Exhibit 10.1
EXECUTION COPY
CONFIDENTIAL
LICENSE AGREEMENT BETWEEN ADOLOR CORPORATION AND XXX XXXXX AND COMPANY
EFFECTIVE AS OF AUGUST 8, 2002
TABLE OF CONTENTS
Article 1 Definitions 1
Article 2 Grant of License 8
2.1 Development and Commercialization License 8
2.2 Sublicensing Rights - ADOLOR 8
2.3 Sublicensing Rights - LILLY 8
2.4 [-------**-------] 8
Article 3 Consideration 9
3.1 Payments from ADOLOR to LILLY 9
3.2 Record Retention, Royalty Reports and Royalty Payment
Schedule 11
3.3 Exchange Rates 11
3.4 Financial Audits 11
3.5 Taxes and Currency 12
3.6 Late Payment 12
Article 4 Transfers of Know-How and Responsibility for Supplying
New Compound 12
4.1 Transfer of Know-How 12
4.2 Research and Development Material 12
Article 5 Development and Commercialization of New Products 12
5.1 Development, Commercialization, Manufacturing,
and Diligence 12
5.2 Adverse Event Reporting 13
Article 6 Transfer of Regulatory Documents; License to LILLY 13
6.1 Regulatory Documents 13
6.2 ADOLOR Improvements and ADOLOR Technology 14
Article 7 Intellectual Property 14
7.1 ADOLOR Improvements and ADOLOR Technology - Ownership 14
7.2 Filing, Prosecution and Maintenance of Licensed Patents 14
7.3 Filing, Prosecution and Maintenance of Process Licensed Patents 14
7.4 Patent Costs 14
7.5 Failure to File or Maintain Applications or Patents 15
7.6 Patent Term Extensions 15
7.7 Declaratory Judgment Action - Issued Licensed Patents
and Process Licensed Patents 15
7.8 Declaratory Judgment Action - Patents On ADOLOR
Improvements and ADOLOR Technology 16
7.9 Limitation on Cooperation with Third Parties 16
Article 8 Infringement 16
8.1 Notification of Suspected Infringement
16
8.2 Infringement of Licensed Patents and Process Licensed Patents 17
8.3 Infringement of Patents Covering ADOLOR Improvements
or ADOLOR Technology 17
8.4 Settlement of Litigation
18
8.5 Cooperation 19
Article 9 Confidentiality 19
9.1 ADOLOR's Obligations 19
9.2 LILLY's Obligations
20
9.3 Use of Confidential Information
21
9.4 Release of Other Information 21
Article 10 Representations, Warranties, Covenants, and Disclaimers 22
10.1 No Litigation
22
10.2 Ownership and Encumbrances 22
10.3 Licensed Patents and Process Licensed Patents 22
10.4 Licenses - ADOLOR 23
10.5 Know-How 23
10.6 No Debarment 23
10.7 Conducting Development Work Under Agreement 23
10.8 Corporate Existence 23
10.9 Authority to Execute and Perform
23
10.10 No Approvals or Consents
23
10.11 No Conflict 24
10.12 Cooperation 24
10.13 Disclaimer of Implied Warranties 24
10.14 Disclaimer of Incidental and Consequential Damages 24
10.15 Confirmation of Assignment and Assumption of
the Xxxxxxx Agreement 24
Article 11 Indemnification 25
11.1 Indemnification 25
11.2 Notice and Opportunity to Defend 25
11.3 Indemnification Payment Obligation 27
11.4 Indemnification Payment Adjustments 27
11.5 Indemnification Payment 28
Article 12 Term and Termination 28
12.1 Term 28
12.2 Termination by Consent 28
12.3 Material Breach by ADOLOR 28
12.4 Material Breach by LILLY 29
12.5 Termination for Bankruptcy 29
12.6 Residual Rights and Obligations Upon Termination 29
12.7 Further Assurances 30
Article 13 Miscellaneous 30
13.1 Independent Contractor 30
13.2 No Benefit to Others 30
13.3 Force Majeure 30
13.4 Amendment 31
13.5 Entire Agreement 31
13.6 Severability 31
13.7 Waiver 31
13.8 Notices 31
13.9 Governing Law 32
13.10 Assignability 32
13.11 Jointly Prepared 32
13.12 Headings, Gender and "Person" 32
13.13 Counterparts 32
13.14 Schedules, Exhibits and Attachments 32
13.15 Affiliates of Xxx Xxxxx and Company 33
Appendix 1 Licensed Patents and Process Licensed Patents 35
Schedule 4.1 Know How 36
Exhibit 9.4 Press Release 37
LICENSE AGREEMENT
This LICENSE AGREEMENT (this "Agreement") is made and entered into
effective as of August 8, 2002 (the "Effective Date"), by and between Xxx
Lilly and Company, a corporation, incorporated under the laws of the State
of Indiana, having its principal place of business at Lilly Corporate
Center, Indianapolis, Indiana, and its Affiliates (hereinafter
collectively referred to as "LILLY"), and Adolor Corporation, a
corporation incorporated under the laws of Delaware, having its principal
place of business at 000 Xxxxxxxxxxxx Xxxxx, Xxxxx, XX ("ADOLOR",
together with LILLY sometimes hereinafter individually referred to as a
"Party" and collectively referred to as the "Parties"). The Parties agree
as follows:
RECITALS
LILLY originally licensed the Xxxxxxx Agreement Compound (as defined
below) to Xxxxxxx Laboratories Inc. ("Xxxxxxx") under the terms and
conditions of the Xxxxxxx Agreement (as defined below). Xxxxxxx
sublicensed certain of its rights in the Xxxxxxx Agreement Compound to
ADOLOR and later assigned all of its rights in the Xxxxxxx Agreement
Compound and in the Xxxxxxx Agreement to Adolor, and Adolor assumed all of
Xxxxxxx' obligations under the Xxxxxxx Agreement.
ADOLOR, now, desires to license from LILLY, and LILLY now desires to
license to ADOLOR, on an exclusive basis, (a) all rights to certain
compounds related to the Xxxxxxx Agreement Compound, and (b) all rights as
to certain processes for use solely in connection with the manufacture of
these related compounds.
NOW, THEREFORE, in consideration of the above premises and the
mutual covenants and agreements set forth below, the Parties hereto agree
as follows.
Article 1
Definitions
As used in this Agreement, the following words and phrases shall
have the following meanings:
1.1 "ADOLOR Improvements" means any inventions, patentable or not,
information and/or data, to the extent that they relate to any New
Compound and/or any New Product, and limited to that extent, including,
without limitation, Toxicology Studies, Clinical Trial information and
data, and Post-Registration Clinical Trial information and/or data, which
are made, conceived, reduced to practice or generated solely by ADOLOR's
employees or agents, or acquired by ADOLOR, during the term of this
Agreement, and which ADOLOR has the unrestricted right to assign (or, if
ADOLOR has no such right of assignment, to license, sublicense or
otherwise provide rights of reference) to LILLY as contemplated hereunder.
1.2 "ADOLOR Technology" means any know-how or patented invention
(other than ADOLOR Improvements) that ADOLOR (i) owns or controls and has
an unrestricted right to license or sublicense to LILLY as contemplated
hereunder, and (ii) uses, to the extent that it is used, in connection
with the manufacture, marketing or sale of New Compound and/or New Product
under this Agreement, and limited to that extent.
1.3 "Affiliate" means, with respect to a Party, any Person
directly or indirectly controlling, controlled by, or under common control
with, such Party. For purposes of this Agreement, the term "controlled"
(including the terms "controlled by" and "under common control with")
means the direct or indirect ability or power to direct or cause the
direction of management policies of a Person or otherwise direct the
affairs of such Person, whether through ownership of equity, voting
securities, beneficial interest, by contract or otherwise.
1.4 "Application for Marketing Authorization" means (i) in the
United States, a New Drug Application filed with the FDA pursuant to 21
U.S.C. SS 357 and 21 C.F.R. SS 314 ("NDA"), and (ii) in any country other
than the United States, an application or set of applications for marketing
approval comparable to an NDA necessary to make and sell a pharmaceutical
product in such country.
1.5 "Calendar Quarter" means the three-month period ending on
March 31, June 30, September 30 or December 31. The initial Calendar
Quarter will be deemed to begin on the Effective Date and end on September
30, 2002.
1.6 "cGCP" means the then current Good Clinical Practices as
defined in U.S. Regulations 21 C.F.R. SS 50, 54, 56, 312 and 314, (or in
the case of foreign jurisdictions, comparable regulatory standards),
including those procedures expressed or implied in the regulatory filings
made with respect to any New Product with the FDA or foreign regulatory
agents, as amended or re-enacted from time-to-time.
1.7 "cGLP" means the then current Good Laboratory Practice
Standards promulgated or endorsed by the FDA (or in the case of foreign
jurisdictions, comparable regulatory standards), including those
procedures expressed or implied in the regulatory filings made with
respect to any New Product with the FDA or foreign regulatory agents, as
amended or re-enacted from time-to-time.
1.8 "cGMP" means the then current Good Manufacturing Practices as
defined in U.S. Regulations 21 C.F.R. SS 210, 211 et seq., the EEC Guide to
Good Manufacturing Practices for Medicinal Products, and the EEC Guide to
Good Manufacturing Practices for Medicinal Products (Vol. IV Rules
Governing Medical Products in the European Community 1992) and other
regulations pertaining to Good Manufacturing Practices in other countries
as amended or re-enacted from time to time.
1.9 "Clinical Trials" means Phase I Clinical Trials, Phase II
Clinical Trials and Phase III Clinical Trials.
1.10 "Commercially Reasonable Efforts" means [---------------------
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1.11 "Damages" means fines, penalties and damages payable to third
parties (other than Affiliates), reasonable expenses, court costs and
interest payable in connection therewith, and reasonable out-of-pocket fees
and disbursements payable to counsel, consultants, and expert witnesses in
connection therewith.
1.12 "Data Exclusivity Period" means the period during which (a) the
FDA (or, in countries other than the United States, an equivalent
regulatory agency) prohibits reference to or reliance on, without the
consent of the owner of an Application for Marketing Authorization for New
Product or Regulatory Approval package, the clinical and other data that is
contained in such Application for Marketing Approval for New Product or
Regulatory Approval package, and (b) such clinical or other data is not
published or publicly available outside of such Application for Marketing
Authorization for New Product or Regulatory Approval package.
1.13 "Effective Date" shall have the meaning ascribed to such term
in the introduction to this Agreement.
1.14 "FDA" means the United States Food and Drug Administration,
and any successor agency or entity that may be established hereafter.
