EXHIBIT 10.15
Confidentiality Requested by
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PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
SUCH PORTIONS ARE DESIGNATED "[***]."
RESEARCH COLLABORATION AND OPTION AGREEMENT
-------------------------------------------
This Research Collaboration and Option Agreement (the "Agreement"),
shall be effective as of June 8th, 2000 (the "Effective Date") between Emisphere
--------------
Technologies, Inc., a Delaware corporation ("Emisphere"), and Xxx Xxxxx and
---------
Company, an Indiana corporation ("Lilly").
-----
WHEREAS, Emisphere is engaged in the research and development of
proprietary synthetic chemical compounds that enable the delivery of therapeutic
macromolecules and other compounds that are not currently deliverable by oral
means or by certain non-oral means (including all related patents, patent
applications and Know-How presently owned by Emisphere and all patents, patent
applications, and Know-How relating to inventions developed by Emisphere
pursuant to the Program [Program and Know-How both defined below], the
"Emisphere Technology"); and
--------------------
WHEREAS, Lilly produces, or is engaged in research to produce,
therapeutic macromolecules and other compounds that are not currently
deliverable by oral means or by certain non-oral means;
WHEREAS, Emisphere and Lilly entered into a Research Collaboration and
Option Agreement (the "Original Agreement") dated and effective as of February
26, 1997;
WHEREAS, the Original Agreement provided Lilly with an option to
execute exclusive license agreements for Oral PTH and Oral HGH (each as defined
in the Original Agreement) and to thereby also contemporaneously extend options
to execute similar agreements for Non-Oral PTH and Non-Oral HGH (each as defined
in the Original Agreement);
WHEREAS, on April 7, 1998, Lilly and Emisphere executed License
Agreements, the "1998 Oral PTH License Agreement" and the "1998 Oral HGH License
Agreement, reflecting the exercise of the Oral PTH and Oral HGH Options (as
defined in the Original Agreement) as well as the contemporaneous extension of
the Non-Oral PTH and Non-Oral HGH Options;
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WHEREAS, the Original Agreement provided Lilly with a first right of
refusal ("Right of First Refusal") to use Emisphere Technology for certain
additional compounds;
WHEREAS, the Right of First Refusal under the Original Agreement has
expired and is no longer relevant to a continuing research collaboration between
Emisphere and Lilly;
WHEREAS, Emisphere and Lilly desire to continue a research
collaboration relevant to the Oral PTH License Agreement and the Oral HGH
License and to otherwise update the Original Agreement, including adoption of
new work plans and budgets reflecting the current research intentions of the
parties ("Work Plans");
WHEREAS, the current market assumptions and projections used by Lilly
relating to the potential for injectible PTH provide an opportunity of at least
that based on the assumptions used at the time of the Original Agreement when
considering risk, stage of development, competition, and evolution of market
strategies;
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
RESEARCH PROGRAM
1.1 Collaboration. Lilly and Emisphere hereby agree to continue their
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collaboration on research and development programs (the "Programs") to research
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the use of the Emisphere Technology for oral delivery (the "Oral Route") of
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parathyroid hormone molecule and human growth hormone molecules [* * *]
(excluding calcitonin) and human growth hormone molecules (not to include
secretagogues) and mimetics ("PTH" and "HGH"), as well as to study the potential
---
for the Emisphere Technology to improve non-oral administration routes,
including, but not limited to, the injectable (sub-cutaneous, intra-venous,
intra-muscular, intra-peritoneal and depot), buccal, nasal, ocular, pulmonary,
transdermal and vaginal administration routes (the "Non-Oral Routes") of
---------------
proteins all as more specifically set forth in the PTH and HGH Work Plans,
attached hereto as Exhibits A and C [* * *]. Emisphere will make available to
Lilly access to all Emisphere Technology relevant for the Program.
1.2 Program Management. Lilly and Emisphere shall establish a steering
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committee (the "Steering Committee"). The function of the Steering Committee
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shall be to
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review and approve the Programs, such approval not to be unreasonably withheld
after the initial programs have been agreed to by the parties. The Steering
Committee is not intended to replace any internal management procedures of
either party or continued and close collaboration by the parties with respect to
the Programs. Rather, it is intended to be a vehicle to ensure that the Programs
proceed in a timely, coordinated, and well-planned fashion. It shall be made up
of up to [* * *] members, with an equal number appointed by each of Lilly and
Emisphere and with a central contact person appointed by each party. Each party
hereto shall name one member to be a co-chairperson of the Steering Committee.
