Amended & Restated Research & Development Agrmnt

AMENDED AND RESTATED
RESEARCH AND DEVELOPMENT AGREEMENT


This Amended and Restated Research and Development Agreement (the "Agreement") is made as of January 30, 1998, by and between Monsanto Company, a Delaware corporation, with its general offices at 800 North Lindbergh Boulevard, St. Louis, Missouri 63167 (together with its Subsidiaries, successors and assigns, "Monsanto"), and Ecogen Inc., a Delaware corporation having its principal office at 2005 Cabot Boulevard West, Langhorne, PA 19047 (together with its Subsidiaries, successors and assigns, "Ecogen").


W I T N E S S E T H


WHEREAS, Monsanto and Ecogen are parties to that certain Research and Development Agreement dated as of January 24, 1996, as amended by Amendment No. 1 thereto dated as of May 22, 1997 (the "Original Agreement");


WHEREAS, Monsanto acquired certain bacterium Bacillus thuringiensis ("Bt") strain libraries, crystal protein gene libraries, and certain proprietary rights regarding protein engineering of Bt crystal proteins pursuant to the Technology Assignment Agreement by and between Monsanto and Ecogen dated as of January 24, 1996 ("Assignment Agreement");


WHEREAS, Monsanto has expertise in the field of plant biotechnology and Ecogen has expertise in finding, screening and commercializing compounds, including proteins based on Bt;


WHEREAS, both Monsanto and Ecogen have research facilities and have conducted research and development pursuant to the Original Agreement which may lead to the commercialization of (i) improved bioinsecticides, and (ii) plants and/or plant seeds into the genomes of which Bt genes have been included so that such plants or plant seeds will express proteins;


WHEREAS, in order to effect an orderly transition of the parties' respective research and development activities, capabilities and resources, Monsanto and Ecogen desire to restructure the terms of Original Agreement;


NOW, THEREFORE, in consideration of the mutual covenants contained herein, Monsanto and Ecogen agree as follows:


ARTICLE 1 - DEFINITIONS


Capitalized terms not otherwise defined in this Agreement shall have the same meaning given such terms in the Assignment Agreement. In addition, the following terms shall have the meanings set forth below and will include the plural as well as the singular.


1.1 "Affiliate" shall mean, as to any party, any other person or entity that controls, is under common control with, or is controlled by, such party.


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1.2 "Change of Control" shall have the meaning specified in Section 7.6(b) hereof.


1.3 "Competitor Company" shall mean any commercial entity (including joint ventures) involved to any significant extent in the development of transgenic plants, plant seeds, plant cells or components thereof, and any Subsidiaries or Affiliates of any of the foregoing entities. For purposes of this Agreement, a university or other educational institution (other than that which maintains a meaningful licensing or other arrangement with a Competitor Company that includes the area of In Planta Application) shall not be deemed a commercial entity.


1.4 "Confidential Information" shall have the meaning specified in that certain Confidentiality Agreement between Ecogen and Monsanto dated as of January 24, 1996.


1.5 "Date of this Agreement" shall mean the date first written above.


1.6 "Designated Supervisory Employees" shall mean the persons identified on Schedule 1.6 hereto.


1.7 "Event of Default" shall have the meaning specified in Section 7.2 hereof.


1.8 "Field of the Agreement" shall mean research and development in finding, discovering, screening and developing new proteins and genes.


1.9 "In Planta Application" means (i) use, development, or commercialization of transgenic plants, plant seeds, plant cells or components thereof (collectively "Plants") or (ii) use, development, or commercialization of genetic material used so that Plants express a new material or an existing material at levels different from the levels that such Plants otherwise would.


