COLLABORATION AGREEMENT

CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. 

This Collaboration Agreement (this “Agreement”) is made as of this 27th day of November, 2006 (the “Effective Date”) by and between Applied NeuroSolutions, Inc., a corporation organized and existing under the laws of the State of Delaware, having its principal place of business at 50 Lakeview Parkway, Suite 111, Vernon Hills, IL 60061 (“APNS”) , and Eli Lilly and Company, a corporation organized and existing under the laws of the State of Indiana, having its principal place of business at Lilly Corporate Center, Indianapolis, Indiana 46285 (“LILLY”) .

Background

LILLY is a major pharmaceutical company interested in drug discovery, particularly in the neuroscience area and including target family and disease pathway mapping, biomarker development, and the use of drugs for treating conditions such as Alzheimer’s disease.

APNS is a development stage biopharmaceutical company focused on diagnostics and therapeutics for the treatment of Alzheimer’s disease and other neurodegenerative diseases, and has entered into (i) a License and Collaborative Research Agreement dated February 1, 1994, as amended by an Amendment Agreement executed on March 20, 2002, a Second Amendment Agreement effective September 21, 2002 and a Third Amendment Agreement effective October 30, 2006 (collectively, the “ 1994 Agreement ”) and (ii) a License and Collaborative Research Agreement effective July 1, 1993, as amended by an Amendment Agreement executed on July 9, 1993, an Amendment Agreement executed on March 20, 2002, a Second Amendment Agreement effective September 21, 2002 and a Third Amendment Agreement effective October 30, 2006 (collectively, the “ 1993 Agreement ”) (the 1994 Agreement and the 1993 Agreement, together, the “ AECOM Agreements ”) with Albert Einstein College of Medicine (“AECOM”) to serve as a scientific collaborator with Dr. Peter Davies to commercialize all of Dr. Davies’ neurodegenerative disease related discoveries on behalf of AECOM, subject to the terms and conditions of the AECOM Agreements. APNS has also entered into a Consulting Agreement with Dr. Peter Davies dated December 1, 2005 (the “ Davies Agreement ”).

APNS and LILLY desire to enter into this Agreement to perform the research collaboration (the “Collaboration”) as initially set forth in the research plan attached as Appendix A (the “Research Plan”) for the purpose of generating information and data relating to the Field (all as defined below).

Stage 2 will consist of pursuing a number of approaches focused on [***] as potential therapeutics for Alzheimer’s disease.

2. Research Plan:

The parties will perform the Collaboration as set forth in the Research Plan attached as Appendix A, which may be amended from time to time by the Collaboration Management Team (defined below).

3. Management:

APNS and LILLY will form a team ( the “ Collaboration Management Team ”) that will consist of two (2) member(s) from each party and will act only by unanimous agreement. One of the LILLY representatives in the Collaboration Management Team shall be [***] and one of the APNS representatives shall be [***]. If the Collaboration Management Team cannot reach agreement on a given issue, then the matter shall be referred to the Chief Executive Officer of APNS and the Vice President of Neuroscience Research of Lilly (or successor position) for further discussion and resolution. If agreement cannot be reached, LILLY shall have the final decision making authority. The responsibilities of the Collaboration Management Team will include, in addition to those mutually agreeable to the parties, evaluating and discussing the handling of [***] IP (Section 8(e)), modifying the Research Plan, managing the execution of the Research Plan, monitoring the progress of the Research Plan, and presenting a report on the Research Plan deliverables to LILLY and APNS ( the “ Final Report ”) . [***]. These processes and authority may change during the course of the Collaboration. All parties, including any subcontractors, will utilize good documentation practices when recording research results. LILLY reserves the right to assess all research data.

4. Term:

The term of the Collaboration under this Agreement (the “ Collaboration Term ” ) shall be three (3) years from the Effective Date with two (2) one (1) year options to extend at LILLY’s sole discretion (so long as LILLY is not in breach of this Agreement) (or such longer period as LILLY and APNS may mutually agree), subject to the early termination rights set forth in Section 17. The term of the other provisions in this Agreement (the “ Agreement Term ” ) shall be from the Effective Date until payment of the final amount due and payable by LILLY to APNS under this Agreement, subject to the early termination rights set forth in Section 17.

5. Materials Transfer:

For the Collaboration Term, through APNS, LILLY shall have access to [***] for the Collaboration in the Field. APNS shall use its reasonable efforts to require [***] to attend all meetings that are held by the parties relating to the Collaboration as contemplated by the Research Plan (such meetings to be (i) [***] and (ii) a [***], unless otherwise agreed by the parties). Re-scheduling of meetings will be permitted on both sides but only with the agreement of the other party. Persistent absence (as determined by the Collaboration Management Team) from meetings (required by the Research Plan) by [***] during the Collaboration Term which results in a significant impairment to the goals of the Collaboration (as determined by the Collaboration Management Team) shall be considered an Event of Default by APNS under Section 17. [***] and/or APNS’ laboratory, as decided by the Collaboration Management Team, will provide [***] to work on the Collaboration as required under the Research Plan. Upon expiration or termination of the Collaboration Term, all rights of LILLY and obligations of APNS and [***] provided in this Section 6 shall terminate.

