EXHIBIT 10.26
RESEARCH AND DEVELOPMENT AGREEMENT
between
NOVARTIS ENZYMES, INC.
and
DIVERSA CORPORATION
*Confidential Treatment Requested
RESEARCH AND DEVELOPMENT AGREEMENT
This Research and Development Agreement, dated and effective as of December
1, 1999 (the "Effective Date"), is between Diversa Corporation ("Diversa"), a
Delaware corporation, and Novartis Enzymes, Inc. ("NEI"), a Delaware corporation
and wholly-owned subsidiary of Novartis Seeds AG ("Novartis"). Diversa and NEI
are referred to herein individually as a "Party" and collectively as the
"Parties."
R E C I T A L S
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WHEREAS, Diversa has discovered and developed Biomolecules (as defined
below), as well as proprietary technologies for the rapid discovery, development
and optimization of Biomolecules;
WHEREAS, Novartis has caused the formation of a new wholly-owned,
affiliated company known as NEI, referred to as "Newco" in the Joint Venture
Agreement, which desires to commercialize products useful in the animal feed and
the agricultural product processing markets; and
WHEREAS, NEI and Diversa desire to enter into a relationship whereby
Diversa discovers, develops and delivers Biomolecules to NEI for NEI to use in
the production and commercialization of products in the areas of animal feed and
agricultural product processing;
WHEREAS, NEI also may transfer to Novartis such Biomolecules as are
appropriate for the development of commercial products with respect to
transgenic crops;
NOW, THEREFORE, in consideration of the mutual covenants set forth in this
Agreement, the parties hereby agree as follows:
1. Definitions.
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"Affiliate" shall mean any entity that directly or indirectly controls, is
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controlled by or is under common control, with NEI or Diversa, as the case may
be, where "control" means direct or indirect possession of more than [*****] of
the outstanding voting securities of a corporation or a comparable equity
interest in any other type of entity, or operational control of such entity.
"Agreement" shall mean this Research and Development Agreement.
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"Agricultural Product Processing Field" shall mean the use of Biomolecules
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on or in Crops to alter, modify or improve the performance or other
characteristics of the Crop. This field specifically excludes the [*****]
Field.
"Agricultural Product Processing Projects" shall mean the Projects defined
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by the RAC pursuant to Section 3.1 in which the field of use of the applicable
Biomolecule(s) is within the Agricultural Product Processing Field.
2. *Confidential Treatment Requested
"Alternate" shall have the meaning set forth in Section 3.4.
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"Animal Feed Field" shall mean the use of Biomolecules on or in Crops for
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feed applications to alter, modify or improve feed conversion and/or animal
nutrition. This field specifically excludes all vaccines and therapeutic
applications.
"Biomolecule(s)" shall mean enzymes and/or genes encoding them.
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"Change of Control" shall mean any of the following transactions involving
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another company (other than NEI or any of its Affiliates) (a) a merger or
consolidation of Diversa which results in the voting securities of Diversa
outstanding immediately prior thereto ceasing to represent at least [*****] of
the combined voting power of the surviving entity immediately after such merger
or consolidation; (b) the sale of all or substantially all of the assets of
Diversa; or (c) any one person (other than Diversa, any trustee or other
fiduciary holding securities under an employee benefit plan of Diversa, or any
corporation owned directly or indirectly by the stockholders of Diversa, in
substantially the same proportion as their ownership of stock of Diversa),
together with any of such person's "affiliates" or "associates", as such terms
are used in the Securities Exchange Act of 1934, as amended, becoming the
beneficial owner of 50% or more of the combined voting power of the outstanding
securities of Diversa or by contract or otherwise having the right to control
the Board of Directors or equivalent governing body of Diversa or the ability to
cause the direction of management of Diversa.
"Commercial Development Biomolecule" shall mean Diversa Biomolecules and/or
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Derivative NEI Biomolecules that have been, pursuant to Preliminary Efficacy
Trials, designated by NEI in accordance with this Agreement, for
commercialization in or as a Product.
"Committee Member" shall have the meaning set forth in Section 3.
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"Confidential Information" shall have the meaning set forth in Section 7.1.
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"Crop" shall mean any component of any cultivated plant species, including,
----
[*****].
"Derivative NEI Biomolecules" shall mean all Biomolecules that are derived
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or discovered from NEI Biomolecules through application of Diversa Technology
and any derivatives of such Biomolecules.
"Disclosing Party" shall mean that Party disclosing Confidential
----------------
Information to the other Party under Section 7.
3. *Confidential Treatment Requested
"Diversa Biomolecules" shall mean all Biomolecules owned by, or licensed
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to, Diversa, with the right to license or sublicense, as of the Effective Date
or during the Research Period.
"Diversa Know-How" shall mean all know-how, trade secrets, inventions,
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data, processes, procedures, devices, methods, formulas, media and/or all lines,
Biomolecules, clones, strains, genes, reagents, protocols and marketing and
other information, including improvements thereon, whether or not patentable,
which are not covered by the Diversa Patent Rights, but which are necessary or
useful for the commercial exploitation of the Diversa Patent Rights or the
conduct of the Projects or otherwise relate to Biomolecules or Products, and
which are owned by or licensed to Diversa, with the right to license, as of the
Effective Date or otherwise during the Research Period.
"Diversa Inventions" shall mean those Inventions over which Diversa has
------------------
exclusive ownership and control as provided in Section 5.1.
"Diversa Patent Rights" shall mean all patent and provisional patent
---------------------
applications, issued and subsisting patents and substitutions, divisionals,
continuations, continuations-in-part, reissues, reexaminations, extensions and
supplementary protection certificates thereof, including foreign counterparts of
the foregoing, in each case which are owned by or licensed to Diversa, with the
right to license, as of the Effective Date or otherwise during the Research
Period, which are necessary or useful for the conduct of the Projects or
otherwise relate to Biomolecules or Products arising from the conduct of the
Projects. Without limiting the generality of the foregoing, Diversa Patent
Rights include any patents and patent applications claiming Inventions owned by
Diversa under Sections 5.1.1, 5.1.3 and 5.1.4.
"Diversa Technology" shall mean the Diversa Know-How and the Diversa Patent
------------------
Rights.