1.10 "Intellectual Property Rights" means (i) all patent rights and all right, title and interest in and to all letters patent and applications for letters patent, and other government issued or granted indicia of invention ownership including any substitutions, extensions, reissues, divisions, continuations or continuations-in-part or applications thereof or therefor throughout the world; (ii) all rights, title and interest in and to all trade secrets and trade secret rights arising under the common law, state law, federal law and laws of foreign countries; (iii) all copyright rights, and all other literary property and author rights whether or not copyrightable; and all rights, title and interest in and to all copyrights, copyright registrations, certificates of copyright and copyrighted interests throughout the world; (iv) all rights, title and interest in and to all know-how whether or not protectable by patent, copyright or trade secret law; and (v) all goodwill associated with any of the foregoing; provided, however, that the term "Intellectual Property Rights" shall not include any trademarks, trade names or service marks, whether registered or arising under the common law, state law, federal law or the laws of foreign countries or any registrations thereof or interests therein.


1.11 "Microbial Applications" shall mean use, development or commercialization of insecticidal, bacterial, fungicidal, pesticidal, medical, veterinary, scientific, nutritional, food


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additive or preservative, materials, textiles, and similar products; provided, however, that such products shall not include any product for an In Planta Application.


1.12 "Naturally Occurring Genes" shall mean genes expressed by Bt that produce proteins without genetic engineering or protein engineering.


1.13 "R&D Technology" shall mean the Bt strains or genes discovered or developed pursuant to the Research Program and the Intellectual Property Rights arising pursuant to the performance of the parties' obligations under this Agreement.


1.14 "Relevant Employee" shall mean the persons named on Schedule 1.14 hereto.


1.15 "Remaining Term" shall mean the period commencing on January 30, 1998 and ending on January 24, 1999.


1.16 "Research Budget" shall mean the forecast of expenses and expenditures set by Monsanto from time to time during the Term for that part of the Research Program undertaken by Ecogen, which may be revised based on the recommendation of the Supervisory Committee; provided, however the Research Budget shall not include the cost or expenses of filing, prosecution or maintenance of patent applications or issued patents.


1.17 "Research Plan" shall mean the Research and Development Plan as may be amended from time to time and which Plan shall include a specific schedule for work, resources to be allocated by each party, the identification of target pests, personnel requirements, capital needs, and a schedule for the duplication and transfer to Monsanto of copies of all strains and genes developed under the Research Program. The selection of projects within the Research Plan is to be determined by Monsanto, with Ecogen having the right to object to any project which is inconsistent with the practices and procedures of Ecogen.


1.18 "Research Program" shall mean all research, experimentation or development relating to the projects to be conducted or conducted by the parties hereto under the terms of the Research Plan, including decisions regarding the filing, prosecution and maintenance of patent applications and issued patents.


1.19 "Subsidiary" shall mean a subsidiary more than 50 percent of whose outstanding securities representing the right, other than as affected by events of default, to vote for the election of directors, is owned by the applicable party and/or one or more of such party's other majority-owned Subsidiaries. Subsidiaries of Ecogen shall also include the entities set forth in Schedule 3.01 to the Investment Agreement by and between Monsanto and Ecogen dated as of January 24, 1996.


1.20 "Supervisory Committee" shall mean the Committee described in Article 2 hereof.


1.21 "Term" shall mean the period commencing on January 24, 1996 and ending on January 24, 1999.


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1.22 "Third Party" shall mean any entity other than Monsanto, Ecogen and their respective Affiliates.


ARTICLE 2 - RESEARCH COLLABORATION


2.1 Research Plan. During the Term and subject to the terms and conditions of this Agreement, Monsanto and Ecogen shall use all commercially reasonable efforts to undertake their respective obligations (including as to the retention of staffing) under the Research Program in accordance with the Research Plan. The Research Plan shall be updated in writing and revised from time to time by the Supervisory Committee in furtherance of the goals of the Research Program, taking into account the then continuing personnel and other resources of Ecogen. The efforts of Ecogen pursuant to Section 4.6 hereof shall be deemed to be a part of the Research Program and the Research Plan. Ecogen agrees to diligently pursue each project covered by the Research Program and to assign the appropriate number of its then continuing personnel required to carry out the Research Program, each of whom shall be qualified to perform his or her assigned duties. The parties acknowledge that Ecogen makes no representation or assurance whatsoever that the Research Program will be successfully completed or result in the development of products with any technical or commercial value.


