Collaboration and License Agreement

COLLABORATION AND LICENSE AGREEMENT


Dated as of


September 1, 1998


By and Among


THE DOW CHEMICAL COMPANY


DOW AGROSCIENCES LLC


AND


BIOSOURCE TECHNOLOGIES, INC.


2


TABLE OF CONTENTS


1. DEFINITIONS.............................................................................2 2. SCOPE AND STRUCTURE OF THE COLLABORATION...............................................12 3. GRANTS OF RIGHTS.......................................................................12 4. CONDUCT OF PARTIES DURING THE RESEARCH COLLABORATION...................................20 5. DISCOVERY, DEVELOPMENT AND MARKETING EFFORTS...........................................26 6. PAYMENTS...............................................................................28 7. INTELLECTUAL PROPERTY..................................................................43 8. RESEARCH MATERIALS.....................................................................53 9. CONFIDENTIALITY........................................................................54 10. REPRESENTATIONS, WARRANTIES AND COVENANTS..............................................56 11. INDEMNITY..............................................................................60 12. TERM AND TERMINATION...................................................................62 13. PROVISIONS FOR INSOLVENCY..............................................................66 14. MISCELLANEOUS..........................................................................67


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COLLABORATION AND LICENSE AGREEMENT


THIS COLLABORATION AND LICENSE AGREEMENT (the "Agreement") is dated as of September 1, 1998 (the "Effective Date") and is made by and among BIOSOURCE TECHNOLOGIES, INC., a corporation having its principal place of business at 3333 Vaca Valley Parkway, Vacaville, California 95688 ("Biosource"), THE DOW CHEMICAL COMPANY, a Delaware corporation having its principal place of business at 2030 Willard H. Dow Center, Midland, Michigan 48674 ("TDCC"), and DOW AGROSCIENCES LLC, a Delaware limited liability company having its principal place of business at 9330 Zionsville Road, Indianapolis, Indiana 46268 ("DAS"). Biosource, TDCC and DAS are sometimes referred to herein individually as a "party" and collectively as the "parties".


R E C I T A L S


WHEREAS, Biosource has developed technologies relating to the identification and characterization of genetic materials, and has developed or acquired certain rights, technologies, data and materials potentially useful in the development of products.


WHEREAS, TDCC and DAS desire to obtain access and rights to Biosource's technologies, and Biosource is willing to provide such access and grant such rights, on the terms and for the purposes set forth in this Agreement.


WHEREAS, DAS has developed technologies related to the development, selection and manufacture of plants.


WHEREAS, Biosource desires to obtain access and rights to DAS's technologies, and DAS is willing to provide such access and grant such rights, on the terms and for the purposes set forth in this Agreement.


WHEREAS, TDCC possesses analytical expertise useful to support the collaborative activities of DAS and Biosource contemplated in this Agreement.


WHEREAS, Biosource, DAS and TDCC desire to collaborate in the fields defined below on the terms set forth in this Agreement.


NOW, THEREFORE, Biosource, TDCC and DAS agree as follows:


1. DEFINITIONS


For purposes of this Agreement, unless otherwise specifically stated in this Agreement, the terms defined in this Article 1 shall have the meanings specified below:


1.1 "Affiliate" means any corporation or other entity which directly or


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indirectly controls, is controlled by or is under common control with a party to this Agreement. A corporation or other entity shall be regarded as in control of another corporation or entity if it owns or directly or indirectly controls more than fifty percent (50%) of the outstanding voting stock or other ownership interest of the other corporation or entity, or if it possesses, directly or indirectly, the power to manage, direct or cause the direction of the management and policies of the corporation or other entity or the power to elect or appoint fifty percent (50%) or more of the members of the governing body of the corporation or other entity. Any such other relationship as in fact results in actual control over the management, business and affairs of a corporation or other entity shall also be deemed to constitute control. Except to the extent explicitly provided otherwise herein, for purposes of this Agreement, members of (i) DAS and DAS Affiliates shall not be considered to be Affiliates of members of (ii) TDCC and Affiliates of TDCC (other than DAS and DAS Affiliates), and members of (ii) above shall not be considered to be Affiliates of members of (i) above. In addition, for purposes of this Agreement, Mycogen shall not be considered to be an Affiliate of TDCC, or a DAS Affiliate, unless and until the parties agree in writing or as provided in Section 14.15, provided, however, in either case Mycogen itself must accept the obligations of an Affiliate hereunder.


