EX-10.30
[***Confidential Treatment Requested. Confidential portions of this
agreement have been redacted and have been separately filed with the
Commission]
LIMITED LIABILITY COMPANY AGREEMENT
OF
WILLMAR/METAMORPHIX TURKEY JOINT VENTURE, LLC
WILLMAR POULTRY COMPANY, INC., a corporation duly incorporated pursuant to
the laws of Minnesota with principal place of business at Box 753, Willmar,
Minnesota 56201-0753 USA (Hereinafter referred to as "WILLMAR")
and
METAMORPHIX, INC., a corporation duly incorporated pursuant to the laws
of Delaware, having a principal place of business at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ (Hereinafter referred to as "MMI"), has entered into
this Limited Liability Company Agreement as of this 4th day of September, 2002.
RECITALS
WHEREAS Willmar is a major producer of, and supplier of the turkey
industry in North America and maintains facilities necessary to test and
evaluate products related to such industry under commercial conditions;
AND WHEREAS MMI is developing products based upon diminishing the
biological activity of Myostatin(TM) (GDF-8) to improve livestock production
efficiency, enhance meat quality, or both;
AND 'WHEREAS Willmar, by its December 1, 1998 Research Agreement with
University of Minnesota, has an option to license from the University of
Minnesota certain technology relating to the immunizing of turkeys to diminish
the biological activity of Myostatin(TM) (GDF-8);
AND WHEREAS Willmar has filed a U.S. patent application relating to
Myostatin(TM);
AND WHEREAS MMI is the owner of U.S. patent applications relating to
Myostatin(TM);
AND WHEREAS MMI and Willmar have agreed to establish a joint venture
(in the form of a limited liability company duly organized pursuant to the laws
of Delaware) for the purposes of developing, manufacturing, marketing, and the
sale of a Myostatin(TM) product or products, based upon the most appropriate
method available through ownership or license to Willmar and MMI, with the
intention that the future development costs of such products be minimized while
expediting delivery and marketing of the product to the turkey industry in North
America;
AGREEMENT
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Willmar and MMI hereby covenant, agree, represent, and warrant, as
follows:
INTERPRETATION AND DEFINITIONS
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INTERPRETATION AND DEFINITIONS
1.01 DEFINITIONS
For the purposes of this Agreement, unless there is something
in the subject matter or context inconsistent therewith, all words and
phrases used herein which are denoted with initial capital letters
shall have the meanings assigned to them as set out in this Agreement
and, in addition, the following words and phrases shall have the
following meanings:
(a) "Affiliate" shall mean, during the period the same pertains,
any corporation, person, firm, partnership, or other entity,
whether de jure or de facto, which directly or indirectly
owns, is owned by, or is under common ownership with a Party
to this Limited Liability Company Agreement to the extent of
not less than fifty (50%) percent of the equity having the
power to vote on or direct the affairs of the entity, and any
corporation, person, firm, partnership, or other entity
actually controlled by, controlling or under common control
with a Party to this Limited Liability Company Agreement.
Notwithstanding the definition of Affiliate, Affiliate does
not include the University of Minnesota or any of its
departments, divisions or wholly owned subsidiaries.
(b) "Existing Confidentiality Agreement" shall mean that
Confidentiality and Non-Disclosure Agreement dated May 11,
2002 and executed by and between MMI and Willmar.
(c) "MMI" means MetaMorphix, Inc.
(d) "Willmar" means Willmar Poultry Company, Inc.
(e) "Myostatin(TM) Technology" means those Myostatin(TM) (GDF-8)
immunizing agents (to be delivered via active or passive
transfer), antagonists, transgenic breeds that delete or
diminish the biological activity of Myostatin(TM), and or
Myostatin(TM) related Turkey-specific diagnostic kits and
services as the case may be now or in the future in respect of
which MMI has a right to grant licenses.
(f) "Licensed Field of Use" means the use in the Turkey market of
the MMI and/or Willmar Technology in the Territory for
purposes of developing, making, using, and selling
Myostatin(TM) related Products and Services that delete or
diminish the biological activity of Myostatin(TM) (GDF-8).
(g) "MMI Technology" means inventions and know-how comprised of
the use and delivery of Myostatin(TM) (GDF-8) immunizing
agents and antagonists as described in the MMI Patents, and
further includes all technical data, information, and
biological materials and reagents useful in working with the
subject matter of the MMI Patents which is now owned or
subsequently acquired by MMI during the term of this
Agreement.
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(h) "Willmar Technology" means inventions and know-how comprised
of the use of the delivery of Myostatin(TM) immunizing agents
by passive transfer as described in the Willmar Patents, and
further includes all technical data, information and
biological materials and reagents useful in working with the
subject matter of the Willmar Patents which is now owned or
subsequently acquired by Willmar during the term of this
Agreement.
(i) "MMI Patents" means any patents granted pursuant to such U.S.
Patent Applications as are set forth in Schedule 1.01(i), or
granted pursuant to any patent applications subsequently filed
that is based on any such MMI Patent and includes any
continuations, continuations-in-part, divisions, patents of
additions re-issues, renewals, and extensions of such patents
and patent applications listing attached hereto in Schedule
1.01(i), and all foreign patents corresponding to any of the
foregoing.
(j) "Party" shall mean either MMI or Willmar.
(k) "Territory" shall mean North America (and any additional areas
included in accordance with Section 9.02d).
(l) "Revenue" shall mean any and all gross revenues payable to or
received by Willmar at any time or in any form, for or on
account of (i) the making, use, imports, or other transfer of
a Product and Service; (ii) the grant to any other person or
entity of a sub-license or any other rights to the rights
granted under this agreement; or (iii) any other use,
practice, or exploitation for use in the Field and Territory,
of the MMI Technology and the Willmar Technology. Revenue
shall include, without limitation, up-front fees, equity,
milestone payments, development payments, maintenance fees,
success fees, service revenues, shares of profits and
royalties.
(m) "Willmar Patents" means any patents granted pursuant to such
U.S. Patent Application 09/754,826 (University of Minnesota
File Number Z00173), or granted pursuant to any patent
applications subsequently filed that is based on the Willmar
Technology and includes any continuations,
continuations-in-part, divisions, patents of additions,
re-issues, renewals, and extensions of such patents and all
foreign patents corresponding to any of the foregoing.
(n) "Registration" means the issuance of approvals from or by
regulatory agencies or other governmental authorities
necessary to authorize sale of a Product in a particular
country or jurisdiction.
(o) "Product and Service" means any product, composition, process,
service, or method of use of any part thereof that deletes or
diminishes the biological activity of Myostatin(TM) in the
licensed field of use and/or Myostatin(TM) related
Turkey-specific diagnostic kits and services and is made,
directly with, from or contains Willmar and/or MMI Technology.
(p) "Target Turkey Companies" means with the following but not
limited to: ▇▇▇▇▇▇▇, Inc. and its subsidiaries and its
contractual growing/processing partners; ▇▇▇▇▇▇-O Turkey
Store, Inc.; Butterball Turkey Company; Pilgrim's Pride; and
Willmar Poultry Company and its Affiliates and
growing/processing partners.
In addition, certain capital, profit, and loss related terms are
defined in Section 15.01.
1.02 DIVISION AND HEADING
The division of this Agreement into Articles and Sections and
the insertion of headings herein are for the convenience of reference
only and shall not affect and shall not be construed as affecting the
interpretation hereof.
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1.03 GENDER
In the Agreement, where the context requires or permits, words
importing the masculine gender shall include the feminine and neuter
genders, and words importing the plural shall include the singular and
vice versa, and the words "person" and "persons" shall include
corporations, partnerships, and all other entities of whatsoever nature
and kind.
1.04 SEVERABILITY
In the event any term or condition, covenant, or agreement or
other provision contained herein is invalid, illegal, or incapable of
being enforced by reason of any rule of law or public policy, such term
or condition, covenant or agreement, or other provision, shall,
nonetheless, continue to be enforceable to the fullest extent permitted
by law against any person(s) and/or in any circumstance(s) other than
those to whom and/or to which such term, condition, covenant or
agreement, or other provision, has been rendered or held invalid,
illegal, or incapable of being enforced.
