Exhibit 10.2


 


***Text Omitted and Filed Separately


with the Securities and Exchange Commission.


Confidential Treatment Requested


Under 17 C.F.R. Sections 200.80(b)(4)


and 240.24b-2.


 


 


COLLABORATIVE RESEARCH,


 


DEVELOPMENT, COMMERCIALIZATION


 


AND LICENSE AGREEMENT


 


 


BETWEEN


 


 


SENOMYX, INC.


 


AND


 


PEPSICO, INC.


 


1

















 


COLLABORATIVE
RESEARCH, DEVELOPMENT,

COMMERCIALIZATION AND LICENSE AGREEMENT


 


This
Agreement is entered into as of August 16, 2010 (the “Effective Date”) by and between SENOMYX, INC.,
a Delaware Corporation having its principal place of business at 4767 Nexus
Centre Drive, San Diego, CA 92121 (“SENOMYX”)
and PEPSICO, INC., a North Carolina Corporation, having its principal
place of business at 700 Anderson Hill Road, Purchase, NY 10577 (“PEPSICO”).


 


BACKGROUND


 


WHEREAS, SENOMYX and PEPSICO desire to enter into a
research and development agreement under which SENOMYX and PEPSICO will
collaborate in the discovery and/or commercialization of compounds that enhance
the sweet taste of sucrose, fructose and high fructose corn syrup (“HFCS”) and
in the discovery and/or commercialization of natural sweeteners, in each
instance for specified fields of use as set forth in this Agreement.


 


NOW, THEREFORE, in consideration of the
foregoing premises and of the covenants, representations and agreements set
forth below, the parties hereby agree as follows:


 


THE AGREEMENT


 


1.                            DEFINITIONS


 


Certain
capitalized terms are defined in Appendix A and incorporated into this Agreement
by reference.


 


2.                            COLLABORATIVE R&D PROGRAM


 


2.1          The goals of
each Collaborative R & D Program between PEPSICO and SENOMYX are as
set forth below.  The parties will
collaborate in the specified Synthetic Enhancing Compound Program, the Natural
Enhancing Compound Program and the Natural Sweetener Compound Program during
the respective Collaborative R & D Period for such program.


 


The
Synthetic Enhancing Compound Program shall be focused on the identification of
Synthetic Enhancing Compounds with respect to the Target Sweeteners.  The Natural Enhancing Compound Program shall
be focused on the identification of Natural Enhancing Compounds of Target
Sweeteners.  The Natural Sweetener
Compound Program shall be focused on the identification of Natural Sweetener
Compounds.


 


1

















 


For
the avoidance of doubt, SENOMYX will have no obligation under this Agreement to
pursue any research, evaluation or development of any compounds provided by
PEPSICO or PEPSICO compound libraries. 
Notwithstanding the foregoing, if the parties mutually decide, in their
sole discretion, to pursue research, evaluation or development of compounds
provided by PEPSICO or PEPSICO compound libraries, they will enter into a
separate agreement related thereto.


 


2.2          During
the applicable Collaborative R & D Period for a given Collaborative
R&D Program, SENOMYX will provide access to PEPSICO, during regular
business hours on reasonable notice, of individual (with respect to [***] as
set forth below) and aggregate results of research performed by SENOMYX under
such Collaborative R&D Program including, but not limited to, [***] at the
regularly scheduled quarterly meetings of each Steering Committee, with [***]
in which relevant information regarding the progress of such Collaborative
R&D Program will be presented.


 


The
content of the foregoing meetings and [***] will include individual and
aggregate results and updates on [***] Collaboration Compounds that have been
[***] Collaboration Compounds for which [***]. 
For the avoidance of doubt, this Section 2.2, and the information
provided by SENOMYX hereunder, is designed to give PEPSICO an understanding of
the scientific progress and related results of research performed by SENOMYX
under each Collaborative R&D Program. 
Subject to the exceptions in Section 13.4, Information
provided to PEPSICO hereunder will be considered Confidential Information of
SENOMYX pursuant to the Agreement.


 


During
the Term of the Agreement PEPSICO will also provide updates of research and
development performed by PEPSICO and its Affiliates under this Agreement (e.g.
results of [***]. Such updates will be provided at the regularly scheduled
quarterly meetings of the applicable Steering Committee, and will be presented
either in slides or other written reports. 
PEPSICO will also contractually require and use commercially reasonable
efforts to cause that its permitted sublicensees provide Senomyx with written
quarterly updates of any equivalent activities that such sublicensees perform
with respect to Selected Compounds.


 


2.3          PEPSICO
shall have the one-time option (“Extension
Option”) to extend the Collaborative R & D Period of any of
the Collaborative R & D Programs for a fixed two year period following
the fourth year of the applicable Collaborative R & D Period.  For the avoidance of doubt, PEPSICO may, at
its option, exercise the Extension Option for all three Collaborative R &
D Programs or only one or two of the Collaborative R&D Programs.  In order for PEPSICO to exercise the Extension
Option, PEPSICO must notify SENOMYX at least [***] prior to the end of the
fourth year of the applicable Collaborative R & D Period and specify
the applicable Collaborative R & D Programs that it wishes to
extend.  In such event, the Collaborative
R & D Period of the applicable Collaborative R & D Program(s) shall
automatically be extended for two years at [***] of the level of annual funding
set forth under Section 8.2.1for the applicable Collaborative R &
D Program except that if [***] then the funding for the [***] shall be [***]
per year.


 


2

















 


Each
Collaborative R & D Program will conclude and expire automatically at
the end of the applicable Collaborative R & D Period for each
respective program, as extended by the Extension Option, if applicable.


 


3.                            STEERING COMMITTEE


 


3.1          Formation of Steering Committee


 


No
later than ten days after the Effective Date, the parties will establish a
joint steering committee for each of the Synthetic Enhancing Compound Program,
Natural Enhancing Compound Program and Natural Sweetener Compound Program
(each, a “Steering Committee”).  Each party may elect to have its Steering
Committee members be the same for any of the respective programs.


 


3.2          Role of Steering Committee


 


The
Steering Committees will manage the applicable Collaborative R&D Program
and will:


 


(a)                                 provide strategic direction
and performance criteria for the applicable Collaborative R&D Program;


 


(b)                                 monitor progress and
communicate status of the applicable Collaborative R&D Program;


 


(c)                                  facilitate the cooperation
of the parties under the applicable Collaborative R&D Program;


 


(d)                                 [***] described in Section 8.2.4
associated with Natural Compounds for the Natural Enhancing Compound Program
and the Natural Sweetener Compound Program;


 


(e)                                  determine [***] under the
applicable Research Plan for each of the Synthetic Enhancing Compound Programs,
the Natural Enhancing Compound Program and the Natural Sweetener Compound
Program;


 


(f)                                   review and amend, if necessary,
the applicable Research Plan;


 


(g)                                  designate the Intended
Purpose for Selected Enhancing Compounds;


 


(h)           provide input into the applicable
Regulatory Plan;


 


(i)                                     review the Commercialization
Plans for any Selected Compounds; and


 


(j)                                    communicate during the
applicable Commercialization Period regarding the development of Selected
Compound(s) under the applicable Collaborative R & D Program and
the commercialization of Products incorporating Selected Compounds.


 


3

















 


3.3          Composition


 


Each
Steering Committee will consist of [***] representatives officially designated
by SENOMYX and [***] representatives officially designated by PEPSICO, all of
whom may change from time to time as provided below.  The initial Steering Committee for each of
the Natural Enhancing Compound Program, Synthetic Enhancing Compound Program
and the Natural Sweetener Compound Program shall be comprised of [***] and
[***] as SENOMYX designees and [***] and [***] as PEPSICO designees.  Each party may change its Steering Committee
representative(s) upon written notice to the other party.  If a Steering Committee member is unable to
participate in a meeting, such Steering Committee member may delegate its
voting powers to a delegate from its company.


 


3.4          Operation


 


Each
official member of each Steering Committee will have one vote.  All Steering Committee decisions will be made
by unanimous vote and at a meeting where all [***] members (or their delegates
as permitted under Section 3.3) participate.  Any unresolved disputes will be subject to
the procedures outlined in Section 16.4, or as otherwise mutually agreed
upon by the parties in writing.


 


3.5          Meetings


 


Each
Steering Committee will first meet no later than thirty days after the
Effective Date and, unless otherwise mutually agreed, four times per year
during the applicable Collaborative R&D Period and the applicable
Commercialization Period of this Agreement using mutually agreed upon meeting
locations and formats including teleconferencing and videoconferencing.  In order to reduce costs, unless both parties
consent, each quarterly Steering Committee meeting for the Natural Enhancing
Compound Program, Synthetic Enhancing Compound Program and the Natural
Sweetener Compound Program will take place consecutively on the same
date(s).  Each party will bear its own
expenses relating to the meetings and activities of the Steering
Committees.  Subject to the approval of
the applicable Steering Committee, which shall not be unreasonably withheld,
each party may request the attendance of subject matter experts, who may or may
not be employees of either party, as desired at Steering Committee meetings as
non-voting, unofficial, ad-hoc members.


 


3.6          Minutes


 


During
the Collaborative R & D Period and the Commercialization Period,
SENOMYX will promptly prepare and deliver to the members of the Steering
Committee, the minutes of meetings of the applicable Steering Committee for
review and approval by both parties.


 


4

















 


4.                            RESEARCH PLANS.


 


4.1          Research Plans


 


SENOMYX
will prepare one Research Plan for the Synthetic Enhancing Compound Program and
a second Research Plan for both the Natural Enhancing Compound Program and
Natural Sweetener Compound Program and, after review by PEPSICO, such Research
Plans will be submitted to the applicable Steering Committee(s) for
approval at the first meeting of the Steering Committee (which pursuant to Section 3.5
will take place within thirty days of the Effective Date).  The Research Plans will reflect the PEPSICO
Criteria, which SENOMYX will use to help guide research priorities for the
applicable Collaborative R & D Program. The Research Plans will be
attached to the minutes of the applicable Steering Committee meeting.  The initial Research Plans will contemplate
the first [***] of the Collaborative R & D Period; however, at least
thirty days prior to the end of the [***] year of the Collaborative R &
D Period, the Steering Committee will update the Research Plans based on the progress
of the programs through such date.


 


4.2          Implementation of Research Plans and
Data Packages


 


SENOMYX
will use its commercially reasonable efforts, using the resources received
under Section 8.2, to perform the activities allocated to SENOMYX as outlined
in the Research Plans during the applicable Collaborative R & D Period
for each of the Synthetic Enhancing Compound Program, Natural Enhancing
Compound Program and Natural Sweetener Compound Program.  SENOMYX will designate a project team
comprising personnel with the technical qualifications and expertise that are
reasonably required to accomplish such activities outlined in the Research
Plans.  If there are any changes in the
members of the project team, SENOMYX will ensure that replacement members will
have the equivalent technical qualifications and expertise.


 


During
the applicable Collaborative R & D Period under the applicable
Research Plan, SENOMYX will provide PEPSICO with information on [***] (“Data Package(s)”) and [***] for full
evaluation (the [***] shall be determined by the Steering Committee).  The Data Package for a Collaboration Compound
shall include the information set forth in Appendix B, including, without
limitation, [***] for the specified Collaboration Compound [***].


 


PEPSICO
will use commercially reasonable efforts to perform the activities allocated to
PEPSICO in accordance with the Research Plans, including the evaluation of the
Data Packages provided by SENOMYX for Collaboration Compounds.


 


Upon
expiration of the applicable Collaborative R & D Period, the parties’
research and development obligations under the applicable Research Plan will
expire.


 


4.3          Notification of Selected Compound


 


By
no later than [***] following receipt of a Data Package and the [***] as set
forth in Section 4.2 for a given Collaboration Compound (“Selection Date”), PEPSICO may, upon written
notice to SENOMYX, select such Collaboration Compound for which it 


 


5

















 


received
such Data Package during the applicable Collaborative R & D Period for
development pursuant to Section 5, but in any event such selection must be
made [***]. If PEPSICO timely selects a Collaboration Compound by written
notice to SENOMYX no later than the Selection Date for such Collaboration
Compound, such Collaboration Compound will thereafter be deemed a “Selected Compound” and PEPSICO and its
Affiliates shall have the license rights to such Selected Compound set forth in
Section 9.


 


With
respect to Selected Enhancing Compounds, promptly after the time of selection,
[***] will designate the specific Target Sweetener(s) that the Selected
Compound may be used to enhance under the license grants in Section 9 (“Intended Purpose”).  With respect to Selected Compounds that are
Natural Sweetener Compounds, “Intended
Purpose” shall mean [***].  
Fructose and HFCS shall be treated as in the same category of Intended
Purpose.  Such Selected Compound must
meet the definition of Enhancing Compound for each such designated Target
Sweetener.  The parties acknowledge and
agree that the Intended Purpose for each Selected Enhancing Compound shall be
for the use of such Selected Enhancing Compound only [***].


 


5.                            DEVELOPMENT.


 


5.1          Regulatory Approvals


 


5.1.1                     Regulatory Approvals for Selected Enhancing Compounds.


 


Promptly following selection of any Selected
Enhancing Compound pursuant to Section 4.3, SENOMYX will use commercially
reasonable efforts to perform the [***] for such Selected Enhancing Compound
and to pursue the Regulatory Plan for such Selected Enhancing Compound.  SENOMYX will provide to the Steering
Committee an updated Regulatory Plan (updated from the [***] which will include
a description of [***].   Within [***] of
selection of any Selected Enhancing Compound pursuant to Section 4.3, the
Steering Committee will meet and discuss in good faith [***].


 


SENOMYX shall solicit PEPSICO input to such
Regulatory Plan during the regular Steering Committee process, but in the event
of any disagreement between the parties SENOMYX shall have final decision making
authority.


 


SENOMYX will exclusively own all regulatory filings
made or filed for a Selected Enhancing Compound, and any such regulatory
filings for such Selected Enhancing Compounds will be subject to the license
grants pursuant to Section 9.


 


SENOMYX shall provide PEPSICO with copies of all
such filings and approvals, which, subject to the exceptions in Section 13.4,
will be considered SENOMYX Confidential Information.


 


The
implementation of the Regulatory Plan for a Selected Enhancing Compound will:


 


(i)            commence upon PEPSICO’s selection of
such Selected Enhancing Compound; and


 


6

















 


(ii)           end upon (a) [***] in the [***]
Exclusive Product Categories, or (b) upon a [***] of the Regulatory Plan
by the Steering Committee.  SENOMYX will
provide PEPSICO with reasonable access, upon advance notice and during normal
business hours, to the appropriate SENOMYX personnel responsible for such
regulatory filings for the purpose of ongoing discussions of the subject matter
among the parties between regularly scheduled Steering Committee meetings.


 


5.1.2                     Regulatory Approvals for Selected Natural Sweetener Compounds.


 


Promptly following selection of any Selected Natural
Sweetener Compound pursuant to Section 4.3, SENOMYX will use commercially
reasonable efforts to perform the anticipated safety studies (based on the
Regulatory Plan) for such Selected Natural Sweetener Compound. Within [***] of
selection, the Steering Committee will meet and discuss in good faith [***] the
Regulatory Plan for such Selected Natural Sweetener Compound.  The Steering Committee will also consider and
discuss whether the Regulatory Plan for selected Natural Sweetener Compounds
should contemplate Regulatory Approval [***].


 


SENOMYX shall solicit PEPSICO input to such
Regulatory Plan during the regular Steering Committee process, but in the event
of any disagreement between the parties SENOMYX shall have final decision
making authority.


 


SENOMYX will exclusively own all regulatory filings
made or filed for a Selected Natural Sweetener Compound, and any such
regulatory filings for such Selected Natural Sweetener Compounds will be
subject to the license grants pursuant to Section 9. SENOMYX shall provide
PEPSICO with copies of all such filings and approvals, which, subject to the
exceptions in Section 13.4, will be considered SENOMYX Confidential
Information.  SENOMYX will provide
PEPSICO with reasonable access, upon advance notice and during normal business
hours, to the appropriate SENOMYX personnel responsible for such regulatory
filings for the purpose of ongoing discussions of the subject matter among the
parties between regularly scheduled Steering Committee meetings.


 


The
implementation of the Regulatory Plan for a Selected Natural Sweetener Compound
will:


 


(i)            commence upon PEPSICO’s selection of
such Selected Natural Sweetener Compound; and


 


(ii)           end upon (a) [***] in the
Exclusive Product Categories, or (b) upon an [***] of the Regulatory Plan
by the Steering Committee.


 


5.2          Costs of
Regulatory Filings


 


5.2.1       Selected
Enhancing Compounds


 


SENOMYX will be responsible
for [***] out-of -pocket costs associated with [***] for Regulatory Approval
for each Selected Enhancing Compound. 
For any out-of-pocket 


 


7

















 


costs associated with
Regulatory Approval of any Selected Enhancing Compound in excess of such
amount,[***] as of the date when such [***], provided that [***] such
out-of-pocket costs [***], and PEPSICO will reimburse SENOMYX for [***] after
receipt of invoice (with supporting documentation) for such out-of-pocket costs
from SENOMYX, together with [***].  By
way of example, (1) if [***] for use in the Exclusive Product Categories
and [***] on an exclusive basis, then PEPSICO’s obligation to reimburse SENOMYX
for out-of-pocket costs [***] for such expenses that relate to [***]; or (2) if
[***] for use in the Exclusive Product Category and [***], then PEPSICO’s
obligation to reimburse SENOMYX for out-of-pocket costs [***].


