Document:

exv10w30

 

Exhibit 10.30

LIMITED LIABILITY COMPANY AGREEMENT

of

WILLMAR/METAMORPHIX TURKEY JOINT VENTURE, LLC

     WILLMAR POULTRY COMPANY, INC., a corporation duly incorporated pursuant to the laws of
Minnesota with principal place of business at Box 753, Willmar, Minnesota 56201-0753 USA
(Hereinafter referred to as “WILLMAR”)

and

     METAMORPHIX, INC., a corporation duly incorporated pursuant to the laws of Delaware, having a
principal place of business at 8510A Corridor Road, Savage, Maryland 20763, USA (Hereinafter
referred to as “MMI”), has entered into this Limited Liability Company Agreement as of this 4th day
of September, 2002.

Recitals

     WHEREAS Willmar is a major producer of, and supplier of the turkey industry in North America
and maintains facilities necessary to test and evaluate products related to such industry under
commercial conditions;

     AND WHEREAS MMI is developing products based upon diminishing the biological
activity of MyostatinTM (GDF-8) to improve livestock production efficiency, enhance
meat quality, or both;

     AND WHEREAS Willmar, by its December 1, 1998 Research Agreement with University of Minnesota,
has an option to license from the University of Minnesota certain technology relating to the
immunizing of turkeys to diminish the biological activity of MyostatinTM (GDF-8);

     AND WHEREAS Willmar has filed a U.S. patent application relating to
MyostatinTM;

     AND WHEREAS MMI is the owner of U.S. patent applications relating to
MyostatinTM;

     AND WHEREAS MMI and Willmar have agreed to establish a joint venture (in the form of a limited
liability company duly organized pursuant to the laws of Delaware) for the purposes of developing,
manufacturing, marketing, and the sale of a MyostatinTM product or products, based upon
the most appropriate method available through ownership or license to Willmar and MMI, with the
intention that the future development costs of such products be minimized while expediting delivery
and marketing of the product to the turkey industry in North America.

Agreement

     Willmar and MMI hereby covenant, agree, represent, and warrant, as
follows:

INTERPRETATION AND DEFINITIONS

1

 

INTERPRETATION AND DEFINITIONS

1.01 Definitions

     For the purposes of this Agreement, unless there is something in the subject matter or
context inconsistent therewith, all words and phrases used herein which are denoted with
initial capital letters shall have the meanings assigned to them as set out in this
Agreement and, in addition, the following words and phrases shall have the following
meanings:

	 	(a)  	“Affiliate” shall mean, during the period the same pertains, any corporation,
person, firm, partnership, or other entity, whether de jure or de facto, which
directly or indirectly owns, is owned by, or is under common ownership with a Party to
this Limited Liability Company Agreement to the extent of not less than fifty (50%)
percent of the equity having the power to vote on or direct the affairs of the entity,
and any corporation, person, firm, partnership, or other entity actually controlled
by, controlling or under common control with a Party to this Limited Liability Company
Agreement. Notwithstanding the definition of Affiliate, Affiliate does not include the
University of Minnesota or any of its departments, divisions or wholly owned
subsidiaries.
	 
	 	(b)  	“Existing Confidentiality Agreement” shall mean that Confidentiality and
Non-Disclosure Agreement dated May 11, 2002 and executed by and between MMI and
Willmar.
	 
	 	(c)  	“MMI” means MetaMorphix, Inc.
	 
	 	(d)  	“Willmar” means Willmar Poultry Company, Inc.
	 
	 	(e)  	“MyostatinTM Technology” means those MyostatinTM (GDF-8)
immunizing agents (to be delivered via active or passive transfer), antagonists,
transgenic breeds that delete or diminish the biological activity of
MyostatinTM, and or MyostatinTM related Turkey-specific
diagnostic kits and services as the case may be now or in the future in respect of
which MMI has a right to grant licenses.
	 
	 	(f)  	“Licensed Field of Use” means the use in the Turkey market of the MMI and/or
Willmar Technology in the Territory for purposes of developing, making, using, and
selling MyostatinTM related Products and Services that delete or diminish
the biological activity of MyostatinTM (GDF-8).
	 
	 	(g)  	“MMI Technology” means inventions and know-how comprised of the use and
delivery of MyostatinTM (GDF-8) immunizing agents and antagonists as
described in the MMI Patents, and further includes all technical data, information,
and biological materials and reagents useful in working with the subject matter of the
MMI Patents which is now owned or subsequently acquired by MMI during the term of this
Agreement.
	 
	 	(h)  	“Willmar Technology” means inventions and know-how comprised of the use of the
delivery of MyostatinTM immunizing agents by passive transfer as described
in the Willmar Patents, and further includes all technical data, information and
biological materials and reagents useful in working with the subject matter of the
Willmar Patents which is now owned or subsequently acquired by Willmar during the
term of this Agreement.

2

 

	 	(i)  	“MMI Patents” means any patents granted pursuant to such U.S. Patent
Applications as are set forth in Schedule 1.01(i), or granted pursuant to any patent
applications subsequently filed that is based on any such MMI Patent and includes any
continuations, continuations-in-part, divisions, patents of additions re-issues,
renewals, and extensions of such patents and patent applications listing attached
hereto in Schedule 1.01(i), and all foreign patents corresponding to any of the
foregoing.
	 
	 	(j)  	“Party” shall mean either MMI or Willmar.
	 
	 	(k)  	“Territory” shall mean North America (and any additional areas
included in accordance with Section 9.02d).
	 
	 	(l)  	“Revenue” shall mean any and all gross revenues payable to or received by
Willmar at any time or in any form, for or on account of (i) the making, use, imports,
or other transfer of a Product and Service; (ii) the grant to any other person or
entity of a sub-license or any other rights to the rights granted under this
agreement; or (iii) any other use, practice, or exploitation for use in the Field and
Territory, of the MMI Technology and the Willmar Technology. Revenue shall include,
without limitation, up-front fees, equity, milestone payments, development payments,
maintenance fees, success fees, service revenues, shares of profits and royalties.
	 
	 	(m)  	“Willmar Patents” means any patents granted pursuant to such U.S. Patent
Application 09/754,826 (University of Minnesota File Number Z00173), or granted
pursuant to any patent applications subsequently filed that is based on the Willmar
Technology and includes any continuations, continuations-in-part, divisions, patents
of additions, re-issues, renewals, and extensions of such patents and all foreign
patents corresponding to any of the foregoing.
	 
	 	(n)  	“Registration” means the issuance of approvals from or by regulatory agencies
or other governmental authorities necessary to authorize sale of a Product in a
particular country or jurisdiction.
	 
	 	(o)  	“Product and Service” means any product, composition, process, service, or
method of use of any part thereof that deletes or diminishes the biological activity
of MyostatinTM in the licensed field of use and/or MyostatinTM
related Turkey-specific diagnostic kits and services and is made, directly with, from
or contains Willmar and/or MMI Technology.
	 
	 	(p)  	“Target Turkey Companies” means with the following but not limited to: Cargill,
Inc. and its subsidiaries and its contractual growing/processing partners; Jennie-O
Turkey Store, Inc.; Butterball Turkey Company; Pilgrim’s Pride; and Willmar Poultry
Company and its Affiliates and growing/processing partners.

     In addition, certain capital, profit, and loss related terms are defined in
Section 15.01.

1.02 Division and Heading

     The division of this Agreement into Articles and Sections and the insertion of
headings herein are for the convenience of reference only and shall not affect and shall
not be construed as affecting the interpretation hereof.

3

 

1.03 Gender

     In the Agreement, where the context requires or permits, words importing the masculine
gender shall include the feminine and neuter genders, and words importing the plural shall
include the singular and vice versa, and the words “person” and “persons” shall include
corporations, partnerships, and all other entities of whatsoever nature and kind.

1.04 Severability

     In the event any term or condition, covenant, or agreement or other provision contained
herein is invalid, illegal, or incapable of being enforced by reason of any rule of law or
public policy, such term or condition, covenant or agreement, or other provision, shall,
nonetheless, continue to be enforceable to the fullest extent permitted by law against any
person(s) and/or in any circumstance(s) other than those to whom and/or to which such term,
condition, covenant or agreement, or other provision, has been rendered or held invalid,
illegal, or incapable of being enforced.

ESTABLISHMENT AND STRUCTURE OF THE JOINT VENTURE AS A LIMITED LIABILITY COMPANY

	2.01  	       Willmar and MMI hereby form a limited liability company with a calendar fiscal year in the
United States of America under the laws of the State of Delaware which company will be
considered a partnership for United States income tax purposes and shall be known as
“Willmar/MetaMorphix Turkey Joint Venture, LLC” (herein such company is referred to as the
“LLC”).

	2.02  	       Willmar and MMI shall execute and file the Certificate of Formation which is attached to this
Agreement as, Exhibit 2.02 for the formation of the LLC. Willmar and MMI agree that the LLC
has been established in accordance with the approved Certificate of Formation and this Limited
Liability Company Agreement.

	2.03  	       All costs of formation, regulatory fees, taxes and other associated costs shall be borne by
the LLC.

ESTABLISHMENT OF BOARD OF GOVERNORS

	3.01  	       MMI and Willmar hereby establish a Board of Governors (“BOG”) which (a) shall determine
pricing of Products and Services, (b) shall review and approve plans and budgets for (i)
testing and evaluation of Products and Services, (ii) research and development of Products and
Services, (iii) manufacturing (subject to Section 10.1), and (iv) patent maintenance
pertaining to new inventions derived from the LLC, (i.e., collectively, “Development Costs”),
(c) shall decide according to Section 9.01 the marketing and distribution channel(s) of
Products and Services, and (d) shall oversee the business of the LLC (including the operation
of the Operating Group).

	3.02  	       The Board of Governors shall consist of five (5) governors. Each Party shall appoint two (2)
governors and the fifth governor shall be mutually appointed by the Parties. An interim person
may be elected as the fifth governor until a mutually agreed upon permanent fifth

4

 

	   	governor is elected. The Chairman of the BOG shall be the CEO of MMI. On the invitation of
the BOG, other persons and parties including the LLC accountant may participate in all or
those portions of the deliberations of BOG as may be appropriate. From the effective date
of this agreement, this initial appointments of the Parties to the BOG are as follows:

	 	 	 
	MMI
	 	WILLMAR
	 	 	 
	Edwin C. Quattlebaum, Ph.D.
	 	Richard Husinga
	 	 	 
	Linda Yaswen-Corkery, Ph.D.
	 	Lee Byberg

Mutually Appointed Governor:                                                                                                    

     Notwithstanding anything in this Agreement to the contrary, the BOG may not broaden
the purpose for which the joint venture was established or pursue opportunities other than
developing, manufacturing, marketing, and the sale of a MyostatinTM product or
products in Turkey, may not admit an additional Party (except as set forth in Section
12.01), may not obligate any member of the LLC beyond that member’s share of an agreed
budget, and may not authorize the LLC to file for bankruptcy without the consent of all of
the Parties (in their sole discretion) and on such terms and conditions as shall be agreed
upon by all the Parties.

	3.03  	       All meetings of the BOG shall be conducted on an as required basis upon
the call of any representative of the BOG with not less than one week’s notice. Meetings of
the BOG shall alternate between the offices of the Parties (or be conducted telephonically).
Each Party shall be responsible for their own respective costs in attending and participating
in BOG meetings and that of their representatives (and the LLC (a) shall reimburse the
mutually appointed governor for his reasonable expenses and (b) shall compensate him in a
manner decided upon by the BOG). As much as practical, communication between the Parties of
the BOG shall be effected regularly by phone, fax, and other similar communication, so as to
foster the regular open exchange of information and collaboration between BOG and the
Parties’ respective personnel. The Parties acknowledge and agree that either Party and their
representatives may upon reasonable notice and a non-disturbance basis visit the facilities
of the other to view and inspect those activities carried on for the LLC in such facilities.

	3.04  	       At its earliest opportunity, the BOG shall evaluate the MMI and Willmar
MyostatinTM technology for purposes of determining their respective ability to
improve production efficiency, enhance meat quality, or both. As a result of such evaluation,
the BOG shall determine the programs, studies, and activities to be pursued in respect to such
MyostatinTM technologies, and which are from time to time to be discontinued. It
shall be the responsibility of the BOG to agree

	3.05  	Budgets.

	 	3.05(a)	After formation of the LLC, no expenditure or in-kind contribution shall be made by
the LLC and/or the Parties until a budget for the current calendar year has been approved
by the BOG. This budget shall itemize and set limits on all foreseen expenditures or
in-kind
contributions by the LLC and the Parties individually on behalf of the LLC. The
budget shall establish pro-forma cash requirements of the LLC and a pro-forma
projection of the estimated capital contributions to be made by the respective
Parties to the LLC. Successive annual budgets shall be approved by the BOG at least
thirty (30) days prior to the end of the preceding calendar year. No expenditure by
the LLC shall be permitted, and no in-kind

5

 

	 	   	contribution by a party shall be recognized as admissible unless in accordance with an
approved budget or subsequently approved by the BOG.
	 
	 	3.05(b)	The approved budget shall be funded by cash contributions on behalf of the Parties as
provided in this Sections 3.05(b) and Sections 3.05(c) 3.06, or by revenues from Target
Turkey Companies. The Parties hereby commit each year to provide an annual minimum capital
contribution to the LLC (as may be required and agreed by the BOG on the basis of that
year’s budget) and as initially provided in Sections 3.06 and 13.03. Such annual minimum
cash contributions by the Parties shall jointly not exceed the aggregate of 1) the actual
expenditure of the LLC for the year and its current liabilities at year end, 2) the total
in-kind contribution of the Parties as invoiced to the LLC during the year, and unpaid,
and 3) such reasonable level of working capital as the BOG may agree.
	 
	 	3.05(c)	All approved out-of-pocket expenditures and in-kind contributions by the Parties shall
be invoiced monthly by each contributing party to the LLC and recognized as an advance
capital contribution of the respective parties to their Capital Account as contemplated by
Section 15. Cash contributions as may be required of any Party may, at the election of that
Party, be contributed net of outstanding invoices due to such Party from the LLC. Cash
contributions received by the LLC shall be immediately used to reimburse invoiced payables
to the Parties to the extent such payables are not offset net in that Party’s cash
contribution.
	 
	 	3.05(d)	At the request of a Party contributing a non-cash contribution, approved non-cash
contributions incurred by such Party and invoiced by such Party to the LLC, shall be
credited by the LLC as one-half of such approved in-kind contribution to the contributing
Party’s capital account, and shall invoice the other Party for the other half of such
in-kind contribution, (whereupon such other Party shall pay such amount to the LLC within
thirty (30) days), and shall pay such contributing Party the other half in reimbursement
from current cash resources or from the receipt of the funds from the other Party. The
remittance of such funds by the other Party to the LLC shall be credited to that Party’s
Capital Account.
	 
	 	3.06  	       No contribution of either Party shall be recognized as a contribution to the LLC if (a)
incurred prior to the formation and establishment of the LLC or (b) not approved by the
BOG. The Parties hereby commit to provide, jointly and in equal shares, an initial capital
contribution of up to Five Hundred Thousand Dollars ($500,000) for expenses as may be
approved by the BOG on an as-required basis. Upon the execution of this Agreement, the
Parties will each contribute Five Thousand Dollars ($5,000) to the LLC to be deposited into
a bank account held by the LLC and subsequently, the remaining Four Hundred Ninety Thousand
Dollars ($490,000) shall be provided as required within thirty (30) days of the LLC
incurring approved expenditures or being invoiced for approved expenditures or
contributions by the Parties.

ESTABLISHMENT OF LLC OPERATING GROUP

	4.01  	          MMI and Willmar shall forthwith upon execution of this Agreement establish a three person
Operating Group (OP) which shall be overseen and directed by the BOG. The Manager of the LLC
OP shall be the MMI Vice President of Business Development (or, upon and after launch of
product marketing and selling, such other governor as may be selected by the BOG). The
Manager is responsible for facilitating day to day operations within the LLC. The Manager
shall also be a governor on the BOG. Each Party shall appoint one technical person to the OP.

6

 

            And from the effective date of this agreement the initial appointments of the
Parties to the OP are as follows:

	 	 	 	 	 
	MMI
	 	 	 	WILLMAR
	 	 	 	 	 
	Linda Yaswen, Ph.D.
	 	Manager	 	 
	 	 	 	 	 
	Ronald L. Stotish, Ph.D.
	 	Technical
	 	Daryl Emery

	4.02  	       All meetings of the OP shall be conducted, as required, based upon the call of the Manager or
Willmar’s technical representative with not less than one week’s notice. Meetings of the OP
shall alternate between the offices of the Parties (or be conducted telephonically). Each
Party shall be responsible for their own respective costs in attending and participating in
OP meetings. As much as practical, communication between the Parties of the OP
shall be effected regularly by phone, fax, and other similar communication, so as to foster
the regular open exchange of information and collaboration between OP and the Parties
respective personnel. The Parties acknowledge and agree that either Party and their
representatives may upon reasonable notice and a non-disturbance basis visit the facilities of
the other to view and inspect those activities carried on for the LLC in such facilities.

