<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 15, 1998
REGISTRATION STATEMENT NO. 333-58795
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------
ALBANY MOLECULAR RESEARCH, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW YORK 2833 14-1742717
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
OF INCORPORATION OR
ORGANIZATION)
----------------
21 CORPORATE CIRCLE, ALBANY, NEW YORK 12203
(518) 464-0279
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
----------------
THOMAS E. D'AMBRA, PH.D.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
ALBANY MOLECULAR RESEARCH, INC.
21 CORPORATE CIRCLE
ALBANY, NEW YORK 12203-5154
(518) 464-0279
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
----------------
COPIES TO:
STUART M. CABLE, ESQ. ALEXANDER D. LYNCH, ESQ.
GOODWIN, PROCTER & HOAR LLP BABAK YAGHMAIE, ESQ.
EXCHANGE PLACE BROBECK, PHLEGER & HARRISON LLP
BOSTON, MASSACHUSETTS 02109-2881 1633 BROADWAY
(617) 570-1000 NEW YORK, NEW YORK 10019
(212) 581-1600
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO
SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This Amendment No. 1 is solely to file Exhibits 10.7, 10.8 and 10.9.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION(1)
The following table sets forth the estimated expenses payable by the Company
in connection with this offering (excluding underwriting discounts and
commissions):
<TABLE>
<CAPTION>
NATURE OF EXPENSE AMOUNT
----------------- -------
<S> <C>
SEC Registration Fee................................................ $12,688
NASD Filing Fee..................................................... 4,801
Nasdaq Listing Fee.................................................. *
Accounting Fees and Expenses........................................ *
Legal Fees and Expenses............................................. *
Printing Expenses................................................... *
Blue Sky Qualification Fees and Expenses............................ 10,000
Transfer Agent's Fee................................................ 25,000
Miscellaneous....................................................... *
-------
TOTAL............................................................. $
=======
</TABLE>
- ----------
(1) The amounts set forth above, except for the SEC, NASD and Nasdaq fees, are
in each case estimated.
* To be completed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company has entered into indemnification agreements with each of its
directors reflecting the provisions of its By-laws and requiring the
advancement of expenses in proceedings involving such directors in most
circumstances.
Under Section 8 of the Underwriting Agreement filed as Exhibit 1.1 hereto,
the Underwriters have agreed to indemnify, under certain conditions, the
Company, its directors, certain officers and persons who control the Company
within the meaning of the Securities Act against certain liabilities.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Set forth in chronological order below is information regarding the number
of shares of capital stock issued by the Registrant for the past three years
beginning in July 1995. Further included is the consideration, if any,
received by the Registrant for such shares, and information relating to the
section of the Securities Act of 1933, as amended (the "Securities Act"), or
rule of the Securities and Exchange Commission under which exemption from
registration was claimed. The following transactions give effect to the
Company's 3-for-2 stock split of its Common Stock, which will become effective
in August 1998.
(1) In August 1995, under the Registrant's 1992 Stock Option Plan, the
Registrant granted options to purchase an aggregate of 72,000 shares of
the Registrant's Common Stock to employees of the Registrant in reliance
upon the exemption from registration under Rule 701 promulgated under the
Securities Act.
(2) In October 1995, under the Registrant's 1992 Stock Option Plan, the
Registrant granted options to purchase an aggregate of 45,000 shares of
the Registrant's Common Stock to directors of the Registrant in reliance
upon the exemption from registration under Rule 701 promulgated under the
Securities Act.
II-1
<PAGE>
(3) In February 1996, the Registrant issued 52,500 shares of the Registrant's
Common Stock upon the exercise of an outstanding stock option for an
aggregate exercise price of $11,550 to an employee of the Registrant in
reliance upon the exemption from registration under Rule 701 promulgated
under the Securities Act.
(4) In May 1996, under the Registrant's 1992 Stock Option Plan, the
Registrant granted options to purchase an aggregate of 45,000 shares of
the Registrant's Common Stock to employees and directors of the
Registrant in reliance upon the exemption from registration under Rule
701 promulgated under the Securities Act.
(5) In May 1996, the Registrant issued 30,075 shares of the Registrant's
Common Stock upon the exercise of outstanding stock options for an
aggregate exercise price of $5,063 to employees of the Registrant in
reliance upon the exemption from registration under Rule 701 promulgated
under the Securities Act.
(6) In July 1996, the Registrant issued 22,500 shares of the Registrant's
Common Stock upon the exercise of an outstanding stock option for an
aggregate exercise price of $4,950 to an employee of the Registrant in
reliance upon the exemption from registration under Rule 701 promulgated
under the Securities Act.
(7) In July 1996, the Registrant issued 3,750 shares of the Registrant's
Common Stock upon the exercise of an outstanding stock option for an
aggregate exercise price of $3,125 to an employee of the Registrant in
reliance upon the exemption from registration under Rule 701 promulgated
under the Securities Act.
(8) In October 1996, under the Registrant's 1992 Stock Option Plan, the
Registrant granted options to purchase an aggregate of 15,000 shares of
the Registrant's Common Stock to an employee of the Registrant in
reliance upon the exemption from registration under Rule 701 promulgated
under the Securities Act.
(9) In December 1996, under the Registrant's 1992 Stock Option Plan, the
Registrant granted options to purchase an aggregate of 15,000 shares of
the Registrant's Common Stock to an employee of the Registrant in
reliance upon the exemption from registration under Rule 701 promulgated
under the Securities Act.
(10) In January 1997, pursuant to stock option agreements, the Registrant
granted options to purchase an aggregate of 22,743 shares of the
Registrant's Common Stock to employees of the Registrant in reliance upon
the exemption from registration under Rule 701 promulgated under the
Securities Act.
(11) In January 1997, under the Registrant's 1992 Stock Option Plan, the
Registrant granted options to purchase an aggregate of 56,232 shares of
the Registrant's Common Stock to employees of the Registrant in reliance
upon the exemption from registration under Rule 701 promulgated under the
Securities Act.
(12) In January 1997, the Registrant issued 75 shares of the Registrant's
Common Stock upon the exercise of an outstanding stock option for an
aggregate exercise price of $63 to an employee of the Registrant in
reliance upon the exemption from registration under Rule 701 promulgated
under the Securities Act.
(13) In February 1997, under the Registrant's 1992 Stock Option Plan, the
Registrant granted options to purchase an aggregate of 15,000 shares of
the Registrant's Common Stock to an employee of the Registrant in
reliance upon the exemption from registration under Rule 701 promulgated
under the Securities Act.
(14) In April 1997, under the Registrant's 1992 Stock Option Plan, the
Registrant granted options to purchase an aggregate of 11,250 shares of
the Registrant's Common Stock to directors of the Registrant in reliance
upon the exemption from registration under Rule 701 promulgated under the
Securities Act.
(15) In May 1997, under the Registrant's 1992 Stock Option Plan, the
Registrant granted options to purchase an aggregate of 45,000 shares of
the Registrant's Common Stock to employees of the Registrant in reliance
upon the exemption from registration under Rule 701 promulgated under the
Securities Act.
II-2
<PAGE>
(16) In May 1997, the Registrant issued 1,435 shares of the Registrant's
Common Stock upon the exercise of an outstanding stock option for an
aggregate exercise price of $1,196 to an employee of the Registrant in
reliance upon the exemption from registration under Rule 701 promulgated
under the Securities Act.
(17) In June 1997, the Registrant granted an aggregate of 4,431 shares of the
Registrant's Common Stock to directors of the Registrant in reliance upon
the exemption from registration under Rule 701 promulgated under the
Securities Act.
(18) In July 1997, the Registrant issued 600 shares of the Registrant's Common
Stock upon the exercise of an outstanding stock option for an aggregate
exercise price of $500 to an employee of the Registrant in reliance upon
the exemption from registration under Rule 701 promulgated under the
Securities Act.
(19) In December 1997, pursuant to stock option agreements, the Registrant
granted options to purchase an aggregate of 18,300 shares of the
Registrant's Common Stock to employees of the Registrant in reliance upon
the exemption from registration under Rule 701 promulgated under the
Securities Act.
(20) In December 1997, under the Registrant's 1992 Stock Option Plan, the
Registrant granted options to purchase an aggregate of 109,575 shares of
the Registrant's Common Stock to employees of the Registrant in reliance
upon the exemption from registration under Rule 701 promulgated under the
Securities Act.
(21) In December 1997, the Registrant issued 3,750 shares of the Registrant's
Common Stock upon the exercise of an outstanding stock option for an
aggregate exercise price of $825 to an employee of the Registrant in
reliance upon the exemption from registration under Rule 701 promulgated
under the Securities Act.
(22) In February 1998, the Registrant issued 4,500 shares of the Registrant's
Common Stock upon the exercise of an outstanding stock option for an
aggregate exercise price of $990 to an employee of the Registrant in
reliance upon the exemption from registration under Rule 701 promulgated
under the Securities Act.
(23) In February 1998, the Registrant issued 3,825 shares of the Registrant's
Common Stock upon the exercise of an outstanding stock option for an
aggregate exercise price of $638 to an employee of the Registrant in
reliance upon the exemption from registration under Rule 701 promulgated
under the Securities Act.
(24) In March 1998, under the Registrant's 1992 Stock Option Plan, the
Registrant granted options to purchase an aggregate of 22,500 shares of
the Registrant's Common Stock to an employee of the Registrant in
reliance upon the exemption from registration under Rule 701 promulgated
under the Securities Act.
(25) In March 1998, the Registrant issued 1,251 shares of the Registrant's
Common Stock upon the exercise of an outstanding stock option for an
aggregate exercise price of $3,444 to the estate of a former director of
the Registrant in reliance upon the exemption from registration under
Rule 701 promulgated under the Securities Act.
(26) In March 1998, the Registrant issued 3,450 shares of the Registrant's
Common Stock upon the exercise of an outstanding stock option for an
aggregate exercise price of $575 to an employee of the Registrant in
reliance upon the exemption from registration under Rule 701 promulgated
under the Securities Act.
(27) In March 1998, the Registrant issued 15,000 shares of the Registrant's
Common Stock to Hoffman Enterprises, the Registrant's landlord, as
partial reimbursement for expenses incurred by Hoffman Enterprises in
relocating other tenants in order to facilitate the Company's expansion
in reliance upon the exemption from registration under Section 4(2) of
the Securities Act.
(28) In April 1998, the Registrant issued 17,400 shares of the Registrant's
Common Stock upon the exercise of outstanding stock options for an
aggregate exercise price of $5,300 to employees of the Registrant in
reliance upon the exemption from registration under Rule 701 promulgated
under the Securities Act.
II-3
<PAGE>
(29) In May 1998, the Registrant issued 7,500 shares of the Registrant's
Common Stock to Michael J. Sherrod in consideration of his interest in
his regulatory consulting business in reliance upon the exemption from
registration under Section 4(2) of the Securities Act.
(30) In May 1998, the Registrant issued 6,000 shares of the Registrant's
Common Stock upon the exercise of an outstanding stock option for an
aggregate exercise price of $16,520 to an employee of the Registrant in
reliance upon the exemption from registration under Rule 701 promulgated
under the Securities Act.
(31) In June 1998, the Registrant issued 6,000 shares of the Registrant's
Common Stock upon the exercise of outstanding stock options for an
aggregate exercise price of $2,240 to employees of the Registrant in
reliance upon the exemption from registration under Rule 701 promulgated
under the Securities Act.
(32) In June 1998, the Registrant granted 525 shares of the Registrant's
Common Stock to a director of the Registrant in reliance upon the
exemption from registration under Rule 701 promulgated under the
Securities Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<C> <S>
*1.1 Form of Underwriting Agreement.
*3.1 Amended and Restated Certificate of Incorporation.
*3.2 Amendment to Amended and Restated Certificate of Incorporation.
*3.3 Form of Second Amended and Restated Certificate of Incorporation (to be
filed immediately prior to effectiveness of the Registration Statement).
*3.4 Form of Restated Certificate of Incorporation (to be filed following the
closing of the Offering referred to in the Registration Statement).
*3.5 By-Laws.
*3.6 Form of Amended and Restated By-laws (to be effective upon effectiveness
of the Registration Statement).
*4.1 Specimen certificate for shares of Common Stock, $0.01 par value, of the
Registrant.
*5.1 Opinion of Goodwin, Procter & Hoar LLP as to the validity of the
securities being offered.
*10.1 Lease dated as of October 9, 1992 by and between the Registrant and
Hoffman Enterprises.
*10.2 1998 Stock Option and Incentive Plan of the Registrant, as amended.
*10.3 1992 Stock Option Plan of the Registrant.
*10.4 1998 Employee Stock Purchase Plan of the Registrant.
*10.5 Form of Indemnification Agreement between the Registrant and each of its
directors.
*10.6 Form of Stock Option Agreement.
10.7 License Agreement dated March 15, 1995 by and between the Registrant and
Marion Merrell Dow Inc. (now Hoechst Marion Roussel, Inc.) (excluding
certain portions which have been omitted as indicated based upon a
request for confidential treatment, but which have been filed separately
with the Commission).
10.8 Principles of Cooperation Between Albany Molecular Research and Cambrex
Corporation dated February 1, 1997 by and between the Registrant and
Cambrex Corporation (excluding certain portions which have been omitted
as indicated based upon a request for confidential treatment, but which
have been filed separately with the Commission).
10.9 Agreement dated December 16, 1997 by and between the Registrant and Eli
Lilly and Company (excluding certain portions which have been omitted as
indicated based upon a request for confidential treatment, but which
have been filed separately with the Commission).
</TABLE>
II-4
<PAGE>
<TABLE>
<C> <S>
*10.10 Description of Technology Development Incentive Plan.
*11.1 Computation of income per common share.
*21.1 Subsidiaries of the Registrant.
*23.1 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5.1
hereto).
+23.2 Consent of KPMG Peat Marwick LLP.
+24.1 Powers of Attorney (included on pages II-4).
+27.1 Financial Data Schedule.
</TABLE>
- ----------
* To be filed by amendment to this Registration Statement.
