EX-10.36
LETTER OF INTENT REGARDING GRANT OF
LIMITED LICENSE IN THE REPUBLIC OF MEXICO
THIS LETTER OF INTENT, ("Letter") is entered into this 10th day of October, 2000
by and between MetaMorphix, Inc., a Delaware corporation with a business address
at 0000 Xxxxx Xxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxx 00000 ("MMI") and Avicola
Pilgrim's Pride de Mexico S.A. de C.V., a Mexico entity with its principal place
of business at Col San Pablo, Ave 5 De Febrero 1408, Xxxxxxxxx, Xxxxxxxxx,
Xxxxxx, 00000 ("Pilgrim's Pride").
WHEREAS, MMI is in the business of producing biotechnology-based
products focused on improving poultry production, livestock production and
animal health; and
WHEREAS, MMI has developed Myostatin(TM) Blockers, biotechnology-based
products that inhibit the biological function of the Myostatin(TM) protein
thereby causing an increase in muscle mass and carcass weight, accelerated
weight gain, improved feeding efficiency, standardization and uniformity of
growth and/or improved nutritional profile of the meat ("Myostatin(TM)
Blockers"); and
WHEREAS, MMI represents that it either owns or holds valid exclusive
licenses to patent applications, patents and know-how (hereinafter collectively
referred to as "Myostatin(TM) Blocker Technology") in the Republic of Mexico
related to the Myostatin(TM) Blockers for nonhuman applications that (x) either
disrupt or eliminate Myostatin(TM) protein synthesis, bind to Myostatin(TM)
receptors or interfere with Myostatin(TM) signal transduction; and (y) result in
an increase or modification of muscle growth in poultry (the "MBT
Applications"); and
WHEREAS, Pilgrim's Pride is in the business of producing, processing and
marketing poultry products in the Republic of Mexico; and
WHEREAS, MMI and Pilgrim's Pride desire to enter into a long-term,
non-exclusive, non-divisible, personal license agreement with respect to the
Myostatin(TM) Blocker Technology for use by Pilgrim's Pride in poultry
production in the Republic of Mexico; and
WHEREAS, MMI and Pilgrim's Pride desire to enter into the such license
agreement, a Confidentiality and Non-Disclosure Agreement and a Material
Transfer Agreement (collectively, the "Agreements") for the territory of the
Republic of Mexico; and
WHEREAS, as further inducement to enter into the Agreements, MMI desires
to enter into similar agreements with Pilgrim's Pride granting a long-term,
non-exclusive, non-divisible, personal license agreement with respect to the
Myostatin(TM) Blocker Technology for use by Pilgrim's Pride in poultry
production for the territory of the Republic of Mexico (the "Limited License")
NOW, THEREFORE, in consideration of the mutual promises and benefits set
forth herein, the adequacy of which is hereby acknowledged, the parties hereto
contemplate entering into agreements relating to the grant of the Limited
License that will reflect the following understandings:
1. RELATIONSHIP MANAGEMENT. It is anticipated that MMI and Pilgrim's Pride
will formulate a committee of managers which will develop protocols for
the commercial-scale production and sale of products based on the
Myostatin(TM) Blocker Technology in the country of Mexico (the "Mexican
Regulatory Approval"). Such protocols will include:
2
(a) Manufacturing practices that will meet or exceed the standards
required to obtain and maintain Mexican Regulatory Approval;
(b) MMI, in an effort to expedite the Mexican Regulatory Approval
process, will make a good faith effort to seek agreement by the
Mexican regulatory authorities to observe or, alternatively, to
be a part of the Commercial Scale Trials referenced in the
LOI/Limited License/Option Agreement that are required to obtain
U.S. regulatory approval.
(c) Pilgrim's Pride will participate in regularly scheduled
quarterly meetings in an effort to identify any further
requisite scope of work that must be performed to obtain and
maintain Mexican Regulatory Approval and to analyze the
performance and results of any required internal research and
trials.
2. GRANT OF LICENSE. It is anticipated that MMI will grant the Limited
License to Pilgrim's Pride for the limited purposes of: (1) performing
any required research and trials to be conducted in their effort to
obtain Mexican Regulatory Approval and (2) for use of the Myostatin(TM)
Blocker technology limited to improving chicken meat production
economies by inhibiting the biological function of the Myostatin protein
by injecting Myostatin(TM) Blocker into chicken eggs. The parties
further anticipate that:
(a) The territory of the Limited License will solely include the
Republic of Mexico, without any rights of export (the
"Territory").
(b) Pilgrim's Pride will execute, simultaneously with the Limited
License, a Confidentiality and Non-Disclosure Agreement and a
Material Transfer Agreement.
3
(c) The Limited License will bear an initial term of five years.
Such initial term will begin upon obtaining Mexican Regulatory
Approval, with an option to renew the Limited License for
similar five year terms until the expiration of the license
patents; PROVIDED, HOWEVER, that renewal of the Limited License
will be conditioned upon Pilgrim's Pride achieving certain
minimum sale volumes which will be mutually agreed upon by
Pilgrim's Pride and MMI.