	4.03  	       At its earliest opportunity, the OP shall evaluate the MMI and Willmar MyostatinTM
technology for purposes of determining their respective ability to improve production
efficiency, enhance meat quality, or both. The evaluation shall lead to a recommendation to
the BOG with a preferred course of action.

	4.04  	       The OP shall evaluate the various product development and Registration steps and establish
responsibilities of the respective Parties as to conduct of the work and the appropriate
budget allocation for each step of product development and Registration as provided for in
Section 3.05(a). Such budget allocation shall reflect the reasonable costs expected to be
incurred by a Party or its affiliates in performing its obligations hereunder including
overhead, but excluding profit. The evaluation shall lead to a recommendation to the BOG with
a preferred course of action and proposed budget.

LICENSES OF TECHNOLOGY TO THE LLC

	5.01  	       Willmar hereby licenses to the LLC all Willmar Technology together with any and all
improvements, continuations, continuations-in-part, reissuances, and related foreign filings
which may come into Willmar’s possession in respect to the Licensed Field of Use such that the
LLC shall be exclusively entitled to practice such Willmar Technology in the Licensed Field of
Use in the Territory. In respect to any of the Willmar Technology which is subject of a
license from a third party, Willmar shall sublicense such subject matter to the LLC in a
separate sublicense agreement. In such sublicense the LLC is solely responsible for all third
party payments, benefits, or consideration which shall become payable pursuant to such
licenses to any third party. Willmar agrees that it shall in respect of any patent
applications, patent filing or prosecutions diligently maintain and prosecute such patent
applications, patent filings, or prosecutions at its own expense except as otherwise permitted
by the OP. Such maintenance, application, or prosecution costs and any third party payments or
benefits incurred by Willmar in connection with the sublicenses
hereinbefore referred to shall not constitute costs constituting contribution to the LLC by
Willmar.

7

 

	5.02  	       MMI hereby licenses to the LLC all MMI Technology together with any and all
improvements, continuations, continuations-in-part, reissuances, and related foreign filings which
may come into MMI’s possession in respect to the Licensed Field of Use such that the LLC shall be
exclusively entitled to practice such MMI Technology in the Licensed Field of Use in the
Territory. In respect to any of the MMI Technology which is subject of a license from a third
party, MMI shall sublicense such subject matter to the LLC in a separate sublicense agreement. In
such sublicense the LLC is solely responsible for all third party payments, benefits or
consideration which shall become payable pursuant to such licenses to any third party. MMI agrees
that it shall in respect of any patent filing or prosecutions diligently maintain and prosecute
such patent applications, patent filings, or prosecutions at its own expense except as otherwise
permitted by the OP. Such maintenance, application, or prosecution costs and any third party
payments or benefits incurred by MMI in connection with the sublicenses hereinbefore referred to
shall not constitute costs constituting contribution to the LLC by MMI.
	 
	5.03.  	       The LLC shall pay any and all royalties due to the licensors of any Willmar Technology
and any MMI Technology, respectively, from sales of the LLC. Willmar and MMI shall each be
responsible to their respective licensors for any and all non-species specific milestone payments,
non-species specific license fees, patent cost reimbursements, and the like.

SHARING INFORMATION

	6.01  	       MMI and Willmar shall freely exchange all relevant information (except as the disclosure
of such information may be restricted by such Party’s confidentiality agreements with other
entities), i.e. between MMI and LLC and between Willmar and LLC. Such information may benefit MMI
for instance if the LLC had turkey MyoVaxTM information that would assist MMI in the
development of MyoVaxTM for chicken/swine. Conversely, information on Chicken
MyoXtraTM might help Turkey MyoXtra development. Willmar, for example,
might have breeding information that it has developed that might help the LLC and may learn from
the LLC experience breeding approaches helpful to Willmar generally. However, other than for
research and development, and ultimately commercialization purposes for LLC Product and Services,
this sharing of information shall not give MMI any rights to use Willmar’s proprietary breeding
technology and patents and shall not give Willmar any rights to use MMI’s proprietary
MyostatinTM (GDF-8) or other technology or patents Any commercial exploitation
performed by the LLC and/or MMI of Willmar’s breeding technology must be approved by Willmar.
	 
	6.02  	The Parties acknowledge that the Existing Confidentiality Agreement shall control all
disclosures from its effective date up to and until the Effective Date of this Agreement. The
Parties agree that the Existing Confidentiality Agreement is hereby superseded as of the Effective
Date of this Agreement by the terms and conditions set forth in this Section 6.02 and the other
applicable terms and conditions set forth in this Agreement, as follows:

	 	(a)  	The Parties acknowledge that during the course of this Agreement
they may each receive (and hence become a “Receiving Party”) from the other
(the “Disclosing Party”) information electronically, in writing, or orally,
that is proprietary and/or confidential and of commercial value to the
Disclosing Party. The Parties agree that they shall take all reasonable
measures to protect the secrecy of and avoid
disclosure and unauthorized use of the Confidential Information. Without
limiting the foregoing, the Parties shall take at least those measures that
each takes to protect its own confidential information of a similar nature,
but in no event less than a reasonable degree of care. Both Parties shall
immediately notify the other in the event either Party has knowledge of any
unauthorized use or

8

 

	 	   	disclosure of the Confidential Information.
	 
	 	(b)  	Except to the extent expressly authorized by this Agreement, the
Parties agree that the Receiving Party shall keep confidential and shall not
publish or otherwise disclose, and shall not use for any purpose, any
Confidential Information furnished to it by the Disclosing Party pursuant to
this Agreement, regardless of the medium on which it is provided, including
know-how, except to the extent that it can be established by the Receiving
Party by competent proof that such information:

	 	(i)  	was already known to the Receiving Party, other than under an
obligation of confidentiality, at the time of disclosure by the Disclosing
Party;
	 
	 	(ii)  	was generally known to the public or otherwise
part of the public domain at the time of its disclosure to the
Receiving Party;
	 
	 	(iii)  	became generally available to the public or
otherwise part of the public domain after its disclosure through no
fault of the Receiving Party, or its Affiliates.
	 
	 	(iv)  	was subsequently lawfully disclosed to the
Receiving Party by a Third Party who did not require the Receiving
Party to hold it in confidence or limit its use, provided it was not
obtained by such Third Party under an obligation of confidentiality
directly or indirectly from the Disclosing Party; or
	 
	 	(v)  	was independently discovered or developed by the
Receiving Party without the use of the Disclosing Party’s Confidential
Information, as can be documented by written records created at the
time of such independent discovery or development.

6.03 Permitted Disclosures.

	 	(a)  	Subject to Section 6.02, the Receiving Party may disclose the
Disclosing Party’s Confidential Information to the extent such disclosure is
required for complying with applicable laws, regulations, and/or court or
administrative orders; provided however, that in each case described in this
Section 6.03, the Receiving Party shall (i) promptly give advance notice to the
Disclosing Party of such disclosure requirement; (ii) promptly provide a copy
of the proposed disclosure; and (iii) use commercially reasonable efforts in
assisting the Disclosing Party to secure confidential treatment, including a
protective order, for such Confidential Information required to be disclosed.
	 
	 	(b)  	The Receiving Party may disclose the Disclosing Party’s
Confidential Information to the Receiving Party’s employees, contractors, or
consultants who (i) have a need-to-know, and (ii) are party to a
confidentiality and non-disclosure agreement with the Receiving Party
prohibiting such employee, contractor, or consultant from disclosing or using
Confidential Information in the manner and with the same
degree of care as set forth in this Section 6.02. Each such disclosure shall
be limited in the scope of information provided if such recipient has a need
to know only specific information.

9

 

	 	(c)  	Either Party, as is customary or required in accordance with
securities law and practice, but only to the extent so necessary, may disclose
the existence or terms of this Agreement. In the event either Party so desires
to make such a disclosure to an investor or in a public filing, such Party shall
(a) include only such information that is specifically required or requested.
	 
	 	(d)  	The Receiving Party, to the extent required or useful, may
disclose Confidential Information in any patent filing made under or envisioned
by this Agreement.
	 
	 	(e)  	Any confidentiality agreement under this Section 6.03 with any
Third Party shall have at last such terms and be as strict as Sections 6.02 -
6.07.

6.04 Copies

     A Receiving Party shall not make any copies of the Disclosing Party’s Confidential
Information without the prior written approval of the Disclosing Party or in strict
accordance with Section 6.03, except that the Parties may make copies that are reasonably
necessary for its internal planning for the commercialization, marketing, sale, and use of
products for the conduct of any regulatory approval, and manufacturing. Notwithstanding the
foregoing, the Receiving Party may retain one (1) sealed copy of the Disclosing Party’s
Confidential Information solely for legal archival purposes.

6.05 Publication

     Any Publications shall not include any of the Disclosing Party’s Confidential
Information without the Disclosing Party’s prior written consent and shall include
appropriate recognition of the other Party’s contributions in accordance with the standard
practice for assigning scientific credit, either through authorship or acknowledgement as
may be appropriate.

	 	(a)  	Joint Publication. In the event that the Parties agree
to jointly prepare a Publication of the results of any turkey-related research
and development in a mutually acceptable scientific journal the Parties shall
(i) jointly draft such Publication through the research representatives; (ii)
prepare such Publication within a mutually agreed upon time; and (iii) have
such joint Publication reviewed and approved by the duly authorized officers of
the Parties prior to submission of the article to the agreed upon scientific
journal. Except by mutual consent, neither Party shall release or otherwise
transfer any of the results from any research and development to any Third
Party or the public prior to the date on which such joint Publication will be
released.

6.06 Public Announcements

	 	(a)  	Except as may otherwise be required by law or regulation, neither
Party shall make any public announcement, directly or indirectly, concerning the
existence or terms of this Agreement (or the subject matter hereof) without
obtaining the prior consent of the other Party under Section 6.06(b); it being
envisioned, however, that there shall be an initial public announcement of the
existence of this Agreement.
	 
	 	(b)  	Unless otherwise agreed upon by the Parties, the reviewing
Party shall have ten (10) business days to consent (or decline to consent) to
an initial public announcement concerning the existence or terms of this
Agreement (or the subject matter hereof), such consent not to be unreasonably
withheld or delayed.

10

 

	 	   	The aforegoing “reasonable” standard of consent shall not apply to a
proposed public disclosure of Confidential Information, which may be
prohibited by the Disclosing Party in its sole and absolute discretion.
	 
	 	(c)  	If either Party shall be required by law or regulation to make a
public announcement concerning the existence or terms of this Agreement, such
Party shall (a) include only such information in the public announcement that
is specifically required, and (b) give at least forty-eight (48) hours prior
advance notice to the other Party and obtain the other Party’s comments.

6.07 Equitable Relief

     MMI and Willmar, in their role as Receiving Parties under this Agreement, hereby
acknowledge and agree that with respect to the nature of the Confidential Information,
there may be no adequate remedy at law for any breach of their obligations as Receiving
Party under the confidentiality provisions of this Agreement, that any such breach may
result in irreparable harm to the Disclosing Party, and therefore, notwithstanding Section
17.10, that upon any such breach the Disclosing Party shall be entitled to seek equitable
relief, in addition to whatever remedies it might have at law, including injunctive relief,
specific performance, or such other relief as the Disclosing Party may request to enjoin or
otherwise restrain any act prohibited hereby, as well as the recovery of all reasonable
costs and expenses, including attorneys’ fees incurred.

OWNERSHIP OF INTELLECTUAL PROPERTY

	7.01  	       In any event, (1) MMI shall exclusively own any patent improvements to its
MyostatinTM (GDF-8) technology and/or additional or improved know-how relating to
such technology and MMI may use any data produced by the Research in the prosecution of its
existing patent applications and (2) Willmar shall exclusively own any patent improvements to
its hatching, breeding, and commercial growing technology and/or additional or improved
know-how relating to such technology (and not related to passive immunization to diminish
MyostatinTM activity). In addition, any joint inventions (not relating to
MyostatinTM (GDF-8) or hatching, breeding and growing technologies and not
constituting an improvement upon any Party’s patent estate) shall be owned by the LLC but
shall be licensed royalty-free to MMI if useful to its MyostatinTM (GDF-8)
products and services and/or licensed royalty-free to Willmar if useful to its production or
to turkey-related products and services.

NON-COMPETITION

	8.01  	       Subject to Section 9 below, the Parties covenant and agree that during the continuance of
this Agreement and the conduct of business by the LLC that neither of them in the Territory
shall alone, or in conjunction with any other person, whether as shareholder, advisor,
employee or in any other capacity develop or market biologic products in the Licensed Field
of Use in the Territory if such products would be competitive with the Products and Services
for which the LLC has obtained Registration in any such jurisdiction within the Territory.
The LLC shall obtain similar agreements in favor of the LLC from their respective affiliates.

MARKETING ENTITLEMENTS

11

 

	9.01  	       The BOG shall appoint individuals from MMI and Willmar to jointly pursue and offer
“Combined Funding and Licensing Agreements(s)”, similar in nature to the agreements
achieved by MMI in the chicken industry, with the “Target Turkey Companies,” as follows:

	 	a)  	The LLC shall have exclusive rights to offer such Combined
Funding and Licensing Agreement(s) for Products and Services covered in the
Licensed Field of Use within the Territory to the Target Turkey Companies. It
is the intent of the LLC to capture a minimum of 30% of the value added by the
Technology.
	 
	 	b)  	The LLC shall offer to the Target Turkey Companies two Funding
and Licensing alternatives: (1) Direct Cash Contribution for Licensing
Agreement and/or (2) Funding method that allows licensing rights by funding the
LLC through a “Premium” paid per poult by the Target Turkey Companies for
poults purchased from Willmar and/or Ag Forte, LLC, and/or for poults placed
and/or sold by Willmar and its Affiliates. Such Premium per poult and any
associated up front, milestone, equity or other development or incentive
payments shall be collected by Willmar and Ag Forte, LLC on behalf of the LLC
and forwarded to the LLC on a monthly basis.
	 
	 	c)  	The BOG shall approve and the LLC shall pay for the cost of
marketing and distribution of Products and Services as it relates to sales to
Target Turkey companies holding a Combined Funding and Licensing Agreement,
funding the LLC either with direct cash contributions and/or through a Premium
paid per poult.
	 
	 	d)  	MMI shall provide Products and Services to the LLC on an “at
cost” basis (which shall include a reasonable allocation, in accordance with
GAAP, of the cost of facilities and other overhead).

	9.02  	       While it is the intent of the LLC to market in accordance with Section 9.01, to the extent
that the LLC does not enter into Agreements with customers as defined in Section 9.01 (a) and
Section 9.01 (b), Willmar will at its option, after twelve months following Registration of a
Product in the United States, have the right to enter into a marketing and distribution
agreement with the MMI and/or the LLC (which agreement shall be acceptable to each Party) for
the Product(s) and Services covered in the Licensed Field of Use for North America (i.e., The
United States, Canada, and Mexico). This marketing agreement shall aim to capture a minimum
of 30% of the value added by the Technology and provide among other matters normally subject
of such an agreement as follows:

	 	a)  	Willmar will make all diligent efforts to develop the
market for and market the Product and/or Service in North America in
consideration for a marketing fee approved by the BOG which shall include a
reasonable allocation, in accordance with GAAP, of the cost of facilities and
other overhead. All Revenue arising from such marketing and distribution effort
shall accrue to the benefit of the LLC.
	 
	 	b)  	The Marketing and Distribution Agreement shall be exclusive in
respect to Willmar for North America, with exception of any marketing performed
directly by the LLC to target turkey customers as described in Section 9.01(a)
and Section 9.01 (b).
	 
	 	c)  	MMI will not license and/or agree to any other party, including
MMI itself, to import the product(s) from other countries and/or to market from
within North America in competition with the LLC and/or as long as Willmar is
maintaining exclusive Marketing and Agreement as specified in Section 9.02 (b)
and 9.02 (d).

12

 

	 	   	cannot be reached, the LLC thereafter (for up to one year) shall be
entitled to negotiate a Marketing and Distribution Agreement on same terms or
better terms (i.e., more favorable to the LLC) with another entity. However, if
the LLC desires to enter into a Marketing and Distribution Agreement on terms
less favorable to the LLC, the LLC first must reinitiate the “first offer”
process of this Section 9.02(d).

	9.03  	       MMI retains the exclusive right to market, distribute, license such rights, or otherwise
exploit any and all MMI Technology and/or Willmar Technology royalty-free outside of the
field. MMI will pay any royalty fee to the University of Minnesota for Willmar Technology
used outside of the field. MMI shall be granted a royalty-free license to any LLC information
and know-how for non-field purposes.