+ Previously filed.
(B) FINANCIAL STATEMENT SCHEDULES
All schedules have been omitted because they are not required or because the
required information is given in the Financial Statements or Notes thereto.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act, and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF ALBANY, STATE OF NEW YORK, ON JULY 15, 1998.
Albany Molecular Research, Inc.
/s/ Thomas E. D'Ambra, Ph.D.
By: _________________________________
Thomas E. D'Ambra, Ph.D.
Chairman and Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<S> <C>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Thomas E. D'Ambra, Ph.D. Chairman of the July 15, 1998
- ------------------------------------- Board, Chief
THOMAS E. D'AMBRA, PH.D. Executive Officer
and Director
(Principal
Executive Officer)
* President and July 15, 1998
- ------------------------------------- Director
DONALD E. KUHLA, PH.D.
/s/ Harold M. Armstrong, Jr. Executive Vice July 15, 1998
- ------------------------------------- President, Chief
HAROLD M. ARMSTRONG, JR. Financial Officer,
Secretary,
Treasurer and
Director (Principal
Accounting Officer)
* Vice President, July 15, 1998
- ------------------------------------- Senior Research
CHESTER J. OPALKA Chemist and
Director
* Director July 15, 1998
- -------------------------------------
ANTHONY M. TARTAGLIA, M.D.
*By:/s/ Thomas E. D'Ambra, Ph.D.
----------------------------------
THOMAS E. D'AMBRA, PH.D.
ATTORNEY-IN-FACT
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
*1.1 Form of Underwriting Agreement.
*3.1 Amended and Restated Certificate of Incorporation.
*3.2 Amendment to Amended and Restated Certificate of Incorporation.
*3.3 Form of Second Amended and Restated Certificate of Incorporation
(to be filed immediately prior to effectiveness of the
Registration Statement).
*3.4 Form of Restated Certificate of Incorporation (to be filed
following the closing of the Offering referred to in the
Registration Statement).
*3.5 By-Laws.
*3.6 Form of Amended and Restated By-laws (to be effective upon
effectiveness of the Registration Statement).
*4.1 Specimen certificate for shares of Common Stock, $0.01 par
value, of the Registrant.
*5.1 Opinion of Goodwin, Procter & Hoar LLP as to the validity of the
securities being offered.
*10.1 Lease dated as of October 9, 1992 by and between the Registrant
and Hoffman Enterprises.
*10.2 1998 Stock Option and Incentive Plan of the Registrant, as
amended.
*10.3 1992 Stock Option Plan of the Registrant.
*10.4 1998 Employee Stock Purchase Plan of the Registrant.
*10.5 Form of Indemnification Agreement between the Registrant and
each of its directors.
*10.6 Form of Stock Option Agreement.
10.7 License Agreement dated March 15, 1995 by and between the
Registrant and Marion Merrell Dow Inc. (now Hoechst Marion
Roussel, Inc.) (excluding certain portions which have been
omitted as indicated based upon a request for confidential
treatment, but which have been filed separately with the
Commission).
10.8 Principles of Cooperation Between Albany Molecular Research and
Cambrex Corporation dated February 1, 1997 by and between the
Registrant and Cambrex Corporation (excluding certain portions
which have been omitted as indicated based upon a request for
confidential treatment, but which have been filed separately
with the Commission).
10.9 Agreement dated December 16, 1997 by and between the Registrant
and Eli Lilly and Company (excluding certain portions which have
been omitted as indicated based upon a request for confidential
treatment, but which have been filed separately with the
Commission).
*10.10 Description of Technology Development Incentive Plan.
*11.1 Computation of income per common share.
*21.1 Subsidiaries of the Registrant.
*23.1 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5.1
hereto).
+23.2 Consent of KPMG Peat Marwick LLP.
+24.1 Powers of Attorney (included on pages II-4).
+27.1 Financial Data Schedule.
</TABLE>
- ----------
* To be filed by amendment to this Registration Statement.
+ Previously filed.
<PAGE>
EXHIBIT 10.7
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION. THE LOCATIONS
OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH ASTERISKS.
LICENSE AGREEMENT
TERFENADINE ACID METABOLITE
THIS AGREEMENT is entered into as of the 15th day of March, 1995, (the
"Effective Date") by and between MARION MERRELL DOW INC., a corporation
organized under the laws of Delaware ("MMD") and ALBANY MOLECULAR RESEARCH INC.,
a corporation organized under the laws of New York ("ALBANY"), with respect to
the following facts.
A. MMD possesses U.S. Patent No. 4,254,129 (the "MMD '129 Patent") and
two patent applications (the "MMD-Krauss Patent Application" as defined further
in Exhibit A-1; and the "MMD-King Application" as further defined in Exhibit
A-2) relating to terfenadine carboxylate ("Terfenadine Acid Metabolite" or
"TAM," (as defined further in Exhibit A)).
B. ALBANY also has rights to and has filed, in the U.S., U.S. Patent
Application Serial No. 08/083,102 (the "ALBANY Patent Application," as defined
further in Exhibit B).
C. The parties recognize and acknowledge that MMD may provoke, or the
U.S. Patent and Trademark Office (U.S. PTO) may declare, an interference
proceeding, between either of the MMD Patent Applications and the ALBANY Patent
Application or patents issuing therefrom.
D. MMD desires to obtain an exclusive license to the ALBANY Patent
Application and all patents issuing therefrom and ALBANY is willing to grant
such a license to MMD in accordance with the terms and conditions of this
Agreement.
E. Simultaneously with this Agreement, MMD and ALBANY are entering into a
Stock Purchase Agreement whereunder MMD shall purchase from ALBANY 723,214
shares of ALBANY's Common Stock, at a purchase price of $2.7654331 per share
and a Commercialization Agreement for further work to be undertaken by ALBANY
relating primarily to additional development of the TAM manufacturing process.
NOW THEREFORE, in consideration of the foregoing and the covenants and
promises contained in this Agreement, the parties agree as follows:
ARTICLE 1
DEFINITIONS
-----------
Capitalized terms used herein shall have the meanings set forth in
Exhibit A.
<PAGE>
ARTICLE 2
LICENSE
-------
2.1 License Grant. Subject to the terms and conditions of this Agreement,
ALBANY hereby grants to MMD an exclusive, worldwide license, with the right to
grant sublicenses, upon the prior written consent of ALBANY which shall not be
unreasonably withheld, under the ALBANY Patent Application, the ALBANY Patents,
and the Technology developed under the Commercialization Agreement between the
parties dated the date hereof, to develop, manufacture or have manufactured,
market and sell TAM and/or Product.
2.2 Sublicense to Controlled Affiliates. Notwithstanding the provisions
of Section 2.1, MMD shall have the right to grant sublicenses to its Controlled
Affiliates (as defined in Section 6.3.2) and to TDCC, without ALBANY'S written
consent, on such terms as are specified in a form of Sublicense Agreement
approved in advance by ALBANY and providing for the right of ALBANY to cause the
termination of the sublicense when such Sublicensee is no longer a Controlled
Affiliate. MMD agrees to notify ALBANY promptly of any such sublicenses,
identifying the Sublicensee, and agrees to provide to ALBANY a copy of the
signed sublicense agreement.
2.3 No Other Patents. ALBANY hereby represents and warrants that, as of
the date of this Agreement, there do not exist any patents or pending patent
applications owned or controlled by ALBANY, other than the ALBANY Patent
Application, which would be infringed by the practice of the inventions claimed
under the ALBANY Patent Application or which would otherwise prevent the
practice of any claims under the ALBANY Patents. The parties agree and
acknowledge, however, that if such patents or patent applications owned or
controlled by ALBANY are subsequently found to have existed prior to the
Effective Date, or found to exist during the term of this Agreement, ALBANY
shall grant to MMD a fully paid-up nonexclusive license to such patents and/or
patent applications, to the extent necessary for the practice of the ALBANY
Patent Application and the ALBANY Patents.
ARTICLE 3
INTELLECTUAL PROPERTY
---------------------
3.1 Prosecution.
ALBANY confirms to MMD that it has previously filed under the Patent
Cooperation Treaty ("PCT") the ALBANY Patent Application so as to achieve
international patent coverage including in the ex-US Countries (as defined
herein), in which MMD maintains a significant marketing presence.
2
<PAGE>
ALBANY shall diligently and in good faith, through its counsel, conduct the
prosecution (including patent issuance prosecution) of the ALBANY Patent
Application in the U.S. and in all countries in which the ALBANY Patent
Application is filed. MMD shall reimburse ALBANY for all reasonable, necessary,
and appropriate expenses incurred for such prosecution.
3.2 ALBANY Patents. After the respective dates of the allowance and
issuance of ALBANY Patents in any country, and except for the fees and costs
associated with any U.S. interference dealt with separately in this Article 3,
MMD shall, through its counsel and at its own expense, diligently direct and
conduct such processes as appropriate for extension, renewals, Supplemental
Protection Certificates and maintenance of the ALBANY Patents.
3.3 Abandonment. Should ALBANY decide, for any reason, not to prosecute
the ALBANY Patent Application or maintain the ALBANY Patents pursuant to this
Article 3, it will promptly notify MMD, and MMD may prosecute, maintain or
abandon the ALBANY Patent Application or ALBANY Patents, at its own expense and
in its sole discretion. ALBANY shall cooperate with MMD, at the reasonable
expense of MMD, in the prosecution and maintenance of the ALBANY Patent
Application and ALBANY Patents by MMD pursuant to this Section 3.3.
3.4 U.S. Interference Proceeding. The parties recognize and acknowledge
that certain patent applications owned by MMD or its Affiliates or Sublicensees,
including the MMD-Krauss Patent Application and the MMD-King Patent Application,
and the ALBANY Patent Application, may claim overlapping subject matter and
that, therefore, an interference proceeding may be declared as to certain claims
by the U.S. PTO either prior or subsequent to the issuance of any patent or
patents from the ALBANY Patent Application or patent applications owned by MMD
or its Affiliates or Sublicensees. It is further understood by the parties that
it is in the best interests of both parties to resolve all issues of
interference in order to ensure that the claims of any patent or patents which
may issue from the ALBANY Patent Application and/or the patent applications
owned by MMD or its Affiliates or Sublicensees are valid and enforceable. In the
event that an interference is declared or provoked, the parties agree to resolve
issues relating to this interference as follows:
3.4.1 Arbitration. Both parties will immediately exchange proofs on
-----------
the issue of priority. If the parties cannot agree as to who should prevail in
an interference, the parties agree that the issue of priority and any other
matters which may properly be considered pursuant to interference practice
before the U.S. PTO shall be determined by arbitration pursuant to the
provisions of 35 USC Sec. 135 and 37 CFR Sec. 1.690.
3.4.2 Single Arbitrator. The parties agree that the arbitration
-----------------
shall be conducted using a single arbitrator. In the event the parties are
unable to agree on a
3
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single arbitrator, the arbitration shall be conducted by a single arbitrator
chosen by agreement of two arbitrators, one selected by each of the respective
parties.
3.4.3 Procedure. Upon selection of an arbitrator, the parties shall meet
---------
with the arbitrator to determine the issues for consideration and the procedure
to be followed. The procedure to be followed in the arbitration shall be as set
forth in 37 CFR, Part 1, Subpart E, including but not limited to, motion
practice and the submission of priority evidence by declaration and/or by
testimony, except as otherwise agreed by the parties. The arbitrator shall
establish a reasonable schedule for action not inconsistent with practice in the
U.S. PTO or with the parties' desire to expedite the process leading to a
decision.
3.4.4 Legal Fees; Reimbursement. In the event that ALBANY prevails in
-------------------------
the arbitrated interference with the Process Manufacturing Claim, and the
arbitration decision is accepted by the U.S. PTO, ALBANY shall bear its own fees
and costs associated with the interference. However, in the event that ALBANY
does not prevail in the arbitrated interference with the Process Manufacturing
Claim, MMD shall reimburse ALBANY for actual out-of-pocket legal fees and costs
associated with the interference within ninety (90) days of receipt of an
itemized invoice therefor, provided that such reimbursement shall be limited to
the amount of the fees actually paid and incurred by MMD and its Affiliates and
Sublicensees for its own counsel in such interference. To the extent MMD
determines that such reimbursement shall not be paid in full, MMD and its
Affiliates and Sublicensees shall submit to ALBANY a detailed accounting of all
costs incurred for its own internal and external counsel in such interference
and ALBANY shall have the right to, and MMD and its Affiliates and Sublicensees
will execute whatever documents need to be executed to accommodate such right,
make inquiries of each counsel representative as to the validity and
completeness of the detail provided.
3.4.5 Submission of Agreements. The parties agree to comply with the
------------------------
requirements of 35 USC 135(c) relating to submission of agreements between the
parties to the U.S. PTO.
3.4.6 Third Party to Interference. In the event that a third party is
---------------------------
joined by the U.S. PTO in any interference proceeding relating to the MMD-Krauss
Patent Application and/or MMD-King Patent Application and the ALBANY Patent
Application, the entire interference proceeding will be conducted in the PTO
unless all parties agree to the arbitration as provided in this Section 3.4.
3.5 Enforcement of ALBANY Patents.
3.5.1 ALBANY warrants that, insofar as it is aware, no claim is pending
or has been made that the manufacture, distribution and/or Sale of Product, or
any material formula, process, or material employed in connection therewith,
infringes upon or conflicts
4
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in any way with any proprietary rights owned by others (except for MMD and its
Affiliates and Sublicensees).
3.5.2 Initiation of Infringement Actions. In the event MMD or ALBANY
----------------------------------
becomes aware of any actual or threatened infringement of any ALBANY Patents,
that party shall promptly notify the other party. MMD shall promptly take all
reasonable legal action necessary to cause each of its Assignees, Controlled
Affiliates, or Sublicensees (and to request each of its other pharmaceutical
Affiliates), to notify MMD in the event any of such entities become aware of any
such actual or threatened infringement, to protect against infringement by third
parties of the ALBANY Patents and any uses or processes pertaining thereto.