 


For
any out-of-pocket costs associated with Regulatory Approval contemplated by the
Regulatory Plan other than [***], PEPSICO and SENOMYX will [***] as of the date
when such out-of-pocket costs [***], provided that [***] such out-of-pocket
costs [***], and PEPSICO will reimburse SENOMYX for [***] after receipt of
invoice (with supporting documentation) for such out-of-pocket costs, together
with [***].


 


All
reimbursement payments under this Section 5.2.1 are non-refundable and
non-creditable.


 


5.2.2       Selected Natural Sweetener Compounds


 


SENOMYX will be responsible for [***] (based on the
Regulatory Plan) of each Selected Natural Sweetener Compound.  After such amount has been reached [***]
Selected Natural Sweetener Compound.  For
any out-of-pocket costs associated with Regulatory Approval of any Selected
Natural Sweetener Compound in excess of [***] as of the date when such
out-of-pocket costs [***] provided that [***] incurred by SENOMYX within [***]
after receipt of invoice (with supporting documentation) for such out-of-pocket
costs from SENOMYX, together with such detail relating to such costs as are
reasonably required by PEPSICO.  By way
of example, (1) if [***] for use in the Exclusive Product Category and
[***] on an exclusive basis (and provided such [***]), then PEPSICO’s obligation
to reimburse SENOMYX for out-of-pocket costs [***]; or (2) if [***] for
use in the Exclusive Product Category and [***] (and provided such [***]), then
PEPSICO’s obligation to reimburse SENOMYX for out-of-pocket costs [***].


 


All reimbursement payments under this Section 5.2.2
are non-refundable and non-creditable.


 


5.3          Safety
Evaluation of Collaboration Compounds


 


SENOMYX will have sole control and manage all safety
studies for any Collaboration Compound. 
PEPSICO and its Affiliates and permitted sublicensees [***].


 


The results of all safety studies for any
Collaboration Compound shall be owned by SENOMYX and such results shall be
deemed SENOMYX Confidential Information hereunder, subject to the exceptions in
Section 13.4.  SENOMYX will provide
PEPSICO with reasonable access, upon advance notice and during normal business
hours, to the appropriate personnel responsible for such safety studies for the
purpose of ongoing 


 


8

















 


discussions of the subject matter among the parties
between regularly scheduled Steering Committee meetings.


 


During the applicable Collaborative R&D Period,
SENOMYX shall provide PEPSICO with copies of the results of all such safety
studies for all Collaboration Compounds which were part of a Data Package for
PEPSICO’s internal evaluation. SENOMYX will provide PEPSICO with such results
for any Selected Compounds both during and following the Collaborative R &
D Period, for so long as such Collaboration Compound remains a Selected Compound.


 


5.4          Cooperation


 


PEPSICO and its Affiliates will cooperate to the
extent reasonably necessary to assist SENOMYX in the performance of the
foregoing activities and SENOMYX will provide PEPSICO with copies of all
regulatory filings and supporting data and regulatory determinations on the
Selected Compound(s), which, subject to the exceptions in Section 13.4,
shall be considered Confidential Information of SENOMYX.  PEPSICO will contractually require and use
commercially reasonable efforts to cause its permitted sublicensees to
cooperate to the extent reasonably necessary to assist SENOMYX in the
performance of the foregoing activities. 
SENOMYX and its Affiliates will cooperate to the extent reasonably
necessary to assist PEPSICO, its Affiliates and their permitted sublicensees in
the performance of the foregoing activities.


 


In addition, each party is obligated to:


 


(i)            [***]
relating to any Compounds licensed under this Agreement and will keep the other
party updated of [***]; and


 


(ii)           report such [***].


 


With
respect to (i) above, PEPSICO and its Affiliates shall involve SENOMYX in
any [***] and will provide access to SENOMYX to all related information and
SENOMYX shall involve PEPSICO in any [***] and will provide access to PEPSICO
to all related information.  PEPSICO will
contractually require and use commercially reasonable efforts to cause its
sublicensees to report any such [***] directly to SENOMYX, involve SENOMYX in
any [***] and provide access to SENOMYX to all related information.  Upon prior notice to PEPSICO, notwithstanding
Section 13 of this Agreement, each party may provide such information to
its [***] Compound.


 


6.                            COMMERCIALIZATION


 


6.1          Commercialization Plans


 


As
an overall goal of the Commercialization Plans, PEPSICO desires to market
current and new Products incorporating Selected Compounds.  Within [***] of selection of each Selected
Compound pursuant to Section 4.3, PEPSICO will prepare in good faith a
detailed plan for the commercialization of Products incorporating such Selected
Compound that includes, [***] in Section 6.2 (the “Commercialization Plan(s)”).  Each 


 


9

















 


Commercialization
Plan will reflect the mutual intention of the parties to commence the
commercialization of a Selected Compound as soon as possible following the
first Regulatory Approval of a Selected Compound in each country.  The Commercialization Plans for each Selected
Compound will be attached to the minutes of the applicable Steering Committee
meeting.  Subject to the exceptions in Section 13.4,
the Commercialization Plans will be considered Confidential information of
PEPSICO under this Agreement.


 


6.2          Format of Commercialization Plans


 


PEPSICO
agrees that it will [***] each Commercialization Plan the following information
for PEPSICO, its Affiliates and permitted sublicensees:


 


(i)                                     commercially reasonable
timelines consistent with the mutual intention of the parties as set forth in Section 6.1
above;


 


(ii)                                  specific diligence timelines
for PEPSICO (and its Affiliates and permitted sublicensees) and SENOMYX; (e.g.
key activities related to [***]


 


(iii)                               the worldwide [***] Products
incorporating the applicable Selected Compound broken out by [***].


 


(iv)                              estimated [***] of Selected
Compound to be [***]


 


(v)                                 projected [***] Products
incorporating the applicable Selected Compound; and


 


(vi)                              [***] information on [***]
of Products incorporating the applicable Selected Compound.


 


Thereafter
PEPSICO will update each Commercialization Plan on an annual basis in good
faith for the remainder of the applicable Commercialization Period.  Such updated Commercialization Plans shall,
[***] include quantifiable information, including [***] submitted to SENOMYX at
least [***].  PEPSICO shall [***] the
Commercialization Plans and the Steering Committee will meet as appropriate to
review and discuss progress against the Commercialization Plan.  In accordance with the Commercialization
Plans, PEPSICO will be responsible for formulating and testing Products
incorporating Selected Compounds including the cost associated with such
activities.


 


Notwithstanding
the foregoing, PEPSICO is [***] and shall [***] as contemplated by Section 8.5
of this Agreement.


 


10
















 


7.                            RIGHTS, OBLIGATIONS AND LIMITATIONS OF THE PARTIES


 


7.1  Exclusivity in the Exclusive Product
Categories with Respect to Selected Compounds


 


For so long as PEPSICO is paying the MARs during the
Commercialization Period for a particular Minimum Annual Royalty Category, and
subject to Sections 9.5.2 and 9.6.1 and PEPSICO’s continuing compliance with
the other material terms of this Agreement, with respect to any Selected
Compounds in that particular Minimum Annual Royalty Category for which PEPSICO
is paying MARs, SENOMYX agrees not to [***] for use of such Selected Compounds
[***] (e.g., for the purpose of  [***]
for which PEPSICO [***]). 
Notwithstanding the foregoing, this paragraph 7.1 shall not apply with
respect to [***] for which a license is converted to non-exclusive or is
terminated under Sections 8.5 ([***]), 11.1 ([***]) or otherwise.


 


7.1.1  Synthetic
Enhancing Compound Program


 


Subject
to Section 9.5.2, during the applicable Collaborative R & D
Period for the Synthetic Enhancing Compound Program, SENOMYX agrees not to
provide research and development services or grant any rights to SENOMYX
Technology to a Third Party for use in the discovery or commercialization of
Synthetic Compounds that have an enhancing effect on the sweetness of a Target
Sweetener and that are intended for use as a sweetness enhancer in any
Exclusive Product Category. 
Notwithstanding the foregoing, SENOMYX is permitted at any time to
provide research and development services and/or grant any rights in SENOMYX
Technology to a Third Party(ies) for use in the discovery or commercialization
of Synthetic Compounds that have a primary sweetness enhancing effect on a
sweetener that is not a Target Sweetener and that also enhance the sweetness of
a Target Sweetener [***]in in vitro
assays and product prototypes at a concentration that is [***]. Such sweetness
comparison will be measured in Taste Tests. 
By way of illustration, but not limitation, in Taste Tests Synthetic
Compound A enhances the sweetness of [***] and enhances the sweetness of [***]
and at a concentration of [***] Synthetic Compound A has sweetness on its own
that is [***] (based on Taste Tests). 
Such Synthetic Compound is not considered an Enhancing Compound for
sucrose. Accordingly, SENOMYX would be permitted to provide research and
development services and/or grant to Third Party(ies) rights in SENOMYX
Technology for use in the discovery or commercialization of such Synthetic
Compound in an Exclusive Product Category for use as an enhancer of the
sweetness of sucralose at such concentrations or below; provided, however, that
during the applicable Collaborative R & D Period for the Synthetic
Enhancing Compound Program SENOMYX shall not grant any rights in SENOMYX
Technology for use as an enhancer of the sweeteners of a Target Sweetener and
that are intended for use as a sweetness enhancer in an Exclusive Product
Category.


 


During
the Commercialization Period SENOMYX will not violate its exclusivity
commitments in Section 7.1 [***]. 
Subject to Section 7.1 above [***] and Section 7.4, after
expiration of the applicable Collaborative R & D Period for the
Synthetic Enhancing Compound Program and for the remainder of the Term, SENOMYX
may provide 


 


11

















 


research
and development services and/or grant rights to SENOMYX Technology to Third
Parties for use in the discovery or commercialization of Synthetic Compounds
that are not Selected Compounds in any field of use, and nothing in this
Agreement will prevent or limit the foregoing.


 


7.1.2  Natural Enhancing Compound Program


 


Subject
to Section 9.5.2, during the applicable Collaborative R & D
Period for the Natural Enhancing Compound Program, SENOMYX agrees not to
provide research and development services or grant any rights to SENOMYX
Technology to a Third Party for use in the discovery or commercialization of
Natural Compounds that have an enhancing effect on the sweetness of a Target
Sweetener and that are intended for use as a sweetness enhancer in any
Exclusive Product Category. 
Notwithstanding the foregoing, SENOMYX is permitted at any time to
provide research and development services or grant any rights in SENOMYX
Technology to a Third Party(ies) for use in the discovery or commercialization
of Natural Enhancing Compounds that have a primary sweetness enhancing effect
on a sweetener that is not a Target Sweetener and that also enhance the
sweetness of a Target Sweetener [***] in in
vitro assays and product prototypes at a concentration that is
[***]. Such sweetness comparison will be measured in Taste Tests.  By way of illustration, but not limitation,
in Taste Tests Natural Compound A enhances the sweetness of [***] and enhances
the sweetness of [***] and at a concentration of [***] Natural Compound A has
sweetness on its own that is [***] (based on Taste Tests).  Such Compound is not considered an Enhancing
Compound for sucrose. Accordingly, SENOMYX would be permitted to provide
research and development services and/or grant to Third Party(ies) rights in
SENOMYX Technology for use in the discovery or commercialization of such
Natural Compound in an Exclusive Product Category for use as an enhancer of the
sweetness of sucralose at such concentrations or below; provided, however, that
during the applicable Collaborative R&D Period for the Natural Enhancing
Compound Program SENOMYX shall not grant any rights in SENOMYX Technology for
use as an enhancer of the sweeteners of a Target Sweetener and that are
intended for use as a sweetness enhancer in an Exclusive Product Category.


 


During
the Commercialization Period SENOMYX will not violate its exclusivity
commitments in Section 7.1 [***]. 
Subject to Section 7.1 above [***] and Section 7.4, after
expiration of the applicable Collaborative R & D Period for the
Natural Enhancing Compound Program, and for the remainder of the Term, SENOMYX
may provide research and development services and/or grant rights to SENOMYX
Technology to Third Parties for use in the discovery or commercialization of
Natural Compounds that are not Selected Compounds in any field of use, and
nothing in this Agreement will prevent or limit the foregoing.


 


7.1.3  Natural Sweetener Compound Program


 


Subject
to Section 9.5.2, during the applicable Collaborative R & D
Period for the Natural Sweetener Compound Program, SENOMYX agrees not to
provide research and development services or grant any rights to SENOMYX
Technology to a Third Party for 


 


12

















 


use
in the discovery or commercialization of Natural Compounds that are intended
for use as a sweetener in any Exclusive Product Category.


 


Subject
to the first paragraph of Section 7.1 above, after expiration of the
applicable Collaborative R & D Period for the Natural Sweetener
Compound Program, and for the remainder of the Term, SENOMYX may provide
research and development services and/or grant rights to SENOMYX Technology to
Third Parties for use in the discovery or commercialization of Natural
Compounds that are not Selected Compounds in any field of use, and nothing in this
Agreement will prevent or limit the foregoing.


 


7.2          Co-Exclusive Product Category and
Outside the Fields


 


Subject
to Section 7.4, nothing in this Agreement shall be deemed to restrict or
otherwise limit SENOMYX from providing research and development services and/or
granting rights to SENOMYX Technology (i) to Third Parties with respect to
use of Compounds outside the Field for any purpose (including for enhancing
sweetness of a Target Sweetener or acting as a sweetener) or for any purpose in
the Field other than enhancing
the sweetness of a Target Sweetener or acting as a sweetener, (ii) to one
other party (and such party’s Affiliates) with respect to use of Compounds as
an enhancer of sweetness of a Target Sweetener in the Co-Exclusive Product
Category; or (iii) to one other party (and such party’s Affiliates) with
respect to use of Natural Compounds as a sweetener in the Co-Exclusive Product
Category.


 


7.3          Manufacturing


 


PEPSICO
and its Affiliates will be responsible for all costs associated with manufacturing
and commercial scale-up of Selected Compounds including manufacturing
optimization costs.  In addition, PEPSICO
and its Affiliates shall bear all manufacturing related costs for any material
required for its internal evaluations including prototype and product
development efforts.


 


If
PEPSICO or its Affiliates elects to outsource the manufacture of Selected
Compounds to a Third Party, [***].


 


7.4          Right of First Negotiation Regarding [***]


 


Subject
to Section 9.5.2, this Section 7.4 shall apply in the event that
during a given Collaborative R&D Period, for either the Synthetic Enhancing
Compound Program or the Natural Enhancing Compound Program, SENOMYX develops a
synthetic or natural Compound that [***] which either (i) [***], or (ii) [***]
(such [***] referred to as the “ROFN Uses”).  During the Collaborative R&D Period,
before SENOMYX (or its Affiliate) either commercializes such Compound directly
or first grants a commercial license to any Third Party to such Compound, in
each case for use in [***] for the ROFN Uses, SENOMYX will present the ROFN
Uses opportunity first to PEPSICO. 
PEPSICO must inform SENOMYX of commercial interest in such opportunity
in writing [***] of written notice from SENOMYX.  In the event that SENOMYX does not receive
such written notification within such [***] period then SENOMYX shall be free
to retain such rights for itself or its Affiliates and/or enter into agreements
with one or more Third 


 


13

















 


Parties
for their commercial use of the applicable Compound in [***] for the ROFN
Uses.  If SENOMYX does receive such
written notification, the parties shall exclusively negotiate in good faith to
complete a commercial license agreement for such Compound in [***] for the ROFN
Uses for a period not to exceed [***] following PEPSICO’s delivery of such
written notice. In the event that the parties do not enter into a license
agreement for such Compound within such [***] period, then SENOMYX shall be
free to retain such rights for itself or its Affiliates and/or enter into
agreements with one or more Third Parties for a license to use the applicable
Compound in [***] for the ROFN Uses. During said [***] negotiation period,
neither party may [***].  For avoidance
of doubt, PEPSICO acknowledges and agrees that SENOMYX shall have sole and
absolute discretion to determine whether the terms offered by PEPSICO during
such negotiation process, if any, are acceptable to SENOMYX and therefore
SENOMYX shall have sole and absolute discretion whether to enter into any such
agreement with PEPSICO on the terms offered.


 


8.                            FINANCIAL TERMS


 


8.1          Nonrefundable Payment


 


In
consideration for (i) SENOMYX’s initiation of the Synthetic Enhancing
Compound Program, the Natural Enhancing Compound and the Natural Sweetener
Program, (ii) SENOMYX’s agreement to provide future R&D services on an
exclusive or co-exclusive basis during the applicable Collaborative R&D
Period as described by Section 7.1, and (iii) the Extension Option
provided in Section 2.3 pursuant to which PEPSICO may extend the
Collaborative R&D Period for one or more of the Collaborative R&D
Programs, PEPSICO shall pay to SENOMYX a nonrefundable payment of
US$30,000,000, of which US$7,500,000 has been previously paid by PEPSICO to
SENOMYX in connection with the execution of the Term Sheet and the remaining
US$22,500,000 of which shall be paid by PEPSICO to SENOMYX within fifteen days
of the Effective Date.


 


Such
payment shall be non-refundable and non-creditable.


 


8.2          Research Support


 


8.2.1
Annual Funding Amount


 


Each
year during the first four years of the applicable Collaborative R&D
Period, PEPSICO will pay SENOMYX annual funding as follows:


 


·                                          [***] for the
Synthetic Enhancing Compound Program


 


·                                          [***] for the
Natural Sweetener Compound Program; and


 


·                                          [***] for the
Natural Enhancing Compound Program.


 


At the end of the [***] of the applicable Collaboration R & D
Period, and [***] during the applicable Collaboration R & D Period,
the Steering Committee will [***].