(a) Each of APNS and LILLY will be providing to the other certain Confidential Information in order to perform the Collaboration. "Confidential Information" includes (other than as described in Section 7(g)) all information, know-how, data or Materials of an intellectual, technical, scientific, commercial, financial or industrial nature disclosed by either party to the other, in a written document received from or belonging to the disclosing party, or oral or visual information, whether by inspection or otherwise, which reasonably should be considered as confidential from the context of the disclosure at the time of such disclosure.

(b) Each of APNS and LILLY agrees to safeguard such information from unauthorized use or disclosure to the same extent as it does its own confidential information of similar nature, but with no less than reasonable care.

(c) Each of LILLY and APNS agrees that it will not, without the express written consent of the other party, or as permitted by agreement of the Collaboration Management Team, use the other party’s Confidential Information for any purpose other than the performance of the Research Plan or any other purpose expressly contemplated by the terms of this Agreement.

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     (d) Each of LILLY and APNS agrees not to disclose the other party’s Confidential Information to any person other than to such of its (and its affiliates’) employees, agents, consultants, representatives, contractors and advisors who have a need to know such Confidential Information for purposes of the Collaboration and who shall be informed by the receiving party of the confidential nature of the Confidential Information and shall agree to observe the same terms and conditions set forth herein as if specifically named a party hereto. Each of LILLY and APNS agrees that it will be responsible for any breach of confidentiality terms of this Agreement by its (and its affiliates’) agents, employees, consultants, representatives, contractors or advisors. As used herein, “affiliate” of a party means, any entity controlling, controlled by or under common control with such party.

(e) Each party agrees that it will maintain in confidence, and not disclose, the terms of this Agreement without the prior written permission of the other party, except (i) as required by law, provided that the party provides the text of the proposed disclosure to the other party; (ii) to its attorneys, accountants, and other professional advisors under a duty of confidentiality; or (iii) to a third party under a duty of confidentiality in connection with a financing or a proposed merger or a proposed sale of all or part of such party’s business. In addition, if a party receives a request from an authorized representative of a U.S. or foreign tax authority for a copy of the Agreement, that party may provide a copy of the Agreement to such tax authority representative without advance notice to, or the permission or cooperation of, the other party, but the disclosing party must notify the other party of the disclosure as soon as practicable.

Any proposed disclosures by APNS where APNS is required to provide a copy of the text of the proposed disclosure to LILLY under this Subsection must be delivered to LILLY’s Corporate Communications Department, [***] for LILLY’s review and comment. Any proposed disclosures by LILLY where LILLY is to provide a copy of the text of the proposed disclosure to APNS under this Subsection must be delivered to APNS’ offices, 50 Lakeview Parkway, Suite 111, Vernon Hills IL 60061, Attn: Chief Financial Officer, for APNS’ review and comment.

(f) Each of the parties agrees, in the event that either party terminates this Agreement, or at the end of the term of this Agreement if requested by the other, to return to the originating party, all of the Confidential Information and all related material provided by the originating party. The “related material” refers to all memoranda, notes, reports and documents containing copies, extracts or reproductions of the Confidential Information provided by one of the parties to the other pursuant to this Agreement. The receiving party shall be entitled to retain in its legal files one copy of all Confidential Information and related material received under this Agreement for the sole purpose of determining the scope of the obligations incurred hereunder.

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(g) The provisions of this Agreement relating to Confidential Information will not apply to any part of such information where:

Notwithstanding the foregoing, the receiving party shall be permitted to disclose Confidential Information to the extent that the receiving party has been authorized by the disclosing party to disclose such information, or to the extent the disclosure is required by law and the receiving party has provided the disclosing party reasonable advance notice of the potential disclosure and reasonable cooperation with efforts by the disclosing party to limit disclosure, obtain a protective order or take other similar steps.

(h) Each of the parties acknowledges and agrees that the obligations of confidentiality and trust herein provided are in addition to and not in substitution for any duties or obligations of secrecy, confidence or trust arising from or implied by any statute or rule of law.

 (i) Nothing contained in this Agreement shall be construed as a grant of a license to use the Confidential Information other than for purposes described herein.

(j) Each party’s obligation of confidentiality under this Agreement shall survive the termination or expiration of the Agreement Term for five (5) years.

