Exhibit 10.1

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***],
HAS BEEN OMITTED BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE
HARM TO THE COMPANY IF PUBLICLY DISCLOSED.

EXCLUSIVE LICENSE AGREEMENT

This Exclusive License Agreement (the “Agreement”) is entered into as of
April 4, 2019 (the “Effective Date”) by and between Shionogi Inc., a Delaware
corporation having its principal place of business at 300 Campus Drive, Florham
Park, New Jersey (“Shionogi”), and BioDelivery Sciences International, Inc., a
Delaware corporation having its principal place of business at 4131 ParkLake
Avenue, Suite 225, Raleigh, NC 27612 (“BDSI”). Shionogi on the one hand and BDSI
on the other hand are sometimes referred to herein individually as a “Party” and
collectively as the “Parties”.

Background

BDSI is a specialty biopharmaceutical company specializing in the development
and commercialization of branded products focused on treating patients with
chronic pain;

Shionogi has exclusive rights to Symproic (as defined below) in the Territory
(as defined below); and

BDSI desires to obtain an exclusive license and certain assets from Shionogi,
and Shionogi desires to grant BDSI certain licenses, under Shionogi’s
intellectual property rights related to Symproic, and assign to BDSI certain
assets, to enable BDSI to Commercialize (as defined below) Symproic in the
Territory.

Now, therefore, in consideration of the foregoing premises and the mutual
promises, covenants and conditions contained in this Agreement, the Parties
agree as follows:

Article 1

Definitions

As used in this Agreement, the following initially capitalized terms, whether
used in the singular or plural form, shall have the meanings set forth in this
Article 1. In addition, the terms “includes,” “including,” “include” and
derivative forms of them shall be deemed followed by the phrase “without
limitation” (regardless of whether it is actually written there (and drawing no
implication from the actual inclusion of such phrase in some instances after
such terms but not others)).

1.1    “Accounting Standards” means the current accounting standards applicable
to Shionogi or BDSI, as applicable, for the relevant time period. As of the
Effective Date, the Accounting Standards are U.S. GAAP for Shionogi and BDSI,
but in the event Shionogi or BDSI, as applicable, adopts a different accounting
standard, such as the International Financial Reporting Standards, then such
accounting standard shall become the Accounting Standards applicable to such
Party as of the effective date of its adoption, as applicable.

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1.2    “Acquired Entity” means, in the event a Party or any Affiliate of a Party
acquires all or substantially all of the stock, assets, or business of a Third
Party or otherwise obtains control of a Third Party (with “control”, for
purposes of this definition, having the meaning set forth below in the
definition of “Affiliate”), such Third Party or any Affiliate thereof.

1.3    “Acquiring Entity” means any Third Party that acquires all or
substantially all of the stock, assets, or business of a Party or any Affiliate
of a Party (or all or substantially all of the assets or business thereof
related, in either case, to this Agreement) or otherwise obtains control of a
Party or any Affiliate thereof (with “control”, for purposes of this definition,
having the meaning set forth below in the definition of “Affiliate”), or any
Affiliate of such Third Party.

1.4    “Affiliate” means, with respect to a particular party, a person,
corporation, partnership, or other entity that controls, is controlled by or is
under common control with such party, whether now or in the future. For the
purposes of this definition, the word “control” (including, with correlative
meaning, the terms “controlled by” or “under the common control with”) means the
actual power, either directly or indirectly through one or more intermediaries,
to direct or cause the direction of the management and policies of such entity,
whether by the ownership of more than fifty percent (50%) of the voting stock or
equity securities of such entity, or by contract or otherwise.

1.5    “AG Product” means Symproic Commercialized by BDSI, an Affiliate thereof,
or a BDSI Licensee under the Assigned NDA as a generic product (i.e., without
use of any Symproic Marks or BDSI Marks).

1.6    “AG Royalty Term” means for AG Product, the period beginning upon First
Commercial Sale of an AG Product and ending upon the last to occur of: (a) the
expiration of all regulatory exclusivity for Symproic in the Field in the
Territory; (b) expiration of the last to expire Orange Book Patent in the
Territory; (c) the date of a Final Court Decision holding all the unexpired
claims of the Orange Book Patents to be invalid or unenforceable, or (d) the
seventh (7th) anniversary of the First Commercial Sale of an AG Product in the
Territory.

1.7    “Agreement” has the meaning set forth in the Preamble.

1.8    “Alliance Manager” has the meaning set forth in Section 9.4.

1.9    “ANDA” means Abbreviated New Drug Application as defined in the FD&C Act
and all applicable regulations promulgated thereunder.

1.10    “API” means active pharmaceutical ingredient (or in the case of any
product that is not a pharmaceutical or biologic, active ingredient).

1.11    “API Supply Agreement” shall have the meaning set forth in the Supply
Agreement.

1.12    “Assigned NDA” means NDA #208854.

1.13    “Assigned NDA Letters” means the letters from each Party to the FDA,
duly executed by each Party, the forms of which are attached hereto as EXHIBIT
A.

 

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1.14    “Bankrupt Party” has the meaning set forth in Section 14.5.

1.15    “BDSI” has the meaning set forth in the Preamble.

1.16    “BDSI Claims” has the meaning set forth in Section 12.1.

1.17    “BDSI Damages” has the meaning set forth in Section 12.1.

1.18    “BDSI Indemnitees” has the meaning set forth in Section 12.1.

1.19    “BDSI Know-How” means all Information that (a) is (1) generated during
the Term (in the course of any activities with respect to Symproic or
Naldemedine) by or on behalf of, or if any of the foregoing Information
generated in the course of any activities with respect to Symproic or
Naldemedine otherwise becomes Controlled during the Term by, BDSI, any of its
Affiliate(s), and/or any BDSI Licensee, and (2) reasonably necessary or useful
for the research, development, manufacture, use, importation, sale, development
or commercialization of Symproic or manufacture or use of Naldemedine (or any
analog or derivative thereof), (b) is Controlled by BDSI, an Affiliate thereof,
and/or any BDSI Licensee and incorporated into Symproic by or on behalf of BDSI,
its Affiliate(s), and/or BDSI Licensees (and is not already included in clause
(a) above), (c) is pharmacovigilance data or documentation generated during the
Term in the course of any activities with respect to specific to Symproic or
Naldemedine by or on behalf of BDSI, any of its Affiliate(s), and/or any BDSI
Licensee (and is not already included in clause (a) or (b) above), or (d) is
otherwise used by BDSI, its Affiliate(s), and/or BDSI Licensees to Develop,
Manufacture, or Commercialize Symproic in the Field in the Territory during the
Term (and is not already included in clause (a), (b), or (c) above).
Notwithstanding anything to the contrary, however, BDSI Know-How shall not
include any Information (1) to the extent directly concerning any API other than
Naldemedine (or any analog or derivative thereof) or (2) that is owned,
licensed, or otherwise controlled by any Acquiring Entity with respect to BDSI
(a “BDSI Acquiring Entity”) or Acquired Entity with respect to BDSI (a “BDSI
Acquired Entity”) at the time such Acquiring Entity or Acquired Entity first
became an Acquiring Entity or Acquired Entity of, in either case, BDSI, except
to the extent such Information (i) is incorporated into Symproic, or utilized in
the Development, Manufacture, or Commercialization of Symproic (or manufacture
of Naldemedine for use in the Manufacture of Symproic), by or on behalf of BDSI,
any Affiliate thereof, or any BDSI Licensee, (ii) was generated following the
Effective Date by or on behalf of such Acquiring Entity or Acquired Entity in
the course of their activities under this Agreement with respect to Symproic or
Naldemedine, or (iii) was already included within the BDSI Know-How immediately
prior to the date of the transaction by which such Acquiring Entity or Acquired
Entity first became a BDSI Acquiring Entity or BDSI Acquired Entity. For
additional clarity, BDSI Know-How shall exclude rights under any BDSI Patents.

