Burcon, ADM in Agreement

November 15/Vancouver/PRNewswire -- Burcon NutraScience Corporation signed a non-binding letter of intent with Archer Daniels Midland Company (ADM) which details the intention of the two parties to enter into a license agreement pursuant to which Burcon will license its Clarisoy technology to ADM on an exclusive basis to produce, market and sell Clarisoy soy protein isolates worldwide.

The letter of intent outlines the major agreed-upon terms for the proposed definitive agreement whereby Burcon will grant an exclusive, worldwide and royalty-bearing license to ADM for Burcon's Clarisoy soy protein isolate technology. The terms of the proposed lLicense include:

- License to ADM of all intellectual property, including know-how and trade secrets, concerning the manufacture and use of Clarisoy
- Royalty stream payable to Burcon on a quarterly basis begins upon the signing of the definitive agreement  
- Engineering and design of initial semi-works commercial Clarisoy production plant to be completed by ADM concurrent with the completion of the definitive agreement.  
- Royalty structure incorporates financial incentive for ADM to expand sales globally  

Concurrent with and forming part of the letter of intent, Burcon has also agreed to enter into a stand-still/no-shop agreement with ADM while the two parties negotiate and execute the definitive agreement for the Clarisoy license.

Proposed Clarisoy License
Under the terms of the letter of intent, Burcon and ADM have agreed to negotiate and execute the definitive agreement setting forth the terms and conditions of the license by no later than March 1, 2011. Under the proposed License, ADM will build an initial semi-works commercial facility within a pre-defined time period after the signing of the definitive agreement. A pre-production royalty will be payable quarterly starting from the signing of the definitive agreement through and until the first sale of the products from the initial facility. Upon the first sale of products from the initial semi-works commercial facility, ADM will then pay a royalty based on a percentage of net revenues generated by ADM from the sale of the products.

The license further contemplates that ADM will increase capacity to a full-commercial scale. Upon such increase, a full-commercial royalty rate will be payable on a percentage of the net revenues generated by ADM from the sale of Clarisoy. Under the proposed terms of the license, there is a mechanism for ADM to benefit from a stepped-down royalty rate on the establishment of certain commercial sales levels in additional geographic regions beyond North America. The additional geographic regions include the rest of the world and are defined as Asia, South and Central America, Europe including Eastern Europe and Africa. Capital costs associated with building and commissioning of production plants and the general market development of Clarisoy will be the sole expense of ADM.

The letter of intent provides for, and the parties have contemplated, certain specific timing goals. One of these goals is the preparation of engineering plans for the first semi-works commercial production facility to be completed by the date of signing of the definitive agreement.

As part of the letter of intent, Burcon has agreed to a stand-still and no-shop clause with ADM. The stand-still provides that during the period starting from the date of the execution of the letter of intent and continuing and until the earlier of the date of signing the definitive agreement with ADM or March 1, 2011, Burcon and its officers, agents and employees will not, directly or indirectly, (i) engage in discussions or negotiations, (ii) enter into any letter of intent or contract, or (iii) take any action or encourage any offer or indication of interest from any person, entity or group, in relation to the license, sale or other form of transfer of any Burcon intellectual property related to Clarisoy. As previously noted, it is the intention of the two parties to enter into the definitive agreement on or before March 1, 2011.

Although it is the stated intention of Burcon and ADM to enter into a definitive agreement as described above, the letter of Intent is non-binding on the parties except for the stand-still agreement and certain provisions concerning confidentiality and each party bearing its own expenses relating to the negotiation of the definitive agreement

"We have worked closely with ADM on Burcon's canola technology and have valued our relationship with ADM for over seven years. As a leader in the global food ingredient industry, and one of the world's pre-eminent producers of soy proteins, ADM is the perfect partner to commercialize Burcon's Clarisoy soy protein isolate" said Johann F. Tergesen, president and chief operating officer, adding, "We believe Clarisoy's potential in the global protein ingredient industry will be well served through the license structure as contemplated in the letter of intent we have executed with ADM today."

BMO Capital Markets has acted as financial advisor to Burcon.

From the November 29, 2010, Prepared Foods E-dition