8. Intellectual Property:

(a) LILLY will remain the sole owner of or otherwise shall continue to control rights in all IP (as defined below) relating to any and all Materials, information, plans or methods that may be disclosed to APNS or developed solely by LILLY or licensed to LILLY prior to or separate from performance of the Collaboration (“LILLY Existing IP”) . “IP” means all discoveries, inventions (whether patentable or not), knowledge, know-how, data, techniques, processes, systems, formulations, designs and information of any and every kind, and all worldwide intellectual property or proprietary rights (including, but not limited to patent rights, copyrights and trade secrets) claiming, memorializing or covering the same.

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      (b)   APNS will remain the sole owner of or otherwise shall continue to control rights in all IP relating to any and all Materials, information, plans or methods, [***], that may be disclosed to LILLY or developed solely by APNS, or licensed to APNS prior to or separate from performance of the Collaboration (“APNS Existing IP”) . [***].

(c)   [***] ( “ Product-related IP ” ), [***] (“LILLY New IP” and, together with LILLY Existing IP , “LILLY IP”) .

(d)   All IP conceived in the execution of the Collaboration solely by APNS [***] will be owned by APNS (“APNS New IP” and, together with APNS Existing IP , “APNS IP”) .

(e)   All IP [***] conceived in the [***], will be owned [***] (“ [***] IP”) , provided that all IP [***] created solely by [***] will be owned by [***], and will be considered part of the [***].

The parties’ rights as [***] hereunder of [***] IP shall include, in all countries of the world, all rights inherent in [***] of intellectual property under the laws of the United States. For the avoidance of doubt, and without limiting or narrowing the foregoing, [***] shall expressly be permitted to use and exploit the [***] IP and to [***] in the [***] IP [***], except as limited by the licenses granted hereunder. [***] shall be responsible, at its sole discretion [***], for preparing, filing, prosecuting, maintaining, asserting in infringement actions and defending (collectively, “Prosecuting”) [***] IP (“[***] Patent”) that constitutes [***]. [***] shall be responsible, at its sole discretion [***], for Prosecuting any [***] Patent. The parties shall cooperate reasonably in obtaining, maintaining and enforcing all intellectual property and proprietary rights (including patent rights) in and to [***] IP and keep the other informed of progress in Prosecuting any [***] Patent, but neither party shall be obligated to [***] and thus [***]. If either party elects not to file any [***] Patent or to abandon any [***] Patent, such party will notify the other party to give the other party an opportunity to file or to continue to prosecute or maintain such [***] Patent. Each party will promptly notify the other in writing of any alleged or threatened infringement of any [***] Patent. Both parties shall be entitled to participate in [***] Patent [***], but neither party shall be required to do so, unless such party is [***], in which case such party must [***]. Neither party shall [***]. [***] in connection with any enforcement claim or action involving any [***] Patent shall be retained by [***] Patent [***].  

(f)       Notwithstanding the foregoing, each party acknowledges that the other party also has ongoing, similar but separate research projects, and any inventions arising therefrom shall be owned by the respective party.

9. Licenses:

(a)    Research Licenses to LILLY. Subject to the terms and conditions of this Agreement, APNS hereby grants to LILLY a co-exclusive, non-sublicensable, royalty free license during the Collaboration Term under APNS IP solely to the extent necessary or appropriate to carry out LILLY’s responsibilities under the Research Plan.

(b)    Research Licenses to APNS. Subject to the terms and conditions of this Agreement, LILLY hereby grants to APNS a non-exclusive, non-sublicensable, royalty free license during the Collaboration Term under LILLY IP solely to the extent necessary or appropriate to carry out APNS’ responsibilities under the Research Plan.

(c)    Commercial Licenses to LILLY. Subject to the terms and conditions of this Agreement, APNS hereby grants to LILLY (i) an exclusive worldwide, [***] license during the Agreement Term, including the right to sublicense subject to Section 9(e), under the APNS IP and [***] IP to make, use, import, sell and offer to sell Products and (ii) a non-exclusive, worldwide [***] license, [***], under the APNS IP to make, use, import, sell, and offer to sell biomarkers and diagnostics relating to Products. The license granted under Section 9(c)(ii) shall [***].

(d)    Commercial Licenses to APNS. Subject to the terms and conditions of this Agreement and rights previously granted to third parties by LILLY, LILLY hereby grants to APNS a [***], with the right to sublicense, under the LILLY IP to make, have made, use, import, sell, offer to sell, and otherwise distribute, biomarkers and diagnostics. The license granted under this Section 9(d) shall [***].