1.15 "Field of Use" [----------------------------------------------
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1.16 "First Commercial Sale" means the first commercial sale of a
New Product or New Compound (after approval of the applicable Application
for Marketing Authorization) to a Third Person by ADOLOR, its Affiliates
or Sublicensees.
1.17 "IND" means Investigational New Drug Applications as defined
in 21 C.F.R. SS 312 (as amended from time to time), and any equivalent of
such items in other countries.
1.18 "Know-How" means the items listed in Schedule 4.1 that are
owned by or licensed to LILLY, and relate to New Compounds.
1.19 "Licensed Patents" shall mean those United States and foreign
patents, and patent applications as set forth in Appendix 1, attached
hereto, except the patents designated as Process Licensed Patents, and
shall also include any provisional applications, divisionals and
continuations thereof, any renewals, reissues, extensions (or other
governmental actions that provide exclusive rights to the owner thereof in
the patented subject matter beyond the original expiration date), as well
as any foreign counterparts of the foregoing.
1.20 "Net Sales" means with respect to a New Product or New
Compound, the gross amount invoiced by ADOLOR, its Affiliates and
Sublicensees for sales of such New Product or New Compound to Third
Persons (excluding ADOLOR's Affiliates and Sublicensees), less:
(i) Trade, quantity and cash discounts actually allowed;
(ii) Rebates, Medicaid reimbursements, and chargebacks;
(iii) Any tax imposed on the sale, delivery or use of New
Product or New Compound;
(iv) Allowances or credits for returned goods of any New
Product or New Compound; and
(v) Any other similar and customary deductions taken in
accordance with United States Generally Accepted
Accounting Principles or, in the case of Sublicensees
as applicable on a country-by-country basis,
such similar accounting principles, consistently applied.
Such amounts shall be determined from the books and records of
ADOLOR (including ADOLOR's Affiliates and Sublicensees), maintained in
accordance with United States Generally Accepted Accounting Principles
(GAAP) consistently applied or, in the case of Sublicensees, such similar
accounting principles, consistently applied. ADOLOR further agrees that
in determining such amounts, ADOLOR will use its then current standard
procedures and methodology, including its then current standard exchange
rate methodology for the translation of foreign currency sales into United
States dollars or, in the case of Sublicensees, such similar methodology,
consistently applied.
In the event that any New Product is sold as part of a Combination
Product (where "Combination Product" means any pharmaceutical product
which comprises a New Product and other active compound(s) and/or
ingredients), the Net Sales of such New Product, for the purposes of
determining royalty payments, shall be determined by multiplying the Net
Sales of the Combination Product (as defined in the standard Net Sales
definition) by the fraction, A / (A+B) where A is the weighted average
sale price of the New Product when sold separately in finished form, and B
is the weighted average sale price of the other product(s) sold separately
in finished form.
In the event that the weighted average sale price of New Product can
be determined but the weighted average sale price of the other product(s)
cannot be determined, Net Sales for purposes of determining royalty
payments shall be calculated by multiplying the Net Sales of the
Combination Product by the fraction A / C where A is the weighted average
sale price of New Product when sold separately in finished form and C is
the weighted average sale price of the Combination Product.
In the event that the weighted average sale price of the other
product(s) can be determined but the weighted average sale price of the
New Product cannot be determined, Net Sales for purposes of determining
royalty payments shall be calculated by multiplying the Net Sales of the
Combination New Product by the following formula: one (1) minus B / C
where B is the weighted average sale price of the other product(s) when
sold separately in finished form and C is the weighted average sale price
of the Combination Product.
In the event that the weighted average sale price of both the New
Product and the other product(s) in the Combination Product cannot be
determined, the Net Sales of the New Product shall be deemed to be equal
to fifty percent (50%) of the Net Sales of the Combination Product.
The weighted average sale price for a New Product, other product(s),
or Combination Product shall be calculated once each calendar year and
such price shall be used during all applicable royalty reporting periods
for the entire following calendar year, subject to reconciliation as set
forth below. An estimated weighted average sale price shall be calculated
by dividing the sales dollars (translated into U.S. dollars) by the units
of active ingredient sold during the twelve (12) months (or the number of
months sold in a partial calendar year) of the preceding calendar year for
the respective New Product, other product(s), or Combination Product. In
the initial calendar year, a forecasted weighted average sale price will
be used for the New Product, other product(s), or Combination Product.
Promptly following the end of the relevant calendar year, and in any
event, within not more than sixty (60) days, the Parties shall calculate
the actual weighted average sale price for the New Product, other
product(s), or Combination Product. Any over or under payment due to a
difference between forecasted/estimated and actual weighted average sale
prices will be paid or credited in the first royalty payment of the
following calendar year.
If a New Product is sold in combination with a device, Net Sales for
purposes of computing royalty payments, shall be determined by multiplying
the net sales of such combination by a fraction, which shall not exceed
the unity, X/Y where X is the selling price of the New Product if sold
separately, and Y is the selling Price of the combination of the New
Product and such device. The term "device" shall mean technological
advances in the delivery system that represents proprietary technology
developed, licensed or acquired by ADOLOR, but shall exclude packaging
improvements that do not represent added technology.
1.21 "New Compound" shall mean a chemical entity (including salts
and solvates thereof, which shall be considered the same New Compound for
purposes of this Agreement) covered by any valid and unexpired claim of
Licensed Patents, but shall exclude in all cases the Xxxxxxx Agreement
Compound.
1.22 "New Product" means a finished, formulated pharmaceutical
product containing a New Compound, together with all improvements and line
extensions thereon which may be included in any supplement, modification
or addition to the relevant Regulatory Approval to the extent that any
such improvements or line extensions contain a New Compound.
1.23 "Person" means a natural person, a corporation, a partnership,
a trust, a joint venture, a limited liability company, any governmental
authority, or any other entity or organization.
1.24 "Phase I Clinical Trials" means human clinical trials
conducted anywhere in the world in accordance with cGCPs in a small number
of healthy volunteers or patients to establish an initial safety profile
and the pharmacokinetics and/or pharmacodynamics of a New Product.
1.25 "Phase II Clinical Trials" means human clinical trials
conducted anywhere in the world in accordance with cGCPs and intended to
demonstrate efficacy and a level of safety in a particular indication
tested, as well as to obtain a preliminary indication of the unit and/or
daily dosage regimen required.
1.26 "Phase III Clinical Trials" means large scale human clinical
trials conducted in patients in accordance with cGCPs and intended to
demonstrate efficacy and a level of safety in the particular indication
tested sufficient to obtain Regulatory Approval of New Product. Phase III
Clinical Trials include "bridging studies" which allow submission in a
target country of clinical data generated from Phase III Clinical Trials
completed in other countries to be submitted in lieu of repeating Phase
III Clinical Trials in the target country.
1.27 "Post-Registration Clinical Trial" means all clinical trials
conducted following Regulatory Approval of a New Product having been
obtained from FDA (or, in countries other than the United States, an
equivalent regulatory agency) comprising clinical trials conducted
voluntarily by one or both Parties for enhancing marketing or scientific
knowledge of an approved indication and/or to explore additional
indications, and clinical trials due to request or requirement of FDA (or,
in countries other than the United States, an equivalent regulatory
agency).
1.28 "Process Licensed Patents" shall mean those United States and
foreign patents, and patent applications so identified in Appendix 1,
attached hereto, and shall also include any provisional applications,
divisionals and continuations thereof, any renewals, reissues, extensions
(or other governmental actions that provide exclusive rights to the owner
thereof in the patented subject matter beyond the original expiration
date), as well as any foreign counterparts of the foregoing.
1.29 "Regulatory Approval" means (a) in the United States, approval
of an Application for Marketing Authorization for New Product and
satisfaction of any related applicable FDA registration and notification
requirements (if any), and (b) in any country other than the United
States, approval by regulatory authorities having jurisdiction over such
country of a single Application for Marketing Authorization for a New
Product or set of Applications for Marketing Authorization for a New
Product, including, if applicable, approval of pricing or reimbursement.
1.30 "Regulatory Documents" shall mean all INDs, clinical
protocols, Applications for Marketing Authorization and other regulatory
filings, Regulatory Approvals, reports on clinical and non-clinical
studies that have been filed or prepared for filing with the FDA or
another regulatory authority, clinical study databases to the extent
readily available in a non-proprietary format, case report forms for
patients enrolled in clinical studies for which no final reports have been
prepared, correspondence with the FDA and other regulatory authorities and
any other items requested by the FDA or other regulatory authorities.
1.31 "Xxxxxxx" shall have the meaning ascribed to such term in the
recitals set forth above.
1.32 "Xxxxxxx Agreement" shall mean the license agreement dated
November 5, 1996, between Xxx Lilly and Company and Xxxxxxx Laboratories
Inc.
1.33 "Xxxxxxx Agreement Compound" means [--------------------------
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1. 34 "Royalty Report" shall have the meaning ascribed to such term
in Section 3.2.
1.35 "Sublicensee" shall have the meaning as set forth in Section
2.2.
1.36 "Territory" means all countries of the world.
1.37 "Third Person" means Persons other than the Parties or
Affiliates thereof, or employees or directors of the Parties or
Affiliates.
1.38 "Toxicology Studies" means all toxicology and absorption,
distribution, metabolism and elimination ("ADME") studies performed by
ADOLOR in order to obtain Regulatory Approvals of New Product.
1.39 "Valid Claim" means a claim of an issued and unexpired patent,
or a claim of a pending patent application, which claim has not been held
invalid or unenforceable by a court or other government agency of
competent jurisdiction from which no appeal can be or has been taken, and
has not been admitted to be invalid or unenforceable through re-
examination or disclaimer or otherwise.
Capitalized terms and acronyms used in this Agreement, but not
defined in this Agreement, shall have the meaning generally ascribed to
such terms by professionals in the pharmaceutical research industry.
Defined capitalized terms may be used in the singular or plural.
Article 2
Grant of License
2.1 Development and Commercialization License. As of the
Effective Date, LILLY grants ADOLOR an exclusive (except as to LILLY for
internal research purposes only and not for clinical development),
royalty-bearing, license under Know-How, the Licensed Patents and the
Process Licensed Patents, to develop, obtain Regulatory Approval for, use,
make, have made, import, sell, and offer for sale New Compounds and New
Products in the Territory.
