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Exhibit 10.17(b)
Confidentiality Requested by
Emisphere Technologies, Inc.
SEC File No. 1-10615
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. SUCH PORTIONS ARE DESIGNATED "[***]."
This Agreement is made as of the 7th day of April, 1998
BY AND BETWEEN
Eli Lilly & Company
An Indiana Corporation with offices at Lilly Corporate Center, Indianapolis,
Indiana 46285
Emisphere Technologies, Inc.
A Delaware Corporation with offices at 15 Skyline Drive, Hawthorne, New York
10532
LICENSE AGREEMENT
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Confidentiality Requested by
Emisphere Technologies, Inc.
SEC File No. 1-10615
TABLE OF CONTENTS
Section Page
1 DEFINITIONS ................................................ 2
2 GRANT OF RIGHTS ............................................ 13
3 IMPROVEMENTS ............................................... 14
4 MANUFACTURING .............................................. 15
5 RESEARCH AND DEVELOPMENT ................................... 16
6 SUPPLY OF PRODUCT(S) ....................................... 17
7 EXPLOITATION OF LICENSED TECHNOLOGY ........................ 17
8 FINANCIAL PROVISIONS ....................................... 18
9 RIGHT OF AUDIT AND INSPECTION .............................. 20
10 PATENTS .................................................... 21
11 CONFIDENTIAL INFORMATION ................................... 25
12 TERM OF AGREEMENT .......................................... 27
13 WARRANTIES/INDEMNITIES ..................................... 30
14 REGULATORY APPROVALS ....................................... 35
15 INSURANCE .................................................. 36
16 IMPOSSIBILITY OF PERFORMANCE - FORCE MAJEURE ............... 36
17 SETTLEMENT OF DISPUTES; PROPER LAW ......................... 36
18 ASSIGNMENT ................................................. 37
19 NOTICES .................................................... 37
20 MISCELLANEOUS CLAUSES ...................................... 38
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Confidentiality Requested by
Emisphere Technologies, Inc.
SEC File No. 1-10615
WHEREAS
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A. Emisphere is beneficially entitled to the use of various patents,
including the Emisphere Patents which have been granted or are pending
under various international conventions in relation to the Emisphere
Technology.
B. Emisphere is knowledgeable in the discovery and use of compounds which can
interact with therapeutic agents in a manner to improve the transport of
such therapeutic agents through biological membranes.
C. Lilly is knowledgeable in the research, development, manufacture and
marketing of pharmaceutical formulations. Lilly owns and possesses
patented therapeutic agents and other technologies.
D. Emisphere and Lilly have previously entered into a Research Collaboration
and Option Agreement regarding the Emisphere Technology.
E. Lilly desires to enter into this Agreement with Emisphere so as to (a)
permit Lilly to utilize the Emisphere Patents and the Emisphere Know-How
in the research, development, manufacture, distribution and sale of the
Products and other products in the Field and (b) to permit Lilly to
utilize the Emisphere Program Technology in combination with the Lilly
Program Technology in connection with (i) research and development work
conducted by the Parties and (ii) Lilly's manufacture and supply of
Products and other related components.
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Confidentiality Requested by
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SEC File No. 1-10615
NOW IT IS HEREBY AGREED AS FOLLOWS:
1. DEFINITIONS
1.1 In this present Agreement, including the Recitals and Appendix, the
following definitions shall prevail unless the context otherwise requires:
"Acquired" means a transfer of intellectual property or information
from an Independent Third Party to Emisphere or Lilly, as
the case may be, to the extent to which there are no
obligations or restrictions as to confidentiality in respect
of that information which prohibit disclosure or use by
Lilly or Emisphere, as appropriate;
"Activation Letter" is the notification document (a copy of which is
attached as Schedule II hereto) received by Emisphere from a
senior Lilly officer or representative with appropriate
legal responsibility to render this Agreement binding on
Lilly with respect to a single Compound and a single Route
of Administration, both identified therein;
"Affiliate" means any corporation or business entity which Lilly or
Emisphere, directly or indirectly, owns or controls, is
under common ownership with, or which owns one of the
Parties to this Agreement. Ownership or control shall exist
when an entity owns more than 50% of the capital or business
assets of another entity; has the power to exercise more
than 50% of the voting rights or to appoint more than 50% of
the Board of Directors of another entity; or has the right
to control the affairs of another entity. It being
understood that the direct or indirect ownership of a lesser
percentage of such shares shall not necessarily preclude the
existence of control;
"Agreement" means this license agreement (which expression shall be
deemed to include the Recitals, Schedules and Appendix
hereto, and any other document(s) incorporated herein by
reference);
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Confidentiality Requested by
Emisphere Technologies, Inc.
SEC File No. 1-10615
"Carriers" means various agents that are used to facilitate transport
through membranes via a number of different Routes of
Administration to deliver the Compounds utilizing the
Emisphere Technology and/or the Emisphere Program
Technology. These agents can include, but are not limited to
proteins, peptides and other chemicals;
"Compound(s)" means the therapeutic agent specified by Lilly in the
Activation Letter (in this Agreement, the human growth
hormone molecule and all active fragments, analogs, HGH-like
peptides with primary function similar to the HGH molecule
(not to include secretagogues) and mimetics);
"Cost" means, depending upon the context, one of the following:
In the case of research and development, Cost will be
calculated in accordance with Emisphere's internal
accounting system, will exclude any element of corporate
overhead and will be in accordance with Generally Accepted
Accounting Principles ("GAAP").
In the case of materials purchased from an Independent Third
Party, Cost will comprise the amount actually paid,
including import duties, transport and handling costs and
other directly attributable costs, in accordance with GAAP;
"Effective Date" means the date Emisphere receives the Option Exercise
Payment;
"Emisphere" means Emisphere Technologies, Inc., its Affiliates,
successors and permitted assignees;
"Emisphere
Know-How" means all trade secrets, confidential scientific, technical
and medical information and expertise from time to time
developed, produced, created or Acquired by or on behalf of
Emisphere, on or before the Effective Date (i.e., excluding
Emisphere Program Know-How, Joint Know-How and
Improvements), including, but not limited to, unpatented
inventions,
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Emisphere Technologies, Inc.
SEC File No. 1-10615
discoveries, theories, plans, ideas or designs
(whether or not reduced to practice) relating to the
research and development, registration for marketing, use or
sale of the Carriers or the Product(s), needed relevant data
on the Carriers, preclinical toxicity and manufacturing data
for the Carriers and prototype Product(s), and
toxicological, pharmacological, analytical and clinical
data, bioavailability studies, formulations, control assays
and specifications, methods of preparation and stability
data with respect to the Carriers and prototype Product(s);
"Emisphere Patents" means all and any patents, utility models and any
applications therefor in the Territory (other than the
Emisphere Program Patents or Joint Patents) that are or
subsequently may be owned or Acquired by, or assigned or
licensed to, Emisphere (including any and all divisions,
continuations, continuations-in- part, extensions,
additions, registrations, confirmations, reexaminations,
Supplementary Protection Certificates, renewals or reissues
thereto or thereof) and that would be infringed by the
development, manufacture, use, disposal, sale, offer of
disposal or sale, or importation of the Product(s) in the
Territory and/or relate to the Field; the Emisphere Patents
as of the date hereof are listed on Schedule I hereto;
"Emisphere Program
Know-How" means all trade secrets, confidential scientific,
technical and medical information and expertise developed,
produced, created or Acquired by or on behalf of Emisphere
pursuant to the Research and Development Program (other than
Emisphere Know-How and Joint Know-How), including, but not
limited to, unpatented inventions, discoveries, theories,
plans, ideas or designs (whether or not reduced to
practice), and relating to the research and development,
registration for marketing, use or sale of the Carriers or
the Product(s), needed relevant data on the Carriers,
preclinical toxicity and manufacturing data for the Carriers
and prototype Product(s), and toxicological,
pharmacological, analytical and clinical data,
bioavailability studies, formulations, control
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assays and specifications, methods of preparation and
stability data with respect to the Carriers and prototype
Product(s); Emisphere Program Know-How shall not include any
trade secrets, information and expertise developed,
produced, created or Acquired by or on behalf of Emisphere
pursuant to the Research and Development Program relating to
the Compounds or their therapeutic uses or properties as
such trade secrets, information and expertise shall be Lilly
Program Know-How;
"Emisphere Program
Patents" means all and any patents, utility models and applications
therefor in the Territory (including any and all divisions,
continuations, continuations-in-part, extensions, additions,
registrations, confirmations, reexaminations, Supplementary
Protection Certificates, renewals or reissues thereto or
thereof) on or for any inventions or discoveries that (i)
have been or subsequently may be conceived or made by
employees or agents of Emisphere pursuant to the Research
and Development Program (regardless of when or by whom such
inventions and/or discoveries are reduced to practice) or
(ii) relate to the Carriers or the use thereof for delivery
of Compounds (regardless of when or by whom such inventions
and/or discoveries are reduced to practice or by whom they
are conceived);
"Emisphere Program
Technology" means the Emisphere Program Patents, the Emisphere Program
Know-How and/or Emisphere's share of the Joint Patents and
the Joint Know-How;
"Emisphere
Technology"
means the Emisphere Patents and/or the Emisphere Know-How;
"Ex Works" shall have the meaning as such term is defined in the ICC
Incoterms, 1990, International Rules for the Interpretation
of Trade Terms, ICC Publication No. 460;
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SEC File No. 1-10615
"FDA" means the United States Food and Drug Administration or any
successors or agency the approval of which is necessary to
market a product in the United States of America or any
other relevant regulatory authority the approval of which is
necessary to market a product in any other country of the
Territory;
"Field" means the research, development and optimization of the
Compound specified in the Activation Letter utilizing one or
more Carriers for all medical ailments or indications for
the Route of Administration (in this Agreement, the oral
route) specified in the Activation Letter as well as the
manufacture, use, promotion, distribution, marketing and
sale of the Product(s);
[* * *] means, in the case of supply of Carrier(s), [* * *].