1.20    “BDSI Licensee” means any Third Party to whom BDSI or any Affiliate
thereof grants any rights under the Shionogi Technology to Commercialize
Symproic in the Field in the Territory, including (a) any such Third Party
granted such rights under a Sublicense Agreement or (b) any further sublicensee
of any such rights granted pursuant to a sublicense thereto granted by another
BDSI Licensee.

1.21    “BDSI Marks” has the meaning set forth in Section 10.7.

 

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1.22    “BDSI Patents” means all Patents that, during the Term, (a) become
owned, licensed, or otherwise Controlled (in the course of any activities with
respect to Symproic or Naldemedine) by BDSI, its Affiliate(s), and/or BDSI
Licensees and cover BDSI Know-How or (b) are Controlled by BDSI, its Affiliates,
and/or BDSI Licensees and used by or on behalf of BDSI, its Affiliates, and/or
BDSI Licensees to manufacture, develop, or commercialize Symproic or manufacture
or use Naldemedine (or any analog or derivative thereof). Notwithstanding
anything to the contrary, however, BDSI Patents shall not include any Patents
(1) to the extent claiming any API other than Naldemedine (or any analog or
derivative thereof) or (2) owned, licensed, or otherwise controlled by any BDSI
Acquiring Entity or BDSI Acquired Entity at the time such Acquiring Entity or
Acquired Entity first became a BDSI Acquiring Entity or BDSI Acquired Entity,
except to the extent such Patents (i) cover technology incorporated into
Symproic, or utilized in the Development, Manufacture, or Commercialization of
Symproic (or manufacture of Naldemedine for use in the Manufacture of Symproic),
by or on behalf of BDSI, any Affiliate thereof, or any BDSI Licensee, (ii) cover
technology that was generated following the Effective Date by or on behalf of
such Acquiring Entity or Acquired Entity in the course of their activities under
this Agreement with respect to Symproic or Naldemedine, or (iii) were already
included within the BDSI Patents immediately prior to the date of the
transaction by which such Acquiring Entity or Acquired Entity first became a
BDSI Acquiring Entity or BDSI Acquired Entity.

1.23    “BDSI Technology” means the BDSI Patents and BDSI Know-How.

1.24    “Branded Net Sales” shall have the meaning set forth in Section 3.2(a).

1.25    “Branded Product” means Symproic Commercialized by BDSI, an Affiliate
thereof or a BDSI Licensee that is not an AG Product.

1.26    “Branded Royalty Term” means, for Branded Product, the period beginning
on the Effective Date and continuing until the last to occur of: (a) the
expiration of all regulatory exclusivity for Symproic in the Field in the
Territory; (b) expiration of the last to expire Orange Book Patent in the
Territory; (c) the date of a Final Court Decision holding all the unexpired
claims of the Orange Book Patents to be invalid or unenforceable, or (d) the
tenth (10th) anniversary of the Effective Date.

1.27    “Calendar Quarter” means each of those three (3) complete calendar month
periods of each Calendar Year ending March 31, June 30, September 30 and
December 31.

1.28    “Calendar Year” means each twelve complete consecutive calendar month
period beginning January 1 and ending December 31, provided that the initial
Calendar Year hereunder shall begin on the Effective Date and end December 31,
2019.

1.29    “Certification” has the meaning set forth in Section 10.3(c).

1.30    “Change of Control” means, with respect to a Party, any of the
following: (a) any Third Party (or group of Third Parties acting in concert)
acquires, directly or indirectly, a majority of voting stock or other securities
then outstanding of such Party; (b) the sale of substantially all assets of such
Party in a transaction or a series of transactions to a Third Party buyer; or
(c) a merger or consolidation of such Party with or into any Third Party, as a
result of which the holders of voting stock or other securities of such Party
immediately prior to such event hold less than a majority of the outstanding
voting stock or other securities of the surviving entity or parent of the
surviving entity.

 

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1.31    “Claim” has the meaning set forth in Section 12.3.

1.32    “Clinical Trial” means any human clinical trial of Symproic.

1.33    “Commercialization” means the Promotion and Distribution of Symproic,
but excluding the conduct of any Phase 4 Trials other than Phase 4 Trials that
are required by a Regulatory Authority as a condition of maintaining Regulatory
Approval (including, without limitation, the Current Phase 4 Studies).
“Commercialize” has a correlative meaning.

1.34    “Commercialization Report” has the meaning set forth in Section 6.4.

1.35    Confidential Information” means, with respect to a Party, all
Information (subject to the exceptions set forth in Section 13.1) of such Party
that is disclosed to the other Party or its Affiliate under this Agreement,
which may include, without limitation, specifications, know-how, trade secrets,
technical information, models, business information, inventions, discoveries,
methods, procedures, formulae, protocols, techniques, data, and unpublished
patent applications, whether disclosed in oral, written, graphic, or electronic
form. All Information disclosed by a Party pursuant to the Existing
Confidentiality Agreement shall be deemed to be such Party’s Confidential
Information hereunder (with the mutual understanding and agreement that any use
or disclosure thereof that is authorized under Article 13 shall not be
restricted by, or be deemed a violation of, such Existing Confidentiality
Agreement).

1.36    “Control” means, with respect to any material, Information, or
intellectual property right, that a Party (a) owns such material, Information,
or intellectual property right or (b) has a license or right to use to such
material, Information, or intellectual property right, in the case of (a) and
(b) with the ability to grant to the other Party access, a right to use, or a
license or sublicense (as applicable) to such material, Information, or
intellectual property right on the terms and conditions set forth herein,
without violating the terms of any agreement or other arrangement with any Third
Party. For Information or Patents of which a Party obtains “Control” after the
Effective Date, such Control shall only be deemed to exist if the grant of a
license or sublicense thereunder in accordance with this Agreement does not
result in the granting Party owing payment to a Third Party, unless the Party
receiving the grant of rights agrees in writing to pay the resulting amounts due
to the Third Party as a condition of receiving such grant of rights.

1.37    “Current Phase 4 Studies” means those Phase 4 Trials required by the FDA
as a condition to obtaining and/or maintaining the Assigned NDA, as further
described on EXHIBIT B.

1.38    “DEA” means the U.S. Drug Enforcement Administration or its successor
entity.

1.39    “Debarment Laws” has the meaning set forth in Section 11.1(d).

1.40    “Definitive Agreements” means, individually or collectively, this
Agreement, the Transition Services and Distribution Agreement, the Supply
Agreement, the API Supply Agreement, the Quality Agreement, and the PVG
Agreement.

 

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1.41    “Designated Executives” means the Chief Executive Officer of Shionogi
(or, if there is no Chief Executive Officer, the highest-ranking officer of
Shionogi) and the Chief Executive Officer of BDSI (or, if there is no Chief
Executive Officer, the highest-ranking officer of BDSI).

1.42    “Detailing” means any in-person sales presentation of Symproic made by
or on behalf of BDSI, any Affiliate thereof, or any BDSI Licensee to physicians
and other health care practitioners licensed to prescribe pharmaceutical
products, describing it in a fair and balanced manner consistent with the
requirements of this Agreement, the product label and all applicable laws,
rules, and regulations, and in a manner that is customary in the industry for
the purpose of promoting a prescription pharmaceutical product. When used as a
verb, “Detail” shall mean to engage in a Detail.