1.2 "Agricultural Value-Added" means, in respect of Products that constitute seed or agrochemicals, as applicable (i) the incremental value-added or measurable Trait premium associated with a Product Trait, net of additional costs associated with the manufacture of the Product, when a party sells such Product directly, and (ii) the revenue received by a party from licensees or sublicensees which is attributable to the value-added or measurable Trait premium associated with a Product Trait. Calculation of Agricultural Value-Added is more specifically described in Exhibit B.


1.3 "Alliance Gene" means any nucleotide sequence or fragment thereof that encodes for a Trait in plants, either alone or in conjunction with other encoding sequences, and including antisense or co-suppression use thereof, which is discovered, designed, selected, identified or modified in the course of the Research Collaboration, but excluding the genes, nucleotide sequences or fragments therefrom of Photorhabdus, Xenorhabdus, Bacillus thuringiensis, and Saccharopolyspora spinosa or those covered by or derived by use of Demeter Technology, provided that these excluded genes, nucleotide sequences and fragments were identified without use of Discovery Technology Owned by Biosource.


1.4 "Annual Research Plan" means the plan to be developed by Biosource and approved by the Research Committee for each Contract Year, as described in Section 4.5.4. A summary of the Annual Research Plan being considered by the parties for the first Contract Year during the Research Collaboration is set forth in Schedule I hereto.


1.5 "Biosource Agricultural Cumulative Investment" means the total


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cumulative amount of: (i) all expenses incurred and capital dedicated by Biosource and its Affiliates during the term of this Agreement (including, but not limited to internal expenses and capital, all payments to TDCC under this Agreement, and amounts paid to Third Parties for research or other services, but excluding the cost of sponsored research described in Section 6.3.1 and all other expenses of Biosource reimbursed by TDCC), to support the discovery, development, commercialization and manufacture of Biosource Products comprising agrochemicals or seed, excluding Biosource Products in the Nicotiana Field and the Pharmaceutical Field); (ii) reduced by the cumulative Value-Added by distinct Traits derived from one or more Alliance Genes in Biosource Products that constitute seed; and (iii) the remainder compounded on an annual basis by the Biosource Cost of Capital.


1.6 "Biosource Cost of Capital" means, as of any date of determination, the same rate as the TDCC Cost of Capital, established pursuant to Section 1.43.


1.7 "Biosource Crops" means plants grown for forestry and ornamental horticulture purposes.


1.8 "Biosource Field" means the Pharmaceutical Field; the Nicotiana Field; all uses of all Biosource Crops (provided that TDCC has not exercised the option in Section 3.9); and all organisms in the Pharmaceutical Field and the Nicotiana Field; provided, however, that the "Biosource Field" shall not include the use of Alliance Genes in TDCC Crops other than for use in the Pharmaceutical Field.


1.9 "Biosource Industrial Cumulative Investment" means the total cumulative amount of: (i) all expenses incurred and capital dedicated by Biosource and its Affiliates during the term of this Agreement (including, but not limited to internal expenses and capital, all payments to TDCC under this Agreement, and amounts paid to Third Parties for research or other services, but excluding the cost of sponsored research described in Section 6.3.1 and all other expenses of Biosource reimbursed by TDCC), to the discovery, development, commercialization and/or manufacture of Biosource Products that constitute Industrial Products (excluding Biosource Products in the Nicotiana Field and the Pharmaceutical Field); (ii) reduced by the cumulative Value-Added by distinct Traits derived from one or more Alliance Genes in such Biosource Products; and (iii) the remainder compounded on an annual basis by the Biosource Cost of Capital.


