Development and License Agreement

EXHIBIT 10.1

CONFIDENTIAL TREATMENT REQUESTED: Certain portions of this document have been omitted pursuant to a request for confidential treatment and, where applicable, have been marked with an asterisk (“[*****]”) to denote where omissions have been made. The confidential material has been filed separately with the Securities and Exchange Commission.

Development and License
Agreement

THIS DEVELOPMENT AND LICENSE AGREEMENT (the “Agreement”) is entered into as of 21 June, 2008 (the “Effective Date”) by and between and EMISPHERE TECHNOLOGIES, INC., a Delaware corporation having an address at 240 Cedar Knolls Road, Cedar Knolls, NJ 07927, USA (“Emisphere”) and NOVO NORDISK AS, a Danish corporation having an address at Novo Allé, 2880 Bagsvaerd, Denmark (“Novo Nordisk”).

RECITALS

     WHEREAS, Emisphere is a biopharmaceutical company specializing in the discovery, development, and commercialization of proprietary drug delivery technology;

     WHEREAS, Novo Nordisk is a leading global health care company engaged in the research, development and commercialization of pharmaceutical products;

     WHEREAS, Emisphere and Novo Nordisk have entered into a certain Research, Collaboration and Option Agreement with an effective date of July 6th, 2007;

     WHEREAS, Novo Nordisk desires to obtain, and Emisphere is willing to grant to Novo Nordisk, an exclusive, worldwide right to develop and commercialize formulations of GLP-1 Receptor Agonists (as defined below) with certain of Emisphere’s proprietary delivery agents for oral administration only, subject to the terms and conditions set forth herein; and

     WHEREAS, Novo Nordisk desires to obtain, and Emisphere is willing to grant to Novo Nordisk, exclusivity to certain Emisphere proprietary delivery agent(s), subject to the terms and conditions set forth herein.

     NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1. Definitions and Interpretation

1.1 The following words have the following meaning when used in this Agreement.

“Affiliate” means any corporation, company, partnership, joint venture or other entity which Controls, is Controlled by, or is under common Control with a Party, as the case may be. For the purpose of this definition, “Control” means the ownership of more than fifty percent (50%) of the issue share capital or the legal power to direct or cause the direction of the general management and policies of the Party in question. For purposes of this definition, MHR Capital Partners Master Account LP, MHR Capital Partners (100) LP, MHR Institutional Partners II LP, MHR Institutional Partners IIA LP and their owners and their affiliates are not Affiliates of Emisphere.

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“API” means active pharmaceutical ingredient.

“Auditor” shall have the meaning provided in Section 7.6.

“Background Intellectual Property” means all Intellectual Property in existence and Controlled by a Party prior to the effective date of the Option Agreement or conceived by a Party independently during the term of the Option Agreement or this Agreement and that is used in connection with the work performed during the term of this Agreement.

“Carrier” means synthetic chemical compounds, including pharmaceutically acceptable salts, solvates, and polymorphs identified by Emisphere for use in oral delivery of therapeutics molecules and that are claimed or disclosed in Emisphere Patent Rights or are Controlled by Emisphere.

“Carrier [*****] ” means the Carrier whose structure is shown in Exhibit A.

“Commercially Reasonable Efforts” means such application of effort and resources by the relevant Party as would be consistent with its actions in respect of a product or compound Controlled by such Party, which is of similar market potential and at a similar stage in its development or product life, taking into account, without limitation, with respect to a product issues of safety and efficacy, product profile, the proprietary position of the product, the then current competitive environment for the product and the likely timing of the product's entry into the market, the regulatory environment of the product, and other relevant scientific, technical and commercial factors. Notwithstanding the foregoing, to the extent that the performance of a Party's responsibilities hereunder is adversely affected by the other Party's failure to perform its responsibilities hereunder, such Party will not be deemed to have failed to use its Commercially Reasonable Efforts in performing such responsibilities.

“Confidential Information” means confidential and proprietary technical, commercial and other information, know-how, drawings, specifications, models and/or designs relating to the design, development, manufacture, production, registration (including but not limited to information relating to safety, adverse events and recalls), promotion, distribution, marketing, performance, sale or use of the Licensed Product(s) and information concerning business transactions or associations including other technical or commercial co-operation or collaborative arrangements or financial arrangements with other persons or bodies or customers (existing or potential or otherwise) or licensors or licensees. Confidential Information includes without limitation and without prejudice to the generality of the foregoing:  

(i)

all experimental, manufacturing, process, analytical, packaging, product, warehousing, quality control and quality assurance and marketing specifications, standards, procedures, processes, methods, instructions and techniques, samples, prototypes, formulae, writings of any kind, opinions or otherwise unwritten data or in the form of computer software or computer programs or any part thereof in any code or language relating to the Licensed Product(s);

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	(ii)		all data and proprietary know-how relating to the Carriers, Products and/or Licensed Product(s);
	(iii)		any biological, chemical or physical materials;
	(iv)		information necessary or useful in obtaining registration or approval from any Regulatory Authority;
	(v)		all other information and other material supplied to or received by a Party on a confidential basis pursuant to this Agreement;
	(vi)		any reports provided under this Agreement; and
	(vii)		the terms of this Agreement.

“Control” or “Controlled” means with respect to a particular item, material, information or Intellectual Property, that a Party, as of the effective date of this Agreement and during its Term, owns or has a license to and that the Party has the ability to use or grant licenses or sublicenses to.