1.43    “Development” means, except as provided below, all development
activities that relate to expanding Regulatory Approval of Symproic with respect
to new or improved indications, presentations, formulations, dosage forms,
dosage strengths, and/or line extensions including, without limitation:
(a) research, nonclinical studies, toxicology, and Clinical Trials; and
(b) preparation, submission, review, and development of data or information for
the purpose of submission to a Regulatory Authority to obtain, maintain and/or
expand Regulatory Approval of Symproic with respect to such new or improved
indications, presentations, formulations, dosage forms, dosage strengths, and/or
line extensions; provided, however, that Development shall exclude
Commercialization of Symproic. For clarity, Development shall not include Phase
4 Trial commitments that are required by a Regulatory Authority as a condition
of Regulatory Approval of Symproic in the Field in the Territory. “Develop” has
a correlative meaning.

1.44    “Diligent Efforts” means, with respect to a Party’s obligations under
this Agreement or any other Definitive Agreement, the carrying out of such
obligations or tasks with a level of efforts and resources consistent with the
[***] or [***] of a [***] as [***] at a [***], taking into account [***]
(including [***] and any [***]), [***], and all other relevant factors, all
based on conditions then prevailing.

1.45    “Distribution” means the commercial sale and distribution of Symproic.
“Distribute” has a correlative meaning.

1.46    “Effective Date” has the meaning set forth in the preamble.

1.47    “Existing Confidentiality Agreement” means that certain Mutual
Confidentiality Agreement, dated [***], between Shionogi and BDSI.

1.48    “FDA” means the U.S. Food and Drug Administration or its successor.

1.49    “FD&C Act” means the U.S. Federal Food, Drug and Cosmetic Act, as
amended.

1.50    “Field” means the treatment of opioid-induced constipation in humans.

1.51    “Final Court Decision” means a decision of a court or of the United
States Patent and Trademark Office from which no appeal has been or can be
taken, excluding any petition for a writ of certiorari or other proceedings
before the United States Supreme Court.

 

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1.52    “First Commercial Sale” means the first sale of Symproic by or on behalf
of BDSI, its Affiliates, or a BDSI Licensee, for end use or consumption, in the
Territory. A First Commercial Sale excludes any sale or distribution for use in
any clinical trial or other Development activity, promotional use (including
samples) or for compassionate use or on a named patient basis.

1.53    “Generic Competition” means, on a Calendar Quarterly basis, a fraction
(expressed as a percentage), the numerator of which shall be the aggregate
number of units of Generic Equivalents sold by Third Parties in the Territory
during such Calendar Quarter, and the denominator of which shall be the
aggregate number of units of all such Generic Equivalents plus the aggregate
number of units of Symproic (including AG Products) sold by BDSI, its
Affiliates, and BDSI Licensees under this Agreement in the Territory during such
Calendar Quarter, based on independent market data published by IQVIA, or if
such data is not available from such source, such other reliable data source as
is reasonably agreed to by the Parties.

1.54    “Generic Equivalent” means, with respect to Symproic in the Territory, a
product, other than an AG Product, that (a) contains Naldemedine as its sole API
in the same dosage(s) as Symproic, (b) is bioequivalent to Symproic, (c) may be
legally substituted by pharmacies in the Territory for Symproic when filling a
prescription written therefor without, as a legal requirement, having to seek
authorization to do so from the physician or other health care provider writing
such prescription, (d) is not marketed or sold under the approval of the
Assigned NDA (but instead is sold under the authorization of a Third Party’s
ANDA or NDA submitted by a Third Party under §505(b)(2) of the FD&C Act with
reference to, in either case, the Assigned NDA), and (e) is sold in the
Territory by any Third Party.

1.55    “Governmental Authority” means any multi-national, federal, state,
local, municipal or other government authority of any nature (including any
governmental division, subdivision, department, agency, bureau, branch, office,
commission, council, court or other tribunal).

1.56    “Hatch-Waxman Act” has the meaning set forth in Section 10.3(c).

1.57    “[***] Service Agreement” means the Services Agreement, effective as of
September 1, 2017, by and between Shionogi and [***], as amended by the
Amendment and Change Order No. 1, effective as of [***], a copy of which has
been provided to BDSI.

1.58    “H-W Suit Notice” has the meaning set forth in Section 10.3(c).

1.59    “IND” means an Investigational New Drug Application as defined in the
FD&C Act and applicable regulations promulgated thereunder by the FDA.

1.60    “Information” means any data, results, and information of any type
whatsoever, in any tangible or intangible form, including know-how, trade
secrets, practices, techniques, methods, processes, inventions, developments,
specifications, formulations, formulae, materials or compositions of matter of
any type or kind (patentable or otherwise), software, algorithms, marketing
reports, expertise, stability, technology, test data including pharmacological,
biological, chemical, biochemical, toxicological, and clinical test data,
analytical and quality control data, stability data, studies and procedures.

 

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1.61    “MAC” means the Medical Affairs Committee formed by the Parties as
described in Section 9.2(a).

1.62    “Manufacturing” or “Manufacture” means, with respect to Symproic, all
activities related to the manufacture of Symproic (but excluding in all cases
the manufacture of Naldemedine) including, but not limited to, manufacturing
supplies of Symproic (but not Naldemedine) for Development or Commercialization,
packaging, in-process and finished product testing, release of Symproic, quality
assurance and quality control activities related to manufacturing and release of
Symproic, ongoing stability tests, storage, shipment, and regulatory activities
related to any of the foregoing.

1.63    “Medical Affairs Activities” means (a) publications relating to Symproic
or Naldemedine in scientific or medical journals and similar forums and
(b) attendance at scientific or medical conferences concerning Symproic or
Naldemedine. For clarity, Medical Affairs Activities shall not include [***].

1.64    “Naldemedine” means the compound known as naldemedine tosylate having
the structure set forth on EXHIBIT C.

1.65    “NDA” means a New Drug Application, as defined in the FD&C Act and
applicable regulations promulgated thereunder by the FDA.

1.66    “Net Sales” means, with respect to Symproic, the gross amount invoiced
or, if not invoiced, received, by BDSI, its Affiliate, or a BDSI Licensee, as
applicable, for sales of Symproic to a Third Party less deductions for:

[***]

[***]

[***]

[***]

Sales between BDSI, its Affiliates, and/or BDSI Licensees, as applicable, for
purposes of resale shall be disregarded for purposes of calculating Net Sales so
long as such resale is subject to royalties under Section 3.2.

With respect to any sale of Symproic for any substantive consideration other
than monetary consideration on arm’s length terms (which has the effect of
reducing the invoiced amount below what it would have been in the absence of
such non-monetary consideration), for purposes of calculating the Net Sales
under this Agreement, such Symproic shall be deemed to be sold exclusively for
cash at the average Net Sales price charged to Third Parties for cash sales
during the applicable reporting period (or if there were only de minimus cash
sales, at the fair market value as determined by comparable markets).
Notwithstanding the foregoing, Net Sales shall not include amounts (whether
actually existing or deemed to exist for purposes of calculation) for Symproic
distributed for Promotional Activities or for distribution as samples.

 

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Net Sales shall be determined in accordance with those generally accepted
Accounting Standards regularly and consistently employed by BDSI, its
Affiliate(s), and/or BDSI Licensees, as applicable, with respect to the
transactions in questions.

1.67    “Orange Book” means the FDA publication entitled “Approved Drug Products
with Therapeutic Equivalence Evaluations” or any replacement thereof established
or approved by the FDA.

1.68    “Orange Book Patent” means, with respect to Symproic, any patent listed
in the Orange Book pursuant to 21 U.S.C. § 355(b)(1) for the Assigned NDA.

1.69    “Party” or “Parties” has the meaning set forth in the Preamble.

