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EXHIBIT 10.7
COOPERATION AGREEMENT
This is a Cooperation Agreement between
Donlar Corporation (hereinafter called "Donlar") having an office at Bedford
Park, Illinois, U.S.A.,
and
BASF Aktiengesellschaft (hereinafter called "BASF") having
an
office at 00000 Xxxxxxxxxxxx, Xxxxxxx.
WITNESSETH
WHEREAS, Donlar owns patents and know how about the application of
polyaspartate products which are produced and marketed by Donlar in North
America (the "Products") in the agricultural field as a nutrient absorption
enhancer; and
WHEREAS, BASF has vast experience in the production, sales and application of
fertilizers and is able to test the effect of the Products as a nutrient
absorption enhancer in field trials under European and other geographic
conditions; and
WHEREAS, Donlar is interested in carrying out these trials to gain results
under different climatic and soil conditions to optimize Product sales and
application; and
WHEREAS, BASF agrees to conduct these field trials initially in Germany during
the year 1997 and upon positive results in other regions to be defined during
the remaining 5 year term of this Agreement; and
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WHEREAS, Donlar offers to BASF then mutual exclusive distributorship for the
Products in Europe, and then on a region - by - region basis outside North
America (USA, Canada and Mexico), wherever BASF decides after consultation with
Donlar, that there is market potential and where BASF possesses or is able to
establish the necessary marketing and distribution facilities for the Products
as a nutrient absorption enhancer. "Mutual exclusive distributorship" means
that Donlar is the exclusive supplier of Products to BASF, and BASF is the
exclusive distributor of Product (except for North America and those regions
where BASF declines distributorship); and
WHEREAS, Donlar and BASF desire to engage in a mutually beneficial business
relationship based on close cooperation and frequent communication;
NOW THEREFORE, in consideration of the mutual terms and agreements hereinafter
set forth, the parties hereto do hereby agree as follows:
1. TECHNICAL COOPERATION
1.1. The parties shall cooperate in the development of the Products as a
nutrient absorption enhancer in the agricultural field (hereinafter referred to
as the "Agreement Field") according to the following division of work:
a) DONLAR
aa) Donlar shall disclose to BASF during the term of this Agreement all its
present and future technical and commercial expertise and know how in the
Agreement Field in
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written and if necessary in oral form and grant BASF experts access to all
relevant data.
bb) Donlar shall exercise its best efforts to speedily react on all suggestions
made by BASF as a result of its field trials with the Products and adjust the
Products to the requirements of the crops and the environmental, legal,
applicational, commercial etc. requirements of the prospective markets.
b) BASF
aa) BASF shall disclose to Donlar during the term of this Agreement all its
present and future technical and commercial expertise and know how in the
Agreement Field correspondingly to Donlar's obligation.
bb) BASF shall carry out first in Germany and then in other regions outside
North America in priority sequence of their market potential, field trials of
the Products with crops jointly identified by the parties. The cost incurred by
BASF in 1997 for such trials shall be borne by BASF.
If the Scientific Analysis for 1997 indicates that the results are less than
satisfactory, the parties shall decide whether to terminate this Agreement or
continue testing for one more year. If the parties renew testing for one more
year the cost for the field trials of the Products in the different countries
shall be equally shared by the parties.
1.2. The schedule for the cooperation in 1997 is attached hereto as Appendix 1.
If, during the period of cooperation, the results of individual phases of this
work require changes in the schedule the parties shall determine any such
changes on a case-by-case basis.
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1.3. The parties shall establish an Executive Committee consisting of two
members from Donlar and two members from BASF. One member from each group shall
be of "officer" rank. The Executive Committee, operating through majority vote,
shall decide all research projects, all research protocols, all business plans
and resolve any problems. The Executive Committee shall meet or conference once
per month, at alternating host sites.
1.4. Donlar shall be permitted to assist in and inspect all trials, to insure
proper application and methodology.
1.5. The parties shall inform each other regularly of the results of their work
on the AGREEMENT FIELD.