ESTABLISHMENT AND STRUCTURE OF THE JOINT VENTURE AS A LIMITED LIABILITY COMPANY
2.01 Willmar and MMI hereby form a limited liability company with a
calendar fiscal year in the United States of America under the laws of
the State of Delaware which company will be considered a partnership
for United States income tax purposes and shall be known as
"Willmar/MetaMorphix Turkey Joint Venture, LLC" (herein such company is
referred to as the "LLC").
2.02 Willmar and MMI shall execute and file the Certificate of
Formation which is attached to this Agreement as, Exhibit 2.02 for the
formation of the LLC. Willmar and MMI agree that the LLC has been
established in accordance with the approved Certificate of Formation
and this Limited Liability Company Agreement.
2.03 All costs of formation, regulatory fees, taxes and other
associated costs shall be borne by the LLC.
ESTABLISHMENT OF BOARD OF GOVERNORS
3.01 MMI and Willmar hereby establish a Board of Governors ("BOG")
which (a) shall determine pricing of Products and Services, (b) shall
review and approve plans and budgets for (i) testing and evaluation of
Products and Services, (ii) research and development of Products and
Services, (iii) manufacturing (subject to Section 10.1), and (iv)
patent maintenance pertaining to new inventions derived from the LLC,
(i.e., collectively, "Development Costs"), (c) shall decide according
to Section 9.01 the marketing and distribution channel(s) of Products
and Services, and (d) shall oversee the business of the LLC (including
the operation of the Operating Group).
3.02 The Board of Governors shall consist of five (5) governors.
Each Party shall appoint two (2) governors and the fifth governor shall
be mutually appointed by the Parties. An interim person may be elected
as the fifth governor until a mutually agreed upon permanent fifth
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governor is elected. The Chairman of the BOG shall be the CEO of MMI.
On the invitation of the BOG, other persons and parties including the
LLC accountant may participate in all or those portions of the
deliberations of BOG as may be appropriate. From the effective date of
this agreement, this initial appointments of the Parties to the BOG are
as follows:
MMI WILLMAR
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Ph.D. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇▇, Ph.▇. ▇▇▇ ▇▇▇▇▇▇
Mutually Appointed Governor:______________________________
Notwithstanding anything in this Agreement to the contrary,
the BOG may not broaden the purpose for which the joint venture was
established or pursue opportunities other than developing,
manufacturing, marketing, and the sale of a Myostatin(TM) product or
products in Turkey, may not admit an additional Party (except as set
forth in Section 12.01), may not obligate any member of the LLC beyond
that member's share of an agreed budget, and may not authorize the LLC
to file for bankruptcy without the consent of all of the Parties (in
their sole discretion) and on such terms and conditions as shall be
agreed upon by all the Parties.
3.03 All meetings of the BOG shall be conducted on an as required
basis upon the call of any representative of the BOG with not less than
one week's notice. Meetings of the BOG shall alternate between the
offices of the Parties (or be conducted telephonically). Each Party
shall be responsible for their own respective costs in attending and
participating in BOG meetings and that of their representatives (and
the LLC (a) shall reimburse the mutually appointed governor for his
reasonable expenses and (b) shall compensate him in a manner decided
upon by the BOG). As much as practical, communication between the
Parties of the BOG shall be effected regularly by phone, fax, and other
similar communication, so as to ▇▇▇▇▇▇ the regular open exchange of
information and collaboration between BOG and the Parties' respective
personnel. The Parties acknowledge and agree that either Party and
their representatives may upon reasonable notice and a non-disturbance
basis visit the facilities of the other to view and inspect those
activities carried on for the LLC in such facilities.
3.04 At its earliest opportunity, the BOG shall evaluate the MMI and Willmar
Myostatin(TM) technology for purposes of determining their
respective ability to improve production efficiency, enhance
meat quality, or both. As a result of such evaluation, the BOG
shall determine the programs, studies, and activities to be
pursued in respect to such Myostatin(TM) technologies, and
which are from time to time to be discontinued. It shall be
the responsibility of the BOG to agree
3.05 Budgets.
3.05(a) After formation of the LLC, no expenditure or in-kind
contribution shall be made by the LLC and/or the Parties until
a budget for the current calendar year has been approved by
the BOG. This budget shall itemize and set limits on all
foreseen expenditures or in-kind contributions by the LLC and
the Parties individually on behalf of the LLC. The budget
shall establish pro-forma cash requirements of the LLC and a
pro-forma projection of the estimated capital contributions to
be made by the respective Parties to the LLC. Successive
annual budgets shall be approved by the BOG at least thirty
(30) days prior to the end of the preceding calendar year. No
expenditure by the LLC shall be permitted, and no in-kind
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contribution by a party shall be recognized as admissible
unless in accordance with an approved budget or subsequently
approved by the BOG.
3.05(b) The approved budget shall be funded by cash contributions on
behalf of the Parties as provided in this Sections 3.05(b) and
Sections 3.05(c) 3.06, or by revenues from Target Turkey
Companies. The Parties hereby commit each year to provide an
annual minimum capital contribution to the LLC (as may be
required and agreed by the BOG on the basis of that year's
budget) and as initially provided in Sections 3.06 and 13.03.
Such annual minimum cash contributions by the Parties shall
jointly not exceed the aggregate of 1) the actual expenditure
of the LLC for the year and its current liabilities at year
end, 2) the total in-kind contribution of the Parties as
invoiced to the LLC during the year, and unpaid, and 3) such
reasonable level of working capital as the BOG may agree.
3.05(c) All approved out-of-pocket expenditures and in-kind
contributions by the Parties shall be invoiced monthly by each
contributing party to the LLC and recognized as an advance
capital contribution of the respective parties to their
Capital Account as contemplated by Section 15. Cash
contributions as may be required of any Party may, at the
election of that Party, be contributed net of outstanding
invoices due to such Party from the LLC. Cash contributions
received by the LLC shall be immediately used to reimburse
invoiced payables to the Parties to the extent such payables
are not offset net in that Party's cash contribution.
3.05(d) At the request of a Party contributing a non-cash
contribution, approved non-cash contributions incurred by such
Party and invoiced by such Party to the LLC, shall be credited
by the LLC as one-half of such approved in-kind contribution
to the contributing Party's capital account, and shall invoice
the other Party for the other half of such in-kind
contribution, (whereupon such other Party shall pay such
amount to the LLC within thirty (30) days), and shall pay such
contributing Party the other half in reimbursement from
current cash resources or from the receipt of the funds from
the other Party. The remittance of such funds by the other
Party to the LLC shall be credited to that Party's Capital
Account.
3.06 No contribution of either Party shall be recognized as a
contribution to the LLC if (a) incurred prior to the formation
and establishment of the LLC or (b) not approved by the BOG.
The Parties hereby commit to provide, jointly and in equal
shares, an initial capital contribution of up to Five Hundred
Thousand Dollars ($500,000) for expenses as may be approved by
the BOG on an as-required basis. Upon the execution of this
Agreement, the Parties will each contribute Five Thousand
Dollars ($5,000) to the LLC to be deposited into a bank
account held by the LLC and subsequently, the remaining Four
Hundred Ninety Thousand Dollars ($490,000) shall be provided
as required within thirty (30) days of the LLC incurring
approved expenditures or being invoiced for approved
expenditures or contributions by the Parties.
ESTABLISHMENT OF LLC OPERATING GROUP
4.01 MMI and Willmar shall forthwith upon execution of this
Agreement establish a three person Operating Group (OP) which shall be
overseen and directed by the BOG. The Manager of the LLC OP shall be
the MMI Vice President of Business Development (or, upon and after
launch of product marketing and selling, such other governor as may be
selected by the BOG). The Manager is responsible for facilitating day
to day operations within the LLC. The Manager shall also be a governor
on the BOG. Each Party shall appoint one technical person to the OP.
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And from the effective date of this agreement the initial
appointments of the Parties to the OP are as follows:
MMI WILLMAR
▇▇▇▇▇ ▇▇▇▇▇▇, Ph.D. Manager
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Ph.D. Technical ▇▇▇▇▇ ▇▇▇▇▇
4.02 All meetings of the OP shall be conducted, as required, based
upon the call of the Manager or Willmar's technical representative with
not less than one week's notice. Meetings of the OP shall alternate
between the offices of the Parties (or be conducted telephonically).