(d) MMI will waive all up-front license fees; PROVIDED HOWEVER, MMI
and Pilgrim's Pride shall negotiate a mutually acceptable value
added royalty payment to be paid by Pilgrim's Pride to MMI prior
to the execution of the Limited License. The methodology will be
based on the usual business practices of Mexico. The terms of
the value added royalty will be similar to those terms which
have been or will be negotiated with all other licensees of the
territory of Mexico. Such terms shall be in compliance with all
regulations and laws of the Republic of Mexico.
(e) If the parties enter into a Limited License, Pilgrim's Pride
will provide sales and royalty reports to MMI within thirty (30)
days after the end of each fiscal quarter.
(f) The Limited License will contain representations, warranties,
covenants and indemnities by both parties customary for
transactions and relationships of this nature.
(g) The Limited License shall contain provisions that (i) Pilgrim' s
Pride may terminate the Limited License at any time by thirty
(30) days written notice to MMI; (ii) if Pilgrim's Pride
terminates the Limited License, Pilgrim's Pride's license to use
the Myostatin(TM) Blocker Technology will be immediately
revoked; (iii) MMI shall have the right to terminate the Limited
License in the event of a
4
breach by Pilgrims' Pride of any of the representations,
warranties, covenants terms or conditions contained in the
Limited License Agreement and where such breach has not been
cured by Pilgrim's Pride within forty-five (45) days of receipt
of written notice; and (iv) in the event Pilgrim's Pride fails
to execute its Long Term License Agreement or subsequently
terminates same with MMI for the territory of the United States,
MMI shall have the option to either terminate the Mexico Limited
License immediately or negotiate a mutually agreeable annual
license fee for the territory of Mexico.
(h) The Limited License will not be assignable, transferable or
saleable without MMI's prior written consent, which consent may
be granted or withheld in MMI's sole discretion.
(i) Any and all discoveries related to the patent applications,
patents or know-how arising from any required Pilgrim's Pride's
research and trials shall be: (a) disclosed immediately to MMI;
and (b) made available for use by MMI through a royalty-free,
exclusive, world-wide license to the patent applications,
patents or improvements thereof, patent rights and know-how,
with additional rights to sublicense the license to additional
third parties.
(j) Any and all discoveries related to the patent applications,
patents or improvements thereof, patent rights and know-how
arising after obtaining Mexican Regulatory Approval shall be:
(a) disclosed immediately to MMI; and (b) made available for use
by MMI through a warranty-free, nonexclusive, worldwide license
with additional rights to sublicense the license to additional
third parties.
5
(k) Pilgrim's Pride will agree that its internal research and trials
of the Myostatin(TM) Blocker Technology will comply with any and
all rules, regulations, orders, regulatory laws or restrictions
required to obtain and maintain Mexican Regulatory Approval.
(1) Pilgrim's Pride will make any such data related to their
internal research and trials available to MMI for its internal
use and evaluation.
(m) Nothing in the Limited License shall be construed as preventing
or prohibiting MMI from entering into additional agreements with
third parties for similar activities and/or services in the
Territory. MMI will limit the negotiation of the rights to a
similar Limited License in the Territory to a mutually agreeable
third party that has a substantial market share in the
Territory, provided, however, that such limitation of
participants will comply with all antitrust laws and regulations
of the Republic of Mexico. Moreover, if in the event the initial
company fails to execute a long-term license agreement or in the
event of any governmental intervention, MMI reserves the
exclusive right to negotiate with a replacement company or
companies of MMI's exclusive choosing.
3. SUPPLY OF MYOSTATIN(TM) BLOCKER PRODUCTS.
(a) Upon execution of the Limited License, the Confidentiality and
Non-Disclosure Agreement and the Material Transfer Agreement,
MMI, in its sole discretion, will supply sufficient quantities
of the Myostatin(TM) Blocker product to Pilgrim's Pride. It is
anticipated that MMI will be responsible for manufacturing and
supplying the Myostatin(TM) Blocker product to Pilgrim's Pride
to perform any required research and trials to obtain Mexican
Regulatory Approval; PROVIDED
6
HOWEVER, that the provision of such product by MMI to Pilgrim's
Pride shall be conditioned upon such product being available in
sufficient quantities to honor all of MMI's current commitments
under all of MMI's existing license agreements for the United
States.
(b) It is anticipated that, upon Mexican regulatory approval, MMI
will supply, in its sole discretion, sufficient quantities of
the Myostatin(TM) Blocker product for the use in poultry
production in the Territory.
(c) Pilgrim's Pride agrees to accept such quantities of
Myostatin(TM) Blocker product from MMI on a cost plus 10% basis.
