Document:

EXHIBIT 10.1

 

***Text Omitted and Filed
Separately

with the Securities and Exchange
Commission.

Confidential Treatment Requested

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

and 240.24b-2.

 

Execution Copy

Confidential

 

COLLABORATIVE RESEARCH, DEVELOPMENT, COMMERCIALIZATION

AND LICENSE AGREEMENT

 

BETWEEN

 

SENOMYX,
INC.

 

AND

 

FIRMENICH SA

 

1

 

COLLABORATIVE RESEARCH, DEVELOPMENT, COMMERCIALIZATION AND LICENSE AGREEMENT
 
THIS AGREEMENT is entered into as of the Effective Date by and between SENOMYX, INC., a Delaware Corporation having offices at 4767 Nexus Centre Drive, San Diego, CA 92121, U.S.A. (“Senomyx”) and FIRMENICH SA, a Swiss Company, having its principal place of business at 1, route des Jeunes, 1211 Geneva 8, Switzerland (“Firmenich”).
 
BACKGROUND
 

Firmenich
and Senomyx entered into a Collaborative Research, Development,
Commercialization and License Agreement, dated December 14, 2007 (“First
Agreement”), for a research and development program to discover and develop
compounds which modulate the human TRPM8 receptor and provide a cooling taste
effect.   Firmenich and Senomyx also
entered into a Collaborative Commercialization and License Agreement dated November 5,
2008 (“Second Agreement”) wherein Senomyx granted Firmenich certain license
rights to Senomyx’s proprietary compound, S8475

 

Firmenich
and Senomyx now desire to enter into this Agreement for a research and
development program during the Collaborative Period to discover and/or develop
Compounds that are Synthetic Compounds for use in the Fields (the “Collaborative
Program”). Upon proper exercise of the Option set forth in Section 8.6 of
this Agreement, the Collaborative Program will be automatically expanded to
also include a second research and development program to discover and/or
develop Compounds that are Natural Compounds.

 

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

 

THE AGREEMENT
 
1.              Definitions.  Certain terms set forth in this Agreement with initial capitals are defined in Appendix A or Appendix B, which are both incorporated herein by reference.
 
2.              Steering Committee.  Within [...***...] of the Effective Date, the parties will establish a joint steering committee, which will be made up of representatives from the parties (the “Steering Committee”).  The Steering Committee will manage the Collaborative Program and will (i) provide strategic direction and performance criteria for the Collaborative Program; (ii) direct the efforts of the Collaborative Program and monitor progress and communicate status of the Collaborative Program; 

 

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2

 
(iii) facilitate the cooperation between the parties; (iv) approve the achievement of milestones, and (v) continue to communicate following the Collaborative Period regarding the development and commercialization of Products.  The Steering Committee will consist of two (2) representatives designated by Senomyx and two (2) representatives designated by Firmenich.  Steering Committee members may delegate their voting powers to delegates from their respective companies.  Each member of the Steering Committee will have one (1) vote. The Steering Committee will meet at least four (4) times per year, unless otherwise agreed, using mutually agreed upon meeting locations and formats including teleconferencing and videoconferencing. Each party shall bear its own expenses relating to the meetings and activities of the Steering Committee. Senomyx will prepare and deliver to the members of the Steering Committee minutes of such meetings for review and approval by both parties. Decisions of the Steering Committee will be made by unanimous vote, at a meeting where all four voting representatives are represented, or by unanimous written consent. All unresolved disputes will be settled in accordance with Section 17.4, or as otherwise mutually agreed in writing.
 
3.              Collaborative Program.
 
3.1                               Research.   During the Collaborative Period, Senomyx will collaborate with Firmenich in the Collaborative Program (i) on an Exclusive basis with respect to Field I in the Territory and (ii) on a Co-Exclusive basis with respect to Field II in the Territory.
 
3.1.1                     The Collaborative Program will be conducted pursuant to the Research Plan.
 
3.1.2                     During the Collaborative Period, Senomyx will use its reasonable commercial efforts using the Research Fees provided under Section 7.2 to perform the activities outlined in the Research Plan.  Senomyx shall not be obligated to perform research and development activities under the Collaborative Program for more than [...***...] Target Sweeteners at any one time.  Senomyx will prepare a data package containing technical information such as [...***...], and results of [...***...] as Senomyx shall reasonably determine for Compounds under the Collaborative Program]. Such data package will also designate the specific Target Sweetener(s) that the Selected Compound may be used to enhance under the license grants in Section 8, which shall be determined in advance by [...***...] (the “Intended Purpose”).  For the avoidance of doubt, the Compounds set forth in the data package will be Synthetic Compounds, unless the Option is properly exercised pursuant to Section 8.6.

 

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In addition to the data package(s), Senomyx will provide a reasonable quantity of the applicable Compound material (laboratory synthesized grade) for evaluation by Firmenich.  For each Compound and Selected Compound evaluated by Firmenich under this Agreement, Firmenich will use commercially reasonable precautions in the evaluation of such compound including, without limitation, not exceeding concentration and exposure limits provided by Senomyx and following other guidelines provided by Senomyx with respect to any tasting by humans.  For each taste test of a Compound or Product conducted prior to Regulatory Approval in the applicable country and as permitted by local law, Firmenich will require each participant to sign an attestation of informed consent that is reasonable for tasting an experimental compound.  With respect to any such testing or evaluation activities, Firmenich will [...***...].  Fimenich shall involve Senomyx in any [...***...] and will provide access to Senomyx to all related information.  Upon prior notice to Firmenich, notwithstanding Section 10 of this Agreement, Senomyx may [...***...] accordingly.
 
At the time of submitting a data package, Senomyx will also propose the [...***...] of the applicable Compound.  Upon selection of a Selected Compound by Firmenich pursuant to Section 3.1.3 below, the Steering Committee will agree upon in good faith [...***...] based on the following considerations: (i) a [...***...] shall be considered as part of the [...***...]; (ii) any [...***...] which have been shown to be [...***...] of the Selected Compound shall also be considered to be part of the [...***...]; and (iii) [...***...] which have been shown to [...***...] shall not be considered as part of the [...***...]  Such determination by the Steering Committee shall be completed by the first regularly scheduled Steering Committee meeting following the selection of a Selected Compound.
 
[...***...] example
 
[...***...]
 
If such [...***...] is agreed by the Steering Committee, then any compound that [...***....]
 

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3.1.3                     During the Collaborative Period, Firmenich will use its reasonable commercial efforts to perform the activities in accordance with the Research Plan, including the evaluation of the data package(s) provided by Senomyx under Section 3.1.2.  Such evaluation may not exceed [...***...] from the receipt of the applicable data package and Compound material.
 
3.1.4                     During the Collaborative Period, Firmenich may select Compound(s) for development under the Collaborative Program after evaluation of the data package by Firmenich, as provided for under Section 3.1.3. In order to effect the selection of a Compound under this Section 3.1.4, Firmenich shall notify Senomyx of its selection of a Compound for the Intended Purpose within the period specified in Section 3.1.3. Once a Compound is selected by Firmenich under this Section 3.1.4 or under Section 8.7, Senomyx will [...***...]  Notwithstanding anything in this Agreement to the contrary, the parties agree that a Compound that is selected under this Section 3.1.4 or under Section 8.7 shall not be deemed a Selected Compound unless and until Firmenich has paid to Senomyx [...***...].

 

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3.1.5                     During the Collaborative Period, the parties will cooperate in good faith to support the other party’s performance of the activities set forth in the Research Plan.  Upon expiration of the Collaborative Period, the parties’ research and development obligations pursuant to this Section 3.1 will expire.  If no Compounds are selected as Selected Compounds during the Collaborative Period pursuant to this Section 3.1, [...***...].
 
3.2                               Product Development  and Commercialization. Firmenich, upon execution and for the duration of this Agreement, will diligently proceed with the evaluation of Compounds and the development, manufacture, marketing and sales of Products as set forth below.
 
3.2.1                     Product Development.  Firmenich will be responsible for Product formulation work and [...***...].  Within [...***...] of the selection of a Selected Compound, Firmenich will prepare a plan for product development (“Product Development Plan”) for Products incorporating such Selected Compound for review by the Steering Committee (the “Product Development Plan”), which will be incorporated into the minutes of the Steering Committee; however, Firmenich shall have sole discretion to determine the Product Development Plan.  The Product Development Plan(s) will set forth the following:  (i) specific types of products for potential inclusion of the Selected Compound(s); (ii) specific countries of potential interest for commercialization of Products; (iii) prioritization of Products and countries for development and commercialization; and (iv) a development plan timeline including plans for Product formulation, manufacturing and consumer acceptance testing. Firmenich will use its commercially reasonable and diligent efforts to perform the activities set forth in the Product Development Plan(s).    For the avoidance of doubt, Firmenich will be responsible for formulating the product prototype(s) to be used in consumer panels and consumer acceptance testing of Product prototypes, including the [...***...] with such activities, in accordance with the activities outlined in the Product Development Plan(s).

 

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3.2.2                     Product Commercialization.
 
3.2.2.1           Within [...***...] from the date of compound selection for each Selected Compound, Firmenich shall submit a Strategic Marketing Plan to the Steering Committee for Products containing such Selected Compound, which will be incorporated into the minutes of the Steering Committee; however, [...***...]  Firmenich will update such Strategic Marketing Plan on a [...***...] basis and such updates shall be provided to the Steering Committee and incorporated into the minutes of the Steering Committee.  The Strategic Marketing Plan will [...***...] and neither Firmenich nor any of its Affiliates [...***...]  In addition, Firmenich will use reasonable commercial efforts to develop Product prototypes/formulations and present such samples to [...***...] for the [...***...] product categories as identified in the Strategic Marketing Plan within [...***...] from the first Regulatory Approval Date for each Selected Compound.  Firmenich will provide the Steering Committee with [...***...] updates on such efforts.
 
3.2.2.2           Within [...***...] from each Regulatory Approval Date for each Selected Compound [...***...], Firmenich shall use reasonable commercial efforts to commence commercial sale of [...***...] containing such Selected Compound [...***...].  To the extent Firmenich does not commence commercial sale of [...***...] containing such Selected Compound within within [...***...] of such date [...***...], then Senomyx may, at its sole discretion and upon [...***...] advance written notice to Firmenich, terminate the rights granted to Firmenich in Section 8 or reduce the license granted to a non-exclusive license for the Territory or Fields as a whole or applicable portions, and the definitions of Territory and/or Field shall be deemed modified accordingly in respect of such Selected Compound [...***...].
 
3.2.2.3           Within [...***...] from each Regulatory Approval Date for each Selected Compound [...***...], Firmenich shall use reasonable commercial efforts to commence commercial sale of [...***...] containing such Selected Compound that will be incorporated into an end product of Firmenich’s customer sold [...***...].  To the extent Firmenich does not commence commercial sale of ...***...] containing such Selected Compound within [...***...], then Senomyx may, at its sole option and upon [...***...] advance written notice to Firmenich, terminate the rights granted to Firmenich in Section 8 or reduce the license granted to a non-exclusive license for the Territory or Fields as a whole or applicable portions, and the definitions of Territory and/or Field shall be deemed modified accordingly in respect of such Selected Compound [...***...].

 

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3.2.2.4           For the avoidance of doubt, Firmenich will be responsible for the cost of manufacturing, packaging, promotion, advertising, sales and distribution.
 
3.2.2.5           In accordance with the efforts and resources Firmenich would use for a compound owned by it or to which it has rights, which is of similar market potential at a similar stage in development as the applicable Selected Compound, Firmenich will fill the market demand for such Selected Compound in the Fields following commencement of marketing at any time during which it has Exclusive or Co-Exclusive rights for such Selected Compound under this Agreement.
 
3.2.2.6           If Firmenich elects to abandon, discontinue, or forgo development and commercialization of Products in any country, Firmenich’s licenses in such country under Section 8 will terminate and Firmenich will have no right to practice or use the Senomyx Technology in such country, and all rights, title and interest in and to the Senomyx Technology in such country will revert to and become the sole property of Senomyx.
 
3.2.2.7           For purposes of this Section 3.2.2, if Regulatory Approval in a country is obtained for a Compound prior to its selection by Firmenich, the Regulatory Approval Date for such country shall be deemed to be [...***...].
 
3.3                   Regulatory.
 
3.3.1                     FEMA GRAS filings for Compound(s) shall be made by [...***...] Regulatory filings for Compounds [...***...] shall be made [...***...].      [...***...] will provide a regulatory plan(s) for Selected Compound(s) to the Steering Committee from time to time, which may include [...***...].  The Steering Committee shall provide advice and input into such regulatory plan(s).  Notwithstanding the foregoing, in the event of a disagreement within the Steering Committee regarding such regulatory plan(s), [...***...] shall have the authority to make any final decision.  Firmenich and Senomyx will cooperate to the extent necessary to permit [...***...] to perform the foregoing activities.  In addition, at the request of [...***...] will provide [...***...] with reasonable advice and assistance in connection with the regulatory approval process for Selected Compounds [...***...].

 

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3.3.2                     Unless otherwise required by local law in the relevant country, all regulatory filings made or filed for Compounds will be owned exclusively by Senomyx and shall be subject to the license grant pursuant to Section 8. In the event that due to local law in a relevant country such a regulatory filing is owned by Firmenich, then Firmenich agrees that Senomyx is hereby granted an Exclusive, royalty-free, worldwide, transferable, perpetual license (with a right to sub-license) such regulatory filing, and such regulatory filings shall be subject to the license grant pursuant to Section 8. Such license grant from Firmenich to Senomyx shall survive the termination or expiration of this Agreement and Firmenich agrees to cooperate and provide reasonable assistance to Senomyx to maintain such regulatory filings, if any, in good standing.
 
3.3.3                     Subject to subsections (a) and (b) below, [...***...] the out-of-pocket costs [...***...] associated with (i) the regulatory approval process for each Selected Compound including, without limitation, [...***...]; and (ii) the following [...***...] and are required or may be required to complete a [...***...] for each Selected Compound and which are [...***...]  For the avoidance of doubt, out-of-pocket costs exclude [...***...] unless agreed by the Steering Committee.
 
(a)    [...***...] will [...***...] for any additional out-of-pocket costs associated with the regulatory approval process for each Selected Compound [...***...].
 
(b)    Notwithstanding anything to the contrary in this Agreement, in no event will the total aggregate out-of-pocket costs to Senomyx associated with the regulatory approval process [...***...] for all Selected Compounds in respect of Synthetic Compound(s) [...***...].  Upon proper exercise of the Option set forth in Section 8.6, then the total aggregate out-of-pocket costs to Senomyx, as described in the preceding sentence, shall not exceed [...***...] for Natural Compound(s) which is in addition to the [...***...] for the Synthetic Compound(s).  Firmenich shall reimburse Senomyx for [...***...] incurred in accordance with this Section 3.3.3 in excess of such amount.

 

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(c)    [...***...] that are reimbursable pursuant to this Section 3.3.3 shall not reflect any mark-up. In addition, each party shall have the right to review the costs described in this Section 3.3.3 in [...***...], provided that such costs will be maintained as Confidential Information under Section 10.
 
3.4       For each Compound and Selected Compound evaluated by Firmenich under this Agreement, Firmenich will use commercially reasonable precautions in the evaluation of such compound including, without limitation, not exceeding concentration and exposure limits provided by Senomyx and following other guidelines provided by Senomyx with respect to any tasting by humans.  For each taste test conducted prior to Regulatory Approval in the applicable country and as permitted by local law, Recipient will require each participant to sign an attestation of informed consent that is reasonable for tasting an experimental compound.  With respect to any such testing or evaluation activities and with respect to commercial Products, Firmenich will [...***...].  Fimenich shall involve Senomyx in any [...***...] and will provide access to Senomyx to all related information.  Upon prior notice to Firmenich, notwithstanding Section 10 of this Agreement, Senomyx may [...***...] accordingly.
 
4.              Collaboration with an Affiliate or Third Party.  During the Collaborative Period Senomyx will not provide research and development services to its Affiliates or any Third Party for  the discovery or commercialization of Compounds that enhance the sweetness intensity of Target Sweeteners for application in the Fields, subject to the co-exclusive rights in Field II.  After the Collaborative Period and for the remainder of the Term of the Agreement, provided [...***...] and subject also to Firmenich’s continuing compliance with the terms of this Agreement, Senomyx agrees not to grant any rights under Senomyx Technology to its Affiliates or any Third Party for use in the [...***...], and that also have [...***...] for [...***...] subject to the [...***...].  For the avoidance of doubt, during the Term, Senomyx will have the right to enter into collaborative programs with its Affiliates and/or with Third Parties including, but not limited to, collaborative programs to (i) subject to 8.5, discover compounds that modulate sweetness for use outside the Fields; (ii) modulate modalities other than sweetness within the Fields; and [...***...]

 

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[...***...]
 
Based upon the size of the market opportunity, the probability of success, the timing of potential commercialization of new flavor ingredients and the amount of funding from existing collaborators (including amounts under this Agreement), Senomyx acknowledges that its research program to identify synthetic flavor ingredients that can enhance the sweetness of Target Sweeteners is currently one of its highest priority programs. In the event that Senomyx determines [...***...], including the Research Plan, Senomyx will [...***...] on a program by program basis taking into account factors such as [...***...] for the applicable program, the [...***...] and [...***...] from the program, the [...***...] that Senomyx is [...***...] for the conduct of a given program, the [...***...] to Senomyx as well as other facts and circumstances that may be relevant at that time. If at any time during the Collaborative Period Senomyx, based on relevant facts and circumstances at such time, determines that [...***...], Senomyx shall notify Firmenich and the parties shall then convene a special meeting of the Steering Committee within ten (10) days thereafter. Among the facts and circumstances that Senomyx shall consider in making such a determination shall be:
 
(i) [...***...]
(ii) [...***...]
(iii) [...***...]
(iv) [...***...].
 
During any such specially convened meeting, the Steering Committee shall discuss alternative approaches to provide for the [...***...] that Senomyx determines that it is [...***...], including without limitation [...***...] for the conduct of the Research Plan [...***...] However, no such [...***...] unless and until the [...***...] are mutually agreed by Senomyx and Firmenich in writing.

 

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5.              Law and Regulation.  The Compounds, Selected Compounds, and any other materials provided by Senomyx under this Agreement must be used in compliance with all applicable laws and regulations, including, without limitation, all import and export laws and regulations.
 
6.              Reporting.  Each party will report to the other a written summary of results of research and development work it carries out, if any, under this Agreement at [...***...]. Each party agrees to prepare and exchange written and electronic reports concerning any results and data that must be used by either party as supporting information for any regulatory filings.  The exchange of such report may be reasonably supplemented, at the request of the party receiving a report, by correspondence and/or upon reasonable prior notice, visits to the other party’s facilities.
 
7.              Financial Terms.
 

7.1

 

7.1.1                     License
Fee.  In partial consideration for
the license and Option grants for the Collaborative Program under Sections
8.1.1, 8.1.2 and 8.6, Firmenich shall pay to Senomyx a fee of US $20,000,000 to
be paid according to the following schedule:

 

(a)   US $10,000,000
within twenty (20) days of the Effective Date; and

 

(b)   US $10,000,000
within thirty (30) days of the earlier of (i) the occurrence of first
Regulatory Approval of [...***...] and written notification of determination by
Firmenich pursuant to Section 7.1.2 that [...***...] is Commercially Viable;
or (ii) the occurrence of both first Regulatory Approval of a Selected
Compound [...***...] and written notification of determination by Firmenich
pursuant to Section 7.1.2 that such 
Selected Compound is Commercially Viable.

 

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

 

7.1.2                     Determination
of Commercial Viability.  For
purposes of Section 7.1.1(b), Firmenich will conduct an evaluation of
whether the applicable Compound is Commercially Viable.  Firmenich shall be solely responsible for
[...***...], that it incurs to perform such evaluations.  During such evaluations, Firmenich will
provide regular written updates, but not less often than by the [...***...],
to Senomyx including the progress and results of such evaluation. If Firmenich
determines that the applicable Compound is not Commercially Viable, then Firmenich
shall deliver a final written update that shall include [...***...] For the
avoidance of doubt, the determination of whether a Compound is Commercially
Viable only relates to [...***...]

 

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7.1.2.1           Evaluation
of [...***...]. 
With respect to [...***...], Firmenich will have until [...***...] to provide
written notice to Senomyx that it has determined [...***...] is Commercially
Viable.  In the event that Senomyx does
not receive such written notice from Firmenich within the timeframe set forth
above or in the event that Firmenich determines that S6973 is not Commercially
Viable, then notwithstanding any other provision of this Agreement to the
contrary (including, without limitation, Sections 4, 8.5 and 8.7), Firmenich
shall have no further rights to S6973 (including salt forms thereof) under this
Agreement and Senomyx will be free to license S6973 (including salt forms
thereof) to an Affiliate(s) or a Third Party(ies),  and to enter into discovery and development
collaborations with an Affiliate(s) or a Third Party(ies), in the Fields
for the purpose of developing and commercializing S6973 (including salt forms
thereof).