“Covered by” means, with respect to any Licensed Product, that the manufacture, use, offer for sale, sale or importation of such Licensed Product(s) would (if such activity were performed by a Third Party) infringe an Issued Patent Claim.

“D&C Event” will have the meaning provided in Section 3.2.

“EMEA” means the European Agency for the Evaluation of Medicinal Products or any successor agency thereto.

“Emisphere Background Intellectual Property” means Background Intellectual Property solely related to the Program Carriers and Controlled by Emisphere.

“Emisphere Foreground Intellectual Property” means Intellectual Property arising from work performed under the Option Agreement or this Agreement solely relating to the Program Carriers, whether conceived, discovered, reduced to practice or writing, generated or developed by the employees, agents or consultants of Emisphere and its Affiliates or by the employees, agents or consultants of Novo Nordisk and its Affiliates.

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“Emisphere Intellectual Property” means Emisphere Background Intellectual Property and Emisphere Foreground Intellectual Property.

“Exclusive Program Carrier” will have the meaning provided in Section 2.2(a).

“FDA” means the United States Food and Drug Administration, or any successor agency thereto having the administrative authority to regulate the marketing to human pharmaceutical products or biological therapeutic products, delivery systems and devices in the United States of America.

“Field” means the treatment or prevention of human disease or condition using any Licensed Product.

“First Commercial Sale” means, in a country, the first commercial sale in that country by Novo Nordisk or its Affiliates or a sublicensee of a Licensed Product(s) to a Third Party following receipt of marketing approval to sell such Licensed Product(s) in such country. Sales for clinical studies, com-passionate use, named patient programs, sales under a treatment IND, any non-registrational studies, or any similar instance where the Licensed Product(s) is sold at cost or supplied without charge such as clinical supplies, free samples (promotional or otherwise) or as donations (for example to non-profit institutions or government agencies for a non-commercial purpose) shall not constitute a First Commercial Sale.

“Foreground Intellectual Property” means all Intellectual Property arising from work performed under the Option Agreement or this Agreement whether conceived, discovered, reduced to practice or writing, generated or developed by the employees, agents or consultants of Emisphere or its Affiliates or by the employees, agents or consultants of Novo Nordisk or its Affiliates.

“Formulation Intellectual Property” means all Intellectual Property arising from work performed under this Agreement that relates to Know-How and Patent Rights that claim formulations of GLP-1 Receptor Agonists with Carriers including formulations of Product(s) with Program Carrier(s) whether conceived, discovered, reduced to practice or writing, generated or developed by the employees, agents or consultants of Emisphere or its Affiliates or by the employees, agents or consultants of Novo Nordisk or its Affiliates.

“GLP-1 Receptor Agonist(s)” means a [*****] that has the ability to [*****] and initiate [*****] where such [*****] include but are not limited to [*****] and [*****] and [*****] but excluding [*****].

“Intellectual Property” means Know-How and Patent Rights.

“Issued Patent Claim” means, on a country by country basis, a claim of an issued patent that covers Licensed Product(s) and that has not:

(a) lapsed, expired, been formally disclaimed by written submission to any US or foreign patent office, withdrawn, cancelled or abandoned; or

(b) been held revoked, invalid or unenforceable in an unappealable or unappealed decision of a court or other body of competent jurisdiction.

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If there should be two or more decisions within the same country which are conflicting with respect to the invalidity or unenforceability of the same claim, the unappealed or unappealable decision of the highest tribunal shall thereafter control.

“Know-how” means ideas, concepts, discoveries, inventions, developments and non-public, confidential or proprietary trade secrets, techniques, methodologies, modifications, innovations, improvements, designs and design concepts, and any other information that is necessary or useful for the research, development, manufacture, use, import, export, sale, offer for sale, transfer, or regulatory approval of products or processes, including but not limited to technical information, expertise, processes, techniques, specifications, formulas, procedures, protocols, and data, results and other information generated or developed through experiments and testing.

“Licensed Know-how” means Know-How Controlled by Emisphere that is directed to the Program Carrier(s), the Licensed Product(s), or their use or production/manufacturing, and which is necessary or useful for the research, development, manufacture, use, import, export, sale, offer for sale, transfer, and/or regulatory approval of Licensed Product(s). Licensed Know-How shall in addition include Know-How Controlled by Emisphere developed during the term of this Agreement that is related to the Program Carrier(s) or the Licensed Product(s), their use or production/manufacturing, and which is necessary or useful for the research, development, manufacture, use, import, export, sale, offer for sale, transfer, and/or regulatory approval of Licensed Product(s). Licensed Know-How does not include Know-How which (i) at the time of disclosure by Emisphere to Novo Nordisk was already in the public domain through no wrongful act of Novo Nordisk; (ii) prior to the disclosure by Emisphere to Novo Nordisk, or the development by Emisphere or Novo Nordisk under this Agreement, was already in Novo Nordisk’s possession from a Third Party source that was under no obligation to Emisphere to keep such information confidential, or from Emisphere without any obligation of confidentiality on the part of Novo Nordisk; or (iii) was developed independently by Novo Nordisk, outside of the Option Agreement and this Agreement, without the assistance of Emisphere and without any use of Confidential Information Controlled by Emisphere.

“Licensed Product(s)” means any pharmaceutical formulation suitable for administration to humans where such formulation contains at least one Product in combination with a Program Carrier.