Each Party shall be responsible for their own respective costs in
attending and participating in OP.meetings. As much as practical,
communication between the Parties of the OP shall be effected regularly
by phone, fax, and other similar communication, so as to ▇▇▇▇▇▇ the
regular open exchange of information and collaboration between OP and
the Parties respective personnel. The Parties acknowledge and agree
that either Party and their representatives may upon reasonable notice
and a non-disturbance basis visit the facilities of the other to view
and inspect those activities carried on for the LLC in such facilities.
4.03 At its earliest opportunity, the OP shall evaluate the MMI and
Willmar Myostatin(TM) technology for purposes of determining their
respective ability to improve production efficiency, enhance meat
quality, or both. The evaluation shall lead to a recommendation to the
BOG with a preferred course of action.
4.04 The OP shall evaluate the various product development and
Registration steps and establish responsibilities of the respective
Parties as to conduct of the work and the appropriate budget allocation
for each step of product development and Registration as provided for
in Section 3.05(a). Such budget allocation shall reflect the reasonable
costs expected to be incurred by a Party or its affiliates in
performing its obligations hereunder including overhead, but excluding
profit. The evaluation shall lead to a recommendation to the BOG with a
preferred course of action and proposed budget.
LICENSES OF TECHNOLOGY TO THE LLC
5.01 Willmar hereby licenses to the LLC all Willmar Technology
together with any and all improvements, continuations,
continuations-in-part, reissuances, and related foreign filings which
may come into Willmar's possession in respect to the Licensed Field of
Use such that the LLC shall be exclusively entitled to practice such
Willmar Technology in the Licensed Field of Use in the Territory. In
respect to any of the Willmar Technology which is subject of a license
from a third party, Willmar shall sublicense such subject matter to the
LLC in a separate sublicense agreement. In such sublicense the LLC is
solely responsible for all third party payments, benefits, or
consideration which shall become payable pursuant to such licenses to
any third party. Willmar agrees that it shall in respect of any patent
applications, patent filing or prosecutions diligently maintain and
prosecute such patent applications, patent filings, or prosecutions at
its own expense except as otherwise permitted by the OP. Such
maintenance, application, or prosecution costs and any third party
payments or benefits incurred by Willmar in connection with the
sublicenses hereinbefore referred to shall not constitute costs
constituting contribution to the LLC by ▇▇▇▇▇▇▇.
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5.02
MMI hereby licenses to the LLC all MMI Technology together
with any and all improvements, continuations, continuations-in-part,
reissuances, and related foreign filings which may come into MMI's
possession in respect to the Licensed Field of Use such that the LLC
shall be exclusively entitled to practice such MMI Technology in the
Licensed Field of Use in the Territory. In respect to any of the MMI
Technology which is subject of a license from a third party, MMI shall
sublicense such subject matter to the LLC in a separate sublicense
agreement. In such sublicense the LLC is solely responsible for all
third party payments, benefits or consideration which shall become
payable pursuant to such licenses to any third party. MMI agrees that
it shall in respect of any patent filing or prosecutions diligently
maintain and prosecute such patent applications, patent filings, or
prosecutions at its own expense except as otherwise permitted by the
OP. Such maintenance, application, or prosecution costs and any third
party payments or benefits incurred by MMI in connection with the
sublicenses hereinbefore referred to shall not constitute costs
constituting contribution to the LLC by MMI.
5.03. The LLC shall pay any and all royalties due to the licensors
of any Willmar Technology and any MMI Technology, respectively, from
sales of the LLC. Willmar and MMI shall each be responsible to their
respective licensors for any and all non-species specific milestone
payments, non-species specific license fees, patent cost
reimbursements, and the like.
SHARING INFORMATION
6.01
MMI and Willmar shall freely exchange all relevant information
(except as the disclosure of such information may be restricted by such
Party's confidentiality agreements with other entities), i.e. between
MMI and LLC and between Willmar and LLC. Such information may benefit
MMI for instance if the LLC had turkey MyoVax(TM) information that
would assist MMI in the development of MyoVax(TM) for chicken/swine.
Conversely, information on Chicken MyoXtra(TM) might help Turkey
MyoXtra(TM) development. Willmar, for example, might have breeding
information that it has developed that might help the LLC and may learn
from the LLC experience breeding approaches helpful to Willmar
generally. However, other than for research and development, and
ultimately commercialization purposes for LLC Product and Services,
this sharing of information shall not give MMI any rights to use
Willmar's proprietary breeding technology and patents and shall not
give Willmar any rights to use MMI's proprietary Myostatin(TM) (GDF-8)
or other technology or patents Any commercial exploitation performed by
the LLC and/or MMI of Willmar's breeding technology must be approved by
Willmar.
6.02 The Parties acknowledge that the Existing Confidentiality
Agreement shall control all disclosures from its effective date up to
and until the Effective Date of this Agreement. The Parties agree that
the Existing Confidentiality Agreement is hereby superseded as of the
Effective Date of this Agreement by the terms and conditions set forth
in this Section 6.02 and the other applicable terms and conditions set
forth in this Agreement, as follows:
(a) The Parties acknowledge that during the course of
this Agreement they may each receive (and hence
become a "Receiving Party") from the other (the
"Disclosing Party") information electronically, in
writing, or orally, that is proprietary and/or
confidential and of commercial value to the
Disclosing Party. The Parties agree that they shall
take all reasonable measures to protect the secrecy
of and avoid disclosure and unauthorized use of the
Confidential Information. Without limiting the
foregoing, the Parties shall take at least those
measures that each takes to protect its own
confidential information of a similar nature, but in
no event less than a reasonable degree of care. Both
Parties shall immediately notify the other in the
event either Party has knowledge of any unauthorized
use or
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disclosure of the Confidential Information.
(b) Except to the extent expressly authorized by this
Agreement, the Parties agree that the Receiving Party
shall keep confidential and shall not publish or
otherwise disclose, and shall not use for any
purpose, any Confidential Information furnished to it
by the Disclosing Party pursuant to this Agreement,
regardless of the medium on which it is provided,
including know-how, except to the extent that it can
be established by the Receiving Party by competent
proof that such information:
(i) was already known to the Receiving Party,
other than under an obligation of
confidentiality, at the time of disclosure
by the Disclosing Party;
(ii) was generally known to the public or
otherwise part of the public domain at the
time of its disclosure to the Receiving
Party;
(iii) became generally available to the public or
otherwise part of the public domain after
its disclosure through no fault of the
Receiving Party, or its Affiliates.
(iv) was subsequently lawfully disclosed to the
Receiving Party by a Third Party who did not
require the Receiving Party to hold it in
confidence or limit its use, provided it was
not obtained by such Third Party under an
obligation of confidentiality directly or
indirectly from the Disclosing Party; or
(v) was independently discovered or developed by
the Receiving Party without the use of the
Disclosing Party's Confidential Information,
as can be documented by written records
created at the time of such independent
discovery or development.
6.03 PERMITTED DISCLOSURES.
(a) Subject to Section 6.02, the Receiving Party may
disclose the Disclosing Party's Confidential
Information to the extent such disclosure is required
for complying with applicable laws, regulations,
and/or court or administrative orders; provided
however, that in each case described in this Section
6.03, the Receiving Party shall (i) promptly give
advance notice to the Disclosing Party of such
disclosure requirement; (ii) promptly provide a copy
of the proposed disclosure; and (iii) use
commercially reasonable efforts in assisting the
Disclosing Party to secure confidential treatment,
including a protective order, for such Confidential
Information required to be disclosed.
(b) The Receiving Party may disclose the Disclosing
Party's Confidential Information to the Receiving
Party's employees, contractors, or consultants who
(i) have a need-to-know, and (ii) are party to a
confidentiality and non-disclosure agreement with the
Receiving Party prohibiting such employee,
contractor, or consultant from disclosing or using
Confidential Information in the manner and with the
same degree of care as set forth in this Section
6.02. Each such disclosure shall be limited in the
scope of information provided if such recipient has a
need to know only specific information.
