusive,
royalty-free, paid-up and irrevocable.
7.2 Agritope may at its option terminate this Agreement or the
License Period at its election upon at least 180 days' written
notice to Salk.
7.3 If either party materially breaches any of the terms,
conditions or agreements contained in this Agreement to be
kept, observed or performed by it, the other party may
terminate this Agreement, at its option and without prejudice
to any of its other legal or equitable rights or remedies, by
giving the party who committed the breach ninety days' notice
in writing, unless the notified party within such 90-day
period shall have cured the breach; provided, however, that
without prejudice to Salk's other rights or remedies hereunder
for a breach by Agritope, Salk's license under Section 3.4
13 July 99 Page 17
<PAGE>
with respect to a particular crop shall not be terminable for
any reason following the satisfactory completion of the
development of such crop in the Research Program and the
earlier of the commencement of its commercialization, or
Agritope's authorization of such commercialization by any
third party. Neither party will be considered in breach of
this Agreement for purposes of the termination remedy stated
herein during any period in which there is a good faith
dispute between the parties as to the existence of such
breach. If the parties are, despite negotiations at
appropriate, high levels of their respective managements over
a period of at least ninety days, unable to resolve any good
faith dispute between them as to the existence of such breach,
such dispute may at the election of either party be resolved
in accordance with Section 11.8.
7.4 Agritope's obligations regarding payment of Royalties accrued
as of the date of termination, and the provisions of Sections
8, 10, and 11 hereof shall survive any expiration or
termination of this Agreement.
8. CONFIDENTIALITY.
8.1 In the course of the Research Program, whether before or after
the Effective Date, a party may disclose, or may have
disclosed, to the other confidential information belonging to
the disclosing party ("Discloser's Technology"), some of which
may be exclusively licensed to the receiving party as provided
hereunder (the "Exclusively Licensed Technology"). It is
understood, however, that the parties do not anticipate that
Salk will require, or that it will be provided with, any
confidential information of Agritope, and that should this
understanding change, the consent of Salk's Program
Coordinator will be obtained prior to the disclosure of such
Agritope confidential information to Salk.
8.2 The parties will cooperate reasonably with each other in
arranging for publication regarding the Research Program and
its results in appropriate scientific journals or monographs,
if such publication is desired by either party; provided,
however, that:
(a) either party may elect that no such publication will
be made as to results of the Research Program that
were obtained or discovered solely by it and not
jointly with the other party; and
(b) publication may be delayed if it would, or when it
would, lessen either party's ability to seek or
obtain patent protection for any invention or
improvement.
8.3 The reasonable cooperation referred to in Section 8.2 shall
include, without limitation:
13 July 99 Page 18
<PAGE>
(a) responding within 30 days after any request by the
other party for consent to publication of any
manuscript (which request shall be accompanied by a
draft or detailed outline of such manuscript) as to
whether the same should not be published in whole or
in relevant part due to clause (a) above, or as to
whether such publication should be delayed for an
additional 60 days while patent applications are
being filed in situations covered by clause (b)
above; and
(b) consenting to and reasonably assisting with the
distribution of appropriate individual items and
specimen materials from the Collection following such
a publication, to the extent such items or materials
bear directly and specifically on the results that
are the principal subjects of such publication.
8.4 The receiving party will maintain in confidence the
Discloser's Technology and will not use it for any purpose
except as authorized hereunder. Both parties will maintain in
confidence the Exclusively Licensed Technology and will not
use it for any purpose except as authorized hereunder. Each
party shall safeguard such information against disclosure to
non-Affiliated third parties, including without limitation
employees and persons working or consulting for such party
that do not have an established, current need to know such
information for purposes authorized under this Agreement, and
each party shall require a similar agreement from its
Affiliates that are given any access to such information. This
obligation of confidentiality does not apply to restrict use
or disclosure by the receiving party of information and
material that meet one or more of the following criteria:
(a) they were properly in the possession of the receiving
party, without any restriction on use or disclosure,
prior to receipt from the other party;
(b) they are at the time of disclosure hereunder in the
public domain by public use, publication, or general
knowledge;
(c) they become general or public knowledge through no
fault of the receiving party following disclosure
hereunder;
(d) they are properly obtained by the receiving party on
a non-confidential basis from a third party not under
a confidentiality obligation to the disclosing party
hereto;
(e) they are independently developed by or on behalf of
the receiving party without the assistance of the
confidential information of the other party;
13 July 99 Page 19
<PAGE>
(f) are required to be disclosed by order of any court or
governmental authority; provided, however, that the
receiving party shall use its best efforts to give
the disclosing party prior notice of any such
disclosure so as to afford the disclosing party a
reasonable opportunity to seek, at the expense of the
disclosing party, such protective orders or other
relief as may be available in the circumstances.
8.5 Notwithstanding the foregoing provisions Agritope shall be
permitted to disclose:
(a) any Salk Confidential Technology to regulatory
authorities and to potential licensees or
collaborators and other persons performing tests and
studies, and as needed or useful for regulatory
and/or marketing purposes, which disclosure shall be
made so far as reasonably practicable under
conditions of confidentiality and limited use; and
(b) any Salk Confidential Technology to its patent
attorney or agent or any patent authority in any
country as shall be reasonably required for filing or
prosecuting any patent application with respect to
any Licensed Product or any related process.
8.6 Neither party shall make any public announcement or other
publication regarding this Agreement (whether as to the
existence or terms hereof) or the Research Program or the
results thereof without the prior, written consent of the
other party, which consent shall not be unreasonably withheld;
provided that the foregoing shall not prohibit any disclosure
that is required by any applicable law, regulation, or by any
competent governmental authority.
9. INFRINGEMENT.
9.1 Each party shall promptly inform the other of any suspected
infringement of any of the Licensed Patents or the
infringement or misappropriation of Salk Confidential
Technology by a third party, to the extent such infringement
involves the manufacture, use, or sale of a Licensed Product
in any applicable Exclusivity Period ("Covered Infringement").
Each party will also exert reasonable efforts to notify the
other party of any suspected infringements of any of the
Licensed Patents by a third party that do not involve a
Covered Infringement.
9.2 If a suspected infringement or misappropriation does not
involve a Covered Infringement, Salk may take, or refrain from
taking, any action it chooses, with or without notice to
Agritope, and Agritope shall have no right to take any action
with respect to such suspected infringement or
misappropriation, nor to any recoveries with respect thereto.
Salk will exert reasonable efforts to keep Agritope informed
of actions Salk may take as described in the preceding
sentence. If the suspected infringement or misappropriation
13 July 99 Page 20
<PAGE>
involves a Covered Infringement, Salk shall, within 30 days of
the first notice referred to in Section 9.1, inform Agritope
whether or not Salk intends to institute suit against such
third party with respect to a Covered Infringement. Agritope
will not take any steps toward instituting suit against any
third party involving a Covered Infringement until Salk has
informed Agritope of its intention pursuant to the previous
sentence.
9.3 If Salk notifies Agritope that it intends to institute suit
against a third party with respect to a Covered Infringement,
and Agritope does not agree to join in such suit as provided
in Section 9.4, Salk may bring such suit on its own and shall
in such event bear all costs of, and shall exercise all
control over, such suit. Salk may, at its expense, cause
Agritope to be joined in the suit as a plaintiff. Recoveries,
if any, whether by judgment, award, decree or settlement,
shall belong solely to Salk.
9.4 If Salk notifies Agritope that it desires to institute suit
against such third party with respect to a Covered
Infringement, and Agritope notifies Salk within 30 days after
receipt of such notice that Agritope desires to institute suit
jointly, the suit shall be brought jointly in the names of
both parties and all costs thereof shall be borne equally.
Recoveries, if any, whether by judgment, award, decree or
settlement, shall, after the reimbursement of each of Salk and
Agritope for its share of the joint costs in such action, be
shared between Salk and Agritope as the interests of the
parties were affected by the infringement.
9.5 If, as the parties expect, Salk notifies Agritope that it does
not intend to institute suit against such third party with
respect to a Covered Infringement (or fails to give any notice
in this respect or to actually bring a suit against the third
party), Agritope may institute suit on its own. Agritope shall
bear all costs of, and shall exercise all control over, such
suit. Recoveries, if any, whether by judgment, award, decree
or settlement, shall belong solely to Agritope; provided,
however, that any amounts recovered in excess of expenses
shall be subject to the payment of royalties under Section
5.2.2.