1.6. Each party shall retain sole responsibility for its work. If one of the
parties contracts a third party to carry out its work, it does so in its own
name and at its own expense, and will ensure that proper confidentiality
arrangements are in place.
1.7. The parties shall carry out with utmost care and diligence all tasks
pursuant to this Agreement. They shall base their work on the latest state of
the art in science and technology that they have achieved.
2. ORGANIZATION OF TRIAL AND DEVELOPMENT WORK
2.1 BASF shall test the Product on multiple crops and in multiple geographical
soil conditions. Each year new crops and new geographies and soil conditions
shall be identified for testing.
2.2 At the end of each crop growing season a detailed scientific analysis shall
be conducted on each test crop
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with respect to yield data, maturation, nutritional analysis, size of plant and
applicational method (the "Scientific Analysis"). The Scientific Analysis shall
be completed within two months after each crop growing season.
2.3 BASF will regularly report on its observations with regard to the test
crops and the parties will discuss the consequences for the adaptation of the
Products. Donlar will keep BASF informed on all its development work and will
exercise its best efforts to satisfy all reasonable demands of BASF with regard
to the adjustment of the Products to the physical and commercial requirements.
3. COMMERCIAL COOPERATION
3.1 Based on the results of the Scientific Analysis, the parties shall conduct
a commercial feasibility study and decide whether the Product is "Viable" for
commercial development for a particular crop in a particular region. This
determination shall be made within one month after the preparation of the
Scientific Analysis. "Viable" means that the Product has the potential to
produce an acceptable return to the grower for a particular crop, given the
fertility practices and yield data of the particular market and region, has the
potential to be successfully marketed in the particular region with acceptable
profit for both parties, and has the potential to be successfully registered
for use and sale in the region with the appropriate regulatory authorities.
3.2 If the parties believe that the Product is Viable in a particular region,
then, within three months after the determination of Viability, the parties
shall agree on the terms and conditions of the mutually exclusive
distributorship of BASF of the Products in the respective region.
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Any such sole distributorship agreement shall be valid for a fixed
period of 5 years starting with the first commercial sale of the Products for
application as a nutrient absorption enhancer in the respective region and
shall thereafter be automatically extended for further periods of 2 years
unless terminated by either party by giving six (6) months prior notice to the
end of the initial term or each subsequent term.
Unless the parties agree otherwise the profits resulting from the sale
of the Products in the Agreement Field shall be equally shared. In order to
properly assess the profit each party shall disclose to the other party or a
neutral chartered accountant firm acceptable to the other party its cost
incurred in manufacturing, marketing and selling the Products.
The marketing policy will be decided by BASF upon consultation with Donlar.
Donlar will exercise its best efforts to ensure that the Products are available
in sufficient quantities to meet the demand of the markets developed by BASF.
3.3 Products that are deemed to be Viable by the parties shall be registered
for sale and use in the appropriate regions. Registrations shall be filed in
the appropriate regulatory offices within three months after the determination
of Viability.
3.4 If Donlar believes that, after giving BASF one crop growing season for
testing or if BASF rejects to carry out such field trials, the Product is
Viable for a particular region, and BASF believes, that it is not Viable
Donlar shall have the right to commercially exploit the Product in
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such region, provided Donlar does not infringe on any trademark, design xxxx or
service xxxx of any BASF product.
3.5 Joint inventions made by employees of both parties shall be the entitlement
of both parties in equal parts. Unless the parties agree otherwise, joint
inventions shall be applied for in the name of both parties. Before their
filing the parties will reach an agreement in particular about the wording of
these applications and the countries in which they will apply for property
rights. Licenses to third parties shall be awarded by mutual consent between
the parties. Affiliated companies as defined by 15 Aktiengesetz (German
Corporation) Act and the U.S. Securities Exchange Act) are not considered to be
third parties. In countries in which a party is not interested in applying for
and/or maintaining such property rights, the other party shall be entitled to
proceed alone in its own name and at its own expense.
The parties expect and presume that all inventions will be joint
inventions. If a party believes that it has made the invention independently
from the know how disclosed to it by the other party, it shall have the burden
of proof for the fact that its invention was not derived from the proprietory
information received from the other party.