"Improvements" means inventions, discoveries, developments and indications
conceived by Emisphere, and relating to the Emisphere
Technology, that can usefully be applied to the Field, the
Lilly Program Technology and/or the Emisphere Program
Technology, and which were first reduced to practice during
the term of this Agreement by Emisphere whether or not such
modification adds any benefit to the Field, the Lilly
Program Technology, the Emisphere Program Technology, or the
Joint Technology;
"INDA" means any Investigational New Drug Application in relation
to a Product(s) filed by Lilly or its approved designee with
the FDA or a similar application filed in another
jurisdiction;
"Independent Third
Party" means any person other than Lilly, Emisphere or any of their
Affiliates;
"JointKnow-How" means all trade secrets, confidential scientific, technical
and medical information and expertise, technical data and
marketing information, studies and data developed, produced,
created or Acquired jointly by the Parties during the term
of this Agreement pursuant to the Research and Development
Program,
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Confidentiality Requested by
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SEC File No. 1-10615
including, but not limited to, unpatented inventions,
discoveries, theories, plans, ideas or designs; Joint
Know-How shall not include any trade secrets, confidential
scientific, technical and medical information and expertise,
technical data and marketing information, studies and data
developed, produced, created or Acquired jointly by the
Parties pursuant to the Research and Development Program to
the extent any of such items relate to either (i) Carriers
or the use thereof for delivery of Compounds or (ii) the
Compounds or their therapeutic uses or properties, since
such items relating to Carriers and such use thereof shall
be considered Emisphere Program Know-How and such items
relating to Compounds and the therapeutic uses or properties
thereof shall be considered Lilly Program Know-How;
"Joint Patents" means all and any patents, utility models and any
applications therefor in the Territory (including any and
all divisions, continuations, continuations-in-part,
extensions, additions, registrations, confirmations,
reexaminations, Supplementary Protection Certificates,
renewals or reissues thereto or thereof) on or for any
inventions or discoveries that are jointly conceived by the
Parties during the term of this Agreement pursuant to the
Research and Development Program (regardless of when or by
whom such inventions and/or discoveries are reduced to
practice) that do not relate to (i) the Carriers or the use
----------------
thereof for delivery of Compounds nor to (ii) the Compounds
------
or their therapeutic uses or properties (i.e., other than
Emisphere Patents, Emisphere Program Patents, Lilly Patents
and Lilly Program Patents);
"Launch" means the commercial sale (including promotion) of a
Product; the date thereof shall be determined on a
country-by-country basis.
"Lilly" means Eli Lilly & Company, its Affiliates, successors and
permitted assignees;
"Lilly Know-How" means all trade secrets, confidential scientific,
technical and medical information and expertise,
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Confidentiality Requested by
Emisphere Technologies, Inc.
SEC File No. 1-10615
technical data and marketing information, studies and data
from time to time developed, produced, created or Acquired
by or on behalf of Lilly, whether before the Effective Date
or during the term of this Agreement (other than the Lilly
Program Know-How or Joint Know-How), including, but not
limited to, unpatented inventions, discoveries, theories,
plans, ideas or designs (whether or not reduced to
practice), relating to the research and development,
manufacture, registration for marketing, use or sale of the
Product(s), and toxicological, pharmacological, analytical
and clinical data, bioavailability studies, product forms
and formulations, control assays and specifications, methods
of preparation and stability data with respect to the
Product(s);
"Lilly Patents" means all and any patents, utility models and any
applications therefor in the Territory (other than the Lilly
Program Patents or Joint Patents) that are or subsequently
may be owned or acquired by or assigned or licensed to Lilly
(including any and all divisions, continuations,
continuations-in-part, extensions, additions, registrations,
confirmations, reexaminations, Supplementary Protection
Certificates, renewals or reissues thereto or thereof) and
that would be infringed by the development, manufacture,
use, disposal, sale, offer of disposal or sale, or
importation of the Product(s) in the Territory and/or relate
to the Field;
"Lilly Program
Know-How" means all trade secrets, confidential scientific, technical
and medical information and expertise, technical data and
marketing information, studies and data developed, produced,
created or Acquired by or on behalf of Lilly, pursuant to
the Research and Development Program (other than the Lilly
Know-How and Joint Know-How), including, but not limited to,
unpatented inventions, discoveries, theories, plans, ideas
or designs (whether or not reduced to practice), relating to
the research and development, manufacture, registration for
marketing, use or sale of the Product(s), needed relevant
data generated by Lilly
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Confidentiality Requested by
Emisphere Technologies, Inc.
SEC File No. 1-10615
(including preclinical toxicity data) on the Product(s) and
toxicological, pharmacological, analytical and clinical
data, bioavailability studies, product forms and
formulations, control assays and specifications, methods of
preparation and stability data with respect to the
Product(s); Lilly Program Know-How shall not include any
trade secrets, information and expertise developed,
produced, created or Acquired by or on behalf of Lilly
pursuant to the Research and Development Program relating to
the Carriers or the use thereof for delivery of Compounds,
as such trade secrets, information and expertise shall be
Emisphere Program Know-How;
"Lilly Program
Patents" means all and any patents, utility models and applications
therefor in the Territory (including any and all divisions,
continuations, continuations-in-part, extensions, additions,
registrations, confirmations, reexaminations, Supplementary
Protection Certificates, renewals or reissues thereto or
thereof) on or for any inventions or discoveries that (i)
have been or subsequently may be conceived or made by
employees or agents of Lilly pursuant to the Research and
Development Program (regardless of when or by whom such
inventions and/or discoveries are reduced to practice) or
(ii) relate to the Compounds or their therapeutic uses or
properties (regardless of when or by whom such inventions
and/or discoveries are reduced to practice or by whom they
are conceived);
"Lilly Program
Technology" means the Lilly Program Patents, the Lilly Program Know-How
and/or Lilly's share of the Joint Patents and the Joint
Know-How;
"Lilly Technology" means the Lilly Patents and/or the Lilly Know-How;
[* * *] means a manual, a table of contents of which is attached
hereto as Appendix I, containing certain specifications,
procedures, methods and personnel contacts relating to
[* * *] that will be compiled and agreed upon between the
Parties prior to the
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Confidentiality Requested by
Emisphere Technologies, Inc.
SEC File No. 1-10615
commencement of manufacture of the Carrier(s) by Emisphere.
Sections of the [* * *] may be modified from time to time
through the issuance of a revised section incorporating the
modification and stating the effective date of the
modification. Each such revised section shall be signed on
behalf of the Parties by a duly authorized representative.
The duly authorized representative shall be of a management
level no lower than the management level of the duly
authorized representative who signed that section of the
original [* * *].
"Milestone" means milestones as specified in Appendix 3 to the Option
Agreement, as modified by the Activation Letter attached
hereto as Schedule II;
"NDA" means any New Drug Application in relation to a Product(s)
filed by Lilly or its approved designee with the FDA or a
similar application filed in another jurisdiction;
"Net Sales" means with respect to the Product(s) the gross amount
invoiced by Lilly, its Affiliates and/or any sub- licensee
of Lilly or its Affiliates to unrelated third parties for
the Product(s) less the following seven items: (a) trade
quantity and cash discounts actually allowed; (b)
commission, discounts, refunds, rebates, charge backs,
retroactive price adjustments, and any other allowances
which effectively reduce the net selling price; (c) actual
product returns and allowances; (d) that portion of the
sales value associated with non pharmaceutical drug delivery
devices (not to include Emisphere's Carriers); (e) any tax
imposed on the production, sale, delivery or use of the
Product(s); (f) allowance for distribution (transportation)
expenses (limit of [* * *]% of gross sales); (g) any other
similar, reasonable and customary deductions which are
properly recorded as a reduction of sales under GAAP,
consistently applied.
In the event that the Product is sold as part of a
combination product, the Net Sales of Product, for purposes
of determining royalty payments, shall be
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Emisphere Technologies, Inc.
SEC File No. 1-10615
determined by multiplying the Net Sales of the combination
product by the fraction, A/(A+B) where A is the average
sales price of the Product when sold separately in finished
form and B is the average sales prices of the other
product(s) sold separately in finished form; in the event
that such average sales price cannot be determined for both
Product and the other products(s) used in the combination
product, Net Sales for the purposes of determining royalty
payments shall be calculated by multiplying the Net Sales of
the combination product by the fraction C/(C+D) where C is
Lilly's cost of goods for the Product and D is Lilly's cost
of goods of the other products(s) used in the combination
product, determined in accordance with the method of
accounting normally employed by Lilly in computing cost of
goods.
"Option" means the option to enter into a license agreement in the
form of this Agreement, as provided for in the Option
Agreement;
"Option Agreement" means that certain Research Collaboration and Option
Agreement, dated as of February 26, 1997, between Emisphere
and Lilly, incorporated herein by reference;
"Option Exercise
Payment" means the Milestone payment specified in Appendix 3 to the
Option Agreement and the payment of which is required upon
execution of this Agreement;
"Parties" means Lilly and Emisphere;
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company,
trust, unincorporated association, joint venture, or other
entity of whatever nature;
[* * *] means a system of (1) developing standard costs at levels
which would be incurred if [* * *] or (2) analyzing and
reporting variances caused by [* * *] of resources;
practical capacity means the
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volume, usually expressed in hours or minutes, which a
plant, department or work center can achieve in an operating
period under normal but efficient operating conditions and
assuming sufficient volume is available; it measures the
amount one is prepared to make or sell and includes
allowances for unavoidable down time;
"Product(s)" means, depending on the context, one or more formulations of
the Compound(s) with one or more of the Carriers for a
specific Route of Administration that complies with the
Specifications;
"Research and
Development
Program" means the joint program of research and development work,
with respect to the Field and the Product, being conducted
or to be conducted by, inter alia, Lilly and Emisphere for
and on behalf of Lilly, for which both Parties are
responsible, and which has been devised by and approved by
the Steering Committee; the Research and Development Program
shall not include work for which Lilly alone is responsible,
such as clinical trials of Product(s);
"Route of
Administration" means administration of the Compound(s) by the oral route;
"Specifications" means the specifications for each of the Carriers or
Product(s) as approved by the FDA, as well as such other
specifications which may be agreed upon by the Parties in
writing or by the Steering Committee;
"Steering
Committee" means the management committee appointed by Emisphere and
Lilly to oversee the Research and Development Programs
related to the Product(s);
"Territory" means all the countries of the world; and
"United States
Dollars" and "US$" means the lawful currency for the time being of
the United States of America.
1.2 In this Agreement:
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1.2 The singular includes the plural and vice versa.
1.2 Any reference to a Clause shall, unless otherwise specifically
provided, be to a Clause of this Agreement.
1.2.3 The headings of this Agreement are for ease of reference only and
shall not affect its construction or interpretation.