9.6 Should either Salk or Agritope commence a suit under the
provisions of this Section 9 and thereafter elect to abandon
the same, it shall give timely notice to the other party, who
may, if it so desires, be joined as a plaintiff in the suit
(or continue as such if it is already one) and continue
prosecution of such suit, provided, however, that the sharing
of expenses and any recovery of such suit shall be as
equitably agreed upon between Salk and Agritope.
10. REPRESENTATIONS, WARRANTIES AND INDEMNITIES.
10.1 Salk warrants that it has not received written notice of any
pending or threatened claim of infringement relating to the
13 July 99 Page 21
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Collection, the Licensed Patents, the Salk Program Technology,
or the Salk Background Technology, and that it shall
immediately inform Agritope should any such notice be received
at any time by Salk. Nothing in this Agreement is or shall be
construed as a warranty or representation by Salk as to the
validity or scope of any Licensed Patent, or that anything
made, used, sold or otherwise disposed of under any license
granted in this Agreement is or will be free from infringement
of patents, copyrights and other rights of third parties, or
as an obligation to bring or prosecute actions or suits
against third parties for infringement, except to the extent
and in the circumstances described in Section 9.
10.2 Salk has informed Agritope, and Agritope acknowledges, that
the laboratories of Salk's Program Coordinator have received,
and expect to continue to receive, certain supports and grants
from one or more U.S. federal governmental agencies. To the
extent any of the Salk Background Technology, Salk Program
Technology, or Salk Program Patents has been, or later is,
conceived or first reduced to practice in the performance of
work under any such governmental funding, the U.S. Government
may have certain rights with respect thereto. This Agreement
and the grants hereunder are explicitly made subject to the
U.S. Government's rights under any agreement whereby such
governmental funding was provided to Salk, and any applicable
law or regulation, including P.L. 96-517, as amended by P.L.
98-620. To the extent permitted by such governmental funding
agreements, laws and regulations, Salk shall promptly elect to
retain title to any subject inventions that may be applicable
to this Agreement.
10.3 Each party represents and warrants to the other that it has
obtained, and will at all times during the term of this
Agreement hold and comply with, all licenses, permits and
authorizations necessary to perform this Agreement, as now or
hereafter required under any applicable statutes, laws,
ordinances, rules and regulations of the United States and any
applicable foreign, state, and local governments and
governmental entities.
10.4 Salk hereby waives all claims against, and shall defend and
indemnify Agritope and its Affiliates, personnel, and
sublicensees against any and all liability, loss, damage,
costs, legal costs (including without limitation reasonable
attorneys' fees) which may arise from the injury or death of
an employee or agent of Salk engaged in conducting the
research contemplated by or performed under this Agreement,
working in the facility in which such research is conducted,
or damage to or loss of the property of Salk, caused by the
negligence or willful misconduct of Salk in conducting such
research. With respect to any matter for which Salk has
indemnified Agritope hereunder, Salk shall be afforded the
right to control the defense of all actions, to enter into all
settlements, judgments or other arrangements in respect
13 July 99 Page 22
<PAGE>
thereof. Agritope agrees to notify Salk promptly after it
becomes aware of any claim, action or proceeding by a third
party and to co-operate with Salk, at Salk's expense, in any
defense or prosecution thereof.
10.5 Except to the extent of the limited waiver and indemnity by
Salk set forth in Section 10.4: (i) Salk shall not be liable
for any direct, consequential, or other damages suffered by
Agritope, any licensee, or otherwise resulting from the use of
the research or any invention or product under this Agreement;
and (ii) Agritope shall be liable for and shall defend and
indemnify Salk against any and all liability, loss, claim,
damage, costs, legal costs (including without limitation
reasonable attorneys' fees) in respect of any injury or damage
caused by Agritope's or its Affiliates', or sublicensees' use
or exploitation of the Collection, the Licensed Patents, the
Salk Program Technology, the Salk Background Technology, or
any Licensed Products. With respect to any matter for which
Agritope has indemnified Salk hereunder, Agritope shall be
afforded the right to control the defense of all actions, to
enter into all settlements, judgments or other arrangements in
respect thereof. Salk agrees to notify Agritope promptly after
it becomes aware of any claim, action or proceeding by a third
party and to co-operate with Agritope, at Agritope's expense,
in any defense or prosecution thereof.
10.6 Before the first commercial sale of a Licensed Product,
Agritope agrees to procure and maintain comprehensive product
liability insurance against any claims or expenses for which
it is obligated to indemnify Salk as provided above. Such
insurance shall be in an amount not less than [ * ] per
incident and [ * ] annual aggregate.
10.7 THE FOREGOING WARRANTIES AND INDEMNITIES ARE IN LIEU OF, AND
THE PARTIES EACH DISCLAIM, ALL OTHER WARRANTIES, EXPRESS,
IMPLIED OR ARISING BY LAW, INCLUDING WITHOUT LIMITATION ANY
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE. EXCEPT AS EXPLICITLY STATED HEREIN,
NEITHER PARTY WILL BE LIABLE FOR ANY CONSEQUENTIAL OR
INCIDENTAL DAMAGES.
11. MISCELLANEOUS.
11.1 With the exception of the 1997 Option and Research Agreement
(which agreement shall remain in full force and effect in
accordance with its terms and shall not be modified or
affected by this Agreement or by the conduct of the Research
Program, except as described in Section 3.5), this Agreement
constitutes the entire agreement and supersedes all prior
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
13 July 99 Page 23
<PAGE>
agreements and understandings, both written and oral, between
the parties hereto with respect to the subject matter hereof.
11.2 This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their successors and assigns.
11.3 All notices, requests or other communication provided for or
permitted hereunder shall be given in writing and shall be
hand delivered or sent by facsimile, reputable courier or by
registered or certified mail, postage prepaid, return receipt
requested, to the address set forth on the signature page of
this Agreement, or to such other address as either party may
inform the other of in writing. Notices will be deemed
delivered on the earliest of transmission by facsimile, actual
receipt or three days after mailing as set forth herein.
11.4 Any terms of this Agreement may be amended, modified or waived
only in a writing signed by both parties.
11.5 If any provision of this Agreement shall be held invalid,
illegal or unenforceable, such provision shall be enforced to
the maximum extent permitted by law and the parties'
fundamental intentions hereunder, and the remaining provisions
shall not be affected or impaired.
11.6 Nothing herein contained shall constitute this a joint venture
agreement or constitute either party as the partner, principal
or agent of the other, this being an Agreement between
independent contracting entities. Neither party shall have the
authority to bind the other in any respect whatsoever to third
parties. Except as provided herein, nothing contained in this
Agreement shall be construed as conferring any right on either
party to use any name, trade name, trademark or other
designation of the other party hereto, unless the express,
written permission of such other party has been obtained.
11.7 This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of California without
regard to its conflict of laws rules.
11.8 If the parties fail to reach agreement with respect to a
dispute or difference (other than as to a question relating to
patent validity), between the parties arising out of or in
connection with this Agreement, the dispute or difference will
be determined by arbitration in San Francisco, California, in
accordance with the Non-Administered Arbitration Rules &
Commentary (Amended 1993) of the CPR Institute for Dispute
Resolution by an independent and impartial arbitrator, who
(unless the parties agree otherwise) shall have had both
training and experience as an arbitrator of commercial
licensing matters and who shall be, and for at least ten years
shall have been, a partner, shareholder or member in a highly
13 July 99 Page 24
<PAGE>
respected law firm headquartered in the United States. If the
parties to this Agreement cannot agree on the arbitrator, then
the arbitrator will be selected by the President of the CPR
Institute for Dispute Resolution in accordance with the
criteria set forth in the preceding sentence. The arbitrator
may decide any issue as to whether, or as to the extent to
which, any dispute is subject to the arbitration and other
dispute resolution provisions in this Agreement. The
arbitrator must base the award on the provisions of this
Agreement and must render the award in a writing which must
include an explanation of the reasons for such award. Any
arbitration pursuant to this section will be governed by the
substantive laws of California applicable to contracts made
and to be performed in that state, without regard to conflicts
of law rules, and by the arbitration law of the Federal
Arbitration Act (9 U.S.C. ss.1 et seq.). Judgment upon the
award rendered by the arbitrator may be entered by any court
having jurisdiction thereof. The statute of limitations of
California applicable to the commencement of a lawsuit will
apply to the commencement of an arbitration under this
Section. All fees, costs and expenses of the arbitrators, and
all other costs and expenses of the arbitration, will be
shared equally by the parties to this Agreement unless such
parties agree otherwise or unless the arbitrator in the award
assesses such costs and expenses against one of such parties
or allocates such costs and expenses other than equally
between such parties. Each party to this Agreement
acknowledges receipt of a copy of the Non-Administered
Arbitration Rules & Commentary (Amended 1993) of the CPR
Institute for Dispute Resolution. Notwithstanding the
foregoing, either party may, on good cause shown, seek a
temporary restraining order and/or a preliminary injunction
from a court of competent jurisdiction, to be effective
pending the institution of the arbitration process and the
deliberation and award of the arbitrator.