4. COST AND EXPENSES. The shared cost of any research and trials to obtain
any Mexican Regulatory Approvals will be limited to $100,000 and in the
event the cost of such research and trials exceeds $100,000, MMI will
not seek any further contributions from Pilgrim's Pride. However, each
party will bear separately all other individual costs and expenses in
connection with the transactions contemplated in this Letter.
5. INDEMNIFICATION.
(a) It is anticipated that Pilgrim's Pride, its directors, officers,
employees, agents and assigns will agree to indemnify, defend
and hold harmless MMI and its directors, officers, employees and
agents from and against any and all claims threatened or
initiated against MMI that arise under any Mexican or United
States antitrust or unfair competition law, and which challenge
any conduct contemplated herein, including, but not limited to
the provisions of Paragraph 2(m), INFRA, or its
7
implementing provision in the Limited License. This agreement to
indemnify, defend and hold harmless shall cover any and all
losses, expenses, damages, liabilities, and costs, including
without limitation, interest, penalties, double or treble
damages, reasonable attorneys' fees, court or litigation costs,
costs associated with responding to any investigative demand or
discovery request, judgments, and amounts paid in settlement by
MMI (upon consultation with Pilgrim's Pride) arising from such
claims or any claims supplemental to them. This is conditional,
however, upon a finding and or judgment of a court of competent
jurisdiction in the Republic of Mexico or the United States that
the provisions contemplated herein, or its implementing
provision in the Limited License, are unlawful, or if MME, after
consultation with Pilgrims Pride, enters into an agreement
settling any such actual or threatened claims.
(b) Each Party hereto and its directors, officers, employees, agents
and assigns agrees to indemnify, defend and hold harmless the
other Party hereto and its directors, officers, employees and
agents from and against all claims, losses, damages, costs,
expenses (including, but not limited to, reasonable attorney's
fees and costs of litigation actually incurred) or liability
incurred or suffered due to either of such Parties, or such
Parties authorized agents or contractors, negligence or willful
misconduct.
(c) MMI, its directors, officers, employees, agents and assigns will
agree to indemnify, defend and hold harmless Pilgrim's Pride and
its directors, officers,
8
employees and agents from and against any and all claims related
to Patent infringements by MMI under or related to the Limited
License.
(d) The foregoing agreements to indemnify, defend and hold harmless
shall be effective throughout the term of the Limited License,
and shall extend to any claim initiated or threatened after the
termination of the Limited License, if such claim arises out of
conduct that occurred during the term of the agreement.
6. CONFIDENTIALITY. The Confidentiality and Non-Disclosure Agreement and
Material Transfer Agreement shall survive any termination or expiration
of this Letter.
7. PUBLICITY. MMI intends to issue press releases directly related to the
execution of this Letter; PROVIDED HOWEVER, that prior to making any
such release or discussing the transactions contemplated herein with any
third party, with the exception of that party's legal counsel, the
disclosing party must obtain the prior written consent of the
nondisclosing party.
8. RELATIONSHIP OF THE PARTIES. Nothing in this Letter shall be construed
as preventing or prohibiting either arty from entering into agreements
with any third parties for other activities, goods and/or services.
9. CLOSING DATE. The parties shall negotiate in good faith towards
execution of the various agreements containing the terms and conditions
for the transactions contemplated herein no later than three (3) months
from the execution of this Letter (the "Closing Date"). Such Closing
Date will only be extended upon the mutual written consent of the
parties.
9
10. SUPERSEDED LETTER. This Letter supersedes and replaces any oral or
written agreements between the parties that exist with reference to the
Limited License.
Except for provisions in this Letter relating to Cost and Expenses and
Closing Date, this Letter represents only our good faith intention to negotiate
toward execution of the Limited License and the various agreements related
thereto. This Letter is not a binding agreement between the parties and neither
party shall have any liability to the other party if either party fails to
execute the Limited License or any of the agreements related thereto for any
reason.
Except for those Sections described herein, upon execution and delivery
of the Limited License, this Letter shall be superseded thereby, and the Limited
License, and the various agreements related thereto, shall thereafter govern the
rights and obligations of the parties with respect to the proposed transactions.
If you agree that the foregoing correctly expresses your intent, please
sign below in the space provided. The parties shall thereafter negotiate with
each other in a positive and constructive manner with the objective of executing
a mutually satisfactory and definitive Limited License.
IN WITNESS WHEREOF, the parties have agreed to and executed this Letter
as of the date first above written.
10
MMI PILGRIM'S PRIDE
METAMORPHIX, INC. AVICOLA PILGRIM'S PRIDE DE
MEXICO S.A. DE C.V.
By:/s/ Xxxxx X. Xxxxxxxxxxx By: /s/ Xxxxx Xxx Xxxxx
----------------------------- -------------------------------
Name: Xxxxx X. Xxxxxxxxxxx Name: Xxxxx Xxx Xxxxx
-------------------- ------------------------------
Title:Chairman, President, CEO Title: President, CEO, COO
-------------------------------- -----------------------------
Date of Execution: 11/15/00 Date of Execution: 11/10/00
------------------- ----------------
11