 

7.1.2.2           Other
Compounds.  In the event
that Senomyx has not received payment under Section 7.1.1(b), then with
respect to any Compound [...***...], Firmenich will have up to [...***...] from receipt
of the data package under Section 3.1.2 for the applicable Compound to
provide written notice to Senomyx that it has determined such  Compound is Commercially Viable.  In the event that Senomyx does not receive
such written notice from Firmenich within the timeframe set forth above or in
the event that Firmenich determines that such Compound is not Commercially
Viable, then notwithstanding any other provision of this Agreement to the
contrary, such Compound will thereafter not be considered a Selected Compound
under the Agreement.  In such event,
Firmenich agrees to reimburse Senomyx pursuant to Section 3.3.3 for work
performed until such date and any non cancelable costs.  For the avoidance of doubt, costs incurred by
Senomyx for such Compound will be included in the [...***...] for purposes of Section 3.3.3.

 

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7.2                               Research
and Development Support.

 

7.2.1                     Research
Fees.  During the Collaborative
Period, Firmenich will pay Senomyx annual research fees of [...***...] for the
Collaborative Program including the activities performed pursuant to the
Research Plan (“Research Fees”).  These
payments will be made in advance in equal quarterly installments in the amount
of [...***...].  The first payment of [...***...]
will be made within [...***...] following the Effective Date.  In addition to the foregoing,
Firmenich and Senomyx have agreed that at the first meeting of the Steering
Committee following the Effective Date of this Agreement, the parties will
discuss [...***...]. Such discussion shall include a consideration of [...***...] and
other related details for the [...***...], including [...***...].

 

7.2.2                     Option for Natural Compounds.  In the event the Option is exercised pursuant to Section 8.6, the
annual Research Fees for the Collaborative Program shall automatically increase
upon receipt of such notice by [...***...] such that the total annual Research Fees will be [...***...]. These payments will be made in
advance in equal quarterly installments in the amount of [...***...].  For
the avoidance of doubt, in the event the Option is exercised, all work on
Synthetic Compounds will continue unless the parties mutually agree otherwise
at the time the Option is exercised or thereafter, in which case the parties
shall also [...***...]. In
the event that the work for Synthetic Compound(s) is discontinued in
accordance with the previous sentence, work on Natural Compounds may continue
independently, provided that:  (i) work
on Synthetic Compound(s) may not be discontinued at [...***...]; (ii) Firmenich
must have previously paid to Senomyx [...***...] under both Sections 7.1.1(a) and
(b); and (iii) the parties will negotiate in good faith any appropriate
changes to the Agreement [...***...].  In the
event the Option is exercised pursuant to Section 8.6, Firmenich will reimburse Senomyx for [...***...] [...***...] up to a maximum amount equal to [...***...]. The parties recognize that Firmenich and/or Senomyx may have the
in-house capabilities required to perform certain research or development
activities associated with Natural Compounds. 
The Steering Committee will discuss the relative capabilities of the two
parties and decide the most appropriate party to perform such activities.

 

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7.2.3                     Extension
of Collaborative Period.  The
parties hereby agree that Firmenich will have the option to extend the Collaborative
Period upon the following terms and conditions:

 

7.2.3.1           Firmenich shall
have three (3) consecutive options (“Extension Options”) to extend the
Collaborative Period each for consecutive one (1) year periods following
the second year of the Collaborative Period. 
In the event Firmenich elects to exercise an Extension Option, the
Collaborative Period shall be extended on the same terms and conditions as set
forth in the Agreement, subject to an increase in Research Fees in accordance
with Section 7.2.3.3. The Extension Options herein granted are not
assignable separate and apart from this Agreement. [...***...] prior to the end of
the final Extension Option, either party may request the Steering Committee to
discuss whether to grant an additional extension if such extension would be
mutually beneficial to the parties; however, this does not guarantee an
extension would be granted and neither party shall have any obligation to enter
into any such extension.

 

7.2.3.2           Each Extension
Option is conditional upon Firmenich providing Senomyx written notice of its
election to exercise the Extension Option at least [...***...] prior to the end of
the Collaborative Period or any prior extension thereof.  Failure of Firmenich to properly notify
Senomyx will be deemed by Senomyx as an election by Firmenich not to extend the
Collaborative Period and, in such event, the parties’ research and development
obligations pursuant to Section 3 of the Agreement will expire and
thereafter Firmenich shall have no right to exercise any subsequent Extension
Option.

 

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7.2.3.3                 In the event the Extension Options are exercised pursuant to this Section 7.2.3,
the annual Research Fees for the Collaborative Program shall automatically
increase to the following:

 

	
  Collaborative

  Period

  	
   

  	
  Total annual

  Research Fees in

  the event the Option

  has not been

  exercised under

  Section 8.6

  	
   

  	
  Total annual Research

  Fees in the event the

  Option has been

  exercised under

  Section 8.6

  	
   

  
	
  Year 3

  	
   

  	
  [...***...]

  	
   

  	
  [...***...]

  	
   

  
	
  Year 4

  	
   

  	
  [...***...]

  	
   

  	
  [...***...]

  	
   

  
	
  Year 5

  	
   

  	
  [...***...]

  	
   

  	
  [...***...]

  	
   

  

 

These
payments will be made in advance in equal quarterly installments.  The table above assumes that [...***...]. In the
event the parties mutually agree to a different arrangement with respect to
ongoing research, the parties shall also revise the funding amounts in the
table above.

 

7.2.4                     Payment
Terms for Research Fees. 
Payments for any period which is less than three (3) months of the
Collaborative Period will be prorated based on the actual number of days in
such period. These Research Fees are inclusive of [...***...]. These payments do
not include: (i) [...***...] associated with providing support for the
Collaborative Program; or (ii) the costs of any unanticipated materials or
equipment as requested and agreed to by the Steering Committee. Additional
Research Fees, if any, may be proposed to the Steering Committee and agreed to
in writing.

 

7.3                               Milestone Payments.
 
7.3.1                     Synthetic Compounds.  With respect to Compounds that are Synthetic Compounds, Firmenich will pay Senomyx the non-creditable, non-refundable milestone payments below within [...***...] of the occurrence of the following milestone events under this Agreement:

 

	
  [...***...]

  	
   

  	
  Payment†

  	
   

  
	
  First [...***...]

  	
   

  	
  [...***...]

  	
   

  
	
  Each subsequent [...***...]

  	
   

  	
  [...***...]

  	
  *

  

 

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  [...***...]

  	
   

  	
  Payment

  	
   

  
	
  First [...***...]

  	
   

  	
  [...***...]

  	
   

  
	
  Each subsequent [...***...]

  	
   

  	
  [...***...]

  	
  *

  

 

	
  [...***...]

  	
   

  	
  Payment

  	
   

  
	
  First
  [...***...]

  	
   

  	
  [...***...]

  	
   

  
	
  Each
  subsequent [...***...]

  	
   

  	
  [...***...]

  	
  *

  

 

*[...***...].

 

†[...***...].

 

For purposes of this Section 7.3.1, if [...***...]
is obtained for a Compound prior to [...***...], the date of [...***...] shall be
deemed to be the date Firmenich [...***...].

 

***Confidential Treatment
Requested

 

17

 

Milestone Example:

 

[...***...]

 

7.3.2                     Option for Natural Compounds.  In the event the Option is exercised under Section 8.6, with respect to Compounds that are Natural Compounds, Firmenich will pay Senomyx the non-creditable, non-refundable milestone payments below within [...***...] of the occurrence of the following milestone events under this Agreement:

 

***Confidential Treatment
Requested

 

18

 

	
  [...***...]

  	
   

  	
  Payment

  	
   

  
	
  First
  [...***...] 

  	
   

  	
  [...***...]

  	
   

  
	
  Each
  subsequent [...***...] 

  	
   

  	
  [...***...]

  	
  *

  

 

	
  [...***...]

  	
   

  	
  Payment

  	
   

  
	
  First
  [...***...] 

  	
   

  	
  [...***...]

  	
   

  
	
  Each
  subsequent [...***...] 

  	
   

  	
  [...***...]

  	
  *

  

 

	
  [...***...]

  	
   

  	
  Payment

  	
   

  
	
  First
  [...***...] 

  	
   

  	
  [...***...]

  	
   

  
	
  Each
  subsequent [...***...] 

  	
   

  	
  [...***...]

  	
  *

  

 

*[...***...]

 

For purposes of this Section 7.3.2, if [...***...] is obtained for a
Compound prior to [...***...], the date of [...***...] shall be deemed to be the date
Firmenich [...***...].

 

7.4                               Minimum
Annual Royalties.

 

7.4.1                     Synthetic
Compounds.  During the
Royalty Term, Firmenich will pay the following minimum annual royalties to
Senomyx for Synthetic Compounds:

 

***Confidential Treatment
Requested

 

19

 

7.4.1.1           Following first
[...***...] of a Selected Compound that is a Synthetic Compound:

 

	
  Royalty Year for
  first

  Selected Compound

  	
   

  	
  Minimum Annual Royalty Payment

  Due (for the applicable Royalty Year,

  as defined below)

  	
   

  
	
  [...***...]
  Royalty Year

  	
   

  	
  [...***...]

  	
   

  
	
  [...***...]
  Royalty Year

  	
   

  	
  [...***...]

  	
   

  
	
  [...***...]
  Royalty Year

  	
   

  	
  [...***...]

  	
   

  
	
  [...***...
  Royalty Year

  	
   

  	
  [...***...]

  	
   

  
	
  [...***...]
  Royalty Year and successive years

  	
   

  	
  [...***...]

  	
   

  

 

7.4.1.2           Following first [...***...] of a
Selected Compound that is a Synthetic Compound:

 

	
  Royalty
  Year after

  [...***...]
  for first Selected

  Compound

  	
   

  	
  Minimum
  Annual Royalty Payment

  Due (for the applicable Royalty Year,

  as defined below)

  	
   

  
	
  [...***...]
  Royalty Year

  	
   

  	
  [...***...]

  	
   

  
	
  [...***...]
  Royalty Year

  	
   

  	
  [...***...]

  	
   

  
	
  [...***...]
  Royalty Year

  	
   

  	
  [...***...]

  	
   

  
	
  [...***...]
  Royalty Year

  	
   

  	
  [...***...]

  	
   

  
	
  [...***...]
  Royalty Year, and successive years

  	
   

  	
  [...***...]

  	
   

  

 

7.4.2             Option for
Natural Compounds.  In the event
the Option is exercised under Section 8.6, during the Royalty Term, within
[...***...] following Firmenich’s [...***...] for each Natural Compound that Firmenich
selects under Section 3.1.4, Firmenich and Senomyx shall [...***...] minimum
annual royalty [...***...] the amounts due under Section 7.4.1) based on
[...***...] (as compared to the [...***...] that are [...***...]) for such [...***...]
based on information contained in the [...***...] (which shall contain [...***...]),
with the first such [...***...] minimum annual royalty to be due (i) with
respect to the [...***...] commencing for the [...***...] Royalty Year, and [...***...]
each year thereafter in accordance with any [...***...] in [...***...]; and (ii) with
respect to [...***...], commencing on the [...***...] Royalty Year following such
approval and [...***...] each year thereafter in accordance with any [...***...] in
[...***...]. The [...***...] with respect to any such [...***...] minimum annual royalty
shall be reflected in the minutes of the [...***...] and shall be [...***...]. In the
event that [...***...] the [...***...] minimum annual royalties due for any Natural
Compound under this Section 7.4.2, the [...***...] in accordance with the
[...***...] Agreement.

 

***Confidential Treatment
Requested

 

20

 

7.4.3                           Payment
Terms for Minimum Annual Royalties.  For purposes of
this Section 7.4, if [...***...] is obtained for a Compound prior to [...***...],
the date of [...***...] shall be deemed to be the date Firmenich [...***...].  Minimum annual royalty payments are
non-refundable.

 

The
amount by which the earned royalties provided for in Section 7.5 paid for
a given Royalty Year (as defined below) is less than the amount of the relevant
minimum annual royalty shall be paid by Firmenich to Senomyx within [...***...]
from the end of that Royalty Year.

 

In
the event of the expiration or termination of this Agreement, the minimum
annual royalty for the final Minimum Annual Royalty Year shall be paid on such
expiration or termination date on a pro-rata basis and shall be non-refundable
and non-creditable.

 

7.5                               Royalty
for Products.

 

During
the Royalty Term, Firmenich will pay to Senomyx a royalty equal to the
applicable Royalty Rate multiplied by Net Sales of Products. The Royalty Rate
will be calculated at the end of each calendar quarter during the Royalty Term,
and will be based on cumulative Net Sales during the applicable Royalty Year,
as follows:

 

***Confidential Treatment
Requested

 

21

 

·                  If the cumulative Net Sales for the
applicable Royalty Year as of the end of the applicable calendar quarter are
equal to or less than Threshold One, then the Royalty Rate shall be [...***...].

 

·                  If the
cumulative Net Sales as of the end of the applicable calendar quarter are
greater than Threshold One but less than Threshold Two for such Royalty Year as
reflected on the table in Appendix B
attached to this Agreement, then the royalty rate will be [...***...].

 

·                  Through the end
of the [...***...], if the cumulative Net Sales as of the end of the applicable
calendar quarter are equal to or greater than Threshold Two for such Royalty
Year as reflected on the table in Appendix B
attached to this Agreement, then the royalty rate will be [...***...]

 

·                  Beginning in
the [...***...], if the cumulative Net Sales as of the end of a calendar quarter
are greater than Threshold Two for such Royalty Year as reflected on the table
in Appendix B attached to this Agreement,
then the royalty rate will be [...***...] on the [...***...], and [...***...] on the
[...***...].

 

The
amount due each calendar quarter will be equal to the applicable Royalty Rate
multiplied by the cumulative Net Sales of Product during the applicable Royalty
Year, less any royalty payments actually paid with respect to calendar quarters
during the same Royalty Year. An example of the calculation methodology for a
sample Royalty Year is provided on Appendix B.

 

Sales
by Firmenich and its Affiliates in all cases (including, without limitation, to
related parties such as Affiliates and joint ventures) shall be conducted
through arms-length transactions based on fair market value.  In the event of a dispute between the parties
regarding the fair market value, [...***...].  
In the event that Firmenich sells Products to its Affiliates, amounts payable
to Senomyx will be based on the greater of (i) [...***...]; (ii) [...***...]
or (iii) [...***...].  For the avoidance
of doubt, [...***...] [...***...].

 

***Confidential Treatment
Requested

 

22

 

7.6                               Payment  Terms.  The amounts due under Section 7.5 will
be paid within [...***...] after the end of each calendar quarter period in which
such royalties are earned during the Royalty Term for each Product.  With each such quarterly payment, Firmenich
(or its respective Affiliate) will furnish to Senomyx a statement in sufficient
detail to permit confirmation of the accuracy of the payment made, which sets
forth [...***...] the relevant sales information, including [...***...].  In addition, with respect to payments to
Senomyx for sales of Selected Compound [...***...], Firmenich (or its respective
Affiliate) will furnish to Senomyx a royalty statement to permit confirmation
of the accuracy of the royalty payment made, which includes [...***...].

 

7.7                               Currency of Payment. All payments to be made under this
Agreement, including the amounts payable to Senomyx by Firmenich, will be paid
in United States dollars by wire transfer or other mutually acceptable means to
a bank account designated by Senomyx. 
With respect to each quarter, for countries other than the United
States, whenever conversion of payments from any foreign currency are required,
such conversion will be made [...***...]. 
Translation of sales and all components of the royalty calculation
recorded in local currencies to United States dollars will be performed in a
manner consistent with Firmenich’s normal practices used to prepare its
financial statements audited by an independent auditor for internal and
external reporting purposes, which uses a widely accepted published exchange
rate.

 

7.8                               Taxes Withheld.  Any income
or other tax that Firmenich, or any of its Affiliates is required by a
government agency to withhold and pay on behalf of Senomyx with respect to the
royalties payable under this Agreement will be deducted from and offset against
such royalties prior to remittance to Senomyx; provided, however, that in
regard to any tax so deducted, Firmenich will give or cause to be given to
Senomyx such assistance as may reasonably be necessary to enable Senomyx to
claim exemption from or credit for the tax so deducted, and in each case will
promptly furnish to Senomyx proper evidence of the taxes paid on Senomyx’s
behalf.

 

***Confidential Treatment
Requested

 

23

 

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

 

7.10                        Records of [...***...], Net Sales
and Royalty Calculations. 
During the Royalty Term and for a period of [...***...] thereafter,
Firmenich will keep complete and accurate records of [...***...] to calculate Net
Sales of each Product and royalty payment calculations in sufficient detail to
allow the accrued royalties to be determined accurately in accordance with
International Financial Reporting Standards (“IFRS”) and to verify the royalty
payments and Royalty Rate pursuant to Section 7.5.  Senomyx, with reasonable written notice to
Firmenich and not to exceed once per year, will have the right to [...***...] to
verify the accuracy of the reports of [...***...] and [...***...].  [...***...] 
Senomyx agrees not to disclose Confidential Information concerning
royalty payments reports, and all other information learned in the course of an
audit or inspection, except to the extent necessary for Senomyx to enforce its
rights under this Agreement or if disclosure is required by law.

 

8. Grants.
 
8.1                               Grant of Rights.
 
8.1.1        Field I.   Subject to the terms and conditions of this Agreement, Senomyx hereby grants to Firmenich an Exclusive, nontransferable (except as permitted under Sections 8.2.1 and 17.12), license under the Senomyx Technology, to (i) use Compound(s) for evaluation during the Collaborative Period in Field I in the Territory for the intended purpose of enhancing the sweet taste of a Target Sweetener; and (ii) to make, have made, use, sell, offer for sale, have sold, import and export Products incorporating a Selected Compound for use in Field I in the Territory for the applicable Intended Purpose.

 

***Confidential Treatment
Requested

 

24

 

8.1.2 Field II.   Subject to the terms and conditions of this Agreement, Senomyx hereby grants to Firmenich a Co-Exclusive, nontransferable (except as permitted under Sections 8.2.1 and 17.12), license under the Senomyx Technology, to (i) use Compound(s) for evaluation during the Collaborative Period in Field II in the Territory for the intended purpose of enhancing the sweet taste of a Target Sweetener; and (ii) to make, have made, use, sell, offer for sale, have sold, import and export Products incorporating a Selected Compound for use in Field II  in the Territory for the applicable Intended Purpose.
 
8.1.3  Collaboration Program [...***...].  Senomyx hereby grants to Firmenich a non-exclusive, non-sublicensable and non-transferable (except as permitted under Sections 8.2.1 and 17.12) license under the Collaboration Program IP to [...***...] under the Collaborative Program (but only to the extent [...***...] as reflected in the Research Plan [...***...].  Notwithstanding the foregoing, it is understood and agreed that Firmenich may not exercise or use any of the rights granted under the [...***...] unless and until such time as [...***...], and Firmenich has exercised its right to effect [...***...] as set forth below. It is further understood and agreed that Firmenich shall be prohibited from exercising or using any of the rights granted under [...***...] (i) during any period if it is in material breach of this Agreement, or (ii) if [...***...] occurs after the end of the [...***...] under the Agreement. Any use by Firmenich of the [...***...] prior to Firmenich’s proper exercise of [...***...] shall invalidate this Section 8.1.3 ab initio.  [...***...] following Firmenich’s written notice of [...***...] subsequent to [...***...] Senomyx shall promptly use [...***...] from the aforementioned [...***...] in order to give Firmenich the full benefits and rights of the [...***...] but only to the extent that it would not cause Senomyx to incur out-of-pocket expenses [...***...] Nevertheless, Firmenich acknowledges and agrees that this Section 8.1.3 shall not obligate Senomyx to maintain [...***...] or to continue to perform any obligations under [...***...] either during or following the Term of this Agreement. Similarly, this Section 8.1.3 does not impose on Senomyx any obligation to [...***...] prior to or following [...***...]

 

***Confidential Treatment
Requested

 

25

 

In addition to [...***...] set forth in the paragraph above, following Firmenich’s written notice to Senomyx of a [...***...], (i) Senomyx shall provide Firmenich with [...***...] and [...***...], such as information regarding [...***...] to the extent necessary to evaluate [...***...] or to support [...***...] of any [...***...] and [...***...] but only to the extent that such [...***...]; and (ii) Senomyx shall provide Firmenich with [...***...] and a copy of [...***...] if any, but only to the extent that [...***...].
 
In the event of the first occurrence of an event under subsection (A) under the definition of a [...***...] (as defined on Appendix A) during the Collaborative Period, Senomyx shall promptly notify Firmenich of such occurrence. In the event that [...***...] occurs during the Collaborative Period, Firmenich shall have the option, in its sole discretion, within [...***...] thereafter to [...***...]  To exercise this option, Firmenich shall send written notice of its election to Senomyx and, immediately upon the sending of such notification, Firmenich shall be permitted to exercise its rights under [...***...], except in the event that Firmenich is in material breach of this Agreement. Upon Firmenich’s exercise of [...***...] the Collaborative Program as reflected in the Research Plan. For avoidance of doubt, [...***...] Notwithstanding anything in this Agreement to the contrary, this Section 8.1.3 shall terminate automatically upon the earlier of (i) termination or expiration of this Agreement and (ii) the [...***...] of the Effective Date of this Agreement, except that [...***...] [...***...].