1.70    “Patent” means any granted patents and pending patent applications,
together with all additions, divisionals, continuations, continuations-in-part,
substitutions, reissues, re-examinations, extensions, registrations, patent term
extensions, revalidations, supplementary protection certificates, and renewals
of any of the foregoing and all foreign applications and patents corresponding
to or claiming priority from any of the foregoing.

1.71    “Phase 4 Trial” means a Clinical Trial commenced after receipt of
Regulatory Approval and which is intended to support the Commercialization of
Symproic. Phase 4 Trials may include, without limitation, epidemiological
studies, modeling and pharmacoeconomic studies, investigator-sponsored clinical
trials of Symproic and post-marketing surveillance studies.

1.72    “Promotion” and “Promotional Activities” means those activities normally
undertaken by a pharmaceutical company to implement marketing plans and
strategies aimed at encouraging the Regulatory Authority-approved use of a
prescription pharmaceutical product, including Detailing, marketing, advertising
and related activities. When used as a verb, “Promote” or “Promoting” means
engagement in such activities.

1.73    “Promotional Materials” means the written, printed, graphic, electronic,
audio or video matter, including sales visual aids, reprints, direct mail, and
direct-to-consumer advertising, in each case, intended for use or used by in
connection with the advertising, marketing or promotion of Symproic in the Field
set forth on EXHIBIT D.

1.74    “PVG Agreement” means that certain Pharmacovigilance Agreement to be
executed by the Parties as contemplated by Section 5.3.

1.75    “Quality Agreement” means that certain Quality Agreement to be executed
by the Parties as described in the Supply Agreement.

1.76    “Regulatory Approval” means any and all approvals by Regulatory
Authorities necessary or useful for the manufacture, use, marketing,
importation, sale, Development or Commercialization of Symproic in the Field in
the Territory.

1.77    “Regulatory Authority” means any applicable Governmental Authority
involved in granting Regulatory Approval in an applicable regulatory
jurisdiction, including without limitation the FDA and the DEA and any successor
agency(ies) thereto.

 

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1.78    “Regulatory Materials” means regulatory applications, submissions,
notifications, registrations, Regulatory Approvals and/or other filings or
correspondence to or from, or other approvals granted by, a Regulatory Authority
that are necessary or reasonably useful in order to develop, manufacture,
market, sell or otherwise commercialize Symproic in a particular jurisdiction.
Regulatory Materials include INDs, NDAs, and any other application to a relevant
Regulatory Authority for approval of Symproic for commercial sale in a
particular jurisdiction. For the avoidance of doubt, Regulatory Materials shall
not include agreements or related filings or correspondence with Regulatory
Authorities covering the purchase of Symproic, or payment of any rebates or
chargebacks in respect of Symproic, by any Regulatory Authority.

1.79    “SEC” means the U.S. Securities and Exchange Commission.

1.80    “Senior Managers” has the meaning set forth in Section 4.1(d).

1.81    “Shionogi” has the meaning set forth in the Preamble.

1.82    “Shionogi Claims” has the meaning set forth in Section 12.2.

1.83    “Shionogi Corporate Marks” means those logos, trade names, and
trademarks, other than the Symproic Marks, appearing on the Promotional
Materials.

1.84    “Shionogi Damages” has the meaning set forth in Section 12.2.

1.85    “Shionogi Indemnitees” has the meaning set forth in Section 12.2.

1.86    “Shionogi Know-How” means all Information (excluding any Shionogi
Corporate Marks or Symproic Marks) Controlled as of the Effective Date by, or
thereafter coming under the Control of, Shionogi and reasonably necessary for
the Commercialization of Symproic in the Field in the Territory, including any
such Information made or generated by or on behalf of Shionogi in the course of
performing Shionogi’s obligations or exercising Shionogi’s rights under this
Agreement or the other Definitive Agreements. Notwithstanding anything to the
contrary, however, Shionogi Know-How shall not include any Information that is
owned, licensed, or otherwise controlled at any time by any Acquiring Entity
with respect to Shionogi (a “Shionogi Acquiring Entity”) or Acquired Entity with
respect to Shionogi (a “Shionogi Acquired Entity”), except to the extent such
Information was already included within the Shionogi Know-How immediately prior
to the date of the transaction by which such Acquiring Entity or Acquired Entity
first became a Shionogi Acquiring Entity or Shionogi Acquired Entity. For
additional clarity, Shionogi Know-How shall exclude rights under any Shionogi
Patents.

1.87    “Shionogi Licensee” means any Third Party to whom Shionogi, any
Affiliate thereof, or any prior Shionogi Licensee grants any of the rights
granted under Section 2.5.

1.88    “Shionogi Patents” means (a) all Orange Book Patents, (b) Patents in the
Territory set forth on EXHIBIT E and, with respect to the patent applications
set forth on EXHIBIT E, all Patents in the Territory issuing therefrom, and
(c) all other Patents in the Territory Controlled by Shionogi during the Term
that are reasonably necessary for BDSI to exercise its rights under Section 2.1.
Notwithstanding anything to the contrary, however, Shionogi Patents shall not
include any Patents that are owned, licensed, or otherwise controlled at any
time by any Shionogi

 

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Acquiring Entity or Shionogi Acquired Entity, except to the extent such Patents
were already included within the Shionogi Patents immediately prior to the date
of the transaction by which such Shionogi Acquiring Entity or Shionogi Acquired
Entity first became a Shionogi Acquiring Entity or Shionogi Acquired Entity.

1.89    “Shionogi Products” has the meaning set forth in Section 2.5(b).

1.90    “Shionogi Technology” means the Shionogi Patents and the Shionogi
Know-How.

1.91    “Sublicense Agreement” has the meaning set forth in Section 2.3(a).

1.92    “Supply Agreement” means that certain Supply Agreement to be executed by
the Parties and effective as of the Effective Date.

1.93    “Symproic” means Symproic® tablets containing 0.2mg Naldemedine as
approved pursuant to the Assigned NDA, and all amendments and supplements
thereto, and all new or improved forms, presentations, strengths, doses, and
formulations (including any method of delivery or administration), improvements,
and line extensions thereto Developed under any Development Plan approved by the
JDC pursuant to Article 4, whether Commercialized under the brand name
Symproic®, any other Symproic Mark, or any BDSI Mark or as an AG Product.

1.94    “Symproic Domain Names” means those domain names set forth on EXHIBIT F.

1.95    “Symproic Infringement” has the meaning set forth in Section 10.3(a).

1.96    “Symproic Marks” means those logos, trade names, trade dress,
trademarks, and associated registrations or applications therefor with respect
to the Territory set forth on EXHIBIT G. Symproic Marks shall not include the
Symproic Domain Names.

1.97    “Term” has the meaning set forth in Section 14.1.

1.98    “Territory” means the U.S.

1.99    “Third Party” means any entity other than Shionogi, BDSI, or an
Affiliate of any of the foregoing.

1.100    “[***]” means [***]

1.101    “[***]” means [***].

1.102    “[***]” has the meaning set forth in Section 3.2(d).

1.103    “Transferred Sample Inventory” means the inventory of Symproic
described on EXHIBIT H hereto.

1.104    “Transition Services and Distribution Agreement” means that certain
Transition Services and Distribution Agreement to be executed by the Parties and
effective as of the Effective Date.

 

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1.105    “U.S.” means the United States of America and its territories,
districts and possessions, including the Commonwealth of Puerto Rico.

1.106    “Upfront Payment” has the meaning set forth in Section 3.1.