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute this Agreement as of the date first written
above.
THE SALK INSTITUTE FOR AGRITOPE, INC.
BIOLOGICAL STUDIES
By: /s/Thomas E. Jurgensen By: /s/Adolph J. Ferrov
Name: Thomas E. Jurgensen Adolph J. Ferro
Title: Vice President IPTT President
Address: Address:
10010 North Torrey Pines 16160 SW Upper Boones Ferry Rd.
La Jolla, CA 92037 Portland, OR 97224-7744
Fax: 619-450-0509 Fax: 503-670-7703
Attn: V.P. IPTT Attn: President
13 July 99 Page 25
<PAGE>
Schedule 1.1: Additional Activation Tagging References
[ * ]
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
13 July 99 Page 26
<PAGE>
EXHIBIT A
LISTED SALK BACKGROUND PATENTS
[ * ]
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
13 July 99 Page 27
EXHIBIT 10.6
(REDACTED)
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
<PAGE>
ASSIGNMENT AND ASSUMPTION AGREEMENT
AND BILL OF SALE
This Agreement and Bill of Sale, dated as of July 15, 1999, is
made by and between Agritope, Inc., a Delaware corporation ("Agritope"), and
ACTTAG, Inc., a Delaware corporation ("ACTTAG"). ACTTAG is the wholly-owned
subsidiary of Agritope. Agritope and ACTTAG hereby agree as follows:
1. ASSIGNMENT. As a contribution to the capital of ACTTAG and
in consideration for the issuance to Agritope of all of the issued and
outstanding shares of the the common capital stock of ACTTAG, Agritope hereby:
(i) assigns to ACTTAG, and ACTTAG hereby accepts, all of Agritope's right, title
and interest in the contracts listed in the attached Schedule 1 (the
"Contracts"); (ii) assigns, transfers, conveys and delivers to ACTTAG, all of
Agritope's right, title and interest in and to the biological materials
described in the attached Schedule 2 hereto (the "Existing Agritope
Collection"); and (iii) assigns, transfers, conveys and delivers to ACTTAG, as
the successor to that portion of Agritope's business to which the trademarks
"AGRINOMICS" and "ACTTAG" (the "Marks") pertain, all of Agritope's right, title
and interest in and to such trademarks and any goodwill associated therewith and
all pending trademark applications with respect thereto. Schedule 1 and Schedule
2 are incorporated herein by this reference.
2. ASSUMPTION. ACTTAG hereby assumes all of the obligations to
be performed by Agritope under the Contracts after the date of this Agreement
and Bill of Sale (the "Assumed Obligations"). ACTTAG shall fully and timely
perform all of the Assumed Obligations in accordance with the applicable
Contracts, it being understood, however, that the parties contemplate that
ACTTAG will assign the Contracts to Agrinomics LLC ("Agrinomics") and obtain the
agreement of Agrinomics to fully and timely perform all of the Assumed
Obligations in accordance with the applicable Contracts.
3. DELIVERY. Agritope shall deliver to ACTTAG the Existing
Agritope Collection and a copy of Agritope's records pertaining to any of the
Contracts or any of the Marks (including, without limitation, copies of the
Contracts, any amendments to the Contracts, any reports and other documentation
delivered under the Contracts, and any correspondence with the other party to
the Contracts to the extent relating to the Contracts).
4. WARRANTY. Agritope warrants that all of its right, title
and interest in the Existing Agritope Collection, the Contracts, and the Marks
are assigned to ACTTAG pursuant to this Agreement and Bill of Sale free and
clear of any and all mortgages, deeds of trust, security interests and other
liens arising by, through or under Agritope. Agritope shall defend ACTTAG's
right, title and interest in the Existing Agritope Collection, the Contracts,
and the Marks against any such mortgage, deed of trust, security interest or
other lien.
-2-
<PAGE>
5. DISCLAIMER. Except as may be explicitly stated in the LLC
Agreement establishing Agrinomics, and in that certain Research and Management
Contract between Agritope and Agrinomics dated as of July 1, 1999, AGRITOPE DOES
NOT MAKE ANY WARRANTY (WHETHER OF MERCHANTABILITY, FITNESS, NON-INFRINGEMENT OR
OTHERWISE) WITH REGARD TO THE CONDITION, NATURE, PERFORMANCE, CAPACITY,
RESPONSIVENESS, QUALITY, SUITABILITY, FITNESS, SOURCE OR CHARACTERISTICS OF THE
EXISTING AGRITOPE COLLECTION, THE MARKS, OR OF ANY FACILITY, COLLECTIONS,
EQUIPMENT, SOFTWARE, SERVICES, GOODS OR OTHER ITEMS SUBJECT TO ANY OF THE
CONTRACTS. ACTTAG acknowledges that it has reviewed, understands and agrees to
all of the provisions of each Contract.
6. INDEMNITY BY AGRITOPE. Agritope shall defend and indemnify
ACTTAG and Agrinomics and its Members and their affiliates (other than Agritope)
and their officers, directors, shareholders, employees representatives, and
agents, from and against any and all claims that may arise out of any breach of
or default under any of the Contracts by Agritope prior to the date of this
Agreement and Bill of Sale. Further, Agritope shall pay or reimburse any and all
costs, expenses and attorneys' fees reasonably incurred by ACTTAG or Agrinomics
and its Members and their affiliates (other than Agritope) and their officers,
directors, shareholders, employees representatives, and agents, in connection
with the defense, settlement or satisfaction of any such claim. However,
Agritope's obligations under this paragraph are conditioned upon ACTTAG's and
Agrinomics' or such parties': giving Agritope prompt written notice of the
claim; cooperating with Agritope in connection with Agritope's defense,
compromise, settlement and satisfaction of the claim; and not compromising,
settling or satisfying the claim without the prior written consent of Agritope,
which consent shall not be unreasonably withheld.
7. INDEMNITY BY ACTTAG. ACTTAG shall defend and indemnify
Agritope and its affiliates and their officers, directors, shareholders,
employees representatives, and agents from and against any and all claims that
may arise out of any breach of or default under any of the Contracts by ACTTAG
or Agrinomics after the date of this Agreement and Bill of Sale. Further, ACTTAG
shall pay or reimburse any and all costs, expenses and attorneys' fees
reasonably incurred by Agritope in connection with the defense, settlement or
satisfaction of any such claim. However, ACTTAG's obligations under this
paragraph are conditioned upon Agritope's or such parties': giving ACTTAG prompt
written notice of the claim; cooperating with ACTTAG in connection with ACTTAG's
defense, compromise, settlement and satisfaction of the claim; and not
compromising, settling or satisfying the claim without the prior written consent
of ACTTAG, which consent shall not be unreasonably withheld.
8. GOVERNING LAW; DISPUTES. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware, without
regard to the choice of law provisions of the State of Delaware or any other
jurisdiction to the contrary. If the parties fail to reach agreement with
respect to a dispute or difference (other than as to a question relating to
patent validity, which the parties intend will be decided in litigation and not
-3-
<PAGE>
in arbitration), between the parties arising out of or in connection with this
Agreement, the dispute or difference will, to the fullest extent permitted by
law, be determined by arbitration in New York City, in accordance with the
Commercial Arbitration Rules of the American Arbitration Association by an
independent and impartial arbitrator, who (unless the parties agree otherwise)
shall have had both training and experience as an arbitrator of agricultural
technology licensing matters, including biotechnology, and who shall be, and for
at least ten years shall have been, a partner, shareholder or member in a highly
respected law firm headquartered in the United States. The arbitrator may decide
any issue as to whether, or as to the extent to which, any dispute is subject to
the arbitration and other dispute resolution provisions in this Agreement. The
arbitrator must base the award on the provisions of this Agreement and must
render the award in a writing which must include an explanation of the reasons
for such award. Any arbitration pursuant to this section will be governed by the
substantive laws of Delaware applicable to contracts made and to be performed in
that state, without regard to conflicts of law rules, and by the arbitration law
of the Federal Arbitration Act (9 U.S.C. ss.1 et seq.). Judgment upon the award
rendered by the arbitrator may be entered by any court having jurisdiction
thereof. The statute of limitations of Delaware applicable to the commencement
of a lawsuit will apply to the commencement of an arbitration under this
Section. All fees, costs and expenses of the arbitrator, and all other costs and
expenses of the arbitration, will be shared equally by the parties to this
Agreement unless such parties agree otherwise or unless the arbitrator in the
award assesses such costs and expenses against one of such parties or allocates
such costs and expenses other than equally between such parties. Notwithstanding
the foregoing, either party may, on good cause shown, seek a temporary
restraining order and/or a preliminary injunction from a court of competent
jurisdiction, to be effective pending the institution of the arbitration process
and the deliberation and award of the arbitrator.