"Fields" shall mean the Animal Feed Field and the Agricultural Product
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Processing Field.
"Indemnitees" shall have the meaning set forth in Section 9.1.
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"Indemnitor" shall have the meaning set forth in Section 9.1.
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"Inventions" shall have the meaning set forth in Section 5.1.
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"Joint Inventions" shall have the meaning set forth in Section 5.2.3.
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"Joint Venture Agreement" shall mean that certain Joint Venture Agreement,
-----------------------
dated as of its effective date, by and between Diversa and Novartis Seeds AG.
"[*****]" shall mean, with respect to each Project, the [*****] activity
level against a [*****] according to the Project Plan.
"NEI Biomolecules" shall mean all Biomolecules owned by, or licensed to,
----------------
NEI, with the right to license or sublicense which are provided by NEI to
Diversa under this Agreement.
4. *Confidential Treatment Requested
"NEI Inventions" shall mean those Inventions over which NEI has exclusive
--------------
ownership and control as provided in Section 5.1.
"NEI Patent Rights" shall mean all patent and provisional patent
-----------------
applications, issued and subsisting patents and substitutions, divisionals,
continuations, continuations-in-part, reissues, reexaminations, extensions and
supplementary protection certificates thereof, including foreign counterparts of
the foregoing, in each case which are owned by or licensed to NEI, with the
right to license, as of the Effective Date or otherwise during the Research
Period, which are necessary or useful for the conduct of the Projects or
otherwise relate to Biomolecules or Products. Without limiting the generality of
the foregoing, NEI Patent Rights include any patents and patent applications
claiming Inventions owned by NEI under Sections 5.1.2, 5.1.3 and 5.1.5.
"Preliminary Efficacy Trials" shall mean, with respect to each Commercial
---------------------------
Development Biomolecule and Transferred Biomolecule, preliminary testing
conducted by or for NEI to determine functional efficacy conducted under
anticipated use conditions, generally outside of a laboratory environment.
Preliminary Efficacy Trials [*****], such as [*****] in the [*****] and [*****]
for [*****] including [*****], and [*****] or any other [*****] for [*****].
"Product" when used without further qualification shall mean a commercial
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product containing or consisting of any Biomolecule designated under this
Agreement as a Commercial Development Biomolecule.
"Project" shall mean research efforts undertaken pursuant to a Project
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Plan.
"Project Plan" shall mean a written plan prepared by the RAC, documenting
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the research and development to be performed by Diversa and the work to be
performed by NEI in support of a Project. Such documentation will include
[*****], an [*****] of [*****] of [*****] in terms of [*****] and all
[*****],[*****] and [*****] for purposes of [*****] and an estimated schedule
for completion of the research and development work, as well as specific details
regarding the [*****] of Biomolecules delivered by Diversa to NEI (including,
without limitation, [*****], the [*****] and details of [*****] plans to
[*****]. Each Project Plan may be amended from time to time, as required and
subject to approval by the [*****], and incorporated by reference as part of
this Agreement.
"Receiving Party" shall mean that Party receiving Confidential
Information under Section 7.
"Research FTE" shall mean the equivalent of one full year of work on a
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full-time basis by a scientist or other professional employed or retained as a
consultant by Diversa and possessing
5. *Confidential Treatment Requested
skills and experience necessary to carry
out the Project(s) contemplated by this Agreement, determined in accordance with
Diversa's normal policies and procedures.
"Research Period" shall mean the period beginning on the Effective Date and
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ending upon the termination or expiration of this Agreement.
"Responsible Party" shall have the meaning set forth in Section 5.2.3.
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"RAC" shall have the meaning set forth in Section 3.
---
"[*****]" shall mean [*****] of a Biomolecule against a [*****] appropriate
to the [*****] as determined by the [*****].
"Sublicensee" shall mean any third party (other than an Affiliate of a
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Party) licensed by NEI or its Affiliates to make, use (except where the implied
right to use accompanies the sale to the third party of any [*****] by NEI or
its Affiliates or Sublicensees), sell, import, export, advertise, promote and
otherwise commercialize any [*****].
"[*****]" shall mean a [*****] discovered or derived under the terms of
this Agreement which [*****].
"Valid Claim" shall mean a claim included in any pending patent application
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or any issued patent included within the NEI Patent Rights or the Diversa Patent
Rights, which, if with respect to any pending claim, has not been irrevocably
abandoned or held to be unpatentable by a court or other authority of competent
jurisdiction in a proceeding which is not reversed, not appealable and not
appealed, or, with respect to any issued claim, has not been held invalid by a
decision of a court or other authority of competent jurisdiction which is not
reversed, not appealable and not appealed.
"Year" shall mean any consecutive 12-month period during the Research
----
Period that begins on the Effective Date or an anniversary of the Effective
Date. For example, Year 1 shall be the consecutive 12-month period beginning on
the Effective Date.
The above definitions are intended to encompass the defined terms in both
the singular and plural tenses.
2. Collaboration.
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2.1. Scope. Diversa agrees to work exclusively with NEI in the Animal
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Feed Field and on Agricultural Product Processing Projects under the terms of
the Joint Venture Agreement during the term of this Agreement.
2.2. Projects. During the Research Period, NEI and Diversa will, with the
--------
advice of the RAC, define and perform Projects in the Fields with the goal of
identifying or discovering Biomolecules suitable for development by NEI or its
Affiliates. Each such proposed Agricultural
6. *Confidential Treatment Requested
Product Processing Project and the corresponding Project Plan will be further
defined by the RAC in accordance with Section 3.
NEI agrees to provide funding in accordance with Section 6.1 for the
following minimum number of Diversa FTEs to work on Projects for the following
years :
[*****]
2.3. Limited Use of [*****] Provided by Diversa. Without limiting any
--------------- --------------------
other provision of this Agreement, NEI agrees that it will use [*****] derived
from [*****] provided by Diversa pursuant to any Project Plan only for
evaluating such [*****] in connection with the Project and will not use such
[*****] for any other purpose. NEI may not transfer such [*****] to any other
party; provided that NEI may transfer such [*****] to its Affiliates subject to
the limitations on use set forth herein and only to the extent necessary to
effect the purposes of this Agreement. NEI will inform Diversa in writing of the
targets to be used in [*****] such [*****] prior to commencing such [*****]. NEI
will provide Diversa with regular written reports (no less frequently than once
per quarter) identifying the [*****] and [*****] used in such [*****] and the
results of such [*****]. NEI will employ a system to track the identity and use
of such clones and to ensure that such [*****] are maintained separately from
any other [*****] used by NEI (or any Affiliate of NEI, if applicable) and will
provide Diversa with a detailed description of such system prior to the delivery
of any [*****] by Diversa to NEI under any Project Plan.