Article 2

Licenses; Trademarks

2.1    Licenses to BDSI under Shionogi Technology. Subject to the terms and
conditions of this Agreement, Shionogi hereby grants BDSI a royalty-bearing,
sublicensable (solely as permitted in accordance with Section 2.3), transferable
with this Agreement pursuant to Section 16.5, exclusive (even as to Shionogi)
license under the Shionogi Technology to:

(a)     Commercialize Symproic in the Field in the Territory;

(b)    As and to the extent the Development thereof by BDSI is contemplated by
any Development Plan approved by the JDC pursuant to Article 4, Develop Symproic
in the Field in the Territory; and

(c)    Following the termination or expiration of the Supply Agreement or as
otherwise expressly permitted by the Supply Agreement, Manufacture and have
Manufactured Symproic anywhere in the Territory, solely for (i) Development of
Symproic in the Field in the Territory as and to the extent contemplated by any
Development Plan approved by the JDC pursuant to Article 4; and
(ii) Commercialization of Symproic in the Field in the Territory.

Subject to the terms and conditions of this Agreement, Shionogi hereby grants
BDSI and its Affiliates a “Right of Reference” as that term is defined in
21 C.F.R. § 314.3(b) (or any successor rule) to [***] and all other Regulatory
Materials related to such IND to the extent necessary to exercise the rights
granted under Section 2.1, and such right shall be sublicensable in conjunction
with the sublicense of any of the rights granted under Section 2.1. In addition,
Shionogi shall take all actions and execute all documents (e.g. Certificates of
Pharmaceutical Products (CPPs)) reasonably requested by BDSI in its exercise of
the foregoing rights. Without limiting the foregoing, Shionogi shall submit a
letter of authorization permitting the FDA to reference such IND on behalf of
BDSI and its Affiliates in connection with the activities under this Agreement.
For clarity, the rights granted by Shionogi under this Agreement shall not
include any rights (i) other than as specifically outlined in Article 4, to
Develop Symproic, Naldemedine, or any product, (ii) to Commercialize any product
incorporating Naldemedine (or any analog or derivative thereof) other than
Symproic, or (iii) except for any new indication the development of which is
expressly authorized by the JDC pursuant to Article 4, with respect to any
indications other than the Field.

Shionogi shall use Diligent Efforts to make available to BDSI all material
Shionogi Know-How of which Shionogi has actual knowledge (after reasonable
inquiry) existing as of the Effective Date and, after the Effective Date,
(i) Shionogi shall use Diligent Efforts to make available to BDSI all Shionogi
Know-How arising after the Effective Date of which Shionogi has actual knowledge
(after reasonable inquiry) as such Information is generated (to the extent
reasonably possible and

 

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practicable) and (ii) BDSI shall use Diligent Efforts to make available to
Shionogi all BDSI Know-How arising after the Effective Date of which BDSI has
actual knowledge (after reasonable inquiry) as such Information is generated (to
the extent reasonably possible and practicable).

2.2    Trademark Rights.

(a)    Subject to the terms and conditions of this Agreement, Shionogi hereby
grants BDSI a sublicensable (solely as permitted in accordance with
Section 2.3), transferable (with this Agreement pursuant to Section 16.5),
exclusive (even as to Shionogi) license to use and display the Symproic Marks in
the exercise of the rights granted BDSI under Section 2.1.

(b)    Subject to the terms and conditions of this Agreement, Shionogi hereby
grants BDSI a limited, non-exclusive license to use and display the Shionogi
Corporate Marks solely to the extent such rights are necessary for the use of
the Promotional Materials in the Commercialization of Symproic in the Field in
the Territory for a period of [***] after the Effective Date. The license
granted under this Section 2.2(b) shall terminate upon the end of the [***]
following the Effective Date.

(c)    BDSI shall comply with all applicable laws, rules, and regulations
pertaining to the proper use and designation of the Symproic Marks and Shionogi
Corporate Marks. Additionally, BDSI shall not:

(i)    use any Symproic Mark or Shionogi Corporate Mark other than for such
specific purposes set forth above; nor

(ii)    conduct, without the written consent of Shionogi, the whole or any part
of its business under a business name or trading style which incorporates any of
the Shionogi Corporate Marks.

(d)    BDSI shall not take any action inconsistent with Shionogi’s ownership of
the Symproic Marks or Shionogi Corporate Marks. Any benefits (including
goodwill) accruing from BDSI’s use of the Symproic Marks and Shionogi Corporate
Marks shall automatically vest in Shionogi. Upon Shionogi’s reasonable request,
BDSI shall provide to Shionogi samples of BDSI’s and its Affiliates’ packaging,
labeling, marketing, promotional and other materials for the purpose of
inspecting the use of the Symproic Marks and Shionogi Corporate Marks pursuant
to this Agreement.

(e)    Shionogi shall be entitled to terminate the rights to any Symproic
Mark(s) or Shionogi Corporate Mark(s) granted above on written notice to BDSI if
BDSI fails to correct any noncompliance with the terms of any license granted in
Section 2.2(a) or 2.2(b) or uses any Symproic Mark(s) or Shionogi Corporate
Mark(s) in any manner not authorized by any such license, within [***] of BDSI’s
receipt of written notice from Shionogi describing such non-compliance.

2.3    Sublicensing by BDSI.

(a)    Scope of Permissible Sublicensing. The licenses granted by Shionogi to
BDSI in Sections 2.1 and 2.2 may be sublicensed (through multiple tiers) by BDSI
to a Third Party or any

 

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Affiliate of BDSI without any requirement of consent, subject to the
requirements of this Section 2.3(a) and Section 2.3(b). At least [***] prior to
entering into any sublicense of its rights under Sections 2.1 or 2.2, BDSI shall
provide to Shionogi, on a confidential basis, written notice of its intent to
enter into such sublicense, including [***]. BDSI shall consider diligently,
reasonably and in good faith all input received in writing from Shionogi within
such [***] period, which for the avoidance of doubt, shall not begin until
Shionogi has received all information BDSI is required pursuant to the
immediately preceding sentence to provide to Shionogi, with respect to such
proposed sublicense. For the avoidance of doubt, subject to the preceding and
Section 2.3(b), BDSI shall have final say on, and Shionogi shall not attempt to
interfere with, any sublicense and the terms thereunder.

(b)    Sublicense Agreements. Each agreement under which BDSI grants a
sublicense under the licenses set forth in Sections 2.1 and 2.2 (each, a
“Sublicense Agreement”) shall be subject to the applicable terms and conditions
of this Agreement. BDSI shall be responsible for each of its Affiliates’ and
each BDSI Licensee’s compliance with the terms of this Agreement, including the
provision of Diligent Efforts by such sublicensee for the full term of their
responsibilities under this Agreement during the AG Royalty Term and Branded
Royalty Term and adherence to 2.7(a) and 2.7(c) BDSI shall, in each Sublicense
Agreement, require such Affiliate or BDSI Licensee to provide the following to
BDSI if such Sublicense Agreement terminates: (i) [***]) and (ii) [***]. BDSI
will, as soon as reasonably practicable following the execution of any
Sublicense Agreement, provide Shionogi with a copy of any executed Sublicense
Agreement (which copy may be redacted to remove financial provisions and other
provisions which are not necessary to monitor compliance with this
Section 2.3(b)).

2.4    Shionogi Reserved Rights in the Territory. Notwithstanding anything to
the contrary, all rights granted to BDSI under this Article 2 shall not be
construed to in any event limit Shionogi’s, its Affiliates’, or its or their
licensees’, sublicensees’ or any of its or their Third Party contractors’ or
agents’ rights to (a) perform Shionogi’s obligations or exercise Shionogi’s
rights under this Agreement or any other Definitive Agreement or (b) without
limiting Section 2.7(b), research, develop, manufacture, have manufactured,
sell, offer for sale, import, export, or use Symproic or Naldemedine for any
purposes related to the development or commercialization of Symproic,
Naldemedine, or any product incorporating Naldemedine either outside the
Territory or outside the Field.