Within thirty (30) days of execution of this agreement, the Steering Committee
will meet to review and approve the initial HGH Work Plan (Exhibit C). On at
least a quarterly basis, the Steering Committee shall meet, to review progress
and approve modifications to the PTH Work Plan (Exhibit A), and review progress
and changes to the HGH Work Plan (Exhibit C) as appropriate. The Steering
Committee shall keep minutes of its meetings, shall act by a majority vote of
its members and shall be responsible for the development and implementation of
the PTH Work Plan. In the event the Steering Committee is unable to reach
resolution on any issue, such issue shall be resolved in a timely manner in
accordance with the procedures defined in this agreement. Finally, meetings of
the Steering Committee will alternate between Emisphere's designated facility
and Lilly's designated facility. Each party will bear all expenses associated
with attendance of its own employees at such meetings held at the other party's
designated facility. Work on the Steering Committee (including attendance of its
meetings) by Emisphere employees shall be included in the Programs' work
compensated by Lilly pursuant to Section 1.4 below. It is anticipated that
almost all FTE's and subcontractors doing work under the HGH Work Plan will be
provided by Emisphere.
1.3 Term; Termination; Damages.
--------------------------
(a) This Agreement shall continue in effect until expiration or
termination of the 1998 Oral PTH License Agreement and the 1998 Oral HGH License
Agreement (the "Term");
----
(b) Either party may terminate this Agreement upon written notice to
the other party that such party has breached this Agreement if, within sixty
(60) days of receipt of such notice such breach has not been cured. [* * *].
Should Lilly terminate this agreement, not due to Emisphere's breach, then the
1998 Oral PTH and HGH License Agreements shall also be immediately terminated.
If Emisphere terminates due to Lilly's breach, then the License Agreements also
shall terminate.
(c) In the event of termination, the parties will issue a joint press
release which states the facts of the termination of the Agreement, and if the
termination was
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not due to the Emisphere Technology, that Lilly will continue to evaluate the
Emisphere Technology with respect to other Lilly proteins.
(d) Termination or expiration of this Agreement shall not affect the
rights and obligations of the parties accrued hereunder prior to termination or
expiration. To avoid doubt, it is hereby confirmed that termination of this
Agreement by Lilly because of a breach by Emisphere shall not affect Lilly's
options as set forth in Article II. To further avoid doubt, if Emisphere
terminates this Agreement because of a breach by Lilly, Lilly's unexercised
rights under Articles II shall be terminated. Termination of this Agreement
shall not affect the licenses set forth in the 1998 Oral License Agreements
except as set forth in Article 1.3 (b)(whether Lilly or Emisphere is the
terminating party).
1.4 Payments.
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(a) Lilly shall pay Emisphere [* * *] for activities and any third party
work conducted by Emisphere in accordance with the then-current Work Plans.
Payments shall be made by wire transfer of immediately available funds within
thirty (30) days of receipt by Lilly of a detailed quarterly invoice setting
forth expenses incurred pursuant to the Work Plans. Emisphere will invoice Lilly
within 30 days of the end of each calendar quarter.
(b) "Full Time Employee" is defined as an Emisphere employee having at
least a Bachelors Degree in science, or experience equivalent thereto [* * *].
"Project Effort" is defined as the percentage of a Full Time Employee's
scientific effort that is devoted exclusively to a Program. Scientific work on
or directly related to the Programs to be performed by Emisphere can include,
but is not limited to, experimental laboratory work, recording and writing up
results, reviewing literature and references, holding scientific discussions,
managing and leading scientific staff, and carrying out Program management
duties or such other activities as may be appropriate to the conduct of the
Programs. An "FTE" is defined as the aggregate of individual Project Effort that
equates to 100%. For example, a Full Time Employee that devotes 100% of Project
Effort and another Full Time Employee that devotes 50% Project Effort equate to
1.5 FTE's. [* * *].
(c) [* * *]. Emisphere shall, further, maintain records in reasonable
detail and in accordance with generally accepted accounting principles ("GAAP")
of all monies paid by Emisphere for research under the Programs and shall
provide Lilly, within forty-five (45) days of the end of each semi-annual
period, with a report stating the dollar amount of funds supplied by Lilly that
were expended on research activities during the six month period for which the
report is made, using Emisphere's standard
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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 law, for the
Programs' funds paid by Lilly. Also, Lilly may have the costs of research and
development programs audited in accordance with Section 4.19.
(d) Lilly shall pay to Emisphere within thirty (30) days of the effective
date of this Agreement, [* * *].
(e) Lilly shall pay to Emisphere within thirty (30) days of the effective
date of this Agreement, [* * *].
1.5 Ownership of Data and Technology.
--------------------------------
(a) "Know-How" means all trade secrets, confidential scientific, technical
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and medical information, data and expertise from time to time developed,
produced, created or acquired by Lilly or Emisphere, as appropriate, either
prior to the Effective Date and pertaining to the Programs or during the term
and in the course of carrying out the Programs, including, but not limited to,
unpatented inventions, discoveries, theories, plans, ideas or designs (whether
or not reduced to practice). To the extent that any of the items listed above
are acquired by either Emisphere or Lilly, they shall only fall within the
definition of Know-How hereunder to the extent to which there are no obligations
or restrictions in respect of such items which would prohibit disclosure or use
by Lilly or Emisphere, as appropriate.