(e)    Sublicense. LILLY shall have the right to grant commercial sublicenses under the licenses granted in Section 9(c)(i) and Section 9(c)(ii) to its Affiliates and to a third party (“Sublicensee”); provided that:

(1)   any Sublicensee shall: (i) affirmatively agree in writing that it is subject to and shall be governed by this Agreement and that the Sublicensee shall comply with all relevant obligations hereunder in accordance herewith and (ii) be immediately disclosed to APNS; and

(2)   the grant of a sublicense shall not relieve LILLY of any duty or obligation under this Agreement, and LILLY shall be fully liable to APNS for all failures by any Sublicensee to comply with the terms and conditions set forth in this Agreement; and

(3)   in the case of the grant of any sublicense under the license granted in Section 9(c)(ii), LILLY shall [***] (A) [***] or (B) [***] in the form of [***] based in whole or in part [***], in each case on [***], with the intent that [***] will receive [***]from such [***].

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(f)         LILLY acknowledges that pursuant to the AECOM Agreements, (i) AECOM retains the right to make and use products covered by IP licensed under those agreements in its own laboratories for scientific purposes and for continued research, as well as to make small quantities of biological materials developed in Dr. Davies’ laboratory covered by such intellectual property available to other scientific institutions and researchers solely for scientific and research purposes; and (ii) the research which led to the intellectual property licensed under the AECOM Agreements was funded with National Institutes of Health (“NIH”) and Federal government grants and therefore NIH and the Federal government retain certain rights with respect to such IP. LILLY further acknowledges that, to the extent that any APNS IP licensed to LILLY under this Agreement constitutes IP of AECOM licensed to APNS under the AECOM Agreements, such license is subject to the terms and conditions of the AECOM Agreements.

10. Costs:

LILLY will bear the costs and expenses under this Agreement and, in particular, the Research Plan, to be paid as follows:

Lilly shall make to APNS the following payments in consideration of the work performed during the Collaboration:

11. Milestones and Royalties and Other Payments: LILLY hereby agrees to make the following additional payments to APNS:

(a) Milestone Payments: LILLY shall make the following payments upon achievement of the applicable milestones set forth below which are satisfied by [***]:

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     “Target X” means either [***]. “Target X Compounds” means Compounds discovered during [***], or within [***], that [***]. “Other Target Compounds” means Compounds discovered against [***].

Payments will be made only once per Target for Compounds which achieve the applicable milestone regardless of the number of Compounds developed for such Target; provided, however, that there shall be no limitation on the number of Other Targets which may be identified and for which milestone payments may become payable hereunder.

All milestone payments shall be made by LILLY to APNS within seventy-five (75) days of achievement of the applicable milestone.

(b) Royalties

LILLY shall pay to APNS the following royalties on Net Sales (as defined below) of Products sold by LILLY, its Affiliates and Sublicensees:

Annual Sales *      [***]

* Annual Sales refers to [***]. The Net Sales tiers shall be [***].

Royalties are payable for APNS know-how and expertise only and are not license payments for any APNS patents or patents licensed to APNS existing on the Effective Date. Royalties will be paid for [***] from [***]. There shall be [***] for which royalty payments may become payable hereunder.

(c) “Net Sales” means with respect to sales of a Product, the gross amount invoiced by LILLY (including a LILLY Affiliate), or any Sublicensee thereof, to unrelated third parties, excluding any Sublicensee, for the Product in the Territory, less:

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     Such amounts shall be determined from the books and records of LILLY, its Affiliates or Sublicensees, maintained in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) or, in the case of Sublicensees, such similar accounting principles, consistently applied. LILLY further agrees that in determining such amounts, it will use LILLY's then current standard procedures and methodology, which are in accordance with U.S. GAAP, and including LILLY’s then current standard exchange rate methodology for the translation of foreign currency sales into U.S. dollars or, in the case of Sublicensees, such similar methodology, consistently applied.

In the event that the Product is sold as part of a Combination Product (as defined below), the Net Sales of the Product, for the purposes of determining royalty payments, shall be determined as follows.

(i) By multiplying the Net Sales of the Combination Product by the fraction, A / (A+B) where A is the weighted average sale price of the Product when sold separately in finished form, and B is the weighted average sale price of the other product(s) sold separately in finished form.

(ii) In the event that the weighted average sale price of the Product can be determined but the weighted average sale price of the other product(s) cannot be determined, Net Sales for purposes of determining royalty payments shall be calculated by multiplying the Net Sales of the Combination Product by the fraction A / C where A is the weighted average sale price of the Product when sold separately in finished form and C is the weighted average sale price of the Combination Product.

(iii) In the event that the weighted average sale price of the other product(s) can be determined but the weighted average sale price of the Product cannot be determined, Net Sales for purposes of determining royalty payments shall be calculated by multiplying the Net Sales of the Combination Product by the following formula: one (1) minus B / C where B is the weighted average sale price of the other product(s) when sold separately in finished form and C is the weighted average sale price of the Combination Product.