2. GRANT OF RIGHTS
In consideration of the receipt of the Activation Letter specifying the Compound
and the Route of Administration to be licensed and simultaneous receipt of the
first Milestone payment by Emisphere (both from Lilly), the receipt and adequacy
of which is acknowledged by Emisphere to Lilly by Emisphere's acceptance of the
Activation Letter and Milestone payment, Emisphere grants to Lilly for the term
of this Agreement:
2.1 an exclusive license to use (a) the Emisphere Patents, the Emisphere
Program Patents and Emisphere's share of the Joint Patents for the Field,
and (b) the Emisphere Know-How, the Emisphere Program Know-How and
Emisphere's share of the Joint Know-How for the Field. All proprietary
rights and rights of ownership with respect to the Emisphere Technology and
Emisphere Program Technology shall at all times remain solely with
Emisphere unless otherwise specified in this Agreement. Lilly shall not
have any rights to use the Emisphere Technology or Emisphere Program
Technology other than insofar as they relate directly to the Field and are
expressly granted herein.
2.2 Subject to Clause 6.3, Lilly shall have the right to sublicense the rights
granted to it by Emisphere pursuant to this Agreement. Insofar as the
obligations owed by Lilly to Emisphere are concerned, Lilly shall remain
responsible for all acts and omissions of any sub-licensee as if they were
by Lilly. Lilly shall forthwith notify Emisphere of any sub-license granted
by Lilly. In all cases, (i) royalties shall be paid at the rate provided
for herein (i.e., in accordance with the relevant Option Agreement
Appendix); and (ii) the applicable royalty rate shall be determined with
reference to market share or net sales figures (as the case may be)
determined by cumulating all sales of the Product by Lilly and all of its
sub-licensees. It shall be Lilly's responsibility in all cases to determine
the cumulated net sales or market share data and assure that Emisphere is
paid (whether by Lilly or the sub-licensee) the royalties at the increased
rate provided for upon reaching the yearly targets, all as set forth in the
relevant Appendix of the Option Agreement. If Emisphere does not receive
payment from a sublicensee within [* * *] days of the end of each quarter,
Emisphere shall immediately notify Lilly's royalty administration personnel
(contact name
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shall be provided once Product is Launched) that payment has not been
remitted. If unforeseen circumstances result in a sublicensee not reporting
to Lilly, the amount of their Net Sales such that Lilly cannot determine
the cumulative Net Sales or market share data, Lilly shall pay Emisphere
its royalty due on Lilly Net Sales only and within [* * *] days of the end
of such calendar quarter, ensure that Emisphere will receive the
appropriate amount of royalties from either the sublicensee or Lilly.
Notwithstanding the previous sentence however, Net Sales by sublicensees
shall not be counted twice in the calculation of royalty payments due to
Emisphere. In the event of a termination of this Agreement due to a breach
by Lilly, Emisphere shall have the right but not the obligation to assume
any such sub-license under the same terms.
In consideration of the obligations assumed hereunder, Lilly grants to
Emisphere, solely for the purposes of carrying out the latter's obligations
hereunder:
2.3 a non-exclusive license to use the Lilly Technology and the Lilly Program
Technology. All proprietary rights and rights of ownership with respect to
the Lilly Technology and the Lilly Program Technology shall at all times
remain solely with Lilly, unless otherwise specified in this Agreement.
Emisphere shall not have any rights to use the Lilly Technology or the
Lilly Program Technology other than insofar as expressly granted herein.
2.4 Emisphere shall have no right to sublicense the rights granted to it by
Lilly pursuant to this Agreement except as expressly authorized by Lilly.
Insofar as the obligations owed by Emisphere to Lilly are concerned,
Emisphere shall remain responsible for all acts and omissions of any
approved sub-licensee as if they were by Emisphere.
3. IMPROVEMENTS
3.1 If Emisphere shall develop or have developed by an Independent Third Party
any Improvements during the term of this Agreement (other than pursuant to
the Research and Development Program which constitute Emisphere Program
Technology), Emisphere shall, to the extent that it is not prohibited by
any undertaking given to any Independent Third Party (provided that
Emisphere shall use its commercially reasonable efforts to exclude or
minimize the extent of any such limitations or restrictions which prevent
or limit disclosure to or use by Lilly), communicate to Lilly such
Improvements and shall provide to Lilly such rights, licenses, information
and explanations as Lilly may reasonably require to be able effectively to
utilize the Improvements for the life of this Agreement. Such disclosed
Improvements shall automatically on disclosure
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to Lilly become part of the Emisphere Know-How or Emisphere Patents, as the
case may be, and shall be subject to the provisions of this Agreement.
4. MANUFACTURING
4.1 Lilly will manufacture final Product(s). Emisphere will manufacture at
least [* * *]% of the Carrier needed for Product sales. Lilly will pay
Emisphere the latter's [* * *] on all Carrier used for sales of Products
less than or equal to the sales schedule set forth in the relevant Appendix
to the Option Agreement. Above the Product sales level specified in the
relevant Appendix of the Option Agreement, Lilly will pay Emisphere's
direct manufacturing costs (calculated according to the [* * *]). Lilly
will be permitted to manufacture up to [* * *]% of the Carrier needed to
manufacture the Products. If Lilly can find a Carrier source that can offer
a supply price that is at least [* * *]% lower than Emisphere's supply
price (including Lilly, with supply price in such case being [* * *], all
determined in accordance with GAAP principles), Lilly may use such supplier
for up to [* * *]% of the Carrier needed to manufacture the Product. So
long as Lilly uses it as a supplier of Carrier, Emisphere will hold at
minimum [* * *] of Carrier inventory per year to be determined at the
appropriate time. Emisphere's manufacturing operations will meet any
required regulatory agency's specifications for registration, as set forth
in the [* * *].
4.2 Lilly shall be permitted to produce Carrier for its use in clinical trials,
but only until Emisphere is able to supply the Carrier pursuant to the
terms of Section 4.1.
4.3 Lilly reserves the right to audit the facility of Emisphere as specified in
the [* * *], including its processes, records, and other facets of the
operation as may be necessary to assure that all applicable FDA or similar
government regulations have been met. Emisphere shall permit duly
authorized representatives of Lilly to audit all research, development and
manufacturing areas and operations as they apply to Emisphere projects or
Carriers for Lilly at reasonable times with a prior appointment. The right
to audit will also apply to Carrier used in trials to support product
registration. These audits will be conducted to assure compliance with all
pertinent acts, regulations, and guidelines promulgated by the FDA and
other regulatory authorities. Such audits will be permitted during normal
business hours and will be performed with a minimum of disruption. Lilly
shall furnish to Emisphere copies of all reports prepared as a result of
these audits. Lilly agrees to notify Emisphere within [* * *] of any
concerns that it may have regarding Carrier(s). Lilly will also have the
right to audit Emisphere's financial manufacturing records in accordance
with Clause 9.2.
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5. RESEARCH AND DEVELOPMENT
5.1 Subject to any and all specific provisions included in the Option Agreement
or relevant Appendix, and to the extent Emisphere does not have the
requisite capability or resources or Lilly elects to do so itself, Lilly
agrees to use Emisphere, on terms to be negotiated in good faith, to
conduct the Research and Development Program. Upon agreement by the Parties
as to the appropriate amount of compensation to Emisphere therefor,
Emisphere shall conduct its portion of such Research and Development
Program.
5.2 Subject to any and all specific provisions included in the Option Agreement
or relevant Appendix, the research and development work conducted jointly
by the Parties shall be in accordance with the Research and Development
Program devised by the Steering Committee. Both Parties shall use
reasonably diligent efforts, consistent with their efforts on other
projects of similar commercial importance and state of development, to
conduct their respective portions of the Research and Development Program.
5.3 Subject to any and all specific provisions included in the Option Agreement
or relevant Appendix, the Research and Development Program shall be
directed by the Steering Committee. In conducting the Research and
Development Program, each Party shall co-operate fully with the Steering
Committee. Each Party shall maintain the facilities used by it for the
performance of the Research and Development Program in compliance with the
applicable requirements of the FDA and other regulatory authorities,
including then-current Good Manufacturing Practices and then-current Good
Laboratory Practices standards.
5.4 Subject to any and all specific provisions included in the Option Agreement
or relevant Appendix, Emisphere shall provide Lilly on a quarterly basis
during the term of the Research and Development Program a report, detailing
how Emisphere allocated funds provided by Lilly for such Program, if Lilly
provided any such funds. Such report shall provide Lilly with the names of
the Emisphere employees utilized on the Program and the amount of each
employee's time devoted to the Program. Emisphere shall, further, maintain
records in reasonable detail and in accordance with GAAP of all monies paid
by Emisphere for research under the Program and shall provide Lilly, within
[* * *] of the end of each quarterly period, with a report stating the
dollar amount of funds supplied by Lilly that were expended on research
activities during the three month period for which the report is made,
using Emisphere's standard project accounting procedures, and such
supporting details as are reasonably required by Lilly. Lilly shall be
entitled to any tax credits due on account of research and development
expenses, to the extent permitted by
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law, for the funds paid by Lilly to Emisphere hereunder. Also, Lilly may
have the costs of the Research and Development Program audited in
accordance with Clause 9.2.
6. SUPPLY OF PRODUCT(S)
6.1 Except as otherwise herein provided in this Agreement, Lilly shall produce
and supply the final commercial Product(s). Any chemical (not including the
Carriers) or formulation components required to make use of the Emisphere
Technology shall be procured by Lilly at its own Cost. Lilly shall ensure
that supplies of the Product(s) are produced as diligently as any of its
products of similar commercial importance.
6.2 Lilly shall deliver the Product(s) in appropriate packaging as specified in
the [* * *] so as to permit safe storage and transport.
6.3 In the event that Lilly appoints a third party to manufacture the
Product(s), Lilly shall be solely responsible and liable for the
performance of the manufacturer. Lilly shall ensure that said
manufacturer's facility is an FDA-approved facility and that such facility
complies with all relevant FDA and other relevant governmental and
regulatory requirements and that all then-current Good Manufacturing
Practices are adhered to. In no case will Lilly appoint a third party to
manufacture the Product(s) if that third party is a competitor with
Emisphere in the oral protein delivery field or if that third party is
involved in pending or threatened litigation with Emisphere.
6.4 Pursuant to the procedures set forth in the Manufacturing Responsibilities
Document, the quality and form of the Product(s) delivered by Lilly
hereunder shall conform in all material aspects to the Specifications and
all prevailing legislative and regulatory requirements of the countries
where the Product(s) are manufactured and to be used.