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(c) Either Party, as is customary or required in
accordance with securities law and practice, but only
to the extent so necessary, may disclose the
existence or terms of this Agreement. In the event
either Party so desires to make such a disclosure to
an investor or in a public filing, such Party shall
(a) include only such information that is
specifically required or requested.
(d) The Receiving Party, to the extent required or
useful, may disclose Confidential Information in any
patent filing made under or envisioned by this
Agreement.
(e) Any confidentiality agreement under this Section 6.03
with any Third Party shall have at last such terms
and be as strict as Sections 6.02 - 6.07.
6.04 COPIES
A Receiving Party shall not make any copies of the Disclosing
Party's Confidential Information without the prior written approval of
the Disclosing Party or in strict accordance with Section 6.03, except
that the Parties may make copies that are reasonably necessary for its
internal planning for the commercialization, marketing, sale, and use
of products for the conduct of any regulatory approval, and
manufacturing. Notwithstanding the foregoing, the Receiving Party may
retain one (1) sealed copy of the Disclosing Party's Confidential
Information solely for legal archival purposes.
6.05 PUBLICATION
Any Publications shall not include any of the Disclosing
Party's Confidential Information without the Disclosing Party's prior
written consent and shall include appropriate recognition of the other
Party's contributions in accordance with the standard practice for
assigning scientific credit, either through authorship or
acknowledgement as may be appropriate.
(a) JOINT PUBLICATION. In the event that the Parties
agree to jointly prepare a Publication of the results
of any turkey-related research and development in a
mutually acceptable scientific journal the Parties
shall (i) jointly draft such Publication through the
research representatives; (ii) prepare such
Publication within a mutually agreed upon time; and
(iii) have such joint Publication reviewed and
approved by the duly authorized officers of the
Parties prior to submission of the article to the
agreed upon scientific journal. Except by mutual
consent, neither Party shall release or otherwise
transfer any of the results from any research and
development to any Third Party or the public prior to
the date on which such joint Publication will be
released.
6.06 PUBLIC ANNOUNCEMENTS
(a) Except as may otherwise be required by law or
regulation, neither Party shall make any public
announcement, directly or indirectly, concerning the
existence or terms of this Agreement (or the subject
matter hereof) without obtaining the prior consent of
the other Party under Section 6.06(b); it being
envisioned, however, that there shall be an initial
public announcement of the existence of this
Agreement.
(b) Unless otherwise agreed upon by the Parties, the
reviewing Party shall have ten (10) business days to
consent (or decline to consent) to an initial public
announcement concerning the existence or terms of
this Agreement (or the subject matter hereof), such
consent not to be unreasonably withheld or delayed.
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The aforegoing "reasonable" standard of consent shall
not apply to a proposed public disclosure of
Confidential Information, which may be prohibited by
the Disclosing Party in its sole and absolute
discretion.
(c) If either Party shall be required by law or
regulation to make a public announcement concerning
the existence or terms of this Agreement, such Party
shall (a) include only such information in the public
announcement that is specifically required, and (b)
give at least forty-eight (48) hours prior advance
notice to the other Party and obtain the other
Party's comments.
6.07 EQUITABLE RELIEF
MMI and Willmar, in their role as Receiving Parties under this
Agreement, hereby acknowledge and agree that with respect to the nature
of the Confidential Information, there may be no adequate remedy at law
for any breach of their obligations as Receiving Party under the
confidentiality provisions of this Agreement, that any such breach may
result in irreparable harm to the Disclosing Party, and therefore,
notwithstanding Section 17.10, that upon any such breach the Disclosing
Party shall be entitled to seek equitable relief, in addition to
whatever remedies it might have at law, including injunctive relief,
specific performance, or such other relief as the Disclosing Party may
request to enjoin or otherwise restrain any act prohibited hereby, as
well as the recovery of all reasonable costs and expenses, including
attorneys' fees incurred.
OWNERSHIP OF INTELLECTUAL PROPERTY
7.01 In any event, (1) MMI shall exclusively own any patent
improvements to its Myostatin(TM) (GDF-8) technology and/or additional
or improved know-how relating to such technology and MMI may use any
data produced by the Research in the prosecution of its existing patent
applications and (2) Willmar shall exclusively own any patent
improvements to its hatching, breeding, and commercial growing
technology and/or additional or improved know-how relating to such
technology (and not related to passive immunization to diminish
Myostatin(TM) activity). In addition, any joint inventions (not
relating to Myostatin(TM) (GDF-8) or hatching, breeding and growing
technologies and not constituting an improvement upon any Party's
patent estate) shall be owned by the LLC but shall be licensed
royalty-free to MMI if useful to its Myostatin(TM) (GDF-8) products and
services and/or licensed royalty-free to Willmar if useful to its
production or to turkey-related products and services.
NON-COMPETITION
8.01 Subject to Section 9 below, the Parties covenant and agree
that during the continuance of this Agreement and the conduct of
business by the LLC that neither of them in the Territory shall alone,
or in conjunction with any other person, whether as shareholder,
advisor, employee or in any other capacity develop or market biologic
products in the Licensed Field of Use in the Territory if such products
would be competitive with the Products and Services for which the LLC
has obtained Registration in any such jurisdiction within the
Territory. The LLC shall obtain similar agreements in favor of the LLC
from their respective affiliates.
MARKETING ENTITLEMENTS--
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9.01 The BOG shall appoint individuals from MMI and Willmar to
jointly pursue and offer "Combined Funding and Licensing
Agreements(s)", similar in nature to the agreements achieved by MMI in
the chicken industry, with the "Target Turkey Companies," as follows:
a) The LLC shall have exclusive rights to offer such
Combined Funding and Licensing Agreement(s) for
Products and Services covered in the Licensed Field
of Use within the Territory to the Target Turkey
Companies. It is the intent of the LLC to capture a
minimum of 30% of the value added by the Technology.
b) The LLC shall offer to the Target Turkey Companies
two Funding and Licensing alternatives: (1) Direct
Cash Contribution for Licensing Agreement and/or (2)
Funding method that allows licensing rights by
funding the LLC through a "Premium" paid per poult by
the Target Turkey Companies for poults purchased from
Willmar and/or ▇▇ ▇▇▇▇▇, LLC, and/or for poults
placed and/or sold by Willmar and its Affiliates.
Such Premium per poult and any associated up front,
milestone, equity or other development or incentive
payments shall be collected by Willmar and ▇▇ ▇▇▇▇▇,
LLC on behalf of the LLC and forwarded to the LLC on
a monthly basis.
c) The BOG shall approve and the LLC shall pay for the
cost of marketing and distribution of Products and
Services as it relates to sales to Target Turkey
companies holding a Combined Funding and Licensing
Agreement, funding the LLC either with direct cash
contributions and/or through a Premium paid per
poult.
d) MMI shall provide Products and Services to the LLC on
an "at cost" basis (which shall include a reasonable
allocation, in accordance with GAAP, of the cost of
facilities and other overhead).
9.02 While it is the intent of the LLC to market in accordance with
Section 9.01, to the extent that the LLC does not enter into Agreements
with customers as defined in Section 9.01 (a) and Section 9.01 (b),
Willmar will at its option, after twelve months following Registration
of a Product in the United States, have the right to enter into a
marketing and distribution agreement with the MMI and/or the LLC (which
agreement shall be acceptable to each Party) for the Product(s) and
Services covered in the Licensed Field of Use for North America (i.e.,
The United States, Canada, and Mexico). This marketing agreement shall
aim to capture a minimum of 30% of the value added by the Technology
and provide among other matters normally subject of such an agreement
as follows:
a) Willmar will make all diligent efforts to develop the
market for and market the Product and/or Service in
North America in consideration for a marketing fee
approved by the BOG which shall include a reasonable
allocation, in accordance with GAAP, of the cost of
facilities and other overhead. All Revenue arising
from such marketing and distribution effort shall
accrue to the benefit of the LLC.
b) The Marketing and Distribution Agreement shall be
exclusive in respect to Willmar for North America,
with exception of any marketing performed directly by
the LLC to target turkey customers as described in
Section 9.01(a) and Section 9.01 (b).
c) MMI will not license and/or agree to any other party,
including MMI itself, to import the product(s) from
other countries and/or to market from within North
America in competition with the LLC and/or as long as
Willmar is maintaining exclusive Marketing and
Agreement as specified in Section 9.02 (b) and 9.02
(d).