“Licensed Patents” means (i) any Patent Rights directed to the Emisphere Intellectual Property; and (ii) any other Patent Rights Controlled by Emisphere having at least one Issued Patent Claim that would be infringed by the manufacture, import, use, offering for sale, or sale of a Licensed Product(s) (if such activity were performed by a Third Party).

“ [*****] ” means [*****].

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“NDA” means an application and all amendments and supplements thereto filed with the FDA, or the equivalent application filed with any equivalent agency or governmental authority outside the United States of America (including any supra-national agency such as in the European Union), including all documents, data, and other information concerning a pharmaceutical product which are necessary for gaining Regulatory Approval to market and sell such pharmaceutical product.

“Net Sales” shall be calculated in the same manner as Novo Nordisk calculates Net Sales reported to its shareholders and shall mean all revenues, recognized in accordance with the International Financial Reporting Standards, from the sale of a Licensed Product(s) by Novo Nordisk or its Affiliates or its sublicensees, less the following deductions which are actually incurred, allowed, paid, accrued or specifically allocated:

(a) credits or allowances actually granted for damaged Licensed Product(s)s, returns or rejections of Licensed Product(s), price adjustments and billing errors;

(b) governmental and other rebates (or equivalents thereof) granted to managed health care organizations, pharmacy benefit managers (or equivalents thereof), federal, state, provincial, local and other governments, their agencies and purchasers and reimbursers or to trade customers;

(c) normal and customary trade, cash and quantity discounts, allowances and credits actually allowed or paid;

(d) commissions allowed or paid to Third Party distributors, brokers or agents other than sales personnel, sales representatives and sales agents employed by Novo Nordisk;

(e) transportation costs, including insurance, for outbound freight related to delivery of a Licensed Product(s) to the extent included in the gross amount invoiced;

(f) sales taxes, VAT taxes and other taxes directly linked to the sales of Licensed Product(s) to the extent included in the gross amount invoiced; and

(g) any other items that reduce gross sales amounts as required by the International Financial Reporting Standards applied on a consistent basis.

Net Sales shall not include sales at Novo Nordisk’s cost price to Affiliates or to contractors or sublicensees engaged by or partnered with Novo Nordisk to develop, promote, co-promote, market, sell or otherwise distribute a Licensed Product(s). However, subsequent sales of Licensed Product(s) by Novo Nordisk Affiliates, contractors, or sublicensees shall be included in the Net Sales when sold in the market for end-user use.

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For Net Sales of a Licensed Product sold or supplied as a “Combination” where “Combination” means Licensed Product(s) as sold or supplied is a pharmaceutical product containing, in addition to the Licensed product(s), one or more biologically active pharmaceutical(s) which are not Licensed Product(s), the Net Sales of such a Combination in a country will be determined by multiplying the Net Sales of such Combination by the fraction of A/A+B, where A is the average unit selling price of the Licensed Product sold separately in that country and B is the total average unit selling price of the other biologically active pharmaceutical(s), when sold separately in that country. If neither the Licensed Product nor the other biologically active pharmaceutical(s) of the Combination are sold separately, then the Parties shall negotiate in good faith the value of the other biologically active pharmaceutical(s) of the Combination that are to be deducted from the Net Sales of the Combination in determining the Net Sales of the Licensed Product contained in the Combination.

Monetary conversion from the currency of a country outside the U.S. in which a Licensed Product(s) is sold into U.S. dollars shall be calculated at the rates of exchange used by Novo Nordisk in producing its quarterly and annual reports to its shareholders, as confirmed by Novo Nordisk’s independent registered public accountants.

“Non-GLP-1 Receptor Agonist” means any API other than a GLP-1 Receptor Agonist.

“Non-Exclusive Program Carrier” will have the meaning provided in the first sentence of Section 2.2(d).

“Novo Nordisk Background Intellectual Property” means Background Intellectual Property solely related to Products and Controlled by Novo Nordisk.

“Novo Nordisk Foreground Intellectual Property” means all (i) Formulation Intellectual Property, (ii) Option Agreement Formulation Intellectual Property, and (iii) Intellectual Property arising from work performed under the Option Agreement or this Agreement, solely relating to Product(s), their method(s) of production or their method(s) of use, whether conceived, discovered, reduced to practice or writing, generated or developed by the employees, agents or consultants of Emisphere or its Affiliates or by the employees, agents or consultants of Novo Nordisk or its Affiliates.

“Novo Nordisk Intellectual Property” means Novo Nordisk Background Intellectual Property and Novo Nordisk Foreground Intellectual Property.

“Option Agreement” means the Research, Collaboration and Option Agreement executed by Parties with an effective date of July 6th, 2007.

“Option Agreement Formulation Intellectual Property” means Formulation Intellectual Property as defined in the Option Agreement and arising form work performed under the Option Agreement.

“Party” means Emisphere and its Affiliates or Novo Nordisk and its Affiliates.

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“Parties” means Emisphere and its Affiliates and Novo Nordisk and its Affiliates.

“Patent Authority” means a governmental, intergovernmental, or government-authorized body responsible for receiving, examining, issuing, extending or maintaining patents.

“Patent Rights” means all patents and patent applications, and any and all continuations, continuations-in-part, divisionals, utility models, extensions (including extensions under the U.S Patent Term Restoration Act, extensions of patents under the Japanese Patent Law and Supplementary Protection Certificates), renewals, substitutions and additions thereof and all reissues, revalidations and re-examinations thereof, including any and all patents issuing there from and any and all foreign counter-parts thereof.