(b) Except as set forth in Sections 1.5(f) and (g) below, Emisphere shall
own all patents, patent applications and Know-How relating to the Emisphere
Technology to the extent that Lilly and/or Emisphere invents and/or develops
same during the course of and as part of the Programs, including, but not
limited to, any Lilly Improvements.
(c) It will not be Lilly's responsibility or intent to develop new
synthetic chemical compounds that enable the delivery of therapeutic
macromolecules and other compounds that are not currently deliverable by oral
means or by certain non-oral means (the "Carriers") as part of the Programs. Any
new Carriers or inventions which are closely related to the Emisphere Technology
(as it exists as of the Effective Date) that arise, in whole or in part, out of
suggestions, recommendations or discussions held between Emisphere and Lilly
scientists shall be Emisphere Technology.
(d) "Lilly Improvement" shall be an improvement to Emisphere's then-
-----------------
existing Emisphere Technology made by a Lilly employee as part of the Program.
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(e) If Lilly makes recommendations, suggestions and/or has discussions
with Emisphere scientists that lead to a material addition to Emisphere
Technology pursuant to Section 1.5 (c) above, or Lilly obtains a material Lilly
Improvement, Lilly will receive for any given protein (the "Chosen Protein"),
--------------
provided that the addition to Emisphere Technology and/or Lilly Improvement at
issue is applicable to the Chosen Protein(s), the right to license all Emisphere
Technology and the Lilly Improvement for the Chosen Protein(s) at Lilly's
discretion in accordance with any one of the following milestone/royalty
schedules (the "Chosen Protein Right"):
--------------------
[* * *]
[* * *]
[* * *]
[* * *]
[* * *]
[* * *].
The Chosen Protein(s) shall not include HGH or PTH. The Chosen Protein Right
shall apply to [* * *]. Lilly shall not be permitted to choose [* * *].
The parties agree to negotiate in good faith whether or not an addition to
Emisphere Technology or a Lilly Improvement is material, taking into account the
size of the potential market and the value of the reduced payments to Emisphere.
[* * *]
[* * *]
[* * *]
[* * *]
[* * *]
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[* * *]
[* * *]
[* * *]
[* * *].
(f) Lilly shall own all patents, patent applications and Know-How relating
to the therapeutic uses (specifically excluding Carrier delivery systems) of
PTH, HGH or any of its other proteins, to the extent that Lilly or Emisphere
invents same during the course of the Programs.
(g) Lilly shall [* * *]. If for reasons other than a decision not to
commercialize (i.e., for technical or other business reasons, not for
competitive reasons) the corresponding Product (as defined in Article II), Lilly
does not exercise any of the Options (as also defined in Article II) granted
pursuant to Article II, below, or terminates this Agreement under Article 1.3,
or terminates the Oral HGH License Agreement under Article 1.9, except for
Emisphere's breach, then Emisphere shall have the right to [* * *] all data
generated by Lilly utilizing Emisphere Technology [* * *]. If because of its
determination not to commercialize (for competitive, as opposed to technical or
other business reasons) a Product Lilly fails to exercise any of the Options
granted pursuant to Article II, below, then Emisphere shall have the same right
to [* * *] Lilly's data set forth above. However, Emisphere's use of those data
under such circumstances shall be [* * *]. Emisphere shall own any data that it
or its subcontractors generates during the Programs.
(h) With respect to patents, patent applications and Know-How invented
and/or developed by Emisphere or Lilly during the course of the Programs, and to
the extent the ownership of such patents, patent applications and Know-How is
not established in Sections 1.5(b), (c), (f) or (g), above, ownership of such
patents, patent applications and Know-How shall be as follows:
i) if made solely by an employee of Emisphere, Emisphere shall
own such patents, patent applications and Know-How;
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ii) if made solely by an employee of Xxxxx, Xxxxx shall own
such patents, patent applications and Know-How;
iii) if made jointly by employees of Lilly and Emisphere, Lilly
and Emisphere shall each own an undivided one-half interest in
such patents, patent applications and Know-How.
1.6 Patent Applications - Emisphere. Emisphere agrees to undertake diligent
-------------------------------
efforts to file patent applications, to the extent it deems advisable, within
sixty (60) days of the Effective Date for the existing Emisphere Technology in
any country listed in Exhibit B attached hereto in which it does not hold a
patent, provided the filing of any such patent applications is not barred by
local law. In pursuing patent protection for Emisphere Technology made pursuant
to the Programs, Lilly Improvements and/or any inventions that fall within
Section 1.5(h)(i), above, Emisphere will use the same diligence it would apply
to the pursuit of such protection for other discoveries of similar importance.