9. ENTIRE AGREEMENT. This Agreement and Bill of Sale is made
pursuant to that certain Limited Liability Company Agreement among Agritope,
ACTTAG and Rhone-Poulenc Ag Company dated as of July 1, 1999 (the "LLC
Agreement") and that certain Stock Subscription between Agritope and ACTTAG,
dated as of July 12, 1999 (the "Subscription"). This Agreement and Bill of Sale,
together with the Subscription and the LLC Agreement, and the agreements
referenced therein, constitutes the entire agreement, and supersedes any and all
prior agreements, between the parties with respect to the Existing Agritope
Collection, the Contracts, and the Marks.
-4-
<PAGE>
IN WITNESS WHEREOF, the parties have entered into this
Agreement and Bill of Sale as of the date first set forth above.
AGRITOPE, INC.: ACTTAG, INC.:
- -------------- -------------
By: /s/Adolph J. Ferro By: /s/Adolph J. Ferro
Title: Adolph J. Ferro, CEO Title: Adolph J. Ferro, President
<PAGE>
SCHEDULE 1: ASSIGNED CONTRACTS
------------------------------
1. That certain Research, License and Option Agreement dated as of
October 23, 1998, by and between The Salk Institute for Biological Sciences and
Agritope, as amended.
2. That certain Research and Option to License Agreement dated as of
January 21, 1999, by and between the University Court of the University of
Edinburgh and Agritope.
-6-
<PAGE>
SCHEDULE 2: DESCRIPTION OF EXISTING AGRITOPE COLLECTION
-------------------------------------------------------
[ * ]
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
-7-
EXHIBIT 10.7
(REDACTED)
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
Page 1
<PAGE>
THIS AGREEMENT is entered into as of the 21st day of January, 1999 (the
"Effective Date") by and between the University Court of the University of
Edinburgh ("University"), and Agritope, Inc., a Delaware corporation
("Agritope").
A. University, in part through the use of activation tagging
techniques, intends to develop, by means of the research program to be carried
out pursuant to this Agreement and will therefore own all right, title and
interest in and to certain Arabidopsis plants, and associated germplasm, gene
constructs, seeds and other tissues, DNA sequences and information derived by
University therefrom (together called herein the "Collection").
B. Agritope is experienced in the management of large scale research
programs and in genetic studies and techniques likely to be useful in the
screening and analysis of the Collection. Agritope believes that useful
information may be derived from the Collection, which may aid in the discovery
or development of commercializable products, and desires to help, support and
participate with University in such a research program for that purpose.
C. University desires Agritope's support and participation in such a
research program, and is willing to grant Agritope certain licenses and options
to University and certain third-party rights in connection therewith and with
the potential commercialization of such products.
NOW THEREFORE the parties hereby agree as follows:
1. DEFINITIONS
1.1 "AFFILIATE" of Agritope shall mean any entity that, directly or
indirectly, owns and controls the voting of at least 50% of the
voting capital shares of Agritope (a "Parent" entity), or at least
50% of the voting capital shares (or equivalent control) of which
is, directly or indirectly, owned, and the voting of which is
controlled, by Agritope, its Parent or any other Affiliate of
Agritope.
1.2 "AGRITOPE-DISCOVERED PRODUCTS" shall mean genes, information about
gene function, products, processes and technologies (including
without limitation Joint Inventions), the discovery or isolation
of which was made by Agritope or its Affiliates from or using
physical materials provided to Agritope by University as part of
the Collection, whether or not in the course of the Research
Program, and whether or not the same also may be
University-Discovered Products or Third-Party
Researcher-Discovered Products.
1.3 "COMMITMENT DATE" shall mean, as to any Licensed Product or
Agritope-Discovered Product, the first date on which Agritope or
its Affiliate has done any of the following, bearing on such
product:
(a) submitted any regulatory filing;
(b) commenced any material field trial;
Page 2
<PAGE>
(c) entered into any relationship with a commercialization
party such as a distributor, seed company, and other
marketer.
1.4 "CONFIDENTIAL TECHNOLOGY" shall mean all technology and related
information that is, at the relevant time hereunder, required to
be protected as confidential pursuant to Section 7 hereof.
"Confidential Program Technology" shall mean the Program
Technology that is also Confidential Technology.
1.5 "ENABLEMENT PERIOD" shall mean the period beginning on the
Effective Date and extending until the third anniversary of the
last payment made by Agritope to University under Section 3
hereof.
1.6 "EXCLUSIVITY PERIOD" shall mean that period during the License
Period that is determined on a territory by territory basis for
each Agritope-Discovered Product and that extends from the
Effective Date until there are no longer any Licensed Patents in
that territory applicable to the making, using, selling, offering
for sale or importing of the relevant Agritope-Discovered Product,
or, if later, until all of the Confidential Program Technology
relevant to the applicable Agritope-Discovered Product or its
development has been disclosed without restriction to the public
(but in the case of territories in the European Union where there
are no longer any Licensed Patents based at least in part on
technology existing as of the Effective Date, the Exclusivity
Period applicable to the relevant Agritope-Discovered Product will
not extend longer in such territory than ten years from the first
commercial sale thereof in any territory in the European Union).
Restrictions on passive marketing (i.e., merely accepting
unsolicited orders) of a Licensed Product in the European Union
will not (unless otherwise permitted under applicable law) last
more than five years from the first commercial sale thereof in any
territory in the European Union.
1.7 "INVENTOR'S DISCLOSURE" shall mean the formal written
documentation by a scientist or other inventor of any Program
Technology with respect to such Program Technology. A "Preliminary
Inventor's Disclosure" means such documentation that includes at
least a description of the nature and operative principle of the
Program Technology, and of its likely uses. The "Interim
Inventor's Disclosure" shall mean a disclosure, including
information (to the extent available) of the sort to be mutually
agreed by the parties following the submission of the Preliminary
Inventor's Disclosure, and to be submitted within six months
following the submission of the Preliminary Inventor's Disclosure.
The "Final Inventor's Disclosure" shall mean such a disclosure
that includes at least the information of a Preliminary Inventor's
Disclosure, plus a full technical disclosure of a technology, and,
where such Program Technology may be patentable, also including
all information normally required to support a regular (i.e., not
merely provisional) patent application thereon, considered in the
light of normal industry and academic practice for such
disclosures.
1.8 "JOINT INVENTIONS" shall mean any inventions or technology that is
Page 3
<PAGE>
jointly conceived or reduced to practice by or for University and
Agritope (or University and any Agritope Affiliate).
1.9 "LICENSE PERIOD" shall mean, as to each Licensed Product and each
Agritope-Discovered Product in each territory in the world, the
period from the Option Exercise through the last to occur of the
following:
(a) the [ * ] of the first commercial launch of such product
anywhere in the world;
(b) the expiration of the Exclusivity Period applicable to
such a product in such territory.
1.10 "LICENSED PATENTS" shall mean University's or any Third-Party
Researcher's rights under patents in any and all territories, if
any, obtained and in force during the term of this Agreement, and
all patent applications arising on or after the Effective Date, in
each case covering or disclosing: (a) any aspect or part of the
Collection or the development or use thereof; (b) any of
University's techniques, improvements, modifications, alterations,
or enhancements to the Collection or with respect to the design,
development or use of such collections developed in the course of
the Research Program; or (c) any inventions that are made or
acquired in whole or in part during and in the course of the
Research Program or that otherwise disclose or cover any of the
Program Technology.
1.11 "LICENSED PRODUCTS" shall mean the University-Discovered Products
and the Third-Party Researcher-Discovered Products, and any of
them.
1.12 "NET SALES" shall mean payments received by Agritope or an
Affiliate from non-Affiliates to the extent pertaining to net
sales of a Licensed Product or an Agritope-Discovered Product by
Agritope or such Affiliate, as the case may be. The calculation of
Net Sales shall include amounts specifically identifiable to such
Licensed Product or Agritope-Discovered Product and amounts
allocated to the Licensed Product or Agritope-Discovered Product,
it being understood that amounts which are not specifically
identifiable to the Licensed Product or Agritope-Discovered
Product by virtue of their being identifiable to a group of
products that includes the Licensed Product or Agritope-Discovered
Product shall be allocated thereto in a consistent and equitable
manner which will equitably reflect the contribution of the
Licensed Product or Agritope-Discovered Product to such Net Sales.