2.5    Licenses to Shionogi.

(a)    Subject to the terms and conditions of this Agreement, BDSI hereby grants
Shionogi and its Affiliates a worldwide, nonexclusive, sublicensable (through
multiple tiers of sublicenses), royalty-free, fully-paid license, transferable
with this Agreement pursuant to Section 16.5, under the BDSI Technology during
the Term to perform Shionogi’s obligations under this Agreement and any other
Definitive Agreement, such license to be for a term commencing on the Effective
Date and terminating on the day of termination or expiration of the last
Definitive Agreement.

(b)    Subject to the terms and conditions of this Agreement, BDSI hereby grants
Shionogi and its Affiliates a worldwide, perpetual and irrevocable,
sublicensable (through multiple tiers of sublicenses in accordance with this
Section 2.5(b)), royalty-free, fully-paid,

 

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nonexclusive license, transferable with this Agreement pursuant to Section 16.5,
under the BDSI Technology to (i) research, develop, manufacture, have
manufactured, sell, offer for sale, import, export, and use Symproic for any
purposes related to the development, manufacture, or commercialization thereof
outside the Territory or outside the Field and (ii) research, develop,
manufacture, have manufactured, sell, offer for sale, import, export, and use
Shionogi Products. Without limiting the foregoing, BDSI hereby grants Shionogi
and its Affiliates a right of reference to all Regulatory Approvals (including
the Assigned NDA), applications therefor, or other Regulatory Materials owned or
controlled by BDSI, any Affiliate thereof, or any BDSI Licensee to exercise the
rights granted in this Section 2.5(b), including without limitation in
connection with seeking, obtaining and maintaining INDs and NDAs (and any other
analogous regulatory approvals in foreign jurisdictions) in relation to Shionogi
Products both inside and outside the Territory. In addition, BDSI shall take all
actions and execute all documents (e.g. Certificates of Pharmaceutical Products
(CPPs)) reasonably requested by Shionogi in its exercise of the foregoing
rights. For clarity, the foregoing rights (A) shall be subject to the negative
covenants in Section 2.7 below and (B) shall not create any right in favor of
Shionogi to amend or supplement the Assigned NDA after the Effective Date.
Shionogi and its Affiliates may grant sublicenses to Third Parties, with the
rights for such sublicensees to grant further sublicenses, of the rights granted
to Shionogi and its Affiliates under this Section 2.5(b) solely in connection
with the grant of a license or other rights to any Information (other than BDSI
Know-How), Patents (other than BDSI Patents), other intellectual property rights
(e.g., trademarks), or regulatory assets that are owned, licensed, or otherwise
controlled by Shionogi or any Affiliate thereof and relate to any of the
Shionogi Product(s) that are the subject of such sublicense. Notwithstanding
anything to the contrary contained herein, Shionogi shall ensure that any
written agreement pursuant to which Shionogi or its Affiliate or any of their
sublicensees grant a sublicense pursuant to this Section 2.5(b) contains terms
and conditions reasonably sufficient to ensure Shionogi’s ability to comply with
the applicable terms of this Agreement. For purposes of this Agreement “Shionogi
Products” means any of the following: Naldemedine, any analog or derivative
thereof, or any product (other than Symproic) incorporating Naldemedine or any
analog or derivative thereof (alone or with any other API).

2.6    Domain Names. On the Effective Date, Shionogi shall transfer, and hereby
assigns, to BDSI all of Shionogi’s right, title and interest in and to the
Symproic Domain Names. Such transfer shall be accomplished via the delivery by
each Party to the other of a duly executed Domain Name Assignment substantially
in the form attached hereto as EXHIBIT I. BDSI shall, at its cost and expense,
use Diligent Efforts to maintain the Symproic Domain Names in good standing
throughout the Term.

2.7    Negative Covenants.

(a)    During the Term, BDSI shall not develop, commercialize, nor enable any
Third Party to develop or commercialize (by license or otherwise), and BDSI
shall ensure that none of its Affiliates nor any BDSI Licensees develop,
commercialize, nor enable any Third Party to develop or commercialize (by
license or otherwise), any product (other than Symproic Developed or
Commercialized in accordance with this Agreement) in the Territory that, alone
or in combination with another product, (i) is indicated (or intended to be
indicated) or the subject of regulatory approval for the treatment of
opioid-induced constipation in humans or (ii) is a peripherally-acting mu-opioid
receptor antagonist for any indication.

 

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(b)    During the Term, Shionogi shall not (i) develop any pharmaceutical
product with the intention of seeking regulatory approval in the Territory for
the treatment of opioid-induced constipation in humans or (ii) commercialize or
promote in the Territory any pharmaceutical product that (x) is indicated (or
intended to be indicated) for the treatment of opioid-induced constipation in
humans or (y) [***], provided that for the avoidance of doubt and
notwithstanding anything to the contrary, Shionogi shall be free to
commercialize Naldemedine or any other product incorporating Naldemedine or any
analog or derivative thereof in the Territory outside the Field.

(c)    Each Party covenants that it will not knowingly use or practice any of
the other Party’s intellectual property rights licensed to it under this Article
2 except for the purposes expressly permitted in the applicable license grant.

2.8    No Implied Licenses. Except as explicitly set forth in this Agreement,
neither Party grants to the other Party any license, express or implied, under
its intellectual property rights.

Article 3

Payments

3.1    Upfront Payment. In consideration of the licenses granted by Shionogi
herein and the other assets transferred by Shionogi, BDSI will pay Shionogi the
amount of thirty million U.S. dollars (US$30,000,000) (the “Upfront Payment”).
The Upfront Payment shall be payable by BDSI as follows: (a) twenty million U.S.
dollars (US$20,000,000) shall be paid by BDSI on the Effective Date, and (b) ten
million U.S. dollars (US$10,000,000) shall be paid by BDSI on or before the
earlier to occur of (i) the six-month anniversary of the Effective Date or
(ii) any assignment or other transfer of this Agreement by BDSI. Such payments
shall be nonrefundable and non-creditable and shall be made by wire transfer of
immediately available funds into an account designated by Shionogi.

3.2    Royalties.

(a)    Branded Product Royalties. BDSI shall pay Shionogi the applicable
percentage set forth below of Net Sales of Branded Products during the Branded
Royalty Term (“Branded Net Sales”):

 

Portion of Branded Net Sales in a Calendar Year

   Applicable
Royalty Rate  

That portion of Branded Net Sales in a given Calendar Year that is less than or
equal to [***]

     8.5 % 

That portion of Branded Net Sales in a given Calendar Year that exceeds [***]
and is less than or equal to [***]

     [*** ] 

That portion of Branded Net Sales in a given Calendar Year that exceeds [***]
and is less than or equal to [***]

     [*** ] 

All Branded Net Sales in a given Calendar Year in excess of [***])

     17.5 % 

 

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(b)    Branded Product Royalty Adjustments. During the Branded Royalty Term,

(i)    Upon the date that Generic Competition is greater than [***] but less
than [***], all royalty rates set forth in Section 3.2(a) shall be reduced by
[***] with respect to all Branded Net Sales occurring on or after such date;

(ii)    Upon the date that Generic Competition equals or exceeds [***], but less
than [***], all royalty rates set forth in Section 3.2(a) shall be reduced by
[***] with respect to all Branded Net Sales occurring on or after such date; and

(iii)    Upon the date that Generic Competition equals or exceeds [***], all
royalty rates set forth in Section 3.2(a) shall be reduced by [***] with respect
to all Branded Net Sales occurring on or after such date.

