Exhibit 10.57
***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.
DISTRIBUTION
AGREEMENT
This DISTRIBUTION AGREEMENT
(the “Agreement”) is made and entered into this 1st day
of January, 2005 (the “Effective Date”), by and between
DIVERSA CORPORATION, a Delaware corporation with a place of
business at 4955 Directors Place, San Diego, California 92121 USA
(hereinafter referred to as “Diversa”), and VALLEY
RESEARCH, a corporation with a place of business at 3502 North
Olive Road, South Bend, Indiana 46628 USA (hereinafter referred to
as “VRi”). Diversa and VRi shall be referred to
individually as a “Party” and collectively as
“Parties”.
RECITALS
WHEREAS, Diversa is a biotechnology company engaged in
the production, manufacture, and sale of, among other things,
enzymes that have applications in agricultural, chemical,
pharmaceutical, and a wide range of specialty and industrial
processes.
WHEREAS, VRi is a company engaged in the business of
marketing, selling and supplying, among other things, enzymes and
other specialty compounds, for use in various commercial
applications.
WHEREAS, Diversa desires to license and appoint VRi as a
distributor of certain of Diversa’s enzyme products and VRi
desires to accept such appointment on the terms and conditions set
forth in this Agreement.
NOW THEREFORE
, in consideration of the mutual
covenants, representations and warranties hereinafter set forth,
Diversa and VRi agree as follows:
ARTICLE 1 –
DEFINITIONS
1.1 “Additional Distributor” has the
meaning set forth in Section 4.2.
1.2 “Additional Term” means any
extension of the term of this Agreement beyond the end of the
Initial Term.
1.3 “Affiliate” means any corporation,
firm, partnership or other entity that directly or indirectly owns
or is owned by, or is under common ownership with a Party to this
Agreement or a Third Party, as applicable. For purposes of the
preceding definition, “owns,” “owned” and
“ownership” shall mean beneficial ownership of more
than fifty percent (50%) of the outstanding voting shares or
securities or the ability otherwise to elect a majority of the
board of directors or other managing authority.
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1.4 “Approved Customer” means a customer
or segment of customers for a Diversa Enzyme in the applicable
Field within the applicable Territory, as set forth in the Minimum
Sales Requirement, as amended from time to time during the term of
this Agreement.
1.5 “Certificate of Analysis” has the
meaning set forth in Section 11.1.
1.6 “Confidential Information” means all
information disclosed by a Party to the other pursuant to this
Agreement, including, without limitation, manufacturing, marketing,
financial, personnel, scientific and other business information and
plans, and the material terms of this Agreement, whether in oral,
written, graphic or electronic form.
1.7 “Current VRi Technology” has the
meaning set forth in Section 14.3.
1.8 “Disclosing Party” has the meaning
set forth in Section 13.1.
1.9 “VRi Profit” has the meaning set
forth in Section 16.3.3.
1.10 “Diversa Enzyme Related Technology”
has the meaning set forth in Section 14.3.
1.11 “Diversa Enzyme” means each enzyme
more particularly described on Addendum A attached hereto, under
whatever name, mark, or description Diversa shall hereafter elect
to manufacture and sell such enzyme, as amended from time to time
pursuant to Article 3.
1.12 “Diversa Patent Rights” means any
patent or patent application in the Territory owned by or licensed
to Diversa (with the right to further license or sublicense) during
the term of this Agreement claiming the use, sale, offer for sale
or import of the Diversa Enzymes, either generally or in the
applicable Field.
1.13 “Diversa Trademarks” means the
trademarks set forth on Addendum E and any worldwide counterpart
registered, applied for or in use, as such Addendum E may be
amended from time to time by Diversa.
1.14 “Exclusive Approved Customer” means
each Approved Customer identified as exclusive in the Minimum Sales
Requirement.
1.15 “Field” means the application area
of the applicable Diversa Enzyme described in Addendum
B.
1.16 “Initial Term” has the meaning set
forth in Section 16.1.
1.17 “Losses” has the meaning set forth
in Section 12.1.
1.18 “Minimum Purchase Requirement” means
the amount of each Diversa Enzyme set forth in Addendum C that VRi
agrees to purchase from Diversa during the specified time
period.