Prior to the contemplated filing date, Emisphere shall make a diligent effort to
submit to Lilly a substantially completed draft of any patent application
Emisphere intends to file for inventions made pursuant to the PTH or HGH Work
Plan (including any subsequent amendments) and that relate to the oral delivery
of PTH or HGH. Emisphere will make reasonable efforts to adopt Lilly's promptly
made suggestions, when appropriate in Emisphere's opinion, regarding any such
draft. Furthermore, Emisphere will confer with Lilly regarding the prosecution
of pending patent applications and make reasonable efforts to adopt Lilly's
promptly made suggestions, when appropriate in Emisphere's opinion, regarding
the prosecution of such patent applications. [* * *].
[* * *] shall bear all costs of preparing, filing, prosecuting and maintaining
any patent applications and patents relating to the Emisphere Technology, Lilly
Improvements and/or any inventions that fall within Section 1.5(h)(i), above.
Should Emisphere not wish to file, prosecute, maintain or issue any patent
application, or maintain a patent issuing from any such patent application, in
any particular country, Emisphere will so notify Lilly of its intentions. At
Emisphere's election, Lilly shall then have the right to file, prosecute, issue
and maintain such patent application or maintain such patent in the name of
Lilly. Such patent application or patent, further, shall be owned by Lilly and
shall not be considered Emisphere Technology or a Lilly Improvement. Under no
circumstances, however, shall Emisphere fail to file, prosecute, maintain or
issue any patent application, or maintain a patent issuing from such
application, in any particular country unless Lilly consents to such failure on
the part of Emisphere (such consent not to be unreasonably withheld) or the
right to file, prosecute, maintain and/or issue any such patent application or
patent has been granted to Lilly.
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1.7 Patent Applications - Joint Inventions. With respect to any inventions that
--------------------------------------
fall within Section 1.5(h)(iii), above, 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 substantially completed
drafts 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 Section
1.7. Should Emisphere not wish to file, prosecute, maintain or issue any patent
application falling within this Section 1.7, or maintain a patent issuing from
any such patent applications, in any particular country, Emisphere, at its
election, will xxxxx Xxxxx 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, the title and ownership of such patent application
or patent for such country shall be assigned to Lilly. Likewise, should Lilly
not wish to file, prosecute, maintain or issue any patent application falling
with this Section 1.7, or maintain a patent issuing from such patent
applications, in any particular country, Lilly, at its election, 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, the title and ownership of such patent application or
patent for such country shall be assigned to Emisphere.
1.8 Patent Applications - Cooperation. Each party shall cooperate with the
---------------------------------
other in completing any patent applications on Emisphere Technology, Lilly
Improvements, therapeutic uses of PTH and HGH or any of Lilly's other
proteins/peptides or inventions falling within Section 1.5(h)(iii) to the extent
the non-filing party has information reasonably relevant to the preparation or
prosecution of such patent applications. Further, each party shall cooperate in
executing and delivering any instrument required to assign, convey or transfer
to the other party its interest in Emisphere Technology, Lilly Improvements,
therapeutic uses of PTH, HGH or any other of Lilly's proteins/peptides or
inventions falling within Section 1.5(h)(iii) should such assignment, conveyance
or transfer be required by the terms of this Agreement.
1.9 Upon presentation by Emisphere to Lilly of final Phase I clinical
activities relating to the HGH Work Plan in Exhibit C in a mutually agreed to
format, Lilly shall have sixty (60) days to decide whether to continue with the
Oral HGH Program or terminate the Oral HGH License Agreement.
[* * *]
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ARTICLE II
OPTIONS
2.1 Exercised Options. As of the Effective Date of this Agreement, Lilly has
-----------------
exercised the following options (the "Exercised Options"):
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(a) An option (the "Oral PTH Option") to an exclusive worldwide (the
---------------
"Territory") license to make and use the Emisphere Technology to develop
---------
products (the "Oral PTH Products") to deliver PTH by the Oral Route. The terms
-----------------
of that agreement are set forth in the 1998 Oral License Agreement, and the
license supplement attached hereto as Appendix 1.
(b) An option (the "Oral HGH Option") to an exclusive license in the
---------------
Territory to make and use the Emisphere Technology to develop products (the
"Oral HGH Products") to deliver Lilly's HGH by the Oral Route. The terms of that
-----------------
agreement are set forth in the 1998 Oral HGH License Agreement, and the license
supplement attached hereto as Appendix 3.
(c) The work done under this Agreement is related to the Research and
Development Programs called for in Clause 5 of the agreements set forth in
Sections 2.1 (a) and (b). The terms in these Oral HGH and PTH License Agreements
shall supersede any terms of this Agreement that are in conflict therewith,
except as noted in Appendix 3.