7. EXPLOITATION OF LICENSED TECHNOLOGY
7.1 Lilly will have the exclusive right to develop and/or exploit the Field. In
order to commercialize the Product(s), Lilly shall use commercially
reasonable efforts (consistent with its efforts on products of similar
commercial importance) to obtain marketing approval for and Launch the
Product(s) in such countries in the Territory as is determined by normal
Lilly business practices. It may be necessary to file an INDA or NDA and
perform clinical testing in more than one country. The conduct of such
clinical trials and the obtaining of regulatory approvals shall be
controlled and completed by Lilly.
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7.2 The strategy for the registration and the commercialization of the
Product(s) shall be determined by Lilly. Upon inquiry, Emisphere shall be
advised as to Lilly's general commercialization strategy on a semi-annual
basis. For each country in which the Product is Launched, Lilly shall
inform Emisphere of the Launch at least [* * *] prior to the expected date
therefor.
7.3 Lilly shall exert its reasonable efforts to commercialize the Product(s) in
each country of the Territory where Lilly has Launched Product(s). Such
efforts shall be consistent with Lilly's efforts on products of similar
commercial importance.
7.4 Lilly will be solely responsible for ensuring that the manufacture,
promotion, distribution, marketing and sale of the Product(s) within each
country of the Territory is in strict accordance with all the legal and
regulatory requirements of each country of the Territory.
7.5 All advertising, promotional materials and marketing costs needed to
exploit the Product(s) are to be paid by Lilly. All package inserts, and
any advertising or promotional materials that substantially reproduce the
material included in the package inserts, shall, to the extent allowed by
applicable law or regulation, include: (i) acknowledgment that the Product
uses Emisphere technology; (ii) Emisphere's trade name (whether or not
registered); and (iii) Emisphere's logo (whether or not registered). Such
incorporation by Lilly shall be made upon discussion between Emisphere and
Lilly with respect to the appropriate protection of Emisphere's trademark,
service mark or trade name rights, and pursuant to a non-exclusive license
which Emisphere shall grant Lilly for such purpose at the appropriate time.
8. FINANCIAL PROVISIONS
8.1 In consideration of the research and development work conducted by
Emisphere for and on behalf of Lilly pursuant to the Research and
Development Program, Lilly shall pay Emisphere the sums agreed to by the
Parties pursuant to Clause 5.1, above, subject to the proper documentation
of research and development work and expenses.
8.2 In consideration of the granting of a license of the Emisphere Technology
to Lilly, Lilly shall make Milestone payments and pay royalties on Net
Sales of the Product(s) in the amounts and at the rates set forth in
Appendix 3 of the Option Agreement, as modified by the Activation Letter
attached hereto as Schedule II.
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8.3 Lilly's obligation to pay royalties shall expire on a country-by-country
basis upon the conclusion of the term of this Agreement, as set forth in
Clause 12.1. Emisphere shall file for patent protection on Emisphere
Technology and Emisphere Program Technology included in the Product in
those countries listed in Exhibit C to the Option Agreement.
8.4 Payment of royalties shall be made quarterly within [* * *] after the
expiry of the calendar quarter; provided, that if the information necessary
--------
to make such payments is not available within such [* * *] period, Lilly
shall have an additional [* * *] to make such payments. The method of
payment shall be by wire transfer to an account specified by Emisphere, or
by such other manner as is mutually acceptable to the Parties. Each payment
made to Emisphere shall be accompanied by a written report, prepared and
signed by the appropriate royalty administration personnel of Lilly. The
report shall clearly show the Net Sales for the calendar quarter for which
payment is being made on a country-by-country basis. In the event that no
royalty is due to Emisphere for any quarterly period, Lilly's appropriate
royalty administration officer shall so report.
8.5 Lilly shall maintain and keep clear, detailed, complete, accurate and
separate records so:
8.5.1 as to enable any royalties on Net Sales of the Product(s) which
shall have accrued hereunder to be determined; and
8.5.2 that any deductions made in arriving at the Net Sales can be
determined by Emisphere.
8.6 All payments due hereunder shall be made in United States Dollars. Lilly's
standard exchange rate methodology will be employed for the translation of
foreign currency sales into United States Dollars. This methodology shall
be the one used by Lilly in the translation of its foreign currency
operating results for external reporting, shall be consistent with general
accepted accounting principles, and shall be the one approved and reviewed
by Lilly's independent certified public accountants.
8.7 Subject to the provisions of Clauses 8.8 and 8.10 of this Agreement, Lilly
shall pay all royalties at full rate.
8.8 If, at any time, legal restrictions in the Territory prevent the prompt
payment of running royalties or any portion thereof, the Parties shall meet
to discuss suitable and reasonable alternative methods of reimbursing
Emisphere the amount of such running royalties. In the event that Lilly is
prevented from
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making any payment under this Agreement by virtue of the statutes, laws,
codes or government regulations of the country from which the payment is to
be made, then such payments may be paid by depositing them in the currency
in which they accrue to an account set up for Emisphere in a bank
acceptable to Emisphere in the country the currency of which is involved or
as otherwise agreed by the Parties.
8.9 Emisphere and Lilly agree to co-operate in all respects necessary to take
advantage of any double taxation agreements or similar agreements as may,
from time to time, be available.
8.1 All taxes levied on payment of royalties accruing to Emisphere under this
Agreement shall be paid by Emisphere. If applicable laws or regulations
require withholding taxes by Lilly, the taxes will be deducted by Lilly
from remittable royalties and will be paid by Lilly on account of Emisphere
to the appropriate government tax authority.
9. RIGHT OF AUDIT AND INSPECTION
9.1 Within the term of this Agreement and within one year after its
termination, Emisphere shall not more than [* * *] each year have the right
at its expense to have Lilly's independent certified public accountants
inspect and audit Lilly's records for any of the two 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 report to Emisphere only the
amounts of Net Sales and royalties due and payable. Any such inspection of
Lilly's records shall be at the expense of Emisphere, except that if any
such inspection reveals a deficiency in the amount of the running royalty
actually paid to Emisphere hereunder in any calendar year of [* * *]% or
more of the amount of any running royalty actually due to Emisphere
hereunder, then the expense of such inspection shall be borne solely by
Lilly. Any amount of deficiency shall be paid promptly to Emisphere. If
such inspection reveals a surplus in the amount of running royalty actually
paid to Emisphere by Lilly, Emisphere shall reimburse Lilly the surplus.
9.2 Within the term of this Agreement and within one year after its
termination, Lilly shall not more than [* * *] each year have the right at
its expense to have Emisphere's independent certified public accountants
inspect and audit Emisphere's records and accompanying reports (and all
associated documentation) for any of the two preceding years for the
purpose of determining the accuracy of Emisphere's reported, [* * *] and
Costs with respect to any Research and Development Program. The independent
certified
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public accountants shall keep confidential all materials subject to
third-party confidentiality agreements and all materials not directly
relevant to the purpose of their audit. Any such inspection of
Emisphere's records shall be at the expense of Lilly, except that if any
such inspection reveals an overpayment in the amount of such Costs paid
to Emisphere hereunder in any calendar year of [* * *]% or more of the
amount of such Costs actually due to Emisphere hereunder, then the
expense of such inspection shall be borne solely by Emisphere instead of
by Lilly. Any surplus over the Costs properly payable by Lilly to
Emisphere shall be refunded promptly to Lilly. If such inspection reveals
a deficit in the amount of the Costs properly payable to Emisphere by
Lilly, Lilly shall pay the deficit to Emisphere.
9.3 In the event of any unresolved dispute regarding any alleged deficiency
or overpayment of royalty payments or Cost payments hereunder, the matter
will be referred to the independent firm of certified public accountants
of [* * *] for a resolution of such dispute. The decision of said firm of
certified public accountants shall be binding on the Parties.
10. PATENTS
10.1 Emisphere shall be obliged to disclose promptly to Lilly inventions made
by or on behalf of Emisphere in connection with the performance of the
Research and Development Programs, any patentable inventions and
discoveries within the Emisphere Know-How that relate to the Field, the
Emisphere Program Know-How and any patentable Improvements developed by
or on behalf of Emisphere (other than pursuant to the Research and
Development Program).
10.2 The Parties shall discuss in good faith all material issues relating to
filing, prosecution and maintenance of Emisphere Patents (insofar as the
Emisphere Patents are of relevance to the Field), the Emisphere Program
Patents, any patentable inventions and discoveries within the Emisphere
Know-How that relate to the Field, and any patentable Improvements
developed by or on behalf of Emisphere (other than pursuant to the
Research and Development Program). Subject to agreement to the contrary
the following provisions shall apply:
10.2.1 Emisphere at its expense shall make a good faith effort (a) to
secure the grant of any patent applications within the Emisphere
Patents and Emisphere Program Patents; (b) to file and prosecute
patent applications on patentable inventions and discoveries
within the Emisphere Know-How and patentable Improvements (or to
protect such inventions and/or Improvements as trade secrets)
developed by or on behalf of Emisphere (other than pursuant to the
Research and
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Development Program); (c) to defend all such applications against
third party oppositions; and (d) to maintain in force any issued
letters patent within the Emisphere Patents and Emisphere Program
Patents (including any letters patent that may issue covering any
Improvements). Emisphere shall have the sole right in its
reasonable business discretion to control such filing,
prosecution, defense and maintenance; provided however, that Lilly
shall have a reasonable right to be provided with copies of all
documents relating to such filing, prosecution, defense, and
maintenance in sufficient time to review such documents and
comment thereon, if desired by Lilly, prior to filing. Should
Emisphere decide for commercial or other reasons to abandon in any
country any patent or patent application pertaining to the
Emisphere Patents or the Emisphere Program Patents for those
Carriers that (i) are part of a Product which is either undergoing
or has gone through a Lilly clinical development program or (ii)
Emisphere, in good faith, reasonably believes may be utilized as
part of a Product for clinical development by Lilly, it shall
first obtain Lilly's written consent, which consent shall not be
unreasonably withheld.