 

***Confidential Treatment
Requested

 

26

 

8.1.4                                             Regulatory Approval of [...***...].  Provided that Firmenich (i) has selected [...***...] for development under the Collaborative Program pursuant to Section 3.1.4, and (ii) has determined that [...***...] is Commercially Viable in accordance with Section 7.1.2.1, then in the event that [...***...] the provisions of this Section 8.1.4 shall apply. Beginning as of [...***...] and continuing on the last day of each [...***...] thereafter if [...***...] has still not occurred by such date, within [...***...] following the end of such [...***...] Senomyx shall [...***...], as reflected in the [...***...]. If any [...***...] reflects that [...***...], then the parties shall convene a special meeting of the Steering Committee to [...***...], subject to Senomyx’s obligations to any other Third Party under existing agreements. The parties acknowledge and agree that after such meeting Senomyx shall [...***....] At such specially convened Steering Committee meeting, notwithstanding the provisions of Section 3.3.1, provided that Firmenich is not then in material breach of this Agreement [...***...] and following such [...***...] to the extent that the [...***...] would not cause Senomyx to violate its obligations to any Third Party under existing agreements, to: (i) [...***...] for use in the Fields; (ii) [...***...] presented to the Steering Committee pursuant to Section 3.3.1; (iii) [...***...] and [...***...] any additional [...***...] for use in the Fields that in [...***...] for use in the Fields, it being understood however that [...***...] for which the

 

***Confidential Treatment Requested

 

27

 

parties have previously agreed [...***...] between the parties and that [...***...]; and (iv) [...***...] for use in the Fields. Notwithstanding the immediately preceding sentence, [...***...] previously presented to the Steering Committee [...***...] the Steering Committee and the Steering Committee shall [...***...] to the [...***...]. Firmenich acknowledges and agrees that [...***...]. Firmenich agrees to undertake any and all activities authorized under this Section 8.1.4 in good faith and [...***...]. Except to the extent that this Section 8.1.4 expressly modifies the provisions of Section 3.3.1, this Section 8.1.4 shall not be deemed to modify any other section of this Agreement.

 

8.2                               Limitations
to Licenses.

 

8.2.1                     Except as provided below, Firmenich may not sublicense its rights under Section 8
to Third Parties.  Firmenich may
sublicense its rights [...***...], on
the condition that Firmenich assumes the responsibility for performance due by
any such sublicensee under a sublicense of the obligations imposed upon
Firmenich in the license under the Agreement (including, without
limitation, diligence obligations under Section 3 of this Agreement, the
timely payment by Firmenich under Section 7 of the Agreement and the
conditions of sales under Section 8.2.2 of the Agreement).  Firmenich
will agree to be responsible for and to guarantee payment of royalties due on [...***... by [...***...].

 

8.2.2                     For the avoidance of doubt, Firmenich and its Affiliates shall not
knowingly sell or provide Selected Compound(s) or Product(s) to any third party
for use outside the Fields or for use other than for the intended purpose of
enhancing the sweet taste of one or more Target Sweeteners. Firmenich and its
Affiliates shall [...***...] with
its purchasers which include the [...***...] upon Firmenich in this Section 8. 
If Firmenich (or any of its Affiliates) [...***...] Selected Compound(s) or Product(s) outside
of the Fields licensed to Firmenich under this Section 8 or other than for
the intended purpose of enhancing the sweet taste of a Target Sweetener, then
Firmenich (and its Affiliates) will

 

***Confidential Treatment Requested

 

28

 

[...***...]:
(a) [...***...]; (b)[ ...***...]; and (c) [...***...] until such time that it receives [...***...]  In
the event that [...***...] Firmenich
becomes aware [...***...] Selected
Compound(s) or Product(s) outside of the Fields licensed to Firmenich
under Section 8 or other than for the intended purpose of enhancing the
sweet taste of a Target Sweetener, then Firmenich shall promptly notify Senomyx
and immediately discontinue sales of Products to such purchasers until such
time that Senomyx agrees to authorize future sales, in its reasonable
determination.

 

8.2.3                     With respect to any rights licensed to Senomyx by [...***...], notwithstanding the exclusive licenses
granted in this Section 8, Firmenich acknowledges that (i) academic,
government and other not-for-profit organizations are not precluded from
practicing such rights for educational and research purposes.; and (ii) the
research leading to such rights was funded in part by the U.S. Government, and
the U.S. Government has certain rights as set forth in 37 CFR 401.  Firmenich agrees to comply with all
obligations resulting from such government rights, including, but not limited to,
the requirement that any Products embodying such rights sold in the United
States must be substantially manufactured in the United States to the extent
required by 35 U.S.C. Sec. 204, if such statute is applicable. No earned
royalty will be collected or paid hereunder to [...***...] on Products sold to, or otherwise exploited
for, the account of the United States government as provided for in the license
to the United States government. 
Firmenich will reduce the amount charged for Products sold to or otherwise
exploited by the United States Government by an amount equal to the earned
royalty for such product otherwise due [...***...].

 

8.3                               Grant of
Rights from Firmenich to Senomyx.

 

8.3.1                     Senomyx Selected Compound-Containing Formulations License.  For
the avoidance of doubt, Firmenich [...***...] Senomyx Selected Compound-Containing Formulations [...***...].

 

With
respect to: (i) Senomyx Selected Compound-Containing Formulations that
[...***...], and (ii) Senomyx Selected Compound-Containing Formulations that
[...***...]

 

***Confidential Treatment Requested

 

29

 

[...***...],
[...***...] hereby grants to [...***...] and its Affiliates a non exclusive,
royalty-free, sublicenseable, nontransferable (except as permitted under Section 17.12)
worldwide license under such Patent Rights and under such [...***...] Know-How that
[...***...] to make, have made, use, sell, offer for sale, have sold, import and
export products [...***...].  If this
Agreement terminates or [...***...], then the licenses granted in the immediately
preceding sentence shall be automatically expanded to include any and all
Fields and/or territories for which [...***...].

 

In
the event that [...***...] or its Affiliates desire a license to a Senomyx Selected
Compound-Containing Formulation that consists of [...***...] to make, use or sell a
Selected Compound [...***...], and requests such a license from [...***...], [...***...]
shall negotiate in good faith with [...***...] (or its Affiliates) commercially
reasonable terms and conditions, including the appropriate amount and form of
consideration to be paid to [...***...] for such rights.  [...***...] agrees that the terms and conditions
offered to [...***...] (and its Affiliates) shall be no less favorable [...***...], and
in the event that [...***...] and [...***...] (or its Affiliates) enter into such a
license and [...***...] subsequently offers to any other Third Party a license to
such Patent Rights on terms more favorable than the applicable terms of the
license with [...***...] (or its Affiliates), then [...***...] shall notify [...***...] of
such more favorable terms [...***...] If this Agreement terminates or [...***...], then
[...***...] rights under the preceding sentence shall apply equally to the
[...***...]  Notwithstanding anything else in
this document, any rights granted by [...***...] under this paragraph shall be non-sublicenseable
unless otherwise decided by [...***...], at its sole and absolute discretion.

 

In
addition, in the event that a [...***...] desires a license to a Senomyx Selected
Compound-Containing Formulation that consists of [...***...] to make, use or sell a
Selected Compound [...***...],and requests such a license from [...***...] commercially
reasonable terms and conditions, including the appropriate amount and form of
consideration to be paid by [...***...] for such rights.

 

***Confidential Treatment Requested

 

30

 

8.3.2                     Senomyx Compound(s) Manufacturing Methods.  With
respect to Senomyx Compound Manufacturing Methods, [...***...] hereby grants to [...***...]
and its Affiliates a [...***...],
nontransfereable (except as permitted under Section 17.12) worldwide
license under Patent Rights and under [...***...] Know-How that [...***...] to
make, have made, use, sell, offer for sale, have sold, import and export
products [...***...] the Fields.

 

If this Agreement terminates or [...***...], then [...***...] hereby grants to [...***...]
and its Affiliates a non-exclusive, royalty-free, sublicenseable,
nontransferable (except as permitted under Section 17.12) worldwide
license under Patent Rights and under [...***...] Know-How that [...***...]
Senomyx Compound Manufacturing Methods for all Selected Compounds, in the case
of termination of this Agreement, or for applicable Selected Compounds, in the
case that [...***...] (i) to
make, have made, use, sell, offer for sale, have sold, import and export
products [...***...] (ii) to
make, have made, use, sell, offer for sale, have sold, import and export
products [...***...]

 

During the Term of this Agreement, in the event that
[...***...] desires a license to a
Senomyx Compound Manufacturing Method for which [...***...] to make, use or sell a Selected Compound [...***...] and requests such a license from [...***...] shall negotiate in good faith with such [...***...] commercially reasonable terms and
conditions, including the appropriate amount and form of consideration to be
paid by [...***...] for such rights.

 

8.3.3                     If Firmenich identifies any [...***...] that it considers may be relevant or useful for the research purposes
under this Agreement, Senomyx may request a license of the relevant [...***...] and Firmenich may in its sole discretion
grant a license of the [...***...].  Where Firmenich consents to a license in this
Section 8.3.3, Firmenich will grant a fully paid, non-exclusive,
non-transferable license to use the relevant [...***...] for research purposes solely related to
Senomyx’s performance of its obligations pursuant to this Agreement.  For the avoidance of doubt [...***...].

 

***Confidential Treatment Requested

 

31

 

8.4                               Limited Product Applications.  In the event that (a) Firmenich
has commenced sales of Products and determined in good faith that [...***...] due
to limited product applications(s) within the Fields, and (b) [...***...]
have [...***...] Products in such product application(s) that [...***...], then
upon good faith request of Firmenich the Steering Committee will [...***...] and to
[...***...]. The Steering Committee will document any such changes to [...***...] in
the minutes of the Steering Committee. In such event, and provided Firmenich is
then in compliance with the other terms of this Agreement and subject to
Firmenich’s continuing compliance with the terms of this Agreement, [...***...]

 

8.5                               Right
of First Negotiation for [...***...] Product
Categories.  In the event that
an Exclusive license becomes available for Compounds in the field of [...***...],
Firmenich shall have the following rights.  
Before Senomyx first grants such a license to any Third Party (other
than Senomyx’s existing licensee for the applicable field), Senomyx will
present that opportunity first to Firmenich. 
Firmenich must inform Senomyx of commercial interest in such opportunity
in writing within [...***...] of receipt of written notice from Senomyx and such
written response shall include proposed, and in good faith, [...***...] for a
potential collaboration in the applicable field.  In the event that Senomyx does not receive
such written notification and proposal within [...***...] then Senomyx shall be
free to retain such rights for itself or its Affiliates and/or enter into
agreements with one or more Third Parties for their use of any Compound for use
in the applicable field.  If Firmenich
submits a proposal, the parties shall negotiate in good faith to complete a
license agreement for such Compound in the applicable field for a period not to
exceed [...***...]. In the event that the parties do not enter into a license
agreement for such Compound within [...***...], then Senomyx shall be free to
retain such rights for itself or its Affiliates and/or enter into agreements
with one or more Third Parties for their use of any Compound for use in the
applicable field. For avoidance of doubt, Firmenich acknowledges and agrees
that Senomyx shall have sole and absolute discretion to determine whether the
terms offered by Firmenich during such negotiation process, if any, are
acceptable to Senomyx and therefore Senomyx shall have sole and absolute discretion
whether to enter into any such agreement with Firmenich on the terms offered.

 

***Confidential Treatment Requested

 

32

 

8.6                               Grant
of Option — Natural Compounds.  Subject to the
terms and conditions of this Agreement, Senomyx hereby grants to Firmenich an
exclusive option (“Option”) to expand the Collaborative Program and the license
grant under Section 8.1 to include Natural Compounds in addition to
Synthetic Compounds.   The Option shall
expire on the earlier of (i) [...***...] from the Effective Date (provided,
however, that if Firmenich [...***...], the [...***...] from the Effective Date, except
that in no event shall [...***...]); or (ii) [...***...] from the date that
Senomyx notifies Firmenich in writing that Senomyx has [...***...] (“Option
Expiration Date”).  The Option is
conditional upon Firmenich providing written notice of its election to exercise
the Option to Senomyx on or before the Option Expiration Date. Upon proper
exercise of the Option, the licenses set forth in this Section 8.6 will be
on the same terms and conditions as set forth in this Agreement including,
without limitation, diligence obligations under Section 3 and royalties
under Section 7.5; provided, however, that effective upon exercise of the
Option, the [...***...] pursuant to Section 7.2, 7.3.2 and 7.4.2.  If the Option is not properly exercised by
the Option Expiration Date then, subject to the immediately following
paragraph, the Option and all rights and obligations under this Section 8.6
will terminate and Senomyx shall be free to retain rights to Compounds that are
Natural Compounds for itself or its Affiliates and/or enter into agreements
with one or more Third Parties for their use of any Compounds that are Natural
Compounds for use in the Fields.

 

Notwithstanding the
foregoing, in the event that the Option is not properly exercised by Firmenich
prior to the Option Expiration Date as provided above, for [...***...] immediately
following the Option Expiration Date in the event that Senomyx desires to enter
into an agreement with a Third Party to initiate discovery and development of
Compounds that are Natural Compounds for use in the Fields, Senomyx will notify
Firmenich in writing and Firmenich will have [...***...] to exercise the Option
under the same terms set forth above.  If
the Option is not properly exercised within [...***...], the rights and obligations
under this paragraph will terminate and Senomyx shall be free to retain rights
to Compounds that are Natural Compounds for itself or its Affiliates and/or
enter into agreements with one or more Third Parties for their use of any
Compounds that are Natural Compounds for use in the Fields.

 

The rights under this Section 8.6
are not assignable separate and apart from this Agreement.

 

***Confidential Treatment Requested

 

33

 

8.7                               After
the Collaborative Period.  Upon
expiration of the Collaborative Period, in the event that Firmenich has
selected a Selected Compound(s) pursuant to Section 3.1.4 then,
provided it maintains its Exclusive and Co-Exclusive licenses to such Selected
Compound, Firmenich shall have the following rights. Subject to Section 7.1.2.1,
during [...***...], Senomyx will not grant a license under Senomyx Technology to
any Third Party to [...***...] for use in the Fields (subject to the Co-Exclusive
rights in Field II) for the Intended Purpose of [...***...]. At any time during
[...***...] Firmenich, upon written notice to Senomyx, [...***...] as set forth in this
Agreement including, without limitation, [...***...].  In such event, the applicable [...***...]

 

In addition to the
restrictions set forth in the immediately preceding paragraph, in the event
that Firmenich has selected a Selected Compound(s) pursuant to Section 3.1.4
then, provided it maintains its Exclusive and Co-Exclusive licenses to such
Selected Compound, during [...***...], Senomyx will not grant a license under
Senomyx Technology to any Third Party [...***...] for use in the Fields (subject to
the Co-Exclusive rights in Field II) for the Intended Purpose of [...***...].  Notwithstanding anything in this Agreement to
the contrary, if during [...***...] Senomyx grants a license under Senomyx
Technology to a Third Party [...***...] then even if such Third Party is
subsequently deemed [...***...] during such [...***...] Senomyx shall have no
obligation to terminate such license and Senomyx shall not be deemed to be in
breach of this Section 8.7.

 

***Confidential Treatment Requested

 

34

 
9.  Ownership of Intellectual Property.
 
9.1                               Retention of Rights.  Senomyx retains all rights in Senomyx Technology not expressly licensed, or assigned in this Agreement.  Firmenich retains all rights in Firmenich Technology not expressly licensed, or assigned in this Agreement. Except as otherwise expressly provided in this Agreement, nothing in this Agreement is intended to convey or transfer ownership or the grant of any license or sublicense by one party to the other party of any rights in any Confidential Information, Patent Rights or Know-How Controlled by a party.
 

9.2                               Senomyx Sole Inventions.  Senomyx will own all Inventions and other
Know-How made solely by its employees and agents under this Agreement (the “Senomyx
Sole Inventions”), and all claims within Patent Rights claiming such Inventions
and Know-How.  Subject to Sections 9.5
and 9.6, Senomyx hereby irrevocably assigns to Firmenich all right, title and
interest in and to any such Senomyx Sole Inventions that consist of
improvements to the Firmenich Technology (“Firmenich Improvements”), including,
without limitation, [...***...], and all claims within Patent Rights claiming such
Senomyx Sole Inventions, subject to any license granted to Senomyx pursuant to Section 8.  In the event that Senomyx is legally unable
to assign such rights to Firmenich, then Senomyx agrees either to waive the
enforcement of such rights against Firmenich and any sublicensees and
assignees, or to grant Firmenich an Exclusive, irrevocable, perpetual,
worldwide, fully paid-up license, with right to sublicense through multiple
tiers of sublicense, to such rights, subject to any license granted to Senomyx
pursuant to Section 8.

 

9.3                               Firmenich
Sole Inventions.  Firmenich
will own all Inventions and other Know-How made solely by its employees and
agents under this Agreement (“Firmenich Sole Inventions”), and all claims
within Patent Rights claiming such Inventions and Know-How.  Subject to Sections 9.5 and 9.6, Firmenich
hereby irrevocably assigns to Senomyx all right, title and interest in and to
any such Firmenich Sole Inventions that consist of improvements to the Senomyx
Technology (“Senomyx Improvements”), including, without limitation, [...***...],
and all claims within Patent Rights claiming such Firmenich Sole Inventions,
subject to any licenses granted to Firmenich pursuant to Section 8.  In the event that Firmenich is legally unable
to assign such rights to Senomyx, then Firmenich agrees either to waive the
enforcement of such rights against Senomyx and any sublicensees and assignees,
or to grant Senomyx an Exclusive, irrevocable, perpetual, worldwide, fully
paid-up license, with right to sublicense through multiple tiers of sublicense,
to such rights, subject to any license granted to Firmenich pursuant to
Sections 8.

 

***Confidential Treatment Requested

 

35

 

9.4                               Joint
Inventions.  All
Inventions and other Know-How made under this Agreement jointly by employees or
agents of Senomyx and employees or agents of Firmenich (the “Joint Inventions”)
and all claims within Patent Rights claiming such Joint Inventions will be
owned jointly by Firmenich and Senomyx. 
Subject to Sections 9.5 and 9.6, Firmenich hereby irrevocably assigns to
Senomyx all interest in and to any Joint Inventions that consist of Senomyx
Improvements, including, without limitation, [...***...] and all claims within
Patent Rights claiming such Joint Inventions, subject to the licenses granted
to Firmenich pursuant to Section 8. In the event that Firmenich is legally
unable to assign such rights to Senomyx, then Firmenich agrees either to waive
the enforcement of such rights against Senomyx and any sublicensees and
assignees, or to grant Senomyx an Exclusive, irrevocable, perpetual, worldwide,
fully paid-up license, with right to sublicense through multiple tiers of
sublicense, to such rights, subject to any license granted to Firmenich
pursuant to Sections 8. Subject to Sections 9.5 and 9.6, Senomyx hereby
irrevocably assigns to Firmenich all interest in and to any Joint Inventions
that consist of Firmenich Improvements, including, without limitation, [...***...]
and all claims within Patent Rights claiming such Joint Inventions, subject to
any licenses granted to Senomyx pursuant to Section 8.  In the event that Senomyx is legally unable
to assign such rights to Firmenich, then Senomyx agrees either to waive the
enforcement of such rights against Firmenich and any sublicensees and
assignees, or to grant Firmenich an Exclusive, irrevocable, perpetual,
worldwide, fully paid-up license, with right to sublicense through multiple
tiers of sublicense, to such rights, subject to any license granted to Senomyx
pursuant to Section 8.

 

9.5                               [...***...]

 

9.5.1                     [...***...]  For the avoidance of doubt, all [...***...]
Controlled by [...***...] prior to the Effective Date (the “[...***...]”) and all
claims within Patent Rights claiming such [...***...] will be owned [...***...].

 

9.5.2                     [...***...].  Notwithstanding
anything to the contrary contained in Sections 9.2, 9.3 or 9.4, all [...***...] [...***...]
developed by [...***...] under this Agreement which consist of improvements to
[...***...] or which are [...***...] (the “[...***...]”) and all claims within Patent
Rights claiming such [...***...]  will be
owned [...***...].

 

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36

 

9.5.3                     [...***...]
Notwithstanding anything to the contrary contained in Sections 9.2, 9.3, 9.4 or
9.5.2, all [...***...] developed by [...***...] under this Agreement and all claims
within Patent Rights claiming such [...***...] will be owned by [...***...], subject to
the license to [...***...] pursuant to [...***...] 
For the purposes of the previous sentence and [...***...] Notwithstanding
anything to the contrary in this Agreement, [...***...] will have no right to
practice the [...***...] of the Fields.

 

9.5.4                     [...***...]  Prior to [...***...], Firmenich will not [...***...]
on [...***...] and will not disclose such [...***...] 
In the event that Firmenich [...***...], then Firmenich hereby grants to
Senomyx a non exclusive, royalty-free, sublicenseable, nontransferable (except
as permitted under Section 17.12) worldwide license under Patent Rights
and under Firmenich Know-How that [...***...]: (i) to make, have made, use,
sell, offer for sale, have sold, import and export [...***...] (ii) to make,
have made, use, sell, offer for sale, have sold, import and export [...***...], and
(iii) to make, have made, use, sell, offer for sale, have sold, import and
export [...***...]

 

9.6                               Methods
of [...***...]

 

9.6.1                     Products.  Notwithstanding anything to the contrary
contained in Sections 9.2, 9.3 or 9.4, all Inventions and Know-How developed by
Firmenich under this Agreement that consist of methods of [...***...] and all
claims within Patent Rights claiming such Inventions will be owned [...***...].

 

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37

 

9.6.2                     Methods
of [...***...] 
Anything in this Agreement to the contrary notwithstanding and subject
to the license grants in Section 8.3.2, [...***...], and shall be under no
obligation to disclose [...***...], any [...***...] developed [...***...].  For the avoidance of doubt, [...***...] shall
have the right to file Patent Rights claiming such [...***...], subject to Section 10
of this Agreement.