2.4. Biomolecules Provided by a Party. Each Party shall be responsible
--------------------------------
for ensuring that all Biomolecules made available by such Party for the
collaboration are done so in compliance with any intellectual property rights
required by the Biodiversity Convention or legislation related thereto, and such
Party shall further bear all obligations associated therewith.
3. Research Advisory Committee.
----------------------------
NEI and Diversa shall establish a research advisory committee (the "RAC")
comprised of [*****] persons (each, a "Committee Member"), [*****] of whom shall
be appointed by NEI and [*****] of whom shall be appointed by Diversa. The RAC
may invite other representatives of the Parties, or other individuals as deemed
appropriate by the RAC, to participate in meetings of the RAC, as appropriate,
provided that no such representative shall have the right to vote as a Committee
Member. Each Committee Member, other representative of a Party or other
individual invited to participate in a meeting shall, if not already so
obligated to a Party, sign a confidentiality undertaking committing such
Committee Member, representative or invited individual to fully comply with and
respect the Confidentiality obligations of Section 7.
7. *Confidential Treatment Requested
The Committee Members will, within [*****] of executing this Agreement,
define and approve the [*****] Projects and Project Plans for this Agreement.
3.1. Responsibilities. The [*****]. The [*****], and all [*****] When
-----------------
advising NEI management, the [*****] shall, among other things, [*****], and
[*****]. Other responsibilities include, but are not limited to, the following:
3.1.1. Design and Development of Project Plans. The RAC shall take
---------------------------------------
into account the desires and directions of NEI management and advise NEI
management in writing on all Project Plans undertaken pursuant to this
Agreement. The RAC must design and develop all Project Plans to be performed
under the terms of this Agreement. Such design and development will be based on,
but not limited to, [*****], the [*****], the [*****], especially with respect
to [*****], the [*****],[*****]. In addition, for Agricultural Product
Processing Projects, the RAC shall advise NEI management as to whether Diversa
is free to collaborate or has previously granted rights to a third party for the
particular project at the time the project is proposed. Project Plans for the
Projects will be an integral part of this Agreement.
3.1.2. Amendment of Project Plans. All amendments to the Project
---------------------------
Plans proposed by the RAC shall be in writing and be subject to the approval of
NEI management, and incorporated by reference into this Agreement. Amendments to
Project Plans will be an integral part of this Agreement.
3.1.3 Agricultural Product Processing Projects. Work on each
----------------------------------------
Project Plan for Agricultural Product Processing Projects will begin within
[*****] of NEI management approval in writing for each relevant Project Plan.
Agricultural Product Processing Projects will be established as being [*****] at
the time that the applicable Project Plan is approved.
3.1.4. Review of Reports. At certain reporting milestones defined by
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the RAC for each Project, Diversa and NEI shall deliver to the RAC reports
containing a complete compilation of all research activities and data derived
from the activities undertaken hereunder by such Party as part of the Projects,
including revisions to the Project Plans, as appropriate. The RAC will review
such data to determine progress made on the Projects, and make a written report
of its findings to NEI management on a timely basis. Reports to and from the RAC
as
8. *Confidential Treatment Requested
well as all meeting minutes and other documents brought to the attention to
the RAC shall be subject to the confidentiality provisions contained herein.
3.1.5. [*****] of [*****]. Based on the research and development
----
efforts undertaken pursuant to Project Plans, the RAC shall recommend to NEI
management the selection of [*****] or [*****] for [*****]. Such recommendation
shall be accompanied by an amendment to the relevant Project Plan with respect
to the further [*****] of such [*****]. Based on the information received, the
management of NEI shall notify the RAC in writing whether it accepts such
[*****] as [*****]. Upon acceptance by NEI, Diversa shall deliver [*****] to NEI
and/or Novartis Seeds AG for [*****] and [*****].
3.1.6. Establishment and Evaluation of [*****]. The RAC must
--------------------------------
establish and recommend in writing to NEI management for NEI's approval the
[*****] and [*****] for each Project Plan, which shall be consistent with
Section [*****] hereof. The RAC will regularly [*****] under each Project Plan
to determine whether [*****] thereunder have been achieved.
3.2. Meetings of the RAC. The RAC shall meet at least once per [*****] at
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a location to be determined by the RAC. Within [*****] following each meeting of
the RAC, the RAC shall prepare and deliver to both Parties a written report
describing the RAC's deliberations, conclusions and proposed actions. Subject to
written approval by both parties, such report shall be incorporated as part of
this Agreement by reference.
3.3. Requirements for Action. All proposals, actions, recommendations and
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reports of the RAC will require the unanimous consent of all of its voting
members. The Committee Members or Alternates of NEI shall collectively have
[*****] on the RAC, and the Committee Members or Alternates of Diversa shall
collectively have [*****] on the RAC.
3.4. Members. The initial Committee Members of the RAC shall be designated
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by each Party in writing within [*****] of executing this Agreement.
Diversa and NEI may change one or more of their respective Committee
Members; provided, however, that such person is qualified as reasonably
demonstrated by that Party. All appointments and withdrawals of appointment
shall be made by written notice to the other Party.
Diversa and NEI may designate in writing an alternate Committee
Member ("Alternate") if the designated Committee Member cannot attend a meeting;
provided, however, that such Alternate is qualified as reasonably demonstrated
by that party. Any action taken with approval of an Alternate shall be as valid
as if taken with the approval of the designated Committee Member.
9. *Confidential Treatment Requested
3.5. Visits to Facilities. Committee Members shall have reasonable
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opportunity to visit the facilities of NEI or Diversa (and such party's
Affiliates, if applicable) where activities under this Agreement are in
progress, and with reasonable prior notice. Each of Diversa and NEI shall bear
its own expenses in connection with such site visits, unless such visits are
deemed by the RAC to be part of a Project, in which case the costs will be
included as part of the applicable Project Plan.
