EXHIBIT 10.9
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AGREEMENT
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THIS AGREEMENT is entered into as of the last date of signature hereto (the
"Effective Date") by and between Xxx Xxxxx and Company, a corporation organized
under the laws of Indiana ("Lilly") and having its principal office at Lilly
Xxxxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx, 00000, and Albany Molecular Research,
Inc., a corporation organized under the laws of New York ("Albany") and having
its principal office at 00 Xxxxxxxxx Xxxxxx, Xxxxxx Xxx Xxxx 00000.
Recitals
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X. Xxxxx possesses technology and knowledge with regard to combinatorial
chemical synthesis and wishes to transfer a portion of this know-how to Albany
to enable Albany to become proficient in Lilly's art of practice of
combinatorial chemistry for the purpose of resynthesizing Lilly's combinatorial
collection of chemical compounds.
B. Albany provides resources and services in pharmaceutical chemical
synthesis, analogs and small scale manufacturing and wishes to make available
its resources for the purpose of re-synthesizing Lilly's combinatorial chemistry
library and to establish a group dedicated to combinatorial organic synthesis.
C. The Parties recognize and acknowledge that Lilly, in exchange for
transferring combinatorial chemistry know-how to Albany, wishes to protect the
confidential nature of this technology, maintain a limited period of exclusivity
on Albany's practice of this technology, and participate in future revenues
which Albany may receive as a result of the practice of this technology.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and premises contained in this Agreement, the Parties agree as follows:
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ARTICLE I
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Definitions
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Section 1.1 General. Terms defined in this Article I and parenthetically
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elsewhere shall have the same meaning throughout this Agreement, including the
Recitals hereto. Defined terms may be used in the singular or plural.
Section 1.2 "Affiliates" means (a) any corporation or entity of which Lilly
or Albany at the time in question, directly or indirectly owns or controls more
than fifty percent (50%) of the stock having the right to vote for directors
thereof, or (b) any corporation, individual or entity which now or hereafter
directly or indirectly owns or controls more than fifty percent (50%) of the
stock of Lilly or Albany having the right to vote for directors thereof.
Section 1.3 "Cash Compensation" means any signature fees, license fees,
milestone payments and royalties or equity payments which Albany receives
pursuant to rights granted to Albany under this Agreement. By way of example,
and without limitation, Cash Compensation shall not include payments made to
Albany for research and/or development provided that any agreements covering
such payments are made on an arms length basis on market terms therefor. If
non-monetary consideration is so received, then a commercially reasonable
monetary value will be assigned for purposes of calculating Lilly's share of
compensation.
Section 1.4 "Combinatorial Technology" means ***.
Section 1.5 "Confidential Information" means all materials and information
disclosed by one Party to the other under this Agreement, including, without
limitation: information and materials (whether or not patentable) regarding
Lilly's or Albany's technology, products, research strategy, business
information or objectives; all information and data furnished to either Lilly or
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Albany by any representative of Lilly or Albany, as the case may be; and all
information or data that is acquired by Lilly or Albany by observation during
any visit to the other Parties' facilities.
Section 1.6 "CPI-U" means the Consumer Price Index for all Urban
Consumers as published by the United States Department of Labor, Bureau of Labor
Statistics. The base period for the purpose of calculating adjustments using the
CPI-U under this Agreement shall be December 1, 1997.
Section 1.7 "Effective Date" means the signature date of the last of the
Parties to sign this Agreement.
Section 1.8 "FTE" means a full time equivalent scientific person year
(consisting of a total of *** (***) hours per year of scientific work on or
directly related to the Program), carried out by an Albany employee. Scientific
work on or directly related to the Program to be performed by Albany employees
can include, but is not limited to, experimental laboratory work, recording and
writing of results, reviewing literature and references, holding scientific
discussions, managing and leading scientific staff, and carrying out Program
management duties.
Section 1.9 "Lilly Combinatorial Library" means a collection of
approximately *** (***) organic chemical compounds
that are owned by Lilly and were produced by Lilly using Combinatorial
Technology.
Section 1.10 "Lilly Know-How" means all discoveries, trade secrets,
inventions, and other proprietary information, including formulae, algorithms,
software, technical drawings and methods, and materials, whether or not
patentable, relating to Combinatorial Technology which are owned by Lilly and
disclosed to Albany pursuant to this Agreement.
Section 1.11 "Lilly Licensed Technology" means Lilly Know-How and Lilly
Patent Rights.
Section 1.12 "Lilly Patent Rights" means a Patent Right claiming Lilly
Know-How.
Section 1.13 "Lilly Scaffold" means a common structural subunit used in the
synthesis of the Lilly Combinatorial Library.
Section 1.14 "Lilly Strategic Focus Area" means a medical area of
pharmaceutical discovery research, development or marketing which Lilly has
targeted as an area for strategic growth as evidenced by its prominent role in
Lilly strategic business planning documents and
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presentations, a commitment of Lilly research or development personnel or
resources to the area, or the stature accorded the area as reflected in Lilly's
pharmaceutical research or development organizational structure. The current
Lilly Strategic Focus Areas are as set forth on Appendix A to this Agreement.
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Section 1.15 "Net Sales" means, with respect to a Product, the gross amount
invoiced by Albany or an Albany Affiliate to unrelated Third Parties for the
Product, less:
a) Trade, quantity and cash discounts allowed;
b) Discounts, refunds, rebates, chargebacks, retroactive price
adjustments, and any other allowances which effectively reduce the
net selling price and are appropriately deducted from sales under
generally accepted accounting principles;
c) Product returns and allowances;
d) That portion of the sales value associated with drug delivery
systems, which calculation methodology requires approval by Lilly,
such approval not to be unreasonably withheld; and
e) Any tax imposed on the product that is appropriately deducted from
sales under generally accepted accounting principles;
Such amounts shall be determined from the books and records of Albany
maintained in accordance with generally accepted accounting principles ("GAAP"),
consistently applied.