Amounts to be included in the calculation of Net Sales shall be
those representing the gross amount received, less:
(a) quantity and/or normal and customary cash discounts
allowed or taken;
(b) credits, free goods, rebates and/or adjustments allowed
to or taken by bona fide arms' length purchasers by
reason of rejections, returns, retroactive price
reductions, or volume purchasing discounts; and
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
Page 4
<PAGE>
(c) allowances for freight, taxes and insurance.
1.13 "PROGRAM COORDINATOR(S)" shall mean the individual at Agritope and
the individual at University that are given the primary
responsibility to coordinate and to facilitate the respective
parties' activities in terms of the Research Program. University's
initial Program Coordinator is Chris Lamb, Ph.D., and Agritope's
initial Program Coordinator is D. Ry Wagner, Ph.D. The parties may
replace their respective Program Coordinators from time to time as
the need arises due to departures of personnel or the like,
provided that the replacement is reasonably acceptable to the
other party.
1.14 "PROGRAM TECHNOLOGY" shall mean the Collection as developed by
University in terms of the Research Program and all related
information, technical or otherwise developed or discovered by
University in terms of the Research Program (or by a Third-Party
Researcher in whole or in part from or using any part of the
Collection, whether or not in the course of the Research Program,
but during the Funding Period), including, but not limited to,
that comprised in techniques, improvements, modifications,
alterations, or enhancements with respect to the design,
development or use of such collections, formulae, protein
sequences, gene constructs, genes, information about gene
function, data, techniques, manuals, instructions, samples, or
inventions, development processes, assays, improvements, and
specifications.
1.15 "RESEARCH PROGRAM" shall mean the program of work to be carried
out by University in accordance with the provisions of Section 2
hereof on behalf of Agritope.
1.16 "SUBLICENSING FEES" shall mean the total consideration, in cash or
in-kind, including without limitation up front payments and
royalties, received by Agritope or an Affiliate from
non-Affiliates in return for the grant of any sublicense by it of
any rights under any of the Licensed Patents or Program
Technology, but excluding: [ * ] The calculation of Sublicensing
Fees shall include amounts specifically identifiable to the rights
sublicensed and amounts allocated to such rights, it being
understood that amounts which are not specifically identifiable to
the sublicensed rights by virtue of their being identifiable to a
group of products or services that includes the sublicensed rights
shall be allocated thereto in a consistent and equitable manner
which will equitably reflect the contribution of the sublicensed
rights to such Sublicensing Fees.
1.17 "THIRD-PARTY RESEARCHER" shall mean any person or entity (other
than staff or students of the University) to which the University
provides any portion of the Collection, or any access thereto or
rights to the use thereof, it being agreed that University shall,
within thirty days thereof, give Agritope notice of any such
provision of any of the Collection to any third party.
1.18 "THIRD-PARTY RESEARCHER-DISCOVERED PRODUCTS" shall mean genes,
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
Page 5
<PAGE>
information about gene function, products, processes and
technologies (including without limitation Joint Inventions), the
discovery or isolation of which was made by a Third-Party
Researcher from or using physical materials that are part of the
Collection and that were provided to such third party by the
University, whether or not in the course of the Research Program.
1.19 "UNIVERSITY-DISCOVERED PRODUCTS" shall mean:
(a) the "Unrestricted University-Discovered Products" which are
genes, information about gene function, products, processes
and technologies (including without limitation Joint
Inventions), the discovery or isolation of which was, prior to
the 90th day following the end of the Funding Period, made by
University from or using physical materials that are part of
the Collection, whether or not in the course of the Research
Program, funded through (i) the use in whole or in part of
Agritope's funding (other than the mere use of the Collection)
or (ii) University's own resources (without any third-party
funding) or (iii) third-party sources under terms which do not
have any conditions or requirements that would be inconsistent
with Agritope's obtaining exclusive rights as described in
Section 4.6; and
(b) the "Restricted University-Discovered Products" which are
genes, information about gene function, products, processes
and technologies (including without limitation Joint
Inventions), the discovery or isolation of which was, prior to
the 90th day following the end of the Funding Period, made by
University from or using physical materials that are part of
the Collection, whether or not in the course of the Research
Program, funded without any use of Agritope's funding (other
than the mere use of the Collection) and with third-party
funding sources under terms which require (despite all
reasonable efforts of the University, after consultation with
Agritope, to avoid the imposition of such requirement) that
such source will obtain a commercialization right in
discoveries made with such funding that would be inconsistent
with Agritope's obtaining exclusive rights as described in
Section 4.6.
2. RESEARCH PROGRAM
2.1 University and Agritope shall cooperatively and in good faith
engage in and conduct the Research Program. The conduct of the
Research Program shall be coordinated on a day-to-day basis by the
parties' Program Coordinators, in consultation with each other.
The Program Coordinators will be guided by the detailed Research
Plan to be approved by the parties in terms of Section 2.2 hereof.
Any material changes to the Research Plan will require the written
approval of both parties.
2.2 Forthwith after the Effective Date, and subject to payment by
Agritope to University of the sum specified in Section 3.1 hereof,
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the parties will consult and co-operate with each other in the
preparation of a formal and complete Research Plan document
directed at the achievement of the tasks described in Section 2.4
(the "Research Plan") to be finalised within a period not
exceeding twelve months from the Effective Date.
2.3 Agritope will be entitled to give formal notice to University of
its wish to proceed with the Research Program (the "Option
Exercise") at any time from the Effective Date through the later
of the first anniversary of the Effective Date or the thirtieth
(30th) day following the finalization of the Research Plan.
2.4 Forthwith after the Option Exercise, and subject to payment by
Agritope to University on the due dates of the sums specified in
Sections 3.2 and 3.3 hereof, University will, in accordance with
the Research Plan, carry out the following principal tasks (as
well, incidentally, as possibly developing new and improved
techniques, modifications, alterations, or enhancements with
respect to the design, development or use of collections such as
the Collection):
(i) create activation tagged lines;
(ii) grow primary transformants of Arabidopsis plants;
(iii) document interesting visible traits;
(iv) collect, archive/register, and store seed of primary
transformants; transmit samples of all such seeds to
Agritope;
(v) screen for various traits of special interest to
University researchers, and characterise the underlying
genes and gene function;
(vi) submit periodic and final documentation and
communications to Agritope of the results of all
University activities and, as reported to the University,
of any activities of Third-Party Researchers bearing in
any way on the Program Technology or this Agreement,
including without limitation in each case (as to the
University and Third-Party Researchers) copies of all
Inventor's Disclosures within 10 days of their first
preparation; and
(vii) University will, during the period from the Effective
Date until Agritope makes its last payment under Section
3 (the "Funding Period"), consult and cooperate with
Agritope as reasonably requested in connection with
Agritope's and its Affiliates' and sublicensees' further
use of the Collection.
3. OPTION FEE; RESEARCH PROGRAM FUNDING
3.1 Agritope shall pay University a non-refundable fee of US $10,000
within thirty days following the Effective Date, which the University
agrees to apply to support the University's Institute of Cell and
Molecular Biology.
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3.2 Beginning on the first day of the first calendar month following
the Option Exercise, Agritope shall pay University the sum of US
$5,000 on the first day of each quarter (which shall be a period
of three consecutive calendar months, but not necessarily a
calendar quarter), and continuing until the sum of US $100,000
(twenty such quarterly payments) has been paid under this Section.
Such funds shall be administered in such ways as the University's
Project Coordinator reasonably considers shall most effectively
enhance the academic impact and industrial value of the
Collection.
3.3 Beginning on the first day of the first calendar month following
the Option Exercise, Agritope shall pay University an additional
sum of $150,000 on the first day of each such quarter, and
continuing until the sum of $600,000 (four such quarterly
payments) has been paid under this Section. Such funds shall be
applied to support University's Research Program activities
specifically described in Section 2.
3.4 The sums stated above are exclusive of UK value added tax or
similar UK fiscal taxes, if any, payable thereon either now or at
any time hereafter, and where any such taxes are applicable, all
payments to University shall be accompanied by the relevant tax at
the rate in force at the time when the relevant payment fell due.
3.5 In the event of non-payment of any sum due by Agritope on the due
date for payment, interest shall be payable thereon by Agritope
from the date when it fell due until paid at the rate of 3% per
annum above the Bank of Scotland base rate from time to time.