 


14

















 


All such funding amounts shall be used by SENOMYX to perform the agreed
activities allocated to SENOMYX as outlined in the Research Plans  and shall be non-refundable and
non-creditable.


 


8.2.2 Timing of Payment


 


The annual funding payments under Section 8.2.1 shall be made in
equal quarterly installments in advance, with the first installment payment for
each Collaborative R & D Program to be made within 15 days following
the Effective Date and each installment payment thereafter shall be due and
payable at least [***] prior to the first day of the next full calendar quarter
thereafter.


 


8.2.3
Excluded Items


 


The
annual funding payments under Section 8.2.1 do not include PEPSICO’s costs
associated with providing support for the collaboration including, without
limitation, PEPSICO’s obligations related to reimbursable and advanced expenses
which PEPSICO has specifically agreed to pay under this Agreement.


 


8.2.4       Natural
Compounds


 


The
[***] out-of-pocket costs associated with Natural Compounds for the Natural
Enhancing Compound Program and the Natural Sweetener Program.  The [***] for the first year of the
Collaborative R & D Period will be [***], [***].  PEPSICO shall reimburse SENOMYX for all [***]
associated with Natural Compounds under these programs (as may be [***]
according to the immediately following sentence), such as costs to [***]
activities for Natural Compounds; provided, however, that in the event that
such costs exceed [***], PEPSICO shall have the right to pre-approve the scope of
such activities and their associated costs. PEPSICO’s reimbursement obligation
for such expenses shall be [***] for such costs.  If SENOMYX is [***] for such expenses,
PEPSICO will [***].


 


PEPSICO
shall have no obligation to reimburse SENOMYX for work performed by SENOMYX
with respect to [***].


 


8.3          Milestone
Payments


 


PEPSICO
will pay SENOMYX the non-creditable, non-refundable milestone payments
described below within [***] of the occurrence of the following milestone
events, as determined by the Steering Committee.  All milestone payments are non-refundable and
non-creditable.


 


8.3.1       Synthetic
Enhancing Compound Program


 


a)             Milestone #1:  [***] upon [***];


 


b)            Milestone #2:  [***] upon [***]; and


 


15

















 


c)                                      Milestone #3:  [***] for each [***].


 


8.3.2  Natural
Enhancing Compound Program


 


a)                                      Milestone #1:  [***] upon [***];


 


b)                                     Milestone #2:   [***] upon [***]; and


 


c)                                      Milestone #3:  [***] for each [***].


 


8.3.3  Natural
Sweetener Compound Program


 


a)                                      Milestone #1:  [***] upon [***];


 


b)                                     Milestone #2:   [***] upon [***]; and


 


c)                                      Milestone #3:  [***] for each [***].


 


8.4                               Royalties


 


8.4.1                     Synthetic Enhancing Compounds and Natural Enhancing Compounds


 


With
respect to licenses under Section 9 for Selected Sucrose Enhancing
Compounds, PEPSICO shall pay SENOMYX a royalty on Beverages and Beverage Bases
incorporating a Selected Enhancing Compound sold by PEPSICO and its Affiliates
equal to the amount determined in accordance with the attached Schedule
8.4.1(A).


 


With
respect to licenses under Section 9 for Selected Fructose or HFCS
Enhancing Compounds, PEPSICO shall pay SENOMYX a royalty on Beverages and
Beverage Bases incorporating a Selected Enhancing Compound sold by PEPSICO and
its Affiliates equal to the amount determined in accordance with the attached
Schedule 8.4.1(B).


 


The
amount actually due per Unit Case will be determined separately for each
Beverage and Beverage Base based on the [***] applicable to such Beverage or
Beverage Base as reflected in Schedule 8.4.1(A) or 8.4.1(B), as the case
may be, for the applicable Calendar Quarter. In no event shall SENOMYX be
entitled to receive a royalty on a Beverage for which it has already been paid
a royalty on a Beverage Base used to manufacture that same Beverage.


 


8.4.2                     Natural Sweetener Compounds


 


With
respect to licenses under Section 9 for Selected Natural Sweetener
Compounds, PEPSICO shall pay SENOMYX a royalty on Beverages and Beverage Bases
incorporating a Selected Natural Sweetener Compound 


 


16

















 


sold
by PEPSICO and its Affiliates equal to [***] of the Cost of Selected Compound
[***].  In no event shall SENOMYX be
entitled to receive a royalty on a Beverage for which it has already been paid
a royalty on a Beverage Base used to manufacture that same Beverage.


 


8.4.3                     Royalties Under Sublicenses to Ingredient Suppliers


 


With
respect to sublicenses to Ingredient Suppliers under Section 9.6, PEPSICO
shall pay, or shall cause the Ingredient Supplier sublicensees to directly pay
(provided that PEPSICO guarantees such direct payments) a royalty of [***] on
Net Sales [***].  Any royalties received
by SENOMYX with respect to [***] will not count toward satisfaction of MARs due
from PEPSICO under Section 8.5.


 


During
the Term of this Agreement, [***]. Following the termination of this Agreement,
the provisions of Section 14.5 shall apply.


 


8.4.4                     No Off-Set.  For the
avoidance of doubt, subject to Section 8.9 below, there is no reduction or
off-set of royalties for other payments under this Agreement, such as up-front
payments, research funding, milestone payment or reimbursement payments.


 


8.4.5                     Royalty for More than One Selected Compound.  If a particular Product incorporates more
than one Selected Compound, then [***] set forth above will be applied and the
royalty shall be [***].


 


8.4.6                     Royalty Due [***]. 
Earned royalties under Section 8.4.1 and 8.4.2 shall be calculated
and due on sales of Beverages and Beverage Bases incorporating Selected
Compounds [***] (i) [***] at least one Valid Claim covering [***] of the
applicable Selected Compound or Beverages or Beverage Bases incorporating such
Selected Compound; (ii) [***] Beverages or Beverages Bases incorporating
the applicable Selected Compound [***] if such Beverages or Beverage Bases
[***] at least one Valid Claim covering [***] of the applicable Selected
Compound or Beverages or Beverage Bases incorporating such Selected Compound;
and (iii) where Beverages or Beverage Bases [***] that incorporate the
applicable Selected Compound that [***] where SENOMYX has at least one Valid
Claim covering the [***] Beverages or Beverage Bases incorporating such
Selected Compound.


 


8.5          Minimum
Annual Royalties


 


8.5.1       Minimum
Annual Royalty Schedules


 


PEPSICO
shall pay SENOMYX minimum annual royalties (“MARs”)
for Selected Compound based on the schedules specified below.  MARs will be calculated on a per Minimum
Annual Royalty Category basis for the 5 Minimum Annual Royalty Categories
described below [***].


 


17

















 


On
a Selected Compound-by-Selected Compound basis, not later than [***] months
following the receipt of the first Regulatory Approval a Selected Compound in a
Major Country that authorizes the use of the Selected Compound in any Exclusive
Product Category, PEPSICO may, upon [***] prior written notice, notify SENOMYX
of its election to not pay MARs for the applicable Minimum Annual Royalty
Category for such Selected Compound for future periods (a “Conversion Notice”).
At the end of such [***] notice period under a Conversion Notice, PEPSICO’s
licenses with respect to such Selected Compound under Section 9.3 shall be
automatically converted to non-exclusive without any further action by either
party and PepsiCo’s obligation to pay MARs for such Selected Compound in its
Minimum Royalty Category shall terminate. 
For avoidance of doubt, any MARs due for a partial Calendar Year will be
calculated in a manner consistent with the provisions of Section 14.5.  During said [***] period, and notwithstanding
any conflicting provisions of this Agreement (including Section 7.1), with
respect to any Selected Compound for which SENOMYX has received a Conversion
Notice SENOMYX shall be free to (i) grant to one or more Third Parties a
right to evaluate and perform development activities using such Selected
Compound in the Exclusive Product Categories, and to make and have made such
Selected Compound for purposes of such evaluation and development activities,
and (ii) collaborate and perform research and development activities with
or on behalf of a Third Party relating to such Selected Compound; provided,
however that Senomyx may not grant to the Third Party any rights to sell such
Selected Compound or any non-alcoholic beverage that incorporates such Selected
Compound, in the Exclusive Product Categories that is effective before the end
of such [***] notice period for the given Selected Compound.  After the end of such [***] notice period
under a Conversion Notice, the restrictions set forth in Sections 7.1 shall no
longer be applicable with respect to such Selected Compound notwithstanding any
future election by PEPSICO to pay MARs for another Selected Compound in the
same Minimum Annual Royalty Category as would have applied to the earlier
Selected Compound for which PEPSICO delivered a Conversion Notice. Such
election to deliver a Conversion Notice and conversion to a non-exclusive
license for a Selected Compound shall not relieve PEPSICO from its obligations
to SENOMYX with respect to such Selected Compound under this Agreement other
than the obligation to pay the applicable MARs under this Section 8.5
after the end of such [***] period following a Conversion Notice. Accordingly,
for avoidance of doubt, PEPSICO shall continue to be responsible for payment to
SENOMYX of any royalties as set forth in Section 8.4.


 


Unless
SENOMYX has received a Conversion Notice for a given Selected Compound during
the [***] period referenced above, the MARs due thereafter for the applicable
Minimum Annual Royalty Category shall be non-cancellable and payable during the
remainder of the 


 


18

















 


Commercialization
Period for the applicable Minimum Annual Royalty Category, except that (i) with
respect to [***], the obligation to pay MARs in a given Minimum Annual Category
(i.e., Sections 8.5.1.3 and 8.5.1.4) will end in the Calendar Year in which
there no longer exists a Valid Claim covering the [***] of a Selected Enhancing
Compound in the applicable Minimum Annual Category [***] and (ii) with
respect to [***], the obligation to pay MARs in a given Minimum Annual Category
(i.e., Sections 8.5.1.1 and 8.5.1.2) will end in the Calendar Year in which
there no longer exists a Valid Claim covering the [***] of a Enhancing Compound
in the applicable Minimum Annual Category [***].


 


8.5.1.1    Selected
Compounds that are [***]


 


During
the Commercialization Period for Selected Compounds that are [***], PEPSICO
will pay the following MARs to SENOMYX:


 


·                                          [***] for the
first Commercialization Year;


 


·                                          [***] for the
second Commercialization Year;


 


·                                          [***] for the
third Commercialization Year;


 


·                                          [***] for the
fourth Commercialization Year; provided, however, that if any Selected Compound
that is a [***] has [***] before the beginning of the third Commercialization
Year, the payment amount for the fourth Commercialization Year will be [***];
and


 


·                                          [***] for the
fifth Commercialization Year and each Commercialization Year thereafter
(subject to adjustment as provided in Section 8.6 below); provided,
however, that if any Selected Compound that is a [***] has [***] before the
beginning of the fourth Commercialization Year, the payment amount for the
fifth Commercialization Year and each Commercialization Year thereafter will be
[***] (subject to adjustment as provided in Section 8.6 below).


 


8.5.1.2    Selected
Compounds that are [***]


 


During
the Commercialization Period for Selected Compounds that are [***], PEPSICO
will pay the following MARs to SENOMYX:


 


·                                          [***] for the
first Commercialization Year;


 


·                                          [***] for the
second Commercialization Year;


 


·                                          [***] for the
third Commercialization Year;


 


19

















 


·                                          [***] for the
fourth Commercialization Year; provided, however, that if any Selected Compound
that is a [***] has [***] before the beginning of the third Commercialization
Year, the payment amount for the fourth Commercialization Year will be [***];
and


 


·                                          [***] for the
fifth Commercialization Year and each Commercialization Year thereafter
(subject to adjustment as provided in Section 8.6 below) provided,
however, that if any Selected Compound that is a [***] has [***] before the
beginning of the fourth Commercialization Year, the payment amount for the
fifth Commercialization Year and each Commercialization Year thereafter will be
[***] (subject to adjustment as provided in Section 8.6 below).


 


8.5.1.3    Selected
Compounds that are [***]


 


During
the Commercialization Period for Selected Compounds that are [***], PEPSICO
will pay the following MARs to SENOMYX:


 


·                                          [***] for the
first Commercialization Year;


 


·                                          [***] for the
second Commercialization Year;


 


·                                          [***] for the
third Commercialization Year;


 


·                                          [***] for the
fourth Commercialization Year; and


 


·                                          [***] for the fifth
Commercialization Year and each Commercialization Year thereafter (subject to
adjustment as provided in Section 8.6 below).


 


8.5.1.4    Selected
Compounds that are [***]


 


During
the Commercialization Period for Selected Compounds that are [***], PEPSICO will
pay the following MARs to SENOMYX:


 


·                                          [***] for the
first Commercialization Year;


 


·                                          [***] for the
second Commercialization Year;


 


·                                          [***] for the
third Commercialization Year;


 


·                                          [***] for the
fourth Commercialization Year; and


 


·                                          [***] for the
fifth Commercialization Year and each Commercialization Year thereafter
(subject to adjustment as provided in Section 8.6 below).


 


20
















 


8.5.1.5    Selected
Compounds that are [***]


 


During
the Commercialization Period for Selected Compounds that are [***], PEPSICO
will pay the following MARs to SENOMYX:


 


·                                          [***] for the
first Commercialization Year;


 


·                                          [***] for the
second Commercialization Year;


 


·                                          [***] for the
third Commercialization Year;


 


·                                          [***] for the
fourth Commercialization Year; provided, however, that if any Selected Compound
that is a [***] has [***] before the beginning of the third Commercialization
Year, the payment amount for the fourth Commercialization Year will be [***];
and


 


·                                          [***] for the
fifth Commercialization Year and each Commercialization Year thereafter
(subject to adjustment as provided in Section 8.6 below) provided,
however, that if any Selected Compound that is a [***] has [***] before the
beginning of the fourth Commercialization Year, the payment amount for the
fifth Commercialization Year and each Commercialization Year thereafter will be
[***] (subject to adjustment as provided in Section 8.6 below).


 


8.5.1.6 Royalty Shortfall


 


The
amount due under this Section 8.5 for any Commercialization Year is the
amount, if any, by which the MARs specified for the applicable Minimum Annual
Royalty Category for that Commercialization Year period exceeds the royalties
actually paid on Beverages and Beverage Bases incorporating Selected Compounds
with respect to the applicable Minimum Annual Royalty Category during such
Commercialization Year (“Royalty Shortfall(s)”).   The Royalty Shortfalls shall be calculated
separately for each Minimum Annual Royalty Category.


 


For
the avoidance of doubt, if PEPSICO selects multiple Collaboration Compounds
within any of the five Minimum Annual Royalty Categories, the Royalty Shortfall
shall be due for that category and not for each Selected Compound within that
category.


 


8.6          Adjustment
of Values for Minimum Royalties


 


With
respect to each Minimum Royalty Category, the MARs will be adjusted for the
[***] year of the applicable Commercialization Period and beyond, for
inflation/deflation using the Consumer Price Index as set forth below.  The first adjustment will be effective on the
[***] anniversary of the commencement of the applicable Commercialization
Period and annually on each anniversary thereafter, and shall be calculated as
follows:


 


21

















 


·                  MAR for the
applicable Commercialization Year = Unadjusted Base MAR * (1 + %CPI
Increase/Decrease)


 


Such
amount as calculated shall be the applicable MAR for the given Minimum Royalty
Category to be paid until the next date for adjustment hereunder.


 


·                  The “Unadjusted
Base MAR” for purposes of each MAR adjustment shall be [***], as the case may
be, in the case of Selected Compounds that are [***], [***], as the case may
be, in the case of Selected Compounds that are [***], [***] in the case of
Selected Compounds that are [***], [***] in the case of  Selected Compounds that are [***]; and [***],
as the case may be, in the case of Selected Compounds that are [***].


 


·                  %CPI
Increase/Decrease = (Comparison CPI – Base CPI) ÷ Base CPI


 


·                                          The “Comparison
CPI” shall be the unadjusted Consumer Price Index for the December of the
Calendar Year [***] the applicable annual adjustment and the “Base CPI” shall
be the unadjusted Consumer Price Index for December of the Calendar Year
which is [***] such Calendar Year.


 


8.7          Payment
Terms


 


8.7.1
Timing


 


As
set forth in this Agreement, the royalties will be paid within [***] after the
end of each calendar quarter period in which such royalties are earned during
the Commercialization Period for each Product incorporating a Selected
Compound.  All Royalty Shortfalls will be
paid within [***] after the end of each Commercialization Year.


 


8.7.2
Reporting


 


With
each such quarterly payment, PEPSICO, its Affiliates and permitted sublicensees
will furnish to SENOMYX a royalty statement in sufficient detail to permit
confirmation of the accuracy of the royalty payment made in accordance with the
accounting procedures set forth in Section 8.11.1 below (the “Royalty Report”), which sets forth on a
country-by-country and sweetener-by-sweetener basis and Product-by-Product
basis the relevant sales information for PEPSICO and the applicable Affiliates
and permitted sublicensees including:


 


i.)                            In the case of
sales by PEPSICO and its Affiliates [***] incorporating a Selected Compound
sold;


 


ii.)                         the royalties
payable in United States dollars;


 


22

















 


iii.)                      the method used
to calculate the royalty payment, including the applicable PSR and Cost of
Selected Compound for each Beverage or Beverage Base incorporating a Selected
Compound ;


 


iv.)                     the method used to calculate
the applicable Consumer Price Index adjustments of the MARs and adjustments of
the applicable royalties under Section 8.4.1 based on changes to the
parameters described in Schedules 8.4.1(A) and 8.4.1(B);


 


v.)                        the exchange
rate used;


 


vi.)                     in the case of sublicenses
to Ingredient Suppliers under Section 9.6, the Net Sales and the total
number of units of each such Ingredient Supply Product sold, if applicable; and


 


vii.)                  other information employed
to calculate the royalty payment for such Product incorporating such Selected
Compound.