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cannot be reached, the LLC thereafter (for up to one
year) shall be entitled to negotiate a Marketing and
Distribution Agreement on same terms or better terms
(i.e., more favorable to the LLC) with another
entity. However, if the LLC desires to enter into a
Marketing and Distribution Agreement on terms less
favorable to the LLC, the LLC first must reinitiate
the "first offer" process of this Section 9.02(d).
9.03 MMI retains the exclusive right to market, distribute, license
such rights, or otherwise exploit any and all MMI Technology and/or
Willmar Technology royalty-free outside of the field. MMI will pay any
royalty fee to the University of Minnesota for Willmar Technology used
outside of the field. MMI shall be granted a royalty-free license to
any LLC information and know-how for non-field purposes.
MANUFACTURING ENTITLEMENTS
10.01 MMI shall have a right to manufacture or have manufactured the
Product(s) and/or Services on behalf of the LLC on commercially usual
terms and conditions and at a cost to the LLC equal to that which would
be available to the LLC through alternative manufacturers. If such
right is exercised by MMI, the term of the manufacturing agreement
between LLC and MMI shall be for an initial five year period following
release for sale of the first batch of Product manufactured by, or on
behalf of, MMI. At the expiration of any MMI manufacturing agreement or
any third party agreement, provided that MMI has given at least six (6)
months notice to the LLC and Willmar, MMI shall again have the first
right to manufacture the Product(s).
SPECIFIC RESPONSIBILITIES OF EACH PARTY
11.01 MMI, subject to BOG approval and budgetary requirements, shall
be responsible for providing the LLC with the_ necessary advice and
information with respect to Registration requirements for North America
in respect to Products.
11.02 MMI, subject to BOG approval and budgetary requirements, shall
be responsible upon identification of a Product or Products by the LLC
to prosecute arid diligently pursue Registration of Product at the cost
of the LLC.
11.03 MMI, subject to BOG approval and budgetary requirements, shall
be responsible for research and Development of the Products and
Services.
11.04 MMI, subject to BOG approval and budgetary requirements, shall
be responsible for patent application and maintenance for joint
inventions on behalf of the LLC, at the LLC's cost.
11.05 Willmar, subject to BOG approval and budgetary requirements,
shall be responsible for supervision and conduct of pre-clinical and
clinical trials necessary and desirable for the development and
Registration of a Product at the cost of the LLC. Clinical trials may
or may not be held at Willmar facilities given regulatory requirements
and other regulated trial design requirements.
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be held at Willmar facilities given regulatory requirements and other
regulated trial design requirements.
PARTIES AND PERCENTAGE INTEREST
12.01 The names, and addresses of the Parties of the LLC are as set
forth on Schedule 12.01 attached to and made a part of this Agreement.
Each Party shall have a percentage interest ("Interest" or "Percentage
of Interest") in the LLC as set forth opposite his name on Schedule
12.01. Additional persons may be admitted to the LLC upon the consent
of all of the Parties (in their sole discretion) and on such terms and
conditions as shall be agreed upon by all the Parties and any new
Parties. Unless otherwise agreed (or as may occur in accordance with
Section 13.03), the percentage interest of each Party in the LLC shall
be 50%, and all capital contributions to the LLC shall be funded 50% by
each Party.
CAPITAL AND LOANS
13.01 The Parties, in accordance with Section 3.06, have made
initial capital contributions in cash to the LLC as set forth on
Schedule 13.01.
13.02 No additional Capital Contributions have been agreed to be
made by any Party (except as set forth in Section 3.06 and Section
13.03). The Parties shall make additional contributions and/or loans to
the LLC at such time or times, and upon such conditions, as the Parties
may determine or in accordance with Section 3.06 and in Section 13.03.
13.03 If, as, and when the Board of Governors approves budgets, in
accordance with Sections 3.01 and 3.05(a), each Party shall provide up
to $500,000 per calendar year (or such alternative amount as may be
agreed under section 3.05(a)) to support and fund such budgets (whether
in the form of in-kind effort and/or cash, as may be determined by the
BOG) for at least five (5) years (with the contribution mandated by
Section 3.06 being deemed to be the contribution for the year 2002).
The minimum $2,500,000 per Party commitment shall continue beyond five
(5) years (but not beyond 2011 unless Parties mutually agree to extend
this commitment) if the full, cumulative contribution of $2,500,000 per
Party is not drawn down during the five year period. The Parties
acknowledge and agree that this aggregate capital contribution of up to
Five Million Dollars ($5,000,000) is a presently reasonable estimate of
the research and development, Registration, testing evaluation of
Products and Services, preliminary manufacturing, and "new invention"
patent maintenance costs for such period. In the event that a Party
fails to contribute an amount mandated by the BOG within the parameters
established by this Section 13.03 (and paid within the time provided in
Section 3.06), the LLC shall (and any non-defaulting Party awaiting
reimbursement for in-kind contributions, on behalf of the LLC, may)
provide notice of default of payment to the defaulting Party. In the
event that the defaulting Party fails to make a required contribution
of additional capital in accordance with this Section 13.03 and Section
3.05 within thirty (30) days of the notice of default and payment being
given, the non-defaulting Party may elect one or more of the following
courses of action:
(a) To loan money to the LLC in such amount as the
defaulting Party's required contribution, such monies
loaned to bear interest at the rate of eighteen
percent (18%) per annum on the unpaid principal
amount, until fully repaid. All such loans (and
interest) by any non-defaulting Party to the LLC
shall be repaid out of the Available Cash (in
accordance with Section 15) of the LLC before any
defaulting Party shall receive any distribution; or
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(b) To direct the LLC to withhold distributions of
Available Cash to the defaulting Party until the
amount withheld equals the amount of capital which
the defaulting Party is required to contribute to the
LLC in accordance with this Section 13.03, plus
interest at the rate of eighteen percent (18%) per
annum; or
(c) To direct the LLC to treat the amount of any
reimbursement for in-kind effort not paid to the
non-defaulting Party as an item to be entered on the
books of the LLC as an additional contribution of the
non-defaulting Party, which shall be treated as a
preferred loan and interest in the LLC with interest
accruing at the rate of eighteen percent (18%) per
annum on the amount of such additional contribution
per Section 13.03(a) above; or
(d) To direct that the LLC be dissolved (and its business
affairs wound down) with all MMI Technology being
returned to MMI, all Willmar Technology being
returned to Willmar, and the non-defaulting Party
shall have exclusive license and right to use any
joint inventions.
If after contributing $2,500,000, one Party decides not to contribute
any additional funds, then the other Party may elect one of the
following courses of action:
(a) To loan money to the LLC in such amount as the
non-paying Party's required contribution, such monies
loaned to bear interest at the rate of eighteen
percent (18%) per annum on the unpaid principal
amount, until fully repaid. All such loans (and
interest) by any paying Party to the LLC shall be
repaid out of the Available Cash (in accordance with
Section 15) of the LLC before any Party shall receive
any distribution; or
(b) To direct the LLC to withhold distributions of
Available Cash to the non-paying Party until the
amount withheld equals the amount of capital which
the non-paying Party is required to contribute to the
LLC in accordance with this Section 13.03, plus
interest at the rate of eighteen percent (18%) per
annum; or
(c) To direct the LLC to treat the amount of any
reimbursement for in-kind effort not paid to the
paying Party as an item to be entered on the books of
the LLC as an additional contribution of the paying
Party, which shall be treated as a preferred loan and
interest in the LLC with interest accruing at the
rate of eighteen percent (18%) per annum on the
amount of such additional contribution, per Section
13.03(a) above.
13.04 The Provisions for additional contributions are for internal
LLC purposes and may not be relied on or exercised by third
parties or creditors of the LLC.
CAPITAL ACCOUNTS
14.01 An individual Capital Account shall be maintained for each
Party. Each Party's Capital Account shall be maintained as
provided in Section 15. Except as otherwise provided in this
Agreement, no Party shall be paid interest on any Capital
Contribution, and, no Party shall have the right to withdraw
or receive any return of his Capital Contribution. Under
circumstances requiring a return of any Capital Contribution,
no Party shall have the right to receive property other than
cash, except as provided in Sections 15.01(a) and 15.01(c).