2.2 Sublicensing Rights - ADOLOR. ADOLOR shall have the right to
sublicense the rights granted by LILLY to ADOLOR in Section 2.1 , to any
Persons (including an Affiliate of ADOLOR) ("Sublicensee"). ADOLOR,
further, shall assume responsibility for the performance by its
Sublicensees of all terms, conditions, and obligations imposed on ADOLOR
under the terms of this Agreement as they pertain to the rights
sublicensed to such Sublicensee. Upon any termination of this Agreement,
each sublicense to a Sublicensee will, at the Sublicensee's option, remain
in effect and shall become a direct license of such rights by LILLY to
such Sublicensee, subject to the Sublicensee agreeing in writing to assume
ADOLOR's terms, conditions and obligations to LILLY under this Agreement
as they pertain to the sublicensed rights. ADOLOR shall notify LILLY
within five (5) business days of executing any such sublicense and shall
provide to LILLY a copy of such sublicense, provided that ADOLOR may
redact from such copy any confidential information of ADOLOR or the
Sublicensee that is not relevant to LILLY's administration of this
Agreement.
2.3 Sublicensing Rights - LILLY. With respect to the licenses
granted to LILLY in Sections 6.1, and 6.2, such licenses shall include the
right of LILLY to sublicense so long as such sublicense is consistent with
the terms and conditions of this Agreement. LILLY, further, shall assume
responsibility for the performance by its sublicensees of all terms,
conditions, and obligations imposed on LILLY under the terms of this
Agreement as they pertain to the rights sublicensed to such sublicensee.
2.4 [-------------------------------------------------------------
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Article 3
Consideration
3.1 Payments from ADOLOR to LILLY.
In consideration of the licenses set forth in Sections 2.1 and 2.2,
ADOLOR will pay the following amounts to LILLY:
(a) ADOLOR Payment on the Effective Date. On the Effective Date, ADOLOR
will pay LILLY the non-refundable sum of Four Million and No/100 Dollars
($4,000,000.00) by electronic wire transfer in immediately available funds
to an account designated by LILLY.
(b) Milestone Payments for New Products. Within thirty (30) days of
ADOLOR and/or any Sublicensee achieving a milestone event listed below with
respect to each New Product, ADOLOR will pay the following specified non-
creditable, non-refundable amount by electronic wire transfer in
immediately available funds to an account designated by LILLY:
Milestone Event Payment
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For avoidance of doubt, ADOLOR shall make separate milestone payments to
LILLY for each New Product (i.e., milestone payments for a New Product are
non-creditable against milestone payments for another New Product);
provided, however, that if development of a New Product is discontinued by
ADOLOR because of failure of a Phase I, II, or III Clinical Trial relating
to the New Product, then milestones already paid for such discontinued New
Product shall be credited against milestones due for a subsequently
developed New Product. Further, the Parties understand that the same
milestone event may occur more than once for an individual New Product, but
the Parties agree that ADOLOR shall have no obligation to make more than
one (1) payment for the same milestone event relating to such New Product.
Multiple pharmaceutical products based upon the same New Compound shall be
considered one and the same New Product for purposes of milestone payments.
The aggregate milestone payments for each New Product shall not exceed [---
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(c) Milestone Payments for Xxxxxxx Agreement Compound. In addition
to those milestone payments payable under the Xxxxxxx Agreement and those
payments due with respect to New Products under Section 3.1(b) of this
Agreement, ADOLOR or its Sublicensee shall pay LILLY Four Million and
No/100Dollars ($4,000,000.00) within thirty (30) days of acceptance of the
first Application for Marketing Authorization in any country of the world
for the Xxxxxxx Agreement Compound. ADOLOR will pay the amounts described
in this subsection by electronic wire transfer in immediately available
funds to an account designated by LILLY. For avoidance of doubt, the
payment payable under this subsection is not creditable against any amount
payable under the Xxxxxxx Agreement.
(d) Royalty Payments from ADOLOR to LILLY. In consideration for
the licenses and rights granted by LILLY in Sections 2.1, and 2.2, ADOLOR
shall pay LILLY a [-------------**------------] royalty on Net Sales.
Royalties shall be payable with respect to each country and each New
Product or New Compound, and this payment obligation shall continue on a
country-by-country basis until the later of: (i) the last to expire of a
Valid Claim of a Licensed Patent covering such New Product or New Compound
in such country, (ii) [-----**-------] years from First Commercial Sale in
such country, or (iii) the expiration of Data Exclusivity Period in such
country. In no event shall LILLY receive more than a [------------------
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regardless of the number of Licensed Patents or Process Licensed Patents
covering such New Product or New Compound.
3.2 Record Retention, Royalty Reports, and Royalty Payment
Schedule. ADOLOR shall (and shall require its Affiliates and
Sublicensees) keep complete and accurate books and records that are
necessary to ascertain and verify royalty payments owed under Section
3.1(d). ADOLOR shall keep such records in accordance with United States
Generally Accepted Accounting Principles (GAAP) consistently applied or,
in the case of Sublicensees, such similar accounting principles,
consistently applied. ADOLOR shall furnish LILLY with a quarterly report
("Royalty Report") on Net Sales of New Products within [---------**-------
----] days of the end of each Calendar Quarter. The Royalty Report shall
include: (i) Net Sales of each New Product and New Compound on a country
basis for the prior Calendar Quarter, (ii) royalty payments due for such
New Product by country, and (iii) the basis for calculating such royalty
payment. Royalties due to LILLY shall be paid by ADOLOR in United States
dollars concurrently with the remittance of each Royalty Report (i.e.,
within [----------**---------] days of the end of each calendar quarter).
3.3 Exchange Rates. For those sales of New Product outside the
United States, the royalty shall be calculated on the basis of the local
currency sales figures translated into United States dollars according to
ADOLOR's then current standard procedures and methodology. The
methodology employed shall be: (i) the methodology used by ADOLOR or its
Sublicensees in the translation of their foreign currency operating
results for external reporting; (ii) consistent with United States
Generally Accepted Accounting Principles (GAAP) consistently applied or,
in the case of Sublicensees, such similar accounting principles,
consistently applied; and (iii) approved and reviewed by ADOLOR's or its
Sublicensees' independent certified public accountants.
3.4 Financial Audits. During the term of this Agreement and
within one (1) year after its termination, LILLY shall, not more than once
each year, have the right, at its expense, to select an independent
certified public accountant of LILLY's choice (and reasonably acceptable
to ADOLOR) to inspect ADOLOR's and ADOLOR's Sublicensee(s)'s records to
verify the correctness of royalty payments made hereunder for the two (2)
preceding years to determine the accuracy of any royalty payments made
hereunder (which may include, without limitation, examination of Net
Sales, and cost of goods). The accountants shall keep confidential any
information obtained during such inspection and shall report to LILLY only
the royalty payments due and payable. The expense of such audit shall be
borne by LILLY, unless the audit establishes that payments for the period
examined exceeded the amount that should have been paid by [---------**---
------] or more, in which case ADOLOR shall be responsible for the
reasonable expenses of such audit. Within thirty (30) days after both
Parties have received an audit report, ADOLOR will compensate LILLY for
any errors or omissions revealed by the audit.
3.5 Taxes And Currency. All payments made under this Agreement
shall be in United States dollars. Any and all taxes levied on any
payments under this Agreement shall be the liability of and paid by LILLY.
If laws or regulations require the withholding of such taxes, the taxes
will be deducted by ADOLOR from the payment and remitted by ADOLOR to the
proper tax authority, provided that ADOLOR will furnish LILLY with a copy
of the official tax receipt on such withholdings as soon as reasonably
practicable after such withholding, and give LILLY such assistance as may
be reasonably necessary to enable or assist LILLY to claim exemption
therefrom. Proof of payment shall be provided to LILLY within ninety (90)
days after payment. ADOLOR will cooperate in pursuing tax refunds, if
such refund is appropriate in LILLY's determination.
3.6 Late Payment. In the event a payment is past due as described
in Article 3 any unpaid balance shall accrue interest at the lesser of:
(i) a rate equal to the United States prime interest rate (as reported in
the Wall Street Journal, or comparable publication if the Wall Street
Journal no longer reports such rate, published on the date closest to the
date payment was due) plus [--------**-------], or (ii) the maximum
interest allowed by law. Such interest shall be calculated from the date
payment was due until the date ADOLOR sends the payment to LILLY. The
late payment fees described in this Section, shall be in addition to any
other remedies available to LILLY under applicable law.
Article 4
Transfers of Know-How and Responsibility for Supplying New Compound
4.1 Transfer of Know-How. On the Effective Date after payment by
ADOLOR of the signing fee, LILLY shall supply ADOLOR with the Know-How.
After LILLY provides ADOLOR with the Know-How, LILLY shall have no
obligation to provide ADOLOR with any further know-how with respect to New
Compounds or New Products.
4.2 Research and Development Material. LILLY shall have no
obligation to provide ADOLOR with any quantities of New Compounds that
ADOLOR needs to accommodate its research and development, and
commercialization efforts under this Agreement.
Article 5
Development and Commercialization of New Products
5.1 Development, Commercialization, Manufacturing, and Diligence.
As of the Effective Date and except as expressly provided in this
Agreement, LILLY shall have no further responsibility (financially and
otherwise) for New Compounds or New Products, including: (i) any aspects
of developing (including, without limitation, pre-clinical and clinical);
filing INDs, Applications for Marketing Authorization (and clinical
protocols developed in support thereof); or obtaining Regulatory
Approvals; manufacturing; or commercializing. Subject to ADOLOR's
obligations under Article 12, ADOLOR or its Sublicensees shall also hold
legal title to INDs and Applications for Marketing Authorization. Except
in accordance with this Agreement, LILLY shall have no financial
obligation relating to New Compounds or New Products. ADOLOR shall use [-
-------------------**----------------------] to commence further
development of New Products or products containing the Xxxxxxx Agreement
Compound.
5.2 Adverse Event Reporting. ADOLOR agrees to report adverse
events and serious adverse events (as such terms are commonly understood
in the pharmaceutical industry), which occur during the development and
marketing of New Products to the relevant regulatory authorities promptly
according to the applicable regulations. If this Agreement is terminated
by LILLY as permitted under Section 12.3, ADOLOR will, upon LILLY's
request, supply LILLY with relevant safety information with respect to New
Products in such formats as ADOLOR customarily maintains such information.
Article 6
Transfer of Regulatory Documents; License to LILLY
6.1 Regulatory Documents. If this Agreement is terminated by
LILLY as permitted under Section 12.3, as soon as practicable but in no
event more than ninety (90) days after the effective date of such
termination, ADOLOR, to the extent it has the right to do so, shall
deliver to LILLY, and shall use reasonable best efforts to cause its
Sublicensees and contractors to promptly deliver to LILLY, all Regulatory
Documents related to New Compounds or New Products, and that are
reasonably required to commercialize such New Compounds or New Products,
that ADOLOR or such Sublicensees or contractors own or control, subject to
LILLY's payment of the reasonable costs and expenses incurred by ADOLOR or
its Sublicensees or contractors in connection with facilitating the
delivery of such items. To the extent it has the right to do so, ADOLOR
shall assign to LILLY, and shall use reasonable best efforts to cause its
Sublicensees and contractors to assign to LILLY, ownership of all
Regulatory Documents that relate solely to New Compounds or New Products.