 

9.6.3                     Methods
of [...***...].  Prior
to [...***...] will not file patent applications on methods of [...***...], including
any [...***...] thereof, and will not [...***...]. 
In the event that [...***...] such information [...***...], then [...***...] hereby
grants to [...***...] a non exclusive, royalty-free, sublicenseable,
nontransferable (except as permitted under Section 17.12) worldwide
license under Patent Rights and under Firmenich Know-How that [...***...] to such
methods of [...***...] (i) to make, have made, use, sell, offer for sale, have
sold, import and export products [...***...]; (ii) to make, have made, use,
sell, offer for sale, have sold, import and export [...***...] party (and such
party’s Affiliates), and (iii) to make, have made, use, sell, offer for
sale, have sold, import and export products [...***...]

 

9.7                               Other Inventions. 
Ownership of any Inventions made pursuant to this
Agreement but not included in Sections 9.2, 9.3, 9.4, 9.5 or 9.6 will be
determined by inventorship.

 

9.8                               Inventorship and Assignment.  United States patent law will determine
inventorship of patentable inventions. 
Senomyx and Firmenich agree to execute all documentation necessary to
perfect all assignments of Patent Rights contemplated in this Agreement.

 

9.9                               CREATE
Act.  The parties intend for this
Agreement to qualify for the benefits of the Cooperative Research and
Technology Enhancement (CREATE) Act (35 U.S.C. 103(c)).  Accordingly, each party agrees, without
demanding any further consideration therefor, at the request of the other
party, to do (and cause its employees to do) all lawful and just acts that may
be or become necessary for evidencing, maintaining, recording and perfecting
the benefits of the CREATE Act.

 

***Confidential Treatment Requested

 

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10.       Treatment of Confidential Information; Publicity.
 
10.1                        Confidentiality.  Subject to the terms and conditions of this Agreement, each of Senomyx and Firmenich agrees that, during the Term and for a period of [...***...] thereafter, it will keep confidential, and will cause its Affiliates to keep confidential, all of the other party’s Confidential Information.  Neither Senomyx nor Firmenich nor any of their respective Affiliates will use the other party’s Confidential Information, except as expressly permitted by this Agreement.
 
10.2                        Disclosure to Related Parties.  Senomyx and Firmenich each agree that any disclosure to any of its Affiliaties, or to its or their respective directors, officers, employees, contractors, consultants, sublicensees or agents of the other party’s Confidential Information will be made only if and to the extent necessary to carry out its responsibilities under this Agreement and to exercise the rights granted to it hereunder, will be limited to the extent consistent with such responsibilities and rights, and will be provided only to such persons or entities who are under an obligation of confidentiality no less stringent than as set forth in this Agreement.  Each party will use reasonable efforts to take such action, and to cause its Affiliates to take such action, to preserve the confidentiality of the other party’s Confidential Information, which will be the same efforts as it would customarily take to preserve the confidentiality of its own Confidential Information.
 
10.3                        Return of Confidential Material Upon Termination.  Upon termination of this Agreement, each party, upon the other party’s request, will return or destroy all Confidential Information received from the other party including, without limitation, all copies and extracts of documents, within [...***...] of the date of receipt of the request of such other party; provided, however, one copy of the Confidential Information may be retained in a secure location with limited access for ensuring legal compliance with any ongoing obligation of confidentiality.
 
10.4                        Exceptions to Confidential Information.  Confidential Information will not include any information, which the receiving party can prove by competent written evidence:
 
(A)      is now, or hereafter becomes, through no act or failure to act on the part of the receiving party, generally known or available;
 
(B)        is known by the receiving party prior to receiving such information, as evidenced by its records;
 
(C)        is hereafter furnished to the receiving party without restriction as to disclosure or use by a third party lawfully entitled to furnish such information;

 

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(D)       is independently developed by the employees, agents or contractors of the receiving party without the aid, application or use of the disclosing party’s Confidential Information; or
 
(E)         is the subject of a written permission to disclose provided by the disclosing party.
 
A party may also disclose the other party’s Confidential Information of where required to do so by law, legal process, securities related regulations or by stock exchange rules; provided, however, that, in such event, the party required to disclose such information must give advance written notice of such disclosure to the other party to the extent reasonably possible and must cooperate with the other party’s efforts to seek, at the request and expense of the other party, all confidential treatment and protection for such disclosure as is permitted by applicable laws, regulations and rules; provided  further that the relevant party may disclose the other party’s Confidential Information only to those persons to whom disclosure is so required.  Anything in this Section 10.4 to the contrary notwithstanding, the exceptions provided in (B) and (D) above shall not apply to information developed by Firmenich independently and/or jointly with Senomyx that constitutes a Senomyx Improvement or information developed by Senomyx independently and/or jointly with Firmenich that constitutes a Firmenich Improvement.
 
10.5                        Confidential Financial Information.  The parties agree that the material financial and business terms of this Agreement will be considered Confidential Information of both parties.  Notwithstanding the foregoing, either party may disclose such terms in legal proceedings or as are required to be disclosed in its financial statements, by law or SEC regulation, or under an obligation of confidentiality to bona fide potential sublicensees.  Senomyx may provide a copy of this Agreement or other Confidential Information provided under this Agreement including, without limitation, progress and royalty reports to the extent required by its licensors [...***...] under an obligation of confidentiality.  Either party will have the further right to disclose the material financial terms of this Agreement under an obligation of confidentiality to [...***....]  Notwithstanding the foregoing, the parties will agree upon a press release to announce the execution of this Agreement and [...***...] and other [...***...] under the Agreement.  Thereafter, Firmenich and Senomyx may each disclose to Third Parties the information contained in such press release without the need for further approval by the other party.

 

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10.6                        Permitted Use and Disclosures. Each party may use or disclose Confidential Information disclosed to it by the other party to the extent such information is included in the Firmenich Technology, Senomyx Technology or Joint Patent Rights, and to the extent such use or disclosure is reasonably necessary and permitted in the exercise of the rights granted hereunder in filing or prosecuting patent applications, prosecuting or defending litigation, complying with applicable governmental regulations, or court orders or otherwise submitting information to tax or other governmental authorities, conducting taste testing, submitting information for regulatory applications, or making a permitted sublicense or otherwise exercising rights expressly granted to the other party pursuant to the terms of this Agreement; provided, however, that if a party is required to make any such disclosure of the other party’s Confidential Information, other than pursuant to a confidentiality agreement, it will give reasonable advance notice of such disclosure to the other party where reasonably possible and, save to the extent inappropriate in the case of patent applications, will use its reasonable efforts to secure confidential treatment of such Confidential Information in consultation with the other party prior to such disclosure (whether through protective orders or otherwise).  Any disclosure of Confidential Information shall be limited to the minimum necessary to comply with such requirements.
 
10.7                        Publication of Results.  Subject to this Section 10, results and data obtained by either party in the course of this Agreement may be submitted for publication by such party in accordance with such party’s customary practices.  The publishing party will send a copy of the proposed publication to the non-publishing party and will allow such party [...***...] from the date of receipt for review and comment.  The non-publishing party may, within [...***...] object to the proposed publication on the grounds that either the publication contains Confidential Information of the non-publishing party in which case any such data determined in fact to be Confidential Information shall be removed from the publication before it is published or the publication may prejudice a subsequent patent application by the non-publishing party in which case the publishing party shall delay publication for a further [...***...] or until such patent application is filed, if earlier.  If no answer is received from the non-publishing party within [...***...] of receipt of the proposed publication, the publishing party will be free to submit such proposed publication.
 
10.8                        Confidential Research Information.  Subject to the provisions of Sections 3.3.2 and 9 regarding ownership of certain regulatory data and intellectual property, the parties agree that all results and data generated from the research and development by a party under the Agreement will be owned exclusively by that party and considered Confidential Information of that party subject to the confidentiality requirements of this Section 10. Firmenich will not provide to a Third Party any materials provided to it by Senomyx and Senomyx will not provide to a Third Party any materials provided to it by Firmenich. However, Firmenich may [...***...]

 

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11.  Intellectual Property Enforcement and Defense of Claims.
 
11.1                        Notice of Infringement.  If Senomyx or Firmenich determines that any Senomyx Technology, Firmenich Technology or Jointly Owned Technology is being infringed by a Third Party’s activities and that such infringement could affect the exercise by the parties of their respective rights and obligations under this Agreement, it shall promptly notify the other party in writing and provide such other party with any evidence of such infringement that is reasonably available.  Promptly after the receipt of such written notice, the parties shall meet and discuss in good faith how to stop such infringement.  The pursuing party shall consider in good faith any comments from the other party and shall keep the other party reasonably informed of any steps taken to stop such infringement.
 
11.2                        Senomyx Technology.  With respect to Senomyx Technology and Jointly Owned Technology, Senomyx shall have the first right to take action to remove such infringement using commercially appropriate steps, including without limitation, the filing of an infringement suit or other similar action.  In such event, with respect to [...***...] under this Agreement in the country in which the infringement action is initiated, Firmenich shall have the right to join in such infringement suit or similar action at its own expense.  In the event Senomyx fails to take commercially appropriate steps to remove any infringement of any such Senomyx Technology or Jointly Owned Technology within [...***...] following notice of such infringement, or earlier notifies Firmenich of its intent not to take such steps, then provided Firmenich retains relevant exclusive rights under this Agreement in the country in which the infringement action is initiated, Firmenich shall have the right to do so at its expense; provided, however, that if Senomyx has commenced negotiations with an alleged infringer for discontinuance of such infringement within [...***...], Senomyx shall have an additional [...***...] to conclude its negotiations before Firmenich may bring suit for such infringement or take other similar action.  In the event Firmenich brings such suit for infringement or takes other similar action, Senomyx shall have the right to join in such infringement suit or similar action at its own expense.
 
11.3                        Firmenich Technology.  With respect to Firmenich Technology, Firmenich shall have the sole right, but not the obligation, to take action to stop such infringement at its own expense.  For the avoidance of doubt, Firmenich shall be entitled to take action under this Section 11.3 notwithstanding any action or negotiation commenced by Senomyx under Section 11.2. With respect to Patent Rights owned by Firmenich pursuant to Section 9.5.3 claiming [...***...] where the infringement is [...***...] Firmenich will have the right to take action to stop infringement of the claims in such Patent Rights which claim [...***...] only against Third Parties that are [...***...]

 

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42

 
11.4                        Recovery.  With respect to suits under Section 11.2 and [...***...] owned by Firmenich pursuant to Section 9.5.3, the recoveries will be allocated in the following order: (a) [...***...]; (b) Senomyx will be reimbursed an amount equivalent to [...***...]; and (b) Firmenich will receive [...***...].  With respect to suits brought under Section 11.3 [...***...]
 
11.5                        Counsel and Assistance.  If either party brings an action under Section 11.2, or 11.3, such party will be entitled to control such action, hire and retain counsel, make decisions, settle on any terms, provided that a party joining the action may be represented by counsel of its choice.  At the request and expense of either party, the other party will give the requesting party all reasonable assistance required to file and conduct any such proceeding.
 
11.6                        Defense of Infringement Claims for Senomyx Technology.  Firmenich will cooperate with Senomyx, at Senomyx’s expense, in the defense of any suit, action or proceeding against Firmenich or Senomyx or Senomyx’s Affiliates alleging the infringement of the intellectual property rights of a Third Party by reason of Firmenich’s or Senomyx’s use of any Senomyx Technology licensed to Firmenich under this Agreement.  The parties must notify each other promptly in writing of the commencement of any such suit, action, proceeding or claim of infringement.  Firmenich will give to Senomyx full and sole authority, information and assistance necessary to defend, hire counsel, make decisions or settle on [...***...] terms any such suit, action or proceeding and Firmenich will execute all documents, provide pertinent records, and take all other actions, including requiring persons within its control to give testimony, which may be reasonably required in connection with the defense or settlement of such litigation.

 

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11.7                        Defense of Infringement Claims for Firmenich Technology.  Senomyx will cooperate with Firmenich, at Firmenich’s expense, in the defense of any suit, action or proceeding against Senomyx or Firmenich alleging the infringement of the intellectual property rights of a Third Party by reason of Firmenich’s or Senomyx’s use of any Firmenich Technology licensed to Senomyx under this Agreement.  The parties must notify each other promptly in writing of the commencement of any such suit, action, proceeding or claim of infringement.  At the expense of Firmenich, Senomyx will give to Firmenich full and sole authority, information and assistance necessary to defend, hire counsel, make decisions or settle on [...***...] terms any such suit, action or proceeding and Senomyx will execute all documents, provide pertinent records, and take all other actions, including requiring persons within its control to give testimony, which may be reasonably required in connection with the defense or settlement of such litigation.
 
12. Patent Prosecution and Maintenance.  Each party will bear the cost of filing and prosecuting the patents and patent applications associated with inventions owned or assigned to that party.  Firmenich will [...***...] for [...***...] for the applicable Selected Compounds in the applicable country), [...***...], of the reasonable out-of-pocket costs incurred [...***...] for [...***...] patents and patent applications for the Selected Compound(s).   With respect to such patent applications after Firmenich has selected a Selected Compound, the parties will discuss and agree at least [...***...] before the due date of international filings or at least [...***...] before the due date of [...***...], [...***...] to file patent applications claiming Selected Compounds and Firmenich shall [...***...].  Notwithstanding the foregoing, if [...***...] decides it does not wish to have a patent application claiming a Selected Compound(s) either (i) filed or (ii) prosecuted [...***...] or [...***...] decides that it does not wish to have maintained a patent claiming a Selected Compound(s), [...***...], [...***...] may still (i) file or (ii) prosecute such patent application, or may maintain such patent [...***...]; provided, however, that if [...***...] actually files or prosecutes such patent application or maintains such patent [...***...], Firmenich will [...***...] for such application or maintenance costs of such patent in such country, and [...***...].  Senomyx agrees to [...***...] relating to claims within the Senomyx Patent Rights claiming Selected Compounds or use thereof in the Fields, including without limitation, by [...***...] thereto upon request.  Firmenich shall hold all such information disclosed to it under this Section as Confidential Information under Section 10.

 

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13. Manufacturing.

 

13.1                Manufacturing
in the Fields.  All actual
[...***...] manufacturing and commercial scale-up of Selected Compounds will be
[...***...] including, without limitation, manufacturing [...***...].  In addition, Firmenich shall [...***...] for any
material required for its internal evaluations including prototype and product
development efforts.  Subject to the
terms and conditions of this Agreement, Firmenich may, in [...***...].

 

13.2                                                Preferred
[...***...].

 

13.2.1             If Senomyx has
a right to be a supplier of Selected Compounds in the fields of [...***...] under
[...***...], then Senomyx agrees to [...***...].

 

13.2.2             Firmenich
agrees to negotiate in good faith with existing Senomyx collaborators that
license any Selected Compounds from Senomyx to supply such Senomyx collaborators
with their requirements of Selected Compounds on commercially reasonable terms
[...***...] comparable to other customers purchasing [...***...] such materials with
comparable [...***...] and other comparable [...***...].

 

14.       Term and Termination.
 
14.1        Term.  The term of this Agreement will begin on the Effective Date and will continue through the end of the Royalty Term, unless terminated earlier in accordance with the provisions of Section 14.2 or 14.3 hereof (the “Term”).
 
14.2        Termination By Mutual Agreement.  The parties may terminate this Agreement at any time, in whole or in part, by mutual written agreement executed by both parties.
 
14.3        Termination for Breach. Either party has the right to terminate this Agreement at any time for a material breach of this Agreement by the other party, provided that the breaching party has not cured such breach within sixty (60) days after written notice thereof by the non-breaching party.  The non-breaching party, upon termination of this Agreement, may seek actual or general damages and remedies available to it at law or in equity.

 

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14.4        Termination by Firmenich. After the Collaborative Period, Firmenich will have the right to terminate this Agreement without cause upon ninety (90) days prior written notice to Senomyx.
 
15.       Effect of Termination.
 
15.1                        Upon termination of this Agreement pursuant to Section 14, Firmenich will have no right to practice within or use of the Senomyx Technology, and all rights, title and interest in and to the Senomyx Technology will revert to and become the sole property of Senomyx, unless otherwise agreed upon in writing by the parties on or before the effective date of such termination.
 
Upon the expiration of the Term pursuant to Section 14.1, but not termination of this Agreement under Section 14.2, 14.3 or 14.4, [...***...].  For the avoidance of doubt, this [...***...].  Notwithstanding anything to the contrary in this Agreement, [...***...].
 
15.2                        Notwithstanding the foregoing Section 15.1, [...***...] after the date of termination that takes effect prior to the end of the applicable Royalty Term for a Product, [...***...] subject to the terms of this Agreement, including, but not limited to, [...***...]. Such determination shall be made on a [...***...].  Firmenich may not [...***...].
 
15.3                        Expiration or termination of this Agreement will not relieve the parties of any obligation accruing prior to such expiration or termination.
 
15.4                        Survival.  The obligations and rights of the parties under Sections 3.3.2, 3.4, 7.6 – 7.10, 8.2.2, 8.2.3, 8.3.1, 8.3.2, 9, 10, 13.2.1 (second sentence only), 14, 15, 16, 17, and Appendix A, will survive termination or expiration of this Agreement.

 

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16. Warranties and Indemnification.

 

16.1                        Mutual Representations and Warranties. The parties make the following representations and warranties to each other:
 
16.1.1              Corporate Power. Each party hereby represents and warrants that as of the Effective Date such party (i) is duly organized and validly existing under the laws of the jurisdiction of its incorporation and has full corporate power and authority to enter into this Agreement and to carry out the provisions of this Agreement; (ii) has the requisite power and authority and the legal right to own and operate its property and assets, to lease the property and assets it operates under lease, and to carry on its business as it is now being conducted; and (iii) is in compliance with all requirements of applicable law of its state or country of incorporation, except to the extent that any noncompliance would not have a material adverse effect on its ability to perform its obligations under this Agreement.
 
16.1.2              Due Authorization. Each party hereby represents and warrants that as of the Effective Date such party (i) has the requisite power and authority and the legal right to enter into this Agreement and to perform its obligations hereunder; and (ii) has taken all necessary action on its part to authorize the execution and delivery of this Agreement and to authorize the performance of its obligations hereunder and the grant of rights extended by it hereunder.
 
16.1.3              Binding Agreement. Each party hereby represents and warrants to the other that as of the Effective Date (i) this Agreement has been duly executed and delivered on its behalf and is a legal and valid obligation binding upon it and is enforceable in accordance with its terms; (ii) the execution, delivery and performance of this Agreement by such party does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any law or regulation of any court, governmental body or administrative or other agency having authority over it; and (iii) all necessary consents, approvals and authorizations of all governmental authorities and other persons required to be obtained by it in connection with the Agreement have been obtained.

 

47

 

16.2                        EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, SENOMYX MAKES NO WARRANTIES OF ANY KIND.  IN PARTICULAR, (i) SENOMYX (INCLUDING ITS OFFICERS, EMPLOYEES AND AGENTS) EXPRESSLY DISCLAIMS ANY REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS OR IMPLIED, RELATING TO SENOMYX TECHNOLOGY; AND (ii) SENOMYX FURTHER DISCLAIMS ANY EXPRESS OR IMPLIED WARRANTY (a) OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF SENOMYX TECHNOLOGY OR SENOMYX PATENT RIGHTS; (b) THAT THE PRACTICE OF SENOMYX TECHNOLOGY OR ANYTHING MADE, USED, SOLD OR OTHERWISE DISPOSED OF UNDER ANY LICENSE GRANTED UNDER THIS AGREEMENT WILL NOT INFRINGE A PATENT, COPYRIGHT, TRADEMARK OR OTHER RIGHT OF A THIRD PARTY; AND (c) REGARDING THE PATENTABILITY OF ANY SENOMYX TECHNOLOGY, INCLUDING, WITHOUT LIMITATION, SENOMYX TECHNOLOGY CLAIMED IN PATENT APPLICATIONS AS PART OF SENOMYX PATENT RIGHTS. IN ADDITION, NOTHING IN THIS AGREEMENT MAY BE DEEMED TO BE A REPRESENTATION OR WARRANTY BY SENOMYX OF THE ACCURACY, SAFETY, EFFICACY, OR USEFULNESS, FOR ANY PURPOSE, OF THE SENOMYX TECHNOLOGY.
 
16.3                        Senomyx Indemnification.  Senomyx shall indemnify Firmenich, its Affiliates and their respective directors, officers, employees and agents (collectively, “Firmenich Indemnitees”), and defend and save each of them harmless, from and against any and all losses, damages, liabilities, costs and expenses (including without limitation, reasonable attorneys’ fees and expenses) (collectively, “Losses”) in connection with any and all Third Party suits, investigations, claims or demands (collectively, “Third Party Claims”) arising from or occurring as a result of (a) any material breach by Senomyx of this Agreement; (b) any representation or warranties made by Senomyx herein having been incorrect or misleading; (c) any gross negligence or willful misconduct (but not patent infringement which is covered in Section 11) on the part of Senomyx or its Affiliates in performing any activity contemplated by this Agreement including, but not limited to, product liability claims arising out of any tests conducted solely by Senomyx; or (d) the practice by Senomyx of any license granted by Firmenich hereunder.  Notwithstanding the foregoing, Senomyx shall have no obligation to indemnify a Firmenich Indemnitee to the extent, and only to the extent, that Firmenich has an obligation to indemnify any Senomyx Indemnitee pursuant to Section 16.4 for any such Losses.
 