Notwithstanding the foregoing, if and when all Orange Book Patents have expired
or have been held invalid or unenforceable by a Final Court Decision and the
Branded Royalty Term otherwise remains in effect, then the greater of the
following reductions shall apply to the royalties payable on Branded Net Sales
occurring following the occurrence of such circumstances: (a) the reductions
contemplated in (i) through (iii) above or (b) an amount equal to [***] of the
applicable royalty rates set forth in Section 3.2(a) above.

(c)    AG Product Royalties. BDSI shall pay Shionogi [***] of all Net Sales of
AG Product during the AG Royalty Term; provided, however that the royalties
payable by BDSI with respect to Net Sales of such AG Product shall be [***] for
the then-remaining AG Royalty Term on all Net Sales of AG Product occurring
after the date on which all Orange Book Patents have expired or have been held
invalid or unenforceable by a Final Court Decision.

(d)    Third Party Royalties. The Parties acknowledge that pursuant to the
[***], Shionogi’s parent company, Shionogi & Co., Ltd., is obligated to pay
[***] a royalty of [***] of net sales of Symproic (where such net sales are
determined in accordance with the terms of the [***]). In addition to the
payments required by Section 3.2(a) through (c), BDSI shall pay to Shionogi,
[***] of Net Sales of Symproic under this Agreement (as determined in accordance
with the terms of this Agreement) during the applicable AG Royalty Term and
Branded Royalty Term for so long as such obligation of Shionogi & Co., Ltd.
continues under the [***] (the “[***] Royalty”).

3.3    Anti-Stacking. If BDSI is required by (a) a future court order or
(b) settlement, license, or other agreement between BDSI and any Third Party
that, in the case of clause (b), has been consented to in writing and in advance
by Shionogi (such consent not to be unreasonably withheld, conditioned or
delayed), to make any payments to a Third Party for the practice of any Patents
owned by such Third Party with respect to the Commercialization or Development
(pursuant to a Development Plan approved by the JDC pursuant to Article 4) of
Symproic in the Field in the

 

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Territory, then BDSI will be entitled to deduct from all royalties due under
Section 3.2 an amount equal to [***] of the royalties actually paid to such
Third Party in any Calendar Quarter, up to a maximum amount of [***] of the
royalties due to Shionogi in such Calendar Quarter.

3.4    Royalty Payments and Reports. All amounts payable to Shionogi pursuant to
this Section 3.2 shall be paid by BDSI in U.S. dollars within forty-five
(45) days after the end of each Calendar Quarter with respect to royalties
earned in such Calendar Quarter. Each payment of royalties due hereunder shall
be accompanied by a statement of the amount of gross sales of Symproic during
the applicable Calendar Quarter, a calculation of Net Sales detailing the
deductions from gross sales provided for in the definitions of Net Sales during
such Calendar Quarter, and a calculation of the amount of royalty payment due on
such sales for such Calendar Quarter.

3.5    Taxes. All payments under this Agreement shall be made without any
deduction or withholding for or on account of any tax unless such deduction or
withholding is required by applicable laws or by a governmental entity. If a
Party is entitled under an applicable tax treaty to a refund, reduction of rate,
or the elimination of, any applicable withholding tax, it must deliver to the
other Party or the appropriate governmental entity with the assistance of the
other Party, to the extent that this is reasonably required, the prescribed
forms and information necessary to obtain such refund or to reduce the
applicable rate of withholding or to relieve the other Party of its obligation
to withhold tax, and the other Party shall apply the reduced rate of
withholding, or dispense with withholding, as the case may be, provided that the
other Party has received evidence, in a form reasonably satisfactory to the
other Party, of the delivery of all applicable forms and information (and, if
necessary, the receipt of appropriate governmental authorization) at least ten
(10) days prior to the time that the payment is due. The Parties shall cooperate
in accordance with applicable law to minimize withholding taxes. If, in
accordance with the foregoing, a Party withholds any amount, it shall pay to the
other Party the balance when due and make a proper and timely payment of the
withheld tax to the proper taxing authority, and send the other Party proof of
such payment within thirty (30) days following that payment. Notwithstanding a
Party’s acceptance to reduce or dispense with any withholding, in the event it
is determined by a Governmental Authority that there is a liability to such
Party for failure to deduct, withhold or collect and remit any amount exceeding
the amount withheld, if any, then, subject to the provisions of Section 12.3,
the other Party shall defend, indemnify and hold said first Party harmless from
and against any and all any liability for any amount that it should have
deducted, withheld, collected or remitted (as well as any interest and penalties
relating thereto). In furtherance of the above, each Party shall use
commercially reasonable efforts to collaborate with the other Parties to defend
such Claim and to mitigate any and all damages, losses, costs and expenses
related to such Claim.

3.6    Late Payments. If Shionogi does not receive payment of any sum due to it
on or before the due date therefor (other than amounts that are the subject of a
good faith dispute), interest shall thereafter accrue on the sum due to Shionogi
from the due date until the date of payment on a [***] basis at a rate equal to
LIBOR (as published in The Wall Street Journal, New York edition) plus [***] or
the maximum rate allowable by applicable law, whichever is less.

3.7    Financial Records; Audits. BDSI shall maintain complete and accurate
records in sufficient detail to permit Shionogi to confirm the accuracy of any
amounts that are payable under this Agreement. Upon reasonable prior notice,
such records shall be open during regular business

 

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hours for a period of three (3) years from the creation of individual records,
in each case, for examination at Shionogi’s expense, and not more often than
once each Calendar Year, by an independent certified public accountant selected
by the examining Party and reasonably acceptable to BDSI, for the sole purpose
of verifying the accuracy of the financial information and reports furnished by
BDSI pursuant to this Agreement or of any payments made, or required to be made,
to Shionogi pursuant to this Agreement. Any amounts shown to be owed but unpaid,
or overpaid and in need of reimbursement, shall be paid or refunded (as the case
may be) within thirty (30) days after the accountant’s report, plus interest (to
the extent set forth in Section 3.6) from the original due date. Shionogi shall
bear the full cost of such audit unless such audit reveals an underpayment by
BDSI of more than [***] of the amount set forth in the applicable report, in
which case BDSI shall bear the reasonable, out-of-pocket costs of such audit.

3.8    Manner and Place of Payment. All payments owed under this Agreement shall
be made by wire transfer in immediately available funds to a bank and account
designated in writing by the Party to receive such payment, unless otherwise
specified in writing by such Party.

Article 4

Development

4.1    Joint Development Committee

(a)    Formation; Role. Within [***] of the Effective Date, the Parties shall
establish a joint development committee (or “JDC”) as described in this Article
4, which shall exist during the Term of this Agreement. The JDC shall review
(x) all development activities being conducted or proposed to be conducted by or
on behalf of Shionogi, its Affiliates and/or Shionogi Licensees for products
incorporating Naldemedine outside the Field or outside the Territory and (y) all
proposals submitted by BDSI to Develop Symproic in the Field in the Territory
(e.g., to seek additional indications, presentations, formulations, dosage
forms, dosage strengths, and/or line extensions) (“Development Proposals”) and
discuss implementation of such Development Proposals in good faith. If a
Development Proposal is approved by the JDC, then the terms and conditions
governing such Development Proposal, including any performance and financial
obligations of the Parties, shall be memorialized in a “Development Plan”
mutually agreeable to the Parties (which shall not be effective until such
mutual agreement). As applicable, the JDC shall (i) review and approve the
Development Plan, (ii) monitor and oversee the Parties’ progress under any
Development Plan, (iii) review, comment, and approve any changes or amendments
to the Development Plan proposed by any Party, provided that any such changes
and amendments shall only be effective upon approval thereof by the JDC, and
(iv) have such other responsibilities and powers as may be specified in this
Agreement. Each Party shall keep the JDC reasonably informed of its progress and
activities under any Development Plan.