With respect to any Regulatory Documents that relate to both New Compounds
or New Products and other compounds or products, ADOLOR shall, to the
extent it has the right to do so, permit LILLY, and shall use reasonable
best efforts to cause its Sublicensees and contractors to permit LILLY, to
reference such Regulatory Documents as necessary solely in connection with
LILLY's development, manufacturing and/or commercialization of New
Compounds or New Products. Should LILLY elect to sublicense, or to co-
market or co-promote any New Product with a Third Person, LILLY shall have
the right to provide appropriate access to such Regulatory Documents to
such Third Person. LILLY shall be responsible for paying all transfer
costs, royalties, and similar payments to ADOLOR's Sublicensees and
contractors, if any, in connection with the foregoing activities. Nothing
in this Section 6.1 shall provide LILLY with any rights respecting
Regulatory Documents relating solely to the Xxxxxxx Agreement Compound.
6.2 ADOLOR Improvements and ADOLOR Technology. If this Agreement
is terminated by LILLY as permitted under Section 12.3, as soon as
practicable but in no event more than ninety (90) days after the effective
date of such termination, ADOLOR shall, to the extent it has the right to
do so, provide LILLY with access to all ADOLOR Improvements and ADOLOR
Technology related to New Compounds or New Products that are in ADOLOR's
possession or control (including, without limitation, by delivering copies
of all relevant documentation), which items LILLY shall have the right to
use only in connection with making, having made, using, selling, offering
for sale and importing, New Compounds and New Products. LILLY shall
reimburse ADOLOR for the reasonable costs and expenses incurred by ADOLOR
in connection with the provision of such items, including any such amounts
payable to ADOLOR's Sublicensees or contractors. If this Agreement is
terminated by LILLY as permitted under Section 12.3, ADOLOR shall grant
and hereby does grant to LILLY, to the extent it has the right to do so, a
royalty-free, exclusive license solely to make, have made, use, sell,
offer for sale, and import New Compounds and New Products using all ADOLOR
Improvements and ADOLOR Technology. LILLY shall be responsible for
payment of any royalties or other amounts due from ADOLOR to any Third
Person on account of LILLY's exercise of such license rights. Nothing in
this Section 6.2 shall provide LILLY with any rights respecting ADOLOR
Improvements or ADOLOR Technology relating solely to the Xxxxxxx Agreement
Compound.
Article 7
Intellectual Property
7.1 ADOLOR Improvements and ADOLOR Technology - Ownership. Except
as expressly set forth in this Agreement, LILLY shall have no rights,
title or interest in or to any ADOLOR Improvements or ADOLOR Technology.
Nothing herein shall obligate ADOLOR to file, prosecute, defend or
maintain any applications or patents covering ADOLOR Improvements or
ADOLOR Technology.
7.2 Filing, Prosecution and Maintenance of Licensed Patents.
During the term of this Agreement, ADOLOR will file, prosecute and
maintain the Licensed Patents using patent counsel of its choice, but
reasonably acceptable to LILLY. LILLY shall transfer to ADOLOR in a
timely manner all documents and other materials in LILLY's possession or
control that are reasonably required for ADOLOR to perform said
activities.
7.3 Filing, Prosecution and Maintenance of Process Licensed
Patents. During the term of this Agreement, LILLY will file, prosecute
and maintain the Process Licensed Patents.
7.4 Patent Costs. LILLY shall bear all expenses incurred in
preparing, filing, prosecuting, defending and maintaining all patent
applications and patents under the Process Licensed Patents. ADOLOR shall
bear all expenses incurred in preparing, filing, prosecuting, defending
and maintaining all patent applications and patents under the Licensed
Patents. Each Party shall treat any patent applications under Licensed
Patents and Process Licensed Patents as Confidential Information of the
other Party in accordance with the provisions of Section 9.1. Each Party
shall keep the other reasonably informed of the status of its preparation,
filing, prosecution, defense and maintenance of all patent applications
and patents under the Licensed Patents and Process Licensed Patents,
including by providing the other Party annual written reports of all such
patent applications and patents and the status thereof, and by
periodically providing other requested information upon receipt of written
requests from the other Party. Should an official action rejecting any of
the pending claims within the Licensed Patents or Process Licensed Patents
require that an amendment be made or action be taken which would limit or
substantially change the scope of any license rights granted to ADOLOR
hereunder, the controlling Party will timely inform the other thereof,
will consult with the other Party with respect thereto and allow the other
Party to reasonably assist in formulating a response in connection
therewith.
7.5 Failure to File or Maintain Applications or Patents.
Notwithstanding the foregoing provisions of this Article 7, either Party
may decide not to file or to abandon its prosecution, defense or
maintenance of any applications or patents encompassed within the Licensed
Patents or Process Licensed Patents, as the case may be, (or any claims
therein). The abandoning Party shall give the other Party reasonable
written notice to this effect, said notice to be given at least thirty
(30) days in advance of the date such filing is due or such abandonment
will occur to the extent reasonably possible. The notified Party may, at
its expense and in the other Party's name, if necessary, file prosecute,
defend and/or maintain any such applications or patents (or any claims
therein).
If this Agreement has been terminated by LILLY as permitted under
Section 12.3 and ADOLOR decides not to file or to abandon the prosecution,
defense or maintenance of any applications or patents encompassing ADOLOR
Improvements or ADOLOR Technology, it shall give LILLY reasonable written
notice to this effect, said notice to be given at least thirty (30) days
in advance of the date such filing is due or such abandonment will occur
to the extent reasonably possible. After such notice, LILLY may, at its
expense and to the extent ADOLOR has the right to permit LILLY to do so,
file prosecute, defend and/or maintain such applications or patents.
7.6 Patent Term Extensions. For Licensed Patents, ADOLOR may
apply for (in LILLY's name and on LILLY's behalf where reasonably
necessary) term extensions, supplemental protection certificates, or
functional equivalents thereof. LILLY will provide ADOLOR with all
material, information and data in its possession reasonably necessary or
reasonably useful to prepare such items.
7.7 Declaratory Judgment Action - Issued Licensed Patents and
Process Licensed Patents. Notwithstanding anything to the contrary in
this Article, or in Article 8, in the event that a declaratory judgment
action alleging invalidity, unenforceability or noninfringement of any
patent under the Licensed Patents is brought against ADOLOR and ADOLOR
chooses not to defend against such action, LILLY may within thirty (30)
days after commencement of such declaratory action elect to intervene in
such action and take over the defense thereof at LILLY's own expense.
Notwithstanding anything to the contrary in this Article, or in Article 8,
in the event that a declaratory judgment action alleging invalidity,
unenforceability or noninfringement of any patent under the Process
Licensed Patents is brought against LILLY and LILLY chooses not to defend
against such action, ADOLOR may within thirty (30) days after commencement
of such declaratory action elect to intervene in such action and take over
the defense thereof at ADOLOR's own expense.
7.8 Declaratory Judgment Action - Patents On ADOLOR Improvements
and ADOLOR Technology. Notwithstanding anything to the contrary in this
Article, or in Article 8, in the event that a declaratory judgment action
alleging invalidity, unenforceability or noninfringement of any patents
that cover ADOLOR Improvements or ADOLOR Technology shall be brought
against LILLY, ADOLOR may within thirty (30) days after commencement of
such declaratory action elect to intervene in such action and take over
the defense thereof at ADOLOR's own expense.
7.9 Limitation on Cooperation with Third Parties. ADOLOR agrees
to not cooperate with any Third Person beyond what cooperation ADOLOR may
be required to provide by law, in any action or proceeding to render any
patent (or any claim therein) under the Licensed Patents and Process
Licensed Patents invalid, unenforceable, or not infringed, and will not
lodge or cooperate with any Third Person beyond what cooperation ADOLOR
may be required to provide by law, in lodging any opposition against any
pending patent application relating to the Licensed Patents or Process
Licensed Patents.
Conversely, if this Agreement has been terminated by LILLY as
permitted under Section 12.3, LILLY agrees to not cooperate with any Third
Person beyond what cooperation LILLY may be required to provide by law, in
any action or proceeding to render any patent (or any claim therein) that
cover ADOLOR Improvements or ADOLOR Technology invalid, unenforceable, or
not infringed, and will not lodge or cooperate with any Third Person
beyond what cooperation LILLY may be required to provide by law, in
lodging any opposition against any pending patent application relating to
ADOLOR Improvements or ADOLOR Technology.
Article 8
Infringement
8.1 Notification of Suspected Infringement. Each Party shall
promptly notify the other in writing of any actual, potential or suspected
infringement (collectively "alleged infringement") of any patent under the
Licensed Patents or Process Licensed Patents of which such Party becomes
aware, and shall promptly provide the other Party with all reasonably
available evidence of such alleged infringement. Promptly after such
notification regarding any such alleged infringement, ADOLOR and LILLY
shall consult and cooperate fully to determine a course of action, if
possible, to terminate such alleged infringement without litigation.
8.2 Infringement of Licensed Patents and Process Licensed Patents.
ADOLOR shall have the right, but not the obligation, to prosecute at its
own expense and through counsel of its own choice all actions for
infringement of patents under the Licensed Patents or, to the extent
relating to New Compounds or New Products, the Process Licensed Patents.