“Phase 1 Clinical Trial” means a human clinical trial that satisfies the requirements for a Phase 1 study as defined in 21 C.F.R. Part 312.21(a) (or its successor regulation) or the equivalent human clinical trial outside the US.

“Phase 2 Clinical Trial” means a human clinical trial that satisfies the requirements for a Phase 2 study as defined in 21 C.F.R. Part 312.21(b) (or its successor regulation) or the equivalent human clinical trial outside the US.

“Phase 3 Clinical Trials” means a human clinical trial that satisfies the requirements for a Phase 3 study as defined in 21 C.F.R. Part 312.21(c) (or its successor regulation) or the equivalent human clinical trial outside the US.

“Product(s)” means any GLP-1 Receptor Agonist(s).

“Program Carriers” means up to [*****] Carriers that are selected by Novo Nordisk, at its sole discretion, in writing during or before the Term of this Agreement from the Carriers made available by Emisphere. Program Carriers may be either Exclusive Program Carriers or Non-Exclusive Program Carriers. Carrier [*****] and [*****] have been selected by Novo Nordisk as an Exclusive Program Carrier and a Non-Exclusive Program Carrier respectively as of the Effective Date.

“Regulatory Approval” means any approvals (including price and reimbursement approvals), licenses, registrations, or authorizations of the European Union or of any country, federal, state or local regulatory agency, department, bureau or other government entity that is necessary for the manufacture, use, storage, import, transport and/or sale of a Licensed Product in such jurisdiction.

“Regulatory Authority” means any national, supra-national, regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity, whose approval or authorization is necessary for, or to whom notice must be given prior to, the manufacture, distribution, use or sale of a Licensed Product or the designation of a Licensed Product as an orphan drug (or equivalent designation).

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“Selection Date” means any date during the Term on which Novo Nordisk notifies Emisphere in writing of its selection of a Carrier as a Program Carrier.

“ [*****] ” means the Carrier whose structure is shown in Exhibit A.

“Term” shall have the meaning provided in Section 12.1.

“Territory” means the world.

“Third Party” means any party other than the Parties and their Affiliates.

1.2 Interpretation

In this Agreement headings are for convenience only and do not affect interpretation, and unless the context indicates a contrary intention:

(a) if a word or phrase is given a defined meaning, any other part of speech or grammatical form of that word or phrase has a corresponding meaning;

(b) a reference to a Party, Section, schedule, attachment or Exhibit is a reference to a Party, Section, schedule, attachment or Exhibit to this Agreement;

(c) a Section, schedule, attachment or Exhibit to this Agreement forms a part of this Agreement, but if there is inconsistency between this Agreement and any schedule, attachment or Exhibit to it, this Agreement shall prevail unless the Parties have agreed otherwise in writing;

(d) a reference to a document (including this Agreement) is to that document as varied, novated, ratified or replaced from time to time;

(e) a reference to a statute includes its delegated legislation, and a reference to a statute or delegated legislation or a provision of either includes consolidations, amendments, reenactments and replacements;

(f) a reference to “includes” in any form is not a word of limitation;

(g) a reference to a Party shall not or a Party does not have a right to do an act, or prohibition of a Party from doing an act, means the Party and its Affiliates shall not and have no right to do so, and are prohibited from doing so, directly or indirectly, by or with sublicencees, subcontractors or in collaboration;

(h) unless otherwise specifically stated, all provisions are assumed to be applicable during and throughout the Term of this Agreement;

(i) the captions and headings of clauses contained in this Agreement preceding the text of the Sections, sections, subsections and paragraphs hereof are inserted solely for convenience and ease of reference only and shall not constitute any part of this Agreement, or have any effect on its interpretation or construction;

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(j) references to days shall mean calendar days, unless otherwise specified;

(k) ambiguities and uncertainties, if any, shall not be interpreted against either Party, irrespective of which Party may be deemed to have caused the ambiguity or uncertainty to exist; and

(l) this Agreement has been prepared in the English language and the English language shall control its interpretation. In addition, all notices required or permitted to be given hereunder, and all written, electronic, oral or other communications between the Parties regarding this Agreement shall be in the English language.

2. Grant of Rights and Selection of Program Carriers

2.1 Grant of Rights and Exclusivity for Formulations Containing GLP-1 Receptor Agonists and Carriers.

(a) Emisphere grants Novo Nordisk and its Affiliates a worldwide, royalty-bearing exclusive license, with the right for Novo Nordisk and its Affiliates to sublicense under the Licensed Patents and Licensed Know-How, to research, develop, make, have made, use, import, export, sell, offer for sale, and otherwise transfer the Licensed Product(s) in the Territory during the Term;

(b) If Emisphere has rights to Intellectual Property Controlled by a Third Party, for example under an option or a right or first refusal granted to Emisphere by such Third Party, and if such Intellectual Property is necessary or useful for Novo Nordisk to research, develop, make, have made, use, import, export, sell, offer for sale, and otherwise transfer the Licensed Product(s), then Emisphere shall, to the extent permitted under the terms of the agreement with such Third Party, obtain a license to such Intellectual Property, with a right to sublicense to Novo Nordisk, in order to ensure that is included in the Licensed Patents and/or Licensed Know-How;

(c) Emisphere shall not grant a license to a Third Party under Emisphere Intellectual Property to research, develop, make, have made, use, import, export, sell, offer for sale and/or otherwise transfer a formulation(s) of a GLP-1 Receptor Agonist with any Carrier or a formulation of [*****] with a Program Carrier nor shall Emisphere itself research, develop, make, have made, use, import, export, sell, offer for sale and/or otherwise transfer a formulation(s) of a GLP-1 Receptor Agonist with any Carrier or a formulation of [*****] with a Program Carrier other than to fulfill its obligations under this Agreement;

(d) Novo Nordisk shall at all times retain the unrestricted right to develop or commercialize any formulation of GLP-1 Receptor Agonists whether alone or with any agent that is not a Carrier.