In the event a Product is sold as part of a Combination Product, the Net
Sales of the Product, for the purposes of determining royalty payments, shall be
determined by multiplying the Net Sales of the Combination Product (as defined
above in this Section 1.15) by the fraction, A/(A+B) where A is the average sale
price of the Product when sold separately in finished form and B is the average
sale price of the other product(s) sold separately in finished form. In the
event that the average sale price of both the Product and the other product(s)
in the Combination Product cannot be determined, the Net Sales of the Product
shall be deemed to be equal to fifty percent (50%) of the Net Sales of the
Combination Product. The Net Sales price for a Combination Product shall be
calculated once each calendar year and such price shall be used during all
applicable royalty reporting periods for the entire calendar year. When
determining the average sale price of a Product or product(s), the average sale
price shall be calculated using data
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arising from the twelve (12) months preceding the calculation of the Net Sales
price for the Combination Product. As used above, the term "Combination Product"
means any pharmaceutical product which comprises the Product and other active
compounds and/or ingredients determined in accordance with the method of
accounting normally employed by Albany in computing cost of goods.
Section 1.16 "Party" means Lilly or Albany; "Parties" means Lilly and
Albany.
Section 1.17 "Patent Right(s)" means a patent or patent application,
including provisional applications, Patent Cooperation Treaty (PCT) patent
applications, and all divisions, continuations, continuations-in-part, reissues,
reexaminations, extensions, Supplementary Protection Certificates, and any
similar intellectual property rights, and all counterparts thereof in any
country.
Section 1.18 "Product" means a composition which has been packaged and
labeled and is ready for administration for human or animal therapy comprising a
compound discovered or developed by Albany using the Lilly Licensed Technology
or Program Technology. Product does not include any compound contained in the
Lilly Combinatorial Library or any Lilly Scaffold.
Section 1.19 "Program" means the research program to re-synthesize the
Lilly Combinatorial Library as it exists on the Effective Date, (***) which is
to be undertaken by Albany and is funded by Lilly pursuant to this Agreement.
Section 1.20 "Program Know-How" means all information, data or materials
discovered or developed in the course of the Program (whether or not patentable)
by Albany or jointly by Albany and Lilly, including without limitation:
instructions; processes; formulae; assays; biological, chemical,
pharmacological, toxicological, pharmaceutical, physical and analytical,
clinical, safety, manufacturing and quality control data, information and
materials.
Section 1.21 "Program Patent Rights" means Patent Rights covering Program
Know-How.
Section 1.22 "Program Technology" means Program Know-How and Program
Patent Rights.
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Section 1.23 "SAR Projects" means a synthesis project in which the
objective is to optimize the activity of a known lead compound using either
combinatorial technology or traditional medicinal chemistry.
Section 1.24 "Third Party" means any person or organization, incorporated
or unincorporated, other than Albany and Lilly and their respective Affiliates.
ARTICLE II
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Exclusive Arrangement/Restrictions
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Section 2.1 Exclusivity. During the term of the Program, Albany agrees that
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it shall not participate, either directly or in collaboration with any Third
Party in any research relating to Combinatorial Chemistry except pursuant to the
terms of this Agreement, without first securing the written approval of Lilly.
Section 2.2 Non-Use of Technology. During the term of the Program, Albany
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shall not (a) utilize the Lilly Licensed Technology or the Program Technology in
any collaboration with a Third Party unless agreed to by Lilly in writing; or
(b) utilize the Lilly Licensed Technology or the Program Technology to generate
any Combinatorial Library for internal use or to be offered to Third Parties for
use.
Section 2.3 Utilization of Technology. After the expiration or termination
-------------------------
of the Program and for a period of *** (***) years thereafter, Albany may only
utilize the Lilly Licensed Technology and the Program Technology for its
internal research programs or in collaboration with Third Parties subject to the
provisions of this Agreement. Thereafter, Albany may utilize the Lilly Licensed
Technology and the Program Technology without obligation to Lilly, subject to
the obligations of Article VIII.
Section 2.4 Third Party Agreements. Albany shall notify Lilly in the event
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that Albany desires to enter into negotiations with a Third Party on an
agreement relating to a collaboration which would utilize Lilly Licensed
Technology or Program Technology (a "Third Party Collaboration"). Lilly shall
have the right to veto any *** (***) of such proposed Third Party Collaborations
if such proposed collaborations are within a Lilly Strategic Focus Area.
Following the last of such *** (***) vetoes by Lilly, Albany may enter into any
Third Party
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Collaboration subject to the other terms of this Agreement. If such proposed
Third Party Collaboration is outside the Lilly Strategic Focus Area, Albany may
enter into such proposed Third Party Collaboration subject to the other terms of
this Agreement.
Section 2.5 Other Collaboration. During the term of the Program, and in
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the event that Albany desires to enter into a collaboration or other arrangement
with a Third Party in the area of Combinatorial Technology research that would
not utilize Lilly Licensed Technology or Program Technology, Albany shall inform
the Program Chairs. The Program Chairs may approve or disapprove such proposed
collaboration or other arrangement. In the event the Program Chairs disapprove,
Albany shall not enter into such collaboration or other arrangement. In the
event that the Program Chairs are unable to agree, such question shall be
referred to the Executive Director of Lilly's Research Technologies for
resolution. If such a collaboration or other arrangement is approved, any such
collaboration or other arrangement conducted at Albany facilities shall be
conducted in facilities that are separate from those facilities used to conduct
the Program.
Section 2.6 Security. Albany shall use its best efforts to protect and
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to keep confidential the Lilly Licensed Technology and Program Technology. Other
than provided in this Agreement, only those Albany employees working directly on
the Program shall have access to the Lilly Licensed Technology and/or Program
Technology and only those Albany employees working directly on the Program, as
well as management, security, maintenance personnel, and other personnel that
are approved by both Program Chairs shall have access to the facilities in which
the Program is being conducted.