3.6. Information Sharing. Each of the Parties shall provide to the RAC
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all information in such Party's possession that is relevant to the RAC's
deliberations regarding research, development and commercialization efforts
related to the Projects. Without limiting the generality of the foregoing, the
Parties will provide the RAC with the opportunity to review data from the
[*****] to determine the status of the Projects.
3.7. Dispute Resolution. If the RAC fails to achieve unanimous consent
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upon any matter, then it will issue a report on that matter to [****] giving
full consideration to the opposing points of view in the RAC. [****] shall then,
in consultation with the Research and Development Committee of the Board of
Directors of NEI, resolve the matter in the interests of NEI..
4. Grant of Rights.
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4.1. Grant of First Option. Subject to the terms and conditions of this
---------------------
Agreement, with respect to each [*****], Diversa hereby grants to NEI a right of
first option to an exclusive, worldwide, royalty-bearing license (the "License")
under the Diversa Technology to use the applicable [*****] to make, have made,
use, sell, offer for sale and import Products outside the applicable Field.
4.2 Other Rights. All other rights which are to the benefit of NEI with
------------
respect to Diversa's proprietary interest in Biomolecules are provided for in
the Joint Venture Agreement.
5. Intellectual Property Rights.
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5.1. Intellectual Property Ownership. Ownership of all inventions,
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discoveries, developments and improvements conceived of in the course of work
performed on any Project (the "Inventions") shall be determined in accordance
with this Section 5.1.
5.1.1. Diversa shall have exclusive ownership and control,
subject to the grant of exclusive license under the Joint Venture
Agreement, over [*****] made pursuant to this Agreement ([*****]),
including, without limitation, any such Biomolecules, compositions
containing any such Biomolecules ([*****]), methods of using such
Biomolecules (including methods of using
10. *Confidential Treatment Requested
such Biomolecules to make any Product but not methods of using any
Product), methods of making such Biomolecules, and Diversa Know-How.
5.1.2. NEI shall have exclusive ownership and control over all
Inventions relating to any Product, including, without limitation, such
Products, methods of using such Products and methods of making such
Products.
5.1.3. With respect to all Inventions relating to all [*****]
designed and/or developed in the course of a Project, (a) Diversa shall
have exclusive ownership and control over all such Inventions having solely
Diversa inventors; (b) Diversa shall have joint ownership and control over
all such Inventions having Diversa and NEI inventors; provided that, except
as contemplated by the Project, Diversa will not use, and will not provide
or grant any rights to any third party to use, any [*****] that
incorporates or was designed and/or developed using any information or
materials provided to Diversa by NEI; and (c) NEI shall have exclusive
ownership and control over all such Inventions having solely NEI inventors.
5.1.4 Subject to Sections 5.1.1, 5.1.2 and 5.1.3, Joint
Inventions shall be jointly owned.
5.1.5 Subject to Sections 5.1.1, 5.1.2, 5.1.3, and 5.1.4,
Inventions shall be owned by the Party which employs the inventor thereof.
5.1.6 Inventorship of Inventions shall be determined in
accordance with United States patent law.
5.1.7. Each Party will (and will cause each of its Affiliates)
to make such assignments and take such other actions as may be necessary or
appropriate to effect the ownership of Inventions in accordance with this
Section 5.1.
5.2. Filing, Prosecution and Maintenance of Patents.
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5.2.1. NEI Patent Rights. NEI shall have the sole right, at its
-----------------
own expense, to control the filing, prosecution and maintenance of all NEI
Patent Rights.
5.2.2. Diversa Patent Rights. Diversa shall have the sole right,
---------------------
at its own expense, to control the filing, prosecution and maintenance of all
Diversa Patent Rights.
5.2.3 Patent Rights Claiming Joint Inventions. With respect to
---------------------------------------
NEI Patent Rights or Diversa Patent Rights to the extent they claim Inventions
conceived of jointly by Diversa and NEI ("Joint Inventions"), the Parties shall
mutually agree in writing which Party shall file, prosecute and maintain patent
applications and patents protecting Joint Inventions described in Section 5.1.4,
the costs for which shall be shared equally between the Parties. The Party
responsible for filing, prosecution and maintenance of such patent applications
and patents under Section 5.2.1 or 5.2.2, as applicable (the "Responsible
Party") will furnish the other Party
11. *Confidential Treatment Requested
with copies of documentation of patent applications and patents that claim any
Joint Invention and other related correspondence relating thereto to and from
governmental patent agencies or other authorities and permit the other Party to
offer its comments thereon before the Responsible Party makes a submission to a
governmental patent agency or other authority which could materially affect the
scope or validity of the patent coverage with respect to such Joint Inventions.
The other Party shall offer its comments promptly. If the Responsible Party with
respect to patent applications and patents claiming any Joint Invention decides
to abandon or not to pursue prosecution of any such patent applications or
patents which claim such Joint Invention, it shall permit the other Party, at
its option and expense, to undertake such obligations. The Party not undertaking
such actions shall fully cooperate with the other Party and shall provide to the
other Party whatever assignments and other documents that may be needed in
connection therewith. In the event that Parties cannot agree on which Party
shall file, prosecute and maintain such patent applications and patents, Joint
Inventions shall be protected in patent applications and patents filed,
prosecuted and maintained by outside counsel reasonably acceptable to both
Parties, with equal control and joint responsibility for costs incurred in
connection with the applicable patent applications and patents.
5.3. Cooperation of the Parties. Each Party agrees (and will cause any of
--------------------------
its Affiliates) to cooperate fully in the preparation, filing, prosecution and
maintenance of any patent rights under this Agreement. Such cooperation
includes, but is not limited to:
(a) executing all papers and instruments, or using reasonable
efforts to cause its employees or agents, to execute such papers and
instruments, so as to effectuate the ownership of intellectual property rights
set forth in Section 5.1 above and to enable the other Party to file and to
prosecute patent applications and to maintain patents in any country;
(b) promptly informing the other Party of any matters coming to
such Party's attention that may affect the preparation, filing, or prosecution
of any such patent applications or the maintenance of any such patents; and
(c) undertaking no actions that are potentially deleterious to the
preparation, filing, or prosecution of such patent applications or to the
maintenance of such patents.