(e) No right or license under any Intellectual Property is granted or shall be granted by implication under this Agreement. All such rights or licenses are or shall be granted only as expressly provided in the terms of this Agreement.

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2.2 Carrier Exclusivity and Selection of Program Carriers.

(a) If, as of the Selection Date, Emisphere has not granted a license to a Third Party under Emisphere Intellectual Property to research, develop, make, have made, use, import, export, sell, offer for sale and/or otherwise transfer a formulation(s) of a Non-GLP-1 Receptor Agonist with the Program Carrier or is itself not researching, developing or commercializing a formulation a Non-GLP-1 Receptor Agonist with such Program Carrier as shown by written records that predate the Selection Date, then from the Selection Date forward and for the term of this Agreement, provided Novo Nordisk makes the payments set forth in Section 3.4, such Program Carrier shall be subject to the exclusive license granted to Novo Nordisk under Section 2.1(a) and to the restriction set forth in section 2.1(c) and further --

(i) Emisphere shall, subject to section 2.2(e), grant an exclusive license to Novo Nordisk under Emisphere Intellectual Property to research, develop, make, have made, use, import, export, sell, offer for sale or otherwise transfer a formulation(s) of any Non-GLP-1 Receptor Agonist with the Program Carrier;

(ii) and Emisphere shall not grant a license to a Third Party under Emisphere Intellectual Property to research, develop, make, have made, use, import, export, sell, offer for sale and/or otherwise transfer a formulation(s) of a Non-GLP-1 Receptor Agonist with the Program Carrier nor shall Emisphere itself research, develop, make, have made, use, import, export, sell, offer for sale and/or otherwise transfer a formulation(s) of any Non-GLP-1 Receptor Agonist with the Program Carrier (a Program Carrier subject to the licenses and restrictions described in this section 2.2 (a) being an “Exclusive Program Carrier”).

(b) Notwithstanding anything in section 2.2(a) and subject to the last sentence in section 2.2(d), Emisphere’s Carrier commonly referred to as [*****] is a Non-Exclusive Program Carrier.

(c) Within thirty (30) days of the Selection Date, Novo Nordisk will have the right to provide Emisphere with a written due diligence request (hereafter “Due Diligence Request”) for the Program Carrier identified on the Selection Date. If such Due Diligence Request is provided by Novo Nordisk to Emisphere, Emisphere will provide a written response to such Due Diligence Request to Novo Nordisk no later than sixty (60) days from receipt of such Due Diligence Request. Within sixty (60) days of receipt of Emisphere’s response, and no later than one hundred fifty (150) days from the Selection Date, [*****].

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(d) If, as of the Selection Date, Emisphere has granted a license to a Third Party under Emisphere Intellectual Property to research, develop, make, have made, use, import, export, sell, offer for sale and/or otherwise transfer a formulation(s) of a Non-GLP-1 Receptor Agonist with that Carrier or is itself researching, developing or commercializing a formulation a Non-GLP-1 Receptor Agonist with such Carrier as shown by written records that predate the Selection Date, then such Carrier shall be a Program Carrier subject to the exclusive license granted to Novo Nordisk under Section 2.1(a) and to the restriction set forth in Section 2.1(c) and further, to the extent permitted by the license granted by Emisphere to the Third Party and subject to section 2.2(e), Emisphere shall grant a non-exclusive license to Novo Nordisk under Emisphere Intellectual Property to research, develop, make, have made, use, import, export, sell, offer for sale and/or otherwise transfer a formulation(s) of a Non-GLP-1 Receptor Agonist with that Program Carrier (a Program Carrier subject to the licenses and restrictions described in the preceding sentence being a “Non-Exclusive Program Carrier”). If Emisphere’s license with the Third Party as described in the first sentence of this section 2.2(d) terminates and/or its internal research, development and commercialization program ceases, then the non-exclusive license Emisphere granted to Novo Nordisk under Emisphere Intellectual Property to research, develop, make, have made, use, import, export, sell, offer for sale and/or otherwise transfer a formulation(s) of a Non-GLP-1 Receptor Agonist with that [*****]. If Emisphere’s license with the Third Party as described in the first sentence of this section 2.2(d) does not permit Emisphere to grant a non-exclusive license to Novo Nordisk under Emisphere Intellectual Property to research, develop, make, have made, use, import, export, sell, offer for sale and/or otherwise transfer a formulation(s) of a Non-GLP-1 Receptor Agonist with that Program Carrier, Novo Nordisk shall not have any rights to such Program Carrier outside those set forth in sections 2.1(a) and 2.1(c) but if Emisphere’s license with the Third Party terminates, then [*****].