 


The
contents of such Royalty Reports shall, subject to the exceptions in Section 13.4,
be considered Confidential Information of PEPSICO and SENOMYX agrees not to
disclose such contents except to the extent necessary for SENOMYX to enforce
its rights under this Agreement or if disclosure is permitted under Section 13.5
or 13.7.


 


8.8          Currency
of Payment


 


All
payments to be made under this Agreement, including the royalties payable to
SENOMYX by PEPSICO, its Affiliates and permitted sublicensees, will be paid in
United States dollars by wire transfer (or other means acceptable to SENOMYX)
to a bank account designated by SENOMYX.


 


With
respect to each quarter, for countries other than the United States, whenever
conversion of any amounts or payments from any foreign currency are required,
such conversion will be made at the rate of exchange reported in The Wall
Street Journal on the last business day of the applicable reporting period.


 


8.9          Taxes
Withheld


 


Any
income or other tax that PEPSICO or any of its Affiliates or permitted
sublicensees are required by a government agency to withhold and pay on behalf of
SENOMYX with respect to the royalties payable under this Agreement will be
deducted from and offset against such royalties prior to remittance to
SENOMYX.  PEPSICO will use commercially
reasonable efforts to give or cause to be given to SENOMYX by its Affiliates
and permitted sublicensees such assistance as may reasonably be necessary to
enable SENOMYX to claim exemption from, or credit for, the tax so deducted,
and, in each case, will use commercially reasonable efforts to promptly furnish
to SENOMYX proper evidence of the taxes paid on SENOMYX’s behalf.


 


23

















 


8.10        Late Payment


 


In
the event that any payment, including royalty payments, due hereunder is not
made when due, the payment will accrue interest from that date due at the rate
of [***]; provided, however, that in no event will such rate exceed the maximum
legal annual interest rate.  The payment
of such interest will not limit SENOMYX from exercising any other rights it may
have as a consequence of the lateness of any payment.


 


8.11        Records of Unit Sales, Net Sales and Royalty Calculations


 


8.11.1     Records Relating to Royalties


 


PEPSICO will, and will cause its Affiliates and permitted sublicensees
to, keep complete and accurate records of sales and all other information
necessary to calculate royalties due to SENOMYX for any Product incorporating a
Selected Compound.  The records for a
given year will be maintained by PEPSICO, its Affiliates and permitted sublicensees
for a period of [***] following submission of the related Royalty Report for
that year.  The records for a given year
will be in sufficient detail to allow the accrued royalties to be determined in
accordance with United States generally accepted accounting principles (which
shall mean the international financial reporting standards (“IFRS”) at such time as IFRS becomes the
generally accepted accounting standard in the United States and the applicable
laws require that a party use IFRS) and to verify the royalty payments pursuant
to Section 8.4.


 


8.11.2     Attestation of Records Relating to Royalties


 


SENOMYX,
with reasonable written notice to PEPSICO, and no more than [***] per calendar
year, will have the right to cause a nationally recognized independent,
certified public accountant [***] to review such records relating to the
royalty payments at the place or places of business where such records are
customarily kept by PEPSICO, its Affiliates and sublicensees in order to
provide an attestation, based upon accounting procedures [***] (the “Attestation”),
of the accuracy of the reports of royalty payments.  Such accountant must execute a
confidentiality agreement prior to entering the applicable premises, obligating
such accountant to keep all information disclosed to it confidential and will
only be permitted to disclose to SENOMYX whether there was any discrepancy
between royalty payments made by PEPSICO (or its Affiliates or sublicensees)
under this Agreement and the actual royalty required to be so paid and, if so,
the extent of the discrepancy and any information necessary to explain the
cause of the discrepancy.  SENOMYX will
bear the full cost of such Attestation unless such Attestation discloses an
underpayment of more than [***] from the amount of the royalties due under this
Agreement, in which event, PEPSICO will bear the full cost of such
Attestation.  Upon conclusion of such
Attestation, any underpayment shall be promptly paid by PEPSICO and any
overpayment made by PEPSICO will be promptly refunded to PEPSICO.


 


24

















 


PEPSICO
will, and will cause its Affiliates and sublicensees to, cooperate with the
Attestation under this Section 8.11.2 including, without limitation,
promptly and at their own expense providing additional supporting information
and records in the event that the nationally recognized independent certified
public accountant performing such Attestation requests such information or
records. Such additional information and records shall relate to royalties
payable for Products sold by PEPSICO, its Affiliates or permitted
sublicensees.  In the case of the
sublicense to Ingredient Suppliers pursuant to Section 9.6, SENOMYX may
obtain the information described herein directly from sublicensee or request
that PEPSICO promptly obtain such information from such  sublicensee.


 


SENOMYX
agrees not to disclose Confidential Information concerning royalty payments
reports, and all other information learned in the course of an Attestation,
except to the extent necessary for SENOMYX to enforce its rights under this
Agreement or if disclosure is permitted under Section 13.5 or 13.7.


 


9.                            GRANTS


 


Subject
to the terms and conditions of this Agreement, SENOMYX hereby grants to PEPSICO
and its Affiliates and PEPSICO hereby grants to SENOMYX the rights expressly
set forth below.


 


9.1                               Non-exclusive Grant by SENOMYX of Rights Regarding Evaluation of
Compounds and Collaboration Compounds


 


With
respect to the Synthetic Enhancing Compound Program and the Natural Enhancing
Compound Program, subject to the terms and conditions of this Agreement,
SENOMYX hereby grants to PEPSICO and its Affiliates a nontransferable,
non-exclusive, non-sublicensable worldwide license during the applicable
Collaborative R & D Period under the Target IP to use Compounds and
Enhancing Compounds that SENOMYX delivers, in the Steering Committee’s
reasonable discretion and taking into consideration the applicable PEPSICO
Criteria, to PEPSICO in the course of the applicable Collaborative R&D
Program.  Such Compounds and Enhancing
Compounds may only be used for the intended purpose of evaluating the sweetness
effect on enhancing a Target Sweetener in the Field.


 


With
respect to the Natural Sweetener Compound Program, subject to the terms and
conditions of this Agreement, SENOMYX hereby grants to PEPSICO and its
Affiliates a nontransferable, non-exclusive, non-sublicensable worldwide
license during the Collaborative R & D Period for the Natural
Sweetener Compound Program under the Target IP to use Natural Sweetener
Compounds that SENOMYX delivers, in the Steering Committee’s reasonable
discretion taking into consideration the applicable PEPSICO Criteria, to
PEPSICO in the course of the Collaborative R&D Program.  Such Natural Sweetener Compounds may only be
used for the intended purpose of evaluating the effect as a sweetener in the
Field.


 


25

















 


9.2                               Non-exclusive
Grant by SENOMYX of Rights to Make, Have Made, Use and Sell Selected Compounds


 


Subject
to the terms and conditions of this Agreement, SENOMYX hereby grants to PEPSICO
and its Affiliates a nontransferable, non-exclusive, non-sublicensable (except
as provided in Section 9.6 below), worldwide license under the Target IP
for each Selected Compound during the applicable Commercialization Period, to
make, have made (including authorizing third parties to manufacture for them),
import, use and sell Selected Enhancing Compounds or Selected Natural Sweetener
Compounds, as the case may be, for incorporation into Products [***].  Each Selected Enhancing Compound will only be
used by PEPSICO and its Affiliates (or permitted sublicensees) at an Enhancing
Compound Concentration.  Only the license
under this Section 9.2 to make, use and sell Selected Enhancing Compounds
for incorporation into Ingredient Supply Products in the Third Party Beverage
Manufacturer Product Categories will be sublicensable to Ingredient Supplier
sublicensees in accordance with Section 9.6.1.


 


9.3                               Exclusive
Grant of Rights by SENOMYX Regarding Beverages and Beverage Bases that Incorporate
Selected Compounds


 


Subject
to the terms and conditions of this Agreement, SENOMYX hereby grants to PEPSICO
and its Affiliates a nontransferable, Exclusive (except to the extent otherwise
converted to non-exclusive as specifically contemplated by this Agreement),
non-sublicensable, worldwide license under the Target IP for each Selected
Compound  to make, have made (including
authorizing third parties to manufacture for them), import, use and sell
Beverages and Beverage Bases that incorporate the applicable Selected Enhancing
Compound or Selected Natural Sweetener Compound, as the case may be,
[***].   This Exclusive license shall
continue during the term of the Commercialization Period for the applicable
Selected Compound.  Each Selected
Enhancing Compound will only be used by PEPSICO and its Affiliates at an
Enhancing Compound Concentration.  For
the avoidance of doubt, the foregoing shall not be construed to prevent SENOMYX
from exercising its rights and performing its obligations under this Agreement.


 


9.4                               Co-Exclusive
Grant of Rights by SENOMYX Regarding Powdered Beverages incorporating Selected
Compounds


 


Subject
to the terms and conditions of this Agreement, SENOMYX hereby grants to PEPSICO
and its Affiliates a nontransferable, Co-Exclusive, non-sublicensable,
worldwide license under the Target IP for each Selected Compound to make, have
made (including authorizing third parties to manufacture for them), import, use
and sell dry powdered Beverages incorporating the applicable Selected Enhancing
Compound or Selected Natural Sweetener Compound, as the case may be,
[***].   This Co-Exclusive license shall
continue during the term of the Commercialization Period for the applicable
Selected Compound.  Each Selected
Enhancing Compound will only be used by PEPSICO and its Affiliates at an
Enhancing Compound Concentration.  For
the avoidance of doubt, the foregoing shall not be construed to prevent SENOMYX
from exercising its rights and performing its obligations under this Agreement.


 


26

















 


9.5          Limitation on Licenses


 


9.5.1       Sales
of Collaboration Compounds or Selected Compounds


 


Notwithstanding
anything to the contrary in this Agreement, none of the rights granted in this
Agreement are intended to give PEPSICO or its Affiliates the right to sell
Compounds, Collaboration Compounds or Selected Compounds other than as part of
a Beverage or Beverage Base; however, PEPSICO may sublicense its rights to
Ingredient Suppliers to sell Ingredient Supply Products as expressly authorized
by Section 9.6.1.


 


9.5.2       Specifically
Excluded Rights


 


Notwithstanding
anything to the contrary in this Agreement, PEPSICO shall have no rights under
this Agreement with respect to Compounds S2383, S8475 and S6973 (including salt
forms thereof).   SENOMYX will be free to
license Compounds S2383, S8475 and S6973 (including salt forms thereof) to an
Affiliate(s) or a Third Party(ies), and to enter into discovery and
development collaborations with an Affiliate(s) or a Third Party(ies), in
the Field for the purpose of developing and commercializing such Compounds,
without restrictions or limitations and without any obligation to PEPSICO under
Section 7 above.


 


9.5.3       Restrictions;
No Implied Licenses


 


Subject
to the licenses expressly granted in this Section 9, SENOMYX will retain
all rights under the SENOMYX Technology and all other intellectual property
Controlled by SENOMYX, and PEPSICO and its Affiliates agree that, while a Valid
Claim is in effect covering the particular SENOMYX Technology, to not knowingly
practice, either directly or by indirectly supporting or funding the research
and development activities of an Affiliate, sublicensee or any other Third
Party, such SENOMYX Technology except pursuant to the licenses expressly
granted to PEPSICO and its Affiliates in this Section 9.  No right or license under any Patent Rights
or any Know-How of either party is granted or shall be granted by
implication.  All such rights or licenses
are or shall be granted only as expressly provided in the terms of this
Agreement.


 


9.6          Sublicenses


 


9.6.1       Ingredient
Suppliers


 


The
licenses granted by SENOMYX to PEPSICO and its Affiliates under this Section 9
are not sublicensable, except to Ingredient Suppliers as specifically set forth
in this Section 9.6.


 


PEPSICO
will [***] to sublicense its rights under Section 9.2 to Ingredient
Suppliers to make, have made, use and sell Ingredient Supply Products to Third
Parties solely for incorporation into Third Party Manufacturer Beverages and
Third Party Manufacturer 


 


27

















 


Beverage
Bases in the Third Party Beverage Manufacturer Product Categories.  PEPSICO’s right to sublicense in the Third
Party Beverage Manufacturer Product Categories as described in this Section 9.6.1,
shall not limit PEPSICO’s exclusivity rights in Sections 7.1 and 9.3 for the
Exclusive Product Categories.  If PEPSICO
sublicenses to Ingredient Suppliers as described in this Section 9.6,
PEPSICO will be allowing the use of the Selected Enhancing Compounds for
incorporation into Third Party Manufacturer Beverages and Third Party
Manufacturer Beverage Bases in the Third Party Beverage Manufacturer Product
Categories. For avoidance of doubt, in accordance with the provisions of Section 9.2,
each Ingredient Supply Product shall only be used by Ingredient Suppliers and
Third Parties for their respective Intended Purpose and at an Enhancing
Compound Concentration.


 


With
respect to each Selected Compound, if within [***] months following the first
Regulatory Approval authorizing the use of such Selected Compound in [***]
PEPSICO has not [***] sublicense of its rights under Section 9.2 to an
Ingredient Supplier whereby the Selected Compound is made available to Third
Parties [***] in the Third Party Beverage Manufacturer Product Categories, then
notwithstanding the provisions of Section 7.1 or 9.3, or any other
provision of this Agreement to the contrary, SENOMYX shall have the right to (i) license
such rights directly to any Third Party to make, have made, use and sell
Ingredient Supply Products in such country solely for incorporation into Third
Party Manufacturer Beverages and Third Party Manufacturer Beverage Bases in the
Third Party Beverage Manufacturer Product Categories,  and (ii) directly, or through an
Affiliate, manufacture and supply Ingredient Supply Products to any Third Party
for use in such country solely for incorporation into Third Party Manufacturer
Beverages and Third Party Manufacturer Beverage Bases in Third Party Beverage
Manufacturer Product Categories.


 


9.6.2  Obligations
Related to Sublicenses to Ingredient Suppliers


 


PEPSICO
will [***] to enforce the obligations imposed upon a permitted Ingredient
Supplier sublicensee under the applicable sublicense (including, without
limitation, the field of use limitations restricted to the Third Party Beverage
Manufacturer Product Categories and the Intended Purpose limitations).


 


If
PEPSICO (or any of its Affiliates) [***] of any use by a permitted sublicensee
using Selected Compound(s) outside of the Third Party Beverage
Manufacturer Product Categories field of use that is sublicensable by PEPSICO
under this Agreement or other than for the applicable Intended Purpose or at
the applicable Enhancing Compound Concentration, then PEPSICO (and its
Affiliates) will promptly: (a) notify SENOMYX; (b) investigate the
suspected activities and [***] to remove any unauthorized use [***]; and (c) terminate
the sublicense agreement with any sublicensee that fails to immediately cease
the unauthorized activity.  PEPSICO will
use commercially reasonable efforts to keep SENOMYX updated regarding the
nature of the unauthorized use and steps taken under (b) and (c).


 


All
sublicenses under this Section 9.6 will be subject to written sublicense
agreements.  The scope of the rights and
licenses granted to each sublicensee under such sublicense 


 


28

















 


agreement
shall be no greater than the scope of the rights and license granted to PEPSICO
under Section 9.2.  [***] each
sublicense agreement will, to the extent applicable, include the rights of and
obligations due to SENOMYX and contained in this Agreement (including, without
limitation, royalty obligations[***] assignment to PEPSICO of all rights to
inventions and know-how resulting from their work (which shall ultimately be
assigned between PEPSICO and SENOMYX in accordance with the intellectual
property provisions of this Agreement), the confidentiality and non-use
restrictions in a manner consistent with PEPSICO ‘s obligations under Section 13,
record keeping and independent certified public accountant attestation
provisions substantially similar to those set forth in Section 8.11, and
the indemnification obligations consistent with PEPSICO’s obligations under
Sections 15.6.3 and 15.6.4).  Each
sublicense agreement must contain an affirmative statement by the sublicensee
of its agreement to comply with the relevant provisions of this Agreement.  Each sublicense agreement will require the
Ingredient Supplier sublicensee to enter into written agreements with its
purchasers of Ingredient Supply Products that include the purchaser’s agreement
to use Ingredient Supply Products solely (i) in Third Party Manufacturer
Beverages and Third Party Manufacturer Beverage Bases in the Third Party
Beverage Manufacturer Product Categories and (ii) for their respective
Intended Purpose and at an Enhancing Compound Concentration.  PEPSICO will promptly notify SENOMYX of any
sublicense agreements, but in any case not later than [***].  PEPSICO 
will keep SENOMYX informed of all such sublicenses and will, upon
request of SENOMYX, provide SENOMYX with a copy of such written agreement(s),
which shall be unredacted except that [***]. 
[***], PEPSICO will collect and guarantee payment of the royalty
payments (royalties on Net Sales) due, directly or indirectly, to SENOMYX from
Ingredient Supplier sublicensees under Section 8.4.3 and summarize and
deliver all reports due, directly or indirectly, to SENOMYX from such
sublicensees.  PEPSICO shall remain
responsible for the full and faithful performance of all its obligations under
this Agreement, irrespective of whether the same are delegated, expressly or by
implication, by PEPSICO to a sublicensee. 
Such delegation shall not in any way diminish, reduce or eliminate any of
PEPSICO’s obligations under this Agreement, and PEPSICO shall remain primarily
liable for such obligations.