5.4. Infringement by Third Parties.
-----------------------------
5.4.1 Notice. Diversa and NEI shall promptly notify the other in
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writing of any alleged or threatened infringement by a third party of any patent
or patent application included in the Diversa Patent Rights or NEI Patent Rights
of which they become aware. Both Parties shall use reasonable efforts in
cooperating with each other to terminate such infringement without litigation.
5.4.2 NEI Actions. NEI shall have the first right to bring and
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control, by counsel of its own choice, any action or proceeding with respect to
infringement of (a) any NEI Patent Rights, and (b) any Diversa Patent Rights
with respect to a [*****]. Diversa shall have the right, at its own expense,
to participate in any such action
12. *Confidential Treatment Requested
regarding the Diversa Patent Rights by counsel of its own choice. Upon written
notice to Diversa, NEI may require Diversa to participate in such action as a
necessary party to such action, at NEI's expense. If NEI fails to bring an
action or proceeding with respect to any such Diversa Patent Rights within (a)
ninety (90) days following the notice of alleged infringement or (b) ten (10)
days before the time limit, if any, set forth in the appropriate laws and
regulations for the filing of such actions, whichever comes first, Diversa shall
have the right to bring and control any such action, at its own expense and by
counsel of its own choice, and NEI shall have the right, at its own expense, to
be represented in any such action by counsel of its own choice.
5.4.3 Diversa Actions. Diversa shall have the right to bring and
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control, by counsel of its own choice, any action or proceeding with respect to
infringement of any Diversa Patent Rights which are directed to a Diversa
Biomolecule transferred under the terms of this Agreement which is not a [*****]
at the time of commencement of such action or proceeding.
5.4.4 Cooperation; Awards. In the event a Party brings an
-------------------
infringement action, the other Party shall (and will cause any of its
Affiliates) cooperate fully, including if required to bring such action, the
furnishing of a power of attorney. Neither Party shall have the right to settle
any patent infringement litigation under this Section 5.4 in a manner that
diminishes the rights or interests of the other Party without the prior written
consent of such other Party. Except as otherwise agreed to by the Parties as
part of a cost sharing arrangement, any recovery realized as a result of such
litigation, after reimbursement of any litigation costs of Diversa and NEI,
shall belong to the Party who brought the action.
5.5. Claimed Infringement by Third Parties. Diversa and NEI shall
-------------------------------------
promptly notify the other in writing of any allegation by a third party that the
exercise of the rights granted to NEI under this Agreement or the activities
conducted by either Party under this Agreement infringes or may infringe the
intellectual property rights of such third party. Each Party will use reasonable
efforts (and will cause any of its Affiliates) to cooperate with the other Party
to resolve or defend against such claims. Neither Party shall have the right to
settle any patent infringement litigation under this Section 5.5 in a manner
that diminishes the rights or interests of the other Party without the prior
written consent of such other Party.
6. Payments, Reports, and Records.
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6.1. Research Funding. NEI agrees to fund the [*****] number of Research
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FTEs at Diversa indicated in Section 2.1 above at a cost of [*****] per FTE for
the [*****] of this Agreement. Beginning in the third year of this Agreement, a
Cost-of-Living Adjustment (COLA) will be applied to all FTEs. Thereafter, the
COLA will be applied on a yearly basis and will be based on standard CPI values.
6.2. Payments. Payments due pursuant to the above Section 6.1 shall be
--------
made in quarterly installments, in advance. In the event the Effective Date
occurs during a calendar quarter, the first payment shall be the sum of the
prorated amount due for that calendar quarter plus the amount due for the
subsequent full calendar quarter.
13. *Confidential Treatment Requested
6.3. Research Milestone Payments. Each Year for the first five (5) Years
----------------------------
following the Effective Date, NEI shall pay to Diversa research milestones in
accordance with the Project Plans for each Project. Such research milestone
payments shall not exceed [*****] of the total costs of all research FTEs for
each Year, as set forth under the column headed "Total Research FTEs" in Section
6.3 of the Joint Venture Agreement (the "Maximum Annual Milestones"). In any
event, each Year for the first [*****] following the Effective Date, NEI shall
pay to Diversa guaranteed research milestones equal to [*****] of the Maximum
Annual Milestones for such Year. Research milestone payments under this Section
6.3 shall be non-refundable and shall not be credited against any other payments
payable to Diversa under this Agreement or under the Joint Venture Agreement.
6.5. Payments in U.S. Dollars. All payments due under this Agreement
------------------------
shall be payable in United States dollars by wire transfer to an account
designated by Diversa.
6.6. Records. NEI and its Affiliates shall maintain complete and accurate
-------
records of Products made, used or sold by them or their Sublicensees under this
Agreement, and any amounts payable to Diversa in relation to Products, which
records shall contain sufficient information to permit Diversa to confirm the
payments due under the terms of this Agreement, and the Joint Venture Agreement.
NEI and its Affiliates shall retain such records relating to a given Product for
at least [*****] after the first commercial sale of said Product. Diversa
(acting as the "Auditing Party") shall have the right, at its own expense, to
cause an independent certified public accountant reasonably acceptable to NEI,
to inspect such records of NEI or its Affiliates (the "Audited Party") during
normal business hours for the sole purpose of verifying any reports and payments
delivered under this Agreement. Such accountant shall not disclose to the
Auditing Party any information other than information relating to accuracy of
reports and payments delivered under this Agreement and shall provide the
Audited Party with a copy of any report given to the Auditing Party. The Parties
shall reconcile any payment due within [*****] after the accountant delivers the
results of the audit. The Auditing Party shall bear the full cost of the audit
unless, the audit performed under this Section reveals lack of payment due under
the terms of this Agreement, the License Agreement(s) or the Joint Venture
Agreement in which case the Audited Party shall bear the full cost of such
audit. Diversa may exercise its rights under this Section only once every year
and only with reasonable prior notice to NEI. NEI shall use commercially
reasonable efforts to ensure that the other Party will have access to records of
Products sold by its Affiliates.