ALBANY agrees to promptly notify MMD if it receives a patent certification or
any other notice of litigation, and to advise MMD of any litigation it initiates
or which may be initiated against it, and to keep MMD advised throughout such
litigation. All costs of such litigation shall be borne solely by MMD.
3.6 Defense of Third Party Infringement Claims.
3.6.1 Defense of Infringement Claims. In the event MMD or ALBANY becomes
------------------------------
aware that MMD or any of its Affiliates or Sublicensees's practice of ALBANY
Patents is the subject of a claim for patent infringement, that party shall
promptly notify the other and the parties shall consider the claim and the most
appropriate action to take. MMD shall cause each of its Assignees, Affiliates,
or Sublicensees to notify MMD promptly in the event such entity becomes aware
that its practice of the ALBANY Patent is the subject of a claim of patent
infringement. MMD shall have the right to control the defense of any such suit
brought against MMD or any of its Assignees, Affiliates, or Sublicensees and
shall do so at its own expense. MMD shall have the right to require ALBANY's
reasonable cooperation in any such suit, upon written notice to ALBANY, and
ALBANY shall have the obligation to participate and MMD shall bear the costs of
its participation. MMD shall have the right to enter into any settlement upon
ALBANY's written consent, which consent shall not be unreasonably withheld.
3.6.2 Royalty Reduction. In the event that a third party asserts that
-----------------
MMD's manufacture, use or Sale of Product constitutes infringement of such third
party's patent which dominates the ALBANY Patents, MMD shall be entitled to
deduct from royalty payments otherwise due ALBANY under this Agreement the
lesser of One Million Dollars ($1,000,000) or twenty five percent (25%) of any
costs, expenses (including reasonable legal fees and expenses) and damages paid
to such third party or amounts paid in a settlement with such third party;
provided that the amount that MMD is entitled to deduct from royalty payments
due for any quarter shall not exceed one third (1/3) of the royalties due ALBANY
for such quarter.
5
<PAGE>
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION. THE LOCATIONS
OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH ASTERISKS.
3.7 Product Liability Indemnification. MMD agrees to defend ALBANY, its
agents, directors, officers and employees, at MMD's cost and expense, and will
indemnify and hold harmless ALBANY, its agents, directors, officers and
employees, from and against any and all losses, costs, damages, fees or expenses
(including attorney fees and disbursements) arising out of or in connection with
the manufacture, commercialization, marketing, Sale or use of any Product,
including, but not limited to, any actual or alleged injury, damage, death or
other consequence occurring to any person or property as a result, directly or
indirectly, of the possession, use or consumption of any Product, whether
claimed by reason of breach of warranty, theory of strict liability, negligence,
Product defect or otherwise, and regardless of the form in which any such claim
is made.
3.8 Attorneys Fees and Expenses. MMD shall reimburse ALBANY for all of
ALBANY's expenses, including attorney fees and disbursements, arising out of or
relating to a claim by ALBANY to enforce Sections 3.2, 3.4, 3.5, 3.6, and 3.7.
ARTICLE 4
PAYMENT OBLIGATIONS
4.1 Initial License Fee. On the Effective Date hereof MMD shall pay to
the order of ALBANY as the initial license fee for the ALBANY Patent Application
the sum of *** Dollars ($***) in the form of an MMD check or wire transfer to
the following account of Albany Molecular Research, Inc.: ***; ABA # ***;
Account Number ***.
4.2 Milestone Payments. MMD further agrees, on the occurrence of the
events described in this Section 4.2, to make the following additional milestone
payments to the account of ALBANY in the manner set forth in the preceding
section:
(a) With respect to the Process Manufacturing Claim, when and if a
patent with such a claim issues in the U.S., the sum of *** Dollars ($***)
will be paid to ALBANY, at the earlier to occur of (i) the survival of an
interference action with MMD or (ii) the expiration of one year from the date of
issuance, provided that no interference action has been declared by the PTO and
not at that time resolved. MMD shall, within thirty (30) days of the date
notified in writing by ALBANY of the issuance, institute appropriate action to
provoke an interference claim with respect to such patent. So long as MMD
institutes appropriate action to provoke an interference with such patent within
thirty (30) days of the date of notification of issuance and MMD subsequently
prevails in an interference, MMD shall be entitled to reimbursement of all sums
paid under this subsection (a);
<PAGE>
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION. THE LOCATIONS
OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH ASTERISKS.
(b) With respect to the Process Manufacturing Claim in ex-U.S.
countries on the occurrence of the issuance of a patent in the first of such
ex-U.S. countries, the sum of *** Dollars ($***);
(c) With respect to the Intermediate Process Claim, when and if a
patent with such a claim issues in the U.S., the sum of *** Dollars ($***) will
be paid to Albany, at the earlier to occur of (i) the survival of an
interference action with MMD or (ii) the expiration of one year from the date of
issuance, provided that no interference action has been declared by the PTO and
not at that time resolved. MMD shall, within thirty (30) days of the date
notified in writing by ALBANY of the issuance, institute appropriate action to
provoke an interference claim with respect to such patent. So long as MMD
institutes appropriate action to provoke an interference with such patent within
thirty (30) days of the date of notification of issuance and MMD subsequently
prevails in an interference, MMD shall be entitled to reimbursement of all sums
paid under this subsection (c);
(d) With respect to the Substantially Pure Claim, when and if a
patent with such a claim issues in the U.S., the sum of *** Dollars ($***)
will be paid to ALBANY, at the earlier to occur of (i) the survival of an
interference action with MMD or (ii) the expiration of one year from the date of
issuance, provided that no interference action has been declared by the PTO and
not at that time resolved. MMD shall, within thirty (30) days of the date
notified in writing by ALBANY of the issuance, institute appropriate action to
provoke an interference claim with respect to such patent. So long as MMD
institutes appropriate action to provoke an interference with such patent within
thirty (30) days of the date of notification of issuance and MMD subsequently
prevails in an interference, MMD shall be entitled to reimbursement of all sums
paid under this subsection (d);
(e) With respect to the Substantially Pure Claim in ex-U.S.
countries, on the occurrence of the issuance of a patent in any such ex-U.S.
countries, the sum of *** Dollars ($***); and
(f) If ALBANY's Substantially Pure Claim does not issue in the U.S.,
but ALBANY, by reason of its activities pursuing such application in the U.S.
PTO, facilitates the issuance of MMD or its Affiliates and Sublicensees own
Substantially Pure Claim from MMD's-King Patent Application, or any other MMD or
its Affiliates and Sublicensees current or future application, a one time
commercialization fee of *** Dollars ($***).
4.3 Royalty Payments.
4.3.1 Royalty Rates. In addition to the milestone payments described in
-------------
the preceding section, MMD will pay ALBANY the following royalties as a percent
of the
7
<PAGE>
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION. THE LOCATIONS
OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH ASTERISKS.
Net Sales Revenue for Products Sold by MMD or its Affiliates or Sublicensees
from and after the issue date of the applicable ALBANY patent:
(a) If an ALBANY Patent issues containing the Process Manufacturing
Claim in the U.S. and survives an interference as stipulated in Section 4.2(a),
royalties at the rate of *** Percent (***%) of MMD or any of its Affiliates and
Sublicensees worldwide Net Sales Revenues, commencing with Sales from and after
the issue date of the applicable ALBANY patent, for as long as MMD or any of its
Affiliates or Sublicensees utilizes a process which, in the absence of this
Agreement, would otherwise infringe the Process Manufacturing Claim;
(b) If an ALBANY Patent containing a Process Manufacturing Claim does
not issue in the U.S., but does issue in any ex-U.S. countries, a royalty at the
rate of *** Percent (***%) of MMD or any of its Affiliates and Sublicensees Net
Sales Revenues, commencing with Sales from and after the issue date of the
applicable ALBANY patent in those ex-U.S. countries in which a patent with such
Claim issues for as long as MMD or any of its Affiliates or Sublicensees
utilizes a process which, in the absence of this Agreement, would otherwise
infringe the Process Manufacturing Claim as issued in the ex-U.S. country;
(c) No royalties shall be paid in the event that an ALBANY Patent
issues containing an Intermediate Process Claim;
(d) If an ALBANY Patent issues containing a Substantially Pure Claim
in the U.S. and survives an interference as stipulated in Section 4.2(d),
royalties at the rate of *** Percent (***%) of MMD or any of its Affiliates and
Sublicensees Net Sales Revenues in the U.S. commencing with Sales from and after
the issue date of the applicable ALBANY patent for as long as MMD or any of its
Affiliates or Sublicensees markets and/or Sells a product which, in the absence
of this Agreement, would otherwise infringe the Substantially Pure Claim as
issued;
(e) If an ALBANY Patent issues containing a Substantially Pure Claim
in any of the ex-U.S. countries, royalties at the rate of *** Percent (***%) of
MMD or any of its Affiliates and Sublicensees Net Sales Revenues in each of the
ex-U.S. countries in which such a patent issues commencing with Sales from and
after the issue date of the applicable ALBANY patent for as long as MMD or any
of its Affiliates or Sublicensees markets and/or Sells a product which, in the
absence of this Agreement, would otherwise infringe the Substantially Pure Claim
as issued in the ex-U.S. country;
(f) If any ALBANY Patent with the Substantially Pure Claim does not
issue in the U.S., but ALBANY, by reason of its activities pursuing such
application in the U.S. PTO facilitates the issuance to MMD or any of its
Affiliates or Sublicensees
8
<PAGE>
a patent with a Substantially Pure Claim under a patent application of MMD or
any of its Affiliates or Sublicensees patent application, no royalties shall be
payable; and
(g) Royalty rates described in (a), (b), (d) and (e) above are
individually triggered by satisfaction of the preconditions described for each.
4.3.2 Royalty Payment. All royalties due hereunder shall be calculated
---------------
every calendar quarter, or such pro rata share thereof as is applicable, and
shall be paid by MMD to ALBANY within forty-five (45) days after the end of such
quarter.
4.3.3 Exchange Rate. All amounts payable will first be calculated in the
-------------
currency of sale and then converted into United States dollars on a quarterly
basis using as a rate of exchange the actual foreign currency exchange rate on
the last day of the month preceding the end of the quarter or such other method
as is consistent with MMD's internal foreign currency translation procedures.
4.4 Tax Withholding. In the event that MMD is required to withhold taxes
imposed upon ALBANY for any payment under this Agreement by virtue of the
statutes, laws, codes or governmental regulations of the U.S., then such
payments shall be made by MMD on behalf of ALBANY by deducting from the payment
due ALBANY and remitting such taxes to the proper authorities on a timely basis
and the payments provided for under this Agreement shall be adjusted
appropriately, provided that MMD shall supply ALBANY with official documentation
and/or tax receipts on such withholdings supporting such taxes and such payments
as may be required by ALBANY for its tax records within sixty (60) days of the
withholding.
ARTICLE 5
CONFIDENTIALITY
---------------
5.1 Confidentiality. During the term of this Agreement and for a period
of ten (10) years thereafter, each party agrees, for itself, its employees
agents, consultants, Controlled Affiliates, other pharmaceutical Affiliates,
Sublicensees and clinical investigators that it and each such person or entity
will maintain in confidence all Confidential Information disclosed in connection
with this Agreement and shall obtain written confidentiality agreements from
each such person or entity. Neither party nor its employees, agents,
consultants, assignees, Controlled Affiliates, other pharmaceutical Affiliates,
Sublicensees and clinical investigators shall use or disclose such Confidential
Information except as permitted under this Agreement. Each party shall promptly
notify the other upon discovery of any unauthorized use or disclosure of the
Confidential Information. "Confidential Information", with respect to each
party, means any confidential or proprietary information, including, any present
or future formulas, research project, work in process, inventions, procedures,
development, scientific, engineering,
9
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manufacturing, marketing, business or financial plan or records, personnel
matter, products, sales, suppliers, customers, employees, or investors, whether
such Confidential or proprietary information is in oral, written, graphic or
electronic form (including all copies in whole or in part of any of the
foregoing) and which derives value from being known to the discloser or owner.
"Confidential Information" shall not include any information which:
a) the recipient can demonstrate to the reasonable satisfaction of
the disclosing party was already known to the recipient, other than under an
obligation of confidentiality, at the time of disclosure;
b) was generally available to the public or otherwise part of the
public domain at the time of its disclosure;
c) becomes generally available to the public or otherwise part of
the public domain after its disclosure and other than through any act or
omission of the recipient;
d) was disclosed to the recipient, other than under an obligation of
confidentiality, by a third party who had no obligation not to disclose such
information to others; or
e) the recipient can demonstrate to the reasonable satisfaction of
the disclosing party was independently developed by the recipient without
reference to the disclosure.
5.2 Financial Disclosure. The parties agree that the material financial
terms of the Agreement shall also be considered Confidential Information of both
parties and may be disclosed only as required in ALBANY's financial statements.
MMD and its Affiliates and Sublicensees understand that such financial
statements are, or may be, required to be delivered to certain entities and/or
individuals, including shareholders, financial institutions, underwriters, other
lending institutions, government agencies, customers and potential customers and
investors.
5.3 Authorized Disclosure. Each party may disclose the Confidential
Information to the extent such disclosure is reasonably necessary in filing or
prosecuting patent applications, prosecuting or defending litigation, furthering
the research and other progress contemplated by the Commercialization Agreement
or complying with applicable governmental regulations including those requiring
promulgation of periodic reports to shareholders, provided that if such party is
required to make any such disclosure of the Confidential Information it shall,
to the extent practicable, give reasonable advance notice to the other party of
such disclosure requirement and, except to the extent inappropriate in the case
of patent applications, shall use diligent efforts to secure confidential
treatment
10
<PAGE>
of such information required to be disclosed. In addition, MMD may disclose
such Confidential Information to its Controlled Affiliates, other pharmaceutical
Affiliates, and Sublicensees. In connection with any such disclosure, MMD and
its Controlled Affiliates, other pharmaceutical Affiliates, and Sublicensees
shall use diligent efforts to secure confidential treatment of such information
and MMD shall be responsible for any prohibited disclosure by itself or any such
person or entity. ALBANY agrees to request confidential treatment by the
Securities and Exchange Commission with respect to the material financial terms
of this Agreement.