(iv) In the event that the weighted 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 weighted average sale price for a Product, other product(s), or Combination Product shall be calculated once each calendar year and such price shall be used during all applicable royalty reporting periods for the entire following calendar year. When determining the weighted average sale price of a Product, other product(s), or Combination Product, the weighted average sale price shall be calculated by dividing the sales dollars (translated into U.S. dollars) by the units of active ingredient sold during the twelve (12) months (or the number of months sold in a partial calendar year) of the preceding calendar year for the respective Product, other product(s), or Combination Product. In the initial calendar year, a forecasted weighted average sale price will be used for the Product, other product(s), or Combination Product. Any over or under payment due to a difference between forecasted and actual weighted average sale prices will be paid or credited in the first royalty payment of the following calendar year.

“Combination Product”   means any pharmaceutical product which contains one or more pharmacologically or therapeutically active compound(s), product(s) and/or ingredient(s) in addition to Product.

(d)   Royalty Payment [***]. Royalty payments [***] for Net Sales shall be calculated [***] for each calendar quarter. All royalty payments due to APNS shall be paid within [***] after the end of each [***]. Each payment of royalties shall be [***].

(e)   Late Payments. In the event that any payment, including royalty, milestone and research payments, due hereunder is not made when due, the payment shall accrue interest from the date due at the rate of one percent (1%) per month; provided, however, that in no event shall such rate exceed the maximum legal annual interest rate.

(f)   Records. During the term of this Agreement and for a period of three (3) years thereafter, LILLY shall keep complete and accurate records pertaining to [***] in sufficient detail to permit APNS to confirm the accuracy of all payments due hereunder.

(g)   Audit. LILLY agrees that APNS shall have reasonable audit rights during reasonable times to confirm Net Sales and the accuracy of all payments due hereunder. Such audit shall be performed by APNS’ auditors and at the cost of APNS. If such audit discloses an underpayment, LILLY shall pay APNS within thirty (30) days the amount of such underpayment unless LILLY disputes such amount in good faith. If such audit reveals an underpayment for any calendar year of seven and one half percent (7.5%) or more, then LILLY shall reimburse APNS for the reasonable costs of the audit. If such report shows any overpayment by LILLY, then at APNS’ option, such overpayment shall either be refunded to LILLY by APNS within thirty (30) days of receipt of the audit report, or creditable against amounts payable by LILLY in subsequent payment periods. The parties agree that all information subject to review under this Section is Confidential Information and that each party shall retain and cause the accountant to retain all such information in confidence.

(h)   Revenues from Sale of Diagnostics and Biomarkers. LILLY shall share with APNS profit received by LILLY from the sale by it or its Affiliates or sublicensees of diagnostics and biomarkers related to the Compounds or Products or related to disease states, in each case on financial and other terms to be negotiated in good faith by LILLY and APNS, with the intent that APNS will receive most of the financial benefit from such sales.

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12. Representations and Warranties:

(a) Each party represents and warrants to the other that it has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof.

(b) Each party represents and warrants that all necessary consents, approvals and authorizations of all governmental authorities and other persons required to be obtained by such party in connection with the execution and delivery of this Agreement have been obtained. 

(c) Each party represents and warrants that the execution and delivery of this Agreement and the performance of such party’s obligations hereunder (a) do not conflict with or violate any requirement of applicable laws or regulations and (b) do not conflict with, or constitute a default under, any contractual obligation of such party.

(d) APNS represents and warrants that: (i) there is no pending litigation which alleges that any of its activities relating to the APNS Existing IP have violated any of the intellectual property rights of any third person (nor has it received any written communication threatening such litigation); (ii) to the best of its knowledge, no litigation has been otherwise threatened which alleges that any of its activities relating to the APNS Existing IP have violated any of the intellectual property rights of any third person; (iii) it owns all right, title and interest in and to the APNS Existing IP free and clear of all encumbrances, security interests, options and licenses which would conflict with the licenses granted under this Agreement; (iv) to APNS's actual knowledge as of the Effective Date, there is no unauthorized use, infringement or misappropriation of any of its intellectual property rights licensed hereunder to LILLY; (v) to APNS's actual knowledge as of the Effective Date, there is no intellectual property which could act as a blocking patent to the APNS IP; (vi) it has disclosed to LILLY all license agreements pursuant to which APNS has received a license to third party’s patents relevant to the Collaboration, including the AECOM Agreements, and APNS is not in breach or default under any such agreement that may give rise to a right of termination and has not received from any licensor any notice of such breach or default; and (vii) as of the Effective Date, the AECOM Agreements and the Davies Agreement are in full force and effect in accordance with their respective terms .

(e)   LILLY represents and warrants that: (i) there is no pending litigation which alleges that any of its activities relating to the LILLY Existing IP have violated any of the intellectual property rights of any third person (nor has it received any written communication threatening such litigation); (ii) to the best of its knowledge, no litigation has been otherwise threatened which alleges that any of its activities relating to the LILLY Existing IP have violated any of the intellectual property rights of any third person; and (iii) it owns all right, title and interest in and to the LILLY Existing IP free and clear of all encumbrances, security interests, options and licenses which would conflict with the licenses granted under this Agreement.