6.7. Late Payments. In the event that any payment due hereunder is
-------------
not made when due, the payment shall accrue interest from that date due at the
rate of [*****]; provided however, that in no event shall such rate exceed the
maximum legal annual interest rate. The payment of such interest shall not
limit Diversa from exercising any other rights it may have as a consequence of
the lateness of any payment.
14. *Confidential Treatment Requested
7. Confidential Information.
------------------------
7.1. Confidential Information. Confidential Information shall mean
-------------------------
any technical or business information, whether orally or in writing, furnished
by the Disclosing Party to the Receiving Party in connection with this
Agreement. Such Confidential Information shall include, without limitation, the
existence and terms of this Agreement, the identity of a Biomolecule, the
Biomolecule, any gene encoding such Biomolecule, if relevant, the use of a
Biomolecule, patent rights, trade secrets, know-how, inventions, technical data
or specifications, testing methods, business or financial information, research
and development activities, product
and marketing plans, and customer and supplier information, including, but not
limited to, such items that become known to a Party during visits to the
facilities of any other Party.
7.2 Obligations. The Receiving Party agrees that it shall:
7.2.1 Maintain all Confidential Information in strict
confidence, except that the Receiving Party may disclose or permit the
disclosure of any Confidential Information to its Affiliates, directors,
officers, employees, consultants and advisors who are obligated to maintain the
confidential nature of such Confidential Information and who need to know such
Confidential Information for the purposes set forth in this Agreement. Further,
each Party will be entitled to disclose to its Sublicensees that Confidential
Information of the other Party as those Sublicensees need to know in order to
commercialize Products, provided that those Sublicensees are obligated to
maintain the confidential nature of such Confidential Information;
7.2.2 Use all Confidential Information solely for the purposes
set forth in, or as permitted by, this Agreement;
7.2.3 Allow its Affiliates, directors, officers, employees,
consultants and advisors to reproduce the Confidential Information only to the
extent necessary to effect the purposes set forth in this Agreement, with all
such reproductions being considered Confidential Information; and
7.2.4 If the Receiving Party is Novartis, then Novartis shall
also have the right to disclose Confidential Information to Novartis
Agricultural Discovery Institute, Inc. ("NADII") provided that NADII is
obligated to maintain the confidential nature of such Confidential Information.
Each Party shall be responsible for any breaches of this Section 7.2 by any of
its Affiliates, directors, officers, employees, consultants and advisors, and,
in the case of Novartis, also for any breach of this Section 7.2 by NADII.
7.3 Exceptions. The obligations of the Receiving Party under Section
7.2. above shall not apply to any specific Confidential Information to the
extent that the Receiving Party can demonstrate that such Confidential
Information:
7.3.1 Was in the public domain prior to the time of its
disclosure under this Agreement;
15. *Confidential Treatment Requested
7.3.2 Entered the public domain after the time of its disclosure
under this Agreement through means other than an unauthorized disclosure
resulting from an act or omission by the Receiving Party or its Affiliates,
directors, officers, employees, consultants, advisors or agents;
7.3.3 Was or is independently developed or discovered by the
Receiving Party without use of the Confidential Information, and which can be
demonstrated by written record;
7.3.4 Is or was disclosed to the Receiving Party at any time,
whether prior to or after the time of its disclosure under this Agreement by a
third party having no fiduciary relationship with the Disclosing Party and
having no obligation of confidentiality to the Disclosing Party with respect to
such Confidential Information; or
7.3.5 Is required to be disclosed to comply with applicable laws
or regulations (such as disclosure to the SEC, the EPA, the FDA, or the United
States Patent and Trademark Office or to their foreign equivalents), or to
comply with a court or administrative order, provided that the Disclosing Party
receives prior written notice of such disclosure and that the Receiving Party
takes all reasonable and lawful actions to obtain confidential treatment for
such disclosure and, if possible, to minimize the extent of such disclosure.
7.4 Survival of Obligations. The obligations set forth in Sections
7.1, 7.2 and 7.3 shall remain in effect after termination or expiration of this
Agreement for a period of [*****].
7.4. Publication. Diversa, Novartis and NEI shall cooperate in appropriate
-----------
publication of the results of research and development work performed pursuant
to the Project Plans, but subject to the predominating interest to obtain patent
protection for any patentable subject matter. To this end, prior to any public
disclosure of such results, the Party proposing disclosure shall send the other
party(ies) a copy of the information to be disclosed, and shall allow the other
Party(ies) [*****] from the date of receipt in which to determine whether the
information to be disclosed contains subject matter for which patent protection
should be sought prior to disclosure, or otherwise contains Confidential
Information of the reviewing Party(ies). The Party proposing disclosure shall be
free to proceed with the disclosure unless prior to the expiration of such
[*****] period the reviewing Party(ies) notify the Party proposing disclosure
that the disclosure contains subject matter for which patent protection should
be sought or Confidential Information of the reviewing party(ies), and the Party
proposing publication shall then delay public disclosure of the information for
an additional period to be mutually agreed upon to permit the preparation and
filing of a patent application on the subject matter to be disclosed or for the
parties to determine a mutually acceptable modification to such publication to
protect the Confidential Information of the reviewing Party(ies) adequately. The
Party proposing disclosure shall thereafter be free to publish or disclose the
information. The determination of authorship for any paper shall be in
accordance with accepted scientific practice.
16. *Confidential Treatment Requested
8. Representations and Warranties.
------------------------------
8.1. Authorization. Each Party represents and warrants to the other that
-------------
it has the legal right and power to enter into this Agreement, to extend the
rights and licenses granted to the other in this Agreement, and to fully perform
its obligations hereunder, and that the performance of such obligations will not
conflict with its charter documents or any agreements, contracts, or other
arrangements to which it is a party.
8.2 Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER
----------
PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTY OF ANY KIND, EITHER
EXPRESS OR IMPLIED, INCLUDING WARRANTIES AS TO MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE OR NON-INFRINGEMENT.
8.3 Limitation of Liability. IN NO EVENT WILL EITHER PARTY, ITS
-----------------------
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR AFFILIATES BE LIABLE TO THE OTHER
PARTY FOR ANY INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES,
WHETHER BASED UPON A CLAIM OR ACTION OF CONTRACT, WARRANTY, NEGLIGENCE, STRICT
LIABILITY OR OTHER TORT, OR OTHERWISE, ARISING OUT OF THIS AGREEMENT.