1.19 “Minimum Sales Requirement” means
the rolling 4-calendar-quarter minimum requirement for sales of
Diversa Enzyme to each Approved Customer, as set forth in Addendum
B, as amended each calendar quarter during the term of this
Agreement.
1.20 “New Enzyme Notice” has the meaning
set forth in Section 3.1.
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1.21 “Product Shipment Date” has the
meaning set forth in Section 5.3.
1.22 “Projected Volume” has the meaning
set forth in Section 5.2.
1.23 “Purchase Order” has the meaning set
forth in Section 5.3.
1.24 “Receiving Party” has the meaning
set forth in Section 13.1.
1.25 “Reformulated Enzyme” has the
meaning set forth in Section 10.1.
1.26 “Specifications” means the
regulatory, manufacturing, quality control and quality assurance
procedures, processes, practices, standards, instructions and any
other attributes that are otherwise required in connection with the
manufacture of each Diversa Enzyme, as set forth in Addendum D, as
amended from time to time by Diversa. Separate Specifications shall
be required for each distinct Diversa Enzyme and shall be added to
Addendum D.
1.27 “Territory” means such regions
and/or countries, as set forth in the Minimum Sales Requirement, as
amended from time to time during the term of this
Agreement.
1.28 “Third Party” means anyone other
than Diversa or VRi, or their respective Affiliates.
ARTICLE 2 – GRANT OF
NON-EXCLUSIVE DISTRIBUTORSHIP
2.1 Subject to the terms and conditions of this
Agreement, Diversa hereby
2.1.1 Grants to VRi a non-exclusive, royalty-free
license, without the right to sublicense, (i) under the
Diversa Patent Rights solely to sell and offer for sale Diversa
Enzymes and Reformulated Enzymes to Approved Customers for use by
such Approved Customers solely in the applicable Field and
applicable Territory and (ii) subject to Article 15, to
use the Diversa Trademarks solely on packaging and marketing
materials for Diversa Enzymes (but not any Reformulated Enzymes
unless required by or expressly agreed upon by Diversa in writing)
that are supplied or approved by Diversa solely in connection with
the sale and offer for sale of Diversa Enzymes to Approved
Customers; and
2.1.2 Appoints VRi, on a non-exclusive basis (except
as specifically set forth herein), as a distributor of Diversa
Enzymes to Approved Customers in the applicable Field and
applicable Territory. Diversa hereby permits and grants VRi the
right to utilize Third Parties approved in writing by Diversa as
subcontractors of VRi with respect to the rights provided in this
Section 2.1; provided that VRi will remain responsible
for complying with this Agreement and for any such
subcontractor’s performance of any of VRi’s
responsibilities under this Agreement.
ARTICLE 3 – PRODUCT
LISTS
3.1 From time to time during the term of this
Agreement, Diversa may notify VRi, in writing, of any new,
different or additional enzymes which Diversa wishes to add to
Addendum A or substitute for a Diversa Enzyme listed on Addendum A
at the time of such notice (a “New Enzyme Notice”).
Each such New Enzyme Notice shall include the price(s) and other
material terms upon which Diversa proposes to include such enzyme
under the terms of this Agreement. Upon VRi’s request,
Diversa shall provide to VRi enzyme characterization and
application
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information and a reasonable quantity of such
enzyme for lab-scale testing in conjunction with providing such New
Enzyme Notice. Within thirty (30) days of its receipt of a New
Enzyme Notice (or such longer period, not to exceed an additional
sixty (60) days, as VRi shall request in writing for the
purpose of field testing and examining such enzyme), VRi shall
advise Diversa, in writing, whether it consents to the addition or
substitution of such enzyme onto Addendum A. VRi’s failure to
respond within seven (7) days to a New Enzyme Notice shall be
deemed an election by VRi not to accept the addition or
substitution of such enzyme.
3.2 Upon one hundred twenty (120) days written
notice to VRi, Diversa may withdraw or delete an enzyme from the
list of Diversa Enzymes covered by this Agreement in the event
(i) Diversa elects to discontinue the manufacture and/or the
sale of such Diversa Enzyme in the applicable Field or applicable
Territory and/or (ii) Diversa wishes to substitute an
alternative formulation of such Diversa Enzyme to be sold in the
applicable Territory.
