TERMINATION AND LICENSE
AGREEMENT
THIS TERMINATION AND LICENSE AGREEMENT (this
“ Agreement ”)
is made as of the 19th day of December and effective as of
November 23, 2005 (the “ Effective Date
”) by and between Dyadic Netherland, B.V. ,
a Dutch corporation (“ Dyadic NL ”),
its parent, Dyadic International (USA), Inc. , a
Florida, USA corporation (“ Dyadic USA
”), its parent, Dyadic International, Inc .,
a Delaware, USA corporation (“ Dyadic Parent
” and together with Dyadic NL and Dyadic USA, the “
Dyadic Parties ”), Nederlandse
Organisatie voor toegepast-natuurwetenschappeijk onderzoek TNO
Netherlands Organisation for Applied Scientific Research and more
specifically TNO Quality of Life (formerly known as TNO
Nutrition and Food Research Institute), Zeist, the Netherlands
(“ TNO ”) and its wholly owned
subsidiary, TNO Bedrijven B.V. , a Dutch
corporation (“ TNO\BV ” and together
with TNO, the “ TNO Parties ”). The
Dyadic Parties and the TNO Parties are sometimes hereinafter
collectively referred to as the “ Parties
” and individually as a “ Party
.” Certain capitalized terms not expressly defined elsewhere
herein are defined in the glossary appearing in Article X
hereof.
RECITALS:
A. Dyadic NL, Dyadic USA and TNO are parties to
that certain Cooperation and License Agreement dated August 12,
2003 (the “ Cooperation Agreement
”).
B. As was described in Section 1.1 of the
Cooperation Agreement, Dyadic NL is engaged in the business of
developing, commercializing and using high throughput robotic
screening (“ HTRS ”) systems utilizing
fungal organisms including the use of HTRS systems the scope of
which includes, but is not limited to, the discovery and
development of native, cDNA and evolved genes and expressed
bio-molecules (including but not limited to proteins, peptides,
antibodies, enzymes and small molecules), and libraries in fungi,
as well as mode of action research and target gene identification
for antifungal drugs and fungicides, but which, for purposes of
clarity, does not include the over expression of the aforementioned
for commercial purposes (referred to in the Cooperation Agreement
and hereinafter as “ the Business
”).
C. Under the Cooperation Agreement, and as part of
the collaboration of TNO and Dyadic USA to develop an HTRS system
utilizing fungal organisms (a “ Fungal HTRS
System ”), TNO licensed to Dyadic NL on an
exclusive, worldwide basis for the sole purpose of conducting the
Business (i) pursuant to Section 2.2 of the Collaboration
Agreement, International Patent Application WO 2000NL00544 (the
“ TNO Patent ”) and (ii) pursuant to
Section 2.3 of the Collaboration Agreement, any additional
Technology not included in the TNO Patent (including without
limitation, Improvements to the TNO Patent) which TNO has
developed, owns, licenses or otherwise has the right to use as of
the date of the Collaboration Agreement or thereafter, and which is
necessary or useful for the conduct of the Business (the “
Additional TNO Technology ,” and together
with the TNO Patent, collectively, the “ TNO Licensed
Technology ”).
D. Pursuant to the terms of the Cooperation
Agreement, as part consideration for its license of the TNO
Licensed Technology to Dyadic NL as described in Recital C (the
“ Original TNO License ”), TNO was
granted various rights (i) to receive royalties, profits and gains
realized by Dyadic NL from its successful commercialization of a
Fungal HTRS System and certain option rights to purchase shares of
Dyadic Parent stock (collectively, the “ Royalty
and
Equity
Interests ”)
and (ii) be paid fees for R&D services performed for Dyadic NL
by TNO (“ Service Fees ”).
E. As part consideration for its Royalty and
Equity Interests, in addition to the Original TNO License and other
undertakings set for in the Cooperation Agreement, TNO made an
investment in Dyadic NL of costs incurred by TNO prior to the date
of the Cooperation Agreement in the amount of US$161,000, as fixed
by Attachment 1 to the Cooperation Agreement (the “
Investment Amount ”).
F. As of the Effective Date, Dyadic NL owes TNO
US$377,000 of Service Fees for services heretofore rendered by TNO
to Dyadic NL (the “ Unpaid Service Fees
”).
G. The Parties now wish to (i) terminate the
Cooperation Agreement and convert the Original TNO License into a
paid-up, exclusive, worldwide license to use the TNO Licensed
Technology for the sole purpose of conducting the Business (the
“ Replacement TNO License ”), (ii)
extinguish in their entirety TNO’s Royalty and Equity
Interests in Dyadic NV and Dyadic Parent, (iii) have the Dyadic NV
liability to TNO for the Unpaid Service Fees satisfied in full, and
(iv) effect that termination of the Cooperation Agreement and the
conversion of the TNO License into the Replacement TNO License, the
extinguishment of the Royalty and Equity Interests and the
satisfaction of the Unpaid Services Fees liability, respectively,
by Dyadic Parent’s issuance 161,560 shares of its Common
Stock to TNO\BV (the “ Shares ”), all
upon and subject to the terms and conditions of this
Agreement.