ARTICLE III
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Program
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Section 3.1 Goals and Objectives. Albany agrees to re-synthesize the
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Lilly Combinatorial Library under the terms and conditions of this Agreement.
Promptly upon execution of this Agreement, and from time to time during the term
of the Program as described in Article IV, Lilly will commence a training
program of representatives of the FTE's to be assigned by Albany to the Program.
Re-synthesis of the Lilly Combinatorial Library shall be completed when Albany
*** the Lilly
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Combinatorial Library meeting the qualitative standards set forth in accordance
with Section 3.10, and the Lilly Combinatorial Library has been delivered to
Lilly pursuant to Section 3.11.
Section 3.2 Program Managers. The Parties shall each designate one (1)
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Program Manager. The Program Managers shall have the responsibility for the day-
to-day management of activities of the Parties under the Program. Each Party
shall make its initial designation of its representation not later than thirty
(30) days after execution of this Agreement.
Section 3.3 Program Chairs. Each Party shall designate one (1)
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representative as a Program Chair. The initial Program Chair of Lilly shall be
***, and the initial Program Chair of Albany shall be Xxxxxx X. X'Xxxxx, Ph.D.
The Program Chairs shall meet no less frequently than once each calendar
quarter, and shall meet at such other times as deemed appropriate by the Program
Chairs. Each Party may change its Program Chair at any time upon written notice
to the other Party. The location of the Program Chairs' meetings shall alternate
between New York and North Carolina, or as otherwise mutually agreed. The
Program Chairs may conduct meetings by telephone or video-conference. If a
Program Chair of a Party is unable to attend a meeting, such Party may designate
an alternate to attend such meeting in place of the missing Program Chair. The
Program Chairs shall be responsible for coordinating and reviewing the
activities of the Parties under the Program. The Program Chairs shall be
informed of the specific individuals who will work on the Program. The Program
Chairs shall also attempt to settle any disputes that may arise between the
Parties. The unanimous vote of the Program Chairs shall be required to take any
action. The Program Chairs shall refer any issue that it is unable to resolve to
the Executive Director of Lilly's Research Technologies for resolution.
Section 3.4 Albany's Commitment to the Program. Albany shall commit ***
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(***) FTEs to work on the Program. The ratio of Ph.D. to non-Ph.D. FTEs
committed to the Program by Albany shall be ***. The number of FTEs working on
the Program may be increased at the request of Lilly for additional compensation
which shall equal the pro-rata equivalent of the compensation provided in
Section 6.1.2 and which amount shall be adjusted by the CPI in accordance with
Section 6.1.2.
Section 3.5 Diligence. Albany shall use reasonable efforts in pursuing
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and conducting research under the Program. Albany shall use reasonable efforts
to carry out all work done in
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connection with the Program in compliance with any federal, state or local laws,
regulations and guidelines governing the conduct of such work.
Section 3.6 Reports. Within thirty (30) days of the end of each six (6)
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month period during the term of the Agreement, Albany shall provide Lilly with a
written summary of Albany's Program activities, the results thereof, and any
material issue presented during the conduct of such Program activities during
such six (6) month period. The reports shall contain a description on the size,
characteristics, and quality of the Lilly Combinatorial Library, and any Program
Technology developed in such period.
Section 3.7 Safety and Environmental. In carrying out its
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responsibilities under this Agreement, Albany agrees to assure that the services
are conducted in compliance with any applicable Lilly protocols and/or
specifications of which Albany is reasonably advised in a timely manner and in
compliance with all applicable laws, rules, and regulations, including, but not
limited to, the U.S. Food, Drug, and Cosmetic Act and the regulations
promulgated pursuant thereto. Also included is compliance with all relevant
environmental regulations in force at the U.S. federal, state, and local levels.
Section 3.8 Work Standards. Albany represents and warrants that it will
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render the services hereunder in accordance with prevailing high professional
standards and will make all reasonable efforts to produce consistently high
levels of accuracy and expertise and to meet timetables set forth under this
Agreement for completion of services. Albany further represents and warrants
that personnel assigned to perform services under this Agreement shall have the
skills necessary to efficiently perform such services and shall produce
chemicals, data, and/or reports, as the case may be, in a form and of a quality
suitable to Lilly, provided that the re-synthesized Lilly Combinatorial Library
provided by Albany hereunder shall meet the standards set pursuant to Section
3.10.
Section 3.9 Delay Notification. Albany will endeavor with all reasonable
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effort to conform to its obligations identified herein. Although no anticipated
delays or limits in performing any activities under the Program are expected, if
such delays or limits are encountered, Albany will notify Lilly accordingly.
Lilly agrees to accommodate any reasonable change in timetables as a result of
such delays, provided the activities under the Program have been proceeding to
Lilly's satisfaction.
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Section 3.10 Library Standards. Promptly after the Effective Date, the
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Lilly Program Manager will work with the Albany Program Manager to develop
analytical quality standards from the Lilly Combinatorial Library to be
synthesized pursuant to this Agreement. Such standards shall be reviewed by the
Program Chairs and approved by Lilly. Once established, such analytical quality
standards shall be annexed to this Agreement as Exhibit B.
Section 3.11 Delivery. Albany shall deliver the re-synthesized Lilly
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Combinatorial Library, or portions thereof, to Lilly's Sphinx facility in
Durham, North Carolina upon completion as agreed by the Program Chairs. Shipment
of the Lilly Combinatorial Library or portions thereof shall be made in
accordance with both Department of Transportation and Lilly standard procedures.
Lilly shall disclose its standards to Albany prior to the shipment of the Lilly
Combinatorial Library or any portion thereof to Lilly.