16.4        Firmenich Indemnification.  Firmenich shall indemnify Senomyx, its Affiliates and their respective directors, officers, employees and agents (collectively “Senomyx Indemnitees”), and defend and save each of them harmless, from and against any and all Losses in connection with any and all Third Party Claims arising from or occurring as a result of (a) any material breach by Firmenich of this Agreement; (b) any representation or warranties made by Firmenich herein having been incorrect or misleading; (c) any gross negligence or willful misconduct (but not patent infringement which is covered in Section 11) on the part of Firmenich or its Affiliates in performing any activity contemplated by this Agreement; (d) any development, 

 

48

 

manufacturing,
formulation, handling, storage, shipment, sale or other disposition of any
Compound, Selected Compound or any Intermediate by or through Firmenich or its
Affiliates or its permitted sublicensees; (e) a product liability claim on
any Product; (f) the practice by Firmenich of any license granted
hereunder.  Notwithstanding the
foregoing, Firmenich shall have no obligation to indemnify a Senomyx
Indemnitee, except to the extent, and only to the extent, Senomyx has an
obligation to indemnify any Firmenich Indemnitee pursuant to Section 16.3
for any such Losses.

 

16.5                            Limitation of Liability.  NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, NEITHER PARTY WILL SEEK OR BE RESPONSIBLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES IN ANY AMOUNT UNDER ANY THEORY OF LIABILITY INCLUDING TORT, CONTRACT, NEGLIGENCE OR OTHERWISE UNDER THIS AGREEMENT AND NEITHER PARTY WILL SEEK OR BE RESPONSIBLE FOR ANY PUNITIVE DAMAGES IN ANY AMOUNT (INCLUDING, WITHOUT LIMITATION, ANY AND ALL CLAIMS ARISING PURSUANT TO SECTION 14 OR THIS SECTION 16).
 
16.6                            With respect to rights licensed to Senomyx by [...***...], Firmenich hereby agrees to indemnify, defend and hold harmless [...***...], as appropriate, and their respective officers, directors, employees, sponsors and agents from and against all damages or other amounts payable to a Third Party (including product liability) resulting or arising from Firmenich’s use of the rights granted herein to the extent that such indemnification by Firmenich is required by [...***...] pursuant to the agreement between Senomyx and [...***...].
 
17.  Miscellaneous.
 
17.1                        Force Majeure.  Neither party will lose any rights hereunder or be liable to the other party for damages or losses on account of failure of performance by the defaulting party (other than a payment default) if the failure is occasioned by war, fire, explosion, flood, (e.g. El Niño), earthquake, strike, lockout, embargo, act of God, or any other similar cause beyond the control of the defaulting party; provided, however, that the party claiming force majeure has exerted all reasonable commercial efforts to avoid or remedy such force majeure and thereafter takes all reasonable steps to mitigate any such delay in performance hereunder and any damages that may be incurred by the other party thereby.
 
17.2                        Governing Law and Jurisdiction.  This Agreement will be governed exclusively by the laws of [...***...] as such laws are applied to contracts entered into and to be performed entirely within such state.

 

***Confidential Treatment
Requested

 

49

 

17.3                        Binding Effect.  This Agreement will be binding upon and inure to the benefit of the successors and permitted assigns of the parties.  Any assignment not in accordance with this Agreement will be void.
 
17.4                        Dispute Resolution.
 
17.4.1              Negotiation.  The parties recognize that disputes as to certain matters may from time to time arise during the Term, which relate to either party’s rights and/or obligations hereunder (“Disputes”).  It is the objective of the parties to establish procedures to facilitate the resolution of Disputes arising under this Agreement in an expedient manner by mutual cooperation and negotiation.  The parties agree that prior to any arbitration concerning this Agreement or any court action relating to patent rights, Senomyx’s president and Firmenich’s Corporate Vice President, Research and Development will meet in person or by video-conferencing in a good faith effort to resolve any disputes concerning this Agreement.  Within [...***...] of a formal request by either party to the other party, either party may, by written notice to the other party, have such dispute referred to their respective officers designated or their successors, for attempted resolution by good faith negotiations, such good faith negotiations to begin within [...***...] after such notice is received.
 
17.4.2              Arbitration.  Any Dispute arising out of or relating to this Agreement which is not resolved between the parties or the designated officers of the parties pursuant to this Section 17.4 will be resolved by final and binding arbitration conducted in [...***...] The arbitration will be conducted by three (3) arbitrators who are knowledgeable in the subject matter at issue in the dispute.  Senomyx will select one arbitrator, and one arbitrator will be selected by Firmenich.  The third arbitrator will be selected by mutual agreement of the two arbitrators selected by the parties. The decision of the arbitrators will be final and binding on the parties and may be sued on or enforced by the party in whose favor it runs in any court of competent jurisdiction at the option of such party.
 
17.4.3              Interlocutory Relief.  Notwithstanding anything to the contrary in this Section 17.4, either party may seek immediate injunctive or other interim relief from any court of competent jurisdiction, including in Switzerland, with respect to any breach of Sections 9 or 10 hereof, or otherwise to enforce and protect the Patent Rights, copyrights, trademarks, or other intellectual property rights Controlled by such party. In addition, arbitration will not be used to resolve disputes concerning Patent Rights Controlled by either party.  Subject to Section 17.4.1, disputes concerning Patent Rights, including, but not limited to, disputes concerning patent ownership, claim language, claim scope and issues of validity will be settled in a court of law.  Any arbitration ruling that relies on an interpretation of Patent Rights will have no binding effect in a court of law on any Patent Rights related to this Agreement, unless such Patent Rights have been adjudicated in a court of law.

 

***Confidential Treatment
Requested

 

50

 

17.5                        Severability.  If any term, covenant or condition of this Agreement or the application thereof to any party or circumstance is, to any extent, held to be invalid or unenforceable, then the remainder of this Agreement, or the application of such term, covenant or condition to parties or circumstances other than those as to which it is held invalid or unenforceable, will not be affected thereby and each term, covenant or condition of this Agreement will be valid and enforced to the fullest extent permitted by law; the parties covenant and agree to renegotiate any such term, covenant or condition or the application thereof in good faith in order to provide a reasonably acceptable alternative to the term, covenant or condition of this Agreement or the application thereof that is invalid or unenforceable, it being the intent of the parties that the basic purposes of this Agreement are to be effectuated.
 
17.6                        Independent Contractors.  It is expressly agreed that Firmenich and Senomyx will be independent contractors and that the relationship between the parties will not constitute a partnership or agency of any kind.  Neither Firmenich nor Senomyx will have the authority to make any statements, representations or commitments of any kind, or to take any action, which will be binding on the other party, without the prior written authorization of the other party to do so.
 
17.7                        Entire Agreement; Amendment.  This Agreement sets forth all of the covenants, promises, agreements, warranties, representations, conditions and understandings between the parties with respect to the Collaborative Program on and after the Effective Date, and supersedes and terminates all prior agreements and understandings between the parties, with respect to the subject matter of this Agreement.  For the avoidance of doubt, [...***...] between the parties shall continue to apply with respect to the activities of the parties prior to the Effective Date.  For the avoidance of doubt, this Agreement does not supersede, modify or terminate the First Agreement or the Second Agreement.  There are no covenants, promises, agreements, warranties, representations, conditions or understandings, either oral or written, between the parties other than as set forth in this Agreement.  No subsequent alteration, amendment, change or addition to this Agreement will be binding upon the parties unless reduced to writing and signed by the respective authorized officers of the parties.  This Agreement will not be strictly construed against either party.  Any conflict between the terms set forth in the text of this Agreement and the terms of any Appendix hereto will be resolved in favor of the text of this Agreement.

 

***Confidential Treatment
Requested

 

51

 

17.8                        Waiver.  Except as specifically provided for in this Agreement, the waiver from time to time by either of the parties of any rights or the failure to exercise any remedy will not operate or be construed as a continuing waiver of the same right or remedy or any of the other of such party’s rights or remedies provided in this Agreement.
 
17.9                        Construction.  The term “Article” or “Section” can refer to any single paragraph level found in this Agreement or any collection of multiple paragraphs thereunder.
 
17.10                 No Third Party Beneficiaries.  No Third Party, including any employee of any party to this Agreement (except as specifically provided in this Agreement), will have or acquire any rights by reason of this Agreement.  Nothing contained in this Agreement will be deemed to constitute the parties partners with each other or any Third Party.
 
17.11                 Notices.  Any notices or communications provided for in this Agreement to be made by either party to the other party must be in writing, in English, and will be made by prepaid air mail or overnight carrier with return receipt addressed to the other party at its address set forth below.  Any such notice or communication may also be given by hand, or facsimile to the appropriate designation.  Notices will be sent:
 

	
  If
  to Senomyx, to:

  	
  Senomyx, Inc.

  
	
   

  	
  4767
  Nexus Centre Drive

  
	
   

  	
  San
  Diego, CA 92121

  
	
   

  	
  U.S.A.

  
	
   

  	
  Facsimile
  number:

  
	
   

  	
  (858)
  404-0750

  
	
   

  	
  Attention:
  General Counsel with a copy to the President

  
	
   

  	
   

  
	
  If
  to Firmenich, to:

  	
  Firmenich
  SA

  
	
   

  	
  1,
  route des Jeunes,

  
	
   

  	
  1211
  Geneva 8

  
	
   

  	
  Switzerland

  
	
   

  	
  Facsimile
  number: +41.22.780.23.97

  
	 
	Attention: General Counsel

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

 

52

 

17.12                 Assignment.  Notwithstanding any provision of this Agreement to the contrary, neither party may assign any of its rights or obligations under this Agreement in any country to any third party without the prior written consent of the non-assigning party, which consent will not be unreasonably withheld; provided, however, that either party may assign its rights and obligations under this Agreement without the consent of the other party (i) to a successor to substantially all of the assets of such party to which this Agreement relates, whether by merger, sale of stock, sale of assets or other transaction or (ii) to any Affiliate.  [...***...] Notwithstanding the foregoing, any such assignment to an Affiliate will not relieve the assigning party of its responsibilities for performance of its obligations under this Agreement.  This Agreement will survive any merger, consolidation or change of Control (as defined in the term “Affiliate” in Appendix A — Definitions) of either party with or into another party and, subject to the foregoing provisions, no consent for any such merger, consolidation, similar reorganization or change of Control will be required hereunder.  Any assignment in contravention of the provisions of this Section 17.12 shall be null and void ab initio.
 
17.13                 Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.
 
17.14                 Rights Upon Bankruptcy.  All rights and licenses granted under or pursuant to this Agreement are, and shall otherwise be deemed to be, for purposes of Section 365(n) of Title 11 of the United States Code and other similar laws in any jurisdiction where a Party is situated (collectively, the “Bankruptcy Laws”), executor contracts and non-assignable personal licenses of rights to “intellectual property” as defined under the Bankruptcy Laws.  If a case is commenced during the Term by or against a Party under Bankruptcy Laws then, unless and until this Agreement is rejected as provided in such Bankruptcy Laws, such Party (in any capacity, including debtor-in-possession) and its permitted successors and assigns (including, without limitation, a trustee) shall perform all of the obligations provided in this Agreement to be performed by such Party.  If a case is commenced during the Term by or against a Party under the Bankruptcy Laws, and this Agreement is rejected as provided in the Bankruptcy Laws and the other Party, who is not commencing, or otherwise the subject of, a case under the Bankruptcy Laws (the “Non-Bankrupt Party”), elects to retain its rights hereunder as provided in the Bankruptcy Laws, then the Party subject to such case under the Bankruptcy Laws (in any capacity, including debtor-in-possession) and its permitted successors and assigns (including, without limitation, a trustee), shall provide to the Non-Bankrupt Party, to the extent the Non-Bankrupt Party 

 

***Confidential Treatment
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53

 

is a licensee hereunder, [...***...] All rights, powers and remedies of the non-bankrupt Party as provided herein are in addition to and not in substitution for any and all other rights, powers and remedies now or hereafter existing at law or in equity (including, without limitation, the Bankruptcy Laws) in the event of the commencement of a case by or against a Party under the Bankruptcy Laws.  Additionally, in the event of any insolvency of Senomyx or the entry by it into any formal insolvency administration under United States law, it is the intention of the Parties that this Agreement shall not terminate and shall continue pursuant to the principles governing insolvency proceedings under United States law.  In particular, it is the intention and understanding of the Parties to this Agreement that the rights granted to the Parties under this Section 17.14 are essential to the Parties’ respective businesses and the Parties acknowledge that damages are not an adequate remedy.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

***Confidential Treatment
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54

 

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

	
  FIRMENICH SA

  	
   

  	
  FIRMENICH SA

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Paul-Louis Gay

  	
   

  	
  By:

  	
  /s/
  Friedrich Busse

  
	
   

  	
  Paul-Louis Gay

  	
   

  	
   

  	
  Friedrich Busse

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CFO & Corporate VP
  Global Services

  	
   

  	
  Corporate
  VP Strategic Development

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  28
  July 09

  	
   

  	
  Date:

  	
  28
  July 09

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SENOMYX, INC.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Kent Snyder

  	
   

  	
   

  	
   

  
	
   

  	
  Kent Snyder

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  President,
  CEO and Chairman

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	Date:
	July 28, 2009
	 
	 
	 

 
55

 
APPENDIX A - DEFINITIONS
 

“Affiliate” means any entity which, directly or
indirectly, Controls, is Controlled by or is under common Control with a
party.  “Control” means (i) having
the actual, present capacity to elect a majority of the directors of such
affiliate; (ii) having the power to direct at least [...***...] of the voting rights entitled to elect directors; or (iii) [...***...] where the local law will not permit foreign equity participation of a
majority, ownership or control, directly or indirectly, of the maximum
percentage of such outstanding stock or voting rights permitted by local law.

 

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

 

“Co-Exclusive”
means that the right may be granted by Senomyx to only one (1) party (and
such party’s Affiliates) in addition to Firmenich.  For the avoidance of doubt, the foregoing
shall not be construed to prevent Senomyx from performing its obligations under
this Agreement.

 

“Collaborative
Period” means the period beginning on the Effective Date and ending two (2) years
thereafter, unless terminated earlier in accordance with Section 14 or
extended in accordance with Section 7.2.3.

 

“Collaborative
Program” has the meaning set forth under “Background” above.

 

“Collaborative
Program IP” means all Patent Rights and Know-How that is [...***...] pursuant to
the applicable Research Plan, but only to the extent [...***...] as of the
effective date of any [...***...]

 

“Commercialization
Date” means for each Selected Compound the first day of the calendar quarter
immediately following the date of [...***...] such Selected Compound to be sold
[...***...]

 

“Commercially
Viable” means the applicable Compound that in Firmenich’s sole determination
will [...***...] of the Compound for the Intended Purpose of enhancing the relevant
Target Sweetener for use within the Fields, after taking into account the
following: (i) [...***...] technical requirements (such as [...***...]); (ii) [...***...]
targets; (iv) [...***...]; (iv) [...***...] requirements; and (v) [...***...]
targets.

 

***Confidential
Treatment Requested

 

56

 

“Compounds”
means the following:  a molecule(s) that
is under the control of Senomyx, and primarily has an enhancing effect on the
sweetness of a Target Sweetener.   
Unless and until the proper exercise of the Option set forth in Section 8.6
of this Agreement, Compounds shall be expressly limited to Synthetic
Compounds.  Following proper exercise of
the Option, Compounds shall include Natural Compounds in addition to Synthetic
Compounds.

 

“Confidential Information”
of a party means all Inventions, Know-How or other information, including, without
limitation, information and material (whether or not patentable) regarding
technology, products, research, development, manufacturing, marketing,
finances, personnel or other business information or objectives which is
disclosed orally or in writing by the disclosing party to the other party.  Information developed by Firmenich
independently or jointly with Senomyx that is or should be assigned to Senomyx
pursuant to Section 9 shall be deemed Confidential Information of Senomyx
and information developed by Senomyx independently or jointly with Firmenich
that is or should be assigned to Firmenich pursuant to Section 9 shall be
deemed Confidential Information of Firmenich; and (ii) with respect to a
party, other information developed jointly by Firmenich and Senomyx shall be
deemed to be the other party’s Confidential Information for the purpose of the
confidentiality obligations hereunder except in respect of use by such other
party.

 

“Control” or “Controlled” means, with respect to intellectual property, possession by a party, as of the Effective Date or during the Agreement, of the ability to grant a license or sublicense in accordance with the terms of this Agreement, without violating the terms of any agreement by such party with any Third Party.
 
[...***...] means, with respect to any Selected Compound, as determined by the Steering Commmittee pursuant to Section 3.1.2.
 
“Discovered During the Collaborative Period” means, with respect to a Compound, that it was first identified by Senomyx as [...***...].
 

“Effective
Date” means the date that this Agreement is signed by the last party to sign
above.

 

[...***...]
Technology” means (i) [...***...] and associated [...***...] having the intended
effect of improving the [...***...] in a Formulation or Product or (ii) [...***...]
(other than [...***...] and [...***...] that are [...***...]) developed by Firmenich and
that have [...***...] with the Selected Compound.

 

***Confidential
Treatment Requested

 

57

 

“Exclusive”
means exclusive even as to the party granting the license; provided, however,
that Senomyx may exercise such rights for the purpose of performing its
obligations under this Agreement.

 

“Field
I” means any and all forms of foods and beverages for human consumption
excluding (i) nonalcoholic beverages; (ii) Gum; (iii) Sugar and
Chocolate Confectionery and (iii) Therapeutics.

 

“Field
II” means non-alcoholic dry powdered beverages for human consumption.
Notwithstanding the foregoing, Field II specifically excludes (i) Gum; (iii) Sugar
and Chocolate Confectionery and (iii) Therapeutics.

 

“Fields”
means both Field II and I.

 

“Firmenich
Competitor” means [...***...].

 

“Firmenich Know-How” means, any know-how relating to [...***...] which is not covered by Firmenich Patent Rights but is necessary or appropriate for purposes of the activities to be conducted under this Agreement, and which is Controlled by Firmenich as of the Effective Date or which becomes Controlled by Firmenich during the Term.  Firmenich Know-How excludes Know-How under Jointly Owned Technology.
 
“Firmenich Patent Rights” means, any Patent Rights relating to [...***...], that are necessary or appropriate for purposes of the activities to be conducted under this Agreement, and which are Controlled by Firmenich as of the Effective Date or which become Controlled by Firmenich during the Term.  Firmenich Patent Rights excludes Patent Rights under Jointly Owned Technology.
 
“Firmenich Technology” means Firmenich Patent Rights and Firmenich Know-How.  For the avoidance of doubt, Firmenich Technology includes Firmenich Improvements as defined in Section 9.2.
 

“Gum”
means [...***...].

 

“Intended
Purpose” shall have the meaning set forth in Section 3.1.2.

 

“Intermediate”
means intermediates useful for making the applicable Compound.

 

“Invention”
means any invention including, without limitation, any new and useful process,
method, or composition of matter, or improvement, whether or not patentable,
made in the course of the Agreement.

 

“Joint Invention” has the meaning set forth in Section 9.4.

 

***Confidential
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58

 
“Joint Patent Rights” means all Patent Rights containing one or more claims to a Joint Invention.
 
“Jointly Owned Technology” means Know-How and/or Patent Rights with respect to Inventions that are jointly owned by Firmenich and Senomyx.  For the avoidance of doubt, Jointly Owned Technology does not include Firmenich Improvements or Senomyx Improvements.
 
“Know-How” means information and data, whether or not patentable, which is not generally known to the public, including, without limitation, designs, concepts, formulae, software, techniques, practices, processes, methods, knowledge, skill, experience, expertise, technical information, and data, including pharmacological, toxicological and clinical test data, analytical and quality control data, patent and legal data or marketing, sales and manufacturing data.
 

“Major
Country(ies)” means [...***...].

 

“Major
Firmenich Customer” means any Firmenich customer where (a) such customer
is one of Firmenich’s [...***...] as measured by [...***...]; and (b) [...***...] in
the market or product segment where the Product is used.

 

“Modulator Selling Price” means for the applicable
quarterly reporting period the [...***...]  Notwithstanding the foregoing, in
the event that the Steering Committee determines [...***...], the Steering Committee shall [...***...] for a given period; provided, however, that if the Steering Committee [...***...], then [...***...].  In the event that [...***...]
applicable Selected Compound, [...***...]. 
In the event of [...***...] the Modulator Selling Price, the parties
[...***...].

 

“Natural
Compounds” means Compounds that are natural as defined by [...***...].

 

***Confidential Treatment Requested

 
59

 
“Net Sales” means, with respect to a Product, the [...***...] by Firmenich and its Affiliates and/or permitted sublicensees on any sales or other transfer of the Product, less the following items:
 

	i)
	[...***...];
	 

	 
	 
	 

	ii)
	[...***...];
	 

	 
	 
	 

	iii)
	[...***...];
	 

	 
	 
	 

	iv)
	[...***...]; and
	 

	 
	 
	 

	v)
	[...***...].
	 

 
Notwithstanding the foregoing, [...***...].
 
“Non-Major Country” means any country that is not a Major Country.
 

“Patent
Rights” means all rights associated with all U.S. or foreign (including
regional authorities such as the European Patent Office) utility or provisional
patents or patent applications, including any improvements, continuations,
continuations-in-part, or divisionals or any substitute or equivalent
applications, and any patent issuing thereon, including any reissue,
reexamination or extension thereof.