 


For
the avoidance of doubt, all Co-Exclusive and Exclusive licenses granted to
PEPSICO under this Agreement are not sublicensable. In addition, if any
Exclusive or Co-Exclusive license is converted to a non-exclusive license under
Sections 8.5, 11.1 or otherwise, the non-exclusive (converted) license will
continue to be non-sublicensable.


 


9.7  Obligations
Relating to Affiliates


 


PEPSICO
assumes the responsibility for performance due by its Affiliates of all
obligations imposed upon PEPSICO under this Agreement.  PEPSICO is also responsible for and
guarantees payment to SENOMYX of royalties due on sales of Beverages and
Beverage Bases by an Affiliate.   In the
event that an Affiliate of PEPSICO ceases to meet the definition of “Affiliate”
at any time, the licenses granted to such Affiliate under this Agreement will
automatically terminate.


 


29

















 


9.8                               Non-Exclusive Grant of Rights from PEPSICO to SENOMYX for Research
Purposes


 


Subject
to the terms and conditions of this Agreement, PEPSICO and its Affiliates
hereby grants to SENOMYX a royalty free, non-exclusive, worldwide license
during the Collaboration R & D Period to use the PEPSICO Technology
for research purposes related to any given Collaborative R & D Program
under this Agreement, with the right to grant sublicenses for such research
purposes only; provided, however, that any such sublicense shall be subject to
the prior written approval of PEPSICO, which shall not be unreasonably
withheld.


 


All
sublicenses under this Section 9.8 will be subject to written sublicense
agreements.  The scope of the rights and
licenses granted to each sublicensee under such sublicense agreement shall be
no greater than the scope of the rights and license granted to SENOMYX under
this Agreement.  The sublicense
agreements will, to the extent applicable, include all of the rights of and
obligations due to PEPSICO and contained in this Agreement.  Each sublicense agreement must contain an
affirmative statement by the sublicensee of its agreement to comply with the
relevant provisions of this Agreement. 
SENOMYX shall remain responsible for the full and faithful performance
of all of its obligations under this Agreement, and shall assume liability for
any breaches by any SENOMYX sublicensee.


 


10.                     OWNERSHIP OF INTELLECTUAL PROPERTY


 


10.1        Transfer of Rights


 


Each
of the parties retains all rights not expressly licensed or assigned in this
Agreement.  Except as otherwise expressly
provided in this Agreement, nothing in this Agreement is intended to convey or
transfer ownership or the grant of any license or sublicense by one party to
the other party of any rights in any Confidential Information, Patent Rights or
Know-How Controlled by a party.


 


10.2        SENOMYX Inventions


 


SENOMYX
will own all Inventions and other Know-How made solely by its employees and
agents and all Patent Rights claiming such Inventions and Know-How; provided,
however, SENOMYX hereby irrevocably assigns to PEPSICO all interest in and to
any such Inventions and Know-How that consist solely of [***], and all Patent
Rights claiming such Inventions and other Know-How, and SENOMYX agrees to give
PEPSICO prompt notice of the making, conceiving or reducing to practice of any
such Inventions. Any such Inventions and Know-How to be assigned to PEPSICO
shall be deemed PEPSICO Confidential Information.  In the event that SENOMYX is legally unable
to assign such rights to PEPSICO, then SENOMYX agrees either to waive the
enforcement of such rights against PEPSICO and any sublicensees and assignees,
or to grant PEPSICO an exclusive, irrevocable, perpetual, worldwide, fully-paid
license, with right to sublicense through multiple tiers of sublicense, to such
rights.


 


30
















 


10.3        PEPSICO Inventions


 


PEPSICO
will own all Inventions and other Know-How made solely by its employees and
agents, including those related to [***], to the extent that such Inventions
and other Know-How do not [***], and all Patent Rights claiming such Inventions
and Know-How, and SENOMYX will have no rights to such Inventions, Know-How and
[***] except as set forth in Section 9.8. 
Nothing herein shall grant to SENOMYX any rights to [***] that
incorporate Selected Compounds.


 


PEPSICO
and its Affiliates hereby irrevocably assign to SENOMYX all interest in and to
any such Inventions and other Know-How that consist solely of [***] and all
Patent Rights claiming such Inventions and Know-How, and PEPSICO and its
Affiliates agree to give SENOMYX prompt notice of the making, conceiving or
reducing to practice of any such Inventions. 
Any such Inventions and Know-How to be assigned to SENOMYX shall be
deemed SENOMYX Confidential Information. In the event that PEPSICO or its
Affiliates are legally unable to assign such rights to SENOMYX, then PEPSICO
and its Affiliates agree either to waive the enforcement of such rights against
SENOMYX and any sublicensees and assignees, or to grant SENOMYX an exclusive,
irrevocable, perpetual, worldwide, fully-paid license, with right to sublicense
through multiple tiers of sublicense, to such rights.


 


10.4        Joint Inventions


 


All
Inventions conceived jointly by one or more employees or agents of SENOMYX or
of any of its Affiliates and one or more employees or agents of PEPSICO or of
any of its Affiliates (the “Joint Inventions”) and all Joint Patent Rights will
be owned jointly by PEPSICO and SENOMYX, except as provided below.


 


PEPSICO
and its Affiliates hereby irrevocably assign to SENOMYX all interest in and to
any Joint Inventions that consist solely of [***] and all Joint Patent Rights
claiming such Joint Inventions. In the event that PEPSICO or its Affiliate is
legally unable to assign such rights to SENOMYX, then PEPSICO and its
Affiliates agree either to waive the enforcement of such rights against SENOMYX
and any sublicensees and assignees, or to grant SENOMYX an exclusive,
irrevocable, perpetual, worldwide, fully-paid license, with right to sublicense
through multiple tiers of sublicense, to such rights.  For the avoidance of doubt, Inventions
assigned to SENOMYX under this Section 10.4, will no longer be considered
Joint Inventions/Joint Patent Rights and will thereafter be considered SENOMYX
Technology and will be deemed SENOMYX Confidential Information.


 


SENOMYX
hereby irrevocably assigns to PEPSICO all interest in and to any Joint
Inventions that consist solely of [***] to the extent that such [***] and all
Joint Patent Rights claiming such Joint Inventions. In the event that SENOMYX
is legally unable to assign such rights to PEPSICO, then SENOMYX agrees either
to waive the enforcement of such rights against PEPSICO and any sublicensees
and assignees, or to grant PEPSICO an exclusive, irrevocable, perpetual,
worldwide, fully-paid license, with right to sublicense through multiple tiers
of sublicense, to such rights. For the avoidance of 


 


31

















 


doubt, Inventions
assigned to PEPSICO under this Section 10.4, will no longer be considered
Joint Inventions/Joint Patent Rights and will thereafter be considered PEPSICO
Technology and will be deemed PEPSICO Confidential Information.


 


10.5        Other Inventions


 


Any
Inventions not included in Sections 10.2, 10.3, or 10.4 will be owned by their
inventors.


 


10.6        Markings, Inventorship and Assignment
of Inventions


 


PEPSICO
agrees to mark and to cause any Affiliate, Bottler or permitted sublicensee to
mark any Products (or their containers or labels) made, sold or otherwise
disposed of by it or them with any notice of Patent Rights, which shall be made
in accordance with applicable law, if mutually desirable by the parties or
necessary under applicable law to enable the SENOMYX Patent Rights or Joint
Patent Rights, as applicable, to be enforced to their full extent in any
country where Beverages or Beverage Bases incorporating Selected Compounds are
made, used, or sold.


 


United
States patent law will determine inventorship of patentable inventions.  SENOMYX and PEPSICO agree to execute all
documentation necessary to perfect all assignments of Inventions, Know-How and
Patent Rights contemplated in this Agreement.


 


11.                     PATENT PROSECUTION AND MAINTENANCE


 


11.1        Prosecution of Patent Rights Solely
Owned by a Party


 


Subject
to Section 12.3 below, each party will solely control the right to file,
prosecute (including an opposition or interference) and maintain Patent Rights
solely owned by that party or assigned to that party.  Each party will bear the cost of filing,
prosecuting and maintaining the patents and patent applications associated with
inventions solely owned by that party or assigned to that party.  With respect to Target IP for Selected
Compound(s), PEPSICO will reimburse SENOMYX for [***].   By way of example, patent applications
directed to composition of matter of a Selected Compound, use of a Selected
Compound in comestible compositions, and methods of making a Selected Compound
would be subject to a reimbursement obligation.


 


With
respect to each Selected Compound, for so long as PEPSICO maintains its
exclusive license under Section 9.3 for such Selected Compound, in the
case where SENOMYX [***] directed to Target IP for such Selected Compound
[***], then at least [***].  SENOMYX
agrees to [***] with respect to such patent applications that are [***]. SENOMYX
will [***] of all proceedings related to the [***] for Selected Compounds [***]
SENOMYX hereunder, including, without limitation, by [***]. SENOMYX will
provide to PEPSICO invoices (with supporting documentation) to establish the
reasonable out-of-pocket cost incurred for filing, prosecuting and maintaining
each patent or patent application in each country.  Such invoices may be [***]. With respect to
patent applications after PEPSICO has selected a Selected Compound, the parties
will discuss 


 


32

















 


and
agree at least [***] before the due date of international filings or at least
[***] before the due date of [***], in which countries/regions to file patent
applications claiming Selected Compounds. 
Notwithstanding the foregoing, if PEPSICO decides it does not wish to
have a patent application claiming a Selected Compound(s) either (i) filed
or (ii) prosecuted in a particular country or PEPSICO decides that it does
not wish to have maintained a patent claiming a Selected Compound(s), in a
particular country, SENOMYX may still (a) file or (b) prosecute such
patent application, or may maintain such patent in such country; provided,
however, that if SENOMYX actually files or prosecutes such patent application
or maintains such patent in such country, [***], and any rights granted to
PEPSICO, its Affiliates and sublicensees under Sections 7 and 9 with respect to
any such patents in such country will terminate or become non-exclusive at the
sole discretion of SENOMYX.  In such
event, SENOMYX may provide research and development services and/or grant
rights to SENOMYX Technology to Third Parties for the applicable Selected
Compounds in such country in any field of use, and nothing in this Agreement
will prevent or limit the foregoing.


 


PEPSICO
shall hold all such information disclosed to it under this Section 11,
subject to the exceptions in Section 13.4, as Confidential Information of
SENOMYX.


 


11.2        Prosecution of Joint Patent Rights


 


SENOMYX
will have the first right to file, prosecute (including an opposition or
interference) and maintain Joint Patent Rights. 
PEPSICO will use commercially reasonable efforts to cooperate in, the
filing, prosecution and maintenance of Joint Patent Rights and will share
equally in reasonable expenses incurred with respect thereto.


 


12.                     INTELLECTUAL PROPERTY ENFORCEMENT AND DEFENSE OF CLAIMS


 


12.1        Defense of Infringement Claims for
SENOMYX Technology


 


PEPSICO
and its Affiliates and permitted sublicensees will cooperate with SENOMYX, at
SENOMYX’s expense, in the defense of any suit, action or proceeding against
SENOMYX or SENOMYX’s Affiliates alleging the infringement of the intellectual
property rights of a Third Party due to SENOMYX’s or PEPSICO’s or any of their
Affiliates’ or sublicensees’ use of any SENOMYX Technology or any technology
claimed under Joint Patent Rights under this Agreement.


 


The
parties must notify each other promptly in writing of the commencement of any
such suit, action, proceeding or claim of infringement.


 


At
the expense of SENOMYX, PEPSICO and its Affiliates and permitted sublicensees
will give to SENOMYX full and sole authority, information and assistance
necessary to defend, hire counsel, make decisions or settle on any terms, any
such suit, action or proceeding against SENOMYX or SENOMYX’s Affiliates and
PEPSICO and its Affiliates and permitted sublicensees will in good faith
execute all documents, provide pertinent records, and take all other actions,
including requiring persons within its control to give testimony, which may be
reasonably required in connection with the defense or settlement of such
litigation.  SENOMYX will bear the
expense of the defense or 


 


33

















 


settlement
of any such suit.  SENOMYX will have full
and sole authority to settle any such suit except that SENOMYX will not settle
any such suit in a manner that is reasonably likely to have a material adverse
impact to PEPSICO without the prior written consent of PEPSICO, which shall not
be unreasonably withheld.


 


12.2        Defense of Infringement Claims for
PEPSICO Technology


 


SENOMYX
will cooperate with PEPSICO, at PEPSICO’s expense, in the defense of any suit,
action or proceeding against PEPSICO or PEPSICO’s Affiliates alleging the
infringement of the intellectual property rights of a Third Party due to
PEPSICO’s or SENOMYX’s or any of their Affiliates’ use of any PEPSICO
Technology or any technology claimed under Joint Patent Rights under this
Agreement.


 


The
parties must notify each other promptly in writing of the commencement of any
such suit, action, proceeding or claim of infringement.


 


At
the expense of PEPSICO, SENOMYX will give to PEPSICO full and sole authority,
information and assistance necessary to defend, hire counsel, make decisions or
settle on any terms, any such suit, action or proceeding against PEPSICO or
PEPSICO’s Affiliates and SENOMYX will in good faith execute all documents,
provide pertinent records, and take all other actions, including requiring
persons within its control to give testimony, which may be reasonably required
in connection with the defense or settlement of such litigation.  PEPSICO will bear the expense of the defense
or settlement of any such suit.  PEPSICO
will have full and sole authority to settle any such suit except that PEPSICO
will not settle any such suit in a manner that is reasonably likely to have a
material adverse impact to SENOMYX without the prior written consent of
SENOMYX, which shall not be unreasonably withheld.


 


12.3        Intellectual
Property Enforcement


 


With
respect to Target IP for use of a Selected Compound in the Exclusive Product
Categories, SENOMYX shall have the first right, but not the obligation to
commence a particular infringement action against a Third Party or take other
steps to resolve such alleged infringement; provided that, if SENOMYX does not
bring such action or take such other steps within [***] of receiving notice,
PEPSICO, after notifying SENOMYX in writing, will be entitled to bring such
infringement action or any other appropriate action or claim at its own expense;
provided, however, that if SENOMYX has commenced negotiations with an alleged
infringer for discontinuance of such infringement within such [***] period,
SENOMYX shall have an additional [***] to conclude its negotiations before
PEPSICO may bring suit for such infringement or take other similar action.  In the event PEPSICO brings such suit for
infringement or takes other similar action, SENOMYX shall have the right to
join in such infringement suit or similar action at its own expense (and
SENOMYX will join if required by the laws of the jurisdiction).  In any such action, both SENOMYX and PEPSICO
may employ counsel of its own choice at its own expense.  The party conducting such action will
consider in good faith the other party’s comments on the conduct of such action
and will have full and sole authority, information and assistance necessary to
defend, hire counsel, make 


 


34

















 


decisions
or settle on any terms, any such suit, action or proceeding and the other party
will in good faith execute all documents, provide pertinent records, and take
all other actions, including requiring persons within its control to give
testimony, which may be reasonably required in connection with the defense or
settlement of such litigation.  In the
event SENOMYX brings such suit, SENOMYX will be entitled to retain the entire
recovery, if any.  In the event PEPSICO
brings such suit, any recovery will be applied first to [***] expenses and
[***].  The party conducting the action will
have the right to deduct all court costs it pays for such enforcement from any
recovery from any settlement or judgment that is attributable to the losses of
the other party under such action.


 


13.                     TREATMENT OF CONFIDENTIAL INFORMATION: REPORTING REQUIREMENTS, PUBLICITY,
LAW AND REGULATIONS


 


13.1        Confidentiality


 


Subject
to the terms and conditions of this Agreement, SENOMYX and PEPSICO each agree
that, during the Term and for a period of [***] thereafter, it will keep
confidential, and will cause its Affiliates to keep confidential, all
Confidential Information that is disclosed to it or to any of its Affiliates by
the other party.  Neither SENOMYX nor
PEPSICO nor any of their respective Affiliates will use the other party’s
Confidential Information except as expressly permitted in this Agreement.


 


13.2        Disclosure to Related Parties


 


SENOMYX
and PEPSICO each agree that any disclosure of the other party’s Confidential
Information to any officer, employee, contractor, consultant, sublicensee or
agent of the other party or of their respective Affiliates:


 


i)                                         will be made
only if and to the extent necessary to carry out its responsibilities under
this Agreement and to exercise the rights granted hereunder;


 


ii)                                      will be limited to the
extent consistent with such responsibilities and rights; and


 


iii)                                   will be provided only to
such persons or entities who are under an obligation of confidentiality no less
stringent than as set forth in this Agreement.


 


Each
party will use reasonable efforts to take such action, and to cause its
Affiliates to take such action, to preserve the confidentiality of each other’s
Confidential Information, which will be the same efforts as it would
customarily take to preserve the confidentiality of its own similar
Confidential Information.


 


13.3        Return of Confidential Material


 


Upon
termination of this Agreement, each party, upon the other party’s request, will
return or destroy all Confidential Information received from the other party,
including all 


 


35

















 


copies
and extracts of documents, within 30 days of the request of the other party;
provided, however, one copy of the Confidential Information may be retained in
a secure location with limited access for legal purposes only.


 


13.4        Exceptions to Confidential Information


 


Confidential
Information will not include any information, which the receiving party can
prove by competent written evidence:


 


i)                                         is now, or
hereafter becomes, through no act or failure to act on the part of the
receiving party, generally known or available to the public;


 


ii)                                      is known by the receiving
party at the time of receiving such information, as evidenced by its records;


 


iii)                                   is hereafter furnished to
the receiving party without restriction as to disclosure or use by a Third
Party lawfully entitled to furnish such information;


 


iv)                                  is independently developed
by the employees, agents or contractors of the receiving party without the aid,
application or use of the disclosing party’s Confidential Information; or


 


v)                                     is the subject
of a written permission to disclose provided by the disclosing party.


