License Agreement

AGRAQUEST, INC.


AND


DRAGOCO GERBERDING & CO. AG


LICENSE AGREEMENT


Certain confidential information contained throughout this document, marked
by "[***]" has been omitted and filed with the Securities and Exchange
Commission pursuant to 17 C.F.R (S) 230.406, General Rules and Regulations,
Securities Act of 1933.


LICENSE AGREEMENT


THIS LICENSE AGREEMENT, including the exhibits referred to herein and attached hereto (the "Agreement"), effective as of July 1, 2001 (the "Effective Date"), is made and entered into by and between AgraQuest, Inc., a Delaware corporation having a principal place of business located at 1530 Drew Avenue, Davis, California 95616 ("AgraQuest") and Dragoco Gerberding & Co. AG having a principal place of business located at Dragocostrasse, D 36703 Holzminnden, Germany ("Licensee").


RECITALS


A. WHEREAS AgraQuest owns or has the right to grant licenses under certain patents, patent applications, technology, trade secrets, data, know-how and other intellectual property relating to [***] insect repellant and any derivatives, analogs, or combinations with other repellant materials; and


B. WHEREAS Licensee desires to obtain from AgraQuest, and AgraQuest is willing to grant to Licensee, a license under such technology and intellectual property for the development and commercialization of certain products and services under the terms and conditions herein.


NOW, THEREFORE, in consideration of the mutual covenants and obligations set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, AgraQuest and Licensee hereby agree as follows:


1. DEFINITIONS


As used in this Agreement, the following terms shall have the meanings indicated:


1.1. "Confidential Information" shall have the meaning set forth in Section 10.1 below.


1.2. "Deductible Expenses" "shall mean the following items of expense actually incurred in connection with Sales of Licensed Products to the extent paid or allowed by Licensee or Sublicensees and included in accordance with recognized principles of accounting (consistently applied) in the gross sales price billed: (a) sales, use or turnover taxes; (b) excise, value added or other taxes, custom duties or consular fees; (c) transportation, freight, and handling charges, and insurance on shipments to customers; (d) trade, cash or quantity discounts or rebates to the extent actually granted; (e) agent fees or commissions; and (f) refunds and credits for any rejected or returned Licensed Products or because of retroactive price reductions, rebates or chargebacks.


1.3. "Field" shall mean the manufacture, use and sale of insect repellents in toiletries and cosmetics.


1.4. "Improvements" shall mean the improvements, modifications, or enhancements to the Licensed Patents.


1.5. "Joint Inventions" means inventions made or conceived jointly by or for employees of AgraQuest and Licensee during the term of this Agreement and which, under principles arising under the patent laws and regulations of the United States governing inventorship, would be found to be jointly


[***] Confidential information has beem omitted and filed separately with the Securities and Exchange Commission pursuant to 17 C.F.R (S) 230.406.


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invented by AgraQuest and Licensee, and all intellectual property and proprietary rights therein, thereto and thereunder.


1.6. "Licensed Patents" shall mean those patents, inventors' certificates and patent applications set forth in Exhibit A, together with any renewal, division, continuation, continued prosecution application or continuation-in-part of any of such patents, certificates and applications, any and all patents or certificates of invention issuing thereon, and any and all reissues, reexaminations, extensions, divisions, renewals of or to any of the foregoing, and any foreign counterparts of any of the foregoing.


1.7. "Licensed Product" shall mean any material, composition, product, device, or procedure the manufacture, use or sale of which would infringe a Valid Claim in the country of such manufacture, use or sale, but for a license granted hereunder.


1.8. "Net Revenues" shall mean the combined amounts (whether in cash or in non-cash consideration) received or invoiced by Licensee and Sublicensees, whichever is earlier, from Sales of Licensed Products to third parties, less Deductible Expenses.