 

“Product(s)”
means a (i) Selected Compound(s) as a standalone product; and (ii) product(s) that
incorporates a Selected Compound.

 

[...***...]
means Firmenich’s exercising of its rights to [...***...] and to receive and
exercise the rights set forth in Section 8.1.3 of this Agreement for the
limited period set forth therein.

 

***Confidential
Treatment Requested

 

60

 

[...***...]
means the occurrence of: (A) any one or more of the following events: (i) [...***...]
by or against [...***...] (other than as a result of [...***...]), (ii) [...***...]
(other than as a result of [...***...]), (iii) [...***...] (other than as a result
of [...***...]), (iv) [...***...], or (v) [...***...] set forth in subsections (i) through
(iv) [...***...]; AND (B) [...***...]

 

“Regulatory Approval” means in respect of (i) the United States of America and Brazil, receipt of notification from Flavor and Extract Manufacturers’ Association of the United States (“FEMA”) of determination as Generally Recognized As Safe; (ii) Mexico, approval by the Mexican Health authorities and inclusion in the lists of permitted flavoring substances in the Acuerdo por el que se determinan las sustancias permitidas como aditivos y coadyuvantes en alimentos, bebidas y suplementos alimenticios; (iii) the People’s Republic of China, approval by the State Food & Drug Administration of the Peoples’ Republic of China and inclusion in the list of permitted flavoring agents (reference GB270, as of the date of this Agreement); (iv) France and the United Kingdom, approval by the European Food Safety Authority [...***...], in the community list of flavoring substances as laid down in Regulation (EC) No. 1334/2008, or as subsequently amended; (v) Japan, approval by the Japan Ministry of Health, Labor and Welfare for use as a flavoring agent in accordance with the Japanese Food Sanitation Law; and (vi) [...***...].  In the event the regulatory requirements are amended or the parties desire to use a different regulatory pathway for any country, the Steering Committee will revise this definition as necessary and document such revisions in the minutes of the Steering Committee.
 

“Regulatory
Approval Date” means the date in a particular country that the Regulatory
Approval is granted.

 

“Research Plan” means the detailed scientific research plan attached hereto as Appendix C that describes the research program, defines the key activities and responsibilities of the parties, research milestones and timeline for the Collaborative Program.  The Research Plan will include a brief description of the anticipated process required to obtain appropriate regulatory approval(s).  The Research Plan is incorporated by reference into this Agreement.  The Research Plan may be updated from time to time by the Steering Committee and such updates will be maintained in the records of the Steering Committee.

 

***Confidential
Treatment Requested

 

61

 

“Royalty
Term” means, in the case of any Product and as to [...***...], the period of time
commencing on the first commercial sale of such Product [...***...] and ending upon
the date that there no longer exists a Valid Claim in a Patent Right controlled
by Senomyx or its Affiliates covering the manufacture, use or sale of such
Product (or Selected Compound contained therein) [...***...] in which the Product
is sold, with the limitation that for [...***...] the Royalty Term for [...***...]
shall end upon the date that there no longer exists a Valid Claim in a Patent
Right controlled by Senomyx or its Affiliates covering the manufacture, use or
sale of such Product (or Selected Compound contained therein) [...***...] or
[...***...]

 

“Royalty Year” means each twelve-(12)-month period commencing on the Commercialization Date for the first Selected Compound and each anniversary thereof.
 
“Selected Compound(s)” means a Compound(s) that is selected for development pursuant to Section 3.1.4 or Section 8.7.
 
[...***...] shall mean any [...***...]  Notwithstanding the foregoing, [...***...] excludes any Know-How that does not relate to, or claims within Patent Rights that do not claim any Compound(s).
 
[...***...] shall mean any [...***...]  Notwithstanding the foregoing, [...***...] excludes any Know-How that does not relate to, or claims within Patent Rights that do not claim any Selected Compound(s).
 

“Senomyx Compound
Manufacturing Methods” means new methods of [...***...] thereof, developed by
Firmenich independently or together with Senomyx.

 

“Senomyx Know-How” means any Know-How related to the [...***...], which is not covered by the Senomyx Patent Rights, but is necessary or appropriate for purposes of the activities to be conducted under this Agreement, and which is Controlled by Senomyx as of the Effective Date or which becomes Controlled by Senomyx during the Term.  Senomyx Know-How excludes Know-How under Jointly Owned Technology.
 
“Senomyx Patent Rights” means any Patent Rights relating to [...***...] and, that are necessary or appropriate for purposes of the activities to be conducted under the Agreement, and which are Controlled by Senomyx as of the Effective Date or which become Controlled by Senomyx during the Term.   Senomyx Patent Rights excludes Patent Rights under Jointly Owned Technology.
 
“Senomyx Technology” means the Senomyx Patent Rights, and Senomyx Know-How. For the avoidance of doubt, Senomyx Technology includes Senomyx Improvements as defined in Section 9.3.
 

***Confidential Treatment Requested
 
62

 
“Strategic Marketing Plan” means a worldwide marketing plan prepared by Firmenich for Selected Compounds which includes at least the following items:
 

	
  (i)

  	
  [...***...];

  	 

	
  (ii)

  	
  [...***...];

  	 

	
  (iii)

  	
  [...***...]

  	 

	
  (iv)

  	
  [...***...]

  	 

	(v)
	[...***...].
	 

 
“Similarity Index Test” means [...***...].
 
“Substantially Similar Modifications” means [...***...].
 
“Sugar and Chocolate Confectionery” means [...***...].
 
“Steering Committee” has the meaning set forth in Section 2.
 
“Synthetic Compounds” means Compounds that are not Natural Compounds.
 

“Target
Sweeteners” means any of the following sweeteners:  sucrose, fructose, stevioside, rebaudioside
[...***...]

 

“Term” has the meaning set forth in Section 14.1.
 
“Territory” means worldwide.
 
“Therapeutics” means any [...***...]
 

***Confidential Treatment Requested
 
63

 
“Third Party(ies)” means any party other than a party to this Agreement or an Affiliate of Senomyx or Firmenich.
 
“Valid Claim” means a claim of a pending patent application or an issued patent within the Patent Rights, which has not (i) expired or been canceled; (ii) been declared invalid by an unreversed and unappealable decision of a court or other appropriate body of competent jurisdiction; (iii) been admitted to be invalid or unenforceable through reissue, disclaimer or otherwise; and/or (iv) been abandoned.
 
64

 
APPENDIX B — CALCULATION OF NET ROYALTIES
 

[...***...]

 

***Confidential
Treatment Requested

 

65

 
APPENDIX C — RESEARCH PLAN
 

Collaborative
Program Overview — The key objective of the Collaborative Program is
to discover novel compounds that enhance the target sweeteners sucrose,
fructose and rebaudioside [...***...].

 

Specific
Goals — The overall goal of this program is to develop novel compounds with
sweet taste enhancement properties that meet the desired criteria below:

 

	
  i.

  	
   

  	
  [...***...]

  
	
  ii.

  	
   

  	
  [...***...]

  
	
  iii.

  	
   

  	
  [...***...]

  
	
  iv.

  	
   

  	
  [...***...]

  
	
  v.

  	
   

  	
  [...***...]

  

 

Senomyx
Sweet Taste Enhancer Program Status — Senomyx has developed a
proprietary high-throughput screening assay using the human sweet receptor
T1R2/T1R3. This assay allows for [...***...] to be screened per week to identify
novel compounds that enhance the sweet taste receptor. [...***...] In addition, the
assay correctly predicts [...***...] as determined by taste tests.  Senomyx has validated the utility of this
assay to discover novel enhancers of sweet receptor agonists [...***...].

 

To date, we have screened the Senomyx corporate library (approximately
350,000 compounds) for enhancers of [...***...]. Our initial high-throughput screen
uncovered [...***...] receptor activation. 
[...***...] Using the homology model and assay-guided compound optimization,
we were able to develop potent enhancers of both sucralose and sucrose
[...***...]  The homology model also suggests
that the enhancer molecules [...***...]  To
date, characterization of hits from [...***...]

 

***Confidential
Treatment Requested

 

66

 

[...***...]  Approximately 60 compounds with apparent [...***...] enhancement activity were studied in our
dose response assay format which can be utilized to distinguish between true
enhancers and weak receptor agonists. In addition, these same compounds were
evaluated in [...***...]  Several of these compounds were taken forward
into sensory evaluation and did not show [...***...]  To
date, we have yet to do any follow up of the hits from our initial [...***...]
screen. 
This work is scheduled to begin in [...***...].

 

As discussed above, so far we have been successful in developing potent
enhancers of both sucralose (S2383) and sucrose.  Our initial lead sucrose enhancer, S6973,
enables up to a 50% sucrose reduction in various products such as yogurt,
cereal, cookie, and beverage prototypes, while maintaining the sweet taste of
natural sugar.  A multi-kilo GMP scale up
of S6973 has been completed and safety studies to support regulatory filings
are ongoing in 2009.  [...***...]  Top compounds are undergoing taste tests and
additional related compounds continue to be synthesized and screened to
identify compounds with even greater taste and improved physical property
profiles.  Although these second
generation sucrose enhancers have been shown to be significantly [...***...] these compounds will need to be evaluated
in product prototypes to determine if further improvements are necessary to
meet the requirements of all intended product categories.  [...***...]

 

[...***...]  This research plan also outlines the required
steps to discover and develop enhancers for these target sweeteners.

 

[...***...]

 

***Confidential
Treatment Requested

 

67

 

[...***...]The initial collaboration
will focus solely on the discovery of synthetic sweet enhancing compounds;
however an option right exists to add the discovery of natural sweet
enhancers.  At that time, a separate
research plan will be prepared and agreed upon by the Steering Committee
members.

 

Research Plan — The research plan has been divided into
three phases: Phase I, the “Lead Discovery” phase, Phase II, the “Optimization”
phase, and Phase III, the “Development” phase. 

[...***...]

 

Phase I: Lead Discovery

 

Goals — The goal of this phase is to identify lead
compounds from at [...***...] that enhance
the target sweeteners and [...***...]

 

Key activities — The key activities of Phase I are:

 

[...***...]

 

***Confidential
Treatment Requested

 

68

 

[...***...]

 

Phase II: Optimization

 

Goals — The goal of this phase is to optimize one or more
compounds into product candidates that meet the criteria outlined in the
collaboration agreement for an enhancer of the target sweetener.  Suitable compounds will be evaluated in taste
tests and one or more product candidates will be selected by the Steering
Committee for development (Phase III).

 

Key activities — The key activities of Phase II are:

 

***Confidential
Treatment Requested

 

69

 

[...***...]

 

Phase III: Development

 

Goals — The goals of this phase are to 1) scale up
material for safety and initial application work, 2) conduct a series of safety
studies on one or more compounds, [...***...]
5) conduct application work in preparation of product development and
commercialization.

 

Key activities — The key activities of Phase III are:

 

[...***...]

 

***Confidential Treatment Requested

 

70Exhibit 10.1

 

Corrected Execution Copy

 

KEMET CORPORATION

 

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT is made as of January 27, 2010,
between KEMET Corporation, a Delaware corporation (the “Company”), and Per-Olof
Loof (“Executive”).

 

In consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:

 

1.                                       Employment.  The Company
shall employ Executive, and Executive hereby accepts employment with the
Company, upon the terms and conditions set forth in this Agreement for the
period beginning on the date hereof and ending as provided in paragraph 4
hereof (the “Employment Period”).

 

2.                                       Position and Duties.

 

(a)                                  During the Employment Period, Executive
shall serve as the Chief Executive Officer of the Company and shall have the
normal duties, responsibilities, functions and authority of the Chief Executive
Officer, subject to the power and authority of the Board of Directors of the
Company (the “Board”) to expand or limit such duties, responsibilities,
functions and authority within the scope of duties, responsibilities, functions
and authority associated with the position of Chief Executive Officer and to
overrule actions of officers of the Company.  During the Employment Period, Executive shall
render such administrative, financial and other executive and managerial
services to the Company and its Subsidiaries which are consistent with
Executive’s position as the Board may from time to time direct.

 

(b)                                 During the Employment Period, Executive
shall report to the Board and shall devote his best efforts and his full
business time and attention (except for permitted vacation periods and
reasonable periods of illness or other incapacity) exclusively to the business
and affairs of the Company and its Subsidiaries.  Executive shall perform his duties,
responsibilities and functions to the Company and its Subsidiaries hereunder to
the best of his abilities in a diligent, trustworthy, professional and
efficient manner and shall comply with the Company’s and its Subsidiaries’
policies and procedures in all material respects.  In performing his duties and exercising his
authority under the Agreement, Executive shall support and implement the
business and strategic plans approved from time to time by the Board and shall
support and cooperate with the Company’s and its Subsidiaries’ efforts to
expand their businesses and operate profitably and in conformity with the
business and strategic plans approved by the Board.  So long as Executive is employed by the
Company, Executive shall not, without the prior written consent of the Board,
accept other employment or perform other services for compensation or sit on
more than the two company board of directors that he currently sits on (only
one Directorship would be preferable), excluding KEMET Corporation, and not sit
on more than two board of directors of a not-for-profit charitable
organization. (This restriction does not apply to the board of directors of a majority
or wholly owned subsidiary of the Company).

 

 

(c)                                  For purposes of this Agreement, “Subsidiaries”
shall mean any corporation or other entity of which the securities or other
ownership interests having the voting power to elect a majority of the board of
directors or other governing body are, at the time of determination, owned by
the Company, directly or through one or more Subsidiaries.

 

3.                                       Compensation and Benefits.

 

(a)                                  During the Employment Period, Executive’s
base salary shall be $770,000 per annum or such higher or lower rate as the
Board may determine from time to time in accordance with the terms of this
Agreement (as adjusted from time to time, the “Base Salary”), which
salary shall be payable by the Company in regular installments in accordance
with the Company’s general payroll practices (in effect from time to
time).  The Board may lower the Base
Salary to take into account a material reduction in the size or complexity of
the Company’s business that occurs after the Effective Date of this
Agreement.  The Base Salary has been set
to take into account the typical level of perquisites that Executive has been
given in the past, as well as those perquisites that would be provided to a
chief executive officer at a similarly situated company.  As a result, no separate perquisites shall be
paid to Executive, or paid by the Company on his behalf to any third parties,
during the Employment Period, except as specifically set forth herein.

 

(b)                                 Executive has previously received a grant
of 500,000 options to acquire 500,000 shares of Common Stock of the Company
issued under the Company’s 2004 Long-Term Equity Incentive Plan.  The options have a term of ten years, and
vest according to the following schedule:

 

	
  Performance
  (Market Capitalization) Based Vesting:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Stock
  price growth of 50%

  	
   

  	
  100,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Stock
  price growth of 100%

  	
   

  	
  150,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Stock
  price growth of 125%

  	
   

  	
  30,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Stock
  price growth of 150%

  	
   

  	
  50,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Stock
  price growth of 175%

  	
   

  	
  70,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Stock
  price growth of 200%

  	
   

  	
  100,000

  	
   

  

 

In order to vest, the
closing NYSE price must exceed threshold for 30 consecutive calendar days.  The initial exercise price was $8.05 per
share.  All of these options were non-qualified
stock options and will expire on the earlier to occur of April 4, 2015,
which is the ten year life or the third year following Executive’s retirement.

 

(c)                                  In addition, during the Employment
Period, Executive shall be entitled to participate in the Company’s health
insurance coverage plan, and Executive shall be entitled to four weeks of paid
vacation each calendar year in accordance with the Company’s policies, which if
not taken during any year may not be carried forward to any subsequent calendar
year and no compensation shall be payable in lieu thereof.

 

2

 

(d)                                 During the Employment Period, the Company
shall reimburse Executive for all reasonable out-of-pocket business expenses
incurred by him in the course of performing his duties and responsibilities
under this Agreement which are consistent with the Company’s policies in effect
from time to time, with respect to travel, entertainment and other business
expenses, subject to the Company’s requirements with respect to reporting and
documentation of such expenses as in effect from time to time.

 

(e)                                  In addition to the Base Salary, Executive
shall be entitled to participate in the Company’s existing short-term incentive
compensation program (KAIP), long-term incentive compensation program (LTIP)
and deferred compensation plan, in each case as such plans as are generally
available to other executive officers of the Company, and in each case in
accordance with the respective terms of such plans as such plans and terms may
be established from time to time by the Board  As long as Executive is employed as Chief
Executive Officer on June 30, 2015, and has been continuously so employed
by the Company between the date hereof and June 30, 2015, Executive shall
be entitled to participate in a special 15-month long-term incentive
compensation program covering the period April 1, 2014 through June 30,
2015 (“Special LTIP”) that would be based upon the same plan being provided to
the other top executive officers for the two-year period that would otherwise
end on March 31, 2016, but adjusted to take into account that June 30,
2015 will be end of Executive’s employment. 
Any amounts to be paid under the Special LTIP will only be determined at
the end of the entire period (after March 31, 2016), and shall be a
pro-rated amount (62.5%) of the amount that would have been payable as a
two-year payment. No separate targets shall be established. This Special LTIP
shall replace any other long-term incentive compensation opportunity during
such covered period.

 

(f)                                    On or after the date hereof, the Company
shall grant to Executive 250,000 shares of Restricted Common Stock pursuant to
the terms and conditions of the 2004 Long Term Equity Plan, with vesting to
occur 125,000 on June 30, 2014, and the remaining 125,000 on June 30,
2015, and with such other terms and conditions as may be contained in the grant
agreement.  On or after the date hereof,
the Company shall grant to Executive, 250,000 options to acquire 250,000 shares
of Common Stock pursuant to the 1995 Executive Stock Option Plan with vesting
to occur 125,000 on June 30, 2014, and the remaining 125,000 on June 30,
2015, and with such other terms and conditions as may be contained in the grant
agreement.  The exercise price for the
stock option grant shall be the closing price of the common stock on the date
of grant.

 

(g)                                 Executive has previously entered into a
Change in Control Severance Compensation Agreement dated July 28, 2008
(the “CIC Agreement”).  This
Agreement shall also serve as an amendment to the CIC Agreement to change the time
period in Section 4(A)(i) from 36 months to 24 months and by removing
Section 4(E) in its entirety.

 

(h)                                 All amounts payable to Executive as
compensation hereunder shall be subject to all required and customary
withholding taxes by the Company.

 

(i)                                     The Board has undertaken to provide
Executive with all of the incentive compensation that would be payable during
the Employment Period.  The Board
reserves the right to add Executive to any new plans or programs that may be
established for the executive officers of the Company in the future, after
taking into account the terms of this Agreement.

 

3

 

4.                                       Term.

 

(a)                                  This Agreement shall become effective on April 1,
2010, unless terminated by either party prior to such date.  Unless renewed by the mutual agreement of the
Company and Executive, the Employment Period shall end on June 30, 2015;
provided that (i) the Employment Period shall terminate prior to such date
immediately upon Executive’s resignation (with or without Good Reason, as
defined below), death or Disability (as defined below) and (ii) the
Employment Period may be terminated immediately by the Company at any time
prior to such date for Cause (as defined below) or without Cause.  Except as otherwise provided herein, any
termination of the Employment Period by the Company shall be effective at such
time as specified in a written notice from the Company to Executive.  At the end of the Employment Period, at the
request of the Board, Executive agrees to offer to resign from the Board, which
offer may be accepted by the then-current Board.

 

(b)                                 If the Employment Period is terminated by
the Company or its successors in interest without Cause or by Executive for
Good Reason prior to June 30, 2015, Executive shall be entitled to
continue to receive his Base Salary payable in regular installments as special
severance payments (the “Severance Payments”) from the date of
termination through the earlier to occur of (i) June 30, 2015 or (ii) two
years from the date of termination (the “Severance Period”); provided,
that if Executive resigns for Good Reason, such Severance Payments shall be
increased to also include Executive’s Target Bonus under the KAIP during the
Severance Period; provided further, that to the extent that the payment
of any amount of Severance Payments constitutes “nonqualified deferred
compensation” for purposes of Code Section 409A (as defined below), any
such payment scheduled to occur during the first sixty (60) days following the
termination of employment shall not be paid until the first regularly scheduled
pay period following the sixtieth (60th)
day following such termination and shall include payment of any amount that was
otherwise scheduled to be paid prior thereto. 
Payment of the foregoing Severance Payments shall be conditioned upon
the Executive executing and delivering to the Company the General Release
substantially in form and substance as set forth in Exhibit A
attached hereto, Executive’s continued compliance with the provisions of paragraphs
6 and 7 hereof and Executive not applying for unemployment compensation
chargeable to the Company during the Severance Period.  The General Release contemplated by the
foregoing sentence must be executed and delivered (and no longer subject to revocation,
if applicable) within sixty (60) days following termination. Executive shall
not be entitled to any other salary, compensation or benefits after termination
of the Employment Period, including under any severance programs of the Company
generally available to other executive officers of the Company, except as
specifically provided for in the Company’s employee benefit plans, the CIC
Agreement or as otherwise expressly required by applicable law.  For purposes of this paragraph 4(b) only,
Executive’s short-term incentive plan bonus for each year following the year in
which his employment was terminated shall be the same as the target bonus
opportunity in the year of the termination, or if not yet established for such
year, for the immediately preceding year. 
The Base Salary payable pursuant to this paragraph 4(b) shall,
subject to Section 4(h), be payable in regular monthly installments.  The amounts payable pursuant to this
paragraph 4(b) shall not be reduced by the amount of any compensation Executive
receives with respect to any other employment during the Severance Period.  Executive shall have no duty or obligation to
seek other employment during the Severance Period or otherwise mitigate damages
hereunder.  Notwithstanding any other
provision of this Agreement to the contrary, in connection with any 

 

4

 

termination of employment of Executive, to the extent that Executive
becomes entitled to severance benefits under the existing CIC Agreement (or any
replacement agreement or arrangement), Executive shall be entitled to receive
the greater of (but not both of) the severance benefits payable hereunder and
the severance benefits payable under the CIC Agreement.