2.2 Unexercised Options. As of the Effective Date of this Agreement, Lilly has
-------------------
the following unexercised options remaining (the "Unexercised Options"):
-------
(a) An option for each Non-Oral Route (each such option, a "Non-Oral PTH
------------
Option") to an exclusive license in the Territory to make and use the Emisphere
------
Technology to develop products (the "Non-Oral PTH Products") to deliver PTH by
---------------------
such Non-Oral Route (the Non-Oral Route to be specified for each license). The
terms of the license shall be the same as those of the 1998 Oral PTH License
Agreement, provided that the license supplement attached hereto as Appendix 2
shall be used in lieu of Appendices 1 or 3.
(b) An option for each Non-Oral Route (each such option, a "Non-Oral HGH
------------
Option") to an exclusive license in the Territory to make and use the Emisphere
------
Technology to develop products (the "Non-Oral HGH Products") to deliver HGH by
---------------------
such Non-Oral Route (the Non-Oral Route to be specified for each license). The
terms
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of the license shall be the same as those of the 1998 Oral HGH License
Agreement, provided that the license supplement attached hereto as Appendix 4
shall be used in lieu of Appendices 1 or 3.
2.3. The Exercise Price. Any payments due to Emisphere upon exercise of any of
------------------
the Unexercised Options shall be specified in the applicable license agreement
according to the schedule included in the relevant Appendix.
2.4. Option Period. Each Non-Oral PTH Option shall continue for so long as the
-------------
Oral PTH Product is being developed (the "PTH Option Period"). If Oral PTH is
terminated, then each Non-Oral PTH option shall be extended for one additional
year from such date of termination under the same terms. Furthermore, under such
circumstances, Lilly shall have a right of first refusal for each Non-Oral Route
for PTH for one year, commencing at the end of the Option Periods extended as
described immediately above. Emisphere hereby covenants and agrees that during
the PTH Option Period it shall not grant a license to make, use or sell the
Emisphere Technology for the purpose of delivering PTH by Oral Route or Non-Oral
Route to any person other than Lilly. Each Non-Oral HGH Option shall continue
for so long as the Oral HGH Product is being developed (the "HGH Option
Period"). If Oral HGH is terminated, then each Non-Oral HGH option shall be
extended for one additional year from such date of termination, under the same
terms. Furthermore, under such circumstances, Lilly shall have a right of first
refusal for each Non-Oral Route for HGH for one year, commencing at the end of
the Option Periods extended as described immediately above. Emisphere hereby
covenants and agrees that during the HGH Option Period it shall not grant a
license to make, use or sell the Emisphere Technology for the purpose of
delivering HGH by Oral Route or Non-Oral Route to any person other than Lilly.
2.5. Exercising an Option. An Option shall be exercised by Lilly by delivery of
--------------------
a written notice to Emisphere during the relevant Option Period and not less
than three (3) business days prior to the date specified in such notice for the
exercise of the Option (the "Exercise Date") stating the drug to be licensed and
-------------
the route of administration. Each of the parties hereto shall execute an
agreement as required by 2.2 above relating to the Option that has been
exercised within fifteen (15) days of exercise thereof.
2.6 Responsibilities of the parties during the PTH Option and HGH Option
--------------------------------------------------------------------
Periods and subsequent Option Periods. During the PTH Option and HGH Option
-------------------------------------
Periods Emisphere and Lilly shall participate in activities governed by the PTH
and HGH Work Plans with regard to this Section 2.6. For each subsequent Option
Period, the parties' responsibilities shall be agreed upon in good faith
negotiations and shall be analogous to those set forth above in this Section
2.6.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Due Incorporation. Each of the parties hereto hereby represents and
-----------------
warrants to the other that it is duly incorporated under the laws of its state
of incorporation and each has full corporate authority to enter into and to
perform its obligations under this Agreement.
3.2 Due Authorization. Each of the parties hereto hereby represents and
-----------------
warrants to the other that this Agreement has been fully authorized, executed
and delivered by it and it has full legal right, power and authority to enter
into and perform this Agreement, which constitutes a valid and binding agreement
between the parties and that it does not conflict with or result in a breach of
the terms of any agreement to which such party is a party.
3.3 Litigation. Each of the parties hereto hereby represents and warrants to
----------
the other that it is not engaged in any litigation or arbitration, or in any
dispute or controversy reasonably likely to lead to litigation, arbitration or
other proceeding, which would materially affect the validity of this Agreement
or such party's ability to fulfill its respective obligations under this
Agreement.
ARTICLE IV
MISCELLANEOUS
4.1 Confidentiality. Each party hereto shall keep confidential (to itself and
---------------
its officers, directors, employees, agents and advisors), information received
from the other party (including information belonging to the other party
generated during work on the Programs) for a period of 10 years after expiration
or earlier termination of this Agreement Such obligation of confidentiality
shall not apply to any information to the extent that such information is:
(a) independently developed by the receiving party as documented by prior
written records outside the scope and not in violation of this Agreement;
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(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 Section 4.1 by the express
written consent of the party who originally disclosed the information.