1.10 "Biosource Patent Rights" means Patent Rights that cover Technology which are Owned by Biosource, or licensed by Biosource from Third Parties or its Affiliates, but only to the extent that transfer or sublicensing is permitted by agreements with such Third Parties or Affiliates as of the Effective Date or during the term of this Agreement. For the purposes of this Agreement, the Patent Rights of Affiliates of Biosource shall be deemed to be Owned by Biosource, where the Affiliate has granted to Biosource an interest in such Patent Rights which allows Biosource to treat the Patent


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Rights as it treats its own Patent Rights under this Agreement. Biosource Patent Rights as of the Effective Date are set forth in Exhibit A.


1.11 "Biosource Product" means a Product in the Biosource Field the discovery or development of which uses Discovery Technology Owned by DAS, or Product Technology.


1.12 "Biosource Seed Products" shall have the meaning set forth in Section 6.5.2.1 hereof.


1.13 "Confidential Information" means information, which is not subject to an exception in Section 9.2, and relates to one or more of the following: Annual Research Plan; Biosource Patent Rights; Biosource Product; DAS Patent Rights; Development Candidate; Discovery Technology; Transient Transformation Technology Improvements; Overall Research Plan; Product Technology; Production Technology; TDCC Patent Rights; Technology; Transient Transformation Technology; Viral Vector Technology; patent strategies; business strategies and relationships; surveys; forecasts; marketing research; product concepts; targets; product development processes; any other information and data which may be made available by another party pursuant to this Agreement and deemed by the disclosing party to be confidential.


1.14 "Contract Year" means each twelve (12) month period starting on (i) the Effective Date in the case of the first Contract Year and (ii) the anniversary of the Effective Date for each subsequent Contract Year.


1.15 "DAS Affiliates" means any corporation or other entity which DAS directly or indirectly controls. A corporation or other entity shall be regarded as being controlled by DAS if DAS owns or directly or indirectly controls more than fifty percent (50%) of the outstanding voting stock or other ownership interest of the other corporation or entity, or if DAS possesses, directly or indirectly, the power to manage, direct or cause the direction of the management and policies of the corporation or other entity or the power to elect or appoint fifty percent (50%) or more of the members of the governing body of the corporation or other entity. Any such other relationship as in fact results in actual control over the management, business and affairs of a corporation or other entity shall also be deemed to constitute control.


1.16 "DAS Patent Rights" means Patent Rights that cover Technology which are Owned by DAS, or licensed by DAS from Third Parties or the DAS Affiliates but only to the extent that transfer or sublicensing is permitted by agreements with such Third Parties or DAS Affiliates, as of the Effective Date or during the term of this Agreement. For the purposes of this Agreement, the Patent Rights of a DAS Affiliate shall be deemed to be Owned by DAS, where such Affiliate has granted to DAS an interest in such Patent Rights which allows DAS to treat the Patent Rights as it treats its own under this Agreement. DAS Patent Rights as of the Effective Date are set forth in


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Schedule II.


1.17 "Demeter Genes" means any genes, nucleotide sequences, proteins or fragments thereof which are discovered, designed, selected, identified or modified using Demeter Technology during or prior to the term of the Research Collaboration and are notified to Biosource by TDCC as "Demeter Genes" as provided in Section 3.18.