3.6 Except for the payments described above in this Section 3, each of
the parties shall bear all of its own costs and expenses of the
conduct of the Research Program and the performance of its tasks
thereunder.
4. OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS
4.1 Each party will, as between it and the other party hereto, retain
ownership of any and all inventions, copyrights, trade secrets,
patent rights and other technology and rights to the extent
conceived or developed by its personnel or contractors, and
University and Agritope (or University and an applicable Agritope
Affiliate) shall co-own all Joint Inventions.
4.2 University hereby grants to Agritope and its Affiliates a
nonexclusive, paid-up, royalty-free, worldwide license, with right
to sublicense, to use and to exercise the Licensed Patents and the
Program Technology for research purposes.
4.3 In recognition of Agritope's payments hereunder and its support in
the creation of the Collection, University hereby undertakes not
to give any third party access for any purpose to the Collection
during the Enablement Period, provided that this shall not
preclude access to the Collection by University staff or students
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or any bona fide, non-profit Third-Party Researcher for research
purposes only so long as University contractually prohibits any
commercialisation or other exploitation of any part of the
Collection by any such Third-Party Researcher during the
Enablement Period and obtains in proper form grants of all rights
necessary from any Third-Party Researchers in order for University
to make the grants to Agritope and its Affiliates hereunder in and
to the Program Technology, the Licensed Patents and any
Third-Party Researcher-Discovered Products.
4.4 University hereby grants to Agritope and its Affiliates a
worldwide license, with right to sublicense, under the Licensed
Patents and the Program Technology to make, have made, use, sell,
offer for sale, and import any and all Licensed Products and
Agritope-Discovered Products during the License Period. Such
license shall be exclusive in the relevant territories during the
Exclusivity Periods applicable to the relevant Agritope-Discovered
Products and otherwise shall be nonexclusive (subject to later
agreement on an exclusive license pursuant to Section 4.6).
Agritope will notify University of any sublicenses granted
hereunder within thirty days after each such grant.
4.5 If Agritope or its Affiliates or sublicensee(s) wish to exploit a
Licensed Product or an Agritope-Discovered Product commercially it
or they shall be entitled to do so, but Agritope shall be obliged
to pay to University a royalty (the "Royalties") equal to:
(a) [ * ] of Sublicensing Fees (retaining their character as
cash or in-kind) received during the License Period; and
(b) [ * ] of Net Sales during the License Period for the right
to use the Licensed Patents and the Program Technology in
connection with such Licensed Product or Agritope-Discovered
Product.
(c) All Royalties shall be payable in US dollars and shall be
due quarterly within 60 days following the end of each
calendar quarter in respect of Sublicensing Fees and Net
Sales received in such calendar quarter. Each such payment
shall be accompanied by a statement of Sublicensing Fees and
Net Sales for the quarter and the calculation of Royalties
payable hereunder. Agritope and its Affiliates shall keep
complete, true and accurate records for the purpose of
showing the derivation of all Royalties payable to
University under this Agreement. Agritope shall report at
least quarterly to University as to whether there have been
any Sublicensing Fees or Net Sales since the date of the
last such report. University or its representatives shall
have the right to inspect, copy, and audit such records at
any time during reasonable business hours upon notice to
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
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Agritope or its Affiliate. Information gathered during any
such inspection or audit shall be held in confidence by
University, except to the extent any of the exceptions
stated in Sections 7.1.1 - 7.1.6 apply thereto. Any such
audit shall be at the expense of University, unless the
inspection or audit reveals that, with respect to the period
under audit, less than 95% of the Royalties due to
University hereunder have been paid, in which event Agritope
shall pay or reimburse University for the reasonable
expenses of such inspection or audit (but not in any case in
excess of the full amount of the deficiency discovered in
such audit), in addition to University's other remedies for
such underpayment.
4.6 University hereby grants to Agritope and its Affiliates the right,
during the Enablement Period, to obtain an exclusive,
royalty-bearing, worldwide license, with right to sublicense, on
the terms and conditions hereof (other than royalty rates and due
diligence provisions, including minimum financial return
provisions), to exploit, for the duration of the License Period,
on the following basis, Unrestricted University-Discovered
Products (but not Restricted University-Discovered Products and
not any Unrestricted University-Discovered Product as to which
Agritope has not, prior to the thirty-first day following the date
of the Preliminary Inventor's Disclosure, elected that at least a
provisional patent application be made with respect thereto) :-
4.6.1 University shall not actively seek, nor shall it grant
any license to any third party with respect to such an
Unrestricted University-Discovered Product, unless this
section has first been satisfied. If, prior to the
thirty-first (31st) day following the date University
provides to Agritope the Interim Inventor's Disclosure for
such Unrestricted University-Discovered Product (the "Rights
Expiration Date"), Agritope does not notify University that
Agritope and its Affiliates desire to obtain an exclusive
license to such Unrestricted University-Discovered Product,
University will be free to negotiate for and to grant such a
license to a third party, subject to the continuing
nonexclusive licenses granted hereunder to Agritope and its
Affiliates. If, prior to the Rights Expiration Date,
Agritope notifies University that Agritope desires to enter
into negotiations for such a license, University shall, for
an additional period of [ * ], negotiate exclusively and in
good faith with Agritope to determine the royalty and due
diligence and minimum financial return provisions with
respect thereto.
4.6.2 If the procedure in Section 4.6.1 has not been followed as
to any Unrestricted University-Discovered Product, Agritope
may at any time during the Enablement Period notify
University that Agritope or its Affiliate desires to obtain
an exclusive, royalty-bearing, worldwide license, with right
to sublicense, to exploit such Unrestricted
University-Discovered Product for the duration of the
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
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License Period. In such event, University shall, for a
period of [ * ], negotiate exclusively and in good faith
with Agritope or its Affiliate to determine the royalty and
due diligence and minimum financial return provisions with
respect thereto.
4.6.3 If the parties have failed to agree on the level of
royalties and the due diligence and minimum financial return
provisions during the [ * ] negotiation period, it shall be
open to either party to request, at any time within a
further period of [ * ], that these matters will be finally
determined in accordance with reasonable and usual industry
practice for such exclusive licenses by an expert who shall
be mutually appointed by both parties.
4.7 For the avoidance of doubt:
4.7.1 nothing in this Agreement shall restrict University's right
to use, or in accordance herewith to permit the use by
Third-Party Researchers of, fundamental knowledge acquired
by it in the course of the Research Program for education
and/or research;
4.7.2 Agritope further recognises that by charity law under
University policy the results of the Research Program should
be publishable and agrees that the Program Coordinator and
any other researchers engaged in the Research Program may
present at seminars, symposia, national or regional
professional meetings and publish in journals, theses or
dissertations or otherwise of their own choosing, methods
and results of the Research Program, provided however that
Agritope have been furnished copies of any proposed
publication or presentation at least three months in advance
of the submission of such proposed publication or
presentation to a journal editor or other third party.
Agritope shall have one month after receipt of said copies
to object to such proposed presentation or proposed
publication if in Agritope's sole opinion a delay of
publication is necessary in order to protect its commercial
interests, or the commercial use to Agritope or its
licensees of information derived from the Research Program,
including the need to file protective applications with
respect to the information proposed to be published. In the
event that Agritope makes such objection, the Program
Coordinator or such researchers shall refrain from making
such publication or presentation for a maximum of three
months from the date of receipt of such objection in order
for Agritope to obtain appropriate protective applications.
A delay imposed on submission for publication as a result of
a requirement made by Agritope shall not exceed four months
from the date of receipt of the said copies by Agritope,
although University will not unreasonably refuse a request
from Agritope for additional delay in the event that
intellectual property rights might otherwise be lost.
[ * ] = Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
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5. PATENT PROSECUTION AND MAINTENANCE.
5.1 University or a Third-Party Researcher (as University and the
Third-Party Researcher may agree) shall control the preparation,
filing, prosecution and maintenance of any Licensed Patents, other
than Joint Inventions. If Agritope desires that a patent filing
(whether provisional or regular) be made with respect to any
Program Technology, Agritope may at its election direct the
University to make such a filing, and the University shall do so.
Such filings shall be made by University at Agritope's expense
(subject to the requirement that such expenses be reasonable and
incurred in accordance with Section 5.3); provided, however, that
if University or such Third-Party Researcher licenses any such
Licensed Patents in such Program Technology to any third party
subsequently to Agritope's having paid any of Agritope's Share
hereunder with respect thereto, University shall reimburse
Agritope an amount equal to such other licensee(s)' prorata share
of the expenses described in Section 5.4, as if Agritope and such
other licensee(s) had been licensees of such Licensed Patent from
the first date that such Agritope Share began to accrue hereunder.