In furtherance of such right, LILLY understands and agrees that ADOLOR may
join LILLY as a party plaintiff in any such action without expense to
LILLY. The total out-of-pocket cost to ADOLOR of any such infringement
action commenced by ADOLOR shall be borne by ADOLOR. The recovery award
shall be divided as follows: ADOLOR shall apply any recovery of costs or
damages derived from such action as follows: [---------------------------
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LILLY shall have the right to request that ADOLOR take legal action
against any infringement of patents under Licensed Patents or, with
respect to New Compound or New Product, the Process Licensed Patents, as
the case may be. Such request shall be by written notice. The notice
shall set forth the facts of such alleged infringement in reasonable
detail, and shall be accompanied by reasonable evidence of such
infringement. If the infringing activity is not abated within three (3)
months of the time LILLY requests that ADOLOR take legal action, and
either ADOLOR has not commenced an infringement action, or ADOLOR shall
have notified LILLY of its intention not to commence an infringement
action, or ADOLOR shall have ceased its prosecution of an infringement
action, then and only then, shall LILLY have the right, but not the
obligation, to prosecute at its own expense and through counsel of its own
choice an action for infringement (including any related counterclaim for
invalidity) of such Licensed Patents or, with respect to New Compound or
New Product, the Process Licensed Patents. In furtherance of such right,
ADOLOR understands and agrees that LILLY may join ADOLOR as a party
plaintiff in any such action without expense to ADOLOR. The total out-of-
pocket cost to LILLY of any such infringement action commenced by LILLY
shall be borne by it. The recovery award shall be divided as follows:
LILLY shall apply any recovery of costs or damages derived from such
action as follows: [------------------------------------------------------
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8.3 Infringement of Patents Covering ADOLOR Improvements or ADOLOR
Technology. ADOLOR shall have the right, but not the obligation, to
prosecute at its own expense and through counsel of its own choice all
actions for infringement of any patents that cover ADOLOR Improvements or
ADOLOR Technology. ADOLOR shall retain the entirety of any recovery from
such infringement action; provided, however, that if this Agreement has
been terminated by LILLY as permitted under Section 12.3, ADOLOR, after
reimbursing itself for its out-of-pocket expenses, including reasonable
attorneys' fees, incurred in prosecuting such infringement action, shall
pay to LILLY any remaining portion of such recovery that relates directly
to a New Compound, or a New Product.
If this Agreement has been terminated by LILLY as permitted under
Section 12.3, LILLY shall have the right to request that ADOLOR take legal
action against infringement of the patents that cover ADOLOR Improvements
or ADOLOR Technology that relate to any New Compound, or any New Product.
Such request shall be by written notice and shall be accompanied by
reasonable evidence of such infringement. If within three (3) months of
the time LILLY requests that ADOLOR take legal action the infringing
activity shall not have been abated, and either ADOLOR has not commenced
an infringement action or ADOLOR has notified LILLY of ADOLOR's intention
not to commence an infringement action, or ADOLOR shall have ceased its
prosecution of an infringement action, then and only then, shall LILLY
have the right, but not the obligation, to prosecute at LILLY's own
expense and through counsel of its own choice an action for infringement
of such patents, provided such infringement relates directly to a New
Compound, or a New Product. The right for LILLY to prosecute infringers
shall include the right for LILLY to prosecute such suits in ADOLOR's
name, and ADOLOR consents to be a party plaintiff in any such action.
LILLY, after reimbursing ADOLOR for its out-of-pocket expenses, including
reasonable attorneys' fees, incurred in connection with such infringement
action, shall retain the entirety of any recovery from such action.
8.4 Settlement of Litigation. No settlement, consent judgment or
other final disposition of an action for infringement or validity may be
entered into as to any patent (or claim therein) under the Licensed
Patents or Process Licensed Patents without LILLY's prior written consent,
which consent shall not be unreasonably withheld. No settlement, consent
judgment or other final disposition of an action for infringement or
validity that is inconsistent with the rights and licenses granted to
ADOLOR under this Agreement may be entered into as to any patent (or claim
therein) under the Licensed Patents or Process Licensed Patents without
ADOLOR's prior written consent, which consent shall, also, not be
unreasonably withheld. Furthermore, if this Agreement has been terminated
by LILLY as permitted under Section 12.3, no settlement, consent judgment
or other final disposition of an action for infringement or validity that
is inconsistent with the rights and licenses granted to LILLY under this
Agreement may be entered into as to any patent covering ADOLOR
Improvements or ADOLOR Technology without LILLY's written consent, which
consent shall not be unreasonably withheld. It is recognized by both
Parties that what is reasonable will differ depending on whether the owner
of the intellectual property is the Party conducting the action or whether
it is the licensee who is conducting the action due to a failure to act by
the owner.
8.5 Cooperation. In any infringement or declaratory action
conducted pursuant to this Article, both Parties shall cooperate in all
respects and have their employees testify and shall make available
relevant records, papers, information, samples, specimens and the like
without compensation except for out-of-pocket expenses, which shall be
borne by the Party initiating or defending such action.
Article 9
Confidentiality
9.1 ADOLOR's Obligations. ADOLOR will maintain the Know-How and
other proprietary or trade secret information of LILLY which has been
designated to ADOLOR as such ("LILLY Confidential Information") as
confidential during the term of this Agreement and for a period of ten
(10) years after the expiration or earlier termination of this Agreement,
unless LILLY agrees that disclosure will not adversely affect LILLY's
proprietary interests, such agreement not to be unreasonably withheld.
However, such obligation of confidentiality shall not apply to any LILLY
Confidential Information which:
(i) is, as of the Effective Date, in the public domain, or
subsequently enters the public domain through no fault of ADOLOR, it
employees or agents;
(ii) was known by ADOLOR prior to disclosure by LILLY
hereunder as demonstrated by written documentation;
(iii) is disclosed to ADOLOR by a Third Person lawfully in
possession of same and having the right to disclose same;
(iv) is independently developed by ADOLOR as demonstrated by
written evidence without reference to information disclosed to
ADOLOR by LILLY;
(v) is disclosed pursuant to LILLY's prior written approval;
(vi) is required to be disclosed to (or by) a governmental
authority provided reasonable notice of the impending disclosure is
provided to LILLY and ADOLOR provides reasonable assistance to LILLY
in order to permit LILLY to contest such disclosure;
(vii) is required to be disclosed in order to allow ADOLOR to
(a) defend against litigation with a Third Person, (b) file,
prosecute or enforce patents and patent applications, provided
ADOLOR shall not use such information in any patent application
without LILLY's prior written approval, such approval not to be
unreasonably withheld, (c) comply with governmental regulations, or
(d) file or support an IND or an Application for Market
Authorization for a New Product;
(viii) is required to be disclosed in order to allow ADOLOR
to develop or obtain Regulatory Approval of a New Product;
(ix) is disclosed to a Third Person in connection with
developing, testing, evaluating or applying for or securing
Regulatory Approval of a New Product or a New Compound, provided
such Third Person has agreed to be bound by confidentiality and non-
use terms at least as stringent as those in this Agreement; or
(x) is disclosed to a potential Sublicensee who has entered
into, or is contemplating entering into, a written agreement with
ADOLOR regarding the commercialization of New Product, provided such
potential Sublicensee has agreed to be bound by confidentiality and
non-use terms at least as stringent as those in this Agreement.
9.2 LILLY's Obligations. LILLY will maintain all, ADOLOR
Improvements, ADOLOR Technology, Royalty Reports and any other proprietary
or trade secret information of ADOLOR which has been designated to LILLY
as such ("ADOLOR Confidential Information") as confidential during the
term of this Agreement and for a period of ten (10) years after the
expiration or earlier termination of this Agreement, unless ADOLOR agrees
that disclosure will not adversely affect ADOLOR's proprietary interests,
such agreement not to be unreasonably withheld. However, such obligation
of confidentiality shall not apply to any ADOLOR Confidential Information
which:
(i) is, as of the Effective Date, in the public domain, or
subsequently enters the public domain through no fault of LILLY, it
employees or agents;
(ii) was known by LILLY prior to disclosure by ADOLOR
hereunder as demonstrated by written documentation;
(iii) is disclosed to LILLY by a Third Person lawfully in
possession of same and having the right to disclose same;
(iv) is independently developed by LILLY as demonstrated by
written evidence without reference to information disclosed to LILLY
by ADOLOR;
(v) is disclosed pursuant to ADOLOR's prior written
approval;
(vi) is required to be disclosed to (or by) a governmental
authority provided reasonable notice of the impending disclosure is
provided to ADOLOR and LILLY provides reasonable assistance to
ADOLOR in order to permit ADOLOR to contest such disclosure;
(vii) is required to be disclosed in order to allow LILLY to
(a) defend against litigation with a Third Person, (b) file,
prosecute or enforce patents and patent applications, provided LILLY
shall not use such information in any patent application without
ADOLOR's prior written approval, such approval not to be
unreasonably withheld, (c) comply with governmental regulations, or
(d) following any termination of this Agreement by LILLY as
permitted under Section 12.3, file or support an IND or an
Application for Market Authorization for a New Product;
(viii) following any termination of this Agreement by LILLY
as permitted under Section 12.3, is required to be disclosed in
order to allow LILLY to develop or obtain Regulatory Approval of a
New Product;
(ix) following any termination of this Agreement by LILLY as
permitted under Section 12.3, is disclosed to a Third Person in
connection with developing, testing, evaluating or applying for or
securing Regulatory Approval of a New Product or a New Compound,
provided such Third Person has agreed to be bound by confidentiality
and non-use terms at least as stringent as those in this Agreement;
or
(x) following any termination of this Agreement by LILLY as
permitted under Section 12.3, is disclosed to a potential
sublicensee who has entered into, or is contemplating entering into,
a written agreement with LILLY regarding the commercialization of
New Product, provided such potential sublicensee has agreed to be
bound by confidentiality and non-use terms at least as stringent as
those in this Agreement.
9.3 Use of Confidential Information. Other than to perform its
obligations or exercise its rights under this Agreement, neither Party
shall use for any purpose any Confidential Information of the other Party
received under this Agreement.
9.4 Release of Other Information. Neither Party shall use the
name of the other Party in any publication or announcement of this
Agreement (other than to its employees) without the prior written approval
of the other Party. Without limitation, this prohibition applies to press
releases, annual reports, prospectuses, public statements, educational and
scientific conferences, promotional materials, governmental filings and
discussions with public officials, securities analysts, investors and the
media. However, subject to the requirements for review and approval that
follow, this provision does not apply to a disclosure regarding this
Agreement, which counsel to a Party has advised is required by law or
regulation, to regulatory agencies such as the FDA, Securities and
Exchange Commission ("SEC"), Federal Trade Commission and/or Department of
Justice. This includes requests for a copy of this Agreement or related
information by tax authorities. If any Party to this Agreement determines
a release of information regarding the existence or terms of this
Agreement is required by law or regulation, prior to any release of such
information, that Party will notify the other Party as soon as practical
and provide reasonably appropriate detail in relation to the disclosure
required and will endeavor in good faith to provide the other Party with a
minimum of five (5) business days to review the proposed public statement.
The Parties will then discuss what information, if any, will actually be
released and, unless required by law, no such release shall be made unless
both Parties consent to the disclosure and content to be disclosed, such
consent not to be unreasonably withheld. In addition, LILLY shall have
ten (10) business days to review and comment on any redacted version of
this Agreement to be filed with the SEC or other agencies, and ADOLOR
shall use all reasonable efforts to redact therefrom any such information
that LILLY shall reasonably request within such ten (10) business day
period. Nothing herein shall prohibit ADOLOR from disclosing this
Agreement or its terms to a potential Sublicensee who has entered into, or
is contemplating entering into, a written agreement with ADOLOR regarding
the commercialization of a New Product, provided such potential
Sublicensee has agreed to be bound by confidentiality at least as
stringent as ADOLOR's confidentiality obligation to LILLY under this
Agreement.