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Increases or decreases to a Party's Capital Account shall not
affect a Party's Percentage of Interest.
PROFITS, LOSSES, AND DISTRIBUTIONS
15.01 DEFINED TERMS.
For purposes of this Agreement, the following terms shall have
the meaning specified unless the context otherwise requires:
a) ADJUSTED CAPITAL CONTRIBUTIONS -- "Adjusted Capital
Contributions" means, for each Party, such Party's Capital
Contributions to the LLC, reduced (but not below zero) by the
amount of cash and the net fair market value of any other
asset distributed to such Party pursuant to Section 15.03(c)
and Section 15.04 hereof.
AVAILABLE CASH -- "Available Cash" means, with respect to any
taxable year of the LLC, at the time of determination, the
LLC's remaining cash after the payment of costs and expenses
and payments on LLC's debts reduced by such amounts as the
Parties by the affirmative vote of all the Parties and as
approved by the BOG, shall deem reasonably necessary to meet
reasonably anticipated expenditures or liabilities of the LLC,
including, but not limited to, reasonable future budgeted
expenditure, debts to Parties who are creditors of the LLC and
reserves for replacements and capital improvements for which
adequate provision has not otherwise been made in the
reasonable judgment of the Parties. Available Cash shall not
include proceeds from Capital Transactions or the amount of
Parties' Capital Contributions.
CAPITAL ACCOUNT -- "Capital Account" means, as in the books of
the LLC for any Party, the Capital Contribution actually made
by that Party, less all Profit allocated to that Party, and
plus the sum of (I) all Loss allocated to that Party, (ii) the
amount of cash and the fair market value of any other asset
distributed to that Party (net of liabilities, assumed or
taken subject to by such Party), and (iii) such Party's
distributive share of all other expenditures of the LLC not
deductible in computing its taxable income and not properly
chargeable as additions to the basis of LLC property. Each
Party's Capital Account shall be determined and maintained in
accordance with the Treasury Regulations adopted under Section
704(b) of the Code. Any questions concerning a Party's Capital
Account shall be resolved by applying principles consistent
with this Agreement and the Treasury Regulations adopted under
Section 704 of the Code in order to ensure that all
allocations to the Parties will have substantial economic
effect or will otherwise be respected for federal income tax
purposes.
d) CAPITAL CONTRIBUTION -- "Capital Contribution" means the total
amount of cash and the fair market value (net of liabilities
assumed or taken subject to by the LLC), as approved by the
BOG, of any other assets contributed (or deemed contributed
under Treasury Regulations Section 1.704-1(b)(2)(iv)(d)) to
the LLC by a Party.
e) CAPITAL PROCEEDS -- "Capital Proceeds" means the gross
receipts received by the LLC from a Capital Transaction and
the amount of the Parties' Capital Contributions.
f) CAPITAL TRANSACTION -- "Capital Transaction" means the sale,
exchange, financing, refinancing, condemnation, casualty or
other disposition of all, or substantially all, of the assets
of the LLC.
g) CODE- "Code" means the Internal Revenue Code of 1986, as
amended or any corresponding Section of any succeeding law.
h) MINIMUM GAIN -- "Minimum Gain" has the meaning set forth in
Treasury Regulations Section 1.704-2(d). Minimum Gain shall be
computed separately for each Party, applying principles
consistent with both the foregoing definition and the Treasury
Regulations promulgated under Section 704 of the Code.
i) NEGATIVE CAPITAL ACCOUNT -- "Negative Capital Account" means a
Capital Account with a balance less than zero.
j) POSITIVE CAPITAL ACCOUNT -- "Positive Capital Account" means a
Capital Account with a balance greater than zero.
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k) PROFIT AND LOSS -- "Profit and Loss" means for each fiscal
year (which shall be the same as the LLC's taxable year) or
other period, an amount equal to the LLC's taxable income or
loss for such year or period, determined in accordance with
Code Section 703(a) (for this purpose, all items of income,
gain, loss, or deduction required to be stated separately
pursuant to Code Sections 703(a)(1) shall be included in
taxable income or loss and inclusive of interest expense on
loans arising under Section 13); [provided, however, that in
the event the Treasury Regulations promulgated under Section
704 of the Code require book value of assets to be used in
determining profit or loss, then, for purposes of maintaining
Capital Accounts in accordance with such Treasury Regulations,
the taxable income or loss shall be computed using the book
value of the assets.]
1) RESTORATION AMOUNT -- "Restoration Amount" means, with respect
to each Party, (a) the Party's share of Minimum Gain, and (b)
the amount, if any, which the Party is unconditionally
required under this Agreement or by law to contribute to the
LLC (including the Party's share of debts of the LLC which the
Party has guaranteed and the outstanding amount of loans made
by the Party to the LLC, in each case only to the extent that
the Party does not have a right of contribution from another
Party).
15.02 ALLOCATION OF PROFIT OR LOSS FROM OPERATIONS AND DISTRIBUTIONS
OF AVAILABLE CASH.
a) AVAILABLE CASH. For any taxable year of the LLC, Available
Cash shall be distributed to the Parties in proportion to
their respective Percentages of Interest.
b) TAXABLE INCOME OR TAXABLE LOSS. For any taxable year of the
LLC, Profit or Loss (other than Profit or Loss resulting from
a Capital Transaction, which Profit or Loss shall be allocated
in accordance with the provisions of Sections 15.03(a) and
15.03(b)) shall be allocated equally to the Parties in
proportion to their respective Percentages of Interest;
provided, however, that an amount of Profit equal to the
aggregate amount of Losses previously allocated to the Parties
shall first be allocated in proportion to the amount of Losses
previously allocated to the Parties until the aggregate Profit
allocated pursuant to this proviso is equal to the aggregate
Losses previously allocated to the Parties.
c) SPECIAL ALLOCATIONS. Notwithstanding any other provision to
the contrary in this Agreement, the following provisions shall
apply:
(1) QUALIFIED INCOME OFFSET. No Party shall be
allocated Losses or deductions if such allocation causes a
Party's Negative Capital Account to increase in excess of the
Party's Restoration Amount (any such Loss shall be reallocated
to those Parties whose Capital Accounts are not Negative in an
amount in excess of their Restoration Amount in accordance
with their respective share of Loss as set forth in Section
15.02(b)). If a Party receives (1) an allocation of Loss or
deduction (or item thereof) or (2) any LLC distribution, which
causes such Party to have a Negative Capital Account in excess
of its Restoration Amount or increase a Party's Negative
Capital Account at the end of any LLC taxable year in excess
of its Restoration Amount, then all items of income and gain
of the LLC (consisting of a pro rata portion of each item of
LLC income, including gross income and gain) for such taxable
year shall be allocated to such Party, before any other
allocation is made of LLC items for such taxable year, in the
amount and in proportions required to eliminate such excess as
quickly as possible. This Section 15.02(c)(1) is intended to
comply with, and shall be interpreted consistently with, the
"qualified income offset" provisions of the Treasury
Regulations promulgated under Section 704(b) of the Code:
(2) MINIMUM GAIN CHARGEBACK. If there is a net
decrease in the Minimum Gain during any taxable year, then
each Party shall first be allocated all items of gross income
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and gain of the LLC for such taxable year (and, if necessary,
for subsequent taxable years) in an amount equal to the total
net decrease in the LLC's Minimum Gain multiplied by that
Party's percentage of the LLC's Minimum Gain (as determined
pursuant to Treasury Regulations Section 1.704-2(g) at the end
of the immediately preceding taxable year). This Section
15.02(c)(2) is intended to comply with, and shall be
interpreted consistently with, the "minimum gain chargeback"
provisions of the Treasury Regulations promulgated under
Section 704(b) of the Code.