ARTICLE 6
TERM; TERMINATION
-----------------
6.1 Term. This Agreement will commence as of the Effective Date and,
unless sooner terminated as provided hereunder, shall terminate upon the
expiration of the last to expire patent of the ALBANY Patents having a claim
which covers any Product made, used or Sold by MMD or any of its Affiliates and
Sublicensees.
6.2 Termination by MMD.
6.2.1 Unilateral Right to Terminate. In the event MMD and its
-----------------------------
Assignees, Affiliates, and Sublicensees decide to discontinue in any country
development and/or commercialization of Product for any commercial or scientific
reason, MMD shall have the right to terminate this Agreement with respect to
such country upon sixty (60) days' written notice. In the event of such
termination, MMD shall pay ALBANY all accrued payments due ALBANY through the
termination date and ALBANY shall have the right to grant licenses covering the
Technology for sale in such country.
6.2.2 Termination for Breach by ALBANY. MMD shall have the right
--------------------------------
to terminate this Agreement, in addition to pursuing any remedies available
under law or in equity, upon sixty (60) days' written notice to ALBANY, if
ALBANY is in material breach of this Agreement and such breach is not cured
within such sixty (60) day period (unless any such breach is not curable within
sixty (60) days and ALBANY is proceeding to use diligent and continuing efforts
to cure such breach, in such event, such notice period shall be extended for the
time reasonably necessary for cure); provided, however, in the event of such
breach for which MMD elects not to terminate this Agreement, MMD may elect to
continue this Agreement while pursing its legal remedies, including the receipt
of damages related to such breach. Any final, non-appealable damages awarded
may, at MMD's option, be deducted from any royalties or other payments owned to
ALBANY.
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6.3 Termination by ALBANY
6.3.1 Right to Terminate upon Notice from MMD. In the event that MMD
---------------------------------------
or any of its Assignees, Affiliates, and Sublicensees decides to discontinue in
any country development and/or commercialization of Product for any commercial
or scientific reason, MMD shall give notice in writing to ALBANY of such
decision and thereafter, ALBANY shall have the right to immediately terminate
this Agreement with respect to such country by written notice to MMD. In the
event of such termination, MMD shall pay ALBANY all accrued payments due ALBANY
through the termination date and ALBANY shall have the right to grant licenses
covering the Technology for sale in such country.
6.3.2 Right to Terminate upon Notice from MMD. In the event that MMD
---------------------------------------
and such of its Affiliates as to which MMD owns or controls at least ninety five
percent (95%) of the voting stock (a "Controlled Affiliate") fail to devote
their reasonable best efforts to market and Sell Products in any country ALBANY
shall have the right to immediately terminate this Agreement with respect to
such country by sixty (60) day written notice to MMD. In the event of such
termination, MMD shall pay ALBANY all accrued payments due ALBANY through the
termination date.
6.3.3 Termination for breach by MMD. ALBANY shall have the right to
-----------------------------
terminate this Agreement, in addition to pursuing any remedies available under
law or in equity, upon sixty (60) days' written notice to MMD, if MMD or any of
its Assignees, Affiliates, or Sublicensees is in material breach of this
Agreement and such breach is not cured within such sixty (60) day period (unless
any such breach is not curable within sixty (60) days and MMD and such Assignee,
Affiliate, or Sublicensee is proceeding to use diligent and continuing efforts
to cure such breach, in such event such notice period shall be extended for the
time reasonably necessary for cure). Notwithstanding the foregoing, in the event
of nonpayment of any amounts due hereunder, the initial sixty (60) day time
frame set forth above shall be extended for an additional period of up to thirty
(30) days if MMD is attempting to resolve any dispute over the payment
obligation or amount in good faith. Upon resolution of any such dispute, MMD
shall pay ALBANY any amounts owing with interest thereon at the prime rate on
the date of such resolution, as stated in the Wall Street Journal, New York
edition, on such date or the immediately preceding business date if such
resolution date is not a business date.
6.4 Reversion of Rights after Termination. Upon termination,
-------------------------------------
ALBANY shall have the exclusive right, title and interest in and to the ALBANY
Patent Application and the ALBANY Patents; none of MMD or any of its Affiliates
or Sublicensees shall have any right to exploit the ALBANY Patent Application or
the ALBANY Patent from and after the date of termination.
6.5 Termination by either party pursuant to this Article VI shall
be by written notice to the other party and, unless otherwise provided herein,
shall be effective
12
<PAGE>
on the date specified in such written notice to the other party, giving effect
to any applicable notice period provided hereunder.
6.6 Promptly upon termination of this Agreement, each party shall return
to the other party hereto all Technology and Confidential Information of such
other party.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
------------------------------
7.1 Mutual Representations and Warranties. Each party hereby represents
and warrants:
7.1.1 Corporate Power. Such party is duly organized and validly
---------------
existing under the laws of the state of its incorporation and has full corporate
power and authority to enter into this Agreement and to carry out the provisions
hereof.
7.1.2 Due Authorization. Such party is duly authorized to execute
-----------------
and deliver this Agreement and to perform its obligations hereunder.
7.1.3 Binding Agreement. This Agreement is a legal and valid
-----------------
obligation binding upon it and enforceable in accordance with its terms. The
execution, delivery and performance of this Agreement by such party does not
conflict with any agreement, instrument or understanding, oral or written, to
which it is a party or by which it may be bound, nor violate any law or
regulation of any court, governmental body or administrative or other agency
having jurisdiction over it.
7.2 ALBANY Representations and Warranties.
7.2.1 Ownership. ALBANY represents and warrants that (i) it has
---------
received an assignment of the rights of all named inventors in and to the ALBANY
Patent Application, (ii) it has not granted any license under the ALBANY Patent
Application or ALBANY Patents except pursuant to this Agreement and is under no
obligation to grant such license, (iii) it is the owner of the entire right,
title and interest in and to the ALBANY Patent Application, and (iv) there are
no outstanding liens, encumbrances, agreements or understandings of any kind,
written, oral or implied, which are inconsistent with any provision of this
Agreement.
7.2.2 No Patent Infringement. ALBANY represents and warrants that no
----------------------
individual or entity has asserted to ALBANY that ALBANY, or any employee, agent,
representative or other person affiliated with ALBANY is infringing or has
infringed any foreign or domestic patent or has misappropriated or improperly
used or disclosed any trade secret, confidential information or know-how (and
ALBANY is unaware of any basis
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for such claim) which relates in any manner to the subject matter of this
Agreement except as separately disclosed, in writing, to MMD.
7.2.3 Patent Proceedings. Except as to MMD, ALBANY represents and
------------------
warrants to the best of its knowledge that the ALBANY Patent Application is not
currently the subject of any pending interference, opposition, cancellation or
other protest proceeding.
7.3 MMD Representations and Warranties. Except as to ALBANY, MMD
represents and warrants that no individual or entity has asserted to MMD that
MMD would be infringing any foreign or domestic patent or would be
misappropriating or improperly using or disclosing any trade secret,
confidential information, or know-how (and MMD is unaware of any basis for such
claim) which relates in any manner to the subject matter of this Agreement
except as separately disclosed, in writing, to ALBANY.
ARTICLE 8
CHOICE OF LAW
-------------
8.1 Choice of Law. This agreement shall be construed in accordance with,
and its performance shall be governed by, and construed in accordance with the
substantive laws of the State of New York.
ARTICLE 9
RECORDS; AUDIT
--------------
9.1 Records Retention. MMD shall keep, and cause its Controlled
Affiliates, other pharmaceutical Affiliates, Sublicensees, and Assignees to
keep, complete and accurate records pertaining to the Sale of Products in
sufficient detail to permit ALBANY to confirm the accuracy of calculations of
all payments hereunder. Such records will be maintained for two (2) calendar
years following the year in which any such payments were made hereunder.
9.2 Audit Right. ALBANY shall have the right to audit the records of MMD
and of its Controlled Affiliates, other pharmaceutical Affiliates, and
Sublicensees concerning the payments due hereunder. Any such audit may be
performed by the firm of independent certified public accountants employed by
MMD to conduct its regular annual audit or by a firm of independent certified
accountants selected by ALBANY reasonably acceptable to MMD. In any such audit,
the accountants shall have the right to examine such books of MMD and of its
Controlled Affiliates, other pharmaceutical Affiliates, and Sublicensees at all
reasonable times (but not more than once in each
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calendar year) within two years after the end of the year in which any such
payments were made for the purpose of verifying that such payments were properly
made under this Agreement. Such examination shall be made during normal business
hours. ALBANY agrees that information furnished to it as a result of any such
examination shall be limited to a statement by such firm of independent public
accountants to the effect that it has reviewed the books of account of MMD and
that the amount of the payment has been determined in conformity with such books
of account and the applicable provisions of this Agreement, or setting forth any
required adjustments and the reasons for such adjustments. If the verification
hereunder is performed at substantially the same time as the regular annual
audit of MMD by the firm of independent certified public accountants employed by
MMD to conduct its regular annual audit, the fees and expenses of such
verification shall be borne by MMD. In any other event the fees and expenses of
such verification shall be borne by ALBANY, provided that MMD shall reimburse
ALBANY for such fees and expenses in the event that the audit reveals a
discrepancy between the amount paid in any year and the amount due for such year
of more than five percent (5%).
9.3 Survival. This Article 9 shall survive any termination of this
Agreement for a period of two (2) years.
ARTICLE 10
MISCELLANEOUS PROVISIONS
------------------------
10.1 Relationship of the Parties. Neither party is, nor will be deemed to
be, an agent or legal representative of the other party for any purpose. Neither
party will be entitled to enter into any contracts in the name of or on behalf
of the other party, and neither party will be entitled to pledge the credit of
the other party in any way or hold itself out as having authority to do so. No
party will incur any debts or make any commitments for the other, except to the
extent, if at all, specifically provided herein.
10.2 Assignment. Except as otherwise provided herein, neither this
Agreement nor any interest hereunder will be assignable in part or in whole by
any party without the prior written consent of the other, provided, however,
that either party may assign this Agreement to any successor by merger or sale
of substantially all of its assets in a manner such that the assignor will
remain liable and responsible for the performance and observance of all its
duties and obligations hereunder. This Agreement will be binding upon the
successors and permitted assigns of the parties and the name of a party
appearing herein will be deemed to include the names of such party's successor's
and permitted assigns to the extent necessary to carry out the intent of this
Agreement. Any assignment which is not in accordance with this section will be
void.
15
<PAGE>
10.3 Public Announcements.
10.3.1 Press Releases and Third-Party Communications. After
---------------------------------------------
execution hereof and during the term of this Agreement, neither party shall
issue a press release relating to this Agreement without first obtaining the
approval of the other, such approval not to be unreasonably withheld. The
parties will jointly develop a strategy for responding to third-party inquiries
related to this Agreement.
10.3.2 Publication. During the term of this Agreement, neither party
-----------
shall approve or make any confidential or non-confidential disclosures of the
Technology or the Confidential Information without first securing the written
approval of the other party, which approval shall not be unreasonably withheld.
10.4 Notice. All notices and other communications hereunder will be in
writing and will be deemed given if delivered personally or registered or
certified mail, return receipt requested and postage prepaid or sent by express
courier service, to the parties at the following addresses (or at such other
addresses for a party as will be specified by the like notice; provided, that
notices of a change of address will be effective only upon receipt thereof):
If to ALBANY, addressed to:
Albany Molecular Research, Inc.
21 Corporate Circle
Albany, NY 12203-5154
Attn: Vice President, Finance & Operations
If to MMD, addressed to:
Marion Merrell Dow, Inc.
9300 Ward Parkway
P.O. Box 8480
Kansas City, Missouri 64114-0480
Attn: General Counsel
10.5 Amendment. No amendment, modification or supplement of any provision
of the Agreement will be valid or effective unless made in writing and signed by
a duly authorized officer of each party.
10.6 Waiver. No provision of the Agreement unless such provision
otherwise provides will be waived by any act, omission or knowledge of a party
or its agents or employees except by an instrument in writing expressly waiving
such provision and signed by a duly authorized officer of the waiving party.
16
<PAGE>
10.7 Survival. In the event of termination or expiration of this
Agreement, Sections 3.6, 3.7, 4.2(f), 6.4, and 10.3 and Articles 5, 8, and 9
shall survive.
10.8 Severability. Whenever possible, each provision of the Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of the Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
the Agreement.
10.9 Entire Agreement of the Parties. The Agreement together with the
Stock Purchase Agreement and Commercialization Agreement (both of even date
herewith) constitute and contain the complete, final and exclusive understanding
and agreement of the parties and cancel and supersede any and all prior
negotiations, correspondence, understandings, and agreements, whether oral or
written, between the parties respecting the subject matter thereof.
10.10 Arbitration. Other than the arbitration in Section 3.4, any dispute
arising out of, or relating to, this Agreement shall be resolved by arbitration,
held in New York State, under the Commercial Rules of the American Arbitration
Association. The decision of the Arbitrator(s) shall be binding and conclusive.
10.11 Payment Terms. All payment terms not otherwise defined in this
Agreement, shall be due and payable no later than thirty (30) days after the
date of an invoice submitted by ALBANY to MMD and reasonably detailing the
expenses invoiced.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement,
including all Exhibits attached hereto and incorporated herein by reference.
MARION MERRELL DOW INC. ALBANY MOLECULAR RESEARCH, INC.
By: /s/ Fred W. Lyons, Jr. By: /s/ Harold M. Armstrong, Jr.
------------------------------- -----------------------------------------
Title: Chairman & CEO Title: Vice President, Finance & Operations
---------------------------- --------------------------------------
17
<PAGE>
EXHIBIT A
DEFINITIONS
1. "Affiliate" means any entity that directly or indirectly Owns, is
---------
Owned by or is under common Ownership with a party to this Agreement, where
"Owns" or "Ownership" means direct or indirect possession of at least fifty
percent (50%) of the outstanding voting securities of a corporation or a
comparable equity interest in any other type of entity.