9. Indemnification.
----------------
9.1 Indemnification. Each Party (an "Indemnitor") shall indemnify, defend,
---------------
and hold harmless the other Party and their directors, officers, employees, and
agents and their respective successors, heirs and assigns (an "Indemnitee"),
against any liability, damage, loss, or expense incurred by or imposed upon the
Indemnitee or any one of them in connection with any claims, settlements, suits,
actions, demands, or judgments arising out of any theory of product liability
(including, but not limited to, actions in the form of tort, warranty, or strict
liability) concerning any product (or any process or service) that is made,
used, or sold by the Indemnitor or its Affiliates or Sublicensees pursuant to
any right or license granted under this Agreement; provided, however, that such
indemnification right shall not apply to any liability, damage, loss, or expense
to the extent directly attributable to the negligence, reckless misconduct, or
intentional misconduct of the Indemnitee. An Indemnitee shall not be entitled to
indemnification for the settlement of any claim pursuant to this Agreement
unless it obtains the prior written consent of the Indemnitor to such
settlement.
9.2 Procedures. Any Indemnitee that intends to claim indemnification under
----------
Section 9.1 shall promptly notify the Indemnitor of any claim in respect of
which the intends to claim such indemnification, and the Indemnitor shall assume
the defense thereof with counsel mutually satisfactory to the Parties; provided,
however, that an Indemnitee shall have the right to retain its own counsel, with
the fees and expenses of no more than the law firm representing all Indemnitees
in the proceeding or related proceeding, to be paid by the Indemnitor, if
17. *Confidential Treatment Requested
representation of such Indemnitee by the counsel retained by the Indemnitor
would be inappropriate due to actual or potential differing interests between
such Indemnitee and any other party represented by such counsel in such
proceedings. The indemnity agreement in Section 9.1. shall not apply to amounts
paid in settlement of any loss, claim, liability or action if such settlement is
effected without the consent of the Indemnitor. The failure to deliver notice to
the Indemnitor within a reasonable time after the commencement of any such
action, shall not relieve the Indemnitor of any liability to the Indemnitee
under Section 9.1, except to the extent the Indemnitor has been prejudiced by
such failure to give notice. Each Party and its Affiliates and their employees
and agents shall cooperate fully with the other Party and its legal
representatives in the investigation of any action, claim or liability covered
by this indemnification.
10. Term; Termination.
------------------
10.1 Term. The term of this Agreement will commence as of the Effective
----
Date and, unless sooner terminated as provided hereunder, will expire upon the
[*****] anniversary of the Effective Date, unless extend by mutual agreement of
the Parties.
10.2 Termination.
-----------
10.2.1 Change of Control. NEI shall have the right to terminate
-----------------
this Agreement upon the occurrence of a Change of Control during the term of
this Agreement by providing written notice of termination to Diversa within
[*****] following receipt of written notice of the occurrence of such Change of
Control. In the event that NEI does not terminate this Agreement under this
Section 10.2.1, this Agreement will be binding upon NEI, Diversa or any
successor to Diversa in such Change of Control. Diversa may notify NEI in
advance of a proposed Change of Control and, if NEI approves of such Change of
Control in writing or notifies Diversa in writing that it does not intend to
terminate this Agreement within [*****] after such notice from Diversa, then the
foregoing right of termination shall be deemed waived.
10.2.2 Mutual Consent. This Agreement may be terminated at any time
--------------
by mutual written agreement of the Parties.
10.2.3 Material Breach. In the event that Diversa, or NEI commits a
---------------
material breach of any of its obligations under this Agreement or the Joint
Venture Agreement and such party fails (i) to remedy that breach within [*****]
after receiving written notice thereof from the other party or parties or (ii)
to commence dispute resolution pursuant to Section 11.3, within [*****] after
receiving written notice of that breach from the other party or parties, the
non-breaching party or parties may immediately terminate this Agreement, the
Joint Venture Agreement and the Novartis License Agreement, as applicable, upon
written notice to the breaching party.
10.2.4 Breach of Payment Obligations. In the event that a party
-----------------------------
fails to make timely payment of any amounts due under this Agreement, the Joint
Venture Agreement or the
18. *Confidential Treatment Requested
Novartis License Agreement within ten (10) business days after demand therefor,
the non-breaching party or parties may terminate this Agreement, the Joint
Venture Agreement and the Novartis License Agreement, as applicable, upon thirty
(30) days prior written notice, unless the breaching party cures such breach by
paying all past-due amounts within such thirty (30) day notice period, provided
that the breaching party shall be entitled to use such cure provision no more
than once in any twelve (12) month period.
10.3. Disposition of Confidential Information. In the event of
---------------------------------------
termination or expiration of this Agreement, the Parties shall return or destroy
all forms of Confidential Information of the other Party provided to them under
this Agreement, within thirty (30) days after such termination or expiration;
provided, however, that each Party may retain one copy of such Confidential
Information for the sole purpose of use in any litigation resulting from this
Agreement or the activities undertaken pursuant to this Agreement; and further
provided that each Party shall retain full use of Confidential Information as
provided under this Agreement to the extent it relates to any of the rights
accrued to a Party hereunder prior to such termination or expiration.
10.4. Effect of Termination or Expiration. Termination or expiration of
-----------------------------------
this Agreement shall not relieve the parties of any obligation accruing prior to
such termination or expiration, nor shall it encumber any of the rights accrued
to a Party hereunder prior to such termination or expiration. Diversa will not
take any action to prevent NEI or its Affiliates from commercializing,
subsequent to termination or expiration of this Agreement, any Transferred
Biomolecule or Commercial Development Biomolecule in the Animal Feed Field or
the Agricultural Product Processing Field, or any other field defined in a
License related to such Transferred Biomolecule or Commercial Development
Biomolecule pursuant to Section 4.1 herein. The financial obligations of each
Party with respect to Transferred Biomolecules or Commercial Development
Biomolecules under this Agreement and any License executed pursuant to Section
4.1, or the Joint Venture Agreement shall survive termination or expiration of
this Agreement but only to the extent that the Parties mutually agree through
good faith negotiation to payment at royalty rates equivalent under the Joint
Venture Agreement. The provisions of Sections 5.1, 5.2, 5.3, 7, 8.2, 8.3, 9,
10.3, 10.4 and 11 shall survive the expiration or termination of this Agreement.