ARTICLE IV
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Disclosure
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Section 4.1 Disclosure of Lilly Licensed Technology. Promptly after the
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Effective Date, Lilly will commence a training program of representatives of the
FTE's assigned by Albany to the Program. Under such training program, Lilly
shall disclose the Lilly Licensed Technology to Albany. Such representatives
shall be responsible for disclosing the Lilly Licensed Technology to the other
Albany FTEs that will work on the Program. Lilly shall only be required to
disclose the Lilly Licensed Technology to Albany that Xxxxx xxxxx necessary or
useful for Albany to fulfill its obligations under this Agreement, such
disclosure being in a manner to enable the assigned Albany FTE's to perform
***. Such disclosure may include electronic or written materials provided by
Lilly.
Section 4.2 Chemical Materials and Information. Lilly will provide
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Albany with the structure of the compounds contained in the Lilly Combinatorial
Library as well as the structure of the Lilly Scaffolds. Lilly may, at its
option, provide to Albany sufficient amounts of the Lilly
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Scaffolds necessary for Albany to resynthesize the Lilly Combinatorial Library.
Albany shall not permit any Third Party to observe or have access to any
compound in the Lilly Combinatorial Library, any Lilly Scaffold, or any
information regarding the structures of any such compounds or Lilly Scaffolds.
Section 4.3 Hardware. Lilly shall disclose to Albany ***
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used by Lilly in the synthesis, purification and analysis of the Lilly
Combinatorial Library, including preferred suppliers of such hardware that are
used by Lilly. Albany may purchase such equipment from Lilly, if available, or
the preferred suppliers from which Lilly purchased such equipment. If Albany
purchases such equipment from Lilly, such purchase shall be at ***, and Albany
shall pay Lilly for the equipment within fifteen (15) days of receipt of an
invoice from Lilly for such equipment.
Section 4.4 Further Disclosure. The Parties shall designate individuals
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to participate in informal meetings or to make informal visits as often as once
per month, or as otherwise agreed to by the Parties (the time and place of each
such meeting or visit to be determined by mutual Agreement of the Parties).
Albany shall allow reasonable access to their facilities by Lilly
representatives to observe work done and to be conducted under the Program
during normal business hours on reasonable advance notice. Each Party shall be
responsible for all of its expenses in connection with such visits.
Section 4.5 Site visits by Lilly. During the term of the Program, and at
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the request of Albany, Lilly shall dispatch at least one (1) qualified Lilly
representative to Albany for a period of up to *** (***) working days, to
provide technical assistance in connection with the synthesis of the Lilly
Combinatorial Library. Such Lilly representative granted access to Albany's
facility shall be bound by the reasonable rules and regulations of Albany and
may be prohibited from or have limited access to certain areas within Albany's
facility. Lilly shall be solely responsible for all expenses incurred by such
Lilly representative in connection with such visit.
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ARTICLE V
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Grant of Rights
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Section 5.1 License to Albany.
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5.1.1. Subject to the terms and conditions of this Agreement, Lilly
hereby grants to Albany during the term of the Program a non-exclusive license,
without the right to grant sublicenses, under Lilly Licensed Technology and
Lilly's interest in the Program Technology to re-synthesize the Lilly
Combinatorial Library in accordance with this Agreement.
5.1.2. Subject to the terms and conditions of this Agreement, Lilly
hereby grants to Albany after the term of the Program a non-exclusive license,
with the right to grant sublicenses, under Lilly Licensed Technology and Lilly's
interest in the Program Technology for any purpose.
5.1.3. All licenses granted by Lilly to Albany under this Agreement
specifically exclude any right or license to make, use, or sell Lilly Scaffolds
or the Lilly Combinatorial Library, in whole or in part.
Section 5.2 License to Lilly. Subject to the terms and conditions of this
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Agreement, Albany hereby grants to Lilly, and its Affiliates, a royalty free,
non-exclusive worldwide license, with the right to grant sublicenses, under
Albany's interest in the Program Technology to utilize the Program Technology
for any purpose.
Section 5.3 Lilly Options.
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5.3.1. During the term of the Program and for a period of *** (***)
years after the termination or expiration of the Program, Lilly shall have the
option to have Albany perform additional Combinatorial Chemistry synthesis
projects ("Additional Projects"). In the event Lilly desires to exercise such an
option, Lilly shall notify Albany in writing and the Parties shall promptly
negotiate an agreement covering each such Additional Project, which agreement
shall contain terms that are substantially similar to this Agreement. Such
agreements shall provide that there shall be *** for each such Additional
Project, and that the FTE Rate for each such Additional Project to be paid by
Lilly under such agreements shall be *** per Albany FTE devoted to such
Additional Project. Such FTE Rate will be adjusted according to the CPI-U in
1999.
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5.3.2. During the term of the Program and for a period of *** (***)
years after the termination or expiration of the Program, Lilly shall have the
option to have Albany perform SAR Projects. In the event Lilly desires to
exercise such an option, Lilly shall notify Albany in writing and the Parties
shall promptly negotiate an agreement covering each such SAR Project, which
agreement shall contain terms that are substantially similar to this Agreement.
Such agreements shall also provide that there shall be *** for each such SAR
Project, and that the FTE Rate to be paid by Lilly for each SAR Project shall be
an average of *** per Albany FTE devoted to such SAR Project (***). Such FTE
Rate shall be determined on an SAR Project-by-SAR Project basis and adjusted in
accordance with the Ph.D. to non-Ph.D. committed to each such SAR Project. Such
FTE Rate will be adjusted according to the CPI-U in 1999.
ARTICLE VI
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Payments
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Section 6.1 Payments to Albany.
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6.1.1. As partial consideration for Albany's performance of its
obligations hereunder, Lilly shall pay to Albany ***, which amount shall be used
by Albany for expenses incurred under the Program including but not limited to:
***. Such payment shall be made by Lilly within thirty (30) days after the
Effective Date.