MANUFACTURING ENTITLEMENTS

	10.01  	       MMI shall have a right to manufacture or have manufactured the Product(s) and/or Services
on behalf of the LLC on commercially usual terms and conditions and at a cost to the LLC
equal to that which would be available to the LLC through alternative manufacturers. If such
right is exercised by MMI, the term of the manufacturing agreement between LLC and MMI shall
be for an initial five year period following release for sale of the first batch of Product
manufactured by, or on behalf of, MMI. At the expiration of any MMI manufacturing agreement
or any third party agreement, provided that MMI has given at least six (6) months notice to
the LLC and Willmar, MMI shall again have the first right to manufacture the Product(s).

SPECIFIC RESPONSIBILITIES OF EACH PARTY

	11.01  	       MMI, subject to BOG approval and budgetary requirements, shall be responsible for providing
the LLC with the necessary advice and information with respect to Registration
requirements for North America in respect to Products.

	11.02  	       MMI, subject to BOG approval and budgetary requirements, shall be responsible upon
identification of a Product or Products by the LLC to prosecute arid diligently pursue
Registration of Product at the cost of the LLC.

	11.03  	       MMI, subject to BOG approval and budgetary requirements, shall be responsible for
research and Development of the Products and Services.

	11.04  	       MMI, subject to BOG approval and budgetary requirements, shall be responsible for patent
application and maintenance for joint inventions on behalf of the LLC, at the LLC’s cost.

	11.05  	       Willmar, subject to BOG approval and budgetary requirements, shall be responsible for
supervision and conduct of pre-clinical and clinical trials necessary and desirable for the
development and Registration of a Product at the cost of the LLC. Clinical trials may or may
not be held at Willmar facilities given regulatory requirements and other regulated trial
design requirements.

13

 

	   	be held at Willmar facilities given regulatory requirements and other regulated trial
design requirements.

PARTIES AND PERCENTAGE INTEREST

	12.01  	       The names, and addresses of the Parties of the LLC are as set forth on Schedule 12.01
attached to and made a part of this Agreement. Each Party shall have a percentage interest
(“Interest” or “Percentage of Interest”) in the LLC as set forth opposite his name on Schedule
12.01. Additional persons may be admitted to the LLC upon the consent of all of the Parties
(in their sole discretion) and on such terms and conditions as shall be agreed upon by all the
Parties and any new Parties. Unless otherwise agreed (or as may occur in accordance with
Section 13.03), the percentage interest of each Party in the LLC shall be 50%, and all capital
contributions to the LLC shall be funded 50% by each Party.

CAPITAL AND LOANS

	13.01  	       The Parties, in accordance with Section 3.06, have made initial capital contributions in
cash to
the LLC as set forth on Schedule 13.01.

	13.02  	       No additional Capital Contributions have been agreed to be made by any Party (except as set
forth in Section 3.06 and Section 13.03). The Parties shall make additional contributions
and/or loans to the LLC at such time or times, and upon such conditions, as the Parties may
determine or in accordance with Section 3.06 and in Section 13.03.

	13.03  	       If, as, and when the Board of Governors approves budgets, in accordance with Sections 3.01
and 3.05(a), each Party shall provide up to $500,000 per calendar year (or such alternative
amount as may be agreed under section 3.05(a)) to support and fund such budgets (whether in
the form of in-kind effort and/or cash, as may be determined by the BOG) for at least five (5)
years (with the contribution mandated by Section 3.06 being deemed to be the contribution for
the year 2002). The minimum $2,500,000 per Party commitment shall continue beyond five (5)
years (but not beyond 2011 unless Parties mutually agree to extend this commitment) if the
full, cumulative contribution of $2,500,000 per Party is not drawn down during the five year
period. The Parties acknowledge and agree that this aggregate capital contribution of up to
Five Million Dollars ($5,000,000) is a presently reasonable estimate of the research and
development, Registration, testing evaluation of Products and Services, preliminary
manufacturing, and “new invention” patent maintenance costs for such period. In the event that
a Party fails to contribute an amount mandated by the BOG within the parameters established by
this Section 13.03 (and paid within the time provided in Section 3.06), the LLC shall (and any
non-defaulting Party awaiting reimbursement for in-kind contributions, on behalf of the LLC,
may) provide notice of default of payment to the defaulting Party. In the event that the
defaulting Party fails to make a required contribution of additional capital in accordance
with this Section 13.03 and Section 3.05 within thirty (30) days of the notice of default and
payment being given, the non-defaulting Party may elect one or more of the following courses
of action:

	 	(a)  	To loan money to the LLC in such amount as the defaulting
Party’s required contribution, such monies loaned to bear interest at the rate
of eighteen percent (18%) per annum on the unpaid principal amount, until fully
repaid. All such loans (and interest) by any non-defaulting Party to the LLC
shall be repaid out of the
Available Cash (in accordance with Section 15) of the LLC before any
defaulting Party shall receive any distribution; or

14

 

	 	(b)  	To direct the LLC to withhold distributions of
Available Cash to the defaulting Party until the amount withheld equals the
amount of capital which the defaulting Party is required to contribute to
the LLC in accordance with this Section 13.03, plus interest at the rate of
eighteen percent (18%) per annum; or
	 
	 	(c)  	To direct the LLC to treat the amount of any reimbursement for
in-kind effort not paid to the non-defaulting Party as an item to be entered on
the books of the LLC as an additional contribution of the non-defaulting Party,
which shall be treated as a preferred loan and interest in the LLC with
interest accruing at the rate of eighteen percent (18%) per annum on the amount
of such additional contribution per Section 13.03(a) above; or
	 
	 	(d)  	To direct that the LLC be dissolved (and its business affairs
wound down) with all MMI Technology being returned to MMI, all Willmar
Technology being returned to Willmar, and the non-defaulting Party shall have
exclusive license and right to use any joint inventions.

	 	   	If after contributing $2,500,000, one Party decides not to contribute any additional funds,
then the other Party may elect one of the following courses of action:

	 	(a)  	To loan money to the LLC in such amount as the non-paying
Party’s required contribution, such monies loaned to bear interest at the rate
of eighteen percent (18%) per annum on the unpaid principal amount, until fully
repaid. All such loans (and interest) by any paying Party to the LLC shall be
repaid out of the Available Cash (in accordance with Section 15) of the LLC
before any Party shall receive any distribution; or
	 
	 	(b)  	To direct the LLC to withhold distributions of Available Cash to
the non-paying Party until the amount withheld equals the amount of capital
which the non-paying Party is required to contribute to the LLC in accordance
with this Section 13.03, plus interest at the rate of eighteen percent (18%)
per annum; or
	 
	 	(c)  	To direct the LLC to treat the amount of any reimbursement for
in-kind effort not paid to the paying Party as an item to be entered on the
books of the LLC as an additional contribution of the paying Party, which shall
be treated as a preferred loan and interest in the LLC with interest accruing
at the rate of eighteen percent (18%) per annum on the amount of such
additional contribution, per Section 13.03(a) above.

	13.04  	The Provisions for additional contributions are for internal LLC purposes and may not be
relied on or exercised by third parties or creditors of the LLC.

CAPITAL ACCOUNTS

	14.01  	An individual Capital Account shall be maintained for each Party. Each Party’s Capital
Account shall be maintained as provided in Section 15. Except as otherwise provided in this
Agreement, no Party shall be paid interest on any Capital Contribution, and, no Party shall
have the right to withdraw or receive any return of his Capital Contribution. Under
circumstances requiring a return of any Capital Contribution, no Party shall have the right
to receive property other than cash, except as provided in Sections 15.01(a) and 15.01(c).

15

 

	   	         Increases or decreases to a Party’s Capital Account shall not affect a Party’s Percentage of
Interest.

     PROFITS, LOSSES, AND DISTRIBUTIONS

	15.01  	Defined Terms.

     For purposes of this Agreement, the following terms shall have the meaning specified
unless the context otherwise requires:

	 	a)  	Adjusted Capital Contributions — “Adjusted Capital Contributions”
means, for each Party, such Party’s Capital Contributions to the LLC, reduced (but not
below zero) by the amount of cash and the net fair market value of any other asset
distributed to such Party pursuant to Section 15.03(c) and Section 15.04 hereof.
	 
	 	   	Available Cash — “Available Cash” means, with respect to any taxable year of
the LLC, at the time of determination, the LLC’s remaining cash after the payment of
costs and expenses and payments on LLC’s debts reduced by such amounts as the Parties
by the affirmative vote of all the Parties and as approved by the BOG, shall deem
reasonably necessary to meet reasonably anticipated expenditures or liabilities of the
LLC, including, but not limited to, reasonable future budgeted expenditure, debts to
Parties who are creditors of the LLC and reserves for replacements and capital
improvements for which adequate provision has not otherwise been made in the
reasonable judgment of the Parties. Available Cash shall not include proceeds from
Capital Transactions or the amount of Parties’ Capital Contributions.

Capital Account — “Capital Account” means, as in the books of the LLC for any
Party, the Capital Contribution actually made by that Party, less all Profit allocated
to that Party, and plus the sum of (I) all Loss allocated to that Party, (ii) the
amount of cash and the fair market value of any other asset distributed to that Party
(net of liabilities, assumed or taken subject to by such Party), and (iii) such
Party’s distributive share of all other expenditures of the LLC not deductible in
computing its taxable income and not properly chargeable as additions to the basis of
LLC property. Each Party’s Capital Account shall be determined and maintained in
accordance with the Treasury Regulations adopted under Section 704(b) of the Code. Any
questions concerning a Party’s Capital Account shall be resolved by applying
principles consistent with this Agreement and the Treasury Regulations adopted under
Section 704 of the Code in order to ensure that all allocations to the Parties will
have substantial economic effect or will otherwise be respected for federal income tax
purposes.
	 
	 	d)  	Capital Contribution — “Capital Contribution” means the total amount
of cash and the fair market value (net of liabilities assumed or taken subject to by
the LLC), as approved by the BOG, of any other assets contributed (or deemed
contributed under Treasury Regulations Section 1.704-1(b)(2)(iv)(d)) to the LLC by a
Party.
	 
	 	e)  	Capital Proceeds — “Capital Proceeds” means the gross receipts received
by the LLC from a Capital Transaction and the amount of the Parties’ Capital
Contributions.
	 
	 	f)  	Capital Transaction — “Capital Transaction” means the sale, exchange, financing,
refinancing,
condemnation, casualty or other disposition of all, or substantially all, of the assets of
the LLC.
	 
	 	g)  	Code- “Code” means the Internal Revenue Code of 1986, as amended or any
corresponding
Section of any succeeding law.
	 
	 	h)  	Minimum Gain — “Minimum Gain” has the meaning set forth in Treasury Regulations
Section
1.704-2(d). Minimum Gain shall be computed separately for each Party, applying principles
consistent with both the foregoing definition and the Treasury Regulations promulgated under
Section 704 of the Code.
	 
	 	i)  	Negative Capital Account — “Negative Capital Account” means a Capital
Account with a
balance less than zero.
	 
	 	j)  	Positive Capital Account — “Positive Capital Account” means a Capital
Account with a balance greater than zero.

16

 

	 	k)  	Profit and Loss — “Profit and Loss” means for each fiscal year (which
shall be the same as the LLC’s taxable year) or other period, an amount equal to the
LLC’s taxable income or loss for such year or period, determined in accordance with
Code Section 703(a) (for this purpose, all items of income, gain, loss, or deduction
required to be stated separately pursuant to Code Sections 703(a)(1) shall be included
in taxable income or loss and inclusive of interest expense on loans arising under
Section 13); [provided, however, that in the event the Treasury Regulations
promulgated under Section 704 of the Code require book value of assets to be used in
determining profit or loss, then, for purposes of maintaining Capital Accounts in
accordance with such Treasury Regulations, the taxable income or loss shall be
computed using the book value of the assets.]
	 
	 	1)  	Restoration Amount — “Restoration Amount” means, with respect to each
Party, (a) the Party’s share of Minimum Gain, and (b) the amount, if any, which the
Party is unconditionally required under this Agreement or by law to contribute to the
LLC (including the Party’s share of debts of the LLC which the Party has guaranteed and
the outstanding amount of loans made by the Party to the LLC, in each case only to the
extent that the Party does not have a right of contribution from another Party).

15.02 Allocation of Profit or Loss from Operations and Distributions of Available Cash.

	 	a)  	Available Cash. For any taxable year of the LLC, Available Cash shall
be distributed to the Parties in proportion to their respective Percentages of
Interest.
	 
	 	b)  	Taxable Income or Taxable Loss. For any taxable year of the LLC, Profit
or Loss (other than Profit or Loss resulting from a Capital Transaction, which Profit
or Loss shall be allocated in accordance with the provisions of Sections 15.03(a) and
15.03(b)) shall be allocated equally to the Parties in proportion to their respective
Percentages of Interest; provided, however, that an amount of Profit equal to the
aggregate amount of Losses previously allocated to the Parties shall first be allocated
in proportion to the amount of Losses previously allocated to the Parties until the
aggregate Profit allocated pursuant to this proviso is equal to the aggregate Losses
previously allocated to the Parties.
	 
	 	c)  	Special Allocations. Notwithstanding any other provision to the contrary
in this Agreement, the following provisions shall apply:

     (1) Qualified Income Offset. No Party shall be allocated Losses or
deductions if such allocation causes a Party’s Negative Capital Account to
increase in excess of the Party’s Restoration Amount (any such Loss shall be
reallocated to those Parties whose Capital Accounts are not Negative in an
amount in excess of their Restoration Amount in accordance with their respective
share of Loss as set forth in Section 15.02(b)). If a Party receives (1) an
allocation of Loss or deduction (or item thereof) or (2) any LLC distribution,
which causes such Party to have a Negative Capital Account in excess of its
Restoration Amount or increase a Party’s Negative Capital Account at the end of
any LLC taxable year in excess of its Restoration Amount, then all items of
income and gain of the LLC (consisting of a pro rata portion of each item of LLC
income, including gross income and gain) for such taxable year shall be
allocated to such Party, before any other allocation is made of LLC items for
such taxable year, in the amount and in proportions required to eliminate such
excess as quickly as possible. This Section 15.02(c)(1) is intended to comply
with, and shall be interpreted consistently with, the “qualified income offset”
provisions of the Treasury Regulations promulgated under Section 704(b) of the
Code:

     (2) Minimum Gain Chargeback. If there is a net decrease in the
Minimum Gain during any taxable year, then each Party shall first be allocated
all items of gross income

17

 

and gain of the LLC for such taxable year (and, if necessary, for
subsequent taxable years) in an amount equal to the total net decrease in the
LLC’s Minimum Gain multiplied by that Party’s percentage of the LLC’s Minimum
Gain (as determined pursuant to Treasury Regulations Section 1.704-2(g) at the
end of the immediately preceding taxable year). This Section 15.02(c)(2) is
intended to comply with, and shall be interpreted consistently with, the
“minimum gain chargeback” provisions of the Treasury Regulations promulgated
under Section 704(b) of the Code.

	15.03  	Allocation of Profit or Loss from a Capital Transaction and Distribution of Capital
Proceeds.

	 	a)  	Taxable Income. Profit from a Capital Transaction shall be allocated as follows:

     (1) If one or more Parties has a Negative Capital Account, Profit from a
Capital Transaction shall be allocated first to those Parties, in proportion to
their Negative Capital Accounts, until all Negative Capital Accounts have been
increased to zero; then

     (2) Any remaining Profit not allocated pursuant to Section 15.03(a)(1)
shall be allocated to the extent necessary so that the Capital Account balances
of the Parties are equal to the amounts distributable to them pursuant to
Section 15.03(c) (this calculation shall assume that the Capital Transaction
does not result in the dissolution of the LLC even if the Capital Transaction
does result in the dissolution of the LLC).

	 	b)  	Taxable Loss. Loss from a Capital Transaction shall be allocated as follows:

     (1) If one or more Parties has a Positive Capital Account, Loss from
a Capital Transaction shall be allocated first to those Parties, in
proportion to their Positive Capital Accounts, until all Positive
Capital Accounts have been reduced to zero; then

     (2) Any remaining Loss not allocated to reduce Positive Capital Accounts
to zero pursuant to Section 15.03(b)(1) shall be allocated to the Parties in
proportion to their respective Percentages of Interest.

	 	c)  	Capital Proceeds. Distributions of net Capital Proceeds (after
repayment of all debts and liabilities of the LLC, including loans from Parties, and
the establishment of any reserves that all the Parties deem necessary) shall be made
in the following order of priorities:

     (1) First, to each Party, in proportion to each Party’s Adjusted Capital
Contributions, an amount equal to the amount of that Party’s respective
Adjusted Capital Contributions; then

     (2) If one or more Parties has a Positive Capital Account before any
further allocation of Profit pursuant to Section 15.03(a)(2), to those
Parties, in proportion to and to the extent of their respective Positive
Capital Account balances; and then

     (3) The balance to the Parties in proportion to their respective
Percentages of
Interest.