2. "Agreement" means the present agreement with all Exhibits hereto.
---------
3. "ALBANY Patent Application" means the patent application described in
-------------------------
Exhibit B hereto as originally filed, and including any divisional,
continuations-in-part and continuations thereof as well as non-U.S. counterpart
applications.
4. "ALBANY Patents" means all patents issuing from the ALBANY Patent
--------------
Application. Patents as used herein shall include, without limitation, all
extensions, reissues, reexaminations certificates, renewals, divisions,
continuations, and continuations-in-part of the aforementioned.
5. "Claim or Claims" means any claim or claims of ALBANY Patents which
---------------
cover essentially the same scope as claim 1 (hereinafter referred to as "Process
Manufacturing Claim"), claims 7 and 8 (hereinafter referred to as "Intermediate
Process Claim"), and claim 20 (hereinafter referred to as "Substantially Pure
Claim") of the ALBANY Patent Application as described in Exhibit B.
6. "ex-US countries" are Canada, Japan, Australia and New Zealand,
---------------
France, Germany, Italy, Spain and the United Kingdom.
7. "MMD" '129 Patent" means U.S. Patent Number 4254129.
----------------
8. "MMD-King Patent Application" means the MMD patent application as
---------------------------
originally filed and included as Exhibit A-2 hereto and including any
divisional, continuations-in-part, and continuations thereof.
9. "MMD-Krauss Patent Application" means the MMD patent application as
-----------------------------
originally filed and included as Exhibit A-1 hereto and including any
divisional, continuations-in-part, and continuations thereof.
10. "Net Sales Revenue" means the total of all amounts invoiced by MMD or
-----------------
its Affiliates and Sublicensees, as appropriate, for the Sale of Product in the
relevant territory, less the following deductions to the extent included in the
amount invoiced:
18
<PAGE>
(a) trade, cash, quantity or other discounts including rebates
actually allowed or taken;
(b) amounts repaid or credited by reason of rejections, defects or
returns or because of retroactive price reductions;
(c) freight, insurance and other transportation;
(d) rebates paid pursuant to law or government regulations; and
(e) taxes on the Sales of Product, whether denominated as value
added taxes, sales taxes or excise taxes to the extent arising out of said Sales
and included in said invoiced amount.
Notwithstanding the foregoing, amounts received by MMD or any of its
Affiliates for the sale of Products among MMD and its Affiliates, whether for
their internal use or for resale or other disposition shall not be included in
the computation of Net Sales Revenue hereunder but must be included when
invoiced to non-affiliated third parties by MMD or its Affiliates.
In the event that a pharmaceutical or diagnostic product is developed and
sold by MMD or any of its Affiliates or Sublicensees which is comprised in part
of Product and of one or more other active ingredients or other parts which
could be sold separately (collectively, a "Combination Product"), the parties
shall determine, by mutual agreement, the percentage of sales revenue generated
by Sale of the Combination Product that will be included for the purpose of
calculating "Net Sales Revenue".
11. "Product" means any therapeutic, diagnostic or prophylactic
-------
composition or article of manufacture developed, manufactured or Sold by MMD or
any of its Affiliates or Sublicensees, which when used, made, practiced or Sold
would, but for the license granted MMD pursuant to this Agreement, constitute an
infringement of an ALBANY Patent.
12. "Sale, Sell, or Sold" means the transfer by MMD or any of its
-------------------
Affiliates or Sublicensees to a third party of custody, possession or indicia,
or any right of ownership in a Product. A Sale shall be effective immediately
upon said transfer. Notwithstanding the foregoing, a transfer of a Product to a
third party without consideration in connection with the development, testing,
marketing or promotion of a Licensed Product shall not be deemed to be a Sale
hereunder.
13. "Sublicensee" means a third party to whom MMD has granted a
-----------
sublicense to make, have made, use or sell Products. Notwithstanding the
foregoing, a third party shall not be deemed to be a Sublicensee hereunder if
such third party is a distributor of
19
<PAGE>
MMD who performs a routine distribution function but who does not bear primary
responsibility for marketing.
14. "TDCC" means The Dow Chemical Company and successors to all or
----
substantially all of its pharmaceutical business as currently operated.
15. "Technology" shall mean all inventions, whether patentable or
----------
unpatentable, discoveries, trade secrets, information, experience, data,
formulas, procedures and results, and improvements thereon, developed by ALBANY
which relate to the research, development, synthesis or use of manufacturing
processes for TAM or which is developed by ALBANY pursuant to the Research
Program described in Exhibit C hereto, as may be amended by mutual agreement of
the parties.
16. "Terfenadine Acid Metabolite" or "TAM" means 4-[1-hydroxy-4-[4-
---------------------------
hydroxydiphenylmethyl)-1-piperidinyl]butyl]-[Greek letter alpha], [Greek letter
alpha]-dimethyl-benzeacetic acid,
or a pharmaceutically acceptable salt thereof.
20
<PAGE>
EXHIBIT A-1
MMD Patent Application
----------------------
21
<PAGE>
EXHIBIT 10.8
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION. THE LOCATIONS
OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH ASTERISKS.
[LETTERHEAD OF CAMBREX CORPORATION APPEARS HERE]
PRINCIPLES OF COOPERATION
BETWEEN
ALBANY MOLECULAR RESEARCH
AND
CAMBREX CORPORATION
ALBANY MOLECULAR RESEARCH ("AMR") is in the business of providing scientific
research and development services to its customers in the pharmaceutical
industry and wishes to offer scale up and manufacturing capabilities to its
customers related to such research and development efforts.
CAMBREX CORPORATION ("CAMBREX") is in the business of manufacturing and selling
bulk active ingredients and intermediates to the pharmaceutical industry and
wishes to become a supplier to AMR's customers who are in need of such supply,
and to strengthen its research and development capability to ensure continued
availability of new products on its own behalf.
AMR and CAMBREX therefore agree to cooperate and coordinate their activities in
these areas to their mutual benefit under the principles outlined below or as
otherwise may be discussed and agreed between them. The parties intend that this
Agreement of Cooperation will be supplemented by individual further agreements
as may be appropriate when specific activities (such as technology licensing or
R&D project funding) are undertaken.
Research & Development
1. During the term of this Agreement CAMBREX intends to fund R&D projects in
the pharmaceutical area it shall determine after consultation with AMR to an
annual level of at least $***.
2. In consultation with AMR concerning capabilities and capacities, CAMBREX
shall define the specific objectives and targets of the research projects it
wishes AMR to undertake (the "Projects"). During their consultation the parties
shall estimate the commercial potential of such projects.
3. In consultation with CAMBREX, AMR shall advise its capability to undertake
and complete such Project, and shall estimate its timing and cost. It is agreed
that an AMR research scientist's time shall be costed for this purpose at
$*** per year, including all management overheads and normal support costs.
(This amount shall be indexed annually at a rate of ***%.) fractional parts of
many different skilled professionals will be needed, project accounting will be
based on man-days of effort.
<PAGE>
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION. THE LOCATIONS
OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH ASTERISKS.
4. AMR shall advise CAMBREX in the event it has a conflicting assignment, and
AMR shall not be obligated to undertake Projects where AMR has obligations to
third parties preventing it from doing such research or in cases where the
Project overlaps with AMR's internal research efforts.
5. Upon acceptance of a Project, AMR shall draw up detailed research programs
designating key milestones to achieve the specified objectives and specified
targets of the Projects and shall advise CAMBREX periodically concerning its
progress.
6. CAMBREX shall own all new technology and inventions arising from the
Projects, and AMR shall take reasonable steps to vest these in CAMBREX. In
addition, AMR shall grant CAMBREX a non-exclusive, non-transferable license to
any technology owned or licensed by AMR which is necessary to enable CAMBREX to
commercialize the Project's result.
Commercialization Referrals
1. (A) In certain cases customers for whom AMR provides research services are
in need of scale up and manufacturing capacity. After consultation with CAMBREX
to determine CAMBREX's capabilities and capacities, AMR shall refer these
commercialization projects to CAMBREX, and shall recommend CAMBREX as an
appropriate manufacturer. In addition, AMR shall promote CAMBREX's manufacturing
capabilities to other in its customer base.
(B) AMR shall provide CAMBREX with the first option to commercialize and
exploit manufacturing technology proprietary to AMR and that AMR seeks to have
commercialized. In consultation with AMR, CAMBREX shall advise AMR promptly with
an indication of interest in the project. With regard to any such project, AMR
shall retain all rights in its technology but shall license the appropriate
technology to CAMBREX who shall have the exclusive rights to commercialize the
project.
2. ***.
Mutual Restrictions
1. During the term of this Agreement AMR shall not seek to become a large
scale manufacturer.
Term and Termination
1. This agreement shall commence on 1 April 1997, continue for three years and
may be extended for additional annual terms by mutual agreement.
2
<PAGE>
Practical Implementation
The parties agree to take all such steps as are necessary to implement the
provisions of this agreement effectively on an ongoing basis.
Signed for Cambrex Corporation: /s/ James A. Mack
-----------------------------------------------
by: James Mack, President & Chief Executive Officer
date: 2/1/97
Signed for Albany Molecular Research: /s/ Thomas D'Ambra
-------------------------------------------
by: Thomas D'Ambra, President
date: 2/1/97
3
<PAGE>
EXHIBIT 10.9
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION. THE LOCATIONS
OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH ASTERISKS.
AGREEMENT
---------
THIS AGREEMENT is entered into as of the last date of signature hereto (the
"Effective Date") by and between Eli Lilly and Company, a corporation organized
under the laws of Indiana ("Lilly") and having its principal office at Lilly
Corporate Center, Indianapolis, Indiana, 46285, and Albany Molecular Research,
Inc., a corporation organized under the laws of New York ("Albany") and having
its principal office at 21 Corporate Circle, Albany New York 12203.
Recitals
--------
A. Lilly possesses technology and knowledge with regard to combinatorial
chemical synthesis and wishes to transfer a portion of this know-how to Albany
to enable Albany to become proficient in Lilly's art of practice of
combinatorial chemistry for the purpose of resynthesizing Lilly's combinatorial
collection of chemical compounds.
B. Albany provides resources and services in pharmaceutical chemical
synthesis, analogs and small scale manufacturing and wishes to make available
its resources for the purpose of re-synthesizing Lilly's combinatorial chemistry
library and to establish a group dedicated to combinatorial organic synthesis.
C. The Parties recognize and acknowledge that Lilly, in exchange for
transferring combinatorial chemistry know-how to Albany, wishes to protect the
confidential nature of this technology, maintain a limited period of exclusivity
on Albany's practice of this technology, and participate in future revenues
which Albany may receive as a result of the practice of this technology.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and premises contained in this Agreement, the Parties agree as follows:
<PAGE>
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION. THE LOCATIONS
OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH ASTERISKS.
-2-
ARTICLE I
---------
Definitions
-----------
Section 1.1 General. Terms defined in this Article I and parenthetically
-------
elsewhere shall have the same meaning throughout this Agreement, including the
Recitals hereto. Defined terms may be used in the singular or plural.
Section 1.2 "Affiliates" means (a) any corporation or entity of which Lilly
or Albany at the time in question, directly or indirectly owns or controls more
than fifty percent (50%) of the stock having the right to vote for directors
thereof, or (b) any corporation, individual or entity which now or hereafter
directly or indirectly owns or controls more than fifty percent (50%) of the
stock of Lilly or Albany having the right to vote for directors thereof.
Section 1.3 "Cash Compensation" means any signature fees, license fees,
milestone payments and royalties or equity payments which Albany receives
pursuant to rights granted to Albany under this Agreement. By way of example,
and without limitation, Cash Compensation shall not include payments made to
Albany for research and/or development provided that any agreements covering
such payments are made on an arms length basis on market terms therefor. If
non-monetary consideration is so received, then a commercially reasonable
monetary value will be assigned for purposes of calculating Lilly's share of
compensation.
Section 1.4 "Combinatorial Technology" means ***.
Section 1.5 "Confidential Information" means all materials and information
disclosed by one Party to the other under this Agreement, including, without
limitation: information and materials (whether or not patentable) regarding
Lilly's or Albany's technology, products, research strategy, business
information or objectives; all information and data furnished to either Lilly or
<PAGE>
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION. THE LOCATIONS
OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH ASTERISKS.
-3-
Albany by any representative of Lilly or Albany, as the case may be; and all
information or data that is acquired by Lilly or Albany by observation during
any visit to the other Parties' facilities.
Section 1.6 "CPI-U" means the Consumer Price Index for all Urban
Consumers as published by the United States Department of Labor, Bureau of Labor
Statistics. The base period for the purpose of calculating adjustments using the
CPI-U under this Agreement shall be December 1, 1997.
Section 1.7 "Effective Date" means the signature date of the last of the
Parties to sign this Agreement.
Section 1.8 "FTE" means a full time equivalent scientific person year
(consisting of a total of *** (***) hours per year of scientific work on or
directly related to the Program), carried out by an Albany employee. Scientific
work on or directly related to the Program to be performed by Albany employees
can include, but is not limited to, experimental laboratory work, recording and
writing of results, reviewing literature and references, holding scientific
discussions, managing and leading scientific staff, and carrying out Program
management duties.
Section 1.9 "Lilly Combinatorial Library" means a collection of
approximately *** (***) organic chemical compounds
that are owned by Lilly and were produced by Lilly using Combinatorial
Technology.
Section 1.10 "Lilly Know-How" means all discoveries, trade secrets,
inventions, and other proprietary information, including formulae, algorithms,
software, technical drawings and methods, and materials, whether or not
patentable, relating to Combinatorial Technology which are owned by Lilly and
disclosed to Albany pursuant to this Agreement.
Section 1.11 "Lilly Licensed Technology" means Lilly Know-How and Lilly
Patent Rights.
Section 1.12 "Lilly Patent Rights" means a Patent Right claiming Lilly
Know-How.
Section 1.13 "Lilly Scaffold" means a common structural subunit used in the
synthesis of the Lilly Combinatorial Library.