Notwithstanding the prior paragraph, the Parties agree that it is
appropriate for ADOLOR to release a press release after the execution of
this Agreement, the form of which shall be that of Exhibit 9.4 attached
hereto. Neither Party shall be required to seek the other Party's
approval to re-release or otherwise publicly disseminate any information
contained in such press release. Otherwise, each Party shall submit to
the other all press releases concerning this Agreement that contain
information not included in the original press release, and shall not
release such press release without the other Party's prior written
approval (which shall not be unreasonably withheld).
Article 10
Representations, Warranties, Covenants, and Disclaimers
10.1 No Litigation. Each Party represents that there is no
litigation or proceeding pending or, to the best of such Party's
knowledge, threatened against or involving such Party in any court or
before any agency or regulatory body that is reasonably expected to result
in a judgment or liability against such Party that would adversely affect
its ability or right to carry on its business as now conducted or to
perform its obligations under this Agreement.
10.2 Ownership and Encumbrances. LILLY hereby represents that it
is the owner of the Licensed Patents and Process Licensed Patents and that
it has and shall maintain for the term of this Agreement the full right
and power to grant the licenses set forth in Sections 2.1, and 2.2 in the
manner and to the extent set forth herein, free and clear of any adverse
assignment or other similar encumbrances inconsistent with such
commitments and grants, subject to the provisions of Articles 7 and 8
above.
10.3 Licensed Patents and Process Licensed Patents. To the best of
LILLY's knowledge as of the Effective Date, there is no claim or demand of
any person or entity pertaining to, or any proceeding which is pending or
threatened, that challenges or opposes the rights of LILLY in respect of
any of the Licensed Patents or Process Licensed Patents, or that asserts
the invalidity, misuse, unregisterability or unenforceability of any of
the Licensed Patents or Process Licensed Patents, or requests the
reexamination of any of the Licensed Patents or Process Licensed Patents.
To the best of LILLY's knowledge as of the Effective Date, the
manufacture, use or sale of New Compound or New Product as contemplated
hereunder will not infringe any valid and enforceable patent or other
proprietary rights of any Third Person.
10.4 Licenses-ADOLOR. ADOLOR hereby warrants that it has and shall
maintain for the term of this Agreement, the full right and power to
satisfy its commitments to LILLY under Section 6.1, and to grant the
licenses set forth in Sections 6.2 and 2.3 in the manner and to the extent
set forth, free and clear of any adverse assignment, grant or other
encumbrances inconsistent with such commitments and grants, subject to the
provisions of Articles 7 and 8 above.
10.5 Know-How. LILLY hereby warrants that Schedule 4.1 constitutes
a correct and complete list of all data developed by LILLY relating solely
to New Compounds in the Field of Use that LILLY possesses as of the
Effective Date.
10.6 No Debarment. Each Party represents and warrants to the other
that it will comply at all times with the provisions of the Generic Drug
Enforcement Act of 1992 and upon request each Party will certify in
writing to the other Party that neither such Party, its employees, nor any
Person providing services for such Party under this Agreement has been
debarred under the provisions of such Act.
10.7 Conducting Development Work Under Agreement. All work carried
out by ADOLOR with respect to New Compounds or New Products shall be
carried out in material compliance with applicable laws at the site where
such work is being conducted, including, without limitation,
international, foreign, federal, state, and local laws, statutes,
regulations, guidelines or orders and any relevant cGMP, cGLP and cGCP
requirements.
10.8 Corporate Existence. As of the Effective Date, each Party
represents to the other that it is a company duly organized, validly
existing, and, if relevant in its jurisdiction of formation, in good
standing under the laws of the jurisdiction in which it is formed.
10.9 Authority to Execute and Perform. As of the Effective Date,
each Party represents to the other that it:
(i) has the power and authority and the legal right to enter
into this Agreement and perform its obligations hereunder;
(ii) has taken all necessary corporate action on its part
required to authorize the execution and delivery of this Agreement;
and
(iii) has duly executed and delivered the Agreement, which
constitutes a legal, valid, and binding obligation of it and which is
enforceable against it in accordance with the terms of this
Agreement.
10.10 No Approvals or Consents. Each Party, as of the Effective
Date, represents to the other Party that all necessary consents, approvals
and authorizations of all governmental authorities and Third Persons
required to be obtained by such Party in connection with its execution of
this Agreement and the transfer of rights described in this Agreement have
been obtained.
10.11 No Conflict. Each Party represents to the other that its
execution and delivery of the Agreement and its performance of its
obligations hereunder:
(i) do not conflict with or violate any requirement of
applicable law or regulation or any provision of its company
governance documents in any material way, and
(ii) do not conflict with, violate, breach, or constitute a
default under any contractual obligation or court or administrative
order by which such Party is bound.
10.12 Cooperation. The Parties agree to cooperate with each other
in determining whether any filings are required to be made or consents
required to be obtained in the jurisdictions in connections with the
transactions contemplated hereby and in making or causing to be made any
such filings promptly and in seeking to obtain in a timely manner any such
consents. The Parties shall furnish to each other all information as may
be reasonably required in order to effectuate the foregoing.
10.13 DISCLAIMER OF IMPLIED WARRANTIES. EXCEPT AS EXPRESSLY PROVIDED
IN THIS ARTICLE 10, NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY TO
THE OTHER AS TO THE LICENSED PATENTS OR PROCESS LICENSED PATENTS, KNOW-HOW,
NEW COMPOUNDS, NEW PRODUCTS, REGULATORY DOCUMENTS, ADOLOR IMPROVEMENTS OR
ADOLOR TECHNOLOGY, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF
LAW, STATUTE, OR OTHERWISE, AND EACH PARTY SPECIFICALLY DISCLAIMS ANY AND
ALL IMPLIED OR STATUTORY WARRANTIES INCLUDING WARRANTIES OF MERCHANTABILITY
AND OF FITNESS FOR A PARTICULAR PURPOSE. Without limiting the foregoing,
each Party acknowledges that it has not and is not relying upon any implied
warranty of merchantability or of fitness for a particular purpose or
otherwise, or upon any representation or warranty whatsoever as to the
prospects (financial, regulatory or otherwise), validity, or likelihood of
success of New Compounds, or New Products after the Effective Date.
10.14 DISCLAIMER OF INCIDENTAL AND CONSEQUENTIAL DAMAGES. NEITHER
PARTY WILL BE LIABLE TO THE OTHER PARTY FOR INDIRECT, INCIDENTAL,
CONSEQUENTIAL, OR SPECIAL DAMAGES, INCLUDING BUT NOT LIMITED TO LOST
PROFITS ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT,
REGARDLESS OF ANY NOTICE OF THE POSSIBILITY OF SUCH DAMAGES. NOTHING IN
THIS SECTION IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR
OBLIGATIONS OF ANY PARTY.
10.15 Confirmation of Assignment and Assumption of the Xxxxxxx
Agreement. ADOLOR represents that prior to the Effective Date, Xxxxxxx
conveyed, transferred and assigned to ADOLOR, and ADOLOR accepted all of
Xxxxxxx' right, title and interest in the Xxxxxxx Agreement and all
documents relating thereto. ADOLOR also represents that in consideration
of such assignment, ADOLOR simultaneously assumed all of Xxxxxxx'
obligations under the Xxxxxxx Agreement. ADOLOR warrants to LILLY that
ADOLOR hereby agrees to be bound by and comply with all terms, conditions,
warranties and covenants of Xxxxxxx set forth in the Xxxxxxx Agreement.
LILLY warrants to ADOLOR that LILLY hereby agrees to be bound by and comply
with all terms, conditions, warranties and covenants of LILLY set forth in
the Xxxxxxx Agreement.
Article 11
Indemnification
11.1 Indemnification.
(a) ADOLOR's Obligation. Except to the extent an action as
described below involves gross negligence or willful misconduct by LILLY,
its officers, directors, employees and/or agents, ADOLOR shall defend
LILLY, its officers, directors, employees and/or agents against any and all
third-party claims, suits, actions or proceedings (including, without
limitation, claims alleging personal injury (including death) to any Person
or damage to tangible property) resulting from or arising out of any
material misrepresentation, breach of warranty or non-fulfillment of any
agreement or covenant on the part of ADOLOR under this Agreement, or from
any material misrepresentation in or omission from any certificate,
schedule, attachment, exhibit, statement, document or instrument supplied
by ADOLOR pursuant hereto or in connection herewith, or ADOLOR's activities
as contemplated under this Agreement. In addition, ADOLOR shall indemnify
and hold harmless LILLY, its officers, directors, employees and/or agents
from and against any and all Damages arising out of any such claims.
(b) LILLY's Obligation. Except to the extent an action as
described below involves gross negligence or willful misconduct by ADOLOR,
its officers, directors, employees and/or agents, LILLY shall defend
ADOLOR, its officers, directors, employees and/or agents against any and
all third-party claims, suits, actions or proceedings (including, without
limitation, claims alleging personal injury (including death) to any Person
or damage to tangible property) resulting from or arising out of any
material misrepresentation, breach of warranty or non-fulfillment of any
agreement or covenant on the part of LILLY under this Agreement, or from
any material misrepresentation in or omission from any certificate,
schedule, attachment, exhibit, statement, document or instrument supplied
by LILLY pursuant hereto or in connection herewith, or LILLY's activities
as contemplated under this Agreement. In addition, LILLY shall indemnify
and hold harmless ADOLOR, its officers, directors, employees and/or agents
from and against any and all Damages arising out of any such claims.
11.2 Notice and Opportunity to Defend.
(a) Notice. Promptly after receiving notice of a claim for which
indemnification may be sought pursuant to Section 11.1, a Party (the
"Indemnified Party") will give the other Party (the "Indemnifying Party")
written notice describing the claim in reasonable detail. The failure of
an Indemnified Party to give notice in the manner provided herein will not
relieve the Indemnifying Party of its obligations under this Article,
except to the extent that such failure to give notice materially prejudices
the Indemnifying Party's ability to defend such claim.
(b) Indemnifying Party's Duty to Proceed. Upon receipt of notice
under Subsection (a) from the Indemnified Party, the Indemnifying Party
will have the duty to either to compromise or defend, at its own expense
and by its own counsel, such matter, except as provided in Subsection (c).