 


A
party may also disclose Confidential Information of the other party where
required to do so by law or legal process; provided, however, that, in such
event, the party required to disclose such information must give advance
written notice of such disclosure to the other party and must cooperate with
the other party’s efforts to seek, at the request and expense of the other
party, all confidential treatment and protection for such disclosure as is
permitted by applicable law.


 


13.5        Confidential Material Terms


 


The
parties agree that the material terms, including financial terms, of this
Agreement will be considered Confidential Information of both parties.  Notwithstanding the foregoing, either party
may disclose such material terms and the contents of any Royalty Report (and in
the case of [***] in legal proceedings or as are required to be disclosed in
its financial statements, by law, or under an obligation of confidentiality to
bona fide potential sublicensees (in the case of disclosure to a sublicensee,
only those portions of the Agreement that are applicable to the potential
sublicense may be disclosed).  Either
party will have the further right to disclose such material terms of this
Agreement and the contents of any Royalty Report under an obligation of
confidentiality to any potential acquirer, merger partner, bank, venture
capital firm, or other investor or financial institution for the purpose of
evaluating such investment, transaction or to obtain financing.


 


36

















 


13.6        Confidential Research Information


 


The
parties agree that all results and data generated from the research under each
Collaborative R&D Program will be owned exclusively by SENOMYX and, subject
to the exceptions in Section 13.4, considered Confidential Information of
SENOMYX, subject to the confidentiality requirements of Section 13.  Accordingly, for the avoidance of doubt, the
parties further agree that Senomyx shall have the authority to include any
results and data that it generates in the course of each Collaborative R&D
Program in any patent application , or in connection with the prosecution,
maintenance or enforcement of any patent or patent application, or in
connection with regulatory filings or other submissions to regulatory
authorities without the prior consent or approval of PEPSICO. PEPSICO will not
provide to a Third Party any Materials provided by SENOMYX to PEPSICO.


 


13.7        Permitted Use and Disclosures


 


Each
party may use or disclose Confidential Information disclosed to it by the other
party


 


i)                                         to the extent
such information is included in the PEPSICO Technology, SENOMYX Technology or
Joint Patent Rights, and


 


ii)                                      to the extent such use or
disclosure is reasonably necessary and permitted in the exercise of the rights
granted hereunder in:


 


a)             filing or prosecuting patent
applications;


 


b)             prosecuting or defending
litigation;


 


c)              complying with applicable
governmental regulations, or court orders or otherwise submitting information
to tax or other governmental authorities;


 


d)             conducting clinical trials
or other safety studies for Selected Compounds or other regulatory approval
applications for Selected Compounds;


 


e)              submitting information for food
additive approval applications or other regulatory approval applications for
Selected Compounds; or


 


f)               making a permitted
sublicense or otherwise exercising rights expressly granted to the other party
pursuant to the terms of this Agreement.


 


If
a party is required to make any such disclosure of the other party’s
Confidential Information as described in this Section 13.7, it will give
reasonable advance notice of such disclosure to the other party where
reasonably possible and will use its reasonable efforts to secure confidential
treatment of such Confidential Information in consultation with the other party
prior to such disclosure (whether through protective orders or otherwise) and
disclose only the minimum necessary to comply with such requirements.


 


37

















 


13.8        Use of Data for Promotional Purposes


 


Either party may (i) make public statements regarding
Collaboration Compounds, Selected Compounds, or Beverages or Beverage Bases
incorporating Selected Compounds by announcing the achievement of milestones
therefor, following consultation with the other party and with the written
consent of the other party to the form and content of the public statement
which shall not be unreasonably withheld, conditioned or delayed, and (ii) without
the prior consent of the other party, make public statements regarding the
overall success rate(s) (excluding any competitively sensitive information
of PEPSICO) achieved by and/or for its customers with the use SENOMYX
Technology; provided, however, that it may not disclose any chemical
structures, screens or the other party’s identity.


 


13.9        Publication of Results


 


Subject to the express
provisions of this Agreement, results and data obtained by either party in the
course of the collaboration may be submitted for publication by SENOMYX to the
extent such publication [***], in each case in accordance with SENOMYX’s
customary practices.  SENOMYX will send a
copy of the proposed publication to PEPSICO for its approval which shall not be
unreasonably withheld, conditioned or delayed.


 


13.10      Publicity


 


Except
as required by law and as provided in this Agreement, neither party may make
any public announcement or otherwise disclose the terms of this Agreement
without the prior written consent of the other party, which consent will not be
unreasonably withheld. Notwithstanding the foregoing, not more than two (2) business
days following the Effective Date, the parties will issue a joint press release
in a form mutually acceptable to both parties and not more than four (4) business
days following the Effective Date SENOMYX shall file a current report on Form 8-K
that will publicly disclose the material terms of this Agreement as required
under applicable securities laws. Thereafter, PEPSICO and SENOMYX may each
disclose to Third Parties the information contained in such press release or
current report without the need for further approval by the other party


 


14.                     TERM, EARLY CONCLUSION, AND TERMINATION


 


14.1        Term


 


The
term of this Agreement will begin on the Effective Date and will continue
through the end of the Commercialization Period, unless terminated earlier in
accordance with the provisions of Section 14.2, 14.3 or 14.4 hereof (the “Term”).


 


14.2        Termination for Breach


 


A
party has the right to terminate this Agreement at any time for a material
breach of this Agreement by the other party, provided that the breaching party
has not cured such 


 


38

















 


breach
within sixty (60) days after written notice thereof by the non-breaching party,
except that in the case of failure to timely pay amounts owed such cure period
shall be fifteen (15) days.  In the event
of a termination by SENOMYX due to PEPSICO’s material breach, PEPSICO shall
continue to be responsible for reimbursement of its portion off any
non-cancellable expenditures that SENOMYX has incurred prior to receipt of such
notice of termination and which PEPSICO agreed to pay under this
Agreement.  The non-breaching party, upon
termination of this Agreement, may seek any damages and remedies available to
it at law or in equity.


 


14.3        Termination By Mutual Agreement


 


The
parties may terminate this Agreement at any time, in whole or in part, by
mutual written agreement executed by both parties.


 


14.4        Termination By PEPSICO


 


PEPSICO
may terminate this Agreement in its entirety upon written notice to SENOMYX not
later than sixty days following (i) the merger or consolidation of SENOMYX
with a Direct PEPSICO Competitor or (ii) the acquisition by a Direct
PEPSICO Competitor of ownership or control of more than 30% of the outstanding
securities having voting rights for the election of directors of SENOMYX.  For purposes of this Section 14.4, “control”
shall mean direct or indirect beneficial ownership.


 


Following
conclusion of the Collaborative R & D Period for all three
Collaborative R & D Programs, PEPSICO may terminate this Agreement in
its entirety without cause upon ninety (90) days prior written notice to
SENOMYX.


 


In
the event of termination of this Agreement by PEPSICO under this Section 14.4,
PEPSICO shall continue to be responsible for reimbursement of its portion of
any non-cancellable expenditures that SENOMYX has incurred prior to receipt of
such notice of termination and which PEPSICO agreed to pay under this
Agreement.


 


14.5        Effect of Termination


 


Upon
termination of this Agreement, all rights and obligations of the parties under
this Agreement will terminate, except as expressly provided in this Section 14.5
and Section 14.6, and, without limiting the generality of the foregoing,
PEPSICO and its Affiliates will have no right to practice the Target IP or use
the Target IP, and SENOMYX shall have full and unfettered rights to exploit the
Target IP, and all rights, title and interest in and to the Target IP shall
remain the sole property of SENOMYX.


 


Expiration
or termination of this Agreement will not relieve the parties of any obligation
accruing before such expiration or termination (including, without limitation,
payment of accrued royalties). PEPSICO will be obligated to pay SENOMYX a pro
rata portion of all MARs due as of the effective date of termination (as
described in further detail below).


 


39

















 


In
the event of the expiration or termination of this Agreement, the MARs for the
final Commercialization Year for each Selected Compound shall be calculated by
[***] (i) [***] under Section 8.4.1 and Section 8.4.2 in such
final Commercialization Year for each Minimum Annual Royalty Category from (ii) the
[***] (a) [***] by (b) the [***] in such Commercialization Year.


 


Upon
termination of this Agreement for any reason, SENOMYX, at its sole discretion,
shall determine whether PEPSICO shall cancel or assign to SENOMYX any and all
sublicense agreements executed by Ingredient Suppliers.  Notwithstanding the foregoing, in the event
that PEPSICO has sublicensed the rights applicable to a given Selected
Enhancing Compound [***] under Section 9.6.1 and this Agreement terminates
for any reason (other than [***], then SENOMYX shall promptly notify [***]. Not
later than [***] following [***] receipt of such notice, [***] that were
properly sublicensed (in accordance with Section 9.6 of this Agreement) by
PEPSICO [***] prior to the termination of this Agreement [***] such licensed
rights and of [***] to (i) [***] applicable to PEPSICO relating to the
sublicensed Selected Enhancing Compounds under this Agreement (including the
[***] set forth in this Agreement) and (ii) [***] with PEPSICO, which in
no case [***] of this Agreement. All [***] under this Agreement shall be deemed
to [***] notwithstanding the termination of this Agreement and [***]. In that
circumstance, notwithstanding the [***] properly made by PEPSICO under Section 9.6.1
and [***], SENOMYX shall not be deemed to [***].


 


14.6        Survival


 


The
obligations and rights of the parties under Sections 5.1.1 (third paragraph
only), 5.1.2 (third paragraph only), 5.3 (second paragraph only), 5.4 (other
than first paragraph), 8.10, 8.11, 10, 11, 12, 13, 14.5, 14.6, 15, 16 and
Appendix A, will survive termination or expiration of this Agreement.


 


15.                     Warranties and Indemnification


 


15.1        Mutual Representations and Warranties


 


The
parties make the following representations and warranties to each other:


 


15.2        Corporate Power


 


Each
party hereby represents and warrants that as of the Effective Date, such party:


 


(i)                                     is duly organized, validly
existing under the laws of the state of its incorporation, and in good
standing;


 


(ii)                                  has all requisite corporate
power and authority and the legal right to own and operate its property and
assets, to lease the property and assets it operates under lease, and to carry
on its business as it is now being conducted; and


 


40
















 


(iii)                               is in compliance with all
requirements of applicable law, except to the extent that any noncompliance
would not have a material adverse effect on its ability to perform its
obligations under this Agreement.


 


15.3        Due Authorization


 


Each
party hereby represents and warrants that as of the Effective Date, such party:


 


(i)                                     has the requisite corporate
power and authority and the legal right to execute and deliver this Agreement
and to perform its obligations hereunder;


 


(ii)                                  has taken all necessary
action on its part to authorize the execution and delivery of this Agreement,
the performance of its obligations hereunder and the grant of rights extended
by it hereunder, and no action or corporate procedure is necessary to authorize
this Agreement, the performance of its obligations hereunder or the grant of
rights extended hereunder.


 


15.4        Binding Agreement


 


Each
party hereby represents and warrants to the other that as of the Effective
Date:


 


(i)                                     this Agreement has been duly
executed and delivered on its behalf and is a legal and valid obligation
binding upon it and is enforceable in accordance with its terms;


 


(ii)                                  the execution, delivery and
performance of this Agreement by such party does not conflict with any
agreement, instrument or understanding, oral or written, to which it is a party
or by which it may be bound, nor violate any law or regulation of any court,
governmental body or administrative or other agency having authority over it;
and


 


(iii)                               all necessary consents,
approvals and authorizations of all governmental authorities and other persons
required to be obtained by it in connection with the Agreement have been
obtained.


 


15.5        Warranties Regarding SENOMYX Technology


 


SENOMYX
warrants to PEPSICO as of the Effective Date the following:


 


15.5.1              SENOMYX
Express Warranties


 


As
of the Effective Date:


 


(i)                                     To the best of SENOMYX’s
knowledge, SENOMYX has the lawful right to license the Target IP in existence
on the Effective Date to PEPSICO in accordance with the terms of this
Agreement;


 


41

















 


(ii)                                  SENOMYX is not precluded
under any license or other agreement with a Third Party from entering into this
Agreement and granting the rights to PEPSICO provided hereunder;


 


(iii)                               To the best of SENOMYX’s
knowledge, the activities to be performed by SENOMYX under this Agreement will
not infringe any patents, copyrights, trademarks or other intellectual property
rights of a Third Party; and


 


(iv)                              SENOMYX has not been served
with a Third Party suit, nor otherwise received written notice, or verbal
notice to any current SENOMYX officer, of any allegation of infringement,
relating to the SENOMYX Technology.


 


15.5.2              SENOMYX
Disclaimer


 


EXCEPT
AS EXPRESSLY SET FORTH IN THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION,
THE WARRANTIES SET FORTH IN SECTION 15.5.1, SENOMYX (INCLUDING ITS
OFFICERS, EMPLOYEES AND AGENTS) EXPRESSLY DISCLAIMS ANY FURTHER REPRESENTATIONS
AND WARRANTIES, WHETHER EXPRESS OR IMPLIED, RELATING TO SENOMYX TECHNOLOGY;
INCLUDING ANY EXPRESS OR IMPLIED WARRANTY


 


(i)                                     OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OF SENOMYX TECHNOLOGY OR SENOMYX PATENT
RIGHTS; AND


 


(ii)                                  THAT THE PRACTICE OF SENOMYX
TECHNOLOGY WILL NOT INFRINGE A PATENT, COPYRIGHT, TRADEMARK OR OTHER RIGHT OF A
THIRD PARTY; AND


 


(iii)                               REGARDING THE PATENTABILITY
OF ANY SENOMYX TECHNOLOGY, INCLUDING SENOMYX TECHNOLOGY CLAIMED IN PATENT
APPLICATIONS AS PART OF SENOMYX PATENT RIGHTS.


 


15.5.3              SENOMYX
Indemnification.


 


SENOMYX
hereby agrees to defend and indemnify PEPSICO, and its respective officers,
directors, employees, agents and Affiliates (collectively, the “PEPSICO
Indemnitees”) from and against all damages or other amounts payable by PEPSICO
Indemnitees to a Third Party, including reasonable attorneys’ fees and costs of
litigation, resulting from a claim, demand, action, suit or other proceeding
brought or threatened by a Third Party against a PEPSICO Indemnitee based on
SENOMYX’s material breach of the terms of this Agreement (including any
material breach of any warranties) or SENOMYX’s negligence or willful
misconduct including but not limited to, product liability claims arising out
of any tests conducted solely by SENOMYX on any Compounds and any environmental
claims against PEPSICO Indeminitees relating to 


 


42

















 


SENOMYX’s
performance or failure to perform under this Agreement.  IN NO EVENT WILL SENOMYX BE LIABLE FOR ANY
INCIDENTAL OR CONSEQUENTIAL DAMAGES SUFFERED BY PEPSICO RESULTING FROM THIS
AGREEMENT.


 


15.6        Warranties Relating to PEPSICO
Technology


 


PEPSICO
represents and warrants to SENOMYX as of the Effective Date the following:


 


15.6.1              PEPSICO
Express Warranties


 


As
of the Effective Date:


 


(i)                                     To the best of PEPSICO’s
knowledge, PEPSICO has the lawful right to license (or sublicense, as the case
may be) the PEPSICO Technology to SENOMYX in accordance with the terms of this
Agreement; and


 


(ii)                                  PEPSICO is not precluded
under any license or other agreement with a Third Party from entering into this
Agreement and granting the rights to SENOMYX provided hereunder.


 


15.6.2              PEPSICO
Disclaimer


 


EXCEPT
AS EXPRESSLY SET FORTH IN THIS AGREEMENT, INCLUDING WITHOUT LIMITATION THE
WARRANTIES SET FORTH IN SECTION 15.6.1, PEPSICO (INCLUDING ITS OFFICERS,
EMPLOYEES AND AGENTS) EXPRESSLY DISCLAIMS ANY FURTHER REPRESENTATIONS AND
WARRANTIES OF ANY KIND, WHETHER EXPRESS OR IMPLIED, RELATING TO PEPSICO
TECHNOLOGY, INCLUDING ANY EXPRESS OR IMPLIED WARRANTY


 


(i)                                     OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OF PEPSICO TECHNOLOGY OR PEPSICO PATENT
RIGHTS; AND


 


(ii)                                  THAT THE PRACTICE OF PEPSICO
TECHNOLOGY WILL NOT INFRINGE A PATENT, COPYRIGHT, TRADEMARK, OR OTHER RIGHT OF
A THIRD PARTY; AND


 


(iii)                               REGARDING THE PATENTABILITY
OF ANY PEPSICO TECHNOLOGY, INCLUDING PEPSICO TECHNOLOGY CLAIMED IN PATENT APPLICATIONS
AS PART OF PEPSICO PATENT RIGHTS.


 


15.6.3              PEPSICO
Indemnification


 


PEPSICO
hereby agrees to defend and indemnify SENOMYX, its Affiliates and its and their
respective officers, directors, employees and agents (collectively, the “SENOMYX
Indemnitees”) from and against all damages or other amounts payable by SENOMYX 


 


43

















 


Indemnitees
to a Third Party, including reasonable attorneys’ fees and costs of litigation,
resulting from a claim, demand, action, suit or other proceeding brought or
threatened by a Third Party against a SENOMYX Indemnitee based on:


 


(i)                                     material breach by PEPSICO
of the terms of this Agreement (including any material breach of any
warranties) or negligence or willful misconduct of PEPSICO or its Affiliates
including but not limited to, product liability claims arising out of any tests
conducted solely by PEPSICO or its Affiliates on any Compounds and any
environmental claims against SENOMYX Indeminitees relating to PEPSICO’s (or any
of its Affiliates) performance or failure to perform under this Agreement;


 


(ii)                                  any development, testing,
manufacture, use, handling, storage, sale, or other disposition of a Selected
Compound or Beverage or Beverage Base incorporating a Selected Compound or
other Product by or through PEPSICO or its Affiliates or Bottlers or its
permitted sublicensees;


 


(iii)                               a product liability claim on
any Product; and


 


(iv)                              the practice by PEPSICO, its
Affiliates or its permitted sublicensees of any license granted hereunder.