13. Indemnification:

(a) Each of LILLY and APNS ( in such capacity, the “Indemnitor”)  will defend, indemnify, and hold harmless the other party, its affiliates, and the respective directors, officers, shareholders, employees, and agents of the other party and its affiliates, and in the case of LILLY or APNS as the Indemnitor, AECOM ( in such capacity, the “Indemnitees”) , from and against any and all liabilities, damages, losses, penalties, fines, costs, interest, and expenses, including, without limitation, reasonable attorneys’ fees, (“Damages”) arising from or occurring as a result of a third person’s claim, action, suit, judgment, or settlement against an Indemnitee that is due to or based upon:

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(i)    any breach by the Indemnitor of an obligation, agreement, covenant, representation, or warranty of the Indemnitor under this Agreement; or

(ii)   any negligent or more culpable act or omission of the Indemnitor or an Indemnitor’s affiliate, or contractor or their respective directors, officers, shareholders, employees, and agents related to this Agreement ((i) and (ii) each, a “Third Party Claim”) ;

provided, however, that the Indemnitor will not be obligated to indemnify or hold harmless the Indemnitees from Damages from a Third Party Claim to the extent that such Damages are finally determined to have resulted from the negligent (or more culpable) act or omission of an Indemnitee or any breach by an Indemnitee of an obligation, agreement, covenant, representation, or warranty of an Indemnitee under this Agreement. 

(b) LILLY will defend, indemnify and hold harmless APNS, AECOM, and the other Indemnitees from and against any and all Damages arising from or occurring as a result of the research, development, manufacturing, marketing and/or sale of Targets, Compounds, Products, biomarkers and/or diagnostics by, on behalf of or under authority of, LILLY (but not including any activities of APNS or its sublicensees).

(c) APNS will defend, indemnify and hold harmless LILLY, AECOM, and the other Indemnitees from and against any and all Damages arising from or occurring as a result of the research, development, manufacturing, marketing and/or sale of biomarkers or diagnostics by, on behalf of or under authority of, APNS (but not including any activities of LILLY or its sublicensees).

(d) The Indemnitor will defend and control negotiation of settlement of any Third Party Claim with counsel reasonably acceptable to the Indemnitee, and the Indemnitee may participate in the defense with counsel of its choosing, such separate counsel to be at its sole expense. Any settlement by which the Indemnitee would incur any obligation or liability, whether for the payment of money, the taking of any action, the refraining from any action, or otherwise, unless the Indemnitor is so obliged or liable by this Agreement, will require the advance written consent of the Indemnitee, which consent may be withheld in the sole discretion of the Indemnitee without relieving the Indemnitor of its indemnification obligations hereunder.

14. DISCLAIMERS:

(a) EXCEPT AS EXPRESSLY PROVIDED HEREIN, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND, WHETHER EXPRESS OR IMPLIED, AND EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING ALL WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE AND NONINFRINGEMENT. IN ADDITION AND WITHOUT LIMITATION, EXCEPT AS EXPRESSLY PROVIDED HEREIN, ALL MATERIALS, CONFIDENTIAL INFORMATION AND IP ARISING FROM THE COLLABORATION OR OTHERWISE FROM THIS AGREEMENT IS PROVIDED ON AN “AS IS” BASIS WITH NO REPRESENTATION OR WARRANTIES OF ANY KIND. LILLY ACKNOWLEDGES AND AGREES THAT ALL RIGHTS GRANTED BY APNS TO LILLY UNDER THIS AGREEMENT ARE SUBJECT TO THE TERMS AND CONDITIONS OF THE AECOM AGREEMENTS, AND THE RIGHTS OF AECOM, NIH AND THE FEDERAL GOVERNMENT UNDER THE AECOM AGREEMENTS.

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(b) UNDER NO CIRCUMSTANCES WILL EITHER PARTY BE ENTITLED TO RECOVER FROM THE OTHER PARTY ANY INCIDENTAL, CONSEQUENTIAL, INDIRECT, SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES (INCLUDING DAMAGES FOR LOSS OF BUSINESS, LOSS OF USE AND THE LIKE), WHETHER BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE), OR ANY OTHER CAUSE OF ACTION RELATING TO THE COLLABORATION OR OTHERWISE RELATING TO THIS AGREEMENT, EVEN IF THE OTHER PARTY HAS BEEN INFORMED OR SHOULD HAVE KNOWN OF THE POSSIBILITY OF SUCH DAMAGES.