2.2 Research Funding. Monsanto shall be responsible for providing all funding necessary for both parties to undertake their respective duties and obligations under the Research Program and all other costs and expenses related thereto. Transfers of funds to Ecogen under the Research Budget during the Term shall be in accordance with the terms of Article 3 hereof.


2.3 Supervisory Committee.


(a) Collaboration between the parties shall be determined by a Supervisory Committee of four (4) people; two (2) people appointed by each party. The Chairman of the Supervisory Committee shall be appointed by Monsanto.


(b) It is the intent of the parties that information related to the Research Program be shared with one another in an open manner. For this purpose, the Supervisory Committee shall meet periodically and no less than once a quarter to review the status of the Research Program at mutually convenient locations. It is contemplated, however, that the parties may meet as frequently as weekly at Ecogen's facility to review results of the Research Program. At such meetings the implementation of the Research Program, including insectary services, insect targets and sources of insecticidal or other biocidal proteins, shall be discussed and mutually agreed upon. Each of the parties hereto shall provide to the Supervisory Committee quarterly written summaries of data and the status of its work under the Research Program in such form as such party routinely uses for the summary of similar research work for its own purposes. Modifications to the Research Program may be made by the Supervisory Committee as collaboration progresses in accordance with this Agreement. In the event that the Supervisory Committee cannot reach a decision regarding the Research Program, the issue shall be referred for resolution to a senior business executive of each party responsible for the Research Program.


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In the event that the parties continue to have a good faith dispute, the issue will be resolved by the Monsanto business executive.


2.4 Continuity of Supervisory Committee. Each party shall attempt in good faith to maintain continuity in the identity of its representatives to the Supervisory Committee.


ARTICLE 3 - COSTS


3.1 Research and Development Funding Payment. Monsanto shall pay to Ecogen the amount of $2,000,000 (including funds previously advanced pursuant to the Original Agreement) for the funding of the Research Program during the Remaining Term. $1,270,000, representing the balance of such amount after subtracting amounts already advanced to Ecogen aggregating $730,000, shall be paid to Ecogen in immediately available funds by bank wire transfer to the account designated by Ecogen, contemporaneously with the execution and delivery of this Agreement.


3.2 Transition Payment. Monsanto shall pay to Ecogen the additional sum of $2,500,000 in immediately available funds by bank wire transfer to the account designated by Ecogen, contemporaneously with the execution and delivery of this Agreement. Such payment is in consideration, among other things, of performance by Ecogen of its obligations under Article 4 hereof.


3.3 Research Budget. On or before thirty (30) days after the Date of this Agreement, Monsanto will develop, with input from the Supervisory Committee, and present to the Supervisory Committee a revised Research Budget outlining budgeted costs and expenses on a quarterly basis for the Remaining Term. The Research Budget shall be revised from time to time upon approval of the Supervisory Committee to reflect the availability of continuing personnel and other resources of Ecogen. Any budgeted amounts that remain unallocated or unspent at the termination of this Agreement shall be retained by Ecogen, free and clear of any obligation to Monsanto to perform research or other service; provided, that such unallocated or unspent amounts shall be returned to Monsanto promptly following a termination of the Research Program resulting from an Event of Default by Ecogen.


3.4 Allocated Researchers and Equipment Purchases. In establishing the Research Budget, each researcher employed by Ecogen shall be included in the Research Budget at an annual rate of $*, which annual rate shall include all costs and expenses for personnel, supplies (including consumables and standard reagents), existing equipment required for the services to be performed by Ecogen pursuant to the Research Plan and replacements therefor (so long as the individual cost of any such item of replacement equipment does not exceed $1,000), and overhead with respect to such researcher. Ecogen shall have no obligation to purchase or obtain any other equipment not already in its possession. Ecogen shall be responsible for paying up to $50,000 to Hauptman Woodward Medical Research Institute, Inc. and up to $3,000 to Dr. Slayton of the Albert Einstein College of Medicine for consulting services performed pursuant to the Research Plan. Such amounts paid by Ecogen shall be applied to and shall reduce the Research Budget. No other agreements with or payments to Third Parties shall be included in or


- - ------------ * Confidential Treatment Requested. 6


applied to the Research Budget.