(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); or
(f) (A) (i) required to be disclosed by the provisions of the Securities
Act of 1933, as amended, or (ii) the Securities Exchange Act of 1934, as
amended, and applicable to a public offering of securities by Emisphere or (B)
the managing underwriter of such a public offering reasonably deems it desirable
for the success of such public offering to disclose in the offering documents
any such confidential information.
Notwithstanding the provisions of Section 4.1 hereof, Emisphere and Lilly may,
to the extent necessary, disclose and use confidential information received from
the other party only for the purpose of carrying out their duties under this
Agreement (i) to any Affiliate, sublicensee or subcontractor of either Emisphere
or Lilly hereunder (if such sublicense or subcontractor is subject to provisions
substantially similar to those set forth in this Section 4.1); (ii) to secure
patent protection for an invention developed as a result of the Programs
pursuant to the rights granted in Section 1.5, or (iii) to obtain institutional
or government approval to clinically test or market any product subject to
confidential treatment if possible. For purposes of this Agreement, Affiliate
shall mean
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 50% or more of the capital or business
assets of another entity; has the power to exercise 50% or more of the
voting rights or to appoint 50% or more 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.
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4.2 Indemnity. Lilly shall indemnify, defend and hold harmless Emisphere, its
---------
affiliates, agents, directors, officers and employees from and against any loss,
damage, action, proceeding, expense or liability (including attorney's fees and
disbursements) ("Loss") arising from or in connection with the manufacture,
----
distribution, offer for sale, importation, exportation, possession or use of any
product prepared pursuant to the Programs, except for any Loss caused by
Emisphere's gross negligence or intentional misconduct.
4.3 Public Disclosure. 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 Section 4.1 above,
such approval not to be unreasonably withheld or delayed. Upon the occurrence of
other significant events in the Programs, 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 addition,
Lilly agrees that, unless material events substantially alter the subject matter
which must be covered, Lilly will make reference to this collaboration with
Emisphere during its upcoming analysts meeting (currently scheduled to occur
June 9, 2000) including allowing for disclosure of the compounds PTH and HGH. As
appropriate, Lilly will also speak with members of the investment community on a
mutually agreed upon basis in conjunction and alignment with Lilly's Investor
Relations Group.
4.4 Standstill. Lilly hereby covenants and agrees that, except as provided
----------
below, from the Effective Date until the earlier of [* * *] it shall not acquire
more than 19.9% of the outstanding shares of common stock of Emisphere or other
securities of Emisphere the holders of which have the power to vote together
with the common stock holders (collectively, "Voting Securities"). Emisphere
-----------------
shall provide to Lilly standstill expiration dates for all other licenses to
which Emisphere is (or during the term of this Agreement becomes) a party. Lilly
and its Affiliates may acquire Voting Securities without regard to the foregoing
limitation if any of the following events shall occur: (A) a tender or exchange
offer is made by any person or "group" (as defined in the Securities and
Exchange Act of 1934) (other than by Lilly or one of its Affiliates or any
person acting in concert with Lilly or one of its Affiliates) to acquire Voting
Securities in an amount which, together with Voting Securities already owned by
such person or group, would represent more than 20% of the outstanding shares of
Voting Securities, (B) it becomes publicly disclosed that more than 20% of the
outstanding shares of Voting Securities are held subsequent to the date hereof
by any person and its affiliates (other than Lilly or one of its Affiliates or
any person acting in concert with Lilly or one of its Affiliates) or (C) the
board of directors of Emisphere waives the limitation.
Confidentiality Requested by
Empire Technologies, Inc.,
XXX Xxxx Xx. 00000
15
4.5 Amendment. No amendment, waiver or consent to this Agreement shall be
---------
effective unless signed in writing by both parties hereto.
4.6 Assignment. Neither party may assign its rights or obligations under this
----------
Agreement without the prior written consent of the other party, except that a
party hereto may, without such prior written consent, assign any of its rights
or obligations to an Affiliate.
4.7 Entire Agreement. As of the Effective Date, this Agreement shall constitute
----------------
the entire agreement of the parties with respect to the subject matter hereof
and supersedes any and all prior negotiations, correspondence and understandings
between the parties with respect to the subject matter as of the Effective Date
hereof, whether oral or in writing.
4.8 Governing Law. This agreement shall be governed by and construed in
-------------
accordance with the laws of the state of New York without regard to the
conflicts of laws principals thereof.