6.1.2. As partial consideration for Albany's performance of its
obligations hereunder, Lilly hereby agrees to pay to Albany as described in
Section 6.1.3, and per FTE committed to the Program of *** (the "FTE Rate")
commencing on January 1, 1998 and continuing each quarter thereafter until the
expiration or termination of the Program. On January 1, 1999 and each
January 1 thereafter
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during the term of the Program, the FTE Rate shall be adjusted by an amount
equal to the percentage change, if any, in the CPI-U.
6.1.3. During the term of the Program, Albany shall submit to Lilly
signed invoices identifying the number of FTE's, and the monthly equivalent of
time incurred, at the completion of each quarter's efforts. Such invoices shall
be paid by Lilly within thirty (30) days of receipt and shall be in the form of
a Lilly check or wire transfer to the following account of Albany Molecular
Research, Inc.; ***; ABA # ***; Account Number ***. Lilly shall have the right
to have Albany's independent certified accountants, which accountants shall be
reasonably acceptable to Lilly, audit financial records of Albany pertaining to
this Agreement not more than once a calendar year.
6.1.4. The Parties acknowledge that payments made by Lilly pursuant
to this Article are for contract research and development expenses, and agree
that any and all tax credits or deductions for such contract research and
development expenses arising from such payments shall be claimed by Lilly.
Section 6.2 Payments to Lilly.
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6.2.1. Cash Compensation Received by Albany. As partial consideration
---- ------------ -------- ---------
for Lilly's performance of its obligations hereunder, Albany hereby agrees to
pay to Lilly, all Cash Compensation Albany shall receive under any agreement
entered into with a Third Party, for the use of Lilly Licensed Technology or the
Program Technology within three (3) years of expiration or termination of this
Program as follows: ***. Albany FTE rate charges to any Third Party on any such
projects shall not exceed ***. In the event that Albany enters into such an
Agreement that does not provide for Cash Compensation, Albany shall pay Lilly
*** percent (***%) of the gross revenues received by Albany under such Agreement
up to a total of ***. Such Cash Compensation payments to Lilly shall be paid
within thirty (30) days after receipt of such Cash Compensation by Albany.
6.2.2. Royalty. In addition to the foregoing, with respect to each
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calendar quarter, Albany shall pay to Lilly a running royalty equal to ***
percent (***%) of Net Sales of any
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Products comprising a compound discovered or developed by Albany using Lilly
Licensed Technology or Program Technology that are sold by Albany and/or its
Affiliates or its sublicensees of such Product.
6.2.3. Length of Royalty Payments. The royalties payable to Lilly
------ -- ----------------
under Section 6.2.2 of this Agreement shall be paid on a country-by-country
basis from the date of first commercial sale of each such Product in a
particular country until ten (10) years thereafter.
6.2.4. Royalty Reports. Albany shall deliver to Lilly within ninety
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(90) days after the end of each calendar quarter a written accounting of
Albany's and its Affiliates sales and other consideration received subject to
royalty payment due to Lilly for such quarter. Such reports shall contain (i)
the Net Sales by Product and royalty due on a country-by-country basis for the
quarter reporting period, and (ii) a worldwide sales forecast for the subsequent
five quarters following the current royalty reporting quarter. When Albany
delivers the accounting to Lilly, Albany shall also deliver all royalty payments
due to Lilly for the calendar quarter. Such royalty reports shall be sent to Xxx
Xxxxx and Company, Attention: *** or other address that may be designated by
Lilly.
6.2.5. Wire Transfer of Funds. All payments made by Albany to Lilly
---- -------- -- -----
under this Article VI shall be made by Federal Reserve electronic wire transfer
credit in immediately available funds to Lilly's designated bank account.
6.2.6. Audits. Albany and its Affiliate's shall keep, and cause any
------
sublicensee to keep, accurate records in sufficient detail to enable the amounts
due to Lilly to be determined. Within the term of this Agreement and within one
(1) year after its termination, Lilly shall not more than once each year have
the right at its expense to have independent certified public accountants,
selected by Lilly and reasonably acceptable to Albany, inspect Albany's, and its
Affiliate's, records for any of the two (2) preceding years for the purpose of
determining the accuracy of royalty payments. The independent certified
accountants shall keep confidential any information obtained during such
inspection and shall reported to Lilly only the amounts of royalties due and
payable. If Albany has underpaid a royalty amount due under this Agreement by
more than *** percent (***%), Albany shall promptly pay the appropriate amount
to Lilly and shall also reimburse Lilly for the cost of such audit.
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION. THE LOCATIONS
OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH ASTERISKS.
-16-
6.2.7. Exchange Rates. All payments to be made by Albany to Lilly
--------------
under this Agreement shall be made in United States dollars. In the case of
sales outside the United States, the rate of exchange to be used in computing
the amount of currency equivalent in United States dollars due Lilly shall be
made using Albany's then current standard exchange rate methodology, which
methodology shall be in conformity with generally accepted accounting principles
and approved and reviewed by Albany's independent certified public accountants.
6.2.8. Late Payments. Any amounts not paid by either Party when due
-------------
under this Agreement shall be subject to interest from and including the date
payment is due through and including the date upon which the non-paying Party
has collected immediately available funds in an account designated by such non-
paying Party at a rate equal to the sum of *** percent (***%) plus the prime
rate of interest quoted in the "Money Rates" section of The Wall Street Journal,
calculated daily on the basis of a 360-day year, or similar agreed upon
reputable data source.
Section 6.3 Taxes. All taxes which Lilly is required to pay with respect to
-----
the payments made under this Agreement shall be paid by Lilly. If laws or
regulations require withholding taxes, the taxes will be deducted prior to
remittance of the payments to Lilly and will be paid by Albany to the
appropriate government tax authority. Proof of payment shall then be provided
to Lilly either within ninety (90) days after each payment or once each year for
the prior calendar year within ninety (90) days after December 31.