The Indemnifying Party will promptly (and in any event not more than twenty
(20) days after receipt of the Indemnified Party's original notice) notify
the Indemnified Party in writing of its intention to either compromise or
defend such matter, and the Indemnified Party agrees to cooperate fully
with the Indemnifying Party and its counsel in the compromise or defense
against any such asserted liability, including making available to the
Indemnifying Party any books, records or other documents within its control
that are necessary or appropriate for such defense subject to Indemnifying
Party's obligation to maintain as confidential, information deemed
confidential to the Indemnified Party under this Agreement. All reasonable
costs and expenses incurred in connection with the Indemnified Party's
cooperation will be borne by the Indemnifying Party. In addition, the
Indemnifying Party will not cease to defend any claim (except pursuant to a
permitted settlement or compromise thereof) without the prior written
consent of the Indemnified Party, which consent will not be unreasonably
withheld.
(c) Indemnified Party's Right to Proceed. At its option, the
Indemnified Party will have the right to compromise or defend, by its own
counsel, a claim that could give rise to its right to indemnification
pursuant to Section 11.1 if:
(i) the Indemnifying Party elects in writing not to
compromise or defend the asserted claim;
(ii) the Indemnifying Party fails to notify the Indemnified
Party of its election to compromise or defend the asserted claim as
herein provided;
(iii) the Indemnifying Party fails to admit its obligation
under this Agreement with respect to the claim following a written
request of the Indemnified Party; or
(iv) in the reasonable opinion of counsel to the Indemnified
Party, the claim is reasonably likely to result in the Indemnified
Party becoming subject to injunctive relief or relief other than the
payment of Damages that would have a materially adverse effect on the
ongoing business of the Indemnified Party.
In these situations, the reasonable costs and expenses incurred by the
Indemnified Party in compromising or defending the asserted claim will be
included as part of the indemnification obligation of the Indemnifying
Party.
In the event the Indemnified Party intends to compromise or settle a
claim under this Subsection, the Indemnified Party will provide at least
ten (10) business days prior written notice to the Indemnifying Party
describing the proposed compromise or settlement in order that the
Indemnifying Party may comment and/or object.
(d) Settlement. Notwithstanding the foregoing, neither the
Indemnifying Party nor the Indemnified Party may settle or compromise any
claim under this Section over the written objection of the other Party if
such settlement or compromise could reasonably result in a material adverse
effect on the other Party or otherwise alter, diminish, or derogate the
other Party's rights under this Agreement.
(e) Other Obligations. The Party conducting the defense of a claim
under this Section will (i) keep the other Party informed on a reasonable
and timely basis as to the status of the defense of such claim (but only to
the extent such other Party is not participating jointly in the defense of
such claim), and (ii) conduct the defense of such claim in a reasonably
prudent manner.
11.3 Indemnification Payment Obligation. Neither Party will incur
any indemnification obligations under this Article until the aggregate
amount of Damages incurred or suffered by the Indemnified Party (or which
likely would be incurred or suffered if the relevant claim were successful)
for which the Indemnifying Party is otherwise subject to under this
Agreement exceeds [-----**----] at which time the entire cumulative
aggregate amount of such Damages will be covered. The provisions of this
Section will not limit or otherwise affect the obligations of any
Indemnifying Party under any other Section.
11.4 Indemnification Payment Adjustments.
(a) Net Tax Effects. The amount of any Damages for which
indemnification is provided under this Article will be reduced to take
account of any net tax benefit to the Indemnified Party and will be
increased to take account of any net tax detriment to the Indemnified Party
arising from incurring or paying such Damages or from receiving any
indemnification payment.
(b) Insurance Proceeds or Other Recovery. The amount of any
Damages for which indemnification is provided under this Article will be
reduced by the insurance proceeds received and any other amount recovered,
if any, by the Indemnified Party with respect to any Damages. However, an
Indemnified Party does not have an obligation to pursue an insurance claim
relating to any Damages for which indemnification is sought hereunder.
(c) Refund. If an Indemnified Party receives a payment pursuant to
this Article and subsequently receives insurance proceeds or other amounts
with respect to the same Damages, the Indemnified Party will pay to the
Indemnifying Party an amount equal to the difference (if any) between: (i)
the sum of the insurance proceeds received, other amounts received, and the
indemnification amount received from the Indemnifying Party pursuant to
this Article and (ii) the amount necessary to fully and completely
indemnify and hold harmless the Indemnified Party from and against such
Damages. However, in no event will such refund ever exceed the
Indemnifying Party's payment to the Indemnified Party under this Article.
11.5 Indemnification Payment. Upon the final determination of
liability and the amount of the indemnification payment under this Article,
the Indemnifying Party will pay such amount to the Indemnified Party in
immediately available funds within thirty (30) business days after such
determination.
Article 12
Term and Termination
12.1 Term. The term of this Agreement shall commence as of the
Effective Date and, unless sooner terminated as hereinafter provided,
shall continue in full force and effect on a country-by-country basis
until all royalty payment obligations of ADOLOR to LILLY with respect to
such country are terminated pursuant to the applicable provisions of
Article 3. Upon the expiration of the term of this Agreement with respect
to any country, ADOLOR's license rights under Section 2.1 and Section 2.2
with respect to such country shall become fully paid-up and irrevocable.
12.2 Termination by Consent. This Agreement may be terminated at
any time by mutual written consent of the Parties. Termination by mutual
consent shall become effective on such date as the Parties shall agree.
12.3 Material Breach by ADOLOR. Upon (a) any material breach,
material default or other material defect of performance of this
Agreement, or (b) any warranty or covenant, or representation made by
ADOLOR in this Agreement proving to have been false or misleading in any
material respect when made, or (c) any schedule, attachments, exhibits,
certificate, report, notice or other writing furnished by ADOLOR to LILLY
proving to have been false or misleading in any material respect when made
or delivered by ADOLOR, LILLY may, at its option, terminate this Agreement
upon ninety (90) days written notice detailing the substance of the
alleged breach, default or other defect of performance. Such termination
shall become effective at the end of such ninety (90) day period, unless
(a) ADOLOR cures such breach, default or other defect of performance
during such ninety (90) day period, or (b) if such breach is curable but
not within such ninety (90) day period, ADOLOR initiates and diligently
pursues a cure for such breach. For avoidance of doubt, the Parties
acknowledge and agree that subpart (b) of the prior sentence shall not
apply to ADOLOR's payment obligations to LILLY described in Article 3. As
of the effective date of such termination and subject to the provisions of
Section 2.2 respecting Sublicensees, ADOLOR shall irrevocably lose (i) any
and all licenses granted to ADOLOR by LILLY pursuant to Sections 2.1 and
2.2; and (ii) the right to commercialize New Product. Termination under
this Section will not be an exclusive remedy and will not be in lieu of
any other remedies available to LILLY for any breach hereunder by ADOLOR.
12.4 Material Breach by LILLY. Upon (a) any material breach,
material default or other material defect of performance of this
Agreement, or (b) any warranty or covenant, or representation made by
LILLY in this Agreement proving to have been false or misleading in any
material respect when made, or (c) any schedule, attachments, exhibits,
certificate, report, notice or other writing furnished by LILLY to ADOLOR
proving to have been false or misleading in any material respect when made
or delivered by LILLY, ADOLOR may, at its option and subject to the
remainder of this Article, terminate this Agreement upon ninety (90) days
written notice detailing the substance of the alleged breach, default or
other defect of performance. Such termination shall become effective at
the end of such ninety (90) day period, unless LILLY cures such breach,
default or other defect of performance during such ninety (90) day period,
or (b) if such breach is curable but not within such ninety (90) day
period, LILLY initiates and diligently pursues a cure for such breach. As
of the effective date of such termination, LILLY shall irrevocably lose
any and all licenses granted to LILLY by ADOLOR pursuant to Sections 6.1
and 6.2. Termination under this Section will not be an exclusive remedy
and will not be in lieu of any other remedies available to ADOLOR for any
breach hereunder by LILLY.
12.5 Termination for Bankruptcy. Notwithstanding any other
provision of this Article, this Agreement may be terminated in its entirety
with immediate effect upon receipt by a Party of written notice from the
other Party if the notified Party:
(i) makes a general assignment for the benefit of creditors;
(ii) petitions for or acquiesces in the appointment of any
receiver, trustee or similar officer to liquidate or conserve its
business or any substantial part of its assets;
(iii) commences under the laws of any jurisdiction any
proceeding for relief under the Bankruptcy Code of 1986, as amended
or similar bankruptcy laws in other jurisdictions, involving its
insolvency, reorganization, adjustment of debt, dissolution,
liquidation or any other similar proceeding for the release of
financially distressed debtors; or
(iv) becomes a party to any proceeding or action of the type
described above in (ii) or (iii), and such proceeding or action
remains undismissed or unstayed for a period of more than sixty (60)
days..
12.6 Residual Rights and Obligations Upon Termination. Subject to
the other provisions of this Article, termination of this Agreement for
any reason whatsoever will not release or discharge LILLY or ADOLOR from
the performance of any obligation, the payment of any debt or
responsibility for any liability which may have previously accrued and
remains to be performed, paid or discharged at the date of such
termination, their respective obligations to transfer know-how, licenses
and improvements hereunder, and the obligations and rights of ADOLOR and
LILLY which may accrue after termination of this Agreement as expressly
set forth herein; provided, however, the non-breaching Party may set-off
amounts that the non-breaching Party is entitled to recover under this
Agreement that were incurred because of the breach of the breaching Party.
However, upon termination, neither LILLY nor ADOLOR shall incur any
additional obligation to the other under this Agreement, except that
ADOLOR, its Affiliates and Sublicensees may, for up to one hundred eighty
(180) days following any termination of this Agreement, sell all New
Products then in inventory, and may complete the manufacture of and sell
all New Products then in production, subject to ADOLOR's continuing
obligation to pay to LILLY royalties on account of such sales as required
hereunder. Moreover, termination of this Agreement shall not release
either Party of the obligations of confidentiality and non-use as set
forth in Sections 9.1 and 9.2, the obligations of indemnification as set
forth in Article 11, and such other obligations expressly set forth in
relevant provision of this Agreement.
12.7 Further Assurances. ADOLOR covenants and agrees that if this
Agreement is terminated by LILLY as permitted under Section 12.3, and any
ADOLOR Improvement, ADOLOR Technology or Regulatory Document cannot be
transferred to LILLY in accordance with the provisions of Article 6
without the consent of or notice to a Third Person and in respect of which
any necessary consent or notice has not been obtained or given to transfer
the ADOLOR Improvement, ADOLOR Technology or Regulatory Document, or the
subject ADOLOR Improvement, ADOLOR Technology or Regulatory Document is
non-assignable by its nature, then ADOLOR will, to the extent required
under Article 6 and provided ADOLOR has the right to do so, use reasonable
best efforts to cause the beneficial interest in and to the same to pass
to LILLY and hold such ADOLOR Technology, ADOLOR Improvement and/or
Regulatory Document in trust for, and for the benefit of, LILLY.