3.3 At Diversa’s request, VRi shall test the
effectiveness of any new enzyme developed by Diversa for use by
Approved Customers. VRi shall recommend any potential improvements
identified by VRi to the enzymes covered by this Agreement. At
Diversa’s sole discretion, enzymes developed by Diversa and
tested by VRi offering increased benefits in pursuing the objective
of this Agreement shall be added to or substituted for a Diversa
Enzyme listed on Addendum A as specified in
Section 3.1.
ARTICLE 4 – MINIMUM SALES
REQUIREMENT; PRODUCT INQUIRIES
4.1 The initial Minimum Sales Requirement as of the
Effective Date is attached hereto as Addendum B. Following the
Effective Date, VRi shall update the Minimum Sales Requirement
before the end of each subsequent calendar quarter, maintaining a
4-calendar-quarter rolling forecast, subject to the following
conditions:
4.1.1 VRi shall be permitted to add new Approved
Customers for a Diversa Enzyme in a Field within a Territory to the
Minimum Sales Requirement only with the written approval of
Diversa;
4.1.2 VRi shall be permitted at any time to eliminate
one or more Approved Customers for a Diversa Enzyme and the
corresponding minimum sales requirement from the Minimum Sales
Requirement;
4.1.3 Approved Customers and the corresponding minimum
sales requirement shall automatically be removed from the Minimum
Sales Requirement if (i) no customer trial occurs within six
(6) months from the date such Approved Customer was added to
the Minimum Sales Requirement or (ii) no sales are achieved
within twelve (12) months from the date such Approved Customer
was added to the Minimum Sales Requirement;
4.1.4 Except as provided for in Sections 4.1.2 and
4.1.3, VRi shall not reduce the total minimum sales requirement for
any Diversa Enzyme within any calendar quarter in the Minimum Sales
Requirement without the written approval of Diversa. Further, the
total minimum sales requirement for each Diversa Enzyme
(excluding reductions as provided for in Sections 4.1.2 and 4.1.3)
within any new calendar quarter being forecasted shall not be less
than [...***...] percent ([...***...]%) of the average of actual
quarterly sales of such Diversa Enzyme based on the actual Purchase
Orders of such Diversa Enzyme from the preceding two calendar
quarters without the written approval of Diversa; and
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Confidential
Treatment Requested
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4.1.5 In the event that VRi fails to update the
Minimum Sales Requirement within the time period specified herein,
Diversa shall have the right to update the Minimum Sales
Requirement without the consent of VRi subject to the guidelines in
this Section 4.1.
4.2 For each Exclusive Approved Customer in the
Minimum Sales Requirement, Diversa shall not, and shall not appoint
or license any Third Party as Diversa’s agent,
representative, dealer or distributor (an “Additional
Distributor”) to, sell or distribute the applicable Diversa
Enzyme to such Exclusive Approved Customer prior to the end of the
Initial Term; provided however, that, with respect to each
Diversa Enzyme, Diversa shall have the right, at its sole option,
either to sell or distribute itself, or appoint an Additional
Distributor to sell or distribute, the applicable Diversa Enzyme in
the applicable Territory and/or to Approved Customers and/or
restrict in whole or in part the applicable Territory and/or
Approved Customers for the applicable Diversa Enzyme under this
Agreement in the event that VRi fails to reach the total
Minimum Sales Requirement for the applicable Diversa Enzyme during
any two consecutive calendar quarters. Diversa shall forward or
refer to VRi as soon as practical for processing and/or response
all inquiries regarding Diversa Enzymes received by Diversa from
the corresponding Exclusive Approved Customers. In the event that
an Exclusive Approved Customer states that it desires to purchase
such Diversa Enzymes from a supplier other than VRi, Diversa and
VRi together shall, in good faith, determine the specific customer
issues and how best to respond to the situation.
4.3 Diversa shall have the right to pursue
commercial activities, itself and through any Affiliate or Third
Party, with any Approved Customer that is not an Exclusive Approved
Customer for the applicable Diversa Enzyme in the Field within the
Territory, as set forth in the most recent Minimum Sales
Requirement.
4.4 Neither VRi nor its Affiliates shall solicit or
accept orders for Diversa Enzymes or Reformulated Enzymes from any
prospective purchaser for use outside the applicable Field and/or
outside the applicable Territory or deliver or tender (or cause to
be delivered or tendered) Diversa Enzymes or Reformulated Enzymes
to any purchaser for use (or where VRi knows or has reason to
believe that such purchaser intends to use such Diversa Enzymes or
Reformulated Enzymes) outside the applicable Field and/or outside
the applicable Territory, except with Diversa’s prior written
approval. If VRi receives any order for Diversa Enzymes or
Reformulated Enzymes from a prospective purchaser for use outside
the applicable Field and/or outside the applicable Territory, VRi
shall immediately notify Diversa hereunder of the details of such
order. While Diversa shall have the final decision on how best to
proceed with the order, after discussion with VRi, Diversa shall in
good faith consider whether the addition of said customer as an
Approved Customer within the applicable Territory is in both
Parties’ interest.
4.5 VRi shall forward or refer to Diversa as soon as
practical all inquiries regarding Diversa Enzymes received by VRi
from customers other than the corresponding Approved Customers.
Diversa shall consider how best to handle such inquiries. It is
understood by VRi that Diversa has no obligation to have VRi handle
such potential business and that any price quote, sale, offer or
distribution of a Diversa Enzyme by VRi to a customer other than a
Approved Customer shall constitute a material breach of this
Agreement.
ARTICLE 5 – PROCESSING OF
ORDERS
5.1 VRi shall submit Purchase Orders for the
purchase of Diversa Enzymes by mail, facsimile or electronic mail
to the following Diversa contact, which may be changed upon written
notice by Diversa to VRi:
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Diversa Customer Service
4955 Directors Place
San Diego, California
92121-1609
telephone:
(858) 526-5323
fax: (858) 526-5823
e-mail:
customerservice@diversa.com
5.2 Volume Projection.
No later than the date that is two
(2) months prior to the first Product Shipment Date with
respect to a Diversa Enzyme, and no later than the first day of
each calendar quarter thereafter, VRi shall provide Diversa with
quarterly estimates of the volume of each Diversa Enzyme that VRi
anticipates that it will require each quarter during the subsequent
twenty-four (24) months (the “Projected Volume”).
The Projected Volume will constitute VRi’s good faith
estimate of volumes for the applicable period and will not
constitute a commitment to buy by VRi or a commitment to sell by
Diversa.
5.3 Purchase Orders.
VRi shall provide Diversa with
written purchase orders for each Diversa Enzyme (each a
“Purchase Order”), which Diversa shall either confirm
or reject in writing or via electronic mail within five
(5) business days after receipt thereof, and VRi shall specify
the scheduled shipment date in such purchase orders (each such
date, a “Product Shipment Date”), provided that
the Product Shipment Date is no less than one (1) month after
the date of such Purchase Order; provided further , that VRi
may request a shorter lead time, and, if the related Purchase Order
is accepted by Diversa, Diversa shall use its commercially
reasonable efforts to attempt to meet such earlier date but shall
not be in breach of this Agreement or be liable to VRi or to any
Third Party for failure to do so. Each Purchase Order shall include
the quantity of Diversa Enzyme to be made available for shipping,
Scheduled Shipment Date, and shipping instructions. Each Purchase
Order provided to Diversa hereunder shall constitute a binding
commitment by VRi to purchase Diversa Enzyme as specified in the
Purchase Order on the terms and conditions herein. Diversa shall
use commercially reasonable efforts to maintain sufficient levels
of inventory of the applicable Diversa Enzyme in order to comply
with Purchase Orders. If any term of any Purchase Order conflicts
with any term of this Agreement, the applicable term set forth in
this Agreement shall prevail.