 


IN
NO EVENT WILL PEPSICO BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES
SUFFERED BY SENOMYX RESULTING FROM THE EXERCISE OF ANY RIGHTS GRANTED IN
ACCORDANCE WITH THIS AGREEMENT.


 


15.6.4              PEPSICO
Indemnification Of Certain SENOMYX Licensors


 


PEPSICO
hereby agrees to indemnify, defend and hold [***] and its respective officers,
sponsors, directors, employees, and agents harmless from and against all
damages or other amounts payable to a Third Party, including reasonable
attorneys’ fees and costs, of any (i) [***] arising out of the
development, testing, manufacture, use, handling, storage, sale or other
disposition by PEPSICO or its Affiliates of a Selected Compound, Beverages or
Beverage Bases incorporating a Selected Compound and (ii) resulting or
arising from the exercise of rights by PEPSICO and its Affiliates under the
licenses granted under Section 9.


 


16.                     MISCELLANEOUS


 


16.1        Force Majeure


 


Neither
party will lose any rights hereunder or be liable to the other party for
damages or losses on account of failure of performance by the defaulting party
(other than a payment default) if the failure is occasioned by war, fire,
explosion, flood, (e.g. El Niño), earthquake, strike, lockout, embargo, act of
God, or any other similar cause beyond the control of the defaulting party;
provided, however, that the party claiming force majeure has exerted all
reasonable efforts to avoid or remedy such force majeure and thereafter 


 


44

















 


takes
all reasonable steps to mitigate any such delay in performance hereunder and
any damages that may be incurred by the other party thereby.


 


16.2        Governing Law and Jurisdiction


 


This
Agreement will be governed by the laws of the State of Delaware, as such laws
are applied to contracts entered into and to be performed entirely within such
state.


 


16.3        Binding Effect


 


This
Agreement will be binding upon and inure to the benefit of the successors and
permitted assigns of the parties.


 


16.4        Dispute Resolution


 


The
parties recognize that disputes as to certain matters may, from time to time,
arise during the Term, which relate to either party’s rights and/or obligations
hereunder.  It is the objective of the
parties to establish procedures to facilitate the resolution of disputes arising
under this Agreement in an expedient manner by mutual cooperation and without
resort to arbitration.  The parties agree
that prior to any arbitration concerning this Agreement, SENOMYX’s [***] and
PEPSICO’s [***], or another corporate officer of PEPSICO with the title of
Executive Vice President or higher, will meet in person, or by
video-conferencing and will use best efforts to resolve any disputes concerning
this Agreement.


 


Within
30 days of a formal request by either party to the other party, either party
may, by written notice to the other party, have such dispute referred to their
respective officers designated, or their successors, for attempted resolution
by good faith negotiations, such good faith negotiations to begin within thirty
days after such notice is received.  Any
dispute arising out of or relating to this Agreement which is not resolved
between the parties or the designated officers of the parties pursuant to this Section 16.4  will be resolved by final and binding
arbitration conducted in New York, New York (unless the parties mutually agree
to another location) in accordance with the rules of the American
Arbitration Association.  The arbitration
will be conducted by a single, neutral arbitrator who is knowledgeable in the
general subject matter at issue in the dispute.


 


The
parties will agree on the arbitrator and if they cannot agree, the arbitrator
will be selected in accordance with the procedures of the American Arbitration
Association.


 


In
conducting the arbitration, the arbitrator will


 


(i)                                     determine what discovery
will be permitted, consistent with the goal of limiting the cost and time which
the parties must expend for discovery (and provided that the arbitrators will
permit such discovery they deem necessary to permit an equitable resolution of
the dispute),


 


(ii)                                  ensure that the total time
of the arbitration from filing to a final decision or executed settlement
agreement is less than six months, and


 


45

















 


(iii)                               be able to decree any and
all relief of an equitable nature, including, but not limited to, such relief
as a temporary restraining order, a preliminary injunction, a permanent
injunction, specific performance or repletion of property.


 


The
arbitrator will also be able to award damages and recommend injunctions.


 


The
parties will share equally the arbitrator’s fees and expenses pending the
resolution of the arbitration.


 


The
decision of the arbitrator will be final and binding on the parties and may be
sued on or enforced by the party in whose favor it runs in any court of
competent jurisdiction at the option of such party.


 


Notwithstanding
anything to the contrary in this Section 16.4, either party may seek
immediate injunctive or other interim relief from any court of competent
jurisdiction with respect to any breach of Sections 10 or 13 hereof, or
otherwise to enforce and protect the Patent Rights, copyrights, trademarks, or
other intellectual property rights Controlled by such party.  In addition, arbitration will not be used to
resolve disputes concerning Patent Rights. 
Disputes concerning Patent Rights, including, but not limited to,
disputes concerning patent ownership, claim language, claim scope and issues of
validity will be settled in a court of law. 
Any arbitration ruling that relies on an interpretation of Patent Rights
will have no binding effect in a court of law on any Patent Rights related to
this Agreement, unless such Patent Rights have been adjudicated in a court of
law.  In no event will a demand for arbitration
be made after the date when the institution of a legal or equitable proceeding
based on such claim, dispute or other matter in question would be barred by the
applicable statute of limitations. 
Notwithstanding the foregoing or the outcome of the arbitration
proceeding, each party will bear its own expenses including, without
limitation, attorneys fees and court costs, even if the arbitrators have the
discretion to award such fees and costs to the prevailing party.


 


16.5        Severability


 


If
any term of this Agreement or the application thereof to any party or
circumstance is, to any extent, held to be invalid or unenforceable, then the
remainder of this Agreement, or the application of such term to parties or
circumstances other than those as to which it is held invalid or unenforceable,
will not be affected thereby and each term of this Agreement will be valid and
enforced to the fullest extent permitted by law.  The parties agree to renegotiate such term in
good faith in order to provide a reasonably acceptable alternative to the term
that is invalid or unenforceable, it being the intent of the parties that the
basic purposes of this Agreement are to be effectuated.


 


16.6        Independent Contractors


 


It
is expressly agreed that PEPSICO and SENOMYX will be independent contractors
and that the relationship between the parties will not constitute a partnership
or agency of any kind.  Neither PEPSICO
nor SENOMYX will have the authority to make any statements, 


 


46

















 


representations
or commitments of any kind, or to take any action, which will be binding on the
other party, without the prior written authorization of the other party to do
so.


 


16.7        Entire Agreement


 


This
Agreement sets forth all of the covenants, promises, agreements, warranties,
representations, conditions and understandings between the parties, on the
Effective Date, and supersedes and terminates all prior agreements and
understandings between the parties, with respect to the subject matter hereof (including,
without limitation, the Term Sheet with the exception of the indemnity
provisions therein which shall expressly survive and continue in full force and
effect).  For the avoidance of doubt, the
Mutual Nondisclosure Agreement shall continue to apply with respect to the
activities of the parties prior to the Effective Date.  There are no prior or contemporaneous
covenants, promises, agreements, warranties, representations, conditions or
understandings, either oral or written, between the parties other than as set
forth in this Agreement.


 


16.8        Amendment


 


No
subsequent alteration, amendment, change or addition to this Agreement will be
binding upon the parties unless reduced to writing and signed by the respective
authorized officers of the parties.


 


16.9        Interpretation


 


This
Agreement will not be strictly construed against either party.  Any conflict between the terms set forth in
the text of this Agreement and the terms of any Appendix hereto will be
resolved in favor of the text of this Agreement.


 


16.10      Waiver


 


Except
as specifically provided for in this Agreement, the waiver from time to time by
either of the parties of any rights or the failure to exercise any remedy will
not operate or be construed as a continuing waiver of the same right or remedy
or any of the other of such party’s rights or remedies provided in this
Agreement.


 


16.11      Construction


 


The
term “Article” or “Section” can refer to any single paragraph level found in
this Agreement or any collection of multiple paragraphs.


 


16.12      No Third Party Beneficiaries


 


No
Third Party, including any employee of any party to this Agreement (except as
specifically provided in this Agreement) will have or acquire any rights by
reason of this Agreement.  Nothing
contained in this Agreement will be deemed to constitute the parties partners
with each other or any Third Party.


 


47

















 


16.13      Notices


 


Any
notices or communications provided for in this Agreement to be made by either
party to the other party must be in writing, in English, and will be made by
prepaid air mail or overnight carrier with return receipt addressed to the
other party at its address set forth below. 
Any such notice or communication may also be given by hand, or facsimile
to the appropriate designation.  Notices
will be sent:


 


	
  If
  to SENOMYX, to:

  	
   

  	
  SENOMYX, Inc.

  
	
   

  	
   

  	
  4767 Nexus Centre Drive

  
	
   

  	
   

  	
  San Diego, CA 92121

  
	
   

  	
   

  	
  Facsimile number: (858) 404-0750

  
	
   

  	
   

  	
   

  
	
  Attention:
  [***]

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  If
  to PEPSICO, to:

  	
   

  	
  PepsiCo, Inc.

  
	
   

  	
   

  	
  700
  Anderson Hill Road

  
	
   

  	
   

  	
  Purchase,
  New York 10577

  
	
   

  	
   

  	
  Facsimile
  number: (914) 249-8339

  
	
   

  	
   

  	
   

  
	
  Attention:
  [***]

  	
   

  	
   

  



 


By
like notice, either party may specify or change an address to which notices and
communications must be thereafter sent. 
Notices sent by mail, facsimile or overnight carrier will be effective
upon receipt and notices given by hand will be effective when delivered.


 


16.14      Assignment


 


Neither
party may assign any of its rights or obligations under this Agreement in any
country to any Third Party without the prior written consent of the
non-assigning party, which consent may be withheld in the sole discretion of
the non-assigning party.


 


Notwithstanding
the preceding sentence, either party may assign its rights and obligations
under this Agreement without the consent of the other party:


 


(i)                                     to a successor to
substantially all of the business of such party to which this Agreement
relates, whether by merger, sale of stock, sale of assets or other transaction;
or


 


(ii)                                  to any Affiliate.


 


Notwithstanding
the foregoing, any such assignment to an Affiliate will not relieve the
assigning party of its responsibilities for performance of its obligations
under this agreement.


 


48

















 


Subject
to the foregoing, this Agreement shall inure to the benefit of each party, its
successors and permitted assigns.  Any
assignment of this Agreement in contravention of this Section 16.14 shall
be null and void.


 


16.15      Merger or Consolidation


 


This
Agreement will survive any merger or consolidation of either party with or into
another party and no consent for any such merger, consolidation or similar
reorganization will be required.


 


16.16      Counterparts


 


This
Agreement may be executed in two or more counterparts, each of which will be
deemed an original, but all of which together will constitute one and the same
instrument.


 


16.17 Law and Regulation


 


While
carrying out the obligations set forth in the Agreement, the parties will
ensure compliance with all applicable laws and regulations, including, without
limitation, all environmental, competition and import and export laws and
regulations.


 


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


 


49

















 


IN
WITNESS WHEREOF, the parties, through their authorized officers, have executed
this Agreement as of the Effective Date.


 


 


	
  SENOMYX, INC.

  	
   

  	
  PEPSICO, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:
  

  	
  /s/
  Kent Snyder

  	
   

  	
  By:

  	
  /s/
  Massimo d’Amore

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:
  

  	
  Kent
  Snyder

  	
   

  	
  Name:
  

  	
  Massimo
  d’Amore

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:
  

  	
  Chairman
  and Chief Executive Officer

  	
   

  	
  Title:
  

  	
  CEO,
  PepsiCo Beverages Americas

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:
  

  	
  August 16,
  2010

  	
   

  	
  Date:
  

  	
  August 16,
  2010

  



 


[SIGNATURE PAGE TO
COLLABORATIVE RESEARCH, DEVELOPMENT, COMMERCIALIZATION 

AND LICENSE AGREEMENT BETWEEN SENOMYX, INC. AND PEPSICO, INC.]


 


50
















 


COLLABORATIVE RESEARCH, DEVELOPMENT,

COMMERCIALIZATION AND LICENSE AGREEMENT


 


APPENDIX A - DEFINITIONS


 


“Affiliate”
means any corporation, company, partnership, joint venture, association or
other entity, which directly or indirectly controls, is controlled by or is
under common control with a party.  As
used in this definition, the term “control” means direct or indirect beneficial
ownership of fifty percent or more of the outstanding securities having voting
rights for the election of directors in a corporation or of the comparable
equity interest in any other type of entity. 
With respect to PEPSICO, “Affiliate” includes [***].


 


“Agreement”
means this agreement, together with all appendices attached hereto, as it may
be amended or supplemented from time to time hereafter by a written agreement
executed by authorized representatives of both parties.


 


“Beverages”
means non-alcoholic beverages sold under the trademark(s) of PEPSICO or
its Affiliates (including, without limitation, [***] packaged and sold for use
or consumption by an end user, whether in a ready-to-drink format, or as a
dry-powdered, liquid or frozen concentrate.


 


“Beverage
Base” means concentrated flavor combinations made and sold by PEPSICO or its
Affiliates, such as bases sold to a Bottler or for foodservice for use in
fountain drinks, which are then used to make Beverages which are intended for
use or consumption by an end user.  For
the avoidance of doubt, the Beverage Base is not packaged and sold for end use
by consumers.


 


“Bottlers”
means bottlers of Beverages authorized by PEPSICO or one of its Affiliates to
sell Beverages under the trademarks of PEPSICO or one of its Affiliates.


 


“Calendar
Quarter” means each three month period during a Calendar Year commencing on January 1,
April 1, July 1 and October 1.


 


“Calendar
Year” means a period of a year beginning January 1 and ending December 31.


 


“Co-Exclusive”
means, with reference to a license granted by SENOMYX under Section 9.4,
that, in addition to the license granted to PEPSICO and its Affiliates under Section 9.4,
SENOMYX may grant a comparable license (i.e., a worldwide license under SENOMYX’s
intellectual property to make, have made, use and sell dry-powdered
non-alcoholic beverages incorporating Compounds) to only one (1) party
(and such party’s Affiliates).  SENOMYX
and PEPSICO acknowledge and agree that such other co-exclusive licensee may be
an Ingredient Supplier that is authorized to manufacture and sell a Selected
Compound to a Third Party manufacturer of non-alcoholic beverages.


 


“Co-Exclusive
Product Category” means all dry-powdered non-alcoholic beverages. For the
avoidance of doubt, the Co-Excusive Product Category does not include any 


 


51

















 


Therapeutics
or other products which are not non-alcoholic beverages such as table top or
bulk packaged sweeteners/enhancers, powdered coffee creamers (whether dairy or
non-dairy) or semi-liquid products, such as drinkable, spoonable or squeezable
yogurt.


 


“Collaboration
Compounds” means Enhancing Compounds and Natural Sweetener Compounds.


 


“Collaborative
R&D Period” means with respect to each of the Synthetic Enhancing Compound
Program, the Natural Enhancing Compound Program, and the Natural Sweetener
Compound Program, the period beginning on the Effective Date and ending four
years thereafter, as such period may be extended with respect to such program(s) by
PEPSICO’s exercise of the Extension Option in accordance with Section 2.3.


 


“Collaborative
R&D Program” means any of the Synthetic Enhancing Compound Program, Natural
Enhancing Compound Program and/or Natural Sweetener Program.


 


“Commercialization
Period” (determined with respect to each Selected Compound individually) means
the period (a) beginning on the earlier of (i) with respect to a
Selected Enhancing Compound, the first anniversary of the date of the first
[***] for use of such Selected Enhancing Compound in at least one product
category licensed to PEPSICO under this Agreement, (ii) with respect to a
Selected Natural Sweetener Compound, the first anniversary of the date of the
first Regulatory Approval of such Selected Natural Sweetener Compound
authorizing the use of such Selected Natural Sweetener Compound in a Major
Country in at least one product category licensed to PEPSICO under this
Agreement, or (iii) the first commercial sale by PEPSICO or any of its
Affiliates or permitted sublicensee of a Product incorporating such Selected
Compound and (b) ending on the date that there no longer exists a Valid
Claim in a Patent Right Controlled by SENOMYX or its Affiliates covering the
manufacture, use or sale of such Selected Compound(s) or Product
incorporating such Selected Compound(s) in any country in which the
Selected Compound is manufactured or sold, or where Products incorporating
Selected Compounds are manufactured or sold. 
In the event that PEPSICO does not select at least one Selected Compound
under a given Collaborative R&D Program as contemplated by Section 4.3,
then with respect to that Collaborative R&D Program the Commercialization
Period will automatically expire and terminate.


 


“Commercialization
Plan” has the meaning set forth in Section 6.


 


“Commercialization
Year” means with respect to each Selected Compound, the twelve (12) month
periods beginning the first day of the calendar quarter immediately following
commencement of the applicable Commercialization Period and each twelve (12)
month period thereafter.


 


“Compound(s)”
means (i) a substance(s) that enhances the sweetness intensity of a
sweetener, or (ii) a Natural Compound that is a sweetener.