AGREEMENT:
NOW THEREFORE, in consideration of the foregoing Recitals, the
covenants and agreements of the Parties herein below set forth and
other good and valuable consideration, the receipt and sufficiency
of which the Parties hereby each mutually acknowledge, the Parties,
for themselves and their respective successors and assigns, agree
as follows:
ARTICLE
I
ADOPTION OF
RECITALS
The Parties adopt the foregoing Recitals and
agree and affirm that the construction of this Agreement shall be
guided thereby.
ARTICLE
II
TERMINATION OF
COOPERATION AGREEMENT
Subject
to the provisions of Section 11.2 hereof pertaining to the
continued force and effect of the Cooperation Agreement only as
among the Dyadic Parties and not TNO, as of the Effective Date the
Cooperation Agreement is terminated and without any further force
or effect, and all rights and obligations of the Dyadic Parties to
TNO thereunder and all of the rights and obligations of TNO to the
Dyadic Parties thereunder are cancelled in their entirety,
including but not limited to (i) all of TNO’s Royalty and
Equity Interests, (ii) any obligation of any of the Dyadic Parties
to pay any Service Fees to TNO for past services rendered by it to
Dyadic NL, including but not limited to the Unpaid Service Fees and
(iii) the termination of the Original TNO License, subject to
TNO’s grant to Dyadic NL of the Replacement TNO License
pursuant to the provisions of Article IV hereof.
ARTICLE
III
ISSUANCE OF SHARES TO
TNO\BV
3.1 Purchase and Sale of Shares.
As
consideration to TNO for (i) the termination of the Cooperation
Agreement and grant to Dyadic NL of the Replacement TNO License
upon the terms and conditions of this Agreement, (ii) the
extinguishment in their entirety of all of TNO’s Royalty and
Equity Interests in Dyadic NL and Dyadic Parent, and (iii) the
payment in full by Dyadic NL of its liability to TNO for the Unpaid
Service Fees, Dyadic Parent does hereby sell to TNO\BV, and TNO\BV
does hereby purchase from Dyadic Parent, 161,560 fully paid and
non-assessable shares of $.001 par value Common Stock of Dyadic
Parent (heretofore and hereafter, the “
Shares ”), and the TNO Parties hereby accept
the Shares, subject to the restrictions imposed by applicable US
securities laws, as set forth in Section 3.3 hereof.
3.2 TNO Parties’
Securities Representations and Warranties .
In connection with TNO\BV’s
purchase of the Shares, the TNO Parties hereby make the following
representations and warranties to the Dyadic Parties:
(a) TNO\BV has such knowledge and experience in
financial and business matters in general and with respect to
businesses of a nature similar to Dyadic Parent so as to be capable
of evaluating the merits and risks
of, and making an informed business decision with respect to, the
acquisition of the Shares;
(b)
TNO\BV is acquiring the Shares
solely for its own account and not with a view to or for resale in
connection with any distribution or public offering thereof, within
the meaning of any applicable securities
laws
and regulations, unless such distribution or offering is
registered under the Securities Act of 1933, as amended (the
“ Securities Act ”), or an exemption
from such registration is available.
(c) TNO\BV (i) has received all the information
it has deemed necessary to make an informed investment decision
with respect to an acquisition of the Shares; (ii) understands
that Dyadic Parent is subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the “
Exchange Act ”), and has had the opportunity
to review all publicly available filings made by Dyadic Parent with
the Securities and Exchange Commission (the “
SEC ”) pursuant to either the Securities Act
or the Exchange Act; (iii) has had the unrestricted
opportunity to make such investigation as it has desired pertaining
to Dyadic Parent and the acquisition of the Shares and to verify
the information that is, and has been, available to TNO\BV; and
(iv) has had the opportunity to ask questions of Dyadic Parent
concerning Dyadic Parent.
(d)
TNO\BV is an “accredited
investor” within the meaning of the Securities Act, is able
to bear the economic risk of its investment in the Shares for an
indefinite period of time;
(e) TNO\BV has received no public solicitation or
advertisement with respect to the Shares.
(f) TNO\BV understands that the Shares are
"restricted securities" as that term is defined in Rule 144
promulgated by the SEC under the Securities Act, the resale of
these Shares is restricted by federal and state securities laws
and, accordingly, the Shares must be held indefinitely unless their
resale is subsequently registered under the Securities Act,
effectuated pursuant to Rule 144, or Dyadic Parent receives an
opinion of counsel acceptable to Dyadic Parent or another exemption
from such registration is available for their resale.