Section 1.14 "Lilly Strategic Focus Area" means a medical area of
pharmaceutical discovery research, development or marketing which Lilly has
targeted as an area for strategic growth as evidenced by its prominent role in
Lilly strategic business planning documents and
<PAGE>
-4-
presentations, a commitment of Lilly research or development personnel or
resources to the area, or the stature accorded the area as reflected in Lilly's
pharmaceutical research or development organizational structure. The current
Lilly Strategic Focus Areas are as set forth on Appendix A to this Agreement.
----------
Section 1.15 "Net Sales" means, with respect to a Product, the gross amount
invoiced by Albany or an Albany Affiliate to unrelated Third Parties for the
Product, less:
a) Trade, quantity and cash discounts allowed;
b) Discounts, refunds, rebates, chargebacks, retroactive price
adjustments, and any other allowances which effectively reduce the
net selling price and are appropriately deducted from sales under
generally accepted accounting principles;
c) Product returns and allowances;
d) That portion of the sales value associated with drug delivery
systems, which calculation methodology requires approval by Lilly,
such approval not to be unreasonably withheld; and
e) Any tax imposed on the product that is appropriately deducted from
sales under generally accepted accounting principles;
Such amounts shall be determined from the books and records of Albany
maintained in accordance with generally accepted accounting principles ("GAAP"),
consistently applied.
In the event a Product is sold as part of a Combination Product, the Net
Sales of the Product, for the purposes of determining royalty payments, shall be
determined by multiplying the Net Sales of the Combination Product (as defined
above in this Section 1.15) by the fraction, A/(A+B) where A is the average sale
price of the Product when sold separately in finished form and B is the average
sale price of the other product(s) sold separately in finished form. In the
event that the average sale price of both the Product and the other product(s)
in the Combination Product cannot be determined, the Net Sales of the Product
shall be deemed to be equal to fifty percent (50%) of the Net Sales of the
Combination Product. The Net Sales price for a Combination Product shall be
calculated once each calendar year and such price shall be used during all
applicable royalty reporting periods for the entire calendar year. When
determining the average sale price of a Product or product(s), the average sale
price shall be calculated using data
<PAGE>
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION. THE LOCATIONS
OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH ASTERISKS.
-5-
arising from the twelve (12) months preceding the calculation of the Net Sales
price for the Combination Product. As used above, the term "Combination Product"
means any pharmaceutical product which comprises the Product and other active
compounds and/or ingredients determined in accordance with the method of
accounting normally employed by Albany in computing cost of goods.
Section 1.16 "Party" means Lilly or Albany; "Parties" means Lilly and
Albany.
Section 1.17 "Patent Right(s)" means a patent or patent application,
including provisional applications, Patent Cooperation Treaty (PCT) patent
applications, and all divisions, continuations, continuations-in-part, reissues,
reexaminations, extensions, Supplementary Protection Certificates, and any
similar intellectual property rights, and all counterparts thereof in any
country.
Section 1.18 "Product" means a composition which has been packaged and
labeled and is ready for administration for human or animal therapy comprising a
compound discovered or developed by Albany using the Lilly Licensed Technology
or Program Technology. Product does not include any compound contained in the
Lilly Combinatorial Library or any Lilly Scaffold.
Section 1.19 "Program" means the research program to re-synthesize the
Lilly Combinatorial Library as it exists on the Effective Date, (***) which is
to be undertaken by Albany and is funded by Lilly pursuant to this Agreement.
Section 1.20 "Program Know-How" means all information, data or materials
discovered or developed in the course of the Program (whether or not patentable)
by Albany or jointly by Albany and Lilly, including without limitation:
instructions; processes; formulae; assays; biological, chemical,
pharmacological, toxicological, pharmaceutical, physical and analytical,
clinical, safety, manufacturing and quality control data, information and
materials.
Section 1.21 "Program Patent Rights" means Patent Rights covering Program
Know-How.
Section 1.22 "Program Technology" means Program Know-How and Program
Patent Rights.
<PAGE>
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION. THE LOCATIONS
OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH ASTERISKS.
-6-
Section 1.23 "SAR Projects" means a synthesis project in which the
objective is to optimize the activity of a known lead compound using either
combinatorial technology or traditional medicinal chemistry.
Section 1.24 "Third Party" means any person or organization, incorporated
or unincorporated, other than Albany and Lilly and their respective Affiliates.
ARTICLE II
----------
Exclusive Arrangement/Restrictions
----------------------------------
Section 2.1 Exclusivity. During the term of the Program, Albany agrees that
-----------
it shall not participate, either directly or in collaboration with any Third
Party in any research relating to Combinatorial Chemistry except pursuant to the
terms of this Agreement, without first securing the written approval of Lilly.
Section 2.2 Non-Use of Technology. During the term of the Program, Albany
---------------------
shall not (a) utilize the Lilly Licensed Technology or the Program Technology in
any collaboration with a Third Party unless agreed to by Lilly in writing; or
(b) utilize the Lilly Licensed Technology or the Program Technology to generate
any Combinatorial Library for internal use or to be offered to Third Parties for
use.
Section 2.3 Utilization of Technology. After the expiration or termination
-------------------------
of the Program and for a period of *** (***) years thereafter, Albany may only
utilize the Lilly Licensed Technology and the Program Technology for its
internal research programs or in collaboration with Third Parties subject to the
provisions of this Agreement. Thereafter, Albany may utilize the Lilly Licensed
Technology and the Program Technology without obligation to Lilly, subject to
the obligations of Article VIII.
Section 2.4 Third Party Agreements. Albany shall notify Lilly in the event
----------------------
that Albany desires to enter into negotiations with a Third Party on an
agreement relating to a collaboration which would utilize Lilly Licensed
Technology or Program Technology (a "Third Party Collaboration"). Lilly shall
have the right to veto any *** (***) of such proposed Third Party Collaborations
if such proposed collaborations are within a Lilly Strategic Focus Area.
Following the last of such *** (***) vetoes by Lilly, Albany may enter into any
Third Party
<PAGE>
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION. THE LOCATIONS
OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH ASTERISKS.
-7-
Collaboration subject to the other terms of this Agreement. If such proposed
Third Party Collaboration is outside the Lilly Strategic Focus Area, Albany may
enter into such proposed Third Party Collaboration subject to the other terms of
this Agreement.
Section 2.5 Other Collaboration. During the term of the Program, and in
-------------------
the event that Albany desires to enter into a collaboration or other arrangement
with a Third Party in the area of Combinatorial Technology research that would
not utilize Lilly Licensed Technology or Program Technology, Albany shall inform
the Program Chairs. The Program Chairs may approve or disapprove such proposed
collaboration or other arrangement. In the event the Program Chairs disapprove,
Albany shall not enter into such collaboration or other arrangement. In the
event that the Program Chairs are unable to agree, such question shall be
referred to the Executive Director of Lilly's Research Technologies for
resolution. If such a collaboration or other arrangement is approved, any such
collaboration or other arrangement conducted at Albany facilities shall be
conducted in facilities that are separate from those facilities used to conduct
the Program.
Section 2.6 Security. Albany shall use its best efforts to protect and
--------
to keep confidential the Lilly Licensed Technology and Program Technology. Other
than provided in this Agreement, only those Albany employees working directly on
the Program shall have access to the Lilly Licensed Technology and/or Program
Technology and only those Albany employees working directly on the Program, as
well as management, security, maintenance personnel, and other personnel that
are approved by both Program Chairs shall have access to the facilities in which
the Program is being conducted.
ARTICLE III
-----------
Program
-------
Section 3.1 Goals and Objectives. Albany agrees to re-synthesize the
--------------------
Lilly Combinatorial Library under the terms and conditions of this Agreement.
Promptly upon execution of this Agreement, and from time to time during the term
of the Program as described in Article IV, Lilly will commence a training
program of representatives of the FTE's to be assigned by Albany to the Program.
Re-synthesis of the Lilly Combinatorial Library shall be completed when Albany
*** the Lilly
<PAGE>
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION. THE LOCATIONS
OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH ASTERISKS.
-8-
Combinatorial Library meeting the qualitative standards set forth in accordance
with Section 3.10, and the Lilly Combinatorial Library has been delivered to
Lilly pursuant to Section 3.11.
Section 3.2 Program Managers. The Parties shall each designate one (1)
----------------
Program Manager. The Program Managers shall have the responsibility for the day-
to-day management of activities of the Parties under the Program. Each Party
shall make its initial designation of its representation not later than thirty
(30) days after execution of this Agreement.
Section 3.3 Program Chairs. Each Party shall designate one (1)
--------------
representative as a Program Chair. The initial Program Chair of Lilly shall be
***, and the initial Program Chair of Albany shall be Thomas E. D'Ambra, Ph.D.
The Program Chairs shall meet no less frequently than once each calendar
quarter, and shall meet at such other times as deemed appropriate by the Program
Chairs. Each Party may change its Program Chair at any time upon written notice
to the other Party. The location of the Program Chairs' meetings shall alternate
between New York and North Carolina, or as otherwise mutually agreed. The
Program Chairs may conduct meetings by telephone or video-conference. If a
Program Chair of a Party is unable to attend a meeting, such Party may designate
an alternate to attend such meeting in place of the missing Program Chair. The
Program Chairs shall be responsible for coordinating and reviewing the
activities of the Parties under the Program. The Program Chairs shall be
informed of the specific individuals who will work on the Program. The Program
Chairs shall also attempt to settle any disputes that may arise between the
Parties. The unanimous vote of the Program Chairs shall be required to take any
action. The Program Chairs shall refer any issue that it is unable to resolve to
the Executive Director of Lilly's Research Technologies for resolution.
Section 3.4 Albany's Commitment to the Program. Albany shall commit ***
----------------------------------
(***) FTEs to work on the Program. The ratio of Ph.D. to non-Ph.D. FTEs
committed to the Program by Albany shall be ***. The number of FTEs working on
the Program may be increased at the request of Lilly for additional compensation
which shall equal the pro-rata equivalent of the compensation provided in
Section 6.1.2 and which amount shall be adjusted by the CPI in accordance with
Section 6.1.2.
Section 3.5 Diligence. Albany shall use reasonable efforts in pursuing
---------
and conducting research under the Program. Albany shall use reasonable efforts
to carry out all work done in
<PAGE>
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connection with the Program in compliance with any federal, state or local laws,
regulations and guidelines governing the conduct of such work.
Section 3.6 Reports. Within thirty (30) days of the end of each six (6)
-------
month period during the term of the Agreement, Albany shall provide Lilly with a
written summary of Albany's Program activities, the results thereof, and any
material issue presented during the conduct of such Program activities during
such six (6) month period. The reports shall contain a description on the size,
characteristics, and quality of the Lilly Combinatorial Library, and any Program
Technology developed in such period.
Section 3.7 Safety and Environmental. In carrying out its
------------------------
responsibilities under this Agreement, Albany agrees to assure that the services
are conducted in compliance with any applicable Lilly protocols and/or
specifications of which Albany is reasonably advised in a timely manner and in
compliance with all applicable laws, rules, and regulations, including, but not
limited to, the U.S. Food, Drug, and Cosmetic Act and the regulations
promulgated pursuant thereto. Also included is compliance with all relevant
environmental regulations in force at the U.S. federal, state, and local levels.
Section 3.8 Work Standards. Albany represents and warrants that it will
--------------
render the services hereunder in accordance with prevailing high professional
standards and will make all reasonable efforts to produce consistently high
levels of accuracy and expertise and to meet timetables set forth under this
Agreement for completion of services. Albany further represents and warrants
that personnel assigned to perform services under this Agreement shall have the
skills necessary to efficiently perform such services and shall produce
chemicals, data, and/or reports, as the case may be, in a form and of a quality
suitable to Lilly, provided that the re-synthesized Lilly Combinatorial Library
provided by Albany hereunder shall meet the standards set pursuant to Section
3.10.
Section 3.9 Delay Notification. Albany will endeavor with all reasonable
------------------
effort to conform to its obligations identified herein. Although no anticipated
delays or limits in performing any activities under the Program are expected, if
such delays or limits are encountered, Albany will notify Lilly accordingly.
Lilly agrees to accommodate any reasonable change in timetables as a result of
such delays, provided the activities under the Program have been proceeding to
Lilly's satisfaction.
<PAGE>
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION. THE LOCATIONS
OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH ASTERISKS.
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Section 3.10 Library Standards. Promptly after the Effective Date, the
-----------------
Lilly Program Manager will work with the Albany Program Manager to develop
analytical quality standards from the Lilly Combinatorial Library to be
synthesized pursuant to this Agreement. Such standards shall be reviewed by the
Program Chairs and approved by Lilly. Once established, such analytical quality
standards shall be annexed to this Agreement as Exhibit B.
Section 3.11 Delivery. Albany shall deliver the re-synthesized Lilly
--------
Combinatorial Library, or portions thereof, to Lilly's Sphinx facility in
Durham, North Carolina upon completion as agreed by the Program Chairs. Shipment
of the Lilly Combinatorial Library or portions thereof shall be made in
accordance with both Department of Transportation and Lilly standard procedures.
Lilly shall disclose its standards to Albany prior to the shipment of the Lilly
Combinatorial Library or any portion thereof to Lilly.
ARTICLE IV
----------
Disclosure
----------
Section 4.1 Disclosure of Lilly Licensed Technology. Promptly after the
---------------------------------------
Effective Date, Lilly will commence a training program of representatives of the
FTE's assigned by Albany to the Program. Under such training program, Lilly
shall disclose the Lilly Licensed Technology to Albany. Such representatives
shall be responsible for disclosing the Lilly Licensed Technology to the other
Albany FTEs that will work on the Program. Lilly shall only be required to
disclose the Lilly Licensed Technology to Albany that Lilly deems necessary or
useful for Albany to fulfill its obligations under this Agreement, such
disclosure being in a manner to enable the assigned Albany FTE's to perform
***. Such disclosure may include electronic or written materials provided by
Lilly.