	15.04  	Liquidation or dissolution.

     In the event the LLC is liquidated or dissolved, the assets of the LLC shall be
distributed, after taking into account the allocations of Profit or Loss pursuant to Sections
15.02 or 15.03, if any, and prior distributions of cash or property pursuant to Sections 15.02
or 15.03, if any, to the Parties to the extent of and in proportion to the balances in their
respective Positive Capital Accounts.

18

 

	15.05  	General.

	 	a)  	The timing and amount of all distributions shall be as determined by all of
the Parties. It is the intention of the Parties that any monies available for
distribution to the Parties be distributed promptly.
	 
	 	b)  	If any assets of the LLC are distributed to the Parties in kind, those
assets shall be valued on the basis of their fair market value, and any Party
entitled to any interest in those assets shall receive that interest as a
tenant-in-common with all other Parties so entitled. The fair market value of the
assets distributed in kind shall be determined by the BOG or in the event of any
dispute by a Party by an independent appraiser selected by all the Parties and paid
for by the Party not accepting the BOG valuation. Based upon the fair market value,
the Profit or Loss for each unsold asset shall be determined as if that asset had
been sold at its fair market value, and the Profit or Loss shall be allocated as
provided in Section 15.03 and shall be properly credited or charged to the Capital
Accounts of the Parties prior to the dissolution of the assets in liquidation
pursuant to Section 15.04.
	 
	 	c)  	For each taxable year, all Profit and Loss of the LLC shall be allocated at
and as of the end of that taxable year. The allocations of Profit and Loss shall be
made within seventy-five (75) days after the end of such taxable year.
	 
	 	d)  	Except as otherwise provided ill this Section 15.05(d), all Profit and Loss
shall be allocated, and all distributions of cash shall be distributed, as the case
may be, to the persons shown on the records of the LLC to have been Parties as of the
last day of the taxable year for which that allocation or distribution is to be made.
Unless all the Parties agree to separate the LLC’s taxable year into segments, if the
LLC admits a new Party to the LLC or if a Party sells, exchanges or otherwise
disposes of all or any portion of his Interest to any person who, during that taxable
year is admitted as an additional or substitute Party, the Profit and Loss shall,
except as otherwise provided in the Code, be allocated between the transferor and the
transferee on the basis of the number of days of the taxable year in which each was a
Party; provided, however, that in the event of a Capital Transaction or any other
extraordinary nonrecurring items of the LLC, Profit, Loss and distributions from such
events shall be allocated to the Persons shown on the records of the LLC as of the
date of such event.
	 
	 	e)  	The methods set forth above by which Profit, Loss, and distributions are
allocated, apportioned, and paid are hereby expressly consented to by each Party as
an express condition to becoming a Party. Upon the advice of the outside accountants
or of legal counsel to the LLC, this Section 15 may be amended to comply with the
Code and the regulations promulgated under Section 704 of the Code; provided,
however, that no such amendment shall become effective without the consent of those
Parties who would be materially or adversely affected thereby. The Parties agree
that the LLC shall use the traditional method for purposes of Section 704(c) of the
Code.

BOOKS AND RECORDS

	16.01  	Adequate accounting records of all LLC business shall be kept and these shall be open
to inspection by either of the Parties at all reasonable times. Audit of all books and
accounting records shall be undertaken by a professional “Big Five” auditing company at the
request of the BOG at the LLC’s expense.Within seventy-five (75) days after the end of each
taxable year and
at the expense of the LLC, the LLC shall cause to be prepared a complete accounting
of the affairs of the LLC, together with whatever appropriate information is
required by each Party for the

19

 

	   	purpose of preparing such Party’s income tax return for that year, which accounting and
information shall be furnished to each Party

	16.02  	The LLC shall deliver (and shall cause any sublicensees to deliver) to each Party within
thirty (30) days of the end of each calendar quarter, a written report showing all sales and
other revenues during such calendar quarter.

	16.03  	Until such time as the LLC employs a suitably qualified accountant independent of the
Parties, MMI will provide, or cause to be provided, bookkeeping and accounting services to the
LLC. Such accounting services shall include all necessary returns, financial regulatory
requirements, LLC tax returns, quarterly and annual accounts, which costs thereof, including
reasonable overheads of MMI shall be borne by the LLC.

GENERAL PROVISIONS AND TERMINATION

	17.01  	Termination

     This Agreement shall cease and terminate on the occurrence of any of the following
events, namely:

	 	(a)  	the bankruptcy, receivership, insolvency or dissolution of the LLC; or
	 
	 	(b)  	the execution of an agreement of termination in writing which has the effect of
terminating this Agreement by all of the Parties to this Agreement,

providing such termination shall not affect any entitlements, rights, or obligations which
accrued prior to termination.

	17.02  	Notices

     All notices, requests, demands, payments or other communications by the terms of this
Agreement required or permitted to be given by one Party to the other shall be given in
writing by registered mail, postage prepaid or by nationally recognized overnight delivery
service; addressed or delivered to such other; in the event that postal service is
interrupted or substantially delayed, delivery in person (against a signed receipt) only:

	 	(a)  	in the case of Willmar:

	 	   	Willmar Poultry Company, Inc.

3735 County Road 5, SW

P.O. Box 753

Willmar, Minnesota 56201-0753

Attention: President

	 	(b)  	in the case of MMI:

	 	   	MetaMorphix, Inc.

8510A Corridor Road

Savage, Maryland 20763

20

 

	 	   	Attention: President

     and shall be deemed to have been effectively received on the third business day next
following the posting thereof, if mailed, and on the day of delivery, if delivered.

17.03 Successors and Assigns

     This Agreement shall inure to the benefit of and be binding upon the Parties and their
respective heirs, successors, legal representatives and assigns, subject to subsection
17.04 hereof.

17.04 Prohibition on Assignment

     This Agreement may not be assigned, nor shall the benefit or the burden thereof be
assigned, in whole or in part, by any Party hereto without the unanimous consent of the
other Party hereto first had and obtained. Notwithstanding anything in the foregoing to the
contrary, either Party may assign its interest and right in the Company and this Agreement
to any purchaser of all or substantially all of such Party’s assets (or, in the case of
MMI, all of MMI’s turkey and poultry-related assets). In the event that Willmar sells all
of its assets (including its interest and rights in this Agreement) to an entity also
involved in bovine, poultry, swine, aquaculture, and/or other livestock production and/or
processing, such assignment may be conditioned by MMI upon appropriate “fire wall”
confidentiality protections, operational standards, and agreements being put into place.

17.05 Further Agreement and Instruments

     The Parties hereto covenant and agree to execute any instrument or certificate that may
be necessary or appropriate to carry out the purpose and intent of this Agreement. The
Parties further covenant and agree that they will do all things necessary and attend all BOG
meetings of the LLC or any other corporation and vote thereat in such manner to give effect
to this Agreement. The further agreements contemplated in this Agreement shall reflect the
provisions’ of and the intent of this Agreement to the extent applicable.

17.06 No Counterparts

     This Agreement may not be signed in one or more counterparts.

17.07 Waiver

     The Parties covenant and agree that if either Party hereto fails or neglects, for any
reason, to take advantage of any of the terms herein provided for its benefit, any such
failure or neglect by such Party shall not be, nor be deemed to be, construed as waiver of
any of the terms, covenants, or conditions of this Agreement or the performance thereof.

21

 

17.08 Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the State
of Delaware.

17.09 Force Majeure

     Neither Party of this Agreement shall be liable to the other for failure or delay in
the performance of their obligations under this Agreement, by Acts of God, regulations, or
laws of any government, war, civic commotion, strike, terrorist attack, lock-out, or labor
disturbances, destruction of facilities and any materials and equipment by fire,
earthquake, storm, failure of public utilities or common carriers, and any cause beyond the
control of that Party for the period of time that the foregoing prevents performance. The
Parties acknowledge and agree that the foregoing does not operate so as to excuse any Party
from prompt payment of any and all sums due by it pursuant to the terms and conditions of
this Agreement.

17.10 Arbitration

     The Parties expressly acknowledge and agree that it is their respective intention
that, except as otherwise provided herein, any disputes arising between them in the first
instance be settled amicably.

     All disputes and differences of any kind arising under this Agreement, or arising
between the Parties including the existence or continued existence of this Agreement and
the arbitrability of a particular issue which cannot be settled amicably by the Parties may
be referred by either Party to arbitration. The Party desiring to initiate arbitration
shall serve a written request on the other Party. The Party receiving such written request
shall designate the locale, being either Maryland or Minneapolis, within which arbitration
is to take place.

     The arbitration if conducted in Maryland or Minneapolis shall be finally settled in
accordance with the Rules of Arbitration of the American Arbitration Association by one or
more arbitrators appointed in accordance with the above-mentioned Rules.

     The decision of the arbitration tribunal shall be final and binding upon the Parties
and may be enforced in any court of competent jurisdiction, and no Party shall seek redress
against the other in any court or tribunal except solely for the purpose of obtaining
execution of the arbitration award or of obtaining a judgement consistent with the reward.

     During any adjudication pursuant to this paragraph, the Parties shall continue to
fulfill their respective obligations under this Agreement, unless the subject matter of the
dispute is of such a nature that this is by no means possible until the dispute has been
finally settled.

     Notwithstanding the provision of this article, neither (a) issues relating to validity
or infringement of Patents licensed herein, nor (b) disputes involving a third
party necessary to be

22

 

included for the complete resolution of such dispute, nor (c) an allegation of a failure
of a Party to comply with its obligations under 8.01 shall be a subject for arbitration.

17.11 Entire Agreement

     This Limited Liability Company Agreement, together with the Certificate of Formation,
constitutes the complete and entire agreement between the Parties, and there are no prior or
contemporaneous oral or written representations, promises or agreements not expressly referred
to herein. This Limited Liability Company Agreement may not be altered, amended, modified or
otherwise changed in any respect whatsoever except by a writing dated and signed by the Parties
hereto.

IN WITNESS WHEREOF, Willmar has hereunto affixed its corporate seal attested to by the hands of
its duly authorized officer in that behalf on the 4th day of September, 2002.

	 	 	 	 	 
	 	WILLMAR POULTRY COMPANY, INC.

 	 
	 	/s/ Richard Husinga
 	 
	 	               By: Richard Husinga 	 
	 	               Its: COO 	 
	 

IN WITNESS WHEREOF, MMI has hereunto executed this agreement attested to by the hands of its duly -
authorized officer in that behalf on the 4th day of September, 2002.

	 	 	 	 	 
	 	METAMORPHIX, INC.

 	 
	 	/s/ Edwin C. Quattlebaum
 	 
	 	Edwin C. Quattlebaum, Ph.D., President and CEO 	 
	 	 	 

23

 

SCHEDULE 12.01

	 	 	 	 	 	 	 
	

	 	Schedule of LLC Parties	 	 	 	 
	 
	 	 	 	 	 	 
	

	 	Willmar Poultry Company, Inc.
	 	 	50	%
	

	 	735 County Road 5, SW	 	 	 	 
	

	 	P.O. Box 753	 	 	 	 
	

	 	Willmar, Minnesota 56201-0753	 	 	 	 
	 
	 	 	 	 	 	 
	

	 	MetaMorphix, Inc.
	 	 	50	%
	

	 	8510A Corridor Road	 	 	 	 
	

	 	Savage, Maryland 20763	 	 	 	 

26

 

SCHEDULE 13.01

Schedule of Capital Contributions

None as of Agreement Execution

27

 

EXHIBIT 2.02

Certificate of Formation

CERTIFICATE OF FORMATION

OF

WILLMAR/METAMORPHIX TURKEY JOINT VENTURE LLC

     The undersigned, being duly authorized to execute and file this Certificate of Formation for
the purpose of forming a limited liability company pursuant to the Delaware Limited Liability
Company Act (6 Del.C. § 18-101, et seq.), does hereby certify as follows:

     FIRST: The name of the limited liability company is Willmar/MetaMorphix Turkey Joint Venture
LLC (the “Company”).

     SECOND: The Company’s registered office in the State of Delaware is located at 30 Old Rudnick
Lane, Suite 100, Dover, Kent County, Delaware. The registered agent of the Company for service of
process at such address is LEXIS Document Services Inc.

     THIRD: The operation of the Company shall be governed by a Limited Liability Company Agreement
entered into among the members of the Company.

     IN WITNESS WHEREOF, the undersigned has duly executed this Certificate of Formation as of the
4th day of September, 2002.

	 	 	 	 	 
	 	 	 
	 	/s/ Edwin C. Quattlebaum	 
	 	Edwin C. Quattlebaum, Ph.D., Authorized Person 	 
	 	 	 
	 

28exv10w31

 

Exhibit 10.31

[***Confidential Treatment Requested. Confidential portions of this agreement have been
redacted and have been separately filed with the Commission]

VIDO TECHNOLOGY

THIS AGREEMENT dated as and from the Effective Date

BETWEEN:

THE UNIVERSITY OF SASKATCHEWAN, a corporation pursuant to an Act of the Government
of Saskatchewan, as represented by the Veterinary Infectious Disease organization; a
division of the University of Saskatchewan which has its principal offices located
at 120 Veterinary Road, on the campus of the University of Saskatchewan,

(hereinafter
referred to as “the Licensor”)

OF THE FIRST PART

- and -

METAMORPHIX INTERNATIONAL, INC., a corporation incorporated pursuant to
the laws of the State of Delaware with its registered office located at 1450 South
Rolling Road, Baltimore, Maryland, United States of America, 21227, (hereinafter
referred to as “the Licensee”)

OF THE SECOND PART

WITNESSETH WHEREAS:

A. Biostar Inc. (“Biostar”) and the Licensor entered into a series of license agreements
culminating in a consolidated and amended Pasteurella haemolytica Vaccine and Technology , a
Bovine Herpes Virus-1 and Adjuvant Technology licence agreements, all dated February
29th, 2000 (collectively referred to as the “Original Licenses”);

B. The Original Licenses were partially assigned with the consent of the Licensor in accordance
with and as contemplated by the asset purchase agreement between Biostar and related parties and
the Licensee and related parties dated for reference June 1, 2000 (herein the “Asset Purchase
Agreement”) pursuant to the terms of which Asset Purchase Agreement the Licensor agreed to grant
the within license to the Licensee which license effects certain agreed upon amendments to the
Original Licenses partially assigned to the Licensee;

          NOW THEREFORE, in consideration of the premises and other good and valuable consideration,
the receipt and sufficiency of which consideration is hereby acknowledged, the parties agree as
follows:

 

 

ARTICLE I - INTERPRETATION

1.01 As hereinafter used in this Agreement, terms have the following meanings:

	 	(a)  	“Adjuvant Technology” means the adjuvant technology subject of issued U.S.
patent # 5,951,988 or any continuations, continuations in part, provisional
applications, divisions, patents of additions, re-issues, renewals and extensions
of such patents and patent applications and all non United States of America
patents corresponding to any of the foregoing;
	 
	 	(b)  	“Bovine Technology” means the bovine herpes virus -1 technology subject of
those patents related thereto and listed on attached Exhibit “A” or any
continuations, continuations in part, provisional applications, divisions, patents
of additions, reissues, renewals and extensions of such patents and patent
applications and all non United States of America patents corresponding to any of
the foregoing;
	 
	 	(c)  	“Confidential Information” has the meaning given that term by clause 13.01;
	 
	 	(d)  	“Effective Date” means the closing date of the Asset Purchase Agreement;
	 
	 	(e)  	“External Disclosure" has the meaning given that term by clause 13.03;
	 
	 	(f)  	“Improvements” means all discoveries and inventions owned by the Licensor,
whether patentable or not, that consist of an improvement, addition, extension or
enhancement to the subject matter of the Licensed Patents or to the Licensed
Technology and relating to the within grant of License;
	 
	 	   	“License” has the meaning given that term by clause 2.01;
	 
	 	   	“Licensee” includes for the purpose of calculating Net Sales and Other
Consideration any affiliates of the Licensee and any persons or entities not
dealing at arm’s length with the Licensee as that term is employed pursuant to the
provisions of the Income Tax Act (Canada) as of the date hereof provided that the
term “Licensee” does not extend to Minority or Majority Joint Ventures . For
greater particularity, Net Sales and Other Consideration does not comprise
payments and amounts paid by an entity comprising the Licensee to another entity
comprising the Licensee;
	 
	 	(i)  	“Licensed Technology” means the Adjuvant Technology and proteins,
peptides, nucleic acids, antibodies and adjuvants and methods of production and uses
described in the Licensed Patents referenced in Exhibit A including the use of
Pasteurella haemolytica or Bovine Herpes Virus-1 antigens as immunological carriers,
including products based upon leukotoxin carrier, GnRh or vasoactive intestinal
peptide, and further includes all provisional applications, know-how, proprietary
technical data, information, biological materials and reagents useful in

2

 

	 	   	working with the subject matter of the Licensed Patents and relating to the within grant
of license which is in existence as of the Effective Date;
	 
	 	(j)  	“Licensed Patents” means any patents that are granted pursuant to the applications
referenced in Exhibit “A” or are granted pursuant to any patent application subsequently
filed that is based on the Licensed Technology and includes any continuations,
continuations in part, divisions, patents of additions, re-issues, renewals and extensions
of such patents and patent applications and all non United States of America patents
corresponding to any of the foregoing;
	 
	 	(k)  	“Majority Joint Venture” means other than a Value Added Arrangement a partnership or joint
venture arrangement between the Licensee and a third party or parties whose arrangements
with the Licensee permits the use and application of the Licensed Technology and Licensed
Patents for any of the following species: poultry, swine or cattle, where relative to such
other parties the Licensee has not less than a 50% interest in the business, assets and
profits of the partnership or joint venture and in respect of which the Licensee has
provided written notice to the Licensor within a reasonable time after entering into the
partnership or joint venture arrangement. For greater particularity, if the interest of the
Licensee falls below 50% in the business, assets or profits for two consecutive fiscal
periods then as and from the 1st day of the first of such fiscal periods the entity shall
cease to be a Majority Joint Venture.
	 