10.2.2 In the event that Emisphere informs Lilly that it does not intend
to file patent applications on patentable inventions and
discoveries within the Emisphere Know-How or Emisphere Program
Know-How that relate to those Carriers that have gone through a
Lilly clinical development program or patentable Improvements
developed thereon by or on behalf of Emisphere (other than
pursuant to the Research and Development Program) in one or more
countries in the Territory or fails to file such an application
within a reasonable period of time, but in no event less than four
(4) months after disclosure to Lilly pursuant to Clause 10.1, at
Emisphere's election, Lilly shall have the right, but not the
obligation, at Lilly's sole expense to file and prosecute such
patent application(s) in the name of Lilly and Emisphere, upon
written request from Lilly, shall execute all documents, forms and
declarations and do all things as shall be reasonably necessary to
enable Lilly to exercise such right. In the event that Emisphere
so elects and Lilly files any such application, such application
shall [* * *].
10.3 Emisphere shall assist Lilly in good faith regarding all material issues
that arise from their joint work on the Research and Development Program
relating to filing, prosecution and maintenance of Lilly Patents (insofar
as the Lilly Patents are of relevance to the Field), the Lilly Program
Patents and any patentable inventions and discoveries within the Lilly
Know-How that relate to the Field. Such assistance will be provided,
however, only upon Lilly's request. Subject to agreement to the contrary,
the following provisions shall apply:
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10.3.1 Lilly shall be solely responsible for all facets of filing and
prosecuting patent applications and maintaining and defending
patents within the Lilly Patents and the Lilly Program Patents,
including all expenses pertaining thereto.
10.3.2 Any assistance from Emisphere requested by Lilly with respect to
its obligations as set forth in this Clause 10.3 shall be provided
at Lilly's expense. Emisphere will use its best reasonable efforts
to provide such assistance in the manner requested by Lilly.
10.4 With respect to any Joint Patents, Emisphere will prepare and file patent
applications on behalf of both Parties and will diligently prosecute
same. Prior to the contemplated filing, Emisphere shall submit a
substantially completed draft of such patent applications to Lilly for
approval, which approval shall not be unreasonably withheld or delayed.
In the event of an imminent statutory bar to patenting, Emisphere shall
have the right to file a patent application, for the invention on which a
patent would be barred, without first receiving approval from Lilly, in
order to preserve the patent rights to such invention. Lilly and
Emisphere shall equally bear the cost of preparing, filing, prosecuting
and maintaining any patent applications and patents falling within this
Clause 10.4. Should Emisphere not wish to file, prosecute, maintain or
issue any patent application falling within this Clause 10.4, or maintain
a patent issuing from any such patent applications, in any particular
country, Emisphere will grant Lilly any necessary authority to file,
prosecute, maintain or issue such patent application, or maintain such a
patent, in the name of Lilly. However, in such case, such patent
application or patent for such country shall be considered to be a Lilly
Program Patent. Likewise, should Lilly not wish to file, prosecute,
maintain or issue any patent application falling with this Clause 10.4,
or maintain a patent issuing from such patent applications, in any
particular country, Lilly will grant Emisphere any necessary authority to
file, prosecute, issue and maintain such patent application, or maintain
such a patent, in the name of Emisphere. However, in such case, such
patent application or patent for such country shall be considered to be
an Emisphere Program Patent.
10.5 Emisphere and Lilly shall promptly inform the other in writing of any
alleged infringement of any patents within the Emisphere Patents, the
Emisphere Program Patents or the Joint Patents or of any alleged
misappropriation of trade secrets within the Emisphere Know-How, the
Emisphere Program Know-How or the Joint Know-How, as such infringement or
misappropriation relates to the Field, by a third party of which it
becomes aware and provide the other with any available evidence of such
infringement or misappropriation.
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10.5.1 (a) Emisphere shall have the primary right, but not the
obligation, to institute, prosecute and control any action or
proceeding with respect to any infringement of any of the
Emisphere Technology or the Emisphere Program Technology by
counsel of its own choice. Lilly shall cooperate with Emisphere at
Emisphere's request in the prosecution of such action or
proceeding. If Emisphere reasonably determines that Lilly is an
indispensable Party to the action, Lilly hereby consents to be
joined. In such event, Lilly shall have the right to be
represented in that action by counsel of its own choice and at
Lilly's expense.
(b) If Emisphere fails to bring an action or proceeding within a
period of [* * *] after receiving written notice from Lilly or
otherwise having knowledge of infringement of the Emisphere
Technology or the Emisphere Program Technology in the Field, Lilly
shall have the right to bring and control any such action by
counsel of its own choice and expense. If Lilly reasonably
determines that Emisphere is an indispensable Party to the action,
Emisphere hereby consents to be joined. In such event, Emisphere
shall have the right to be represented in that action by counsel
of its own choice and at Emisphere expense.
(c) No settlement, consent judgment or other voluntary final
disposition of a suit under this Clause 10.5.1 may be entered into
without the joint consent of Lilly and Emisphere (which consent
shall not be withheld unreasonably or delayed by either Party).
(d) If Emisphere brings an action hereunder, any damages or other
monetary awards recovered by Emisphere attributable to sales of
Product shall be applied first to defray the costs and expenses
incurred in the action. If any balance remains, Emisphere shall
pay Lilly [* * *]% of such balance.
(e) If Emisphere fails to bring an action hereunder and Lilly
brings action, any damages or other monetary awards recovered by
Lilly attributable to sales of Product shall be applied first to
defray the costs and expenses incurred in the action. If any
balance remains, Lilly shall pay Emisphere [* * *]% of such
balance.
(f) In the alternative, the Parties may agree to institute such
proceedings in their joint names and shall reach agreement as to
the proportion in which they will share the proceeds of any such
proceedings, and the expense of any costs not recovered.
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(g) If the infringement of the Emisphere Patents or the Emisphere
Program Patents affects the Field as well as other products being
developed or commercialized by Emisphere or its commercial
partners, the Parties shall agree as to the manner in which the
proceedings should be instituted and shall reach agreement as to
the proportion in which they will share the proceeds of any such
proceedings, and the expense of any costs not recovered.
10.5.2 During the term of this Agreement, Lilly shall have the first
right but not the obligation to bring suit or otherwise take
action against any alleged infringement of the Lilly Program
Patents or alleged misappropriation of the Lilly Program Know-How.
In the event that Lilly takes such action, Lilly shall do so
solely at its own cost and expense and all damages and monetary
award recovered in or with respect to such action shall be the
property of Lilly. At Lilly's reasonable request, Emisphere will
co-operate with any such action at Lilly's sole cost and expense.
10.5.3 During the term of this Agreement, both Parties shall have the
right but not the obligation to bring suit or otherwise take
action against any alleged infringement of the Joint Patents or
alleged misappropriation of the Joint Know-How. Both Parties shall
be obligated to inform the other of any infringement or
misappropriation of which they become aware. The Parties shall
jointly determine in good faith how to manage any action with
respect to any such infringement or misappropriation. In the
alternative, or if one party desires to take such an action and
the other does not, the Party that takes such action shall do so
solely at its own cost and expense and all damages and monetary
award recovered in or with respect to such action shall be the
property of that Party. At such Party's reasonable request, the
other Party will co-operate with any such action at the requesting
Party's sole cost and expense.
10.6 Emisphere may defend against any Third Party claim that is related to the
Emisphere Patents, Emisphere Program Patents, Emisphere Know-How or
Emisphere Program Know-How. Lilly shall cooperate with Emisphere as may
be reasonably requested by Emisphere in such defense and shall have the
right to be represented by counsel of its own choice at Lilly's expense
provided that Emisphere shall (i) keep Lilly fully informed with regard
to the defense of such Third Party claim and (ii) obtain Lilly's prior
written approval before entering into any settlement in connection with
such Third Party claims, such approval not to be unreasonably withheld or
delayed.
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If within [* * *] of receiving notice of any Third Party claim related to
the Field, Emisphere fails to defend against such Third Party claim,
Lilly may, at its own cost, defend against such Third Party claim;
provided that Lilly shall (i) keep Emisphere fully informed with regard
to the defense of such Third Party claim, and (ii) obtain Emisphere's
prior written approval before entering into any settlement in connection
with such Third Party claim, such approval not be unreasonably withheld
or delayed. Emisphere shall cooperate with Lilly as may reasonably be
requested by Lilly in such defense and shall have the right to be
represented by counsel of its own choice at Emisphere's expense. If
royalties or lump sum payments are due to the Third Party by reason of a
court order or litigation settlement, such payment shall be solely the
responsibility of Lilly, provided that [* * *]% of such Third Party
royalties or lump sum payments shall be offset against royalties payable
to Emisphere under this Agreement, not to exceed the royalties due
Emisphere, as also set forth in Clause 13.1.
10.7 Except as provided in Clauses 10.6 and 13.1, Emisphere shall have no
liability to Lilly whatsoever or howsoever arising for any losses
incurred by Lilly as a result of having to cease selling Product(s) or
having to defer the Launch of Product(s) as a result of any infringement
proceedings.
11. CONFIDENTIAL INFORMATION
11.1 The Parties acknowledge that it may be necessary, from time to time, to
disclose to each other confidential and proprietary information,
including without limitation, inventions, works of authorship, trade
secrets, specifications, designs, data, know-how and other information,
relating to the Field, the Compounds, the Carriers, the Products,
processes, and services of the disclosing Party or regarding the
Emisphere Technology or Emisphere Program Technology or the Lilly
Technology or the Lilly Program Technology. The foregoing shall be
referred to collectively as "Confidential Information". Any Confidential
Information revealed by a Party to another Party shall be used by the
receiving Party exclusively for the purposes of fulfilling the receiving
Party's obligations under this Agreement.
11.2 Each Party agrees to disclose Confidential Information of another Party
only to those employees, representatives and agents requiring knowledge
thereof in connection with their duties directly related to the
fulfilling of the Party's obligations under this Agreement. Each Party
agrees that it will exercise the same degree of care, but in no event
less than a reasonable degree, and protection to preserve the proprietary
and confidential nature of the Confidential Information disclosed by the
other Party, as the receiving Party would exercise to preserve its own
proprietary and confidential information.
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Each Party agrees that it will, upon request of the other Party, return
all documents and any copies thereof containing Confidential Information
belonging to or disclosed by, such Party if such documents are not
required to perform its obligations hereunder, and further provided that
the returning party may keep one copy of all such documents in its legal
archive for recording purposes.