Section 4.2 Chemical Materials and Information. Lilly will provide
----------------------------------
Albany with the structure of the compounds contained in the Lilly Combinatorial
Library as well as the structure of the Lilly Scaffolds. Lilly may, at its
option, provide to Albany sufficient amounts of the Lilly
<PAGE>
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION. THE LOCATIONS
OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH ASTERISKS.
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Scaffolds necessary for Albany to resynthesize the Lilly Combinatorial Library.
Albany shall not permit any Third Party to observe or have access to any
compound in the Lilly Combinatorial Library, any Lilly Scaffold, or any
information regarding the structures of any such compounds or Lilly Scaffolds.
Section 4.3 Hardware. Lilly shall disclose to Albany ***
--------
used by Lilly in the synthesis, purification and analysis of the Lilly
Combinatorial Library, including preferred suppliers of such hardware that are
used by Lilly. Albany may purchase such equipment from Lilly, if available, or
the preferred suppliers from which Lilly purchased such equipment. If Albany
purchases such equipment from Lilly, such purchase shall be at ***, and Albany
shall pay Lilly for the equipment within fifteen (15) days of receipt of an
invoice from Lilly for such equipment.
Section 4.4 Further Disclosure. The Parties shall designate individuals
------------------
to participate in informal meetings or to make informal visits as often as once
per month, or as otherwise agreed to by the Parties (the time and place of each
such meeting or visit to be determined by mutual Agreement of the Parties).
Albany shall allow reasonable access to their facilities by Lilly
representatives to observe work done and to be conducted under the Program
during normal business hours on reasonable advance notice. Each Party shall be
responsible for all of its expenses in connection with such visits.
Section 4.5 Site visits by Lilly. During the term of the Program, and at
--------------------
the request of Albany, Lilly shall dispatch at least one (1) qualified Lilly
representative to Albany for a period of up to *** (***) working days, to
provide technical assistance in connection with the synthesis of the Lilly
Combinatorial Library. Such Lilly representative granted access to Albany's
facility shall be bound by the reasonable rules and regulations of Albany and
may be prohibited from or have limited access to certain areas within Albany's
facility. Lilly shall be solely responsible for all expenses incurred by such
Lilly representative in connection with such visit.
<PAGE>
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION. THE LOCATIONS
OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH ASTERISKS.
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ARTICLE V
---------
Grant of Rights
---------------
Section 5.1 License to Albany.
-----------------
5.1.1. Subject to the terms and conditions of this Agreement, Lilly
hereby grants to Albany during the term of the Program a non-exclusive license,
without the right to grant sublicenses, under Lilly Licensed Technology and
Lilly's interest in the Program Technology to re-synthesize the Lilly
Combinatorial Library in accordance with this Agreement.
5.1.2. Subject to the terms and conditions of this Agreement, Lilly
hereby grants to Albany after the term of the Program a non-exclusive license,
with the right to grant sublicenses, under Lilly Licensed Technology and Lilly's
interest in the Program Technology for any purpose.
5.1.3. All licenses granted by Lilly to Albany under this Agreement
specifically exclude any right or license to make, use, or sell Lilly Scaffolds
or the Lilly Combinatorial Library, in whole or in part.
Section 5.2 License to Lilly. Subject to the terms and conditions of this
----------------
Agreement, Albany hereby grants to Lilly, and its Affiliates, a royalty free,
non-exclusive worldwide license, with the right to grant sublicenses, under
Albany's interest in the Program Technology to utilize the Program Technology
for any purpose.
Section 5.3 Lilly Options.
-------------
5.3.1. During the term of the Program and for a period of *** (***)
years after the termination or expiration of the Program, Lilly shall have the
option to have Albany perform additional Combinatorial Chemistry synthesis
projects ("Additional Projects"). In the event Lilly desires to exercise such an
option, Lilly shall notify Albany in writing and the Parties shall promptly
negotiate an agreement covering each such Additional Project, which agreement
shall contain terms that are substantially similar to this Agreement. Such
agreements shall provide that there shall be *** for each such Additional
Project, and that the FTE Rate for each such Additional Project to be paid by
Lilly under such agreements shall be *** per Albany FTE devoted to such
Additional Project. Such FTE Rate will be adjusted according to the CPI-U in
1999.
<PAGE>
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION. THE LOCATIONS
OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH ASTERISKS.
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5.3.2. During the term of the Program and for a period of *** (***)
years after the termination or expiration of the Program, Lilly shall have the
option to have Albany perform SAR Projects. In the event Lilly desires to
exercise such an option, Lilly shall notify Albany in writing and the Parties
shall promptly negotiate an agreement covering each such SAR Project, which
agreement shall contain terms that are substantially similar to this Agreement.
Such agreements shall also provide that there shall be *** for each such SAR
Project, and that the FTE Rate to be paid by Lilly for each SAR Project shall be
an average of *** per Albany FTE devoted to such SAR Project (***). Such FTE
Rate shall be determined on an SAR Project-by-SAR Project basis and adjusted in
accordance with the Ph.D. to non-Ph.D. committed to each such SAR Project. Such
FTE Rate will be adjusted according to the CPI-U in 1999.
ARTICLE VI
------- --
Payments
--------
Section 6.1 Payments to Albany.
------------------
6.1.1. As partial consideration for Albany's performance of its
obligations hereunder, Lilly shall pay to Albany ***, which amount shall be used
by Albany for expenses incurred under the Program including but not limited to:
***. Such payment shall be made by Lilly within thirty (30) days after the
Effective Date.
6.1.2. As partial consideration for Albany's performance of its
obligations hereunder, Lilly hereby agrees to pay to Albany as described in
Section 6.1.3, and per FTE committed to the Program of *** (the "FTE Rate")
commencing on January 1, 1998 and continuing each quarter thereafter until the
expiration or termination of the Program. On January 1, 1999 and each
January 1 thereafter
<PAGE>
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION, THE LOCATIONS
OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH ASTERISKS.
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during the term of the Program, the FTE Rate shall be adjusted by an amount
equal to the percentage change, if any, in the CPI-U.
6.1.3. During the term of the Program, Albany shall submit to Lilly
signed invoices identifying the number of FTE's, and the monthly equivalent of
time incurred, at the completion of each quarter's efforts. Such invoices shall
be paid by Lilly within thirty (30) days of receipt and shall be in the form of
a Lilly check or wire transfer to the following account of Albany Molecular
Research, Inc.; ***; ABA # ***; Account Number ***. Lilly shall have the right
to have Albany's independent certified accountants, which accountants shall be
reasonably acceptable to Lilly, audit financial records of Albany pertaining to
this Agreement not more than once a calendar year.
6.1.4. The Parties acknowledge that payments made by Lilly pursuant
to this Article are for contract research and development expenses, and agree
that any and all tax credits or deductions for such contract research and
development expenses arising from such payments shall be claimed by Lilly.
Section 6.2 Payments to Lilly.
-------- -- -----
6.2.1. Cash Compensation Received by Albany. As partial consideration
---- ------------ -------- ---------
for Lilly's performance of its obligations hereunder, Albany hereby agrees to
pay to Lilly, all Cash Compensation Albany shall receive under any agreement
entered into with a Third Party, for the use of Lilly Licensed Technology or the
Program Technology within *** (***) years of expiration or termination of this
Program as follows: ***. Albany FTE rate charges to any Third Party on any such
projects shall not exceed ***. In the event that Albany enters into such an
Agreement that does not provide for Cash Compensation, Albany shall pay Lilly
*** percent (***%) of the gross revenues received by Albany under such Agreement
up to a total of ***. Such Cash Compensation payments to Lilly shall be paid
within thirty (30) days after receipt of such Cash Compensation by Albany.
6.2.2. Royalty. In addition to the foregoing, with respect to each
-------
calendar quarter, Albany shall pay to Lilly a running royalty equal to ***
percent (***%) of Net Sales of any
<PAGE>
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION. THE LOCATIONS
OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH ASTERISKS.
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Products comprising a compound discovered or developed by Albany using Lilly
Licensed Technology or Program Technology that are sold by Albany and/or its
Affiliates or its sublicensees of such Product.
6.2.3. Length of Royalty Payments. The royalties payable to Lilly
------ -- ----------------
under Section 6.2.2 of this Agreement shall be paid on a country-by-country
basis from the date of first commercial sale of each such Product in a
particular country until *** (***) years thereafter.
6.2.4. Royalty Reports. Albany shall deliver to Lilly within ninety
---------------
(90) days after the end of each calendar quarter a written accounting of
Albany's and its Affiliates sales and other consideration received subject to
royalty payment due to Lilly for such quarter. Such reports shall contain (i)
the Net Sales by Product and royalty due on a country-by-country basis for the
quarter reporting period, and (ii) a worldwide sales forecast for the subsequent
five quarters following the current royalty reporting quarter. When Albany
delivers the accounting to Lilly, Albany shall also deliver all royalty payments
due to Lilly for the calendar quarter. Such royalty reports shall be sent to Eli
Lilly and Company, Attention: *** or other address that may be designated by
Lilly.
6.2.5. Wire Transfer of Funds. All payments made by Albany to Lilly
---- -------- -- -----
under this Article VI shall be made by Federal Reserve electronic wire transfer
credit in immediately available funds to Lilly's designated bank account.
6.2.6. Audits. Albany and its Affiliate's shall keep, and cause any
------
sublicensee to keep, accurate records in sufficient detail to enable the amounts
due to Lilly to be determined. Within 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 have independent certified public accountants,
selected by Lilly and reasonably acceptable to Albany, inspect Albany's, and its
Affiliate's, records for any of the two (2) preceding years for the purpose of
determining the accuracy of royalty payments. The independent certified
accountants shall keep confidential any information obtained during such
inspection and shall reported to Lilly only the amounts of royalties due and
payable. If Albany has underpaid a royalty amount due under this Agreement by
more than *** percent (***%), Albany shall promptly pay the appropriate amount
to Lilly and shall also reimburse Lilly for the cost of such audit.
<PAGE>
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION. THE LOCATIONS
OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH ASTERISKS.
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6.2.7. Exchange Rates. All payments to be made by Albany to Lilly
--------------
under this Agreement shall be made in United States dollars. In the case of
sales outside the United States, the rate of exchange to be used in computing
the amount of currency equivalent in United States dollars due Lilly shall be
made using Albany's then current standard exchange rate methodology, which
methodology shall be in conformity with generally accepted accounting principles
and approved and reviewed by Albany's independent certified public accountants.
6.2.8. Late Payments. Any amounts not paid by either Party when due
-------------
under this Agreement shall be subject to interest from and including the date
payment is due through and including the date upon which the non-paying Party
has collected immediately available funds in an account designated by such non-
paying Party at a rate equal to the sum of *** percent (***%) plus the prime
rate of interest quoted in the "Money Rates" section of The Wall Street Journal,
calculated daily on the basis of a 360-day year, or similar agreed upon
reputable data source.
Section 6.3 Taxes. All taxes which Lilly is required to pay with respect to
-----
the payments made under this Agreement shall be paid by Lilly. If laws or
regulations require withholding taxes, the taxes will be deducted prior to
remittance of the payments to Lilly and will be paid by Albany to the
appropriate government tax authority. Proof of payment shall then be provided
to Lilly either within ninety (90) days after each payment or once each year for
the prior calendar year within ninety (90) days after December 31.
Section 6.4 Reports. Albany shall provide Lilly with semi-annual reports
-------
starting one (1) year after the termination or expiration of the Program
relating to compounds discovered or developed by Albany, its Affiliates or its
sublicensees using the Lilly Licensed Technology or the Program Technology. Such
reports shall also include a summary of results of any research conducted
pursuant to any agreement with a Third Party entered into by Albany pursuant to
Section 2.4, but only to the extent that such reports are not in breach of any
obligation of confidentiality to such Third Party.
<PAGE>
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION. THE LOCATIONS
OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH ASTERISKS.
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ARTICLE VII
------- ---
Patent Ownership, Protection, Validity And Related Matters
----------------------------------------------------------
Section 7.1 Ownership. Albany shall own all inventions within the scope of
---------
the Program made solely by its employees. All inventions made jointly by
employees of Lilly and employees of Albany shall be owned jointly by Albany and
Lilly. Lilly shall own all inventions within the scope of the Program made
solely by its employees.
Section 7.2 Patentable Inventions. The Parties hereby agree that all
---------------------
Program Know-How shall be ***. If a patentable invention is conceived in the
course of the Program, Lilly and Albany shall discuss that invention and the
desirability of filing a United States patent application covering the
invention, as well as any foreign counterparts. Lilly shall make the final
decision on whether a patent application should be filed on such invention. In
the event Lilly determines that a patent application should be filed on such
invention, Albany shall file and prosecute the application. If an invention is
made jointly pursuant to 35 U.S.C. (S)116, Lilly shall make the decision on
whether a patent application covering such joint invention should be filed. In
the event Lilly determines that a patent application should be filed on such
joint invention, Lilly shall file and prosecute the application. All patent
applications and patents covering any invention made under the Program shall be
owned by the Parties or Party, as the case may be, that own(s) said invention.
Section 7.3 Review and Comment. Each Party shall provide the Program Chairs
------------------
with a copy of any patent application which first discloses any specific Program
Know-How prior to filing the first of such applications in any jurisdiction for
review and comment by the Program Chairs or its designees. The Program Chairs
and/or its designees shall maintain any such patent application in confidence,
pursuant to Article VIII.
Section 7.4 Retention of Rights. Each Party shall continue to own and
-------------------
retain proprietary rights to its Know-How and Patent Rights which are licensed
or disclosed under this Agreement except as specifically provided herein.
Section 7.5 Prosecution and Maintenance. Each Party agrees to prosecute and
---------------------------
maintain the Program Patent Rights owned by it, and to prosecute any
interference or opposition
<PAGE>
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proceedings with respect to such Program Patent Rights. Patent Rights jointly
owned by the Parties shall be prosecuted and maintained, including the
prosecution of any interference or opposition proceedings with respect thereto,
by Lilly. The Party initially responsible for such prosecution and maintenance
(the "Initial Responsible Party") shall give notice to the other Party of any
decision to cease such prosecution and maintenance and, in such case, shall
permit the other Party at its sole discretion to continue prosecution or
maintenance. If the other Party elects to continue prosecution or maintenance,
the Initial Responsible Party shall execute such documents and perform such acts
as may be reasonably necessary for the other Party to continue prosecution or
maintenance.