ARTICLE 4 - TRANSITIONAL MATTERS


4.1 Access to Certain Employees.


(a) Ecogen shall make no objection to any meetings or interviews at reasonable times and locations between representatives of Monsanto and either or both of the Designated Supervisory Employees for the purpose of allowing Monsanto and either or both of the Designated Supervisory Employees to investigate and consider potential employment of one of the Designated Supervisory Employees with Monsanto.


(b) Monsanto may make an offer of employment to one of the Designated Supervisory Employees. Monsanto may not make an offer of employment to the other Designated Supervisory Employees unless and until (i) such first offer of employment shall have been rejected by the recipient of such offer or (ii) such first offer shall have expired or shall have been withdrawn by Monsanto, or upon the occurrence of one of the events identified in Section 4.1(c) hereof. Except as expressly set forth in Section 4.1(c) hereof, Monsanto shall hire a maximum of one of the Designated Supervisory Employees and shall not have offer of employment to each of the Designated Supervisory Employees pending at the same time.


(c) The restrictions set forth in Section 4.1(b) hereof that Monsanto may hire a maximum of one of the Designated Supervisory Employees and may not have pending offers of employment to each of the Designated Supervisory Employees at the same time shall have no further effect upon the occurrence of any of the following:


(i) Change of Control of Ecogen involving a Competitor
Company;


(ii) Event of Default by Ecogen;


(iii) Receipt by a Designated Supervisory Employee (who has
not previously been hired by Monsanto) of a bona
fide, verifiable offer of employment from a
Competitor Company containing terms reflective of the
skills and background of such person and otherwise
containing reasonably standard terms and conditions
(it being understood that a condition requiring
Ecogen to waive any confidentiality or other
significant obligation owed to Ecogen by such person
shall not be deemed reasonably standard unless such
condition is subsequently waived by the offeror
Competitor Company);


(iv) Termination of employment initiated by Ecogen of a
Designated Supervisory Employee.


(d) Monsanto acknowledges and agrees that the provisions of this Section 4.1 have been specifically negotiated and carefully tailored with a view to preventing the serious and


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irreparable injury that Ecogen will suffer in the event of a breach by Monsanto of its obligations under this Section. Monsanto further acknowledges that a breach of this Section 4.1 by it will cause irreparable injury and damage to Ecogen, the exact amount of which will be difficult to ascertain, and that the remedies at law for any such breach would be inadequate. Accordingly, in the event that Monsanto breaches this Section 4.1, then Ecogen shall be entitled to injunctive relief without posting bond or other security.


4.2 Additional Payment. In the event that Monsanto hires a Designated Supervisory Employee, then, unless any of the events described in clauses (i) through (iv) of Section 4.1(c) hereof shall have occurred prior to the date of commencement of such person's service with Monsanto, Monsanto shall pay to Ecogen the amount of $* within 30 days following such commencement date. For greater certainty, no payment shall be due and payable pursuant to this Section 4.2 if the subject hiring is the second such hiring under Section 4.1(b) hereof.


4.3 Access to Relevant Employees and Information. Ecogen shall make no objection to any reasonable meetings or interviews between representatives of Monsanto and any number of Relevant Employees for the purpose of allowing Monsanto and such Relevant Employees to investigate and consider potential employment of such Relevant Employees with Monsanto. Monsanto may make written offers of employment to no more than six Relevant Employees at any one time. Monsanto shall not hire more than six Relevant Employees; provided, that the hiring of a Relevant Employee who subsequently does not actually begin his or her employment with Monsanto shall not be counted for purposes of this sentence. Ecogen agrees to provide Monsanto with prompt and reasonable access to files, records, contracts and other information pertaining to the employment and work history of such Relevant Employees.


4.4 Cooperation. Ecogen shall cooperate reasonably with Monsanto to ensure the prompt and orderly transition of employment of any Ecogen employee hired by Monsanto pursuant t ...