1.9. "Sale" or "Sold" shall mean the sale, transfer, exchange or other disposition of Licensed Products by or for Licensee of a Sublicensee whether by gift or otherwise, including but not by way of limitation, the use of Licensed Products. Any commercial use of a Licensed Product by Licensee or a Sublicensee shall be considered a Sale hereunder for accounting and royalty purposes. Sales of Licensed Products shall be deemed consummated upon the first to occur of:


(a) receipt of payment from the purchaser;


(b) delivery of Licensed Products to the purchaser or a common carrier at the risk of the purchaser;


(c) release of Licensed Products from consignment;


(d) if deemed sold by use, when first put to such use; or


(e) if otherwise transferred, exchanged or disposed of whether by gift or otherwise when such transfer, exchange, gift or other disposition occurs


1.10. "Sublicensee(s)" shall mean any third party to whom Licensee has sublicensed any or all of the rights in, to and under the Licensed Patents licensed to Licensee hereunder.


1.11. "Sublicense Income" shall mean any proceeds, whether cash or non- cash consideration, received by Licensee in connection with a grant of a sublicense to the Licensed Patents, including without limitation any license fee payments, milestone payments, royalty payments or other cash revenues related to such sublicense grant. For the avoidance of doubt, Sublicense Income does not include amounts received by Sublicensee for Sales of Licensed Products, which shall constitute Net Revenues. In addition, Sublicense Income shall not include amounts received (a) in consideration of equity or dept securities of Licensee (with the exception of equity premiums) or (b) in consideration for the license or sublicense of any intellectual property other than Licensed Patents.


[***] Confidential information has beem omitted and filed separately with the Securities and Exchange Commission pursuant to 17 C.F.R (S) 230.406.


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1.12. "Valid Claim" shall mean (a) any claim of an issued and unexpired patent within the Licensed Patents which has not been held unenforceable or invalid by a court or other governmental agency of competent jurisdiction in an unappealed or unappealable decision, and which has not been disclaimed or admitted to be invalid or unenforceable through reissue or otherwise, or (b) a claim in a pending patent application within the Licensed Patents.


2. LICENSES


2.1. License Grant. Subject to the terms and conditions of this Agreement, AgraQuest hereby grants to Licensee a [***], royalty bearing, exclusive license, including the right to grant sublicenses in accordance with Section 2.3, under the Licensed Patents to [***] (and to have such rights exercised on Licensee's behalf by third parties).


2.2. Ownership; Reservation of Rights. Licensee acknowledges and agrees that AgraQuest shall retain ownership of the Licensed Patents, and the Improvements, subject only to the rights and licenses expressly granted herein. Except as expressly provided herein, no right, title, or interest is granted by AgraQuest to Licensee, implied or otherwise, in to or under the Licensed Patents, or the Improvements.


2.3. Sublicenses. Subject to the terms and conditions of this Agreement, Licensee shall have the right to sublicense any or all of the rights granted to Licensee under Section 2.1; provided that any such sublicense (a) shall be made pursuant to a binding and written agreement which protects AgraQuest's interests and rights in its proprietary information and intellectual property to at least the same extent as this Agreement, (b) shall contain provisions for the benefit of AgraQuest substantially similar in language and scope to Articles 4, 5, 8, 9, 10, and 11, and Sections 2.3, 3.3, 7.3 of this Agreement and (c) shall be of no greater scope than the license granted to Licensee in Section 2.1. Licensee shall provide AgraQuest with a copy of each fully executed sublicense agreement in which Licensee sublicenses any or all of the rights set forth in Section 2.1 which Licensee may enter into during the term of this Agreement.


3. PAYMENTS AND RELATED OBLIGATIONS


3.1. Royalty Payments. In consideration for the rights and licenses granted pursuant to Article 2 above, Licensee shall make royalty payments to AgraQuest as follows:


3.1.1. Licensee shall pay to AgraQuest each calendar quarter running royalties in the amount of [***].


3.1.2. Licensee shall pay to AgraQuest each calendar quarter running royalties in the amount of [***].


3.1.3. [***] shall be due or payable because the manufacture, use, offer for sale, sale or import of any Licensed Product is or shall be covered by more than one Valid Claim.