Section 7.6 Third Party Infringement. Albany and Lilly each agrees to take
------------------------
reasonable actions to protect the Program Patent Rights from infringement and to
protect the Program Know-How from unauthorized use, when, from its own knowledge
or upon notice by the other Party, the Party with knowledge or receiving notice
becomes aware of the reasonable probability that such infringement or
unauthorized use exists.
Section 7.7 Costs and Expenses. Each Party shall bear its own costs and
------------------
expenses in filing, prosecuting, maintaining and extending Program Patent
Rights.
Section 7.8 Third Party Infringement. If any Program Patent Right is
------------------------
infringed by a Third Party, the Party to this Agreement first having knowledge
of such infringement shall promptly notify the other in writing, which notice
shall set forth the facts of such infringement in reasonable detail. Albany
shall have the primary right, but not the obligation, to institute, prosecute,
and control any action or proceeding with respect to such infringement of its
Program Patent Rights, by counsel of its own choice, and Lilly shall have the
right, at its own expense, to be represented in such action by counsel of its
own choice. Lilly shall have the primary right, but not the obligation, to
institute, prosecute, and control any action or proceeding with respect to such
infringement of the jointly owned Program Patent Rights, by counsel of its own
choice, and Albany shall have the right, at its own expense, to be represented
in such action by counsel of its own choice. If the Party having the primary
right to institute, prosecute, and control any action or proceeding with respect
to such infringement of a Program Patent Rights (the "Initial Controlling
Party") shall fail to bring such action or proceeding within a period of one
hundred twenty (120) days after receiving written notice from the other Party or
otherwise having knowledge of such
<PAGE>
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION. THE LOCATIONS
OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH ASTERISKS.
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infringement, the other Party shall have the right to bring and control any such
action by counsel of it's own choice, and the Initial Controlling Party shall
have the right, at its own expense, to be represented in any such action by
counsel of its own choice. If one Party brings any such action or proceeding,
the other Party agrees, if necessary, to be joined as a party plaintiff and to
give the first Party reasonable assistance and authority to file and to
prosecute such suit. The costs and expenses of all suits brought by either Party
under this Section 7.8 shall be reimbursed on a pro-rata basis to both parties
out of any damages or other monetary awards recovered therein in favor of Albany
and/or Lilly. Any remaining damages shall then belong to the Party bringing and
prosecuting such action or proceeding. No settlement or consent judgment or
other voluntary final disposition of a suit under this Section 7.8 may be
entered into without the joint consent of Albany and Lilly (which consent shall
not be withheld unreasonably).
ARTICLE VIII
------------
Confidentiality
---------------
Section 8.1 Confidentiality. During the term of this Agreement and for a
---------------
period of *** (***) years thereafter, each Party agrees, for itself, its
employees, agents, consultants, assignees, Affiliates, sublicensees and clinical
investigators that it and each such person or entity will maintain in confidence
all Confidential Information disclosed in connection with this Agreement and
shall obtain written confidentiality agreements from each such person or entity.
Neither Party nor its employees, agents, consultants, assignees, Affiliates,
sublicensees and clinical investigators shall use or disclose such Confidential
Information except as permitted under this Agreement. Each Party shall promptly
notify the other upon discovery of any unauthorized use or disclosure of the
Confidential Information. Confidential Information shall not include any
information which:
a) the recipient can demonstrate to the reasonable satisfaction of
the disclosing Party was already known to the recipient, other
than under an obligation of confidentiality, at the time of
disclosure;
b) was generally available to the public or otherwise part of the
public domain at the time of its disclosure;
<PAGE>
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c) becomes generally available to the public or otherwise part of the
public domain after its disclosure and other than through any act
or omission of the recipient;
d) was disclosed to the recipient, other than under an obligation of
confidentiality, by a Third Party who had no obligation not to
disclose such information to others; or
e) the recipient can demonstrate by contemporaneous written
documentation to the reasonable satisfaction of the disclosing
Party as independently developed by the recipient without
reference to the disclosure.
Section 8.2 Employee Obligations. Albany and Lilly each agree that it shall
--------------------
provide Know-How and other Confidential Information received from the other
Party only to its employees, consultants and advisors who have a need to know
and have an obligation to treat such information and materials as confidential.
On an annual basis, Albany agrees to explicitly counsel its consultants and
advisors of the implications arising from such obligations.
Section 8.3 Material Breach. Albany acknowledges that Lilly's Confidential
---------------
Information, including the Lilly Licensed Technology, is of a special and unique
character which gives it peculiar value and that consequently any wrongful use
or disclosure of such Confidential Information will cause injury not readily
measurable in monetary damages, and therefore irreparable. Such wrongful use or
disclosure of such Confidential Information shall constitute a breach of this
Agreement and Lilly shall have the right to terminate this Agreement in
accordance with Article IX and all licenses granted to Albany under Section 5.1
shall automatically terminate upon such termination by Lilly.
Section 8.4 Authorized Disclosure. Each Party may disclose the Confidential
---------------------
Information to the extent such disclosure is reasonably necessary in filing or
prosecuting patent applications as provided hereunder, prosecuting or defending
litigation or complying with applicable governmental regulations, including
those requiring promulgation of periodic reports to shareholders, provided that
if such Party is required to make any such disclosure of the Confidential
Information it shall, give reasonable advance notice to the other Party of such
disclosure requirement and, except to the extent inappropriate in the case of
patent applications, use diligent efforts to secure confidential treatment of
such information required to be disclosed.
<PAGE>
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION. THE LOCATIONS
OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH ASTERISKS.
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In addition, each Party may disclose such Confidential Information to its
Affiliates and sublicensees. In connection with any such disclosure each Party
shall use diligent efforts to secure confidential treatment of such information
and each Party shall be responsible for any prohibited disclosure by any such
person or entity. Any copy of this Agreement to be filed with the Securities and
Exchange Commission or any other governmental body shall be redacted to the
satisfaction of both Parties prior to such filing.
Section 8.5 Press Releases and Third Party Communications. After execution
---------------------------------------------
hereof and during the term of this Agreement, neither Party shall issue a press
release relating to this Agreement without first obtaining the approval of the
other, such approval not to be unreasonably withheld. The Parties will jointly
develop a strategy for responding to Third Party inquiries related to this
Agreement. During the term of this Agreement, neither Party shall approve or
make any confidential or non-confidential disclosures of the Lilly Licensed
Technology, Program Technology or any other Confidential Information to any
Third Party without first securing the written approval of the other Party,
which approval shall not be unreasonably withheld. Should the two (2) Parties
not be in mutual agreement, the Lilly shall make the final determination.
Section 8.6 Publications. Albany shall not publish or otherwise
------------
disclose any Lilly Licensed Technology or Program Technology without Lilly's
written permission.
ARTICLE IX
----------
Term, Termination Rights, And Obligations Upon Termination
----------------------------------------------------------
Section 9.1 Term. The term of this Agreement shall begin on the Effective
----
Date and continue until the completion by Albany of the re-synthesis of the
Lilly Combinatorial Library. The Parties agree that the goal for completion of
the resynthesis of the Lilly Combinatorial Library shall be *** (***) years from
the Effective Date. In the event that Albany has not delivered the re-
synthesized Lilly Combinatorial Library to Lilly within *** (***) years of the
Effective Date, Lilly may, at its option, terminate this Agreement. If Lilly
does not terminate the Agreement at such time, this Agreement shall continue
under the same terms and conditions specified herein.
<PAGE>
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION. THE LOCATIONS
OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH ASTERISKS.
-22-
Section 9.2 Permissive Early Termination. Lilly may terminate this
----------------------------
Agreement upon *** (***) months advanced written notice. In the event of
termination pursuant to the is Section 9.2, Lilly shall have the right to apply
*** percent (***%) of the payments to be made to Albany pursuant to
Sections 6.1.2 and 6.1.3 for work conducted during the *** (***) month period
after receipt of such written notice by Albany under this Section 9.2 to fund:
(a) an existing Additional Project or SAR Project or (b) an Additional Project
or SA Project to be agreed upon by the Parties after the date of such written
notification to Albany under this Section 9.2.
Section 9.3 Termination for Breach. If either Party shall be in default of
----------------------
any of its obligations under this Agreement and shall fail to remedy such
default within sixty (60) days after receipt of written notice of such default,
this Agreement shall terminate at the end of such sixty (60) day period.
Section 9.4 Effect of Termination or Expiration. Termination or expiration
-----------------------------------
of this Agreement shall not affect the rights and obligations of the Parties ac-
rued prior to termination or expiration, including the obligations of
confidentiality under Article VIII, provided however, that in case of a
termination for breach pursuant to Section 9.3 the licenses and options granted
under Article V shall: (i) continue for the non-breaching Party and (b)
terminate for the to the breaching Party.
ARTICLE X
---------
Miscellaneous Provisions
------------------------
Section 10.1 Representation of Authority. Albany and Lilly each represents
---------------------------
and warrants to the other that as of the Effective Date it has full right, power
and authority to enter into this Agreement.
Section 10.2 Employee Obligations. Each Party represents and warrants that
--------------------
all of its employees, officers, and consultants have executed agreements or have
existing obligations under law requiring, in the case of employees and officers,
assignment to such Party of all inventions made during the course of and as
the result of their association with such Party and obligating the individual to
maintain as confidential such Party's confidential information as well
<PAGE>
-23-
as confidential information of a Third Party which such Party may receive, to
the extent required to support such Party's obligations under this Agreement.
Section 10.3 Further Assurances. Each Party hereto agrees to execute,
------------------
acknowledge and deliver such further instruments, and to do all such other acts,
as may be necessary or appropriate in order to carry out the purposes and intent
of this Agreement.
Section 10.4 Disclosure of Agreement. Except as required by law, neither
-----------------------
Albany nor Lilly shall release any information to any Third Party with respect
to the existence and terms of this Agreement without the prior written consent
of the other. This prohibition includes, but is not limited, to any press
releases, educational and scientific conferences, promotional materials,
governmental filings, and discussions with public officials and the media.
Section 10.5 No Agency. It is understood and agreed that nothing in this
---------
Agreement shall be construed as authorization for either Albany or Lilly to act
as agent for the other. Lilly shall not incur any liability for any act or
failure to act by employees of Albany. Albany shall not incur any liability for
any act or failure to act by employees of Lilly.
Section 10.6 Force Majeure. The 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 Parties. 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, voluntary
or involuntary compliance with any regulation, law or order of any government,
war, 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.
Section 10.7 Amendment. This Agreement may not be amended, supplemented, or
---------
otherwise modified except by an instrument in writing signed by the Parties.
Section 10.8 Notices and Reports. All notices required by this Agreement
-------------------
shall be in writing. All notices and reports shall be deemed given if delivered
personally or by registered or certified mail, return receipt requested and
postage prepaid or sent by express courier service, to
<PAGE>
-24-
the Parties at the following addresses or such other addresses as may be
designated in writing by the respective Parties:
To Lilly: Eli Lilly and Company/Sphinx Pharmaceutical
4615 University Drive
Durham, NC 27707
Attn: Vice President of Research-Sphinx
Copy to: General Counsel
To Albany: Albany Molecular Research, Inc.
Corporate Circle
Albany, NY 12203-5154
Attn: Executive Vice President and Chief Financial Officer
Section 10.9 Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Indiana, excluding any
choice of law rules which may direct the application of the law of any other
jurisdiction. Questions effecting the construction and effect of any Program
Patent Rights shall be determined by the laws of the country in which the
Program Patent Right has been applied for and granted.
Section 10.10 Assignment. The Parties may not assign their rights and
----------
obligations under this agreement without the prior written consent of the
others, except in connection with any merger, reorganization or sale of all or
substantially all of its assets to which this Agreement relates. This Agreement
shall be binding upon and shall inure to the benefit of the successors and
permitted assigns of the Parties.
Section 10.11 Headings. The captions or headings of the Sections or other
--------
subdivisions hereof are inserted only as a matter of convenience or for
reference and shall have no effect on the meaning of the provisions hereof.
Section 10.12 Severance of Clauses. 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.
<PAGE>
-25-
Section 10.13 No Waiver. The waiver of a breach hereunder may be effected
---------
only by a writing signed by the waiving Party and shall not constitute a waiver
of any other breach.
Section 10.14 Entire Agreement. The Agreement constitutes the entire
----------------
Agreement of the Parties relating to the subject matter.
Section 10.15 Counterparts. The Agreement has been executed in two (2)
------------
counterparts, both of which shall constitute an original, but which together
shall constitute the same instrument.
Section 10.16 Surviving Rights. Termination, expiration, or cancellation
----------------
of this Agreement by any Party shall not relieve the Parties of any rights or
obligations accrued hereunder prior to such termination, expiration, or
cancellation.
IN WITNESS WHEREOF, each of the Parties hereto, through their
duly-authorized representative, has executed this Agreement on the day and year
first above written.
ELI LILLY AND COMPANY ALBANY MOLECULAR RESEARCH, INC.
By: /s/ August M. Watanabe By: /s/ Thomas D'Ambra, Ph.D.
--------------------------- ------------------------------
August M. Watanabe Name: Thomas E. D'Ambra, Ph.D.
Executive Vice President ---------------------------
Title: President
---------------------------
Date: December 15, 1997 Date: December 16, 1997
------------------------- ----------------------------
<PAGE>
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION. THE LOCATIONS
OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH ASTERISKS.
-26-
EXHIBIT A
---------
LILLY STRATEGIC FOCUS AREAS
***
<PAGE>
-27-
EXHIBIT B
---------
LIBRARY STANDARDS
(to be annexed to this Agreement in accordance with Section 3.10)
[No Annex Attached]