Section 6.4 Reports. Albany shall provide Lilly with semi-annual reports
-------
starting one (1) year after the termination or expiration of the Program
relating to compounds discovered or developed by Albany, its Affiliates or its
sublicensees using the Lilly Licensed Technology or the Program Technology. Such
reports shall also include a summary of results of any research conducted
pursuant to any agreement with a Third Party entered into by Albany pursuant to
Section 2.4, but only to the extent that such reports are not in breach of any
obligation of confidentiality to such Third Party.
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION. THE LOCATIONS
OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH ASTERISKS.
-17-
ARTICLE VII
------- ---
Patent Ownership, Protection, Validity And Related Matters
----------------------------------------------------------
Section 7.1 Ownership. Albany shall own all inventions within the scope of
---------
the Program made solely by its employees. All inventions made jointly by
employees of Lilly and employees of Albany shall be owned jointly by Albany and
Lilly. Lilly shall own all inventions within the scope of the Program made
solely by its employees.
Section 7.2 Patentable Inventions. The Parties hereby agree that all
---------------------
Program Know-How shall be ***. If a patentable invention is conceived in the
course of the Program, Lilly and Albany shall discuss that invention and the
desirability of filing a United States patent application covering the
invention, as well as any foreign counterparts. Lilly shall make the final
decision on whether a patent application should be filed on such invention. In
the event Lilly determines that a patent application should be filed on such
invention, Albany shall file and prosecute the application. If an invention is
made jointly pursuant to 35 U.S.C. (S)116, Lilly shall make the decision on
whether a patent application covering such joint invention should be filed. In
the event Lilly determines that a patent application should be filed on such
joint invention, Lilly shall file and prosecute the application. All patent
applications and patents covering any invention made under the Program shall be
owned by the Parties or Party, as the case may be, that own(s) said invention.
Section 7.3 Review and Comment. Each Party shall provide the Program Chairs
------------------
with a copy of any patent application which first discloses any specific Program
Know-How prior to filing the first of such applications in any jurisdiction for
review and comment by the Program Chairs or its designees. The Program Chairs
and/or its designees shall maintain any such patent application in confidence,
pursuant to Article VIII.
Section 7.4 Retention of Rights. Each Party shall continue to own and
-------------------
retain proprietary rights to its Know-How and Patent Rights which are licensed
or disclosed under this Agreement except as specifically provided herein.
Section 7.5 Prosecution and Maintenance. Each Party agrees to prosecute and
---------------------------
maintain the Program Patent Rights owned by it, and to prosecute any
interference or opposition
-18-
proceedings with respect to such Program Patent Rights. Patent Rights jointly
owned by the Parties shall be prosecuted and maintained, including the
prosecution of any interference or opposition proceedings with respect thereto,
by Lilly. The Party initially responsible for such prosecution and maintenance
(the "Initial Responsible Party") shall give notice to the other Party of any
decision to cease such prosecution and maintenance and, in such case, shall
permit the other Party at its sole discretion to continue prosecution or
maintenance. If the other Party elects to continue prosecution or maintenance,
the Initial Responsible Party shall execute such documents and perform such acts
as may be reasonably necessary for the other Party to continue prosecution or
maintenance.
Section 7.6 Third Party Infringement. Albany and Lilly each agrees to take
------------------------
reasonable actions to protect the Program Patent Rights from infringement and to
protect the Program Know-How from unauthorized use, when, from its own knowledge
or upon notice by the other Party, the Party with knowledge or receiving notice
becomes aware of the reasonable probability that such infringement or
unauthorized use exists.
Section 7.7 Costs and Expenses. Each Party shall bear its own costs and
------------------
expenses in filing, prosecuting, maintaining and extending Program Patent
Rights.
Section 7.8 Third Party Infringement. If any Program Patent Right is
------------------------
infringed by a Third Party, the Party to this Agreement first having knowledge
of such infringement shall promptly notify the other in writing, which notice
shall set forth the facts of such infringement in reasonable detail. Albany
shall have the primary right, but not the obligation, to institute, prosecute,
and control any action or proceeding with respect to such infringement of its
Program Patent Rights, by counsel of its own choice, and Lilly shall have the
right, at its own expense, to be represented in such action by counsel of its
own choice. Lilly shall have the primary right, but not the obligation, to
institute, prosecute, and control any action or proceeding with respect to such
infringement of the jointly owned Program Patent Rights, by counsel of its own
choice, and Albany shall have the right, at its own expense, to be represented
in such action by counsel of its own choice. If the Party having the primary
right to institute, prosecute, and control any action or proceeding with respect
to such infringement of a Program Patent Rights (the "Initial Controlling
Party") shall fail to bring such action or proceeding within a period of one
hundred twenty (120) days after receiving written notice from the other Party or
otherwise having knowledge of such
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION. THE LOCATIONS
OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH ASTERISKS.
-19-
infringement, the other Party shall have the right to bring and control any such
action by counsel of it's own choice, and the Initial Controlling Party shall
have the right, at its own expense, to be represented in any such action by
counsel of its own choice. If one Party brings any such action or proceeding,
the other Party agrees, if necessary, to be joined as a party plaintiff and to
give the first Party reasonable assistance and authority to file and to
prosecute such suit. The costs and expenses of all suits brought by either Party
under this Section 7.8 shall be reimbursed on a pro-rata basis to both parties
out of any damages or other monetary awards recovered therein in favor of Albany
and/or Lilly. Any remaining damages shall then belong to the Party bringing and
prosecuting such action or proceeding. No settlement or consent judgment or
other voluntary final disposition of a suit under this Section 7.8 may be
entered into without the joint consent of Albany and Lilly (which consent shall
not be withheld unreasonably).
ARTICLE VIII
------------
Confidentiality
---------------
Section 8.1 Confidentiality. During the term of this Agreement and for a
---------------
period of *** (***) years thereafter, each Party agrees, for itself, its
employees, agents, consultants, assignees, Affiliates, sublicensees and clinical
investigators that it and each such person or entity will maintain in confidence
all Confidential Information disclosed in connection with this Agreement and
shall obtain written confidentiality agreements from each such person or entity.