5.2 Agritope or its Affiliate shall have the right, in its sole
discretion and at its expense, to control the preparation, filing,
prosecution and maintenance of patents on any and all Joint
Inventions.
5.3 The party in control of such patent activities shall use its good
faith efforts to provide the other with an opportunity to review
and comment on the text of each patent application before filing,
and shall supply such other party with a copy of such patent
application as filed, together with notice of its filing date and
serial number. Each party shall cooperate with the other party,
execute all lawful papers and instruments and make all rightful
oaths and declarations as may be necessary in the preparation,
prosecution and maintenance of all applications and patents
described in this Section.
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5.4 As used herein, "AGRITOPE'S SHARE" shall mean that percentage of
the out-of-pocket expenses of University incurred in connection
with the preparation, filing, prosecution up to and through appeal
from a final rejection by a patent examiner, and maintenance of
the applicable patent applications and patents, including the
reasonable fees and expenses of attorneys and patent agents,
filing fees and maintenance fees, and the filing of applications
under the Patent Cooperation Treaty, but excluding costs
associated with any patent infringement actions. Agritope's Share
shall be a prorata percentage, shared fairly with the other
University licensees, as to patent applications and patents that
are licensed by University to any third party. That is, where
there are no such other licensees, Agritope's Share shall be 100%,
and where the University subsequently makes a grant of a license
to a third party (i.e., where Agritope has waived its rights to
obtain an exclusive under Section 4.6), Agritope's Share shall,
effective from the first date that Agritope bore any such expenses
hereunder, be such prorata percentage (half where there is one
such other licensee, one-third where there are two, and so on),
and the University shall cause Agritope to be reimbursed for prior
amounts borne by Agritope, such that Agritope and such other
licensees will have borne their shares of all such expenses to
that time. Where Agritope acquires an exclusive license pursuant
to Section 4.6, the Agritope Share shall remain 100%, and Agritope
shall bear, or reimburse University for, any related patent costs
including renewal fees not already borne by Agritope hereunder.
6. TERM AND TERMINATION
6.1 The term of this Agreement shall begin on the Effective Date and
shall, unless earlier terminated as provided herein, continue
until expiration of the last remaining License Period. If the term
of this Agreement is not so terminated prior to such expiration,
any and all then-remaining licenses to Agritope and its Affiliates
hereunder shall, upon and after such expiration, become
nonexclusive, royalty-free, paid-up and irrevocable.
6.2 Agritope may at its option terminate this Agreement at any time
prior to the Option Exercise upon at least 28 days' written notice
to University. Either Agritope or University may at its option and
by 28 days' written notice to the other, terminate this Agreement
at any time following the later of the first anniversary of the
Effective Date or the thirtieth (30th) day following the
finalization of the Research Plan, if (and only if) the Option
Exercise has not occurred prior to that time.
6.3 Neither party shall be entitled, except by agreement with the
other party, to terminate this Agreement until all the payments
due under Section 3.3 have been made, but thereafter Agritope may
terminate this Agreement at any time upon at least 120 days'
written notice to University.
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6.4 If either party materially breaches any of the terms, conditions
or agreements contained in this Agreement to be kept, observed or
performed by it, the other party may terminate this Agreement, at
its option and without prejudice to any of its other legal or
equitable rights or remedies, by giving the party who committed
the breach ninety days' notice in writing, unless the notified
party within such 90-day period shall have cured the breach;
provided, however, that without prejudice to University's other
rights or remedies hereunder for a breach by Agritope,
University's license under Section 4.4 with respect to any
Licensed Product or Agritope-Discovered Product shall not be
terminated for any reason following the Commitment Date therefor,
it being agreed, however, that Agritope shall be required to
obtain, in its sublicenses, and its agreements with its
Affiliates, the agreement of such sublicensee and Affiliates to
pay, if Agritope does not, any royalties due from Agritope to the
University pursuant to Section 4.5.
6.5 Agritope's obligations regarding payment of royalties accrued as
of the date of termination, and the provisions of Sections 7, 9
and 10 hereof shall survive any expiration or termination of this
Agreement.
6.6 If the performance by any party of any of its obligations under
this Agreement (other than an obligation to make payment) shall be
prevented by circumstances beyond its reasonable control then such
party shall be excused from performance of the obligation for the
duration of the relevant event. Any party so delayed or impeded
shall promptly inform the other parties of the nature of the
relevant cause and of the expected duration of the relevant delay
or impediment.
7. CONFIDENTIALITY
7.1 In the course of the Research Program, whether before or after the
Effective Date, a party may disclose, or may have disclosed, to
the other confidential information belonging to the disclosing
party (the "Discloser's Technology"). The receiving party will
maintain in confidence the Discloser's Technology and will not use
it for any purpose except as authorized hereunder. Each party
shall safeguard such information against disclosure to third
parties, including without limitation employees and persons
working or consulting for such party that do not have an
established, current need to know such information for purposes
authorized under this Agreement. This obligation of
confidentiality does not apply to restrict use or disclosure by
the receiving party of information and material that meet one or
more of the following criteria:
7.1.1 they were properly in the possession of the receiving
party, without any restriction on use or disclosure, prior
to receipt from the other party;
7.1.2 they are at the time of disclosure hereunder in the
public domain by public use, publication, or general
knowledge;
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7.1.3 they become general or public knowledge through no fault
of the receiving party following disclosure hereunder;
7.1.4 they are properly obtained by the receiving party on a
non-confidential basis from a third party not under a
confidentiality obligation to the disclosing party hereto;
7.1.5 they are independently developed by or on behalf of the
receiving party without the assistance of the confidential
information of the other party;
7.1.6 they are required to be disclosed by order of any court
or governmental authority; provided, however, that the
receiving party shall use its best efforts to give the
disclosing party prior notice of any such disclosure so as
to afford the disclosing party a reasonable opportunity to
seek, at the expense of the disclosing party, such
protective orders or other relief as may be available in the
circumstances.
7.2 Notwithstanding the foregoing provisions Agritope or its Affiliate
shall be permitted to disclose:
7.2.1 any Confidential Program Technology as may be required
to be necessarily revealed to any regulatory authorities or,
in connection with the exploitation of any Licensed Product
or Agritope-Discovered Product, to the extent that it
requires to be necessarily revealed to any potential
licensee or to collaborators and other persons performing
necessary tests and studies, which disclosure shall be made
subject to similar conditions of confidentiality and limited
use as apply to Agritope; and
7.2.2 any Confidential Program Technology to its patent
attorney or agent or any patent authority in any country as
shall require to be necessarily revealed for filing or
prosecuting any patent application with respect to any
Agritope-Discovered Product.
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7.3 Subject to Sections 7.1 and 7.2 above neither party shall make any
public announcement or other publication regarding this Agreement
(whether as to the existence or terms hereof) or the Research
Program or the results thereof without the prior, written consent
of the other party, which consent shall not be unreasonably
withheld; provided that neither the foregoing nor Section 7.4
shall prohibit any disclosure that is required by any applicable
law, regulation, or by any competent governmental authority
(despite the affected party's good faith efforts consistent with
law to prevent the applicability of such a requirement).
7.4 Agritope and its Affiliates will not use the name of University,
or of any member of the University staff engaged in the Research
Program, in any publicity, advertising or news release without the
prior written approval of an authorised representative or
University. Neither will University use the name of Agritope or
its Affiliates, or any employee of Agritope or its Affiliates, in
any publicity without the prior written approval of Agritope and
such Affiliate.
8. INFRINGEMENT
8.1 Each party shall promptly inform the other of any suspected
infringement of any of the Licensed Patents or the infringement or
misappropriation of Confidential Program Technology by a third
party, to the extent such infringement involves the manufacture,
use, or sale of an Agritope-Discovered Product in any applicable
Exclusivity Period or of an Unrestricted University-Discovered
Product exclusively licensed under Section 4.6 ("Covered
Infringement").
8.2 If a suspected infringement or misappropriation does not involve a
Covered Infringement, University may take, or refrain from taking,
any action it chooses, with or without notice to Agritope, and
Agritope shall have no right to take any action with respect to
such suspected infringement or misappropriation, nor to any
recoveries with respect thereto. University will exert reasonable
efforts to keep Agritope informed of actions University may take
as described in the preceding sentence. If the suspected
infringement or misappropriation involves a Covered Infringement,
University shall, within 30 days of the first notice referred to
in Section 8.1, inform Agritope whether or not University intends
to institute court action or proceedings against such third party
with respect to a Covered Infringement. Agritope will not take any
steps toward instituting court action or proceedings against any
third party involving a Covered Infringement until University has
informed Agritope of its intention pursuant to the previous
sentence.