 

(c)                                  If the Employment Period is terminated by
the Company for Cause or the Employment Period is terminated pursuant to clause
(a)(i) above (other than termination by Executive with Good Reason) or
this Agreement expires and is not renewed hereunder, Executive shall only be
entitled to receive his Base Salary through the date of termination or
expiration and shall not be entitled to any other salary, compensation or
benefits from the Company or its Subsidiaries thereafter pursuant to any other
agreement with the Company or any then-existing Company policy or plan, except
as otherwise specifically provided for under the Company’s employee benefit
plans or as otherwise expressly required by applicable law.  In addition, notwithstanding any provision in
any outstanding stock option grants to the contrary, in the event Executive
terminates this Agreement without Good Reason, any such stock options must be
exercised on or prior to the 91st day following such termination, or they will
expire and no longer be outstanding or subject to exercise.

 

(d)                                 Except as otherwise expressly provided
herein, all of Executive’s rights to salary, bonuses, employee benefits and
other compensation hereunder which would have accrued or become payable after
the termination or expiration of the Employment Period shall cease upon such
termination or expiration, other than those expressly required under applicable
law (such as COBRA).  The Company may
offset any amounts Executive owes it or its Subsidiaries against any amounts it
or its Subsidiaries owes Executive hereunder unless such offset would otherwise
result in adverse tax consequences under Code Section 409A (as defined
below).

 

(e)                                  For purposes of this Agreement, a
termination for Cause shall mean (i) a Termination as a result of the
willful and continued failure by Executive for a significant period of time
substantially to perform his duties with the Company (other than any such
failure resulting from his Disability), after a demand for substantial
performance is delivered to Executive in writing by the Board or its designee
which specifically identifies the manner in which the Board or its designee
believes that Executive has not substantially performed his duties, or (ii) the
willful engaging by Executive in gross misconduct materially and demonstrably
injurious to the Company or any intentional violation of any Company
policy.  No act, or failure to act, on
Executive’s part shall be considered “willful” unless done, or omitted to be
done, by Executive, not in good faith and without reasonable belief that his
action or omission was in the best interest of the Company.  The burden for establishing the validity of
any termination for Cause shall rest upon the Company.  No Termination shall be deemed to be for
Cause unless and until there shall have been delivered to Executive a copy of a
resolution duly adopted by the affirmative vote of not less than sixty-six and
two-thirds of the entire membership of the Board, but excluding the Executive
if he is also a Director, called and held for such purpose (after reasonable
notice is provided to Executive and he is given an opportunity, together with
counsel, to be heard before the Board), finding that, in the good faith opinion
of the Board, Executive is guilty of the conduct described in subclauses (i) or
(ii) above, and specifying the particulars thereof in reasonable detail.

 

5

 

(f)                                    For purposes of this Agreement, “Disability”
shall mean Executive’s inability to perform the essential duties,
responsibilities and functions of his position with the Company and its
Subsidiaries as a result of any mental or physical incapacity even with
reasonable accommodations of such incapacity provided by the Company and its
Subsidiaries or if providing such accommodations would be unreasonable, all as
determined by the Board in its reasonable good faith judgment.  Executive shall cooperate in all respects
with the Company if a question arises as to whether he has become disabled
(including, without limitation, submitting to an examination by a medical
doctor or other health care specialists selected by the Company and authorizing
such medical doctor or such other health care specialist to discuss Executive’s
condition with the Company).

 

(g)                                 For purposes of this Agreement, “Good
Reason” shall mean the occurrence of any of the following events, without
the express written consent of Executive, unless such events are fully
corrected in all material respects by the Company within thirty (30)  days following written notification by
Executive to the Company of the occurrence of one of the reasons set forth
below:

 

(i)                                     The assignment to Executive  of any duties inconsistent with Executive’s  position, duties, responsibilities and status
with the Company as in effect on the date hereof, or a change in  Executive’s employment titles or offices (if
any) in effect on the date hereof, or any removal of Executive from, or any
failure by the Board of Directors to reelect Executive  to any of such employment positions, except
in connection with  Executive’s
Termination for Cause, death, Disability, or as a result of Executive’s
attainment of  retirement age; or

 

(ii)                                  A material reduction by the Company in
Executive’s base salary below that in effect on the date hereof; provided,
that the Board may lower the Base Salary to take into account a material
reduction in the size or complexity of the Company’s business that occurs after
the Effective Date of this Agreement, any such reductions shall not constitute “Good
Reason” for purposes of this Agreement.

 

(iii)                               Executive shall provide the Company with
a written notice detailing the specific circumstances alleged to constitute
Good Reason within ninety (90) days after the first occurrence of such
circumstances, and actually terminate employment within thirty (30) days following
the expiration of the Company’s thirty (30)-day cure period described
above.  Otherwise, any claim of such
circumstances as “Good Reason” shall be deemed irrevocably waived by Executive.

 

(h)                                 The intent of the parties is that
payments and benefits under this Agreement comply with Internal Revenue Code Section 409A
and the regulations and guidance promulgated thereunder (collectively “Code Section 409A”)
and, accordingly, to the maximum extent permitted, this Agreement shall be
interpreted to be in compliance therewith. 
To the extent that any provision hereof is modified in order to comply
with Code Section 409A, such modification shall be made in good faith and
shall, to the maximum extent reasonably possible, maintain the original intent
and economic benefit to Executive and Company of the applicable provision
without violating the provisions of Code Section 409A.  In no event whatsoever shall Company be
liable for any additional tax, interest or penalty that may be imposed on
Executive 

 

6

 

by Code Section 409A or for damages for failing to comply with
Code Section 409A.  A termination of
employment shall not be deemed to have occurred for purposes of any provision
of this Agreement providing for the payment of any amounts or benefits upon or
following a termination of employment unless such termination is also a “separation
from service” within the meaning of Code Section 409A and, for purposes of
any such provision of this Agreement, references to a “termination,” “termination
of employment” or like terms shall mean “separation from service.”  If Executive is deemed on the date of
termination to be a “specified employee” within the meaning of that term under
Code Section 409A(a)(2)(B), then with regard to any payment or the
provision of any benefit that is considered deferred compensation under Code Section 409A
payable on account of a “separation from service,” such payment or benefit
shall be made or provided at the date which is the earlier of (i) the expiration
of the six (6)-month period measured from the date of such “separation from
service” of Executive, and (ii) the date of Executive’s death to the
extent required under Code Section 409A. 
Upon the expiration of the foregoing delay period, all payments and
benefits delayed pursuant to this Section (whether they would have
otherwise been payable in a single sum or in installments in the absence of
such delay) shall be paid or reimbursed to Executive in a lump sum, and all
remaining payments and benefits due under this Agreement shall be paid or
provided in accordance with the normal payment dates specified for them
herein.  For purposes of Code Section 409A,
Executive’s right to receive installment payments pursuant to this Agreement
shall be treated as a right to receive a series of separate and distinct
payments.

 

(i)                                     No payments, benefits and entitlements
received by Executive hereunder will be subject to any “gross-up” payment or
adjustment with respect to any excise tax, or any other federal and state
income or other taxes that may be payable by Executive.

 

5.                                       Confidential Information.

 

(a)                                  Obligation to Maintain Confidentiality. 
Executive acknowledges that the continued success of the Company and its
Subsidiaries, depends upon the use and protection of a large body of
confidential and proprietary information. 
All of such confidential and proprietary information now existing or to
be developed in the future will be referred to in this Agreement as “Confidential
Information.”  Confidential Information
will be interpreted as broadly as possible to include all information of any
sort (whether merely remembered or embodied in a tangible or intangible form)
that is (i) related to the Company’s or its Subsidiaries’ current or
potential business and (ii) is not generally or publicly known.  Confidential Information includes, without
specific limitation, the information, observations and data obtained by him
during the course of his performance under this Agreement concerning the
business and affairs of the Company and its Subsidiaries, information
concerning acquisition opportunities in or reasonably related to the Company’s
or its Subsidiaries’ business or industry of which Executive becomes aware
during the Employment Period, the persons or entities that are current, former
or prospective suppliers or customers of any one or more of them during
Executive’s course of performance under this Agreement, as well as development,
transition and transformation plans, methodologies and methods of doing
business, strategic, marketing and expansion plans, including plans regarding
planned and potential sales, financial and business plans, employee lists and
telephone numbers, locations of sales representatives, new and existing
programs and services, prices and terms, customer service, integration
processes, requirements and costs of providing service, support and
equipment.  Therefore, Executive agrees
that he shall not disclose to any unauthorized person or 

 

7

 

use for his own account any of such Confidential Information without
both Board’s prior written consent, unless and to the extent that any
Confidential Information (i) becomes generally known to and available for
use by the public other than as a result of Executive’s acts or omissions to
act or (ii) is required to be disclosed pursuant to any applicable law or
court order (provided that Executive provides the Company with prior notice of
the contemplated disclosure and cooperates with the Company at its expense in
seeking a protective order or other appropriate protection of such
information).  Executive agrees to
deliver to the Company at the end of the Employment Period, or at any other
time the Company may request in writing, all memoranda, notes, plans, records,
reports and other documents (and copies thereof) relating to the business of
the Company or its Subsidiaries (including, without limitation, all
Confidential Information) that he may then possess or have under his control.

 

(b)                                 Ownership of Intellectual Property. 
Executive agrees to make prompt and full disclosure to the Company or
its Subsidiaries, as the case may be, all ideas, discoveries, trade secrets,
inventions, innovations, improvements, developments, methods of doing business,
processes, programs, designs, analyses, drawings, reports, data, software,
firmware, logos and all similar or related information  (whether or not patentable and whether or not
reduced to practice) that relate to the Company’s or its Subsidiaries’ actual
or anticipated business, research and development, or existing or future
products or services and that are conceived, developed, acquired, contributed
to, made, or reduced to practice by Executive (either solely or jointly with
others) while employed by the Company or its Subsidiaries and for a period of
one (1) year thereafter (collectively, “Work Product”).  Any copyrightable work falling within the
definition of Work Product shall be deemed a “work made for hire” under the
copyright laws of the United States, and ownership of all rights therein shall
vest in the Company or its Subsidiaries. 
To the extent that any Work Product is not deemed to be a “work made for
hire,” Executive hereby assigns and agrees to assign to the Company or such
Subsidiaries all right, title and interest, including without limitation, the
intellectual property rights that Executive may have in and to such Work
Product.  Executive shall promptly
perform all actions reasonably requested by the Board (whether during or after
the Employment Period) to establish and confirm the Company’s or such
Subsidiaries’ ownership (including, without limitation, providing testimony and
executing assignments, consents, powers of attorney, and other instruments).

 

(c)                                  Third Party Information. Executive understands that the Company
and its Subsidiaries will receive from third parties confidential or
proprietary information (“Third Party Information”) subject to a duty on
the Company’s and its Subsidiaries’ part to maintain the confidentiality of
such information and to use it only for certain limited purposes.  During the Employment Period and thereafter,
and without in any way limiting the provisions of Section 5(a) above,
Executive will hold Third Party Information in the strictest confidence and
will not disclose to anyone (other than personnel of the Company or its
Subsidiaries who need to know such information in connection with their work
for the Company or such Subsidiaries) or use, except in connection with his
work for the Company or its Subsidiaries, Third Party Information unless
expressly authorized by a member of the Board in writing.

 

6.                                       Non-Compete, Non-Solicitation.

 

(a)                                  In further consideration of the
compensation to be paid to Executive hereunder, Executive acknowledges that
during the course of his employment with the Company 

 

8

 

and its Subsidiaries he has become familiar with the Company’s trade
secrets and with other Confidential Information concerning the Company and its
predecessors and its Subsidiaries and that his services are of special, unique
and extraordinary value to the Company and its Subsidiaries, and therefore,
Executive agrees that during the Employment Period and ending on the end of the
Non-compete Period, he shall not directly or indirectly own any interest in,
manage, control, participate in, consult with, render services for, be employed
by, or in any manner associate with or engage in any business competing with
the businesses of the Company or its Subsidiaries, as such businesses exist or
are in process during the Employment Period and on the date of the termination
or expiration of the Employment Period, within any geographical area in which
the Company or its Subsidiaries engage or plan to engage in such businesses.  Nothing herein shall prohibit Executive from
being a passive owner of not more than 5% of the outstanding stock of any class
of a corporation which is publicly traded, so long as Executive has no active
participation in the business of such corporation.  For purposes of this Agreement, the term “Non-compete
Period” shall mean (i) in the event Executive’s employment is
terminated by Executive other than a resignation by Executive for Good Reason,
or by the Company for Cause, the later to occur of (x) one year following
the termination of employment hereunder and (y) June 30, 2015, and (ii) in
the event Executive’s employment is terminated by Executive by a resignation
for Good Reason or by the Company other than a termination for Cause, a period
of time beginning on the date of the termination and ending on the date the
Company is no longer obligated to pay Executive any Severance Payments
hereunder.  In consideration of the
agreement in this Section 6(a), if Executive is employed by the Company as
Chief Executive Officer on June 30, 2015, and has been so continuously
employed from the date hereof through June 30, 2015, Executive shall be
entitled to receive one year of his Base Salary in effect at the time of his
termination plus an amount equal to one year of 
annual short term incentive bonus (KAIP) which shall be determined based
on the target bonus for Executive’s last year of employment, payable monthly in
accordance with the Company’s standard payroll practices as in effect on the
date of termination.

 

(b)                                 During the Non-compete Period, Executive
shall not directly or indirectly through another person or entity (i) induce
or attempt to induce any employee of the Company or any Subsidiary to leave the
employ of the Company or such Subsidiary, or in any way interfere with the
relationship between the Company or any Subsidiary and any employee thereof, (ii) hire
any person who was an employee of the Company or any Subsidiary at any time
during the Employment Period or (iii) induce or attempt to induce any
customer, supplier, licensee, licensor, franchisee or other business relation
of the Company or any Subsidiary to cease doing business with the Company or
such Subsidiary, or in any way interfere with the relationship between any such
customer, supplier, licensee or business relation and the Company or any
Subsidiary (including, without limitation, making any negative or disparaging
statements or communications regarding the Company or its Subsidiaries).

 

(c)                                  If, at the time of enforcement of this
paragraph 6, a court shall hold that the duration, scope or area restrictions
stated herein are unreasonable under circumstances then existing, the parties
agree that the maximum duration, scope or area reasonable under such
circumstances shall be substituted for the stated duration, scope or area and
that the court shall be allowed to revise the restrictions contained herein to
cover the maximum period, scope and area permitted by law.  Executive acknowledges that the restrictions
contained in this paragraph 6 are reasonable and that he has reviewed the
provisions of this Agreement with his legal counsel.

 

9

 

(d)                                 In the event of the breach or a
threatened breach by Executive of any of the provisions of this paragraph 6,
the Company would suffer irreparable harm, and in addition and supplementary to
other rights and remedies existing in its favor, the Company shall be entitled
to specific performance and/or injunctive or other equitable relief from a
court of competent jurisdiction in order to enforce or prevent any violations
of the provisions hereof (without posting a bond or other security).  In addition, in the event of an alleged
breach or violation by Executive of this paragraph 6, the Non-compete Period
shall be tolled until such breach or violation has been duly cured.  In the event of a violation by Executive of
paragraph 5 or paragraph 6 hereof, any severance being paid to Executive
pursuant to this Agreement or otherwise shall immediately cease, any severance
previously paid to Executive shall be immediately repaid to the Company,
Executive shall not be entitled to any payments under the Special LTIP and any
amounts previously paid to Executive under the Special LTIP shall be
immediately repaid to the Company. 
Executive acknowledges that the restrictions contained in paragraph 6
are reasonable and that he has reviewed the provisions of this Agreement with
his legal counsel.

 

7.                                       Executive’s Representations. 
Executive hereby represents and warrants to the Company that (i) the
execution, delivery and performance of this Agreement by Executive do not and
shall not conflict with, breach, violate or cause a default under any contract,
agreement, instrument, order, judgment or decree to which Executive is a party
or by which he is bound, (ii) Executive is not a party to or bound by any
employment agreement, non-compete agreement or confidentiality agreement with
any other person or entity and (iii) upon the execution and delivery of
this Agreement by the Company, this Agreement shall be the valid and binding
obligation of Executive, enforceable in accordance with its terms.  Executive hereby acknowledges and represents
that he has consulted with independent legal counsel regarding his rights and
obligations under this Agreement and that he fully understands the terms and
conditions contained herein.

 

8.                                       Survival.  Paragraphs 4
through 22 shall survive and continue in full force in accordance with their
terms notwithstanding the expiration or termination of the Employment Period.

 

9.                                       Notices.  Any notice
provided for in this Agreement shall be in writing and shall be either
personally delivered, sent by reputable overnight courier service or mailed by
first class mail, return receipt requested, to the recipient at the address
below indicated:

 

Notices to Executive:

 

Per-Olof Loof

1091 Hillsboro Mile

Hillsboro, Fl  33062

 

10

 

Notices to the Company:

 

KEMET Corporation

2835 Kemet Way 

Simpsonville, SC  29681

 

With a copy to:

 

H. Kurt von Moltke, P.C.

Kirkland & Ellis LLP

300 North LaSalle 

Chicago, IL  60654

 

or such other address or to the attention of such
other person as the recipient party shall have specified by prior written
notice to the sending party.  Any notice
under this Agreement shall be deemed to have been given when so delivered, sent
or mailed.

 

10.                                 Severability. 
Whenever possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement or any action in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.

 

11.                                 Complete Agreement. 
This Agreement and those documents expressly referred to herein,
including the CIC Agreement and currently outstanding stock option grants,
embody the complete agreement and understanding among the parties and supersede
and preempt any prior understandings, agreements or representations by or among
the parties, written or oral, which may have related to the subject matter
hereof in any way.  Executive and the
Company agree that no other agreements covering the subject matter hereof exist
between them, all prior agreements, including the July 24, 2007 Employment
Agreement, being terminated or superseded by this Agreement.

 

12.                                 No Strict Construction. 
The language used in this Agreement shall be deemed to be the language
chosen by the parties hereto to express their mutual intent, and no rule of
strict construction shall be applied against any party.

 

13.                                 Counterparts. 
This Agreement may be executed in separate counterparts, each of which
is deemed to be an original and all of which taken together constitute one and
the same agreement.

 

14.                                 Successors and Assigns. 
This Agreement is intended to bind and inure to the benefit of and be
enforceable by Executive, the Company and their respective heirs, successors
and assigns, except that Executive may not assign his rights or delegate his
duties or obligations hereunder without the prior written consent of the
Company.

 

15.                                 Choice of Law. 
All issues and questions concerning the construction, validity,
enforcement and interpretation of this Agreement and the exhibits and schedules
hereto 

 

11

 

shall be governed by, and construed in accordance with, the laws of the
State of South Carolina, without giving effect to any choice of law or conflict
of law rules or provisions (whether of the State of South Carolina or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of South Carolina.

 

16.                                 Amendment and Waiver. 
The provisions of this Agreement may be amended or waived only with the
prior written consent of the Company (as approved by the Board) and Executive,
and no course of conduct or course of dealing or failure or delay by any party
hereto in enforcing or exercising any of the provisions of this Agreement
(including, without limitation, the Company’s right to terminate the Employment
Period for Cause) shall affect the validity, binding effect or enforceability
of this Agreement or be deemed to be an implied waiver of any provision of this
Agreement.

 

17.                                 Insurance.  The Company
may, at its discretion, apply for and procure in its own name and for its own
benefit life and/or disability insurance on Executive in any amount or amounts considered
advisable.  Executive agrees to cooperate
in any medical or other examination, supply any information and execute and
deliver any applications or other instruments in writing as may be reasonably
necessary to obtain and constitute such insurance.  Executive hereby represents that he has no
reason to believe that his life is not insurable at rates now prevailing for
healthy men of his age.

 

18.                                 Indemnification and Reimbursement of
Payments on Behalf of Executive.  The Company
and its respective Subsidiaries shall be entitled to deduct or withhold from
any amounts owing from the Company or any of its Subsidiaries to Executive any
federal, state, local or foreign withholding taxes, excise tax, or employment
taxes (“Taxes”) imposed with respect to Executive’s compensation or
other payments from the Company or any of its Subsidiaries or Executive’s
ownership interest in the Company (including, without limitation, wages,
bonuses, dividends, the receipt or exercise of equity options and/or the
receipt or vesting of restricted equity). 
In the event the Company or any of its Subsidiaries does not make such
deductions or withholdings, Executive shall indemnify the Company and its
Subsidiaries for any amounts paid with respect to any such Taxes.