4.9 Notices. All notices and other communications pursuant to this Agreement
-------
shall be in writing, shall be effective when received, and shall be deemed to
have been received on the date of delivery if delivered personally; on the
fourth business day after the business day of deposit with the United States
Postal Service for delivery by first class mail, registered or certified,
postage prepaid; or on the first business day after the business day of deposit
with Federal Express or other similar courier for overnight delivery, freight
prepaid; in each such case, addressed as follows (until any such address is
changed by notice duly given):
To Lilly: Xxx Xxxxx and Company
Lilly Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: General Patent Counsel
Telecopy: (000) 000-0000
To Emisphere: Emisphere Technologies, Inc.
000 Xxx Xxxxxxx Xxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Telecopy: (000) 000-0000
with copy to: Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
Confidentiality Requested by
Empire Technologies, Inc.,
XXX Xxxx Xx. 00000
16
1285 Avenue of the Americas
Xxx Xxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
4.10 Counterparts. This Agreement may be executed in two or more counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
4.11 Diligence. Each party will use diligent efforts to conduct the tasks
---------
assigned to it hereunder. Each party, further, agrees to conduct such tasks at
least as diligently as the party conducts research and development for other
projects of similar commercial potential and at similar stages of development.
Neither party will be responsible for delays due to factors beyond its control.
4.12 No Agency. It is understood and agreed that Emisphere and Lilly each shall
---------
have the status of independent contractors under this Agreement and that nothing
in this Agreement shall be construed as authorization for either party to act as
agent for the other. Members of the Steering Committee who are employees of
Emisphere shall be and shall remain employees of Emisphere and Lilly shall not
incur any liability for any act or failure to act by such employees. Members of
the Steering Committee who are employees of Lilly shall be and shall remain
employees of Lilly and Emisphere shall not incur any liability for any act or
failure to act by such employees.
4.13 Force Majeure. Each party hereto shall be relieved of its obligations
-------------
hereunder to the extent that fulfillment of such obligations shall be prevented
by acts beyond its reasonable control.
4.14 Titles. The titles of the Articles and Sections of this Agreement are for
------
general information and reference only, and this Agreement shall not be
construed by reference to such titles.
4.15 Severability. Each party agrees that, should any provision of this
------------
Agreement be determined by a court of competent jurisdiction to violate or
contravene any applicable law or policy, such provision will be severed or
modified by the court to the extent necessary to comply with the applicable law
or policy, and such modified provision and the remainder of the provisions
hereof will continue in full force and effect.
4.16 Waiver. Failure by either party to enforce any rights under this Agreement
------
shall not be construed as a waiver of such rights nor shall a waiver by either
party in
Confidentiality Requested by
Empire Technologies, Inc.,
XXX Xxxx Xx. 00000
17
one or more instances be construed as constituting a continuing waiver or as a
waiver in other instances.
4.17 No Strict Construction. This Agreement has been prepared jointly and
----------------------
shall not be strictly construed against either party.
4.18 Dispute Resolution. Any dispute regarding this Agreement or the
------------------
enforcement of a Party's rights or obligations hereunder shall be submitted in
the first instance to the Chief Executive Officer of Emisphere and the Vice
President, Research, Technology and Product Development of Lilly. If the dispute
cannot be resolved by the designated individuals within thirty (30) days after
such submission, then the matter may be referred to mediation under the
mediation rules of the American Arbitration Association, or to any other
mutually agreeable dispute resolution as agreed by the Parties. If either Party
elects not to participate in such mediation, the Parties may then resort to
litigation.
Confidentiality Requested by
Empire Technologies, Inc.,
XXX Xxxx Xx. 00000
18
4.19 Audits. Not more than once in each calendar year, Emisphere shall permit
------
Lilly or its duly authorized representative on reasonable notice and at
reasonable times during normal business hours to have access to inspect and
audit the accounts and records of Emisphere with respect to the costs and hours
worked by Emisphere on the Program and to the accuracy of the reports on same
provided by Emisphere. Any such inspection of Emisphere's records shall be at
the expense of Lilly, except that if any such inspection reveals that Emisphere
has overcharged Lilly by more than 5% in any quarter during this Agreement, then
the expense of such inspection shall be borne solely by Emisphere.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on
the day and year first above written.
EMISPHERE TECHNOLOGIES, INC.
By: ___________________________
Xxxxx X. Xxxxxx
Senior Vice President
Executive Officer
XXX LILLY AND COMPANY
By: ___________________________
Xxxxxxx XxXxxxxx
Vice President,
Research Technology and Product
Development
By: ___________________________
Xxxxx Xxxxxxx
Senior Vice President,
Corporate Strategy
Confidentiality Requested by
Empire Technologies, Inc.,
XXX Xxxx Xx. 00000
19
EXHIBIT A
---------
PTH Work Plan
-------------
Overall initial objectives of program: The Work Plan will be [* * *] and
attached hereto.
Confidentiality Requested by
Empire Technologies, Inc.,
XXX Xxxx Xx. 00000
20
Exhibit B
---------
Countries in Which Relevant Emisphere Technology Shall Be Patented
------------------------------------------------------------------
[* * *].