11.3 With respect to all Confidential Information furnished by one Party to
the other pursuant to this Agreement, either in writing or orally, the
Party receiving such Confidential Information shall maintain the
confidential and proprietary status of such Confidential Information,
keep such Confidential Information and each part thereof within its
possession or under its control, use all its reasonable efforts to
prevent the disclosure of any Confidential Information to any other
person, and use all its reasonable efforts to ensure that such
Confidential Information is used only for those purposes specifically
authorized by this Agreement. These mutual obligations of confidentiality
shall apply until ten (10) years after termination or expiration of this
Agreement. Confidential Information, further, shall not be deemed to
include any information to the extent that such information is:
(a) independently developed by the recipient as documented by prior
written records outside the scope and not in violation of this Agreement;
(b) in the public domain at the time of its receipt or thereafter becomes
part of the public domain through no fault of the recipient;
(c) received without an obligation of confidentiality from a third party
having the right to disclose such information;
(d) released from the restrictions of this Clause 11 by the express
written consent of the disclosing Party;
(e) required by law, statute, rule or court order to be disclosed (the
disclosing Party shall, however, use reasonable efforts to obtain
confidential treatment of any such disclosure, consult with the other
Party and permit the other Party to participate in seeking an appropriate
protective order).
Notwithstanding the provisions of this Clause 11, Emisphere and Lilly
may, to the extent necessary, disclose and use Confidential Information
only for the purpose of carrying out their duties and obligations under
this Agreement (i) to any Affiliate, sublicensee or subcontractor of
either Emisphere or Lilly hereunder (if such sublicensee or subcontractor
is subject to provisions substantially similar to those set forth in this
Clause 11); (ii) to secure patent
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protection, pursuant to Clause 10 hereof, for an invention developed as a
result of the collaboration undertaken pursuant to this Agreement or
(iii) to obtain institutional or government approval to test clinically
or market any Product subject to confidential treatment if possible.
11.4 The Parties agree that the obligations of this Clause 11 are necessary
and reasonable in order to protect the Parties' respective businesses,
and each Party expressly agrees that monetary damages would be inadequate
to compensate a Party for any breach by the other Party of its covenants
and agreements set forth herein. Accordingly, the Parties agree and
acknowledge that any such violation or threatened violation will cause
irreparable injury to a Party and that, in addition to any other remedies
that may be available, in law and equity or otherwise, any Party shall be
entitled to obtain injunctive relief against the threatened breach of the
provisions of this Clause 11, or a continuation of any such breach by the
other Party, specific performance and other equitable relief to redress
such breach together with its damages and reasonable counsel fees and
expenses to enforce its rights hereunder, without the necessity of
proving actual or express damages.
12. TERM OF AGREEMENT
12.1 Subject to the provisions for earlier termination set out in Clauses
12.2, 12.3, and 12.6 and the provisions regarding the payment of
royalties in Clause 8, the term of this Agreement shall be a period
commencing as of the Effective Date and expiring on a country by country
basis on the last to occur of:
12.1.1 nine (9) years from the date of Launch of the Product(s) in the
country concerned; or
12.1.2 upon the expiration of the last to expire patent included in the
Emisphere Patents, the Emisphere Program Patents and/or the Joint
Patents to the extent that any such patents cover Products(s).
12.2 In addition to the rights of early or premature termination provided for
elsewhere in this Agreement, in the event that any of the terms or
provisions hereof are incurably breached by either Party, the non-
breaching Party may immediately terminate this Agreement by written
notice. Subject to the other provisions of this Agreement, in the event
of any other breach, the non-breaching Party may terminate this Agreement
by giving written notice to the breaching Party that this Agreement will
terminate on the sixtieth (60th) day from notice unless cure is sooner
effected. If the breaching Party has proposed a course of action to
rectify the breach and is acting in good faith to rectify same but has
not cured the breach by the sixtieth (60th) day, the
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said period shall be extended by such period as is reasonably necessary
to enable the breach to be cured. If termination of this Agreement
pursuant to this Clause 12.2 is caused by a breach of this Agreement by
Lilly, Lilly shall lose all rights pursuant to Clauses 2 and 3 above. If
Emisphere breaches this Agreement then restitution to Lilly appropriate
for the degree of the breach shall be made, and Lilly shall continue
payments pursuant to a mutually acceptable escrow agreement until the
matter is resolved.
12.3 As used in this Clause 12, the term "Event of Bankruptcy" relating to
either Party shall mean:
(a) the appointment of a liquidator, receiver, administrator,
examiner, trustee or similar officer over either Party or over all
or a substantial part of its assets under the law of any
applicable jurisdiction, including without limit, the United
States of America; or
(b) an application or petition for bankruptcy, corporate re-
organization, composition, administration, examination,
arrangement or any other procedure similar to any of the foregoing
under the law of any applicable jurisdiction, including without
limitation, the United States of America, is filed, and is not
discharged within thirty (30) days, or if either Party applies for
or consents to the appointment of a receiver, administrator,
examiner or similar officer over it or over all or a material part
of its assets, rights or revenues or the assets and/or the
business of either Party are for any reason seized, confiscated or
condemned.
12.3.1 If at any time during the term of this Agreement, an "Event of
Bankruptcy" (as defined above) relating to Emisphere occurs, Lilly
shall have, in addition to all other legal and equitable rights
and remedies available hereunder, the option to terminate this
Agreement upon thirty (30) days' written notice, given within
sixty (60) days following the date that Lilly becomes aware of the
Event of Bankruptcy. Upon such termination by Lilly, Lilly shall
be entitled to solely continue the activities conducted or to be
conducted pursuant to this Agreement but for the Event of
Bankruptcy.
12.3.2 If at any time during the term of this Agreement, an "Event of
Bankruptcy" (as defined above) relating to Lilly occurs, other
than in circumstances where the Event of Bankruptcy arises
directly or indirectly as a result of a dispute with Emisphere and
it is unlikely that the Event of Bankruptcy would have arisen if
Lilly and Emisphere had been in agreement, rather than in dispute,
Emisphere shall have, in
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addition to all other legal and equitable rights and remedies
available hereunder, the option to terminate this Agreement upon
thirty (30) days' written notice, given within sixty (60) days
following the date that Emisphere becomes aware of the Event of
Bankruptcy.
12.4 Upon exercise of those rights of termination as specified in Clause 12.1
to Clause 12.3 inclusive or elsewhere within the Agreement, this
Agreement shall, subject to the other provisions of the Agreement,
automatically terminate forthwith and be of no further legal force or
effect.
12.5 Upon expiration or termination of the Agreement:
12.5.1 any sums that were due from Lilly to Emisphere on Net Sales in the
Territory or in such particular country or countries in the
Territory, as the case may be, prior to the expiration or
termination of this agreement as set forth herein shall be paid in
full within [* * *] (or [* * *] if the information necessary to
make such payment is not available within such [* * *] period) of
the expiration or termination of this Agreement for the Territory
or for such particular country or countries in the Territory, as
the case may be;
12.5.2 all confidentiality provisions set out herein shall remain in full
force and effect;
12.5.3 all responsibilities and warranties shall insofar as are
appropriate remain in full force and effect;
12.5.4 the rights of inspection and audit set out in Clause 9 shall
continue in force for a period of one year;
12.5.5 except as expressly provided for under Clauses 12.2 and 12.5.7 all
rights and licenses granted in and pursuant to this Agreement
shall cease for the Territory or for such particular country or
countries in the Territory, as the case may be. Following such
expiration or termination, Lilly may not thereafter, except as
expressly provided for in Clauses 12.2 and 12.5.7, use in the
Territory or in such particular country or countries in the
Territory, as the case may be, (a) any valid and unexpired
Emisphere Patents or Emisphere Program Patents and/or (b) any
Emisphere Know-How or Emisphere Program Know-How that remains
confidential or otherwise proprietary to Emisphere; and
12.5.6 to the extent this Agreement is terminated (as opposed to expired)
in the Territory or any particular country in the Territory, Lilly
shall
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promptly make an accounting to Emisphere of the inventory of the
Product(s) which it has in the Territory or for such particular
country or countries in the Territory, as the case may be, if any,
as of the date of such termination and Lilly shall have the right
for a period of [* * *] after said termination to sell such
inventory of the Product(s) in the Territory or in such particular
country or countries in the Territory, as the case may be, or, if
appropriate and legally permissible, to transport such inventory
of Product(s) for sale in another country or countries in the
Territory within such [* * *] period; provided that the Net Sales
thereof shall be subject to the royalty provisions of Clause 8 and
so payable to Emisphere. Thereafter, any remaining inventory of
Product(s) shall be disposed of by mutual agreement of the Parties
in accordance with regulatory requirements.
12.5.7 upon the conclusion of the term of this Agreement in any
particular country, Lilly shall have a fully paid-up, exclusive
license to make or use the Emisphere Know-How and Emisphere
Program Know-How for the Products in the Field in that country.
Upon such conclusion of the term of this Agreement in any
particular country, [* * *].
12.6 Lilly shall have the option to terminate the Agreement upon [* * *] prior
written notice to Emisphere. Lilly shall pay for any and all external (to
Lilly) research and development commitments by Emisphere in place at the
time of such notice of termination to the extent that Emisphere cannot
terminate the same without penalty.
If Lilly terminates this Agreement without cause (e.g., for reasons other
than safety of the Carriers, clinical results of the Product, or the
Emisphere Technology efficiency), the Parties will issue a joint press
release which states that the termination was not due to the Emisphere
Technology, and that Lilly will continue to evaluate the Emisphere
Technology with respect to other Lilly therapeutic Compounds.
13. WARRANTIES/INDEMNITIES
13.1 Emisphere represents and warrants that it has the sole, exclusive and
unencumbered right to grant the licenses and rights herein granted to
Lilly, and that it has not granted any option, license, right or interest
in or to the Emisphere Technology, the Emisphere Program Technology, the
Carriers or the Product(s) to any third party which would conflict with
the rights granted by this Agreement.
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In the case where the Emisphere Technology or the Emisphere Program
Technology is covered by a patent or patents (or other intellectual
property rights) held by an Independent Third Party, and both Emisphere
and Lilly agree that a license is required under any such patent (or
other intellectual property right) for the Parties to utilize the
Emisphere Technology or the Emisphere Program Technology, Emisphere shall
obtain such license and shall not pass on to Lilly, in any manner, any of
the costs associated with obtaining such a license, including royalties
to the Independent Third Party. In no case, however, shall Emisphere be
required to obtain such a license if the costs of so doing would exceed
the royalty payments by Lilly provided for hereunder. However, Lilly
shall be permitted to obtain such a license and deduct from royalties
otherwise due to Emisphere the costs of obtaining the license, up to a
limit of all royalty payments due to Emisphere hereunder. In any such
case, Lilly, in its negotiations with the Independent Third Party with
respect to the amount of compensation for such a license, shall act in
good faith vis a vis Emisphere.