(e) If Novo Nordisk provides Emisphere with written notice that Novo Nordisk, at its sole discretion, wishes to develop and commercialize a formulation of a Non-GLP-1 Receptor Agonist with a Program Carrier, the Parties shall negotiate in good faith a Development and License Agreement with a view to reaching agreement on mutually acceptable terms. Both Parties will be obliged to conduct such negotiations with reasonable diligence and without undue delay provided that in the event Novo Nordisk wishes to develop and commercialize a formulation of a Non-GLP-1 Receptor Agonist with a Program Carrier, neither Party shall be obliged to continue negotiations beyond expiration of one hundred and twenty (120) days from the date Novo Nordisk provides Emisphere with written notice unless the Parties mutually agree in writing to extend such negotiations.

(f) Except as set forth under Section 2.2(a) or as set forth in any Development and License Agreement that may be executed under Section 2.2(e), Emisphere retains the right itself under the Emisphere Intellectual Property, with the right to license Third Parties, to research, develop, make, have made, use, import, export, sell, offer to sell and otherwise transfer products in the Territory other than (i) formulation(s) of a GLP-1 Receptor Agonist with any Carrier or (ii) formulations of [*****] with a Program Carrier.

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3. Fees and Payments

3.1 Novo Nordisk shall pay to Emisphere a non-refundable, non-creditable license fee of Ten Million Dollars (US$10,000,000) within [*****] days after the Effective Date. Notwithstanding any other provision of this Agreement to the contrary, it shall be a condition to the effectiveness of this Agreement, including the licenses granted to Novo Nordisk hereunder, that Novo Nordisk timely make such payment to Emisphere.

3.2 Novo Nordisk shall provide Emisphere with written notice of the first occurrence of each Development and Commercialization Event (“D&C Event”) set forth below with respect to a Licensed Product within thirty (30) days after such occurrence. Within thirty (30) days of the first occurrence of each of the events set forth below with respect to a Licensed Product, Novo Nordisk shall pay to Emisphere the applicable payment set forth below, whether such milestone is achieved by Novo Nordisk, its Affiliate or any of their respective sublicensees:

 

The payments set forth above in this Section 3.2 shall be payable only once regardless of the number of indications for which such Licensed Product is developed or approved or the number of Licensed Products for which each event occurs. All payments made to Emisphere pursuant to this Section 3.2 are non-refundable and may not be credited against any other payments payable by Novo Nordisk to Emisphere under this Agreement.

In the event that Regulatory Approval of a [*****] Licensed Product(s) is obtained and Novo Nordisk is developing a [*****] Licensed Product(s), then for each D&C Event achieved for such [*****] Licensed Product(s), Novo Nordisk shall pay Emisphere [*****] of each such D&C Event payment. The [*****] payment shall be payable only once and shall not be payable again despite potential repeated achievement of the D&C Events by a [*****] or subsequent Licensed Product(s).

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3.3 Novo Nordisk shall provide Emisphere with written notice of the first occurrence of each of the events set forth below with respect to a Licensed Product within thirty (30) days after such occurrence. Within thirty (30) days of the first occurrence of each of the events set forth below with respect to a Licensed Product, Novo Nordisk shall pay to Emisphere the applicable payment set forth below, whether such milestone is achieved by Novo Nordisk, its Affiliate or any of their respective sublicensees:

 

The payments set forth above in this Section 3.3 shall be triggered by the achievement of the specified sales for a single Licensed Product and shall be payable only once despite potential repeated achievement of the specified sales by a single Licensed Product or by different Licensed Products. All payments made to Emisphere pursuant to this Section 3.3 are non-refundable and may not be credited against any other payments payable by Novo Nordisk to Emisphere under this Agreement.

In the event that Regulatory Approval of a [*****] Licensed Product(s) is obtained and Novo Nordisk is developing a [*****] Licensed Product(s), then for each Annual Sales Event achieved for such [*****] Licensed Product(s), Novo Nordisk shall pay Emisphere [*****] of each such Annual Sales Event payment. The [*****] payment shall be payable only once and shall not be payable again despite potential repeated achievement of the Annual Sales Events by a [*****] or subsequent Licensed Product(s).

3.4 Additional Program Carrier Payments to Maintain the Program Carrier Exclusivity and Effects of Failure to Make Such Payments.

(a) In order to maintain Program Carriers other than Non-Exclusive Program Carriers as Exclusive Program Carriers during the Term, Novo Nordisk shall pay Emisphere, in addition to any other payments that might be owed Emisphere under Section 3.2 for the following D&C Events, the following amounts: (i) [*****] USD at the time of (A) [*****] and (B) [*****], and (ii) [*****] USD at the time of [*****]. Novo Nordisk will make the above payments to Emisphere within thirty (30) days from the occurrence of the specified D&C Event. For the avoidance of doubt, the above amounts are payable one time only regardless of the number of Licensed Product(s) containing the Exclusive Program Carrier(s) that might achieve the above D&C Events and payment of the above amounts shall never be due for Licensed Product(s) containing a Non-Exclusive Program Carrier.

(b) If one or more of the payments set forth in section 3.4 (a) are not timely made to Emisphere for Program Carriers, such Program Carriers will from the date such payment was due and not made (“Non-Payment Date”), automatically convert from Exclusive Program Carriers to Non-Exclusive Program Carriers and Emisphere shall, subject to the restriction set forth in Section 2.1(c), have the right itself under the Emisphere Intellectual Property, with the right to license Third Parties, to research, develop, make, have made, use, import, export, sell, offer to sell and otherwise transfer formulations containing such Program Carriers in the Territory.