3.6 The parties shall grant each other licenses under any patents obtained for
their inventions made independently from the other party in the AGREEMENT
FIELD. The license fee shall be the lesser of 2 % of the net sales value of the
licensed product or a lower license fee obtained from an unaffiliated third
party.
4. SECRECY AND PUBLICITY
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4.1. The parties shall ensure that its employees or third parties carrying out
the work under this Agreement keep confidential any and all technical know-how
and information to which the supplying party gives them direct or indirect
access under this Agreement. They shall also ensure that no access to such
information is granted to third parties without the supplying party's prior
written consent. This secrecy obligation shall not apply to technical know-how
and information
- of which the receiving party already had prior knowledge, and which did not
come directly or indirectly from the supplying party, or from a third party
under confidentiality with the supplying party,
- which is of public knowledge, provided that it became public knowledge
without a violation of this secrecy obligation,
- which becomes legally available to the receiving party without an
obligation to maintain secrecy,
- which the supplying party, through express written consent, has allowed to
be passed on or made known.
4.2. The parties shall ensure that any manuscripts that their employees might
prepare for publication, in which they report results of the research work
under this Agreement, are submitted to the other party for review at least six
(6) weeks prior to publication, so that an application for patent rights for
any inventions contained therein may be made in good time, and so that it may
be ensured that such publications do not contain any information which is
subject to the maintenance of secrecy pursuant to Article 4.1 above.
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4.3. Neither of the parties shall generate any press releases or otherwise
induce media coverage concerning their cooperation under this Agreement without
first obtaining the other party's written consent to any such press releases or
the contents of any such media coverage.
5. EFFECTIVE DATE AND TERM
5.1 This Agreement shall come into effect retroactively on March 1, 1997 under
the condition precedent that the board of directors of BASF and Donlar, as
required, have approved it, which approval shall be communicated forthwith to
the other party. Each party may rescind this Agreement if the condition
precedent has not been fulfilled by the end of May 1997.
This Agreement shall remain in force for five (5) years and terminate on
February 28, 2002; provided, however, that either party may terminate it at the
end of 1997, if it is not satisfied from the trial tests carried out in 1997
that the Products are Viable, or the parties have not agreed on a mutually
exclusive distributorship agreement for the Products in Europe, unless the
parties decide to extend the testing period for one more year; provided however
that if Donlar terminates this Agreement because it thought the Products not
Viable it shall give BASF the right of first refusal for its distributorship,
if Donlar later on decides to market the Products in the Agreement Field.
5.2. During the term of this Agreement, the Agreement can be terminated by one
party upon a breach by the other party of any of the terms and conditions of
this Agreement.
5.3. Notwithstanding anything to the contrary contained herein, the Secrecy
obligations contained in Section 4
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above shall expire ten (10) years after the termination of this Agreement.
6. Force Majeure
Events or circumstances over which the parties have no control, especially all
cases of force majeure, shall release the parties from fulfilling their
obligations hereunder during the duration of the event and to the extent of its
effects.
7. Amendments
7.1. If one or more provisions of this Agreement should be invalid for any
reason, the validity of the remaining provisions of this Agreement shall not be
affected. The parties agree to replace such invalid provisions in the Agreement
with new, valid provisions that correspond as closely as possible to the
intended purpose of this Agreement.
7.2. Any amendments or supplements to this Agreement shall be effective only if
agreed to in writing by both parties.
8. Governing Law
This Agreement shall be construed according to the laws of the United Kingdom.
9. Arbitration
Any disputes arising from this Agreement shall be settled under the provisions
regarding conciliation procedures of the Conciliation and Arbitration Rules
established by the London Chamber of Commerce. In the event that conciliation
procedure fails, the case shall be submitted to the court
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of Arbitration of the London Chamber of Commerce for final decision pursuant to
the said Conciliation and Arbitration Rules.
Frankfurt the 3rd day of April 1997
BASE Aktiengesellschaft Donlar Corporation
Xxxx Xxxxxxx von Sponeck Xxxxxxxx Xxxx
Xxxxxxx von Sponeck Rico