8.3 If University notifies Agritope that it intends to institute court
action or proceedings against a third party with respect to a
Covered Infringement, and Agritope and its Affiliates do not agree
to join in such court action or proceedings as provided in Section
8.4, University may bring such court action or proceedings on its
own and shall in such event bear all costs of, and shall exercise
all control over, such court action or proceedings. University
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may, at its expense, bring such action in the name of Agritope or
its Affiliate and/or cause Agritope or its Affiliate to be joined
in the suit as a plaintiff. Recoveries, if any, whether by
judgment, award, decree or settlement, shall belong solely to
University.
8.4 If University notifies Agritope that it desires to institute court
action or proceedings against such third party with respect to a
Covered Infringement, and Agritope or its Affiliate notifies
University within 30 days after receipt of such notice that
Agritope or its Affiliate desires to institute court action or
proceedings jointly, the court action or proceedings shall be
brought jointly in the names of both parties and all costs thereof
shall be borne equally. Recoveries, if any, whether by judgment,
award, decree or settlement shall, after the reimbursement of each
of University and Agritope or its Affiliate for its share of the
joint costs in such action, be shared between University and
Agritope or its Affiliate as the interests of the parties were
affected by the infringement.
8.5 If University notifies Agritope that it does not intend to
institute court action or proceedings against such third party
with respect to a Covered Infringement (or fails to give any
notice in this respect or to actually bring a court action or
proceedings against the third party), Agritope or its Affiliate
may institute court action or proceedings on its own. Agritope or
such Affiliate shall bear all costs of, and shall exercise all
control over, such court action or proceedings. Recoveries, if
any, whether by judgment, award, decree or settlement, shall
belong solely to Agritope and its Affiliate.
8.6 Should either University or Agritope or its Affiliates commence a
court action or proceedings under the provisions of this Section 8
and thereafter elect to abandon the same, it shall give timely
notice to the other party, who may, if it so desires, be joined as
a plaintiff in the court action or proceedings (or continue as
such if it is already one) and continue prosecution of such court
action or proceedings, provided, however, that the sharing of
expenses and any recovery of such court action or proceedings
shall be as equitably agreed upon between University and Agritope
or its Affiliate.
9. REPRESENTATIONS, WARRANTIES AND INDEMNITIES
9.1 University represents and warrants that it has full right and
authority to grant the option and the licenses granted herein.
9.2 Each party represents and warrants to the other that to the best
of its knowledge and belief it has obtained, and will at all times
during the term of this Agreement hold and comply with, all
licenses, permits and authorizations necessary to perform this
Agreement, as now or hereafter required under any applicable
statutes, laws, ordinances, rules and regulations of any
applicable national, international and local governments and
governmental entities, and in the event of being notified of any
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deficiency undertakes promptly to use all reasonable endeavours to
obtain all such licenses, permits and authorisations.
9.3 Each party undertakes to use all reasonable endeavours to ensure
the accuracy of all information and material provided by it to the
other party in relation to the Research Program and in the event
of being notified of any error or other deficiency therein, or of
the same coming to its notice, promptly to use all reasonable
endeavours to supply appropriate corrections. Subject thereto
neither party shall be under any further obligation or liability
in respect of any error or deficiency (whether before or after the
date hereof) and no warranty or representation of any kind is made
or given or to be implied as to it sufficiency, accuracy or
fitness for purpose or freedom from infringement of intellectual
property rights and the recipient party shall in each case be
entirely responsible for the use to which it puts the same.
9.4 Save and subject as aforesaid University shall indemnify Agritope
against any and all liability, loss, damage, costs, legal costs
(including without limitation reasonable attorneys' fees),
professional and other expenses of any nature whatsoever incurred
or suffered by Agritope to the extent and only to the extent
Agritope is required to meet a claim by any third party from any
University negligence, intentional misconduct, or from any breach
of University's duties, obligations or warranties hereunder. With
respect to any matter for which University has indemnified
Agritope hereunder, University shall be afforded the right to
control the defense of all actions, to enter into all settlements,
judgments or other arrangements in respect thereof, provided that
University undertakes and pursues such defense with competent
counsel reasonably acceptable to Agritope. Agritope agrees to
notify University promptly after it becomes aware of any claim,
action or proceeding by a third party and to co-operate with
University, at University's expense, in any defense or prosecution
thereof.
9.5 Save and subject as aforesaid Agritope shall indemnify University
against any and all liability, loss, damage, costs, legal costs
(including without limitation reasonable attorneys' fees),
professional and other expenses of any nature whatsoever incurred
or suffered by University to the extent and only to the extent
University is required to meet a claim by any third party from any
Agritope negligence, intentional misconduct, or from any breach of
Agritope's duties, obligations or warranties hereunder, or in
respect of any injury or damage caused by Agritope's or its
Affiliates', or sublicensees' use or exploitation of the rights
granted hereunder or pursuant to the terms of this Agreement. With
respect to any matter for which Agritope has indemnified
University hereunder, Agritope shall be afforded the right to
control the defense of all actions, to enter into all settlements,
judgments or other arrangements in respect thereof, provided that
Agritope undertakes and pursues such defense with competent
counsel reasonably acceptable to University. University agrees to
notify Agritope promptly after it becomes aware of any claim,
action or proceeding by a third party and to co-operate with
Agritope, at Agritope's expense, in any defense or prosecution
thereof.
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9.6 THE FOREGOING WARRANTIES AND INDEMNITIES ARE IN LIEU OF, AND THE
PARTIES EACH DISCLAIM, ALL OTHER WARRANTIES, EXPRESS, IMPLIED OR
ARISING BY LAW, INCLUDING WITHOUT LIMITATION ANY IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.
10. MISCELLANEOUS
10.1 This Agreement constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral,
between the parties hereto with respect to the subject matter
hereof.
10.2 This Agreement shall not be assignable by either party without the
prior written consent of the other party, which consent will not
be unreasonably withheld, provided that Agritope shall be entitled
to assign its interest in this Agreement to any Affiliate that is
demonstrably able to fulfil Agritope's obligations hereunder, and
either party shall be entitled to assign its interest in this
Agreement where the assignment arises as a result of the assigning
of all or substantially of all its assets.
10.3 All notices, requests or other communication provided for or
permitted hereunder shall be given in writing and shall be hand
delivered or sent by facsimile (followed by a mailed or couriered
confirmation copy), reputable courier or by registered or
certified mail, postage prepaid, return receipt requested, to the
address set forth on the signature page of this Agreement, or to
such other address as either party may inform the other of in
writing. Notices will be deemed delivered on the earliest of
transmission by facsimile, actual receipt or five days after
mailing as set forth herein.
10.4 Any terms of this Agreement may be amended, modified or waived
only in a writing signed by both parties.
10.5 If any provision of this Agreement shall be held invalid, illegal
or unenforceable, such provision shall be enforced to the maximum
extent permitted by law and the parties' fundamental intentions
hereunder, and the remaining provisions shall not be affected or
impaired.
10.6 Nothing herein contained shall constitute this a joint venture
agreement or constitute either party as the partner, principal or
agent of the other, this being an Agreement between independent
contracting entities. Neither party shall have the authority to
bind the other in any respect whatsoever to third parties. Except
as provided herein, nothing contained in this Agreement shall be
construed as conferring any right on either party to use any name,
trade name, trademark or other designation of the other party
hereto, unless the express, written permission of such other party
has been obtained.
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<PAGE>
10.7 This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of Scotland and the parties hereto
submit to the non-exclusive jurisdiction of the Scottish Courts.
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute and acknowledge this Agreement as of the date first written
above.
UNIVERSITY COURT OF THE AGRITOPE, INC.
UNIVERSITY OF EDINBURGH
By: /S/ KEITH WINTON By: /S/ ADOLPH J. FERRO
------------------------- ------------------------------
Its: DEPUTY DIRECTOR, RESEARCH Adolph J. Ferro, President
-------------------------
AND INNOVATION Address: 16160 SW Upper Boones Ferry Rd.
-------------- Portland,
Oregon 97224-7744,
Address: Old College USA
South Bridge
Edinburgh EH8 9YL Fax: 01 503 670 7703
Scotland, UK Attn: President
Fax: 00 44 131 650 1000
Attn: The Secretary
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