15. Publications . [***] shall be entitled to issue scientific publications with respect to the Products or their testing, in accordance with [***] and [***] shall be in control of any publications or scientific presentations regarding Products or their testing and [***] shall not publish or present regarding Products or their testing without [***]. Authorship of any scientific publications that emanate from [***] shall be determined in accordance with standard academic practice, but will have at least [***]. [***] shall provide to [***] a copy of any proposed article or publication that contains significant new information prior to submitting the same for publication, if practicable, and, in any case, [***] shall use its best efforts to provide such copy to [***] at least thirty (30) days in advance of the publication date. For clarity, however, [***] intends that all proposed articles and publications will be timely provided to [***].

     16. Press Releases and Other Public Statements. If a party desires to issue a press release or other public statement concerning the execution of, or the parties’ activities under this Agreement, it must first obtain the other party’s written approval of such issuance and, if approved for issuance, the content of such proposed release, except where such press release or other public statement is required to be issued by applicable law or regulation or stock exchange requirement. For clarity, even where such press release or public statement is required by law or regulation, the issuing party will use its reasonable best efforts to provide to the other party an advance copy for review and comment. In all other respects, except as required by applicable laws, neither party may use any trademarks, logos, or symbols associated with the other party without the prior written permission of such other party. All matters that require LILLY’s review or approval under this Section must be delivered to LILLY’s Corporate Communications Department, [***] for such review and approval. All matters that require APNS’ review and approval under this Section must be delivered to APNS’ offices, 50 Lakeview Parkway, Suite 111, Vernon Hills IL 60061, Attn: Chief Financial Officer for such review and approval.

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17. Termination.

(i)    An “Event of Default” by either party shall have occurred upon:

(1)    the occurrence of a material breach of this Agreement if such party fails to remedy such breach within [***] days after written notice thereof by the non-breaching party (or, if remediation of such breach in period is not practicable, if such party fails to commence and diligently pursue such remediation during such period); or

(2)    the commencement of any proceeding in or for bankruptcy, insolvency, liquidation, dissolution or winding up by or against such party that is not dismissed or otherwise disposed of within [***] days thereafter; or

(3)    solely with respect to APNS, AECOM terminates the AECOM Agreement and/or [***] ceases to perform under the Research Plan during the Collaboration as contemplated by this Agreement, if such termination and/or cessation of performance results in a significant impairment to the goals of the Collaboration as determined by the Collaboration Management Team.

(ii)   Upon the occurrence of an Event of Default by the other party, the non-breaching party shall have the right to terminate either (A) the Collaboration or (B) this Agreement in its entirety, which such termination shall be effective immediately upon providing written notice of termination. Termination of the Collaboration shall mean the termination of the Collaboration Term, and termination of this Agreement in its entirety shall mean the termination of the Agreement Term.

(b)   [***].

[***].

(c)   Effect of Termination or Expiration.

(i)   Consequences of APNS’ Termination due to LILLY’s Breach or [***]. In the event of termination of the Collaboration or of this Agreement by APNS pursuant to this Section 17 following the occurrence of an Event of Default by LILLY, or [***] pursuant to this Section 17:

(1)    all rights and licenses granted to LILLY under this Agreement shall terminate [***] (subject to the payment obligations of LILLY to APNS referenced in Section 17(c)(i)(3) below) (and in the event of APNS’ termination of the Collaboration or this Agreement following the occurrence of an Event of Default by LILLY, [***];

(2)    LILLY shall transfer to APNS or, upon APNS’ written instruction, destroy all information, Materials or other Confidential Information that was provided by APNS, and APNS also shall transfer to LILLY or, upon LILLY’s written instruction, destroy all information, Materials or other Confidential Information that was provided by LILLY;

(3)    LILLY shall continue to pay the fees, milestone payments and royalties which may become due under this Agreement whether prior to or subsequent to the effective date of termination (including those set forth in Sections 9(e) and 11);

(4)    all rights and obligations set forth in Sections 7, 8, 9(d), 13, 15, 16 and 19 shall continue in accordance with their terms; and

                       (5)    except as specifically provided under this Section 17, all obligations of LILLY and APNS that become due after the date of termination of this Agreement shall be extinguished.

(ii)   Consequences of LILLY’s Termination due to APNS’ Breach. In the event of termination of the Collaboration or of this Agreement by LILLY pursuant to this Section 17 following the occurrence of an Event of Default by APNS:

(3)   APNS shall promptly return to LILLY or, upon LILLY's written instruction, promptly destroy all LILLY Information supplied by LILLY to APNS pursuant to, or in connection with, this Agreement or any transaction contemplated herein,;

(4)   LILLY shall continue to pay fifty percent (50%) of the fees, milestone payments and royalties which may become due under this Agreement subsequent to the effective date of termination (including those set forth in Sections 9(e) and 11);

(5) LILLY shall remain responsible for all fees, milestone payments and royalties which may have become due under this Agreement prior to the effective date of termination; and

(6) all rights and obligations set forth in Sections 7, 8, 9(d), 13, 15, 16 and 19 shall continue in accordance with their terms.