3.2. Royalty Term. Licensee's obligation to pay royalties to AgraQuest under Section 3.1 shall continue on a Licensed Product by Licensed Product, country by country basis, until the expiration or final determination of invalidity of the last Valid Claim within the Licensed Patents. Notwithstanding the above, Licensee shall be obligated after expiration of the royalty term to pay any royalty amounts that accrued under Section 3.1 prior to such expiration. Licensee acknowledges and agrees that Licensee shall


[***] Confidential information has beem omitted and filed separately with the Securities and Exchange Commission pursuant to 17 C.F.R (S) 230.406.


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be solely responsible for paying all royalties owed to AgraQuest on account of Net Revenues and Sublicensee Income by any and all Sublicensees.


3.3. Royalty Reports. Licensee shall deliver to AgraQuest, within [***] days after the end of each calendar quarter in which Licensed Products are Sold, a written report setting forth in reasonable detail (a) the calculation of the royalties payable to AgraQuest for such calendar quarter under Section 3.1, including the number and types of Licensed Products Sold and distributed in each country, gross sales, Net Revenues thereof and Deductible Expenses, and (b) all Sublicensee Income received on a Sublicensee by Sublicensee basis and further organized based on the type of payment (e.g., royalty, license fee, milestone).


3.4. Payment Terms.


3.4.1. Licensee shall pay all royalties due and payable on [***] pursuant to Section 3.1.1 within [***] days after the last day of each quarter in which the applicable Licensed Products are Sold by Licensee or Sublicensees.


3.4.2. Licensee shall pay all royalties due and payable on Sublicensee Income pursuant to Section 3.1.2 within [***] days after the last day of each quarter in which such Sublicense Income is due and payable to Licensee.


3.4.3. Except as otherwise expressly provided herein, all other payments due to AgraQuest pursuant to the terms and conditions of this Agreement shall be due and payable within [***] after receipt of a proper invoice therefor from AgraQuest. Any sums not paid when due, including amounts determined to be due under Section 3.6, shall automatically accrue interest from the date when due until actually paid at a rate of [***].


3.4.4. All payments made by Licensee under this Agreement shall be made in United States dollars, and such payments shall be made by check or wire transfer to one or more bank accounts to be designated in writing by AgraQuest. In the event that Licensed Products are sold in currencies other than United States dollars, Net Revenues shall be calculated by Licensee by conversion of foreign currency to U.S. dollars at the conversion rate existing in the United States (referencing the "U.S. dollar noon buying rates", or its equivalent, published in the Wall Street Journal) on the last working day of each period during which royalties are calculated, net of applicable exchange related charges, or otherwise in accordance with generally accepted accounting principles consistently applied.


3.5. Taxes. Licensee shall pay, and shall indemnify and hold AgraQuest harmless from, all taxes, duties and levies directly imposed by all foreign, federal, state, local or other taxing authorities (including, without limitation, export, sales, use, excise, and value-added taxes) based on the transactions or payments under this Agreement, other than taxes imposed or based on AgraQuest's net income. All amounts payable hereunder by Licensee shall be paid without deduction or withholding for or on account of any present or future tax, levy, impost, fee, assessment, deduction or charge by any taxing authority. Notwithstanding the foregoing, if Licensee is required by law to deduct or withhold any taxes, levies, imposts, fees, assessments, deductions or charges from or in respect of any amounts payable hereunder to AgraQuest, (a) Licensee shall pay the relevant taxation authority the minimum amounts necessary to comply with the applicable law, (b) Licensee shall make such payment prior to the date on which interest or penalty is attached thereto, and (c) the amounts payable by Licensee to AgraQuest under this Agreement shall be increased as may be necessary so that, after Licensee makes all required deductions or


[***] Confidential information has beem omitted and filed separately with the Securities and Exchange Commission pursuant to 17 C.F.R (S) 230.406.


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withholdings, AgraQuest shall receive amounts equal to the amounts it would have received had no such deductions or withholdings been required.


3.6. Inspection of Books and Records. Licensee shall maintain, and requir ...