 


“Confidential
Information” means all information, Inventions and Know-How disclosed by
one party to the other party, whether pursuant to this Agreement, or the Mutual
Nondisclosure Agreement, including, without limitation, information and
material 


 


52

















 


(whether
or not patentable) regarding technology, products, research, development,
manufacturing, marketing, finances, personnel or other business information or
objectives which is designated as confidential in writing by the disclosing
party, whether by letter or by the use of an appropriate stamp or legend, prior
to or at the time any such material, trade secret or other information is
disclosed by the disclosing party to the other party.  Notwithstanding the foregoing to the contrary, Inventions,
Know-How or other information which is orally, electronically or visually
disclosed by a party, or is disclosed in writing without an appropriate letter,
stamp or legend, will constitute Confidential Information of a party if the
disclosing party, within 30 days after such disclosure, delivers to the other
party a written document or documents describing the Inventions, Know-How or
other information and referencing the place and date of such oral, visual,
electronic or written disclosure and the names of the persons to whom such
disclosure was made.


 


“Control”
or “Controlled” means, with respect to intellectual property, information or
Materials, possession by a party, as of the Effective Date or during the
applicable Collaborative R&D Period, of the ability to grant a license or
sublicense in accordance with the terms of this Agreement, without violating
the terms of any agreement between  such
party and any Third Party that is in effect on the Effective Date.


 


“Consumer
Price Index” means the Consumer Price Index for All Urban Consumers (CPI-U)
U.S. City Average, by expenditure category and commodity and service group,
for the food and beverages expenditure category, as published by the United
States Department of Labor, Bureau of Labor Statistics (1982-84 = 100).  If the 1982-84 base of the Consumer Price
Index is hereafter changed, then the new base will be converted to the 1982-84
base and the base as so converted shall be used.  In the event that the Bureau ceases to
publish the Consumer Price Index at least once a year, then the successor or
most nearly comparable Index thereto selected by SENOMYX and approved by
PEPSICO shall be used.  Changes in the
Consumer Price Index will be measured based on annual average (e.g. percent
change in annual average from 2010 to 2011).


 


“Cost
of Selected Compound” means the actual gross amount invoiced (in US$) to
PEPSICO or its Affiliate by a Third Party in good faith in an arm’s length
transaction for the manufacture, sale and delivery of a Selected Compound on a
per Unit Case basis, including [***]. The Cost of Selected Compound will be
calculated for each Calendar Quarter during the Commercialization Period, for
each Beverage and Beverage Base, based on actual amounts purchased by PEPSICO
and its Affiliates of the Selected Compound [***] and the actual amounts of
such Selected Compound used in a given Beverage or Beverage Base, as the case
may be. In the event that PEPSICO or any of its Affiliates elect to manufacture
a Selected Compound, then the Cost of a Selected Compound will be the actual
cost for such Selected Compound, determined on a per Unit Case basis for a
given Beverage and Beverage Base, during the applicable Calendar Quarter.  Actual costs of such Selected Compound shall
be comprised of [***].  If the Selected
Compound is purchased from a Third Party [***], and not [***], then the gross
amount invoiced for the Selected Compound will be deemed [***] during the
applicable period.  If the Selected
Compound is purchased [***] and not [***], then any [***] as the Cost of
Selected Compound [***] of Selected Compound [***].


 


53

















 


“Data
Package” has the meaning set forth in Section 4.2.


 


“Direct
PEPSICO Competitor” means, as of the relevant date of determination, a company
which has [***] and in which greater than [***] for the last full fiscal year
of such company is generated by [***].


 


“Effective
Date” means the latest date on which this Agreement is signed by the last of
the parties required to execute it.


 


“Enhancing
Compound(s)” means Natural Enhancing Compound(s) and/or Synthetic
Enhancing Compound(s).


 


“Enhancing
Compound Concentration” means the Enhancing Compound is [***] at which such
Enhancing Compound [***] as measured in Taste Tests.


 


“European
Regulatory Approval” means Regulatory Approval by the European Food Safety
Authority (“EFSA”).


 


“Exclusive”
means, with reference to a license granted by SENOMYX under Section 9.3,
exclusive as to Third Parties and SENOMYX.


 


“Exclusive
Product Categories” means all non-alcoholic beverage product categories
including liquid and frozen concentrates, but excluding the Co-Exclusive
Product Category. For the avoidance of doubt, the Exclusive Product Categories
do not include any Therapeutics, or other products which are not non-alcoholic
beverages such as [***].


 


“Extension
Option” shall have the meaning set forth in Section 2.3.


 


“FEMA”
means the Flavor and Extract Manufacturers Association.


 


“FEMA
GRAS” means the process by which a compound is determined to be Generally
Recognized as Safe by the FEMA expert panel.


 


“FEMA
GRAS Determination” means receipt of notification from FEMA of determination as
Generally Recognized As Safe (“GRAS”).


 


“FEMA
GRAS Studies” means the safety studies and manufacture of GMP material to
support FEMA GRAS Determination set forth in the applicable Research
Plan.SENOMYX, in its sole discretion, may supplement the list of FEMA GRAS
Studies at any time, which will be reflected in the minutes for the applicable
Steering Committee meeting.


 


“Field”
means the Exclusive Product Categories and the Co-Exclusive Product Category.


 


“[***]
Categories” means the following subset of the Third Party Beverage Manufacturer
Product Categories:  [***].  For the avoidance of doubt, each of the [***]
Categories must be within the definition of Third Party Beverage Manufacturer
Product Categories.


 


54

















 


[***].


 


“Ingredient
Supplier” means a company that is primarily in the business of providing
ingredients, flavors or food additives to food or beverage customers.


 


“Ingredient
Supply Product(s)” means Selected Enhancing Compound(s) sold as [***]
intended for use in a nonalcoholic beverage; and [***] in each case intended
for use in a Third Party Beverage Manufacturer Product Category.


 


“Initial
Regulatory Plan” has the meaning set forth in Section 4.2.


 


“Intended
Purpose” has the meaning set forth in Section 4.3.


 


“Invention”
means any invention, including any new and useful process, method, or
composition of matter, or improvement thereto, whether or not patentable, made
in the course of the applicable Collaborative R&D Program.


 


“Joint
Invention” has the meaning set forth in Section 10.4 .


 


“Joint
Patent Rights” means all Patent Rights containing one or more claims to a Joint
Invention.


 


“Know-How”
means information and data, whether or not patentable, which is not generally
known to the public, including, without limitation, designs, concepts,
formulae, software, techniques, practices, processes, methods, knowledge,
skill, experience, expertise, technical information and data, including
pharmacological, toxicological and clinical test data, analytical and quality
control data, patent and legal data or marketing, sales and manufacturing data.


 


“Major
Countries” means [***].  A “Major Country”
means any of the foregoing.


 


“MARs”
has the meaning set forth in Section 8.5.1.


 


“Materials”
mean antagonists, agonists, inhibitors, compounds, and chemicals, including without
limitation, Compounds, Collaboration Compounds and Selected Compounds.


 


“Minimum
Annual Royalty Categories” means the following categories and “Minimum Annual
Royalty Category” means any one of the following categories:  [***].


 


“Mutual
Nondisclosure Agreement” means the Mutual Nondisclosure Agreement entered into
between SENOMYX and Pepsi Cola Company dated [***], as amended on [***] and
[***].


 


“Natural
Ago-Enhancing Compounds” means a Natural Compound under the Control of SENOMYX
that when [***] that is equivalent to [***] in an in vitro assay and in Taste Tests.


 


“Natural
Compound(s)” means a compound(s) that is discovered in extracts from
natural materials that would meet the definition of “Natural flavouring
substances” set forth in 


 


55

















 


Codex
Alimentarius Commission Guidelines for the Use of Flavourings (CAC/GL 66-2008).


 


“Natural
Enhancing Compound(s)” means a Natural Compound under the Control of SENOMYX
that has an enhancing effect on the sweetness of a Target Sweetener of at least
[***] in an in vitro assay and in
Taste Tests when used [***].


 


“Natural
Enhancing Compound Program” means the research and development program to
discover Natural Enhancing Compounds and develop any Selected Natural Enhancing
Compounds, pursuant to the applicable Research Plan.


 


“Natural
Sweetener Compound(s)” means a Natural Compound(s) under the Control of
SENOMYX that (a) is a sweetener and is not an Enhancing Compound, or (b) is
a Natural Ago-Enhancing Compound , in either case where such Natural Compound(s) meets
the desired criteria set forth by the Steering Committee and incorporated into
the minutes of the applicable Steering Committee.


 


“Natural
Sweetener Compound Program” means the research and development program to
discover Natural Sweetener Compounds and develop any Selected Natural Sweetener
Compounds pursuant to the applicable Research Plan.


 


“Net
Sales” means, with respect to any Ingredient Supply Product, [***] by
Ingredient Suppliers on any sales or other transfer of the Ingredient Supply
Product, less the following items:


 


i)                 [***];


 


ii)              [***];


 


iii)           [***];


 


iv)          [***]; and


 


v)             [***].


 


“Patent
Rights” means all rights associated with all U.S. or foreign (including
regional authorities such as the European Patent Office) regular or provisional
patents or patent applications, including any continuation,
continuation-in-part, renewal, request for continued examination or division
thereof or any substitute application therefor or equivalent thereof, and any patent
issuing thereon, including any reissue, reexamination or extension thereof and
any confirmation patent, substitutions, confirmations, revalidations, revisions
or registration patent or patent of additions based on any such patent.


 


“PEPSICO
Criteria” means the list of criteria that PEPSICO has established as desirable
for PEPSICO’s evaluation of a Collaboration Compound (including, for example,
[***] which shall be presented to the applicable Steering Committee and
reflected in the minutes at the meeting at which such criteria are first
presented, which shall be not later 


 


56

















 


than
[***], as such criteria may be updated by [***], and which will be reflected in
the minutes for the applicable Steering Committee meeting.


 


“PEPSICO
Know-How” means all Know-How Controlled by PEPSICO as of the Effective Date
that is not covered by PEPSICO’s Patent Rights and that is provided to SENOMYX
and necessary or appropriate for the activities to be conducted by SENOMYX under
this Agreement.


 


“PEPSICO
Patent Rights” means all Patent Rights Controlled by PEPSICO as of the
Effective Date, including, without limitation, any Patent Rights containing one
or more claims to an Invention made solely by employees or agents of PEPSICO,
but excluding any Joint Patent Rights, that are provided to SENOMYX for the
activities to be conducted under this Agreement.


 


“PEPSICO
Technology” means PEPSICO Patent Rights and PEPSICO Know-How.


 


“Percentage
of Sweetener Reduction or PSR” means [***]. The PSR will be adjusted on a [***]
basis to reflect any changes to a product formula that were implemented [***].
With respect to a Beverage Base, the PSR will be calculated by [***].


 


With
respect to a Beverage that is a [***] of a product that PEPSICO or its
Affiliates [***], the Selected Compound’s PSR will be calculated as
(a) the total [***] the total [***] by (b) the total [***] the Selected Compound);


 


With
respect to a Beverage for which PEPSICO or its Affiliates does not [***], the
Selected Compound’s PSR will be calculated in accordance with [***].


 


“Products”
means Beverages, Beverage Bases, and Ingredient Supply Products.


 


“Regulatory
Approval” means, with respect to a Collaboration Compound, any regulatory
approvals, licenses, permits or consents issued by any governmental authority,
authorizing the use of such Collaboration Compound in the Field.


 


“Regulatory
Plan” means an Initial Regulatory Plan as updated as contemplated under Section 5.1.


 


“Research
Plans” means the detailed scientific research and development plans that define
the key activities, responsibilities of the parties, research milestones and
timelines for the Synthetic Enhancing Compound Program, Natural Enhancing
Compound Program and Natural Sweetener Program.


 


“Royalty
Report” has the meaning set forth in Section 8.7.2.


 


“Royalty
Shortfall” has the meaning set forth in Section 8.5.1.6.


 


“Selected
Compound(s)” has the meaning set forth in Section 4.3.


 


57

















 


“Selected
Enhancing Compound(s)” means a Selected Compound(s) that is an Enhancing
Compound(s)


 


“Selected
Natural Enhancing Compound(s)” means a Selected Compound(s) that is a
Natural Enhancing Compound(s).


 


“Selected
Natural Sweetener Compound(s)” means a Selected Compound(s) that is a
Natural Sweetener Compound(s).


 


“Selected
Synthetic Enhancing Compound(s)” means a Selected Compound(s) that is a
Synthetic Enhancing Compound(s).


 


“SENOMYX
Know-How” means all Know-How that is not covered by the SENOMYX Patent Rights
and that is necessary or appropriate for the activities to be conducted under
this Agreement, and which is Controlled by SENOMYX as of the Effective Date or
developed by SENOMYX in the course of the Collaborative R&D Program.


 


“SENOMYX
Patent Rights” mean all Patent Rights that are necessary or appropriate for the
activities to be conducted under this Agreement, and which are Controlled by
SENOMYX as of the Effective Date or developed by SENOMYX in the course of the
Collaborative R&D Program, but excluding any Joint Patent Rights.


 


“SENOMYX
Technology” means all of the SENOMYX Patent Rights and SENOMYX Know-How,
including Target IP.


 


“Synthetic
Compound” means any Compound that is not a Natural Compound.


 


“Synthetic
Enhancing Compound” means a Synthetic Compound under the Control of
SENOMYX  that has an enhancing effect on
the sweetness of a Target Sweetener of at least [***] in in vitro assays and Taste Tests when used
[***].


 


“Synthetic
Enhancing Compound Program” means the research and development program to
discover Synthetic Enhancing Compounds and develop any Selected Synthetic
Enhancing Compounds, pursuant to the applicable Research Plan.


 


“Target
IP” means the SENOMYX Patent Rights and SENOMYX Know-How claiming or covering
[***].


 


“Target
Sweetener(s)” means sucrose, fructose and high fructose corn syrup (“HFCS”).


 


“Taste
Tests” means based on the [***].


 


“Term”
has the meaning set forth in Section 14.1.


 


“Term
Sheet” means the Term Sheet entered into between the parties dated June 23,
2010.


 


“Therapeutics” means any Compound(s) which [***].


 


58

















 


“Third
Party(ies)” means any party other than SENOMYX or PEPSICO or their respective
Affiliates.


 


“Third
Party Beverage Manufacturer Product Categories” means all Third Party Manufacturer
Beverages and Third Party Manufacturer Beverage Bases in the Exclusive Product
Categories, except for the following specified product categories: Carbonated
Soft Drinks, Hydration Beverages, Juices and Juice Flavored Drinks, and RTD
Tea.


 


[***].


 


Notwithstanding the foregoing, each of the
above-referenced product categories (Carbonated Soft Drinks, Hydration
Beverages, Juices and Juice Flavored Drinks, and RTD Tea) specifically excludes
all beverages that contain [***]% or greater milk (or milk substitute, such as
soy milk) content.


 


“Third
Party Manufacturer Beverages” means non-alcoholic beverages sold under the
trademark(s) of a Third Party intended for use or consumption by an end
user, whether in a ready-to-drink format, or as a liquid or frozen
concentrate.  Third Party Manufacturer
Beverages excludes all dry-powdered beverages.


 


“Third
Party Manufacturer Beverage Bases” means concentrated flavor combinations made
and sold by a Third Party (such as bases sold to a bottler or for foodservice
for use in fountain drinks) which are then used to make non-alcoholic beverages
that are intended for use or consumption by an end user.


 


“Unit
Case” means the equivalent of [***]. 
With respect to powdered, liquid and frozen concentrates, it means
[***].


 


“Valid
Claim” means a claim of a pending patent application or an issued patent within
the Patent Rights Controlled by SENOMYX or any of its Affiliates, which has not
(i) expired or been canceled; (ii) been declared invalid by an
unreversed and unappealable decision of a court or other appropriate body of
competent jurisdiction; (iii) been admitted to be invalid or unenforceable
through reissue, disclaimer or otherwise; or (iv) been abandoned.


 


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COLLABORATIVE RESEARCH, DEVELOPMENT,

COMMERCIALIZATION AND LICENSE AGREEMENT


 


Appendix B — Data Package
Information


 


The
following is a summary of the information to be provided in each Data Package.
From time to time, the Steering Committee may consider revisions to this
Appendix B. Any such revisions are subject to the approval of the Steering
Committee and will be attached to the minutes of the applicable Steering
Committee.


 


1.              Data Package
Contents


 


a.              [***] for
applicable Collaboration Compound


i.                                          [***] will be
included in an appendix.


 


b.              [***] of
applicable Collaboration Compound


i.                                          [***].


 


c.               Summary of [***] of
applicable Collaboration Compound in [***]


 


A summary will be provided of the [***].  The [***] will be included in an appendix.
The results of the [***] will reflect the following with respect to SENOMYX’s
[***]:


 


i.                                          [***]


 


d.              [***] for the
applicable Enhancing Compound (applies to [***] Only)


i.                                          [***].


 


e.               [***] Plan


 


SENOMYX’s preliminary plan to pursue regulatory approval for the
applicable Collaboration Compound as set forth in Section 4.2 of the
Agreement. The Initial Regulatory Plan will confirm [***].


 


2.              Additional Data
Package Contents for [***]


 


In
addition to the information set forth above, for a [***] the Data Package(s) will
also include a section regarding [***].


 


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SCHEDULE 8.4.1 (A)


 


ROYALTIES PER UNIT CASE — SUCROSE ENHANCING COMPOUNDS


 


[***]


 


61

















 


SCHEDULE 8.4.1 (B)


 


ROYALTIES PER UNIT CASE — FRUCTOSE ENHANCING COMPOUNDS


 


[***]


 


62