ARTICLE 6 – SHIPPING AND
DELIVERY; RISK OF LOSS
6.1 Diversa shall use its commercially reasonable
efforts to timely ship all Diversa Enzymes ordered by VRi in
accordance with VRi’s instructions in the applicable Purchase
Order, subject to Section 6.2. Diversa shall not be liable to
VRi or to Third Parties who purchase Diversa Enzymes from VRi for
any loss or damage occasioned by its failure to make delivery or
for any delay in making delivery when such failure or delay results
from causes or events beyond Diversa’s reasonable control,
including, but not limited to, fires, floods, accidents or other
acts of God, strikes, labor disputes or difficulties, acts or
requirements of government or civil authority, riot, war,
terrorism, embargo, truck or car shortage or other transportation
delay or difficulty or inability to obtain or scarcity of labor,
component parts or raw materials. In the event of any such
occurrence or event precluding shipment in accordance with the
applicable Purchase Order, Diversa reserves the right to apportion
available supplies of Diversa Enzymes among its customers,
including VRi, in any manner that Diversa, in its sole judgment,
shall deem fair and reasonable. In the event of delay caused by any
such occurrence or event, the shipment date(s) shall be postponed
for a period of time equal to the time required to remedy, correct
or alleviate such cause or event and the Minimum Sales Requirement
timeline shall be similarly adjusted.
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6.2 Shipping of
Product. Diversa shall
package all Diversa Enzymes in accordance with the Specifications
and make available for shipping to VRi all Diversa Enzymes
purchased by VRi hereunder in accordance with the Specifications
and the applicable Purchase Order FCA at the site of
Diversa’s manufacture of the applicable Diversa Enzyme (Free
Carrier, as defined by Incoterms 2000). If VRi requests and Diversa
agrees, Diversa will arrange the shipment and insurance of Diversa
Enzymes purchased by VRi, using carriers approved by VRi, and VRi
shall reimburse Diversa the cost of such shipment and insurance as
reflected on the invoice provided in connection with the applicable
shipment provided however , that in all cases the risk of
loss associated with the Diversa Enzymes shall pass from Diversa to
VRi FCA at the site of Diversa’s manufacture of the
applicable Diversa Enzyme. Diversa shall retain, label, date and
store samples of each shipment of Diversa Enzymes in accordance
with the Specifications sufficient for Third Party testing of such
samples that may be required subsequent to Diversa Enzyme delivery
in accordance with Section 6.3 below. Diversa shall give
prompt notice to VRi as soon as Diversa becomes aware of any
anticipated delay in the shipment of any Diversa Enzyme, and shall
state in such notice the date on which Diversa can make such
Diversa Enzyme available to be shipped.
6.3 Non-Conforming
Shipment. VRi shall be
entitled to test and evaluate all Diversa Enzymes for their
conformity to the Specifications upon the arrival of the Diversa
Enzymes at the location specified in the applicable Purchase Order.
All claims for non-conforming shipments shall be made in writing to
Diversa within fifteen (15) days upon the arrival of the
Diversa Enzymes at the location specified in the applicable
Purchase Order. Any claims not made within such period shall be
deemed waived and released. Upon receipt of a written claim for a
non-conforming Diversa Enzyme shipment, the Parties shall first
work collaboratively in good faith to resolve the claim. In the
event the Parties can not resolve the claim within fifteen
(15) days, Diversa shall submit a retained sample of the
applicable Diversa Enzyme shipment to a mutually acceptable Third
Party laboratory. Such Third Party laboratory shall determine
whether such Diversa Enzyme conforms to the Specifications, and the
Parties agree that such laboratory’s determination shall be
final and determinative. The Party against whom the Third Party
tester rules shall bear all costs of the Third Party testing.
VRi’s exclusive remedy against Diversa for non-conforming
Diversa Enzymes shall be the return and replacement, at
Diversa’s expense, of all Diversa Enzymes determined by the
Third Party laboratory to be non-conforming (including return and
outbound freight of the new shipment, and if no new product is
shipped, then reimbursement of prior freight paid by VRi). DIVERSA
SHALL NOT, IN ANY EVENT, BE LIABLE TO DISTRIBUTOR FOR ANY SPECIAL,
INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES INCURRED UNDER ANY
LEGAL OR EQUITABLE THEORY WITH RESPECT TO THE MANUFACTURE,
PROMOTION, USE, SALE AND/OR DISTRIBUTION OF THE DIVERSA ENZYMES OR
REFORMULATED ENZYMES.
ARTICLE 7 – PRODUCT
PRICING, INVOICING AND PAYMENT
7.1 During the term of this Agreement, Diversa shall
sell Diversa Enzymes to VRi at those prices specified on Addendum A
attached hereto, as such prices are amended pursuant to this
Article 7. Other applicable fees,