	 	(1)  	“Minority Joint Venture” means a partnership or joint venture arrangement between the
Licensee and a third party or parties whose arrangements with the Licensee permits the use
and application of the Licensed Technology and Licensed Patents for any of the following
species: poultry, swine or cattle, but which does not constitute a Majority Joint Venture or
a Value Added Arrangement hereunder.
	 
	 	(m)  	“Major Species Sublicensee" means a person, partnership, joint venture or other
entity (other than a sublicensee that constitutes a Majority Joint Venture or a Minority
Joint Venture or a Value Added Arrangement) whose sublicense with the Licensee permits the
use and application of the Licensed Technology for any of the following species: poultry,
swine or cattle.
	 
	 	(n)  	“Minor Species Sublicensee” means a person, partnership, joint venture or other entity
(other than sublicensee that constitutes a Majority Joint Venture or a Minority Joint Venture
or a Value Added Arrangement) whose sublicense with the Licensee does not extend to the use
and application of the Licensed Technology for poultry, swine or cattle.
	 
	 	(o)  	“Myostatin Product” means a Product that comprises myostatin also known as growth
differentiating factor 8 (GDF-8) protein, peptide or nucleic acid.

3

 

	 	(P)  	“Net Sales” means during any particular period of time the total revenues or receipts from the
sale or disposition of Products by the Licensee subject to the following inclusions or exclusions
(the intent of the parties in connection with this 1.01(i) is described in the attached Exhibit
“B” which Exhibit is to be employed as an aid to interpretation of this provision):

	 	(I)  	Net Sales revenues or receipts include revenues of the Licensee from invoiced sales of
Product to distributors, wholesalers or other persons, but specifically not including Value
Added Receipts (Herein the foregoing referred to as “Conventional Sales”);
	 
	 	   	Net Sales revenues or receipts include revenues of the Licensee which are calculated on
the basis of value added benefits realized in connection with third party
commercialization including that by animal producers, breeders and processors, including
those subject of a sublicense, provided that the Licensee’s revenues from such sublicense
are calculated and periodically payable on the basis of Licensee’s share of the
value-added benefits (the “Value Added Receipts”). During the application of the
applicable Threshold and subject to 1.01(w), Value Added Receipts include payments and
amounts that are paid to the Licensee in connection with the arrangements giving rise to
the Value Added Receipts but which are not directly calculated on the basis of
value added benefits . Other than during the application of the applicable Threshold,
Value Added Receipts do not include payments and amounts that are paid to the Licensee in
connection with the arrangements giving rise to the Value Added Receipts but are not
directly calculated on the basis of value added benefits, which payments and amounts are
to be included in Other Consideration. To the extent that revenues and receipts are
included by virtue of them comprising Value Added Receipts, such revenues and receipts and
such value added benefits on which they were calculated are not otherwise included in the
calculation of Net Sales or Other Consideration hereunder;
	 
	 	(III)  	Other than during the application of the applicable Threshold, in respect of Majority
Joint Ventures that percentage of the net sales of the Majority Joint Venture (calculated as
if it were the Licensee hereunder) that the Licensee has in the profits of such Majority
Joint Venture, shall be included in Net Sales hereunder and the remainder of such net sales
of the Majority Joint Venture shall be excluded in the calculation of Net Sales or otherwise
hereunder;
	 
	 	(IV)  	During the application of the applicable Threshold, in respect of Majority Joint Ventures,
that percentage of the net sales of a Majority Joint Venture that the Licensee has in the
profits of such applicable joint venture, shall be excluded from the calculation of Net Sales
or otherwise hereunder;

4

 

	 	(V)  	Net Sales do not include any net sales made by or royalties paid by
Minor Species Sublicensees, whether or not part of a joint venture
arrangement, (which royalties for greater particularity shall constitute
Other Consideration for the purposes of clause 4.06(iii) herein);
	 
	 	(VI)  	Other than during the application of the applicable Threshold,
Net Sales include the net sales (calculated as if it were the Licensee
hereunder) of Minority Joint Ventures and Major Species Sublicensees (other
than those constituting Majority Joint Ventures), but not including sales
revenues that were included for purposes of calculation of Value Added Receipts
which Value Added Receipts were included in Net Sales;
	 
	 	(VII)  	During the application of the applicable Threshold, Net Sales
exclude the net sales of Minority Joint Ventures and Major Species
Sublicensees;
	 
	 	(VIII)  	If Licensee shall have received separate and identifiable reimbursement or
payment for delivery of Product, including delivery of Product for purposes of
being given away for promotional or similar purposes, from a Majority or
Minority Joint Venture or a sublicensee or, during the application of the
applicable Threshold, paid to the Licensee in connection with the arrangements
giving rise to the Value Added Receipts but which are not directly calculated
on the basis of value added benefits, then to the extent that such
reimbursement or payment has been included in the calculation of Net Sales the
Licensee shall be entitled to deduct from Net Sales the cost to the Licensee
for such Product calculated on the basis of the aggregate of: third party costs
of manufacture incurred by the Licensee, plus the Licensee’s direct labor cost,
plus the Licensee’s direct materials cost plus 40% percent of the direct labor
and materials cost excluding third party costs. Manufacturing for the purposes
of determining direct material or direct labor or third party costs of
manufacturing under this Agreement includes the packaging of Product but
excludes shipping, warehousing and distribution.
	 
	 	(IX)  	Net Sales in respect of included revenues do not include the
following items to the extent that such items are separately identified on the
applicable invoice:

	 	(i)  	sales, import, export, value added and similar taxes including, but
without limitation, the federal goods and services tax imposed by Part
VII of the Excise Tax Act, R.S.C., 1985, C. E-1, as amended
and
similar US or international taxes;
	 
	 	(ii)  	extraordinary packaging and packing costs that
relate to sales to a particular customer and which are reimbursed by such
customer;

5

 

	 	(iii)  	shipping and delivery costs that relate to sales to a particular customer
and which are reimbursed by such customer;
	 
	 	(iv)  	credits on returns, allowances or trades actually allowed
and taken; and
	 
	 	(v)  	freight and insurance charges.

	 	   	For greater particularity, where Value Added Receipts are calculated on the basis of value
added benefits realized during the production or growth of products subsequent sales of
the processed Products do not comprise Net Sales hereunder whether or not the seller is a
partner or joint venturer with the Licensee if the Licensee has no interest in or payment
arising from such sales.
	 
	 	   	“Other Consideration” shall mean the aggregate of all option fees, license fees, or other
cash payments, equity or other consideration of any kind that the Licensee receives in
respect of sublicenses, which general definition is more fully described in clause 4.06
hereof.
	 
	 	(r)  	“Pasteurella Technology” means the Pasteurella haemolytica technology subject of those
patents related thereto and listed on attached Exhibit “A” or any continuations, continuations
in part, divisions, patents of additions, re-issues, renewals and extensions of such patents
and patent applications and all non United States of America patents corresponding to any of
the foregoing;
	 
	 	(s)  	“Products” means all compositions, processes, methods of use, or any part or combination
thereof, that:

	 	(i)  	infringe any claim of a Licensed Patent; or
	 
	 	(ii)  	which incorporate, are made or designed from or with the aid of Licensed
Technology; or both, and “Product” is a singular reference to any one of the Products;

	 	(t)  	“Royalty” and “Royalties” has the meaning given those terms by clauses 4.01, 4.02 and 4.03;
	 
	 	(u)  	“Term” means the period of time during which the Licensee is obligated to pay Royalties on
Products pursuant to clause 2.03;
	 
	 	(v)  	“Threshold” means, net of any applicable credits permitted the Licensee hereunder, the total
average cumulative amount of $1,000,000 US per year for each calendar year from the
commencement of this Agreement received by Licensor (provided that with respect to 2000 the
addition to establish this amount shall be prorated to reflect such partial year) with respect
to Myostatin Products (the “Myostatin Threshold”); and the total average cumulative amount of
$4,000,000 US per year for each calendar year from the commencement of this Agreement received
by Licensor

6

 

	 	   	(provided that with respect to 2000 the addition to establish this amount shall be
prorated to reflect such partial year) in respect to all Products (the Overall
Threshold”). “Application of the applicable Threshold” means the Myostatin Threshold
or the Overall Threshold, as the case may be, has been achieved and maintained with
respect to a particular calendar year and “during the application of the applicable
Threshold” means during the period and with respect to the calendar year that the
application of the applicable Threshold continues and “other than during the
application of the applicable Threshold’ means any other time.
	 
	 	(w)  	“Value Added Arrangement” means an arrangement between the Licensee and one or
more third parties which may include a sublicense, where substantially all of the
continuing intended compensation to the Licensee comprise payments calculated on the
basis of value added benefits. In relation to a Value Added Arrangement, during the
application of the applicable Threshold, initial license fees or similar up-front
payments and payments made on the basis of achievement of non-sales related milestones
or a singular sales related milestone are considered payments and amounts that are paid
to the Licensee in connection with the arrangement for the purposes of 1.01(p)(II) and
are subject of this Agreement respecting Net Sales including the provisions of 4.04.
However, during the application of the applicable Threshold, payments to the Licensee
received in connection with a Value Added Arrangement other than initial license fees
or similar up-front payments and payments made on the achievement of non-sales related
milestones or a singular sales related milestone and payments calculated on the basis
of value added benefits shall be included as Other Consideration under this
Agreement.
	 
	 	(x)  	“VIDO and/or the Licensor” means for all purposes of this Agreement, other than
the enforcement of this Agreement by the University of Saskatchewan and the agreements
of the University of Saskatchewan under section 3.02, that separate and unique division
of the University of Saskatchewan known as the Veterinary Infectious Disease
Organization which currently has its principal offices, facilities and equipment located
at 120 Veterinary Road on the campus of the University of Saskatchewan, has aboard of
directors primarily composed of persons not employed by the Veterinary Infectious
Disease Organization or the University of Saskatchewan and which is engaged in research
and development.

ARTICLE II - GRANT AND TERM OF LICENSE

2.01 In accordance with the provisions of this agreement, the Licensor grants and the Licensee
accepts an exclusive license (the “License”) in all jurisdictions of the world to the Licensed
Technology for the purpose of developing, producing, exploiting, using, selling or otherwise
commercially exploiting, or having developed, produced, used, sold or otherwise commercially
exploited, the Licensed Technology for use in non-humans, and for use in technology relating to the
GDF-8 protein in both humans and non-humans BUT SPECIFICALLY EXCLUDING use of the Licensed
Technology in vaccines to prevent infectious diseases.

7

 

2.02 Subject to the provisions of this Agreement, the Licensor acknowledges that:

	 	(a)  	the License is irrevocable during the Term; and
	 
	 	(b)  	except as herein provided, the License is exclusive to the extent of the above
grant of license in all jurisdictions of the world during the Term and the Licensor
shall not produce, use, sell, lease or otherwise commercially exploit within the scope
of the above grant of license Products other than for its own research purposes, nor
within the scope of the above grant license shall the Licensor provide any third party
with Products or the Licensed Patents and Licensed Technology to any third
party, other than for research and educational purposes. For greater particularity and
notwithstanding the foregoing, this license is non-exclusive as to its use for
diagnostic applications for Pasteurella haemolytica or Bovine Herpes Virus-1
antibodies.

If within the scope of the above grant of license, the Licensor wishes to provide a third party
with Products for research and educational purposes, or to license to a third party the Licensed
Patents and Licensed Technology for research and educational purposes, the Licensor shall first
obtain the Licensee’s written consent. The granting or withholding of such consent shall be in the
Licensee’s sole and absolute discretion and any such consent will be conditional, at the Licensee’s
option, upon the beneficiary of such research and educational license agreeing that the Licensee
shall have the right to make use of any improvements conceived or developed by such beneficiary at
no additional cost to the Licensee.

2.03 Royalty obligations on Products and other payments required pursuant to Article IV in
each jurisdiction of the world shall come to an end upon the later of:

	 	(a)  	the expiration or invalidation of the last remaining Licensed Patents
covering the manufacture, use and/or sale of such Product in such jurisdiction; or
	 
	 	(b)  	ten (10) years from the date of first marketing such Product in such jurisdiction.

Following the expiration of the Licensee’s royalty obligations in a jurisdiction pursuant to this
clause, the Licensee shall be entitled to continue marketing Products and using Licensed
Technology in such jurisdiction without further royalty or other payments of any description. This
Agreement shall cease to be exclusive to the Licensee with respect to any jurisdiction upon the
expiration of the Royalty obligations under this Agreement in such jurisdiction. Provided that
prior to such expiration the Licensee may elect by notice in writing to extend its Royalty
obligations at the rate(s) applicable to the circumstance where a Licensed Patent is not infringed
and its other payment obligations for such period of time as may be specified in such notice and
in which event the Royalty and other payment provisions herein shall be so extended and the
license shall continue for such period to be exclusive to the Licensee.

8

 

2.04 The Licensor shall, upon the request of and at the expense of the Licensee, execute all
further documents which may be necessary to give effect to or register this Agreement and the
Licenses granted hereunder in any jurisdiction of the world.

ARTICLE III - IMPROVEMENTS

3.01 During the Term, the Licensor shall disclose and make available to the Licensee all
Improvements which shall be dealt with in accordance with all the terms and conditions of this
Agreement. If an Improvement is patentable, it shall be treated as one of the Licensed Patents,
and if non-patentable, as part of the Licensed Technology.

3.02 The Licensee acknowledges that the Licensor’s obligations pursuant to clause 3.01 are
conditional upon VIDO’s continued existence and operation. For greater particularity, Improvements
made by employees of the University of Saskatchewan who are not employees of VIDO (the “University
Employees”) are exempt from the operation of clause 3.01.

          The University of Saskatchewan agrees that in the event that University Employees effect
discoveries and inventions which are owned by the University of Saskatchewan, whether patentable
or not, that consist of an improvement, addition, extension or enhancement to the subject matter
of the Licensed Patents or, to the extent the same relate to the within grant of License, the
Licensed Technology, the University of Saskatchewan shall provide the Licensee with the
opportunity to obtain entitlements to such discoveries and inventions for the same purposes as
contemplated by this License on terms and conditions that the University would accept from a third
party. If the Licensee declines to participate in such opportunity (and the License shall be
deemed to have declined in the event that it has not elected to do so within such period of time
as the University may reasonably determine and advise the Licensee), the University may thereafter
without reference to the Licensee provide such entitlements to third parties on terms no more
favorable than those offered the Licensee. The Licensee expressly acknowledges and agrees that no
obligation of the University to the Licensee arises under this provision where any such discovery
or invention is subject of rights or entitlements in favor of a third party. The Licensee further
acknowledges that any invention or discovery arising in the course of third party funded research
gives rise to an expectation (that the University views as and the Licensee agrees is an
entitlement for purposes of this provision) to provide such third party with the opportunity to
commercially exploit the discovery or invention. This obligation of the University shall extend
for five (5) years from the Effective Date of this Agreement.

3.03 The Licensor acknowledges that Licensee may make discoveries or inventions, whether
patentable or not, without the use of the Licensed Technology and which do not infringe upon the
Licensed Patents, which discoveries and inventions shall be owned by the Licensee and shall be
known as “Licensee Improvements,” for purposes of this Agreement. Licensor also acknowledges that
no payment of royalties shall be due under this Agreement with respect to such Licensee
Improvements.