Neither Party nor its employees, agents, consultants, assignees, Affiliates,
sublicensees and clinical investigators shall use or disclose such Confidential
Information except as permitted under this Agreement. Each Party shall promptly
notify the other upon discovery of any unauthorized use or disclosure of the
Confidential Information. Confidential Information shall not include any
information which:
a) the recipient can demonstrate to the reasonable satisfaction of
the disclosing Party was already known to the recipient, other
than under an obligation of confidentiality, at the time of
disclosure;
b) was generally available to the public or otherwise part of the
public domain at the time of its disclosure;
-20-
c) becomes generally available to the public or otherwise part of the
public domain after its disclosure and other than through any act
or omission of the recipient;
d) was disclosed to the recipient, other than under an obligation of
confidentiality, by a Third Party who had no obligation not to
disclose such information to others; or
e) the recipient can demonstrate by contemporaneous written
documentation to the reasonable satisfaction of the disclosing
Party as independently developed by the recipient without
reference to the disclosure.
Section 8.2 Employee Obligations. Albany and Lilly each agree that it shall
--------------------
provide Know-How and other Confidential Information received from the other
Party only to its employees, consultants and advisors who have a need to know
and have an obligation to treat such information and materials as confidential.
On an annual basis, Albany agrees to explicitly counsel its consultants and
advisors of the implications arising from such obligations.
Section 8.3 Material Breach. Albany acknowledges that Lilly's Confidential
---------------
Information, including the Lilly Licensed Technology, is of a special and unique
character which gives it peculiar value and that consequently any wrongful use
or disclosure of such Confidential Information will cause injury not readily
measurable in monetary damages, and therefore irreparable. Such wrongful use or
disclosure of such Confidential Information shall constitute a breach of this
Agreement and Lilly shall have the right to terminate this Agreement in
accordance with Article IX and all licenses granted to Albany under Section 5.1
shall automatically terminate upon such termination by Lilly.
Section 8.4 Authorized Disclosure. Each Party may disclose the Confidential
---------------------
Information to the extent such disclosure is reasonably necessary in filing or
prosecuting patent applications as provided hereunder, prosecuting or defending
litigation or complying with applicable governmental regulations, including
those requiring promulgation of periodic reports to shareholders, provided that
if such Party is required to make any such disclosure of the Confidential
Information it shall, give reasonable advance notice to the other Party of such
disclosure requirement and, except to the extent inappropriate in the case of
patent applications, use diligent efforts to secure confidential treatment of
such information required to be disclosed.
-21-
In addition, each Party may disclose such Confidential Information to its
Affiliates and sublicensees. In connection with any such disclosure each Party
shall use diligent efforts to secure confidential treatment of such information
and each Party shall be responsible for any prohibited disclosure by any such
person or entity. Any copy of this Agreement to be filed with the Securities and
Exchange Commission or any other governmental body shall be redacted to the
satisfaction of both Parties prior to such filing.
Section 8.5 Press Releases and Third Party Communications. After execution
---------------------------------------------
hereof and during the term of this Agreement, neither Party shall issue a press
release relating to this Agreement without first obtaining the approval of the
other, such approval not to be unreasonably withheld. The Parties will jointly
develop a strategy for responding to Third Party inquiries related to this
Agreement. During the term of this Agreement, neither Party shall approve or
make any confidential or non-confidential disclosures of the Lilly Licensed
Technology, Program Technology or any other Confidential Information to any
Third Party without first securing the written approval of the other Party,
which approval shall not be unreasonably withheld. Should the two (2) Parties
not be in mutual agreement, the Lilly shall make the final determination.
Section 8.6 Publications. Albany shall not publish or otherwise
------------
disclose any Lilly Licensed Technology or Program Technology without Lilly's
written permission.
ARTICLE IX
----------
Term, Termination Rights, And Obligations Upon Termination
----------------------------------------------------------
Section 9.1 Term. The term of this Agreement shall begin on the Effective
----
Date and continue until the completion by Albany of the re-synthesis of the
Lilly Combinatorial Library. The Parties agree that the goal for completion of
the resynthesis of the Lilly Combinatorial Library shall be two (2) years from
the Effective Date. In the event that Albany has not delivered the re-
synthesized Lilly Combinatorial Library to Lilly within two (2) years of the
Effective Date, Lilly may, at its option, terminate this Agreement. If Lilly
does not terminate the Agreement at such time, this Agreement shall continue
under the same terms and conditions specified herein.
-22-
Section 9.2 Permissive Early Termination. Lilly may terminate this
----------------------------
Agreement upon six (6) months advanced written notice. In the event of
termination pursuant to the is Section 9.2, Lilly shall have the right to apply
seventy-five percent (75%) of the payments to be made to Albany pursuant to
Sections 6.1.2 and 6.1.3 for work conducted during the six (6) month period
after receipt of such written notice by Albany under this Section 9.2 to fund:
(a) an existing Additional Project or SAR Project or (b) an Additional Project
or SAR Project to be agreed upon by the Parties after the date of such written
notification to Albany under this Section 9.2.
Section 9.3 Termination for Breach. If either Party shall be in default of
----------------------
any of its obligations under this Agreement and shall fail to remedy such
default within sixty (60) days after receipt of written notice of such default,
this Agreement shall terminate at the end of such sixty (60) day period.
Section 9.4 Effect of Termination or Expiration. Termination or expiration
-----------------------------------
of this Agreement shall not affect the rights and obligations of the Parties ac-
rued prior to termination or expiration, including the obligations of
confidentiality under Article VIII, provided however, that in case of a
termination for breach pursuant to Section 9.3 the licenses and options granted
under Article V shall: (i) continue for the non-breaching Party and (b)
terminate for the to the breaching Party.