1.18 "Demeter Technology" means (i) genes, nucleotide sequences, proteins or fragments thereof which are Owned by Demeter Biotechnologies Ltd. or are licensed to Mycogen by Demeter Biotechnologies Ltd.; and (ii) genes, nucleotide sequences, proteins or fragments thereof, which are discovered or developed using anti-microbial technology Owned by Demeter Biotechnologies Ltd. or licensed to Mycogen, including that covered by U.S. Patent Nos. 5,597,946, 5,597,945; Australian Patent No. 611,859; Canadian Patent No. 1,321,157; European Patent No. 0 330 655; and Application Nos. U.S. 08/444,762, U.S. 08/453,436; Japanese SHO 62-504491; European 89900103.6 and 93113536.2; or any provisional, continuation, divisional or continuation-in-part applications; as well as any patents issued thereon and any reissue or reexamination of such patents; and patent applications filed in and patents issued by countries other than the United States and patents of additions and other counterparts of patents and patent applications in such countries.


1.19 "Discovery Technology" means Technology, Transient Transformation Technology and Research Materials, including the use of Nicotiana, which is used for the discovery, design, selection, identification or modification of nucleotide sequence function, and any improvements thereto discovered or developed in the course of the Research Collaboration; provided, however, that Discovery Technology shall not be considered to be Product Technology or Production Technology.


1.20 "Event of Default" shall have the meanings set forth in Section 12.2 hereof.


1.21 "FDA" means the United States Food and Drug Administration, or the foreign equivalent for the country in which a particular Product is offered for sale.


1.22 "First Commercial Sale" of a Product means the first for profit sale for use or consumption by the general public of a Product.


1.23 "Industrial Products" means all Products including, but not limited to, synthetic fiber; cosmetics; industrial compounds; industrial antimicrobial compounds; Nutraceuticals; vitamins; animal health Products; food; feed; natural and synthetic fiber; chemicals and materials; provided, however, that agrochemicals, seed, and products (lower case) in the Nicotiana Field and products (lower case) in the


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Pharmaceutical Field shall not be considered Industrial Products. Industrial Products may include Products subject to compliance with FDA or USDA regulations, but do not include Products subject to registration under FDA or USDA regulations in effect as of the Effective Date for the country in which the Product is offered for sale, as interpreted by administrative and judicial decisions, whenever made.


1.24 "Mycogen" means Mycogen Corporation, a California corporation.


1.25 "Net Sales" means the total of: (a) the gross invoice price for Products sold by a party, less the reasonable and customary accrual-basis deductions from such gross amounts for: (i) normal and customary trade, cash and other discounts, allowances and credits; (ii) credits or allowances actually granted for damaged goods, returns or rejections of Products, consistent with such party's established policies, and government mandated retroactive price reductions; and (iii) freight, postage, shipping, customs duties and insurance charges which are included in the gross invoice amount; and (b) royalties paid to Third Parties and, in the case of TDCC, to Biosource, and, in the case of Biosource, to TDCC. In the case of a transfer of Products by: (x) Biosource or one of its Affiliates to another Affiliate of Biosource; or (y) TDCC, one of its Affiliates, DAS or a DAS Affiliate to another entity in this same group, Net Sales shall be determined based on the invoiced sales price for Products upon the initial transfer to a Third Party customer, less the deductions allowed under this Section. Every other commercial use or disposition of Products by Biosource, its Affiliates, TDCC, its Affiliates, DAS, or DAS Affiliates in barter or other non-monetary commercial transactions, but excluding any sampling of Products, shall be considered a sale of the Products at the weighted average Net Sales price for such Products during the preceding quarter in the same country.


1.26 "Nicotiana Field" means all uses of Nicotiana plants, plant cells, seeds or seedlings (collectively "Nicotiana") in the Pharmaceutical Field or as a production host. Nicotiana Field shall not include use of Nicotiana for cigarettes, cigars, pipe tobacco, chewing tobacco and snuff, and seeds/seedlings for the production thereof.