9

 

ARTICLE IV- ROYALTIES

4.01 Subject to 4.02, the Licensee shall pay to the Licensor a royalty on Net Sales (the
“Royalty” or Royalties”) during the Term in accordance with the following subject only to those
exclusions provided for in this Agreement and as such rates may be modified by clause
4.04:

	 	(a)  	if a Product infringes a claim or claims of a Licensed Patent related to the
Adjuvant Technology, the Royalty shall be [***]; and
	 
	 	(b)  	if a Product infringes a claim or claims of a Licensed Patent related to the
Bovine Technology, the Royalty shall be [***]; and
	 
	 	(c)  	if a Product infringes a claim or claims of a Licensed Patent related to the
Pasteurella Technology, the Royalty shall be [***]; and
	 
	 	(d)  	if 4.01(a) is not applicable and a Product utilizes any part of the Licensed
Technology related to the Adjuvant Technology, the Royalty shall be [***], and
	 
	 	(e)  	if 4.01(b) is not applicable and a Product utilizes any part of the Licensed
Technology related to the Bovine Technology, the Royalty shall be [***], and
	 
	 	(f)  	if 4.01(c) is not applicable and a Product utilizes any part of the Licensed
Technology related to the Pasteurella Technology, the Royalty shall be
[***].

4.02 Notwithstanding 4.01, other than during the application of the applicable Threshold,
with respect to Net Sales made by a Major Species Sublicensee where the Licensee is entitled to
the receipt of royalties based upon Net Sales of Products made by such sublicensees (other than
Value Added Receipts), the Licensee shall pay to the Licensor in respect of such Net Sales (other
than Value Added Receipts) the lesser of :

	 	(a)  	[***]

10

 

	 	   	of the royalties payable by such sublicensees to the Licensee
in respect of its Net Sales; or
	 
	 	(b)  	the amount otherwise determined pursuant to 4.01 on the basis of the Net
Sales of the sublicensee.

For greater particularity, this provision 4.02 has no application to Value Added Receipts.

4.03 Notwithstanding the foregoing, a minimum royalty shall be payable as follows:

4.03.1 in respect of calender year 2000, [***] prorated for such calendar year as and from the
Effective Date;

11

 

4.03.2 in respect of calender year 2001 and 2002, [***]; and

4.03.3 in respect of calendar years 2003, 2004 and 2005, [***]; and

4.03.4 in respect of each calendar year thereafter, [***] (collectively, the amounts referred to in
4.03.1 through 4.03.4 are referred to as “Minimum Annual Royalty”).

The Licensee shall be responsible to make the Minimum Annual Royalty payments as outlined in
section 4.03 in four equal quarterly installments within thirty (30) days of the end of each
calendar quarter (other than in respect of the first year of this Agreement in respect of which
the Minimum Royalties shall be made in two equal installments after the third and fourth calendar
quarter). Notwithstanding any credits against Royalties permitted the Licensee under this
Agreement, no such credits shall apply to reduce Minimum Royalties payable pursuant to this clause
4.03.

4.04 If the Royalties payable to the Licensor and/or the other royalties payable for other Product
components or associated delivery systems by the Licensee would exceed seven [***] for a Product, then the Royalty rates provided for
in clause 4.01 shall be reduced to a point that the total royalties payable by the Licensee to the
Licensor and/or such third parties do not exceed [***]. The Licensee shall use reasonable efforts to ensure that any royalty reduction
necessary under this clause is allocated between the Licensor and such third party in an equitable
manner.

          With respect to the Net Sales of a Minority Joint Venture or Major Species Sublicensee, the
foregoing reference to Licensee shall be construed as a reference to the Minority Joint Venture or
Major Species Sublicensee, as the case maybe, and not a reference to the Licensee.

          With respect to the Net Sales of a Majority Joint Venture, the Licensee may elect to have the
foregoing reference to Licensee with respect to the particular Majority Joint Venture be construed
as a reference to the Majority Joint Venture in lieu of the application of this Agreement without
such substitution.

          For greater particularity, during application of the applicable threshold but subject to the
provisions of 1.01(w), this provision 4.04 shall apply to payments received by Licensee in
connection with arrangements giving rise to the Value Added Receipts in the manner contemplated
by 1.01 (w).

12

 

          However, under no circumstances shall the Royalty rates provided for under clause 4.01 be
reduced to less than one-third (1/3) of the amount otherwise determinable under such clause in
respect to Net Sales of Myostatin Products or one-half (1/2) of the amount otherwise
determinable under such clause in respect of Net Sales of Products other than Myostatin Products.

13

 

4.05 If a third party initiates any legal or administrative proceeding challenging the
validity, scope or enforceability of a Licensed Patent in any country then the Licensee’s royalty
obligations pursuant to this Article IV shall be adjusted as if that particular Product did not
infringe the claim or claims of a Licensed Patent relating to such country. If the enforceability
of the claim in dispute in such proceedings is upheld by a court or other legal or administrative
tribunal from which no appeal is or can be taken, then the balance of the payment that should have
been made during the period of reduction shall be promptly paid by the Licensee to the Licensor
with interest calculated in accordance with clause 5.05. If the claims of a Licensed Patent which
cover that Product are held to be invalid or otherwise unenforceable by a court or other legal or
administrative tribunal from which no appeal is or can be taken, then no such payment shall be
made. The Licensee acknowledges that the foregoing constitutes the full extent of the Licensor’s
liability to the Licensee in the event of any such suit and is a bar to any proceedings for
recovery of any other damages of any description.

4.06 In addition to the amounts payable under 4.01 or 4.02, the Licensee shall remit to the
Licensor [***] (which rate is applicable
other than during the application of the applicable threshold) of Other Consideration and for the
purposes hereof the term “Other Consideration” shall include the following specific inclusions or
exclusions (the intent of the parties in connection with this 4.06 is described in the attached
Exhibit “B” which Exhibit is to be employed as an aid to interpretation of this provision):

	 	(i)  	INCLUDE other than during the application of the applicable Threshold,
payments and amounts that are paid to the Licensee in connection with the arrangements
giving rise to Value Added Receipts which are not directly calculated on the basis of
value added benefits and during the application of the applicable Threshold the
payments and amounts contemplated by 1.01 (w) to be included in Other Consideration
PROVIDED that if other than during the application of the applicable Threshold,
License shall have received separate and identifiable reimbursement or payment for
delivery of Product, including delivery of Product for purposes of being given away
for promotional or similar purposes, which are paid to the Licensee in connection with
the arrangements giving rise to the Value Added Receipts but which are not directly
calculated on the basis of value added benefits, then to the extent that such
reimbursement or payment has been included in the calculation of Other Consideration
the Licensee shall be entitled to deduct from Other Consideration the cost to the
Licensee for such Product calculated on the basis of the aggregate of: third party
costs of manufacture incurred by the Licensee, plus the Licensee’s direct labor cost,
plus the Licensee’s direct materials cost plus 40% percent of the direct labor and
materials cost excluding third party costs. Manufacturing for the purposes of
determining direct material or direct labor or third party costs of manufacturing
under this Agreement includes the packaging of Product but excludes shipping,
warehousing and distribution.
	 
	 	(ii)  	EXCLUDE Conventional Sales and Value Added Receipts;

 14

 

	 	   	INCLUDE other than receipts that constitute Conventional Sales or Value Added Receipts
all payments of any nature and kind including royalties on net sales made by Minor
Species Sublicensees;
	 
	 	(iv)  	In respect of Major Species Sublicensees, Other Consideration shall:

	 	(A)  	EXCLUDE, other than during the application of the applicable Threshold,
payments of royalties on net sales made by Major Species Sublicensees;
	 
	 	(B)  	INCLUDE during the application of the applicable Threshold, payments of
royalties on net sales made by Major Species Sublicensees;

	 	(v)  	In respect of Majority Joint Ventures, Other Consideration shall:

	 	(A)  	INCLUDE during the application of the applicable Threshold, the Licensee’s
share of profits of Majority Joint Ventures as of the relevant fiscal year end of
the Majority Joint Venture,
	 
	 	(B)  	EXCLUDE during the application of the applicable Threshold,
distributions to the Licensee of its proportionate share of the net operating
profits of Majority Joint Ventures to the extent previously included in Other
Consideration and reflected in the statements of such Majority Joint Venture as
such a distribution.
	 
	 	(C)  	EXCLUDE other than during the application of the applicable Threshold,
distributions to the Licensee of its proportionate share of the net operating
profits of Majority Joint Ventures to the extent reflected in the statements
of such Majority Joint Venture as such a distribution.

	 	(vi)  	In respect of Minority Joint Ventures, Other Consideration shall:

	 	(A)  	INCLUDE during the application of the applicable Threshold, the
Licensee’s share of the profits of Minority Joint Ventures as of the relevant
fiscal year end of the Minority Joint Venture
	 
	 	(B)  	EXCLUDE during the application of the applicable Threshold, distributions
to the Licensee of its proportionate share of net operating profits of Minority
Joint Venturers to the extent previously included as Other Consideration and
reflected in the statements of such Minority Joint Venture as such a distribution.
	 
	 	(C)  	EXCLUDE other than during the application of the applicable Threshold,
distributions to the Licensee of its proportionate share of the net operating
profits of Minority Joint Ventures to the extent reflected in the statements of such
Minority Joint Venture as such a distribution.

 15

 

	 	(vii)  	Other Consideration shall:

	 	(1)  	EXCLUDE payments made to the Licensee to fund research or
development, or both, of Product(s) to the extent that such payments are
used for such purposes; and
	 
	 	(2)  	EXCLUDE payments made for the purpose of reimbursing the
Licensee for payments made to the Licensor under this Agreement or for
purposes of reimbursing Licensed Patent related expenses actually incurred by
the Licensee.

The Licensee shall be responsible for demonstrating to the Licensor whether any payments made to
the Licensee falls within an exclusion/deduction to Other Consideration.

4.07.1 Notwithstanding any other provision to the contrary hereunder, with respect to any
particular calendar year if the Licensee’s required payments in either Royalties or remittances
respecting Other Consideration whether in respect of Myostatin Products or sublicenses or
otherwise together with all such payments in prior years are equal to or in excess of the
Myostatin Threshold, then with respect to such calendar year the applicable percentage for
purposes of calculating the payment under 4.06 for Other Consideration in respect of Myostatin
Sublicenses shall be those applicable percentages under clause 4.01 but not to exceed in aggregate
[***], provided that such calculation shall not
permit the payment to the Licensor to fall below the Myostatin Threshold for such calendar year.
For the purposes of this provision, a Myostatin Sublicense means a sublicense, Majority or
Minority Joint Venture or Value Added Arrangement to the extent that the same is related to
Myostatin Products and not other Products.

4.07.2 Notwithstanding any other provision to the contrary hereunder, if with respect to any
particular calendar year if the Licensee’s required payments in either Royalties or remittances
respecting Other Consideration together with all such payments in prior years are equal to or in
excess of the Overall Threshold, then with respect to such calendar year the applicable percentage
for purposes of calculating the payment under 4.06 for Other Consideration in respect of all
sublicenses shall be those applicable percentages under clause 4.01 but not to exceed in aggregate
[***], provided that such calculation shall not
permit the payment to the Licensor to fall below the Overall Threshold for such calendar year.

4.08 The Licensee shall pay to the Licensor all applicable goods and services or value added or
similar taxes on its payments hereunder.

ARTICLE V - REPORTS, PAYMENTS AND ACCOUNT

5.01 The Licensee shall make written reports and payments on account of Royalties to the Licensor
within ninety (90) days of the end of each calendar quarter commencing with the first calendar
quarter in which sale of Products are made in any jurisdiction by the Licensee or its sub
licensees. Given the variable nature of sales revenue, it is difficult to precisely define the
content of written reports to be provided to Licensor. The intent of the parties is for Licensees
to provide

 16

 

Licensor with meaningful data that accurately summarizes the Net Sales made during the applicable

 17

 

calendar quarter and the calculation of the payments due to the Licensor pursuant to Article IV
less any credits provided for in this Agreement. All such written reports shall be certified by a
financial officer of the Licensee. The Licensor acknowledges that the Licensee may integrate its
written reports provided pursuant to this clause 5.01 into and with the written reports that must
be provided to the Licensor pursuant to any other license or similar agreements in force between
the Licensee and the Licensor from time to time. The Licensee acknowledges that the credits
against Royalties otherwise payable provided by clause 7.03 or otherwise under this Agreement
shall not entitle the Licensee to reduce any payment on account of Royalties to less than fifty
(50%) percent of the amount otherwise due absent any credits and that all payments previously made
on account of Royalties are non-refundable under any circumstances except as permitted by clause
5.03. In addition to the foregoing financial reports within ninety days of the end of each
calendar year, the Licensee shall provide the Licensor with an annual report as to the activities
of the Licensee with respect to the development activities and registration of the Products
activities carried on by the Licensee in such twelve month period and an updated estimate by the
Licensee of the date of commencement of sales of Product.

5.02 The Licensee shall make a final written report and payment within ninety (90) days
of the termination of this Agreement whether by expiration of time or otherwise.

5.03 The Licensee shall keep at its head office full, clear and accurate records of the
production, sale and disposition of Products in detail sufficient to allow an audit of payments
due under this Agreement for a period of three (3) years after the delivery of each written report
pursuant to clause 5.01. In addition, the Licensee shall similarly maintain all records provided
to it by its sublicensees and documentation required to establish Net Sales and Other
Consideration hereunder including the nature, status and quantum of sales or receipts for the
relevant period (including the documentation establishing the relationship of the Licensee with
any payor which would constitute a Majority or Minority Joint Venture or sublicensee or a person
with whom arrangements give. rise to Value Added Receipts). The Licensee shall permit such books
and records to be examined from time to time by an independent accountant from an international
affiliated accounting firm designated by the Licensor, and reasonably acceptable to the Licensee,
for the purpose of conducting an audit of such written reports. The Licensor shall not conduct
more than one (1) audit a year except as hereinafter set forth. Audits shall be conducted by the
Licensor at its expense unless an audit reveals a discrepancy between the amount of payments that
should have been made, and the amount of payments actually made of three (3%) percent or greater
for any quarterly period. In such event, the Licensee shall pay the Licensor’s audit expenses. The
Licensor may thereafter conduct more than one (1) audit per year, which remedy shall be without
prejudice to any other rights and remedies the Licensor may have as a result of such breach. In
addition, the difference between the amount of Royalties due and the amount of Royalties actually
paid shall be immediately paid to the Licensee by the Licensor, or to the Licensor by the
Licensee, as the case may be, with interest thereon calculated in accordance with clause 5.05.

5.04 All amounts payable by the Licensee to the Licensor under this Agreement shall be paid in
Canadian dollars. If Products are sold outside of Canada for a currency other than Canadian
dollars, Net Sales shall first be determined in accordance with the currency in which such Net
Sales take place and then converted into the Canadian dollar equivalent using the rate of exchange
published in the Wall Street Journal on the last business day of the applicable calendar
quarter. For the purpose of calculating the Thresholds in US dollars, where revenues are derived
in, or financial

 18

 

data is maintained in, a currency other than US dollars, then the conversion method used in the
prior sentence shall be applied.

5.05 All payments of whatever description owed to either party by the other under this
Agreement shall bear interest at the prime rate published in the Wall Street Journal from time to
time plus two (2%) percent per annum compounded monthly, not in advance from and after the due
date for payment to the date of actual payment.

5.06 With respect to the application of clauses 5.04 to the sales of Products made by
sublicensees where the applicable sublicense agreement contains provisions respecting conversion of
funds to Canadian dollars for the purposes of determining royalties payable to the Licensee, such
provisions shall supersede the provisions of clause 5.04 as regards to calculation and conversion
of Net Sales.

ARTICLE VI - PATENT PROSECUTION

6.01 The Parties acknowledge that Licensor has granted a separate license in respect of the
Licensed Technology and the Licensed Patents for use in vaccines to prevent infectious disease in
non-humans but as more particularly described in such license dated for reference the
29th day of February, 2000, a copy of which has been provided to Licensee (herein the
“Novartis License”). Pursuant to the provisions of Article VI and Article VII of the Novartis
License, the licensee thereunder (such license, its successors and assigns herein referred to as
“Novartis”) has several entitlements, obligations or responsibilities including the following:

	 	(a)  	to file applications, to prosecute and maintain the
Licensed Patents including additions, continuations, divisions and the
like thereto;
	 
	 	(a)  	to discontinue prosecutions and applications and to
advise and provide Licensor with the option to proceed with filings,
applications and prosecutions;
	 
	 	(a)  	to regularly apprise Licensor and at Licensor’s
direction on a confidential basis Licensor’s other licensees of the
Licensed Patents of the status of patent applications and of approved
patents;
	 
	 	(a)  	to make to Licensor and at Licensor’s direction on a
confidential basis to other licensees of the Licensed Patents who have
an interest in an application or registration respecting a Licensed
Patent complete disclosure other than a disclosure which specifically
relates to the license granted under the Novartis License and which
does not affect such other licensee’s interest in the Licensed
Patent(s);
	 
	 	(a)  	to consult with Licensor and at Licensor’s direction on
a confidential basis its other licensees of the Licensed Patents
respecting any actions or prosecutions affecting Licensed Patents and to
insure that any actions of Novartis do not adversely affect such other
licensees without the prior written consent of Licensor; and

 19

 

	 	(a)  	to cooperate with Licensor and at Licensor’s direction on a confidential
basis Licensor’s other licensees of the Licensed Patents in the application,
prosecution and filing of any continuations, continuations-inpart, divisions,
patents of additions, re-issues, renewals and extensions, further applications
or defense of the Licensed Patents desired by Licensor or affecting such other
licensees provided that the same is not adverse to the rights of Novartis
under the Licensed Patents. Novartis is entitled to reimbursement by Licensor
of its out of pocket expenditures incurred in providing such cooperation which
is to be reimbursed to Licensor by the Licensee hereunder.
	 
