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Diversa - Research & Development Agreement ( Novartis )
EXHIBIT 10.26
RESEARCH AND DEVELOPMENT AGREEMENT
NOVARTIS ENZYMES, INC.
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
---------------
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.
------------
"Affiliate" shall mean any entity that directly or indirectly controls, is
--------- 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.
---------
"Agricultural Product Processing Field" shall mean the use of Biomolecules
------------------------------------- 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
---------------------------------------- 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.
---------
"Animal Feed Field" shall mean the use of Biomolecules on or in Crops for
----------------- 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.
--------------
"Change of Control" shall mean any of the following transactions involving
----------------- 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
---------------------------------- 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.
----------------
"Confidential Information" shall have the meaning set forth in Section 7.1.
------------------------
"Crop" shall mean any component of any cultivated plant species, including,
---- [*****].
"Derivative NEI Biomolecules" shall mean all Biomolecules that are derived
--------------------------- 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
-------------------- 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,
---------------- 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
------ Processing Field.
"Indemnitees" shall have the meaning set forth in Section 9.1.
-----------
"Indemnitor" shall have the meaning set forth in Section 9.1.
----------
"Inventions" shall have the meaning set forth in Section 5.1.
----------
"Joint Inventions" shall have the meaning set forth in Section 5.2.3.
----------------
"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
------- 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
------- Plan.
"Project Plan" shall mean a written plan prepared by the RAC, documenting
------------ 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
------------ 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
--------------- ending upon the termination or expiration of this Agreement.
"Responsible Party" shall have the meaning set forth in Section 5.2.3.
-----------------
"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
----------- 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
----------- 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.
--------------
2.1. Scope. Diversa agrees to work exclusively with NEI in the Animal
----- 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
----------------- 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
-------------------- 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
----------------------- 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
------- 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
--------------------- 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
------------------- 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
------------------- 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.
----------------
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.
-----------------------------
5.1. Intellectual Property Ownership. Ownership of all inventions,
------------------------------- 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
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.
----------------------------------------------
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 othe...
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