1.27 "Non-Agricultural Value-Added" means, in respect of Industrial Products, as applicable: (a) (i) incremental Net Sales attributable to one or more measurable Traits used in the production of such Products; (ii) less any increase in the cost of manufacturing (including depreciation) attributable to such Traits used in the production of such Products; (iii) less any increase in selling, general, administrative, research and development costs attributable to such Traits used in the production of such Products; and (iv) less the cost of capital spent on assets deployed in the production of such Products; and (b) the revenue received by a party from licensees or sublicensees which is attributable to one or more measurable Traits used in the production of Products. Calculation of Non-Agricultural Value-Added is more specifically described in Exhibit B.


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1.28 "Nutraceutical" means biological or chemical materials for use by humans and animals which are sold accompanied by only nutritional (and not medical) claims and therefore would not be subject to registration as a pharmaceutical by the FDA in the country in which the material is offered for sale under regulations in effect as of the Effective Date, as interpreted by administrative and judicial decisions, whenever made.


1.29 "Other Inventions" means an invention developed or discovered solely or jointly by the parties in the course of the Research Collaboration that is not Discovery Technology, Product Technology, Production Technology, Viral Vector Technology, Transient Transformation Technology, and does not use or express Alliance Genes.


1.30 "Overall Research Plan" means the research plan to be agreed upon by the Research Committee pursuant to Section 4.5.4 (a) and approved by the Steering Committee pursuant to Section 4.6.4 (a) hereof. A summary of the Overall Research Plan contemplated as of the Effective Date is set forth in Schedule I.


1.31 "Owned" means owned or controlled by the person or entity to whom ownership is attributed in the context, or licensed by such person or entity from Third Parties or its Affiliates but only to the extent that transfer or sublicensing is permitted by agreements with such Third Parties or Affiliates as of the Effective Date or during the term of the Agreement. For the purposes of this Agreement, unless stated otherwise, Technology of Affiliates shall be deemed to be Owned by a person or entity, where the Affiliate has granted the person or entity an interest in such Technology which allows such person or entity to treat the Technology as a party treats its own Technology under this Agreement.


1.32 "Patent Rights" means any United States patent application, including provisionals, and any divisional, continuation, or continuation-in-part of such patent application (to the extent the claims are directed to subject matter specifically described therein), as well as any patent issued thereon and any reissue or reexamination of such patent, and patent applications filed in and patents issued by countries other than the United States and patents of additions and other counterparts of patents and patent applications in such countries.


1.33 "Pharmaceutical Field" means all uses and all biological materials and chemical compounds active for the treatment, mitigation, diagnosis or prevention of disease states and conditions in humans and animals; provided, however, that the Pharmaceutical Field shall include active material and compounds for animal uses only which are: (i) Products that are subject to registration under FDA or USDA regulations in effect as of the Effective Date for the country in which a particular Product is offered for sale, as interpreted by administrative and judicial decisions, whenever made, and (ii) antimicrobial peptide products; and provided, further, that the Pharmaceutical Field


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shall not include Nutraceuticals nor animal feed Products (other than an animal feed Product which itself is used as an oral vaccine) that is not subject to registration under FDA or USDA regulations in effect as of the Effective Date for the country in which a particular Product is offered for sale, as interpreted by administrative and judicial decisions, whenever made.


1.34 "Product" means any seed; seedling; plant; plant cell; agrochemical; industrial chemical; vitamin; Nutraceutical; feed; food; natural or synthetic fiber; pharmaceutical; animal health products; product, compound, substance or composition related to or made from plants or produced by microorganisms or other means; or for the treatment of plants; and which incorporates or is produced utilizing Product Technology.