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3.5 Royalties.

(a) For each Licensed Product Covered by an Issued Patent Claim of Licensed Patents or of Formulation Intellectual Property or Option Agreement Formulation Intellectual Property in a country, Novo Nordisk shall pay to Emisphere a royalty on the Net Sales of each Licensed Product(s) in such country as follows:

 

where the total Net Sales are calculated on a Licensed Product by Licensed Product basis.

(b) For each Licensed Product(s) not Covered by an Issued Patent Claim of Licensed Patents or of Formulation Intellectual Property or Option Agreement Formulation Intellectual Property in a country, in consideration for Novo Nordisk’s use of the Licensed Know-How, Novo Nordisk shall pay Emisphere Know-How royalties on Net Sales of such Licensed Product(s) in such country at [*****] of the above royalty rates for a period of [*****] years from the First Commercial Sale in such country of such Licensed Product(s).

(c) In the event that the only Issued Patent Claim covering a Licensed Product(s) in a country is an Issued Patent Claim of Licensed Patents or Formulation Intellectual Property or Option Agreement Formulation Intellectual Property which has been solely invented by Novo Nordisk, Novo Nordisk shall pay Emisphere royalties on Net Sales of a Licensed Product(s) in such country at [*****] of the above royalty rates.

(d) In the event Novo Nordisk is required to obtain one or more licenses under Intellectual Property Controlled by a Third Party that cover the right to research, develop, make, have made, use, import, export, sell, offer for sale, and otherwise transfer Licensed Product(s), up to [*****] of royalties otherwise payable by Novo Nordisk to Emisphere hereunder may be credited against milestones and/or fees or royalties which Novo Nordisk actually pays to such Third Party. In the event Novo Nordisk is required to obtain a license as in the preceding sentence and the Intellectual Property Controlled by the Third Party that is the subject of such license is Intellectual Property that has arisen from work conducted pursuant to a development and license agreement between that Third Party and Emisphere, then (i) up to [*****] of royalties otherwise payable by Novo Nordisk to Emisphere hereunder may be credited against milestones and/or fees or royalties which Novo Nordisk actually pays to such Third Party and (ii) Emisphere shall use Commercially Reasonable Efforts to assist Novo Nordisk in obtaining a license from such Third Party.

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(e) Notwithstanding anything to the contrary, in no event will the royalty payments listed in Sections 3.5(a) and 3.5(c) be reduced by more than [*****].

(f) Royalty payments shall be calculated and reported for each calendar quarter. All royalty payments due to Emisphere under this Agreement shall be paid within thirty (30) calendar days of the end of each calendar quarter. Each payment shall be accompanied by a report of Net Sales of Licensed Products by Novo Nordisk, its Affiliates and their respective sublicensees in sufficient detail to permit confirmation of the accuracy of the payment made, including, the Net Sales of such Licensed Products in the Territory and country by country, and the royalty payable. Novo Nordisk shall keep, and shall cause its Affiliates and their respective sublicensees to keep, complete and accurate records pertaining to the sale or other disposition of Licensed Products in sufficient detail to permit Emisphere to confirm the accuracy of all payments due hereunder as set forth in Section 7.6.

3.6 General Provisions Applicable to Payments. Emisphere shall be responsible for and shall bear any taxes levied upon payments received by Emisphere and Emisphere hereby authorizes Novo Nordisk to withhold such taxes from the payments which are payable to Emisphere in accordance with this Agreement if Novo Nordisk is either required to do so under applicable law or directed to do so by a governmental authority. Upon Emisphere’s written request, Novo Nordisk shall, with respect to the laws of Denmark, reasonably support Emisphere in its legal efforts to minimize any such withholding taxes and provide Emisphere with information about and necessary for any documentation needed to reduce withholding to a legal minimum.

3.7 Wire Transfer. All payments to be made by Novo Nordisk to Emisphere under this Agreement shall be made by wire transfer from Novo Nordisk to the following account of Emisphere:

     [*****]  
     ABA [*****] 
     Account number: [*****] 
     Account Name: Emisphere Technologies, Inc.

3.8 Loss of Exclusivity of Novo Nordisk's License Rights under Section 2 . If, during the time that this Agreement is in full force and effect, either Party becomes aware that a Third Party owns or has a license to intellectual property rights that negate the exclusivity and/or scope of the rights licensed to Novo Nordisk under Section 2, then (a) such Party will promptly notify the other Party and (b) all future payments by Novo Nordisk under Sections 3.2, 3.3 and 3.5 shall be reduced by [*****].

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4. Product Development

4.1 Novo Nordisk shall, at its own cost and discretion, develop and obtain regulatory approval for the Licensed Product(s).

4.2

(a) The Parties shall jointly select the Carriers which are to be provided to, and screened by, Novo Nordisk. Emisphere shall use Commercially Reasonable Efforts to provide documentation specified by Novo Nordisk concerning the Carriers. The Parties agree that the Know-How related to the Carriers provided to Novo Nordisk, including structures of such Carriers and their availability as Exclusive Program Carriers at the time, must be disclosed by Emisphere to Novo Nordisk at the time of transfer of the Carriers. Any Know-How related to Carriers provided to Novo Nordisk prior to the Effective Date shall be transferred to Novo Nordisk promptly following execution of the Agreement, if any such Know-How has not already been provided.