Article 13
Miscellaneous
13.1 Independent Contractor. It is understood and agreed that the
Parties shall have the status of an independent contractor under this
Agreement and that nothing in this Agreement shall be construed as
authorization for either ADOLOR or LILLY to act as agent for the other.
13.2 No Benefit to Others. The representations, warranties,
covenants and agreements contained in this Agreement are for the sole
benefit of the Parties and their legal representatives, successors and
assigns, and they shall not be construed as conferring any rights to any
Third Person.
13.3 Force Majeure. Except as expressly set forth above, both
Parties to the Agreement shall be excused from the performance of their
obligations under this Agreement if such performance is prevented by force
majeure and the nonperforming Party promptly provides notice of the
prevention to the other Party. Such excuse shall be continued so long as
the condition constituting force majeure continues and the nonperforming
Party takes reasonable efforts to remove the condition. For purposes of
this Agreement, force majeure shall include conditions beyond the control
of the Parties, including without limitation, an act of God, war,
terrorism, civil commotion, epidemic, failure or default of public
utilities or common carriers, destruction of production facilities or
materials by fire, earthquake, storm or like catastrophe, governmental
action or prohibition, or the inability to obtain required supplies or raw
materials.
13.4 Amendment. This Agreement may not be amended, supplemented,
or otherwise modified except by an instrument in writing signed by an
authorized representative of both Parties.
13.5 Entire Agreement. The Parties acknowledge and agree that this
Agreement constitutes the entire agreement and understanding relating to
the subject matter of this Agreement. As such, this Agreement supersedes
all previous communications, proposals, representations and agreements,
whether oral or written, relating to the subject matter of this Agreement;
provided, however, that nothing in this Agreement shall change, modify,
amend or revise the terms, conditions and/or provisions of the Xxxxxxx
Agreement (or the Parties' rights and obligations derived therefrom).
LILLY and ADOLOR each hereby confirm and ratify the Xxxxxxx Agreement and
all of the terms, conditions and provisions of the Xxxxxxx Agreement (and
the Parties' rights and obligations derived therefrom).
13.6 Severability. Each Party agrees that, should any provision of
this Agreement be determined by a court of competent jurisdiction to
violate or contravene any applicable law or policy, such provision will be
severed or modified by the court to the extent necessary to comply with
the applicable law or policy, and such modified provision and the
remainder of the provisions hereof will continue in full force and effect.
13.7 Waiver. The waiver of a breach or a Party's obligation
hereunder may be effected only by a writing signed by the waiving Party
and shall not constitute a waiver of any other breach or the same or
similar obligations of such Party.
13.8 Notices. Any notice required or permitted to be given under
this Agreement shall be in writing and shall be deemed to have been
sufficiently given for all purposes if mailed by first class certified or
registered mail, postage prepaid, sent by overnight mail with a
nationally-recognized overnight carrier, or, other than with respect to
notices under Article 12, sent by facsimile with confirmed receipt of
transmission. Receipt of such notices sent in this manner shall be deemed
to have occurred five (5) business days after dispatch by first class mail
or one (1) business day after dispatch by overnight carrier, unless a
provision of this Agreement specifically provides otherwise relative to a
particular provision of this Agreement. Unless otherwise specified in
writing, the mailing addresses of the Parties shall be as described below.
For ADOLOR: Adolor Corporation
000 Xxxxxxxxxxxx Xxxxx
Xxxxx, XX 00000
Attention: General Counsel
For LILLY: Xxx Xxxxx and Company
Lilly Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: General Counsel
13.9 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, United
States, excluding any choice of law rules that may direct the application
of the law of any other jurisdiction. However, the scope, validity and
enforceability of any patents encompassed within the scope of this
Agreement shall be determined in accordance with the applicable laws of
the countries in which such patents have issued.
13.10 Assignability. During the term of this Agreement, except as
provided in this Section and other provisions of this Agreement, neither
Party shall assign or transfer this Agreement without the prior written
consent of the other Party, and any attempted assignment or transfer of
this Agreement without such written consent shall be of no force or
effect. Notwithstanding the foregoing sentence, either Party may assign
or transfer this Agreement without the other Party's consent to an
Affiliate of Adolor Corporation or Xxx Xxxxx and Company, as the case may
be, or to any Person acquiring all or substantially all of the assets or
stock of Adolor Corporation or Xxx Lilly and Company, as the case may be,
to which this Agreement relates. In addition, Xxx Xxxxx and Company shall
be permitted to assign or transfer any revenue stream under this Agreement
to an Affiliate or Third Party. Subject to the restrictions contained in
the preceding provisions of this Section, this Agreement shall be binding
upon the successors and assigns of the Parties.
13.11 Jointly Prepared. This Agreement has been prepared jointly
and shall not be strictly construed against either Party.
13.12 Headings, Gender and "Person". The captions or headings of
the Sections are inserted only as a matter of convenience or for reference
and shall have no effect on the meaning of the provisions hereof. Words
used herein, regardless of the number and gender specifically used, shall
be deemed and construed to include any other number, singular or plural,
and other gender, masculine, feminine, or neuter, as the context requires.
13.13 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original, but all of which taken
together shall constitute one and the same agreement. It shall not be
necessary in making proof of this Agreement or any counterpart hereof to
produce or account for any of the other counterparts.
13.14 Schedules, Exhibits and Attachments. All schedules, exhibits
and attachments referred to herein are intended to be and hereby are
specifically made part of this Agreement.
13.15 Affiliates of Xxx Lilly and Company. As the Affiliates of Xxx
Xxxxx and Company, being included within the definition of "LILLY" set
forth above, are entitled to exercise the rights and receive the benefits
afforded to LILLY under this Agreement, but are not signatories to and
therefor are not directly bound by the terms and conditions of this
Agreement, Xxx Xxxxx and Company guarantees that its Affiliates, in
exercising such rights and receiving such benefits, shall comply with the
terms and conditions of this Agreement relating thereto, including,
without limitation, the terms and conditions of this Agreement applicable
to LILLY's handling and use of ADOLOR Technology, ADOLOR Improvements and
ADOLOR Confidential Information.
[signatures on next page]
IN WITNESS WHEREOF, the Parties by their respective authorized
officers, have executed this Agreement.
XXX XXXXX AND COMPANY
BY: /s/ August X. Xxxxxxxx
----------------------
August X. Xxxxxxxx, Executive Vice President
ADOLOR CORPORATION
By: /s/ Xxxxxx Xxxxxxx
------------------
Xxxxxx Xxxxxxx, Senior Vice-President & Chief Operating Officer
Appendix 1
Licensed Patents and Process Licensed Patents:
[------------**-------------]
Schedule 4.1
Know How
[------------**-------------]
Exhibit 9.4
Press Release
[Attached hereto]
FOR IMMEDIATE RELEASE
Contact:
Adolor Corporation Xxxxxx Xxxxxxx and Associates (media)
Xxxxx Xxxxxx Xxxx Xxxxxx, Xxxxx Xxxxxxx (000) 000-0000
Senior Vice President and CFO Xxxxx Investor Relations (investors)
(000) 000-0000 Xxxxxx Xxxxx (000) 000-0000
ADOLOR CORPORATION ANNOUNCES EXCLUSIVE LICENSE AGREEMENT
WITH XXX LILLY AND COMPANY
EXTON, Pa, August 12, 2002 -- Adolor Corporation (Nasdaq: ADLR) announced
today that it has entered into an agreement with Xxx Xxxxx and Company
under which it obtained an exclusive license to six issued U.S. patents,
related foreign equivalents and know-how relating to peripherally selective
opioid antagonists. Adolor paid Lilly $4 million upon signing the
agreement announced today. Adolor will be subject to additional clinical
and regulatory milestone payments and royalty payments to Lilly on sales,
if any, of new products utilizing the licensed technology.
Adolor is developing alvimopan, a peripherally selective mu opioid
antagonist, in collaboration with GlaxoSmithKline for management of
postoperative ileus, opioid induced bowel dysfunction and certain other
indications. In 1999, Adolor acquired licensing rights to alvimopan under
Lilly's U.S. and foreign patents and patent applications under an agreement
with Xxxxxxx Laboratories, Inc., who had acquired those rights from Lilly
in 1996. As additional consideration under the agreement announced today,
Adolor will pay $4 million to Lilly upon the acceptance of the first
application for marketing authorization for alvimopan.
"Human opioid receptor technology and peripheralization chemistry are key
components of our proprietary know how," said Xxxxx Xxxxxxx, M.D., senior
vice president of research and development of Adolor. "The intellectual
property licensed under this agreement with Lilly is an important addition
to our proprietary interests," added Xx. Xxxxxxx.
About Adolor Corporation
Adolor Corporation discovers, develops and plans to commercialize
proprietary pharmaceutical products for the treatment of pain and to
mitigate the side effects that are caused by current pain treatments.
The Company's lead product candidate, alvimopan, formerly known as ADL 8-
2698, is being tested in Phase 3 clinical studies for the management of
opioid-induced bowel dysfunction and postoperative ileus. In April 2002
Adolor and GlaxoSmithKline entered into a collaboration agreement for
alvimopan. Adolor also has several novel proprietary compounds in clinical
testing for pain management.
Certain statements herein and oral statements made in respect hereof
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements are those which
express plan, anticipation, intent, contingency or future development
and/or otherwise are not statements of historical fact. These statements
are subject to risks and uncertainties known and unknown, which could cause
actual results and developments to differ materially from those expressed
or implied in such statements. Such risks and uncertainties relate to,
among other factors: the risks of contractual arrangements and intellectual
property; the costs, delays and uncertainties inherent in scientific
research, drug development, clinical trials and the regulatory approval
process; the risk that the clinical trials for Adolor's product candidates
may not be successful; the risk that Adolor may not obtain regulatory
approval for its products. These and other risks are detailed in our
reports filed with the Securities and Exchange Commission, including our
registration statements and our periodic reports. You are encouraged to
read these filings. They are available from the SEC in its XXXXX database
at xxx.xxx.xxx and from the Company. Given the uncertainties affecting
pharmaceutical companies in the development stage, you are cautioned not to
place undue reliance on any such forward-looking statements, any of which
may turn out to be wrong due to inaccurate assumptions, unknown risks,
uncertainties or other factors. We undertake no obligation to update or
revise the statements made herein or the risk factors that may relate
thereto.
This press release is available on the website xxx.xxxxxx.xxx.
# # #
[**] CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION