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18. BANKRUPTCY PROVISION

The parties intend that LILLY shall be protected in the continued enjoyment of its rights as a licensee under this Agreement to the maximum extent feasible. Accordingly, the parties agree that this Agreement shall constitute an “executory contract” under 11 U.S.C. §§ 101 et seq. (“Bankruptcy Code”) , and that LILLY shall be entitled to the fullest protection conferred upon licensees under Section 365(n) of the Bankruptcy Code. The parties specifically acknowledge and agree that rejection of this Agreement shall not impair the rights of LILLY under this Agreement. The APNS Materials shall be deemed to be "intellectual property" as that term is defined in Section 101(35A) of the Bankruptcy Code. The licenses granted hereunder shall be deemed to be rights to intellectual property that existed immediately before the date the Chapter 11 Case commenced. All materials required to be delivered by APNS to LILLY under this Agreement, and all materials relating to the APNS Materials, shall be deemed to be "embodiments" of such intellectual property for purposes of Section 365(n) of the Bankruptcy Code. All written agreements entered into in connection with the Parties' performance hereunder from time to time shall be considered agreements "supplementary" to this Agreement for purposes of Section 365(n) of the Bankruptcy Code.

19. General:

     (a) This Agreement will be governed by, and construed and enforced in accordance with, the substantive laws of Indiana, without regard to its principles of conflicts of laws. Any disputes arising under this Agreement will be resolved through arbitration. The arbitration will be held under the auspices of Judicial Arbitration & Mediation Services, Inc. (“J•A•M•S”). The arbitration shall be in accordance with the J•A•M•S then-current commercial arbitration rules. The arbitrator shall be either a retired judge, or an attorney licensed to practice law in the state in which the arbitration is convened, selected by mutual agreement of APNS and LILLY. Either party may bring an action in any court of competent jurisdiction to compel arbitration under this Agreement and to enforce an arbitration award. A party opposing enforcement of an award may not do so in an enforcement proceeding, but must bring a separate action in any court of competent jurisdiction to set aside the award, where the standard of review will be the same as that applied by an appellate court reviewing a decision of a trial court sitting without a jury.

(b)   If any provision of this Agreement is found to be invalid or unenforceable, this Agreement will remain in full force and effect and will be reformed to be valid and enforceable while reflecting the intent of the parties to the greatest extent permitted by law.

(c) This Agreement constitutes the entire agreement between the parties relating to the subject matter hereof and supersedes all previous agreements, practices or courses of dealings between the parties, whether written or oral, relating to the subject matter hereof; provided, however, that the confidentiality agreements between APNS and LILLY executed prior to the date hereof   shall continue in full force and effect in accordance with their respective terms (except that the obligations of confidentiality and non-use set forth therein shall continue for the period set forth in Section 7(j) of this Agreement).

(d)   The parties may not assign this Agreement, or any rights or obligations hereunder, without the prior written consent of the other party, except either party may assign this entire Agreement in connection with the sale of all or substantially all of its business and assets relating to this Agreement, whether by sale of assets, sale of stock, merger or otherwise. In addition, either party may assign any or all of its rights under this Agreement to any third party financing source in connection with any debt financing which may be entered into by such party. This Agreement will inure to the benefit of, and be binding upon, the legal representatives, and permitted successors and assigns of APNS and LILLY.

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(e) All notices, demands, requests, approvals, consents or other communications to be given or delivered under this Agreement will be in writing and will be deemed to have been given: (i) when delivered in person or by courier or confirmed facsimile; or (ii) upon confirmation of receipt when sent by certified mail, return receipt requested, to the noticed party at the address set forth above, or such other address as either party may specify by written notice (with, in all cases, copies provided to Legal Counsel of the noticed party).

(f)    The parties agree to work together to identify and support hardware, software, and services appropriate for the sharing of information. Such sharing will be done using materials and methods compatible with LILLY’s and APNS’ existing IT standards and platform to the extent reasonably practicable. Any costs incurred by a party associated with this hardware, software and services will be borne by it.

(g)    Each party acknowledges and agrees that in the event of any breach of the provisions of Section 5, Section 7, Section 8 or Section 9 of this Agreement by it, and without prejudice to any rights and remedies otherwise available to the non-breaching party, at law or in equity, the non-breach party shall be entitled (i) to equitable relief by way of injunction and (ii) to compel specific performance without the need of proof of actual damages. Each party further agrees to waive, and to cause its representatives to waive, any requirement for the securing or posting of any bond in connection with such remedies. No failure or delay by the non-breaching party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise hereunder.

IN WITNESS WHEREOF , the parties have signed this Agreement under seal as of the date first written above.

By:        By:      

Title:        Title:_________________________

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