15.03 ALLOCATION OF PROFIT OR LOSS FROM A CAPITAL TRANSACTION AND
DISTRIBUTION OF CAPITAL PROCEEDS.
a) TAXABLE INCOME. Profit from a Capital Transaction shall be
allocated as follows:
(1) If one or more Parties has a Negative Capital
Account, Profit from a Capital Transaction shall be
allocated first to those Parties, in proportion to
their Negative Capital Accounts, until all Negative
Capital Accounts have been increased to zero; then
(2) Any remaining Profit not allocated pursuant to
Section 15.03(a)(1) shall be allocated to the extent
necessary so that the Capital Account balances of the
Parties are equal to the amounts distributable to
them pursuant to Section 15.03(c) (this calculation
shall assume that the Capital Transaction does not
result in the dissolution of the LLC even if the
Capital Transaction does result in the dissolution of
the LLC).
b) TAXABLE LOSS. Loss from a Capital Transaction shall be
allocated as follows:
(1) If one or more Parties has a Positive Capital
Account, Loss from a Capital Transaction shall be allocated
first to those Parties, in proportion to their Positive
Capital Accounts, until-all Positive Capital Accounts have
been reduced to zero; then
(2) Any remaining Loss not allocated to reduce
Positive Capital Accounts to zero pursuant to Section
15.03(b)(1) shall be allocated to the Parties in proportion to
their respective Percentages of Interest.
c) CAPITAL PROCEEDS. Distributions of net Capital Proceeds (after
repayment of all debts and liabilities of the LLC, including
loans from Parties, and the establishment of any reserves that
all the Parties deem necessary) shall be made in the following
order of priorities:
(1) First, to each Party, in 'proportion to each
Party's Adjusted Capital Contributions, an amount equal to the
amount of that Party's respective Adjusted Capital
Contributions; then
(2) If one or more Parties has a Positive Capital
Account before any further allocation of Profit pursuant to
Section 15.03(a)(2), to those Parties, in proportion to and to
the extent of their respective Positive Capital Account
balances; and then
(3) The balance to the Parties in proportion to their
respective Percentages of Interest.
15.04 LIQUIDATION OR DISSOLUTION.
In the event the LLC is liquidated or dissolved, the assets of the LLC
shall be distributed, after taking into account the allocations of Profit or
Loss pursuant to Sections 15.02 or 15.03, if any, and prior distributions of
cash or property pursuant to Sections 15.02 or 15.03, if any, to the Parties to
the extent of and in proportion to the balances in their respective Positive
Capital Accounts.
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15.05 GENERAL.
a) The timing and amount of all distributions shall be as
determined by all of the Parties. It is the intention of the
Parties that any monies available for distribution to the
Parties be distributed promptly.
b) If any assets of the LLC are distributed to the Parties in
kind, those assets shall be valued on the basis of their fair
market value, and any Party entitled to any interest in those
assets shall receive that interest as a tenant-in-common with
all other Parties so entitled. The fair market value of the
assets distributed in kind shall be determined by the BOG or
in the event of any dispute by a Party by an independent
appraiser selected by all the Parties and paid for by the
Party not accepting the BOG valuation. Based upon the fair
market value, the Profit or Loss for each unsold asset shall
be determined as if that asset had been sold at its fair
market value, and the Profit or Loss shall be allocated as
provided in Section 15.03 and shall be properly credited or
charged to the Capital Accounts of the Parties prior to the
dissolution of the assets in liquidation pursuant to Section
15.04.
c) For each taxable year, all Profit and Loss of the LLC shall be
allocated at and as of the end of that taxable year. The
allocations of Profit and Loss shall be made within
seventy-five (75) days after the end of such taxable year.
d) Except as otherwise provided ill this Section 15.05(d), all
Profit and Loss shall be allocated, and all distributions of
cash shall be distributed, as the case may be, to the persons
shown on the records of the LLC to have been Parties as of the
last day of the taxable year for which that allocation or
distribution is to be made. Unless all the Parties agree to
separate the LLC's taxable year into segments, if the LLC
admits a new Party to the LLC or if a Party sells, exchanges
or otherwise disposes of all or any portion of his Interest to
any person who, during that taxable year is admitted as an
additional or substitute Party, the Profit and Loss shall,
except as otherwise provided in the Code, be allocated between
the transferor and the transferee on the basis of the number
of days of the taxable year in which each was a Party;
provided, however, that in the event of a Capital Transaction
or any other extraordinary nonrecurring items of the LLC,
Profit, Loss and distributions from such events shall be
allocated to the Persons shown on the records of the LLC as of
the date of such event.
e) The methods set forth above by which Profit, Loss, and
distributions are allocated, apportioned, and paid are hereby
expressly consented to by each Party as an express condition
to becoming a Party. Upon the advice of the outside
accountants or of legal counsel to the LLC, this Section 15
may be amended to comply with the Code and the regulations
promulgated under Section 704 of the Code; provided, however,
that no such amendment shall become effective without the
consent of those Parties who would be materially or adversely
affected thereby. The Parties agree that the LLC shall use the
traditional method for purposes of Section 704(c) of the Code.
BOOKS AND RECORDS
16.01 Adequate accounting records of all LLC business shall be kept and these
shall be open to inspection by either of the Parties at all reasonable
times. Audit of all books and accounting records shall be undertaken by
a professional "Big Five" auditing company at the request of the BOG at
the LLC's expense.Within seventy-five (75) days after the end of each
taxable year and at the expense of the LLC, the LLC shall cause to be
prepared a complete accounting of the affairs of the LLC, together with
whatever appropriate information is required by each Party for the
20
purpose of preparing such Party's income tax return for that year,
which accounting and information shall be furnished to each Party
16.02 The LLC shall deliver (and shall cause any sublicensees to deliver) to
each Party within thirty (30) days of the end of each calendar quarter,
a written report showing all sales and other revenues during such
calendar quarter.
16.03 Until such time as the LLC employs a suitably qualified accountant
independent of the Parties, MMI will provide, or cause to be provided,
bookkeeping and accounting services to the LLC. Such accounting
services shall include all necessary returns, financial regulatory
requirements, LLC tax returns, quarterly and annual accounts, which
costs thereof, including reasonable overheads of MMI shall be borne by
the LLC.
GENERAL PROVISIONS AND TERMINATION
17.01 TERMINATION
This Agreement shall cease and terminate on the occurrence of
any of the following events, namely:
(a) the bankruptcy, receivership, insolvency or dissolution of the
LLC; or
(b) the execution of an agreement of termination in writing which
has the effect of terminating this Agreement by all of the
Parties to this Agreement,
providing such termination shall not affect any entitlements, rights,
or obligations which accrued prior to termination.
17.02 NOTICES
All notices, requests, demands, payments or other communications
by the terms of this Agreement required or permitted to be given by one
Party to the other shall be given in writing by registered mail,
postage prepaid or by nationally recognized overnight delivery service;
addressed or delivered to such other; in the event that postal service
is interrupted or substantially delayed, delivery in person (against a
signed receipt) only:
(a) in the case of Willmar:
Willmar Poultry Company, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇, ▇▇
▇.▇. Box 753
Willmar, Minnesota 56201-0753
Attention: President
(b) in the case of MMI:
MetaMorphix, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
21
Attention: President
and shall be deemed to have been effectively received on the third
business day next following the posting thereof, if mailed, and on the
day of delivery, if delivered.
17.03 SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of and be binding
upon the Parties and their respective heirs, successors, legal
representatives and assigns, subject to subsection 17.04 hereof.
17.04 PROHIBITION ON ASSIGNMENT
This Agreement may not be assigned, nor shall the benefit or
the burden thereof be assigned, in whole or in part, by any Party
hereto without the unanimous consent of the other Party hereto first
had and obtained. Notwithstanding anything in the foregoing to the
contrary, either Party may assign its interest and right in the Company
and this Agreement to any purchaser of all or substantially all of such
Party's assets (or, in the case of MMI, all of MMI's turkey and
poultry-related assets). In the event that Willmar sells all of its
assets (including its interest and rights in this Agreement) to an
entity also involved in bovine, poultry, swine, aquaculture, and/or
other livestock production and/or processing, such assignment may be
conditioned by MMI upon appropriate "fire wall" confidentiality
protections, operational standards, and agreements being put into
place.
17.05 FURTHER AGREEMENT AND INSTRUMENTS
The Parties hereto covenant and agree to execute any instrument
or certificate that may be necessary or appropriate to carry out the
purpose and intent of this Agreement. The Parties further covenant and
agree that they will do all things necessary and attend all BOG
meetings of the LLC or any other corporation and vote thereat in such
manner to give effect to this Agreement. The further agreements
contemplated in this Agreement shall reflect the provisions' of and the
intent of this Agreement to the extent applicable.