3.3 Restrictions on
Transfer of Shares . TNO\BV acknowledges and consents that
certificates now or hereafter issued for the Shares shall bear a
legend with respect to the transfer restrictions under the
Securities Act. TNO\BV further agrees that if the Shares or any
portion thereof are subsequently transferred, TNO\BV will execute,
deliver and file all such papers, documents and instruments as may
be required by the SEC and any applicable state securities
commission to qualify the transfer for an exemption from
registration under the Securities Act, or any applicable state
securities laws, respectively, to the extent that such papers,
documents and instruments may be necessary for such transfer.
TNO\BV also agrees to furnish Dyadic Parent with a copy of all such
papers, documents and instruments, and, in addition, will furnish
Dyadic Parent with any other information that Dyadic Parent may
reasonably require to ensure that no subsequent transfer or
disposition of the Shares by TNO\BV is in violation of the
Securities Act or any applicable US state or Dutch securities laws.
TNO\BV further acknowledges that it is aware that stop-transfer
instructions may be given to the transfer agent of the Shares to
prevent any illegal transfer of the Shares. For purposes hereof,
the term resale includes any transfer for value including the
mortgage, pledge or hypothecation of such Shares.
ARTICLE
IV
TNO\BV PIGGYBACK REGISTRATION
RIGHTS
4.1 Notice of Registration
of Dyadic Parent Securities . Dyadic Parent hereby covenants and agrees that
in the event it shall take action to register any of its securities
under the Securities Act at any time during the two (2) year period
following the Effective Date other than in the case of a
registration being undertaken for the purpose of registering
“Excluded Securities” (as hereinafter defined), Dyadic
Parent shall give TNO\BV and any other Person that, as of that
date, had been granted piggyback registration rights by Dyadic
Parent comparable to the piggyback registration rights granted to
TNO\BV in this Article IV (for purposes hereof, TNO\BV and all
other such holders being hereinafter referred to as “
Rightsholders ”) written notice of Dyadic
Parent’s intention to take that action (the “
Registration Notice ”).
4.2 TNO\BV Piggyback
Rights . TNO\BV (together with all other Rightsholders)
shall have the right, exercisable by written notice to Dyadic
Parent within forty-five (45) days following receipt of the
Registration Notice from Dyadic Parent, to request the inclusion of
all or such portion of the Shares as TNO\BV may elect in such
registration, at the expense of the Dyadic Parent (other than the
commission costs of selling all such Shares).
4.3 Registration
Process .
Dyadic Parent shall, subject to the
provisions of this Article IV, thereupon use its commercially
reasonable efforts to (i) effect the registration of TNO\BV’s
Shares to the end that such registration under the Securities Act
shall become and remain effective, (ii) cause any underwriting
agreement relating to Dyadic Parent's securities to provide that
TNO\BV shall have the right to sell its Shares to the underwriters
and that the underwriters shall purchase the Shares at the price
paid by the underwriters for the securities sold by Dyadic Parent,
and (iii) keep TNO\BV advised in writing as to the initiation of
each registration and as to the completion
thereof,
(iv) furnish such number of the registration statement and the
prospectus included therein, including preliminary prospectuses and
other documents incident thereto as TNO\BV from time to time may
reasonably request, and (v) cause all Shares covered by such
registrations to be listed on each securities exchange on which
similar securities issued Dyadic Parent are listed, provided
that:
(a)
TNO\BV shall have timely executed
and delivered the usual and customary agreement between Dyadic
Parent, TNO\BV and the underwriters relating to the
registration;
(b) in no event shall Dyadic Parent be required to
keep up to date or to supplement any prospectus more than nine (9)
months after the effective date of the registration statement of
which such prospectus is a part; and
(c) if the registration contemplated by the
Registration Notice consists of an underwritten offer and sale by
Dyadic Parent for its own account of Dyadic Parent securities to be
registered under the Securities Act, and the managing underwriters
advise Dyadic Parent in writing that in their opinion the offering
contemplated by the Registration Notice cannot be successfully
completed if Dyadic Parent were to also register all of the
“Registrable Shares” (as defined below) requested to be
included in such registration by the Rightsholders, then Dyadic
Parent will include in that registration: (i) first, any securities
Dyadic Parent proposes to sell as contemplated by the Registration
Notice, and (ii) second, that portion of the aggregate number of
shares held by TNO\BV and all other Rightsholders (collectively,
the “ Registrable Shares ”), which in
the opinion of such managing underwriters can successfully be sold,
such number of Registrable Shares to be taken pro rata from the
then Rightsholders on the basis of the total number of Registrable
Shares then held by each of them, with further like pro rata
allocations among the Rightsholders of Registrable Shares in the
event that any Rightsholder has requested registration