Confidentiality Requested by
Empire Technologies, Inc.,
XXX Xxxx Xx. 00000
21
EXHIBIT C
---------
HGH Work Plan
-------------
Overall initial objectives of program:
[* * *].
Confidentiality Requested by
Empire Technologies, Inc.,
XXX Xxxx Xx. 00000
22
Appendix 1
----------
LICENSE SUPPLEMENT FOR ORAL PTH OPTION
1. Success milestones (the "Oral PTH Milestones") will be paid according to
-------------------
the following:
[* * *]
[* * *]
[* * *]
[* * *]
[* * *]
[* * *]
[* * *]
[* * *].
2. Royalties. Royalties will be based on annual net sales of Oral PTH Products
---------
and will be calculated according to the following schedule (the "Oral PTH
Products Royalty Rate Schedule"). [* * *].
[* * *].
Confidentiality Requested by
Empire Technologies, Inc.,
XXX Xxxx Xx. 00000
23
Appendix 2
LICENSE SUPPLEMENT FOR NON-ORAL PTH OPTIONS
1. Success milestones for each Non-Oral PTH Product licensed by Lilly (the
"Non-Oral PTH Milestones") will be paid according to the following:
-----------------------
[* * *]
[* * *]
[* * *]
[* * *]
[* * *]
[* * *]
[* * *].
2. Royalties. Should Lilly be required to license technology from a third
---------
party to develop a Non-Oral PTH Product, then the Non-Oral PTH Products Royalty
Rate Schedule (as defined below) for those Non-Oral PTH Products requiring third
party technology shall be subject to further negotiation; provided, that the
--------
terms of the Non-Oral PTH Products Royalty Rate Schedule should [* * *].
[* * *]
[* * *]
[* * *]
[* * *]
[* * *]
[* * *].
Confidentiality Requested by
Empire Technologies, Inc.,
XXX Xxxx Xx. 00000
24
3. Rights of First Refusal - Non-Oral PTH. Should Lilly, during the PTH Option
--------------------------------------
Period, not enter into a License Agreement for the Oral PTH Product, but enter
into a License Agreement for PTH for one (1) Non-Oral Route, then Emisphere
shall xxxxx Xxxxx a right of first refusal for PTH for all other Non-Oral Routes
under terms identical to Sections 3.2 and 3.3 of this Option Agreement. Such
right shall expire one year from the expiration of the PTH Option. Should Lilly,
during the PTH Option Period, enter into a License Agreement for a second Non-
Oral Route for PTH, then upon entering into the License Agreement for the second
Non-Oral PTH Product, Lilly shall have exclusive use of the Emisphere Technology
and Emisphere Program Technology (as defined in the License Agreement) for all
Non-Oral PTH Product for so long as Lilly is diligently developing any Non-Oral
PTH Products. For all Non-Oral PTH Products licensed, the total amount paid by
Lilly for any particular Milestone shall not exceed the amount defined for such
Milestone in Appendix 1.
Confidentiality Requested by
Empire Technologies, Inc.,
XXX Xxxx Xx. 00000
25
Appendix 3
----------
LICENSE SUPPLEMENT FOR ORAL HGH OPTION
1. Success milestones (the "Oral HGH Milestones") will be paid according to
-------------------
the following:
[* * *]
[* * *]
[* * *]
[* * *]
[* * *]
[* * *].
2. Royalties. Royalties will be based on annual net sales of Oral HGH Products
---------
and will be calculated according to the following schedule [* * *].
[* * *]
[* * *]
[* * *]
[* * *].
Confidentiality Requested by
Empire Technologies, Inc.,
XXX Xxxx Xx. 00000
26
----------------------------------------------------------------------------------------------------
Sales Period Date by which Payment Payment Payment
payment must Component 1 Component 2* Component
be received 3**
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
[* * *]
[* * *]
[* * *].
Confidentiality Requested by
Empire Technologies, Inc.,
XXX Xxxx Xx. 00000
27
Appendix 4
LICENSE SUPPLEMENT FOR NON-ORAL HGH OPTIONS
1. Success milestones for each Non-Oral HGH Option exercised (the "Non-Oral
--------
HGH Milestones") will be paid according to the following:
--------------
[* * *]
[* * *]
[* * *]
[* * *]
[* * *]
[* * *]
[* * *]
[* * *].
2. Royalties. Should Lilly be required to license technology from a third
---------
party to develop a Non-Oral HGH Product, then the Non-Oral HGH Products Royalty
Rate Schedule (as defined below) for those Non-Oral HGH Products requiring third
party technology shall be subject to further negotiation; provided, that the
--------
terms of the Non-Oral HGH Products Royalty Rate Schedule should [* * *].
Royalties will be based on annual net sales of Non-Oral HGH Products and will be
calculated according to the following schedule [* * *].
[* * *].