17.06 NO COUNTERPARTS
This Agreement may not be signed in one or more counterparts.
17.07 WAIVER
The Parties covenant and agree that if either Party hereto
fails or neglects, for any reason, to take advantage of any of the
terms herein provided for its benefit, any such failure or neglect by
such Party shall not be, nor be deemed to be, construed as waiver of
any of the terms, covenants, or conditions of this Agreement or the
performance thereof.
22
17.08 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware.
17.09 FORCE MAIEURE
Neither Party of this Agreement shall be liable to the other
for failure or delay in the performance of their obligations under this
Agreement, by Acts of God, regulations, or laws of any government, war,
civic commotion, strike, terrorist attack, lock-out, or labor
disturbances, destruction of facilities and any materials and equipment
by fire, earthquake, storm, failure of public utilities or common
carriers, and any cause beyond the control of that Party for the period
of time that the foregoing prevents performance. The Parties
acknowledge and agree that the foregoing does not operate so as to
excuse any Party from prompt payment of any and all sums due by it
pursuant to the terms and conditions of this Agreement.
17.10 ARBITRATION
The Parties expressly acknowledge and agree that it is their
respective intention that, except as otherwise provided herein, any
disputes arising between them in the first instance be settled
amicably.
All disputes and differences of any kind arising under this
Agreement, or arising between the Parties including the existence or
continued existence of this Agreement and the arbitrability of a
particular issue which cannot be settled amicably by the Parties may be
referred by either Party to arbitration. The Party desiring to initiate
arbitration shall serve a written request on the other Party. The Party
receiving such written request shall designate the locale, being either
Maryland or Minneapolis, within which arbitration is to take place.
The arbitration if conducted in Maryland or Minneapolis shall
be finally settled in accordance with the Rules of Arbitration of the
American Arbitration Association by one or more arbitrators appointed
in accordance with the above-mentioned Rules.
The decision of the arbitration tribunal shall be final and
binding upon the Parties and may be enforced in any court of competent
jurisdiction, and no Party shall seek redress against the other in any
court or tribunal except solely for the purpose of obtaining execution
of the arbitration award or of obtaining a judgement consistent with
the reward.
During any adjudication pursuant to this paragraph, the
Parties shall continue to fulfill their respective obligations under
this Agreement, unless the subject matter of the dispute is of such a
nature that this is by no means possible until the dispute has been
finally settled.
Notwithstanding the provision of this article, neither (a)
issues relating to validity or infringement of Patents licensed herein,
nor (b).disputes involving a third party necessary to be
23
included for the complete resolution of such dispute, nor (c) an
allegation of a failure of a Party to comply with its obligations under
8.01 shall be a subject for arbitration.
17.11 ENTIRE AGREEMENT
This Limited Liability Company Agreement, together with the Certificate
of Formation, constitutes the complete and entire agreement between the Parties,
and there are no prior or contemporaneous oral or written representations,
promises or agreements not expressly referred to herein. This Limited Liability
Company Agreement may not be altered, amended, modified or otherwise changed in
any respect whatsoever except by a writing dated and signed by the Parties
hereto.
IN WITNESS WHEREOF, Willmar has hereunto affixed its corporate seal attested to
by the hands of its duly authorized officer in that behalf on the 4th day of
September, 2002.
WILLMAR POULTRY COMPANY, INC.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------------------
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Its: COO
IN WITNESS WHEREOF, MMI has hereunto executed this agreement attested to by the
hands of its duly - authorized officer in that behalf on the 4th day of
September, 2002.
METAMORPHIX, INC.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Ph.D., President and CEO
24
SCHEDULE 1.01(I)
--------------------------------------------------------------------------------
SCHEDULE OF MMI PATENTS
--------------------------------------------------------------------------------
PATENT / APP # TITLE COUNTRY STATUS
--------------------------------------------------------------------------------
*** *** US Issued
--------------------------------------------------------------------------------
*** *** Argentina Pending
--------------------------------------------------------------------------------
*** *** Brazil Pending
--------------------------------------------------------------------------------
*** *** Canada Pending
--------------------------------------------------------------------------------
*** *** Europe Pending
--------------------------------------------------------------------------------
*** *** Japan Pending
--------------------------------------------------------------------------------
*** *** Mexico Pending
--------------------------------------------------------------------------------
*** *** New Zealand Pending
--------------------------------------------------------------------------------
*** *** South Africa Issued
--------------------------------------------------------------------------------
*** *** US Pending
--------------------------------------------------------------------------------
*** *** World Published
--------------------------------------------------------------------------------
*** *** US Pending
--------------------------------------------------------------------------------
*** *** Canada Pending
--------------------------------------------------------------------------------
*** *** Europe Pending
--------------------------------------------------------------------------------
*** *** Japan Pending
--------------------------------------------------------------------------------
*** *** US Pending
--------------------------------------------------------------------------------
*** *** World Pending
--------------------------------------------------------------------------------
*** *** US Pending
--------------------------------------------------------------------------------
*** *** Australia National
Phase
--------------------------------------------------------------------------------
*** *** Brazil Pending
--------------------------------------------------------------------------------
*** *** Canada Pending
--------------------------------------------------------------------------------
*** *** China Pending
--------------------------------------------------------------------------------
*** *** Europe Published
--------------------------------------------------------------------------------
*** *** Japan National
Phase
--------------------------------------------------------------------------------
*** *** Mexico Pending
--------------------------------------------------------------------------------
*** *** New Zealand National
Phase
--------------------------------------------------------------------------------
*** *** World Pending
--------------------------------------------------------------------------------
*** *** Canada Pending
--------------------------------------------------------------------------------
*** *** Canada Pending
--------------------------------------------------------------------------------
*** *** Canada Pending
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
*** *** Europe Pending
--------------------------------------------------------------------------------
*** *** Japan Pending
--------------------------------------------------------------------------------
*** *** US Allowed
--------------------------------------------------------------------------------
*** *** US Pending
--------------------------------------------------------------------------------
*** *** US Pending
--------------------------------------------------------------------------------
*** *** US Pending
--------------------------------------------------------------------------------
*** *** World Published
--------------------------------------------------------------------------------
*** *** World Published
--------------------------------------------------------------------------------
*** *** US Issued
--------------------------------------------------------------------------------
*** *** US Allowed
--------------------------------------------------------------------------------
*** *** US Issued
--------------------------------------------------------------------------------
*** *** US Pending
--------------------------------------------------------------------------------
*** *** Argentina Pending
--------------------------------------------------------------------------------
*** *** World Published
--------------------------------------------------------------------------------
*** *** US Pending
--------------------------------------------------------------------------------
*** *** US Pending
--------------------------------------------------------------------------------
*** *** World Pending
--------------------------------------------------------------------------------
SCHEDULE 12.01
SCHEDULE OF LLC PARTIES
Willmar Poultry Company, Inc. 50%
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇, ▇▇
P.O. Box 753
Willmar, Minnesota 56201-0753
MetaMorphix, Inc. 50%
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
25
SCHEDULE 13.01
SCHEDULE OF CAPITAL CONTRIBUTIONS
None as of Agreement Execution
26
EXHIBIT 2.02
CERTIFICATE OF FORMATION
CERTIFICATE OF FORMATION
OF
WILLMAR/METAMORPHIX TURKEY JOINT VENTURE LLC
The undersigned, being duly authorized to execute and file this
Certificate of Formation for the purpose of forming a limited liability company
pursuant to the Delaware Limited Liability Company Act (6 Del.C. ss. 18-101, ET
SEQ.), does hereby certify as follows:
FIRST: The name of the limited liability company is Willmar/MetaMorphix
Turkey Joint Venture LLC (the "Company").
SECOND: The Company's registered office in the State of Delaware is
located at ▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇. The
registered agent of the Company for service of process at such address is LEXIS
Document Services Inc.
THIRD: The operation of the Company shall be governed by a Limited
Liability Company Agreement entered into among the members of the Company.
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate
of Formation as of the 4th day of September, 2002.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Ph. D., Authorized Person