 

19.                                 Consent to Jurisdiction. 
EACH OF THE PARTIES IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTH CAROLINA
DISTRICT LOCATED IN GREENVILLE, SOUTH CAROLINA, FOR THE PURPOSES OF ANY SUIT,
ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT, ANY RELATED AGREEMENT
OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.  EACH OF THE PARTIES HERETO FURTHER AGREES
THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY U.S. REGISTERED
MAIL TO SUCH PARTY’S RESPECTIVE ADDRESS SET FORTH ABOVE SHALL BE EFFECTIVE
SERVICE OF PROCESS FOR ANY ACTION, SUIT OR PROCEEDING IN THE DISTRICT COURT FOR
THE SOUTH CAROLINA DISTRICT WITH RESPECT TO ANY MATTERS TO WHICH IT HAS
SUBMITTED TO JURISDICTION IN THIS PARAGRAPH 19. 
EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
OBJECTION TO THE LAYING OF VENUE OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT
OF THIS AGREEMENT, ANY RELATED DOCUMENT OR THE 

 

12

 

TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY IN THE UNITED STATES
DISTRICT COURT FOR THE SOUTH CAROLINA DISTRICT LOCATED IN GREENVILLE, SOUTH
CAROLINA, AND HEREBY AND THEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES
AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION, SUIT
OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.

 

20.                                 Waiver of Jury Trial.  AS
A SPECIFICALLY BARGAINED FOR INDUCEMENT FOR EACH OF THE PARTIES HERETO TO ENTER
INTO THIS AGREEMENT (AFTER HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL), EACH
PARTY HERETO EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR
PROCEEDING RELATING TO OR ARISING IN ANY WAY FROM THIS AGREEMENT OR THE MATTERS
CONTEMPLATED HEREBY.

 

21.                                 Executive’s Cooperation. 
During the Employment Period and thereafter, Executive shall cooperate
with the Company and its Subsidiaries in any internal investigation or
administrative, regulatory or judicial proceeding as reasonably requested by
the Company (including, without limitation, Executive being available to the
Company upon reasonable notice for interviews and factual investigations,
appearing at the Company’s request to give testimony without requiring service
of a subpoena or other legal process, volunteering to the Company all pertinent
information and turning over to the Company all relevant documents which are or
may come into Executive’s possession, all at times and on schedules that are
reasonably consistent with Executive’s other permitted activities and
commitments). In the event the Company requires Executive’s cooperation in
accordance with this paragraph, the Company shall reimburse Executive solely
for reasonable travel expenses (including lodging and meals, upon submission of
receipts) in accordance with the Company’s expense reimbursement policy as in
effect from time to time.

 

22.                                 Arbitration. 
Except with respect to disputes or claims under paragraphs 5 and 6
hereof (which may be pursued in any court of competent jurisdiction as
specified below and with respect to which each party shall bear the cost of its
own attorney’s fees and expenses except as otherwise required by applicable
law), each party hereto agrees that the arbitration procedure set forth in Exhibit B
hereto shall be the sole and exclusive method for resolving any claim or
dispute (“Claim”) arising out of or relating to the rights and obligations
acknowledged and agreed to in this Agreement and the employment of Executive by
the Company and its Subsidiaries (including, without limitation, disputes and claims
regarding employment discrimination, sexual harassment, termination and
discharge), whether such Claim arose or the facts on which such Claim is based
occurred prior to or after the execution and delivery of adoption of this
Agreement.  The parties agree that the
result of any arbitration hereunder shall be final, conclusive and binding on
all of the parties.  Nothing in this
paragraph shall prohibit a party hereto from instituting litigation to enforce
any Final Determination (as defined in Exhibit B hereto).  Each party hereto hereby irrevocably submits
to the jurisdiction of any United States District Court or South Carolina state
court of competent jurisdiction sitting in Greenville County, South Carolina,
and agrees that such court shall be the exclusive forum with respect to
disputes and claims under paragraphs 5 and 6 and for the enforcement of any
Final Determination.  Each party hereto
irrevocably consents to service of process by registered mail 

 

13

 

or personal service and waives any objection on the grounds of personal
jurisdiction, venue or inconvenience of the forum.  Each party hereto further agrees that each
other party hereto may initiate litigation in any court of competent
jurisdiction to execute any judicial judgment enforcing a Final Determination.

 

*    *    *   
*    *

 

14

 

IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first written above.

 

	
   

  	
  KEMET Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ FRANK G.
  BRANDENBERG

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Chairman, Board of
  Directors

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ PER-OLOF LOOF

  
	
   

  	
  Per-Olof Loof

  

 

 

Exhibit A

 

GENERAL
RELEASE

 

I, Per-Olof Loof, in 
consideration of and subject to the performance by KEMET Corporation, a
Delaware corporation (together with its subsidiaries, the “Company”), of its
obligations under the Employment Agreement, dated as of              ,
             (the “Agreement”),
do hereby release and forever discharge as of the date hereof the Company and
its affiliates and all present and former directors, officers, agents,
representatives, employees, successors and assigns of the Company and its
affiliates and the Company’s direct or indirect owners (collectively, the “Released
Parties”) to the extent provided below.

 

1.                                       I understand that any payments or
benefits paid or granted to me under paragraph 4(b) of the Agreement
represent, in part, consideration for signing this General Release and are not
salary, wages or benefits to which I was already entitled. I understand and
agree that I will not receive the payments and benefits specified in paragraph
4(b) of the Agreement unless I execute this General Release and do not
revoke this General Release within the time period permitted hereafter or
breach this General Release.  Such
payments and benefits will not be considered compensation for purposes of any
employee benefit plan, program, policy or arrangement maintained or hereafter
established by the Company or its affiliates. 
I also acknowledge and represent that I have received all payments and
benefits that I am entitled to receive (as of the date hereof) by virtue of any
employment by the Company.

 

2.                                       Except as provided in paragraph 4 below
and except as may be expressly provided in 
the CIC Agreement, the Retention Agreement, and  the provisions of my Employment Agreement which
expressly survive the termination of my employment with the Company, I
knowingly and voluntarily (for myself, my heirs, executors, administrators and
assigns) release and forever discharge the Company and the other Released
Parties from any and all claims, suits, controversies, actions, causes of
action, cross-claims, counter-claims, demands, debts, compensatory damages,
liquidated damages, punitive or exemplary damages, other damages, claims for
costs and attorneys’ fees, or liabilities of any nature whatsoever in law and
in equity, both past and present (through the date this General Release becomes
effective and enforceable) and whether known or unknown, suspected, or claimed
against the Company or any of the Released Parties which I, my spouse, or any
of my heirs, executors, administrators or assigns, may have, which arise out of
or are connected with my employment with, or my separation or termination from,
the Company (including, but not limited to, any allegation, claim or violation,
arising under: Title VII of the Civil Rights Act of 1964, as amended; the Civil
Rights Act of 1991; the Age Discrimination in Employment Act of 1967, as
amended (including the Older Workers Benefit Protection Act); the Equal Pay Act
of 1963, as amended; the Americans with Disabilities Act of 1990; the Family
and Medical Leave Act of 1993; the Worker Adjustment Retraining and
Notification Act; the Employee Retirement Income Security Act of 1974; any
applicable Executive Order Programs; the Fair Labor Standards Act; or their
state or local counterparts; the South Carolina Human Rights Act or under any
other federal, state or local civil or human rights law, or under any other
local, state, or federal law, regulation or ordinance; or under any public
policy, contract 

 

A-1

 

or tort, or under common law; or arising under any policies, practices
or procedures of the Company; or any claim for wrongful discharge, breach of
contract, infliction of emotional distress, defamation; or any claim for costs,
fees, or other expenses, including attorneys’ fees incurred in these matters)
(all of the foregoing collectively referred to herein as the “Claims”).

 

3.                                       I represent that I have made no
assignment or transfer of any right, claim, demand, cause of action, or other
matter covered by paragraph 2 above.

 

4.                                       I agree that this General Release does
not waive or release any rights or claims that I may have under the Age
Discrimination in Employment Act of 1967 which arise after the date I execute
this General Release. I acknowledge and agree that my separation from
employment with the Company in compliance with the terms of the Agreement shall
not serve as the basis for any claim or action (including, without limitation,
any claim under the Age Discrimination in Employment Act of 1967).

 

5.                                       In signing this General Release, I
acknowledge and intend that it shall be effective as a bar to each and every
one of the Claims hereinabove mentioned or implied. I expressly consent that
this General Release shall be given full force and effect according to each and
all of its express terms and provisions, including those relating to unknown
and unsuspected Claims (notwithstanding any state statute that expressly limits
the effectiveness of a general release of unknown, unsuspected and
unanticipated Claims), if any, as well as those relating to any other Claims
hereinabove mentioned or implied. I acknowledge and agree that this waiver is
an essential and material term of this General Release and that without such
waiver the Company would not have agreed to the terms of the Agreement.  I further agree that in the event I should
bring a Claim seeking damages against the Company, or in the event I should
seek to recover against the Company in any Claim brought by a governmental agency
on my behalf, this General Release shall serve as a complete defense to such
Claims. I further agree that I am not aware of any pending charge or complaint
of the type described in paragraph 2 as of the execution of this General
Release.

 

6.                                       I agree that neither this General
Release, nor the furnishing of the consideration for this General Release,
shall be deemed or construed at any time to be an admission by the Company, any
Released Party or myself of any improper or unlawful conduct.

 

7.                                       I agree that I will forfeit all amounts
payable by the Company pursuant to the Agreement if I challenge the validity of
this General Release. I also agree that if I violate this General Release by
suing the Company or the other Released Parties, I will pay all costs and
expenses of defending against the suit incurred by the Released Parties,
including reasonable attorneys’ fees, and return all payments received by me
pursuant to the Agreement.

 

8.                                       I agree that this General Release is
confidential and agree not to disclose any information regarding the terms of
this General Release, except to my immediate family and any tax, legal or other
counsel I have consulted regarding the meaning or effect hereof or as 

 

A-2

 

required by law, and I will instruct each of the foregoing not to
disclose the same to anyone.

 

9.                                       Any non-disclosure provision in this
General Release does not prohibit or restrict me (or my attorney) from
responding to any inquiry about this General Release or its underlying facts
and circumstances by the Securities and Exchange Commission (SEC), the
Financial Industry Regulatory Authority (FINRA), any other self-regulatory
organization or governmental entity.

 

10.                                 I agree to reasonably cooperate with the
Company in any internal investigation or administrative, regulatory, or
judicial proceeding. I understand and agree that my cooperation may include,
but not be limited to, making myself available to the Company upon reasonable
notice for interviews and factual investigations; appearing at the Company’s
request to give testimony without requiring service of a subpoena or other
legal process; volunteering to the Company pertinent information; and turning
over to the Company all relevant documents which are or may come into my
possession all at times and on schedules that are reasonably consistent with my
other permitted activities and commitments. I understand that in the event the
Company asks for my cooperation in accordance with this provision, the Company
will reimburse me solely for reasonable travel expenses, including lodging and
meals, upon my submission of receipts.

 

11.                                 I agree not to disparage the Company, its
past and present investors, officers, directors or employees or its affiliates
and to keep all confidential and proprietary information about the past or
present business affairs of the Company and its affiliates confidential unless
a prior written release from the Company is obtained.  I further agree that as of the date hereof, I
have returned to the Company any and all property, tangible or intangible,
relating to its business, which I possessed or had control over at any time
(including, but not limited to, company-provided credit cards, building or
office access cards, keys, computer equipment, manuals, files, documents,
records, software, customer data base and other data) and that I shall not
retain any copies, compilations, extracts, excerpts, summaries or other notes
of any such manuals, files, documents, records, software, customer data base or
other data.

 

12.                                 Notwithstanding anything in this General
Release to the contrary, this General Release shall not relinquish, diminish,
or in any way affect any rights or claims arising out of any breach by the
Company or by any Released Party of the Agreement after the date hereof.

 

13.                                 Whenever possible, each provision of this
General Release shall be interpreted in, such manner as to be effective and
valid under applicable law, but if any provision of this General Release is
held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision or any other
jurisdiction, but this General Release shall be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein.

 

A-3

 

BY SIGNING THIS GENERAL RELEASE, I REPRESENT AND AGREE
THAT:

 

(a)                                  I HAVE READ IT CAREFULLY;

 

(b)                                 I UNDERSTAND ALL OF ITS TERMS AND KNOW
THAT I AM GIVING UP IMPORTANT RIGHTS, INCLUDING BUT NOT LIMITED TO, RIGHTS
UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, AS AMENDED, TITLE VII
OF THE CIVIL RIGHTS ACT OF 1964, AS AMENDED; THE EQUAL PAY ACT OF 1963, THE
AMERICANS WITH DISABILITIES ACT OF 1990; AND THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED;

 

(c)                                  I VOLUNTARILY CONSENT TO EVERYTHING IN
IT;

 

(d)                                 I HAVE BEEN ADVISED TO CONSULT WITH AN
ATTORNEY BEFORE EXECUTING IT AND I HAVE DONE SO OR, AFTER CAREFUL READING AND
CONSIDERATION I HAVE CHOSEN NOT TO DO SO OF MY OWN VOLITION;

 

(e)                                  I HAVE HAD AT LEAST [21/45] DAYS FROM THE
DATE OF MY RECEIPT OF THIS RELEASE SUBSTANTIALLY IN ITS FINAL FORM ON
                        
TO CONSIDER IT AND THE CHANGES MADE SINCE THE
                        
VERSION OF THIS RELEASE ARE NOT MATERIAL AND WILL NOT RESTART THE REQUIRED
21-DAY PERIOD;

 

(f)                                    THE CHANGES TO THE AGREEMENT SINCE
                        
EITHER ARE NOT MATERIAL OR WERE MADE AT MY REQUEST;

 

(g)                                 I UNDERSTAND THAT I HAVE SEVEN DAYS AFTER
THE EXECUTION OF THIS RELEASE TO REVOKE IT AND THAT THIS RELEASE SHALL NOT
BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE REVOCATION PERIOD HAS EXPIRED;

 

(h)                                 I HAVE SIGNED THIS GENERAL RELEASE
KNOWINGLY AND VOLUNTARILY AND WITH THE ADVICE OF ANY COUNSEL RETAINED TO ADVISE
ME WITH RESPECT TO IT; AND

 

(i)                                     I AGREE THAT THE PROVISIONS OF THIS
GENERAL RELEASE MAY NOT BE AMENDED, WAIVED, CHANGED OR MODIFIED EXCEPT BY
AN INSTRUMENT IN WRITING SIGNED BY AN AUTHORIZED REPRESENTATIVE OF THE COMPANY
AND BY ME.

 

 

	
  DATE:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per-Olof Loof

  

 

A-4

 

Exhibit B

 

ARBITRATION
PROCEDURE

 

1.             Notice of Claim. 
A party asserting a Claim (the “Claimant”) shall deliver written
notice to each party against whom the Claim is asserted (collectively, the “Opposing
Party”), with a copy to the persons required to receive copies of notices
under the Agreement (the “Additional Notice Parties”), specifying the
nature of the Claim and requesting a meeting to resolve same.  The Additional Notice Parties shall be given
reasonable notice of and invited and permitted to attend any such meeting.  If no resolution is reached within 10
business days after delivery of such notice, the Claimant or the Opposing Party
may, within 45 days after giving such notice, invoke the arbitration procedure
provided herein by delivering to each Opposing Party and the Additional Notice
Parties a notice of arbitration which shall specify the Claim as to which
arbitration is sought, the nature of the Claim, the basis for the Claim and the
nature and amount of any damages or other compensation or relief sought (a “Notice
of Arbitration”).  Each party agrees
that no punitive damages may be sought or recovered in any arbitration,
judicial proceeding or otherwise. 
Failure to file a Notice of Arbitration within 45 days shall constitute
a waiver of any right to relief for the matters asserted in the notice of
Claim.  Any Claim shall be forever
barred, and no relief may be sought therefor, if written notice of such Claim
is not made as provided above within one year of the date such Claim accrues.

 

2.             Selection of Arbitrator. 
Within 20 business days after receipt of the Notice of Arbitration, the
Executive and the Board shall meet and attempt to agree on an arbitrator to
hear and decide the Claim.  If the
Executive and the Board cannot agree on an arbitrator within ten business days,
then they shall request the American Arbitration Association (the “AAA”)
in Charleston, South Carolina to appoint an arbitrator experienced in the area
of dispute who does not have an ongoing business relationship with any of the
parties to the dispute.  If the
arbitrator selected informs the parties he cannot hear and resolve the Claim
within the time-frame specified below, the Executive and the Board shall
request the appointment of another arbitrator by the AAA subject to the same
requirements.

 

3.             Arbitration Procedure. 
The following procedures shall govern the conduct of any arbitration
under this section.  All procedural
matters relating to the conduct of the arbitration other than those specified
below shall be discussed among counsel for the parties and the arbitrator.  Subject to any agreement of the parties, the
arbitrator shall determine all procedural matters not specified herein.

 

(a)           Within 30 days after the delivery of a
Notice of Arbitration, each party shall afford the other, or its counsel, with
reasonable access to documents relating directly to the issues raised in the
Notice of Arbitration.  All documents
produced and all copies thereof shall be maintained as strictly confidential,
shall be used for no purpose other than the arbitration hereunder, and shall be
returned to the producing party upon completion of the arbitration.  There shall be no other discovery except
that, if a reasonable need is shown, limited depositions may be allowed in the
discretion of the arbitrator, it being the expressed intention and agreement of
each party to have the arbitration proceedings conducted and resolved as
expeditiously, economically and fairly as reasonably practicable, and with the
maximum degree of confidentiality.

 

B-1

 

(b)           All written communications regarding the
proceeding sent to the arbitrator shall be sent simultaneously to each party or
its counsel, with a copy to the Additional Notice Parties.  Oral communications between any of the
parties or their counsel and the arbitrator shall be conducted only when all
parties or their counsel are present and participating in the conversation.

 

(c)           Within 20 days after selection of the
arbitrator, the Claimant shall submit to the arbitrator a copy of the Notice of
Arbitration, along with a supporting memorandum and any exhibits or other
documents supporting the Claim.

 

(d)           Within 20 days after receipt of the
Claimant’s submission, the Opposing Party shall submit to the arbitrator a
memorandum supporting its position and any exhibits or other supporting
documents.  If the Opposing Party fails
to respond to any of the issues raised by the Claimant within 20 days of
receipt of the Claimant’s submission, then the arbitrator may find for the
Claimant on any such issue and bar any subsequent consideration of the matter.

 

(e)           Within 20 days after receipt of the
Opposing Party’s response, the Claimant may submit to the arbitrator a reply to
the Opposing Party’s response, or notification that no reply is forthcoming.

 

(f)            Within 10 days after the last submission
as provided above, the arbitrator shall notify the parties and the Additional
Notice Parties of the date of the hearing on the issues raised by the
Claim.  Scheduling of the hearing shall
be within the sole discretion of the arbitrator, but in no event more than 30
days after the last submission by the parties, and shall take place within 50
miles of the corporate headquarters of the Company at a place selected by the
arbitrator or such other place as is mutually agreed.  Both parties shall be granted substantially
equal time to present evidence at the hearing. 
The hearing shall not exceed one business day, except for good cause
shown.

 

(g)           Within 30 days after the conclusion of the
hearing, the arbitrator shall issue a written decision to be delivered to both
parties and the Additional Notice Parties (the “Final Determination”).  The Final Determination shall address each
issue disputed by the parties, state the arbitrator’s findings and reasons
therefor, and state the nature and amount of any damages, compensation or other
relief awarded.

 

(h)           The award rendered by the arbitrator
shall be final and non-appealable, except as otherwise provided under the
Federal Arbitration Act, and judgment may be entered upon it in accordance with
applicable law in such court as has jurisdiction thereof.

 

4.             Costs of Arbitration. 
As part of the Final Determination, the arbitrator shall determine the
allocation of the costs and expenses of the arbitration, including the
arbitrator’s fee and both parties’ attorneys’ fees and expenses, based upon the
extent to which each party prevailed in the arbitration.  In the event that any relief which is awarded
is non-monetary, then such costs and expenses shall be allocated in any manner
as may be determined by the arbitrator(s).

 

5.             Satisfaction of Award. 
If any party fails to pay the amount of the award, if any, assessed
against it within 30 days after the delivery to such party of the Final
Determination, 

 

B-2

 

the unpaid amount shall bear interest from the date of such delivery at
the lesser of (i) prime lending rate announced by Citibank N.A. plus three
hundred basis points and (ii) the maximum rate permitted by applicable
usury laws.  In addition, such party
shall promptly reimburse the other party for any and all costs or expenses of
any nature or kind whatsoever (including attorneys’ fees) reasonably incurred
in seeking to collect such award or to enforce any Final Determination.

 

6.             Confidentiality of Proceedings. 
The parties hereto agree that all of the arbitration proceedings
provided for herein, including any notice of claim, the Notice of Arbitration,
the submissions of the parties, and the Final Determination issued by the
arbitrator, shall be confidential and shall not be disclosed at any time to any
person other than the parties, their representatives, the arbitrator and the
Additional Notice Parties; provided, however, that this provision shall not
prevent the party prevailing in the arbitration from submitting the Final
Determination to a court for the purpose of enforcing the award, subject to
comparable confidentiality protections if the court agrees; and further
provided that the foregoing shall not prohibit disclosure to the minimum extent
reasonably necessary to comply with (i) applicable law (or requirement
having the force of law), court order, judgment or decree, including, without
limitation, disclosures which may be required pursuant to applicable securities
laws, and (ii) the terms of contractual arrangements (such as financing
arrangements) to which the Company or any Additional Notice Party may be
subject so long as such contractual arrangements were not entered into for the
primary purpose of permitting disclosure which would otherwise be prohibited
hereunder.

 

B-3

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