ARTICLE X
---------
Miscellaneous Provisions
------------------------
Section 10.1 Representation of Authority. Albany and Lilly each represents
---------------------------
and warrants to the other that as of the Effective Date it has full right, power
and authority to enter into this Agreement.
Section 10.2 Employee Obligations. Each Party represents and warrants that
--------------------
all of its employees, officers, and consultants have executed agreements or have
existing obligations under law requiring, in the case of employees and officers,
assignment to such Party of all inventions made during the course of and as
the result of their association with such Party and obligating the individual to
maintain as confidential such Party's confidential information as well
-23-
as confidential information of a Third Party which such Party may receive, to
the extent required to support such Party's obligations under this Agreement.
Section 10.3 Further Assurances. Each Party hereto agrees to execute,
------------------
acknowledge and deliver such further instruments, and to do all such other acts,
as may be necessary or appropriate in order to carry out the purposes and intent
of this Agreement.
Section 10.4 Disclosure of Agreement. Except as required by law, neither
-----------------------
Albany nor Lilly shall release any information to any Third Party with respect
to the existence and terms of this Agreement without the prior written consent
of the other. This prohibition includes, but is not limited, to any press
releases, educational and scientific conferences, promotional materials,
governmental filings, and discussions with public officials and the media.
Section 10.5 No Agency. It is understood and agreed that nothing in this
---------
Agreement shall be construed as authorization for either Albany or Lilly to act
as agent for the other. Lilly shall not incur any liability for any act or
failure to act by employees of Albany. Albany shall not incur any liability for
any act or failure to act by employees of Lilly.
Section 10.6 Force Majeure. The Parties to the Agreement shall be excused
-------------
from the performance of their obligations under this Agreement if such
performance is prevented by Force Majeure and the nonperforming Party promptly
provides notice of the prevention to the other Parties. Such excuse shall be
continued so long as the condition constituting Force Majeure continues and the
nonperforming Party takes reasonable efforts to remove the condition. For
purposes of this Agreement, Force Majeure shall include conditions beyond the
control of the Parties, including without limitation, an act of God, voluntary
or involuntary compliance with any regulation, law or order of any government,
war, civil commotion, epidemic, failure or default of public utilities or common
carriers, destruction of production facilities or materials by fire, earthquake,
storm or like catastrophe.
Section 10.7 Amendment. This Agreement may not be amended, supplemented, or
---------
otherwise modified except by an instrument in writing signed by the Parties.
Section 10.8 Notices and Reports. All notices required by this Agreement
-------------------
shall be in writing. All notices and reports shall be deemed given if delivered
personally or by registered or certified mail, return receipt requested and
postage prepaid or sent by express courier service, to
-24-
the Parties at the following addresses or such other addresses as may be
designated in writing by the respective Parties:
To Lilly: Xxx Xxxxx and Company/Sphinx Pharmaceutical
0000 Xxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Vice President of Research-Sphinx
Copy to: General Counsel
To Albany: Albany Molecular Research, Inc.
Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attn: Executive Vice President and Chief Financial Officer
Section 10.9 Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Indiana, excluding any
choice of law rules which may direct the application of the law of any other
jurisdiction. Questions effecting the construction and effect of any Program
Patent Rights shall be determined by the laws of the country in which the
Program Patent Right has been applied for and granted.
Section 10.10 Assignment. The Parties may not assign their rights and
----------
obligations under this agreement without the prior written consent of the
others, except in connection with any merger, reorganization or sale of all or
substantially all of its assets to which this Agreement relates. This Agreement
shall be binding upon and shall inure to the benefit of the successors and
permitted assigns of the Parties.
Section 10.11 Headings. The captions or headings of the Sections or other
--------
subdivisions hereof are inserted only as a matter of convenience or for
reference and shall have no effect on the meaning of the provisions hereof.
Section 10.12 Severance of Clauses. Should any provision of this
--------------------
Agreement be determined by a court of competent jurisdiction to violate or
contravene any applicable law or policy, such provision will be severed or
modified by the court to the extent necessary to comply with the applicable law
or policy, and such modified provision and the remainder of the provisions
hereof will continue in full force and effect.
-25-
Section 10.13 No Waiver. The waiver of a breach hereunder may be effected
---------
only by a writing signed by the waiving Party and shall not constitute a waiver
of any other breach.
Section 10.14 Entire Agreement. The Agreement constitutes the entire
----------------
Agreement of the Parties relating to the subject matter.
Section 10.15 Counterparts. The Agreement has been executed in two (2)
------------
counterparts, both of which shall constitute an original, but which together
shall constitute the same instrument.
Section 10.16 Surviving Rights. Termination, expiration, or cancellation
----------------
of this Agreement by any Party shall not relieve the Parties of any rights or
obligations accrued hereunder prior to such termination, expiration, or
cancellation.
IN WITNESS WHEREOF, each of the Parties hereto, through their
duly-authorized representative, has executed this Agreement on the day and year
first above written.
XXX XXXXX AND COMPANY ALBANY MOLECULAR RESEARCH, INC.
By: /s/ August X. Xxxxxxxx By: /s/ Xxxxxx X'Xxxxx, Ph.D.
--------------------------- ------------------------------
August X. Xxxxxxxx Name: Xxxxxx X. X'Xxxxx, Ph.D.
Executive Vice President ---------------------------
Title: President
---------------------------
Date: December 15, 1997 Date: December 16, 1997
------------------------- ----------------------------
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION. THE LOCATIONS
OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH ASTERISKS.
-26-
EXHIBIT A
---------
LILLY STRATEGIC FOCUS AREAS
1. CNS
***
2. Endocrine
***
3. Antiinfectives
***
4. Cardiovascular
***
5. Cancer
***
-27-
EXHIBIT B
---------
LIBRARY STANDARDS
(to be annexed to this Agreement in accordance with Section 3.10)
[No Annex Attached]