Termination of this Agreement pursuant to Section 10.2 shall not limit any other
rights and remedies of the terminating party.
11. Miscellaneous.
--------------
11.1. Relationship of Parties. Nothing in this Agreement is intended
-----------------------
or shall be deemed to constitute a partnership, agency, employer-employee or
joint venture relationship between the parties. No party shall incur any debts
or make any commitments for the other, except to the extent, if at all,
specifically provided herein.
11.2. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of [*****] other than those provisions
governing conflicts of law.
19. *Confidential Treatment Requested
11.3. Dispute Resolution Procedures. Any controversy, claim or dispute
-----------------------------
dispute arising out of or relating to this Agreement shall be resolved in
accordance with Section 10.3 of the Joint Venture Agreement.
11.4. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.
11.5. Headings. All headings in this Agreement are for convenience only
---------
and shall not affect the meaning of any provision hereof.
11.6. Binding Effect. This Agreement and all rights and obligations
---------------
hereunder shall inure to the benefit of and be binding upon the Parties, their
Affiliates, and their respective lawful successors and assigns (including,
without limitation, any successor to Diversa upon a Change of Control subject to
Section 10.2.1).
11.7. Assignment. Except as otherwise provided herein, neither this
-----------
Agreement nor any interest hereunder will be assignable in part or in whole by
any Party without the prior written consent of the other Party; provided,
however, that either Party may assign this Agreement to any of its Affiliates or
to any successor by merger or sale of substantially all of its business to which
this Agreement relates (provided that, in the event of such merger or sale, no
intellectual property of any acquiring corporation that is not a Party shall be
included in the technology licensed hereunder). This Agreement will be binding
upon the successors and permitted assigns of the Parties. Any assignment which
is not in accordance with this Section will be void.
11.8. Notices. All notices, requests, demands and other communications
--------
communications required or permitted to be given pursuant to this Agreement
shall be in writing and shall be deemed to have been duly given upon the date of
receipt if delivered by hand, recognized international overnight courier,
confirmed facsimile transmission, or registered or certified mail, return
receipt requested, postage prepaid to the following addresses or facsimile
numbers:
If to NEI: If to Diversa:
Novartis Enzymes, Inc. Diversa Corporation
[*****] ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
[*****] ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
[*****] Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
[*****] Tel: (▇▇▇) ▇▇▇-▇▇▇▇
[*****] Fax: (▇▇▇) ▇▇▇-▇▇▇▇
20. *Confidential Treatment Requested
with a copy to: with a copy to:
Novartis Seeds ▇▇ ▇▇▇▇▇▇ Godward LLP
Schwarzwaldallee 215 4365 Executive Drive, Suite 1100
CH-4002 San Diego, CA 9221
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Attention: L. ▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Tel: (▇▇▇▇▇) ▇▇▇-▇▇▇▇ Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Either party may change its designated address and facsimile number by notice to
the other party in the manner provided in this Section.
11.9. Amendment and Waiver. This Agreement may be amended, supplemented,
--------------------
or otherwise modified only by means of a written instrument signed by both
parties. Any waiver of any rights or failure to act in a specific instance shall
relate only to such instance and shall not be construed as an agreement to waive
any rights or fail to act in any other instance, whether or not similar.
11.10. Severability. In the event that any provision of this Agreement
------------
shall, for any reason, be held to be invalid or unenforceable in any respect,
such invalidity or unenforceability shall not affect any other provision hereof,
and the parties shall negotiate in good faith to modify the Agreement to
preserve (to the extent possible) their original intent.
11.11. Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties with respect to the subject matter hereof and supersedes all
prior agreements or understandings between the parties relating to the subject
matter hereof.
11.12. Regulatory Filings. NEI shall have sole responsibility for making
------------------
all regulatory filings worldwide, including, without limitation, all filings
required by the Biodiversity Convention and other legislation related to the
ownership or use of biological resources with respect to a Product. Diversa will
cooperate to provide information required to make and maintain such filings, as
appropriate.
11.13. Force Majeure. Neither party shall be held liable or responsible
-------------
to the other party, nor be deemed to be in breach of this Agreement, for failure
or delay in fulfilling or performing any provisions of this Agreement (other
than payment obligations) when such failure or delay is caused by or results
from any cause whatsoever outside the reasonable control of the party concerned
including, but not limited to, fire, explosion, breakdown of plant, damage to
plant material by pests or otherwise, strike, lock-out, labor disputes, casualty
or accident, lack or failure of transportation facilities, flood, lack or
failure of sources of supply or of labor, raw materials or energy, civil
commotion, embargo, any law, regulation, decision, demand or requirement of any
national or local government or authority (in each case, "Force Majeure"). The
party claiming relief shall, without delay, notify the other party by registered
airmail or by telefax of the interruption and cessation thereof and shall use
its best efforts to remedy the effects of such hindrance with all reasonable
dispatch. The onus of proving that any such Force Majeure
21. * Confidential Treatment Requested
event exists shall rest upon the party so asserting. During the period that one
party is prevented from performing its obligations under this Agreement due to a
Force Majeure event, the other party may, in its sole discretion, suspend any
obligations that relate thereto. Upon cessation of such Force Majeure event the
parties hereto shall use their best efforts to make up for any suspended
obligations. If such Force Majeure event is anticipated to continue, or has
existed for nine (9) consecutive months or more, this Agreement may be forthwith
terminated by either party by registered airmail or by telefax. In case of such
termination the terminating party will not be required to pay to the other party
any indemnity whatsoever.
IN WITNESS WHEREOF, the undersigned have duly executed and delivered this
Agreement as a sealed instrument effective as of the date first above written.
NOVARTIS ENZYMES, INC. DIVERSA CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇ /s/ ▇▇▇ ▇. Short
-------------------------- -------------------------------------
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇ ▇. Short
Vice President & Secretary President and Chief Executive Officer
21. *Confidential Treatment Requested