13.2 Lilly represents and warrants that it has the sole, exclusive and
unencumbered right to grant the licenses and rights herein granted to
Emisphere and that it has not granted any option, license, right or
interest in or to the Lilly Technology or the Lilly Program Technology to
any third party which would conflict with the rights granted by this
Agreement.
In the case where the Lilly Technology or the Lilly Program Technology is
covered by a patent or patents (or other intellectual property rights)
held by an Independent Third Party, and, as a result thereof, either (i)
Lilly is prohibited from continuing the development or sale of a Product
or (ii) Lilly ceases development or sale of a Product because the costs
associated with obtaining the rights to proceed with development or sale
of the Product make such continued development or sale uneconomic in
Lilly's sole judgment, then the licenses granted hereunder by Emisphere
shall no longer be exclusive to Lilly, and Emisphere shall, in its sole
discretion, have the right to enter into a license agreement with such
Independent Third Party for use of the Emisphere Technology or Emisphere
Program Technology in the development or sale of the Product. The
foregoing shall not be interpreted so as to imply any license of the
Lilly Technology or the Lilly Program Technology to Emisphere or to the
Independent Third Party, nor shall this clause be deemed an impediment to
any agreement among Emisphere, Lilly and the Independent Third Party to
develop or sell the Product.
13.3 Emisphere represents and warrants that to the best of its knowledge, the
true inventors of the subject matter claimed are named in the Emisphere
Patents
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and all such inventors have irrevocably assigned all their rights and
interests therein to Emisphere.
13.4 Emisphere represents and warrants that it is not aware of any information
material to the examination of the Emisphere Patents that was not
disclosed to the United States Patent Office.
13.5 Emisphere and Lilly represent and warrant for the benefit of each other
that the execution of this Agreement by them and the full performance and
enjoyment of the rights of them under this Agreement will not breach the
terms and conditions of any license, contract, understanding or
agreement, whether express, implied, written or oral between them and any
third party.
13.6 Emisphere and Lilly represent and warrant for the benefit of each other
that as of the Effective Date of executing this Agreement, to the best of
their knowledge no patents, trade secrets or any other proprietary rights
of any third party would be infringed by the manufacture, use or sale of
the Product(s).
13.7 Lilly represents and warrants that with respect to all regulatory filings
to obtain NDA approvals, to the best of Lilly's knowledge, the data and
information in Lilly's submission(s) are and shall be free from fraud or
material falsity, that the NDA approvals have not been and will not be
obtained either through bribery or the payment of illegal gratuities,
that the data and information in Lilly's submissions are and shall be
accurate and reliable for purposes of supporting approval of the
submissions, and that the NDA approvals are and shall be obtained without
illegal or unethical behavior of any kind.
13.8 Lilly represents and warrants that the Product(s) sold by Lilly under
this Agreement shall conform to the Specifications and be in accordance
with all regulations and requirements of the FDA including the then
current Good Manufacturing Practice regulations which apply to the
manufacture and supply of the Product(s). Lilly represents and warrants
that the Product(s) sold by it shall not be adulterated or mis-branded as
defined by the US Federal Food, Drug and Cosmetic Act, and shall not be a
product which would violate any section of such Act if introduced in
interstate commerce. EXCEPT AS EXPRESSLY STATED IN THIS CLAUSE 13.8, ALL
OTHER WARRANTIES, CONDITIONS AND REPRESENTATIONS, EXPRESS OR IMPLIED,
STATUTORY OR OTHERWISE, INCLUDING A WARRANTY AS TO THE QUALITY OR FITNESS
FOR ANY PARTICULAR PURPOSE OF THE PRODUCT(S) ARE HEREBY EXCLUDED AND
LILLY SHALL NOT BE LIABLE IN CONTRACT, TORT OR OTHERWISE FOR ANY LOSS,
DAMAGE, EXPENSE OR INJURY OF ANY KIND WHATSOEVER, CONSEQUENTIAL OR
OTHERWISE, ARISING OUT
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OF OR IN CONNECTION WITH THE PRODUCT(S) OR ANY DEFECT IN THE PRODUCT(S)
OR FROM ANY OTHER CAUSE.
13.9 Lilly is fully cognizant of all applicable statutes, ordinances and
regulations of the Territory with respect to the manufacture of the
Product(s) including, but not limited to, the U.S. Federal Food, Drug and
Cosmetic Act and regulations thereunder, current Good Laboratory
Practices and current Good Manufacturing Practices. Lilly shall
manufacture the Product(s) in conformance with the Specifications and the
Drug Master File (which Lilly shall own), to the extent any such Drug
Master File exists, and in a manner which fully complies with such
statutes, ordinances, regulations and practices.
13.10 Emisphere represents and warrants that the Carrier supplied by Emisphere
under this Agreement shall conform to the Specifications and be in
accordance with all regulations and requirements of the FDA including the
then current Good Manufacturing Practice regulations which apply to the
manufacture and supply of the Carrier. Emisphere represents and warrants
that the Carrier supplied by it shall not be adulterated or mis-branded
as defined by the US Federal Food, Drug and Cosmetic Act, and shall not
be a product which would violate any section of such Act if introduced in
interstate commerce. EXCEPT AS EXPRESSLY STATED IN THIS CLAUSE 13.10, ALL
OTHER WARRANTIES, CONDITIONS AND REPRESENTATIONS, EXPRESS OR IMPLIED,
STATUTORY OR OTHERWISE, INCLUDING A WARRANTY AS TO THE QUALITY OR FITNESS
FOR ANY PARTICULAR PURPOSE OF THE PRODUCT(S) ARE HEREBY EXCLUDED AND
EMISPHERE SHALL NOT BE LIABLE IN CONTRACT, TORT OR OTHERWISE FOR ANY
LOSS, DAMAGE, EXPENSE OR INJURY OF ANY KIND WHATSOEVER, CONSEQUENTIAL OR
OTHERWISE, ARISING OUT OF OR IN CONNECTION WITH THE PRODUCT(S) OR ANY
DEFECT IN THE PRODUCT(S) OR FROM ANY OTHER CAUSE.
13.11 Emisphere is fully cognizant of all applicable statutes, ordinances and
regulations of the Territory with respect to the manufacture of the
Carrier including, but not limited to, the U.S. Federal Food, Drug and
Cosmetic Act and regulations thereunder, current Good Laboratory
Practices and current Good Manufacturing Practices. Emisphere shall
manufacture the Carrier in conformance with the Specifications and the
Drug Master File and in a manner which fully complies with such statutes,
ordinances, regulations and practices. Emisphere shall own the Drug
Master File with respect to the Carriers, and Lilly shall have access and
a right of review thereto with respect to its manufacture of Carriers and
its regulatory filings.
13.12 In addition to any other indemnifications provided for herein, Emisphere
shall indemnify and hold harmless Lilly and its Affiliates and their
respective
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employees, agents, partners, officers and directors from and against any
claims, losses, liabilities or damages (including reasonable attorney's
fees and expenses) incurred or sustained by Lilly arising out of or in
connection with any (a) breach of any representation, covenant, warranty
or obligation by Emisphere hereunder, or (b) any act or omission on the
part of Emisphere or any of its agents or employees in the performance of
this Agreement.
13.13 In addition to any other indemnifications provided for herein, Lilly
shall indemnify and hold harmless Emisphere and its Affiliates and their
respective employees, agents, partners, officers and directors from and
against any claims, losses, liabilities or damages (including reasonable
attorney's fees and expenses) incurred or sustained by Emisphere arising
out of or in connection with any (a) breach of any representation,
covenant, warranty or obligation by Lilly hereunder, or (b) any act or
omission on the part of Lilly or any of its agents or employees in the
performance of this Agreement.
13.14 Lilly shall assume the sole and entire responsibility and shall indemnify
and hold harmless Emisphere from any and all claims, liabilities,
expenses, including reasonable attorney's fees, responsibilities and
damages by reason of any claim, proceedings, action, liability or injury
arising out of any faults of the Product(s) resulting from the transport,
packaging, storage, handling, distribution, marketing or sale of the
Product(s) by Lilly, to the extent that it was caused by the negligence
or wrongful acts or omissions on the part of Lilly.
13.15 Emisphere shall assume the sole and entire responsibility and shall
indemnify and hold harmless Lilly from any and all claims, liabilities,
expenses, including reasonable attorney's fees, responsibilities and
damages by reason of any claim, proceeding, action, liability or injury
arising out of any faults of the Carrier(s) resulting from the transport,
packaging, storage, handling, distribution, marketing or sale of the
Carrier(s) by Emisphere, to the extent that it was caused by the
negligence or wrongful acts or omissions on the part of Emisphere.
13.16 As a condition of obtaining an indemnity in the circumstances set out
above, the Party seeking an indemnity shall:
13.16.1 fully and promptly notify the other Party of any claim or
proceeding, or threatened claim or proceeding;
13.16.2 permit the indemnifying Party to take full care and control of
such claim or proceeding;
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13.16.3 cooperate in the investigation and defense of such claim or
proceeding;
13.16.4 not compromise or otherwise settle any such claim or proceeding
without the prior written consent of the other Party, which
consent shall not be unreasonably withheld, conditioned or
delayed; and
13.16.5 take all reasonable steps to mitigate any loss or liability in
respect of any such claim or proceeding.
13.17 NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, EMISPHERE AND
LILLY SHALL NOT BE LIABLE TO THE OTHER BY REASON OF ANY REPRESENTATION OR
WARRANTY, CONDITION OR OTHER TERM OR ANY DUTY OF COMMON LAW, OR UNDER THE
EXPRESS TERMS OF THIS AGREEMENT, FOR ANY CONSEQUENTIAL OR INCIDENTAL LOSS
OR DAMAGE (WHETHER FOR LOSS OF PROFIT OR OTHERWISE) AND WHETHER
OCCASIONED BY THE NEGLIGENCE OF THE RESPECTIVE PARTIES, THEIR EMPLOYEES
OR AGENTS OR OTHERWISE WHETHER OR NOT THEY HAVE BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
14. REGULATORY APPROVALS
14.1 Any and all INDAs, NDAs and other applications for regulatory approval
filed hereunder for the Product(s) shall be the responsibility and
property of Lilly. Lilly shall allow Emisphere access thereto to enable
Emisphere to fulfill its obligations and exercise its rights under this
Agreement. Lilly will be responsible for all regulatory filings in all
countries and shall allow Emisphere access to related correspondence, to
the extent such access is necessary to enable Emisphere to fulfill its
obligations and exercise its rights under this Agreement. In particular,
Lilly agrees to inform Emisphere should any such correspondence
reasonably pertain to the Emisphere Technology or the Emisphere Program
Technology. The Parties shall collaborate in relation to obtaining the
approval of the FDA for final approved labeling.