	 	(g)  	Within 60 days of execution of this Agreement, Licensor will
direct Novartis to supply Licensee with a copy of all patent applications and
the prosecution histories of the Licensed Patents or Licensed Technology, as
applicable. In addition, Licensor will direct Novartis to apprise the
Licensee of the status of all patent applications included in the Licensed
Patents or Licensed Technology, as applicable.

6.02 Licensor agrees with Licensee with respect to the scope of the within grant of license to:

	 	(1)  	make all directions in favour of Licensee, to Novartis as
directions are contemplated by the provisions of the Novartis License, and to
maintain and not withdraw such directions without Licensee’s consent; and
	 
	 	(2)  	forthwith apprise Licensee of information in its possession
relating to the status of patent applications, approved patents, and
infringements or suspected infringements except as restricted by the terms of
the Novartis License; and
	 
	 	(3)  	obtain Licensee’s written consent prior to providing any
consent or approval affecting the Licensed Patents as contemplated or
requested pursuant to the Novartis License; and
	 
	 	(4)  	to cooperate with Licensee in the application, prosecution
and filing of any continuations, continuations-in-part, divisions, patents of
additions, re-issues, renewals and extensions, further applications or defense
of the Licensed Patents desired by Licensee (and effecting the applicable
directions contemplated under the Novartis License) and to insure that
Novartis does likewise to the extent to do so pursuant to the Novartis
License, all subject to Licensee’s obligation to reimburse Licensor and
Novartis for their respective out of pocket expenditures incurred in providing
such cooperation; and
	 
	 	(5)  	to provide Licensee the opportunity to commence or continue the
prosecution and maintenance of patents that Novartis may determine
under its license not to make or pursue for inclusion under this License;
and

 20

 

	 	(6)  	not to amend Novartis License in a manner adverse to the rights and
entitlements of Licensee contemplated hereunder without the Licensee’s
written consent.

6.03 Intentionally Left Blank

6.04 All patent applications on Licensed Technology or Improvements undertaken by Licensee
in accordance with this Agreement shall be undertaken in the name and on behalf of the University
of Saskatchewan. Licensee shall be responsible for all costs and expenses associated with the
filing and prosecution of such applications and the maintenance fees, if any, required to
maintain the Licensed Patents in full force and effect except to the extent the responsibility
resides with Novartis, pursuant to the Novartis License. The selection of the patent agents
chosen to prosecute applications pursued independently by Licensee shall be in the sole
discretion of Licensee. Other than as contemplated by the provisions of 6.05, Licensor shall
cooperate with Licensee in prosecuting such application at no expense to Licensee other than
reimbursement for out-of-pocket expenses that Licensee approves prior to their being incurred.

6.05 At the request of the Licensee, Licensor shall provide such personnel as may be
available to it for purposes of consultation with and presentations to governmental authorities in
respect of the Licensed Patents and Licensor shall be entitled to be compensated for such
participation of such personnel on the basis of a commercially reasonable consultation fee.

6.06 With respect to the Licensed Patents which are not subject of the Novartis License, the
following provisions will apply:

	 	(a)  	All patent applications on Licensed Technology or Improvements
undertaken by the Licensee in accordance with this Agreement shall be
undertaken in the name and on behalf of the University of Saskatchewan. The
Licensee shall be responsible for all costs and expenses associated with the
filing and prosecution of such applications and the maintenance fees, if any,
required to maintain such applications in fall force and effect. The selection
of the patent agents chosen to prosecute such applications shall be in the
sole discretion of the Licensee. Other than as contemplated by the provisions
of 6.05, Licensor shall cooperate with the Licensee in prosecuting such
applications at no expense to the Licensee other than reimbursement for
out-of-pocket expenses that the Licensee approves prior to their being
incurred. The Licensee’s obligations under this Article VI do not extend to
prosecuting appeals from decisions of the patent office of various
jurisdictions throughout the world nor engaging in litigation with third
parties. The Licensee shall regularly apprize Licensor and at Licensor’s
direction on a confidential basis Licensor’s other licensees of the status of
patent applications and of approved patents. The Licensee shall be entitled to
reimbursement of its out of pocket expenditures incurred in providing such
cooperation to other licensees.
	 
	 	(b)  	Applications for Licensed Patents filed after the date of execution
of this Agreement shall first be filed in the United States of America and
the selection of other jurisdictions of the world in which any particular
application is to be

 21

 

	 	   	filed shall be in the sole discretion of the Licensee. The Licensee shall
advise the Licensor of its decision in this regard within nine (9) months of
the filing date of any particular application in the United States of America.
With respect to applications for Licensed Patents in jurisdictions where the
Licensee chooses not to file, the Licensor may file and prosecute an
application at its own expense. With respect to any jurisdiction in which the
Licensor obtains a patent as contemplated by this clause, the Licensee shall
not have any rights under this Agreement unless and until it
reimburses the Licensor for the cost of obtaining such patent with interest as
provided for in clause 5.05. Furthermore, the Licensor may grant a license to
any third party for a patent it obtains under this clause subject to the
following right of first refusal in the Licensee’s favour. The Licensor shall
not enter into any such license agreement with any third party within the scope
of the within License without giving the Licensee at least sixty (60) days
written notice which written notice shall identify the proposed licensee(s) and
set forth the costs incurred by the Licensor in obtaining such patent. From and
after receipt of any such written notice the Licensee may advise the Licensor
in writing that it wishes to have such patent added to the Licensed Patents.
Accompanying such written notice shall be a cheque in the amount stipulated in
the written notice from the Licensor.
	 
	 	(c)  	If the Licensee complies with the foregoing, such patent shall
become one of the Licensed Patents and the Licensee shall be entitled to
exercise all of its rights hereunder in such jurisdiction. If the Licensee
fails to deliver such written notice, or advises the Licensor that it does not
intend to exercise this right of first refusal, the Licensor may enter into the
license agreement described in the written notice to the Licensee. However, if
the Licensor does not enter into such license agreement for any reason with
such proposed licensee(s), the Licensor shall not enter into any other license
agreements for such patent in such jurisdiction within the scope of the within
License without first again complying with this right of first refusal in
favour of the Licensee.
	 
	 	(d)  	The Licensee shall have the option of discontinuing the
prosecution of an application for a Licensed Patent or not filing an
application based on the Licensed Technology or any Improvement in accordance
with this clause 6.06. If the Licensee’s patent agents provide a written
opinion to the effect that an application for a Licensed Patent does not
warrant the expense of further prosecution, or that an aspect of the Licensed
Technology or any Improvement (which the Licensor considers patentable) does
not warrant the expense of an application the Licensee may, in its sole
discretion, refuse to proceed with such prosecution or application. If the
Licensee exercises such option, it shall so advise the Licensor in writing and
provide the Licensor with a copy of the opinion of the patent agents on which
such decision is based. The Licensor may, in its sole discretion, file and
prosecute, or continue the prosecution, as the case may, of such an
application. If the Licensor is successful in obtaining such patent or patents,
the Licensee must reimburse the Licensor for the Licensor’s costs of obtaining
such patent with interest as provided for in clause 5.05 if the Licensee
desires rights thereunder. Upon payment to the Licensor of its expenses, such
patent or patents, as the case may be, shall become one of the Licensed
Patents.

 22

 

	 	(e)  	With respect to any jurisdiction in which the Licensor obtains a
patent as contemplated by this clause and the Licensee chooses not to reimburse
the Licensor for its costs thereof as set forth above, the Licensor may grant a
license to any third party for such patent within the scope of the within
License subject to the following right of first refusal in the Licensee’s
favour. The Licensor shall not enter into any such license agreement with any
third party within the scope of the within License without giving the Licensee
at least sixty (60) days written notice which written notice shall identify the
proposed licensee(s) and set forth the costs incurred by the Licensor in
obtaining such patent. From and after receipt of any such written notice, the
Licensee may advise the Licensor in writing that it wishes to have such patent
added to the Licensed Patents. Accompanying such written notice shall be a
cheque in the amount stipulated in the written notice from the Licensor.
	 
	 	(f)  	If the Licensee complies with the foregoing, such patents shall become one of the Licensed
Patents and the Licensee shall be entitled to exercise all of its rights hereunder in such
jurisdiction. If the Licensee fails to deliver such written notice, or advises the Licensor that
it does not intend to exercise this right of first refusal, the Licensor may enter into the
license agreement described in the written notice to the Licensee. However, if the
Licensor does not enter into such license agreement for any reason with the proposed licensee(s),
the Licensor shall not enter into any other license agreement for such patent in such
jurisdiction within the scope of the within License without first again complying with this right
of first refusal in favor of the Licensee.
	 
	 	(g)  	Licensee’s patent expenditures for applications covered by this Section
6.06 shall be credited against payments on account of Royalties to a maximum of
fifty (50%) percent of any payment otherwise due until Licensee has been
reimbursed in full provided that such credits may not be applied to reduce
Royalties below those amounts of Minimum Royalties payable pursuant to 4.03.

ARTICLE VII - PATENT PROTECTION AND INFRINGEMENT

7.01 The Licensee and the Licensor shall promptly advise each other of any infringement or
suspected infringement of the Licensed Patents by a third party. Subject to any subsequent
agreement as to the conduct of any such action:

	 	(a)  	the Licensee, or its sublicensees, or both, may institute a suit and, subject
to the provisions hereinafter appearing, join the Licensor as a plaintiff in which case
the Licensee and its sublicensees, as the case may be, shall bear the entire cost of
such litigation and shall be entitled to retain the entire amount of any recovery
whether by way of judgement, award, decree or settlement; or
	 
	 	(b)  	if the Licensee and its sublicensees choose not to institute a suit as provided
for in subclause (a) above, the Licensor may institute a suit in which case the
Licensor shall bear the entire cost of such litigation and shall be entitled to retain
the entire amount of any recovery whether by way of judgment, award, decree or
settlement.

 23

 

If the Licensee and its sublicensees exercise their right to commence a suit, the Licensor need
not consent to being nor shall it be added as a party until provided with an indemnity agreement
from the Licensee and its sublicensees against all costs, expenses and damages which the Licensor
may incur as a result of such cooperation. Such indemnity agreement shall be in a form
satisfactory to the Licensor’s solicitors and be supported by such reasonable assurances in
support of such indemnity as the Licensor considers appropriate in the circumstances.

7.02 Should the Licensor or the Licensee (which includes for purposes of this clause the
Licensee’s sublicensees) commence a suit in accordance with clause 7.01 and subsequently elect to
abandon such suit, the Licensor or the Licensee, as the case may be, shall first give timely
notice to the other, who may, if it so desires, continue prosecution of such suit provided that an
agreement as to the sharing of expenses and any recoveries is first arrived at.

7.03 If the Licensee institutes a suit in accordance with clause 7.01 it may deduct fifty
(50%) percent of its out-of-pocket expenditures, including legal fees and disbursements, that are
incurred in bringing and prosecuting such infringement action from Royalties not yet paid to a
maximum amount of one-half of each payment on account of Royalties otherwise due, until such
expenditures are paid in full. If the Licensee recovers profits or damages, or both, from the
alleged infringer, the Licensee shall after reimbursing itself for such expenditures that it has
had to bear, repay the Licensor all Royalties that have been deducted in accordance with this
clause 7.03 and interest as provided for herein, up to, but not exceeding, the amount of the
damages so recovered by the Licensee. However, if any such infringement suit results in an adverse
judgment and all or some of the Licensed Patents are wholly or partially invalidated, Royalties
shall be adjusted in accordance with clause 4.01.

7.04 Each party shall promptly notify the other in writing of any claim or action for
infringement of the patent rights of any third party based on the production, use or sale of
Products by the Licensee or its sublicensees.

7.05 The entitlements of the Licensee under this Article VII are limited to third party
infringements of the applications subject of this Agreement.

ARTICLE VIII - REPRESENTATIONS AND WARRANTIES

8.01 Subject to
Article IX, the Licensor represents and warrants that it:

	 	(a)  	has obtained and holds title to all such rights in the Licensed Patents and
Licensed Technology as may be necessary to grant the licenses contemplated by this
Agreement subject to the rights of governmental and other agencies pursuant to
funding agreements that the Licensor has with such agencies; and
	 
	 	(b)  	and has full power and authority to enter into this Agreement.

 24

 

ARTICLE IX - DISCLAIMER OF WARRANTIES

9.01 The parties acknowledge and agree that nothing in this Agreement is or shall be construed as
being:

	 	(a)  	a warranty or representation by the Licensor as to whether any patents
based on the Licensed Technology will issue or the validity or scope of the Licensed
Patents once issued; or
	 
	 	(b)  	a warranty or representation by the Licensor that Products made, used, sold
or otherwise disposed of by the Licensee are and will be free from infringement of
patents, copyrights, trademarks or other proprietary interests of any third party; or
	 
	 	(c)  	an obligation on the Licensor to bring or prosecute actions or suits against
third parties for infringement of the Licensed Patents or other proprietary rights
under any circumstances; or
	 
	 	(d)  	the conferring of any rights to use in advertising, publicity or otherwise any
trademark or the name of either the Licensor or the University of Saskatchewan or any
employee, agent or person otherwise associated with either of those institutions; or
	 
	 	(e)  	a grant by implication, estoppel or otherwise of any license to any patents or
other confidential proprietary information of the Licensor other than the Licensed
Patents and Licensed Technology; or
	 
	 	(f)  	A REPRESENTATION OR WARRANTY, WHETHER EXPRESS OR IMPLIED, BY THE LICENSOR OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, NOR A REPRESENTATION OR WARRANTY
BY THE LICENSOR THAT IT SHALL BEAR ANY LIABILITY TO THE LICENSEE WHATSOEVER BY REASON
OF ANY LOSS OR DAMAGE SUSTAINED BY THE LICENSEE, ITS EMPLOYEES, OR ANY THIRD PARTY
ARISING OUT OF THE PRODUCTION, USE, SALE OR OTHER DISPOSAL OF PRODUCTS OR ARISING
DIRECTLY OR INDIRECTLY OUT OF THE USE BY THE LICENSEE OF THE LICENSED PATENTS AND
LICENSED TECHNOLOGY OR OTHERWISE ARISING OUT OF THE GRANT OF ANY RIGHTS UNDER THIS
AGREEMENT OR OUT OF THE PROVISION OF ANY INFORMATION IN CONNECTION WITH THIS
AGREEMENT.

ARTICLE X - INDEMNITY

10.01 The Licensee shall indemnify, hold harmless and defend the Licensor and its officers,
employees and agents against any and all claims arising out of the exercise by the Licensee of
any of the rights granted to it under this Agreement including, without limitation, against any
damages, losses or liabilities whatsoever with respect to death or other personal injury to a
person or damage to property arising from or out of the use of the Licensed Patents and Licensed
Technology by the Licensee, it sublicensees or its customers in any manner whatsoever or the
production, use, sale, or lease of Products by the Licensee, its sublicensees or its customers in
any

 25

 

manner whatsoever; with the exception of any damage or loss directly resulting from acts or
omissions constituting bad faith, willful misfeasance, gross negligence or reckless disregard of
duties under this Agreement by the Licensor or its officers, employees or agents acting in such
capacity on the behalf of the Licensor.

ARTICLE XI - SUBLICENSING

11.01 This Agreement has been entered into so that the Licensee may commercialize the
Licensed Patents and Licensed Technology by the development, production, use and marketing of
Products. Accordingly, the Licensee may grant sublicenses of its rights under this Agreement and
enter into contracts to have Products developed, produced, used or sold provided that all such
sublicenses shall provide, amongst other things, that they come to an end immediately upon the
termination of this Agreement for whatever reason.

ARTICLE XII - TERMINATION

12.01 This Agreement shall terminate at the Licensor’s option if the Licensee is in breach of
any material provision hereof and fails to remedy such breach within ninety (90) days of receipt
of written notice from the Licensor of such breach.

12.02 This Agreement shall further terminate, at the option of the Licensor, if:

	 	(a)  	the Licensee files an Assignment in Bankruptcy or is adjudged a bankrupt or
insolvent corporation; or
	 
	 	(b)  	the Licensee is adjudged a bankrupt or insolvent corporation as a result of taking
advantage of any law or governmental regulation relating to bankruptcy or
insolvency; or
	 
	 	(c)  	a receiver or receiver-manager for all or substantially all of the property
and assets of the Licensee is appointed; or
	 
	 	(d)  	the Licensee makes an assignment or attempted assignment for the benefit of
its creditors; or
	 
	 	(e)  	the Licensee institutes any proceedings for the winding up of its business; or
	 
	 	(f)  	a governmental authority exercises its powers in such a way that the
expropriation or confiscation of all or a substantial part of the property and
assets of the Licensee occurs.