1.35 "Product Technology" means (i) Alliance Genes, and protein, protein fragments, and amino acids sequences encoded therefrom, useful for producing Products, which are discovered, developed, designed, selected, identified or modified in the course of the Research Collaboration; or (ii) genes or any nucleotide sequence or fragment thereof that encodes for a Trait in plants, either alone or in conjunction with other encoding sequences, and including antisense or co-suppression use thereof, and protein, protein fragments and amino acid sequences encoded therefrom, which are discovered, developed, designed, selected, identified or modified after the end of the Research Collaboration by TDCC or its permitted sublicensees through the use of Discovery Technology, or improvements thereon, Owned by Biosource and licensed to TDCC hereunder. Product Technology does not include: (a) genes, nucleotide sequences, proteins or fragments thereof discovered, designed, selected, identified or modified using Demeter Technology; or (b) genes, nucleotide sequences or fragments thereof of Photorhabdus, Xenorhabdus, Bacillus thuringiensis, and Saccharopolyspora spinosa which are discovered, designed, selected, identified or modified using Discovery Technology Owned by Biosource or Transient Transformation Technology Owned by Biosource. Product Technology shall not be considered to be Discovery Technology, Production Technology or Transient Transformation Technology.


1.36 "Production Technology" means Technology (including, but not limited to, promoters, introns, selectable markers, 3' ends, and nucleotide sequences and fragments thereof for transformation and expression of genes in plants) and Research Material, in each case, useful for the development, selection or manufacture of any plant, plant cell, seed, seedling, plant variety, or hybrid; and any improvements thereto discovered or developed in the course of the Research Collaboration; provided, however, that Production Technology shall not be considered to be Product Technology, Discovery Technology or Transient Transformation Technology.


1.37 "Provider" shall have the meaning set forth in Section 8.1.


1.38 "Recipient" shall have the meaning set forth in Section 8.1.


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1.39 "Research Collaboration" means the work to be performed by Biosource, TDCC and/or DAS pursuant to terms of this Agreement in accordance with the Overall Research Plan and each Annual Research Plan to determine the function of nucleotide sequences causing Traits in vascular plants. The first day of the Research Collaboration shall be the Effective Date and it will continue until terminated pursuant to Article 12.


1.40 "Research Materials" means, biological materials useful in the Research Collaboration, including but not limited to, plasmids; vectors; cDNA, proteins, nucleotide sequences, amino acid sequences, and in each case fragments thereof; and infective RNA; and libraries containing the same.


1.41 "Research Services" means the research services provided by Biosource to TDCC and DAS under the Overall Research Plan and each Annual Research Plan.


1.42 "TDCC Agricultural Cumulative Investment" means the total cumulative amount of: (i) all expenses incurred and capital dedicated by TDCC, its Affiliates, DAS and the DAS Affiliates during the term of this Agreement (including, but not limited to internal expenses and capital, all payments to Biosource under this Agreement, and amounts paid to Third Parties for research or other services), to support the discovery, development, commercialization and manufacture of TDCC Products comprising agrochemicals or seed; (ii) reduced by the cumulative Agricultural Value-Added by distinct Traits derived from one or more Alliance Genes in TDCC Products that constitute agrochemicals and seed; and (iii) the remainder compounded on an annual basis by the TDCC Cost of Capital.


1.43 "TDCC Cost of Capital" means, as of the Effective Date, ten and 75/100 percent (10.75%); provided, however, that thereafter the TDCC Cost of Capital shall be reviewed annually and adjusted, up or down, effective as of the first day of the following calendar year, to reflect an increase or decrease of more than one percent (1%) in TDCC's weighted average cost of capital in the preceding calendar year, as determined and used by TDCC in its financial planning. TDCC shall notify Biosource of any change in the TDCC Cost of Capital.


1.44 "TDCC Crops" means all plants (including Nicotiana as a plant and not a production host) other than (i) Biosource Crops, subject however to Section 3.9, or (ii) Nicotiana as used in the Nicotiana Field.


1.45 "TDCC Field" means (i) all uses of TDCC Crops, for seed, seedlings, plants, plant cells, agrochemicals, Industrial Products, vitamins, Nutraceuticals, feed, food, fiber uses, and animal health Products, where animal health Products are limited to Products that are subject to the United States Environmental Protection Agency regulations and/or compliance with, ...