14.2 Save as otherwise outlined in this Agreement, the costs and expenses of
any filings and proceedings made by Lilly to the FDA, including post
approval studies required by the FDA in respect of the Product(s), and to
maintain the FDA approval hereunder shall be paid by Lilly.
14.3 Lilly shall indemnify and hold harmless Emisphere, its agents and
employees from and against all claims, damages, losses, liabilities and
expenses to which Emisphere, its agents, and employees may become subject
related to or arising
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out of Lilly's bad faith, gross negligence or intentional misconduct in
connection with the filing or maintenance or failure to file or maintain
or prosecute the NDA.
14.4 Subject to the provisions of Clause 14.4, it is hereby acknowledged that
there are inherent uncertainties involved in the registration of
pharmaceutical products with the FDA insofar as obtaining approval is
concerned and such uncertainties form part of the business risk involved
in undertaking the form of commercial collaboration as set forth in this
Agreement. Therefore, save for using its reasonable efforts, Lilly and
Emisphere shall have no liability to each other solely as a result of any
failure of the Product(s) to achieve the approval of the FDA, or any
other regulatory body in the Territory.
14.5 Should the Parties receive a notice of regulatory inspection from any
governmental agency, or if the Parties receive notice of any potential
regulatory action, relative to the Carrier, the Parties will have an
obligation to notify each other of same.
Emisphere will prepare and provide Lilly with all information deemed
necessary by Lilly for worldwide regulatory submission of the Product
(Lilly will provide Emisphere with a template for such submissions, which
Emisphere shall prepare and provide the relevant information to Lilly).
Emisphere shall also provide Lilly with necessary access to any
regulatory filings worldwide relevant to the Product and Lilly shall be
entitled to use the information contained therein in its own regulatory
filings on the Product. Should Emisphere wish, at any time during the
term of this Agreement, to modify its regulatory filings relating to the
Product, Emisphere shall provide Lilly with written notification of its
intentions prior to making such modification. Any proposed modification
not required by law, government or regulatory agency must be responded to
by Lilly within thirty (30) days. If Lilly's response is not received by
Emisphere within 30 days, approval of such proposal shall be deemed to
have been granted. Finally, to the extent details of the regulatory
filing process are not set forth in this section or elsewhere in the
Agreement, the Steering Committee shall decide any such matters.
15. INSURANCE
15.1 Lilly shall maintain comprehensive general liability insurance, including
product liability insurance on the Product(s) manufactured and/or sold in
such prudent amount as shall be determined by Lilly management for the
duration of this Agreement and for a period of two (2) years thereafter.
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15.2 Emisphere shall maintain comprehensive general liability insurance,
including product liability insurance on the Carrier(s) manufactured for
and/or sold to Lilly in such prudent amount as shall be determined by
Emisphere management for the duration of this Agreement and for a period
of two (2) years thereafter. Emisphere shall also provide Lilly with a
vendor's certificate for the Carriers substantially in a form to be
agreed between the Parties.
16. IMPOSSIBILITY OF PERFORMANCE - FORCE MAJEURE
16.1 Neither Party to this Agreement shall be liable for delay in the
performance of any of its obligations hereunder if such delay results
from causes beyond its reasonable control, including, without limitation,
acts of God, fires, strikes, acts of war, or intervention of a government
authority, non availability of raw materials, but any such delay or
failure shall be remedied by such Party as soon as practicable.
17. SETTLEMENT OF DISPUTES; PROPER LAW
17.1 The Parties will attempt in good faith to resolve any dispute arising out
of or relating to this Agreement promptly by negotiation between the
Chief Executive Officer of Emisphere and (a) the Vice President of
Science, Technology and Proteins if the dispute is prior to Launch of
Products in any country in the Territory, or (b) if the dispute arises
after such Launch, then the Vice President of Lilly's general business
unit responsible for the Product at issue. In the event that such
negotiations do not result in a mutually acceptable resolution, the
Parties agree to consider other dispute resolution mechanisms including
mediation. Subject to the provisions of Clause 17.2, in the event that
the Parties fail to agree on a mutually acceptable dispute resolution
mechanism, any such dispute shall be finally settled by a court of
competent jurisdiction. The Parties hereby submit to the jurisdiction of
the state and Federal courts located in the state of New York.
17.2 This Agreement shall be governed by and construed in accordance with the
laws of New York without reference to conflicts of laws principles.
18. ASSIGNMENT
18.1 This Agreement may not be assigned by either Party without the prior
written consent of the other, which consent shall not be unreasonably
withheld, conditioned or delayed, save that either Party may assign this
Agreement to its Affiliate or to any successor by merger or sale of
substantially all of the assets of its business unit to which this
Agreement relates without such consent, provided that such assignment
does not have any adverse tax
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consequences on the other Party. Emisphere and Lilly will discuss any
assignment by either Party to an Affiliate prior to its implementation in
order to avoid or reduce any additional tax liability to the other Party
resulting solely from different tax law provisions applying after such
assignment to an Affiliate. For the purpose hereof, an additional tax
liability shall be deemed to have occurred if either Party would be
subject to a higher net tax on payments made hereunder after taking into
account any applicable tax treaty and available tax credits than such
Party was subject to before the proposed assignment.
19. NOTICES
19.1 Any notice to be given under this Agreement shall be sent in writing in
English by registered mail or telefaxed to the following addresses:
If to Lilly:
Eli Lilly and Company
Lilly Corporate Center
Indianapolis, IN 46285
Attention: General Patent Counsel
Telephone: (317) 276-3881
Telefax: (317) 276-2763
If to Emisphere:
Emisphere Technologies, Inc.
15 Skyline Drive
Hawthorne, NY 10532
Attention: Vice President Business Development
Telephone: (914) 347-2220
Telefax: (914) 347-2498
or to such other address(es) and telefax number(s) as may from time to
time be notified by either Party to the other hereunder.
19.2 Any notice sent by mail shall be deemed to have been delivered within
[* * *] working days after dispatch and any notice sent by telefax shall
be deemed to have been delivered within [* * *] of the time of the
dispatch. Notice of change of address shall be effective upon receipt.
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20. MISCELLANEOUS CLAUSES
20.1 No waiver of any right under this Agreement shall be deemed effective
unless contained in a written document signed by the Party charged with
such waiver, and no waiver of any breach or failure to perform shall be
deemed to be a waiver of any other breach or failure to perform or of any
other right arising under this Agreement.
20.2 If any provision in this Agreement is agreed by the Parties to be, or is
deemed to be, or becomes invalid, illegal, void or unenforceable under
any law that is applicable hereto, (i) such provision will be deemed
amended to conform to applicable laws so as to be valid and enforceable
or, if it cannot be so amended without materially altering the intention
of the Parties, it will be deleted, with effect from the date of such
agreement or such earlier date as the Parties may agree, and (ii) the
validity, legality and enforceability of the remaining provisions of this
Agreement shall not be impaired or affected in any way.
20.3 The Parties shall use their respective reasonable endeavors to ensure
that the Parties and any necessary third party shall do, execute and
perform all such further deeds, documents, assurances, acts and things as
any of the Parties hereto may reasonably require by notice in writing to
the other Party or such third party to carry the provisions of this
Agreement.
20.4 This Agreement shall be binding upon and inure to the benefit of the
Parties hereto, their successors and permitted assigns and sub-licensees.
20.5 No provision of this Agreement shall be construed so as to negate, modify
or affect in any way the provisions of any other agreement between the
Parties unless specifically referred to, and solely to the extent
provided, in any such other agreement. In the event of a conflict between
the provisions of this Agreement and the provisions of the Option
Agreement, the terms of the Option Agreement shall prevail unless this
Agreement specifically provides otherwise.
20.6 No amendment, modification or addition hereto shall be effective or
binding on either Party unless set forth in writing and executed by a
duly authorized representative of each Party.
20.7 This Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original and all of which
when taken together shall constitute this Agreement.
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20.8 Each of the Parties undertakes to do all things reasonably within its
power which are necessary or desirable to give effect to the spirit and
intent of this Agreement.
20.9 Each of the Parties hereby acknowledges that in entering into this
Agreement it has not relied on any representation or warranty save as
expressly set out herein or in any document referred to herein.
20.10 Nothing contained in this Agreement is intended or is to be construed to
constitute Emisphere and Lilly as partners, or Emisphere as an employee
of Lilly, or Lilly as an employee of Emisphere. Neither Party hereto
shall have any express or implied right or authority to assume or create
any obligations on behalf of or in the name of the other Party or to bind
the other Party to any contract, agreement or undertaking with any third
party.
20.11 This Agreement has been jointly prepared and shall not be strictly
construed against any Party.
20.12 The parties hereto agree to disclose publicly through a joint press
release, upon signing this Agreement, the nature and scope of the
Agreement. All press releases, scientific papers and all other public
disclosures related to this Agreement shall be approved in advance by
both parties, except for such disclosures permitted pursuant to Clause
11, above, such approval not to be unreasonably withheld or delayed. Upon
the occurrence of other significant events in the Research and
Development Program or other activities hereunder, Emisphere and Lilly
agree to make joint press releases. In all cases Lilly shall have the
right to review portions of any SEC filings by Emisphere that relate
directly to Lilly; in no case shall either party release information
which would allow a third party to determine the actual Carriers
(including, without limitation, the Carrier/Compound complex in the
Product) developed hereunder.
IN WITNESS THEREOF the Parties hereto have executed this Agreement in duplicate.
SIGNED BY
For and on behalf of
Eli Lilly and Company
in the presence of:
41
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Confidentiality Requested by
Emisphere Technologies, Inc.
SEC File No. 1-10615
SIGNED BY Michael M. Goldberg, M.D.
For and on behalf of
Emisphere Technologies, Inc.
in the presence of:
42
<PAGE>
Confidentiality Requested by
Emisphere Technologies, Inc.
SEC File No. 1-10615
APPENDIX I
[* * *] Content Check List
[* * *].
1