(b) Upon selection by Novo Nordisk of a Carrier to be a Program Carrier, Know-How related to such Program Carrier provided under Section 4.2(a) shall become Licensed Know-How as of the Selection Date. Emisphere shall continue to provide Licensed Know-How to Program Carriers to Novo Nordisk through out the Term.

(c) If requested by Novo Nordisk, representatives of Emisphere shall participate, at Novo Nordisk’s cost, in a technology transfer session(s) of commercially reasonable scope and length to be held in Denmark or in the US as decided by Novo Nordisk at its sole discretion.

4.3 Novo Nordisk shall be solely responsible for the development, development plan(s), and commercialization for the Licensed Product(s) and for all of the costs of the development and commercialization of the Licensed Product(s). Novo Nordisk shall own all clinical data and other results, without limitation, arising out of the work under this Agreement. Novo Nordisk shall not, directly or indirectly, attempt to modify, or create derivative materials from any Carriers.

4.4 Novo Nordisk shall compensate Emisphere for its out of pocket costs, including costs for personnel at an hourly rate of $[*****] USD for any development or commercialization activities including technical support, manufacturing support, regulatory support, and support of scale-up/supply activities undertaken by Emisphere at Novo Nordisk’s written request, subject to annual revision to reflect inflation. Novo Nordisk shall be notified in writing in advance of such revision of the hourly rate. Activities requested by Novo Nordisk. Emisphere shall use Commercially Reasonable Efforts to perform any development or commercialization activity undertaken by Emisphere.

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4.5 Novo Nordisk shall use Commercially Reasonable Efforts to develop Licensed Product(s) for one indication in the Territory as decided by Novo Nordisk at its sole discretion and shall comply with all governmental laws and regulations applicable in any such jurisdiction in the development of and obtaining regulatory approval for Licensed Products in the jurisdiction.

4.6 Novo Nordisk may, at its sole discretion, decide on development of any additional Licensed Product(s) and/or indications for any Licensed Product(s) at its own expense.

In addition,

4.8 Novo Nordisk shall be solely responsible for all regulatory and filing activities and shall solely own all regulatory documents and registrations including all clinical trial applications and marketing applications filed with any regulatory agency in any jurisdiction. Novo Nordisk shall inform Emisphere of scheduled meetings, teleconferences and other interactions with regulators to the extent regulators allow them but Emisphere shall not be allowed to participate in any of the aforementioned except those that pertain to Non-Exclusive Program Carriers. Novo Nordisk shall also provide copies of any subsection of any regulatory submission which is related to Program Carriers to Emisphere in a timely fashion. Emisphere may disclose such information as it pertains to any Non-Exclusive Carrier to its Third Party licensees provided (1) such Third Party is not developing or commercializing any formulation of a GLP-1 Receptor Agonist and (2) Emisphere and such Third Party licensees enter into a written agreement (A) under terms and conditions regarding use, handling and non-disclosure of such information that are at least as restrictive as under this Agreement and (B) specifying that if such Third Party later initiates development or commercialization of any formulation of a GLP-1 Receptor Agonist, then at the time of such initiation the Third Party must return to Emisphere any information provided under this section. Upon the reasonable request of Novo Nordisk, Emisphere shall promptly, at Novo Nordisk’s costs, provide Novo Nordisk with information and reasonable assistance for any Novo Nordisk submission to a Regulatory Authority. Upon the reasonable request of Emisphere, Novo Nordisk shall promptly, at Emisphere’s costs, provide Emisphere with information and reasonable assistance for any submission to a Regulatory Agency regarding or relating to a Non-Exclusive Program Carrier. Each Party shall promptly inform the other Party of any material change in information provided under this Section 4.8.

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5. Commercialization of Licensed Product

5.1 Novo Nordisk shall direct, at its own cost and discretion, the marketing and sales activities world-wide.

5.2 Sales shall be booked by Novo Nordisk.

5.3 Novo Nordisk shall use Commercially Reasonable Efforts to market and sell Licensed Product(s) in the Territory as decided by Novo Nordisk at its sole discretion and shall comply with applicable governmental laws and regulations applicable in any such jurisdiction for in marketing and selling of Licensed Product(s) in that jurisdiction. Upon the reasonable request of Novo Nordisk, Emisphere shall promptly, at Novo Nordisk’s costs, provide Novo Nordisk with information and reasonable assistance for Novo Nordisk to comply with any regulations applicable to Licensed Product(s), including without limitation Novo Nordisk’s meeting its reporting and other obligations to maintain and update any marketing authorization for Licensed Product(s). Emisphere shall promptly inform Novo Nordisk of any change in information provided by Emisphere under this Section 5.3.

5.4 Each Party shall provide the other Party with notice, within one (1) business day after notification or other information (directly or indirectly) that it receives from any Regulatory Authority, and/or for Emisphere from a Third Party, (and providing, as soon as reasonably possible, copies of any associated written requests) that (a) raises any material concerns regarding the safety or efficacy of a Program Carrier or a Licensed Products), (b) indicates or suggests a Third Party Claim arising in connection with a Program Carrier or a Licensed Product(s) or (c) is reasonably likely to lead to a Recall (as defined in Section 5.5) of a Program Carrier or a Licensed Pr