12.03 If the Licensor decides to exercise its option to teiminate this Agreement pursuant to
either clauses 12.01 or 12.02, it shall so exercise such option by delivering written notice to
the Licensee, which written notice shall specify the effective date of termination. Termination
of this Agreement shall not prejudice any other rights or remedies, whether in law or in equity,
that the Licensor may have as a result of any actions by the Licensee.

 26

 

12.04 The Licensee shall be entitled, at its option, to terminate this Agreement at any time
by giving the Licensor a minimum of ninety (90) days written notice of its intention.

12.05 Upon termination of this Agreement, whether pursuant to clauses 12.01, 12.02 or 12.04,
the parties shall return to each other all Confidential Information with the exception of one (1)
copy of each such disclosure which may be retained for record purposes. The Licensee acknowledges
that upon termination of this Agreement by the Licensor for any reason other than the expiration
of the Term, it shall no longer have any rights to use the Licensed Technology or infringe the
Licensed Patents. Accordingly, the Licensee shall cease production of Products upon the effective
date of termination and return all cell lines, reagents and other biological material obtained
from the Licensor to the Licensor. With respect to the remaining stock of Products then in the
Licensee’s possession, the Licensor shall have the option of purchasing such remaining stock from
the Licensee at and for a price equal to the price that the Licensee offers such Products to its
third party customers less ten (10%) percent, or by having the Licensee destroy such remaining
stock of Products, and providing proof of such destruction to the Licensor.

12.06 Surviving the termination of this Agreement, whether pursuant to clauses 12.01 and
12.02 of this Article XII or due to the expiration of time, are the appropriate provisions of
Article II (Licenses), Article III (Improvements), Article IV (Royalties), Article V (Reports,
Payments and Accounting), Article IX (Disclaimer of Warranties), Article X (Indemnity), Article
XII (Termination) and Article XIII (Confidentiality and Disclosures).

ARTICLE XIII - CONFIDENTIALITY AND DISCLOSURES

13.01 The parties acknowledge that both of them may from time to time disclose to the other
(respectively referred to as the “Discloser” and the “Recipient”, as the case may be) information
that is confidential and proprietary, or both, to the Discloser. Such information may be disclosed
orally, graphically, by way of sample or specimen or otherwise printed or recorded by any means.
Accordingly, all information disclosed pursuant to this Agreement including, without limitation,
all information pertaining to the Licensed Patents and Licensed Technology, shall be deemed to be
confidential information (hereinafter referred to as “Confidential Information”) unless the
Discloser expressly indicates that it is not confidential or it falls into one of the following
categories.:

	 	(a)  	it is required to be disclosed by reason of judicial action after all
reasonable legal remedies to maintain the confidentiality of such information have
been exhausted; or
	 
	 	(b)  	it is or becomes part of the public domain through no fault of the Recipient; or
	 
	 	(c)  	it is known to the Recipient, or its permitted sublicensees prior to
disclosure by the Discloser; or
	 
	 	(d)  	it is subsequently legally obtained by the Recipient or its sublicensees
from a third party under circumstances which do not constitute a breach of this
Article XIII; or

 27

 

	 	(e)  	it is independently developed by the Recipient outside of this Agreement and
without in any way breaching this Agreement; or
	 
	 	(f)  	it is approved for public release by the Discloser.

13.02 Each of the parties shall use its reasonable best efforts to preserve the secrecy of
Confidential Information and shall only disclose it to:

	 	(a)  	employees, or employees of permitted sublicensees who are required to know
the same for performance of their duties and who have entered into appropriate
confidentiality agreements; and
	 
	 	(b)  	such Government officials as are required for the purpose of obtaining all
necessary regulatory approvals for the purpose of commercializing any Product or for
the filing of any patent in any jurisdiction, provided that the parties shall avail
themselves of all available provisions for ensuring that such disclosures do not
become public.

Neither the Licensor nor the Licensee shall submit any manuscript, abstract, or like document for
written or oral publication if it includes data or other information generated and provided by the
other party without first obtaining the prior written consent of the other, which consent shall
not be unreasonably withheld. The contribution of each party shall be noted in all publications or
presentations by acknowledgment or co-authorship, whichever is appropriate.

13.03 The Licensee recognizes that the Licensor has an obligation to publish and disseminate
scientific knowledge. The Licensor recognizes that the public release of material
pertaining to Licensed Technology may prejudice the possibility of obtaining letters patent for
such Licensed Technology, or result in Commercially Significant Confidential Information being
disclosed to a competitor of the Licensee’s, or both. Therefore, during the Term, the Licensor
shall make all theses, articles and similar publications of any description, and the contents of
all abstracts and poster presentations which relate to the Licensed Patents or Licensed
Technology, or both and Improvements (all hereinafter referred to as “External Disclosures”)
available for review by the Licensee within a reasonable period of time prior to submission for
publication or release, as the case may be, but in any event at least thirty (30) days prior to
such date. The Licensee shall review all External Disclosures to ascertain whether patentable
subject matter or Commercially Significant Confidential Information is disclosed. The Licensor
shall only proceed with an External Disclosure upon receiving the Licensee’s consent, which
consent shall be deemed to have been given if the Licensee does not respond within a period of
thirty (30) days from the date of submission to the Licensee of any particular External
Disclosure. If requested by the Licensee in writing, the Licensor shall:

	 	(a)  	delay submission for publication or release, as the case may be, of any
particular External Disclosure for the period of time required for a patent
application to be filed, which period of time shall not exceed six (6) months without
the Licensor’s written consent; or
	 
	 	(b)  	amend such External Disclosure so as to delete those portions which
constitute Commercially Significant Confidential Information;

 28

 

          As used in clauses 13.03, 13.04 and 13.05, the term “Commercially Significant Confidential
Information” means Confidential Information which, if disclosed to a commercial competitor of the
Licensee’s, could allow such competitor to develop or enhance its position in the market place, or
to price a new product in a more competitive fashion, or to improve the price of an existing
product so as to compete or improve its competitive position with respect to existing or potential
the Licensee Products. Commercially Significant Confidential Information may include, by way of
example and without limitation, information as to the formulation or composition of a Product, the
method of formulating or combining ingredients for a Product, detailed chemical or biological
structural information for a Product and its ingredients, and the method or application of a
Product.

13.04 The Licensor shall use reasonable efforts to ensure that all scientific oral
presentations which are made by its staff and graduate students do not contain Commercially
Significant Confidential Information.

13.05 The Licensee acknowledges and agrees that clause 13.03 shall not prohibit the
Licensor’s personnel from disseminating general information concerning the Licensed Patents and
Licensed Technology to government agencies, associations of livestock producers, other
organizations or groups of whatever description who provide funding to the Licensor or who derive
a direct benefit from the Licensor’s research activities as long as Commercially Significant
Confidential Information is not disclosed.

13.06 The Licensor recognizes that, pursuant to United States laws, the Licensee may have an
obligation, under certain circumstances, to make public announcements relating to this Agreement
or the development, production, exploitation, use, or sale of Products in connection with this
Agreement. The parties hereby agree to abide by the applicable notice and consent provisions of
Section 13.03 above with respect to proposed disclosures to be made by Licensee. Licensor
acknowledges and agrees that nothing in this Agreement shall prevent Licensee from making any
disclosure to the extent required by law provided that prior notice of such disclosure is given to
Licensor.

ARTICLE XIV - COMMERCIAL DUE DILIGENCE

14.01 The Licensor by written notice to the Licensee may make this License non-exclusive with respect to a particular Major Jurisdiction if:

	 	(i)  	the Licensee is not by the expiration of calendar year 2007 selling a
Product into
such Major Jurisdiction, or
	 
	 	   	a New Animal Drug Application (NADA or its equivalent) for a Product has not
been submitted to appropriate governmental authorities prior to the end of
calendar year 2004 or if submitted has not been maintained in effect and
diligently pursued from the end of calendar year 2004, or
	 
	 	(iii)  	amounts paid hereunder by Licensee to Licensor in each of calendar
years 2005
and 2006 have not exceeded $250,000 US.

 29

 

For purposes of this Section 14.01, Major Jurisdictions are the United States of America (which
jurisdiction includes other than for registration purposes Canada and Mexico) and Europe (which
is defined as one of the EU member countries).

          The Licensor by written notice to the Licensee may make this License nonexclusive with
respect to a particular jurisdiction not constituting a Major Jurisdiction if:

	 	(iv)  	the Licensor has the right to render this License non-exclusive in
respect of both Major Jurisdictions, or
	 
	 	(v)  	amounts paid hereunder by Licensee to Licensor in respect of 2007 or any
subsequent calendar year is less than $500,000 and the Licensor is not selling
Product into such jurisdiction.

14.02 In respect of the requirements of 14.01 (ii) to submit a New Animal Drug Application
(NADA or its equivalent) for a Product to appropriate governmental authorities prior to the end of
calendar year 2004, in the event that such submission has not been so effected the Licensee may
obtain an extension of such date for the purposes of 14.01 of up to 12 months (to the end of 2005)
provided that the Licensee can establish that:

	 	(i)  	it has substantially made such application and that the completion of such application within the
period of such extension is probable, and
	 
	 	(ii)  	the Licensee has used all due diligence in its efforts to effect the
submission within the original time limits but that circumstances reasonably beyond
its control prevented it from doing so, and that with due diligence on the part of
the Licensee such circumstances will not in all likelihood prevent the completion of
the submission within the period of the extension.

          The Licensee shall be entitled to one further extension of up to 12 months on the time
limits pertaining to 14.01 (ii) provided that on such further extension the Licensee can
establish the conditions referred to in (i) and (ii) above at such time. If the Licensor does not
agree that the Licensee has established the foregoing such determination may be referred to
arbitration.

14.03 Wherever commercially feasible to do so, the Licensee shall publicly acknowledge and
shall ensure that its sublicensees publicly acknowledge, the role of the Licensor or the
University of Saskatchewan, or both, in the development of Products. Prior to providing any such
public acknowledgment, the Licensee shall obtain the approval of the Licensor or the University
of Saskatchewan, as the case maybe. With respect to the University of Saskatchewan, the Licensee
acknowledges that any such approval must be obtained from the Board of Governors in the manner
stipulated by The University of Saskatchewan Act, 1995, Statutes of Saskatchewan.

 30

 

ARTICLE XV - MISCELLANEOUS

15.01 Assignment

          This Agreement shall not be assigned by the Licensee in whole or in part without the prior
written consent of the Licensor which consent may be unreasonably withheld provided, however, that
the Licensee may, without obtaining such consent, assign, transfer, or part with any of its
rights, duties, or obligations under this Agreement to any parent or subsidiary corporation of the
Licensee or an affiliate of the Licensee as those terms are defined in The Business
Corporations Act (Canada), if such proposed assignee promptly executes and delivers an
agreement in favour of the Licensor pursuant to which the assignee agrees to be bound by all of
the terms and conditions contained in this Agreement. Furthermore, such assignee must covenant to
remain during the continuance of this Agreement, a parent, subsidiary or affiliate of the
Licensee, as the case may be. The Licensee acknowledges that no such assignment shall in any way
affect its liabilities and responsibilities under this Agreement.

15.02 Governing Law

          This Agreement shall be construed, interpreted and applied in accordance with the laws of the
Province of Saskatchewan and Canada, and the parties hereby attorn to the jurisdiction of the
Courts of the Province of Saskatchewan.

15.03 Notices

          All notices, demands or other writings required or permitted to be given hereunder by either
party hereto to the other, may be effectively given by letter, mailed by registered mail, postage
prepared, addressed to:

	(a)  	to the Licensor:

VIDO

120 Veterinary Road

University of Saskatchewan

Saskatoon, Saskatchewan 

S7N OWO

Attention: Director

	 With a copy to:

	   	 McKercher, McKercher and Whitmore,

374 3rd
Avenue South, Saskatoon, Saskatchewan 

S7K 1M5

Attention: L.J. Dick Batten

	(b)  	to the Licensee:

MetaMorphix-International , Inc.

1450 South Rolling Road, Baltimore, Maryland,

United States of America, 21227

Attention: President

 

 

	   	 With a copy to:

	 	   	 Shapiro and Olander,

Twentieth Floor, 36 Charles Street,

Baltimore, Maryland, 21201-3147

Attention: William E. Carlson

or hand delivered to the above addresses or sent by electronic means. If mailed as aforesaid, any
such notice shall be deemed to have been given by the seventh (7th) business day following the
date of posting, and if delivered personally or by electronic means, on the date or delivery,
provided that such date is a business day. Either party to this Agreement may change its address
for service from time to time by giving notice in writing in accordance with the foregoing.

15.04 Waiver

          The parties covenant and agree that if either party hereto fails or neglects, for any reason,
to take advantage of any of the terms herein provided for its benefit, any such failure or neglect
by such party shall not be, nor be deemed to be construed as waiver of any of the terms, covenants
or conditions of this Agreement or the performance thereof.

15.05 No Agency or Joint Venture

          This is a contract between separate legal entities and neither party is the agent of the other
for any purposes whatsoever, and nothing in this Agreement does or shall directly or indirectly
constitute either party to be the agent of the other.

15.06 Successors and Permitted Assigns

          This Agreement shall enure to the benefit of and be binding upon the parties hereto and their
respective successors and any permitted assigns.

15.07 Force Majeure

          Neither party to this Agreement shall be liable to the other for failure or delay in the
performance of their obligations under this Agreement, by Acts of God, regulations, or laws of any
government, war, civic commotion, strike, lock-out, or labour disturbances, destruction of
facilities and any materials and equipment by fire, earthquake, storm, failure of public utilities
or common carriers, and any cause beyond the control of that party for the period of time that the
foregoing prevents performance. The Licensee acknowledges and agrees that the foregoing does not
operate so as to excuse it from prompt payment of any and all sums due by it to the Licensor
pursuant to the terms and conditions of this Agreement.

15.08 Arbitration

          With the exception of:

	(a)  	a dispute arising from any breach or alleged breach of the party’s
obligations with respect to confidentiality; or

 

 

	(b)  	a failure by the Licensee to make any payments when due; or
	 
	(c)  	the exercise by the Licensor of its right to terminate this Agreement pursuant
to Article XII,

the parties shall submit all disputes arising under this Agreement to arbitration. The party
desiring to initiate arbitration shall serve a written request on the other party.

     The party receiving such written request shall designate the locale within which arbitration
is to take place. Within thirty (30) days of receipt of such written request, each party shall
appoint an umpire. The arbitration shall take place in accordance with the provisions of The
Arbitration Act, 1992 Statutes of Saskatchewan, or its successor legislation-in force from
time to time.

15.09 This Agreement constitutes the entire agreement between the parties pertaining to the subject
matter. No representative of the Licensee or the Licensor has been authorized to make any
representation, warranty or promise not contained herein. This Agreement may not be amended or
modified in any manner except by written agreement executed by both of the parties.

 33

 

15.10 The headings contained in this Agreement are for reference purposes
only and shall in no way affect the meaning or interpretation of any section of this Agreement.

          IN WITNESS WHEREOF VIDO has hereunto affixed its corporate seal as evidence of its approval
of this Agreement by the hands of its duly authorized officers in that behalf on the day and year
first above written.

	 	 	 	 	 	 	 
	 	 	THE VETERINARY INFECTIOUS DISEASE ORGANIZATION
	 
	 	 	 	 	 	 
	

	 	PER:
	 	/s/ Lorne Babiuk

	 
	 	 	 	 	 	 
	

	 	PER:
	 	/s/ Martel

     IN WITNESS WHEREOF the Board of Governors University of Saskatchewan has hereunto affixed its
corporate by the hands of its duly authorized officers in that behalf day and year first above
written.

	 	 	 	 	 	 	 
	 	 	BOARD OF GOVERNORS OF THE UNIVERSITY OF SASKATCHEWAN
	 
	 	 	 	 	 	 
	

	 	PER:
	 	/s/ K. Wharton

	 
	 	 	 	 	 	 
	

	 	PER:
	 	/s/ J. Finwirth

     IN WITNESS WHEREOF MetaMorphix International, Inc. has hereunto affixed its corporate seal by
the hands of its duly authorized officers in that behalf on the day and year first above written.

	 	 	 	 	 	 	 
	 	 	METAMORPHIX INTERNATIONAL , INC.
	 
	 	 	 	 	 	 
	 

	 	PER:
	 	/s/ Edwin
Quattlebaum

	 
	 	 	 	 	 	 
	

	 	PER:
	 	/s/ Mike Thomas

 34

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00083-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00083-of-00352.parquet"}]]