(b)    Membership. The JDC will be comprised of two (2) members in total and one
(1) representative from each Party, and, each Party will designate its initial,
respective members and representative prior to the date scheduled for the first
meeting of the JDC. Each Party may replace its representative on the JDC at any
time upon written notice to the other Party and may involve other
representatives from such Party at their discretion. Any member of the JDC may
designate a substitute to attend and perform the functions of that member at any
meeting of the JDC. Each Party may, in its sole discretion, choose to have its
Alliance Manager attend any meeting of the JDC.

 

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(c)    Meetings. The JDC shall meet as reasonably necessary or appropriate, on
such dates and times as the Parties may agree, and by means of
telecommunications and video conferences, or by such other means as the Parties
may agree.

(d)    Decision-Making. The JDC shall make its decisions by consensus, with each
Party’s representatives collectively having one vote. In the event the JDC is
unable to reach consensus on any issue for which the JDC is responsible, the
issue shall be presented to the Alliance Managers (as defined in Section 9.4)
jointly with the Parties’ respective senior managers who are responsible for the
matters in dispute (“Senior Managers”). If the Alliance Managers and Senior
Managers are unable to resolve such dispute within [***], then the dispute shall
be referred to the Parties’ Designated Executives. Once such an issue has been
presented to the Designated Executives, they shall have [***] to make a final
determination regarding the issue in dispute. In the event that the Designated
Executives are unable to reach a final determination within such [***] period
with respect to any issue properly before the JDC (including any issues related
to Development of Symproic), then Shionogi shall have final decision-making
authority with respect thereto.

(e)    Termination of JDC. The JDC shall be disbanded, and no longer meet or
have any obligations or responsibilities under this Agreement, upon termination
or expiration of this Agreement.

Article 5

Regulatory Matters

5.1    Regulatory Filings, Approvals, and Related Know-How.

(a)    Rights and Obligations. Upon the Effective Date, Shionogi shall assign,
and hereby assigns, to BDSI all right, title, and interest to the Assigned NDA,
and the Parties shall file the Assigned NDA Letters as soon as reasonably
possible, but in any event no later than, [***] following the Effective Date.
For clarity, the transfer of the Assigned NDA contemplated by the foregoing
sentence shall not include the transfer of ownership of any of the Information
contained therein as of the Effective Date. BDSI shall use Diligent Efforts to
maintain the Assigned NDA in good standing and full effect and otherwise
preserve and maintain the right to Commercialize Symproic in the Field in the
Territory, including through the payment of all PDUFA fees or other fees payable
to Governmental Authorities in the Territory with respect thereto. Without
limiting the foregoing, BDSI shall (i) use Diligent Efforts to complete, at its
sole cost and expense, the Current Phase 4 Studies in a timely fashion in
accordance with the requirements thereof established by the FDA and the [***]
Service Agreement, and (ii) shall update Shionogi periodically, upon Shionogi’s
reasonable request, on the status and progress toward completion of the Current
Phase 4 Studies. Prior to making any material modification to the Current Phase
4 Studies or the [***] Service Agreement, BDSI shall consult with Shionogi and
shall consider diligently, reasonably and in good faith all input received from
Shionogi with respect to such proposed modification, and BDSI and Shionogi shall
use reasonable efforts to reach consensus on

 

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all input provided by Shionogi prior to BDSI proceeding with any such
modification. For the avoidance of doubt, subject to the immediately preceding
sentence, BDSI shall have final say on, and Shionogi shall not attempt to
interfere with, the Current Phase 4 Studies, the [***] Service Agreement and any
amendments to the foregoing. Upon the Effective Date, (A) Shionogi will assign,
and hereby assigns, to BDSI the [***] Service Agreement and Shionogi’s rights
and obligations thereunder and (B) BDSI shall assume, and hereby assumes, the
[***] Service Agreement and all rights and obligations of Shionogi thereunder
and agrees to pay, perform and discharge when due all liabilities under or in
respect of the [***] Service Agreement arising after the Effective Date, except
to the extent arising from a breach thereof by Shionogi that occurred prior to
the Effective Date.

(b)    Dealings and Filings. BDSI shall be responsible for all dealings with
Regulatory Authorities with respect to Symproic in the Field in the Territory,
including filing all supplements and other documents with such Regulatory
Authorities with respect to the Assigned NDA and responding to all requests,
inquiries or other communications from such Regulatory Authorities, including
those relating to the Promotion of Symproic in the Field in the Territory. BDSI
shall take all actions reasonably requested by Shionogi to update, modify or
supplement the applicable Regulatory Approvals for Symproic in the Field in the
Territory in connection with the manufacture of Symproic by or on behalf of
Shionogi, including relative to the purchase of raw materials, the manufacture
of Naldemedine therefor, the filling, labeling, packaging, serialization and
finishing of Symproic, the release, holding and storage of Symproic, validation,
quality control and assurance, validation, quality control and assurance and any
tests and analysis of Symproic, in each case, to the extent such manufacturing
activities are conducted for BDSI under the Supply Agreement or API Supply
Agreement.

(c)    Right of Reference; Reporting and Review.

(i)    Subject to the terms and conditions of this Agreement, BDSI hereby grants
Shionogi and its Affiliates a “Right of Reference” as that term is defined in
21 C.F.R. § 314.3(b) (or any successor rule or analogous law recognized outside
of the United States) to the Assigned NDA to the extent necessary to exercise
the rights granted under Section 2.5, and such right shall be sublicensable in
conjunction with the sublicense of any of the rights granted under Section 2.5.

(ii)    BDSI shall promptly notify Shionogi of, and shall promptly, and in any
event within [***] from the submission date, provide Shionogi with a copy (which
shall be in electronic form to the extent reasonably possible) of all Regulatory
Materials with respect to the Field in the Territory, including but not limited
to those that are (A) amendments or supplements to the Assigned NDA, (B) related
to the safety or efficacy of Symproic in the Field in the Territory, (C) related
to any clinical Development pursuant to Article 4 (but excluding, for clarity,
the Current Phase 4 Studies), or (D) reasonably necessary to enable the right of
reference in the foregoing Section 5.1(c)(i).

5.2    Symproic Withdrawals and Recalls. If any Regulatory Authority
(a) threatens, initiates or advises any action to remove Symproic from the
market in the Field in the Territory or (b) requires or advises Shionogi, BDSI,
or their Affiliates to distribute a “Dear Doctor” letter or its equivalent
regarding use of Symproic in the Field in the Territory, then Shionogi or BDSI,
as

 

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applicable, shall notify the other Party of such event within [***] (or sooner
if necessary to enable a Party to comply with law) after such Party becomes
aware of the action, threat, advice or requirement (as applicable) and BDSI
shall have the right to decide whether to recall, withdraw or issue a field
alert in the Field in the Territory in connection with Symproic, and as between
the Parties, BDSI shall be responsible for conducting any recalls or
withdrawals, issuing any field alerts, or taking such other necessary remedial
action in the Field in the Territory, provided that, notwithstanding anything to
the contrary, with respect to Symproic sold in the Field in the Territory
bearing any Shionogi name, any Shionogi Corporate Mark, or any Shionogi national
drug code, Shionogi shall be entitled to effect (or to require BDSI to effect)
any recall, withdrawal, or field alert in the Territory, if Shionogi reasonably
determines in good faith that such action is necessary or appropriate after
providing BDSI a reasonable opportunity to do so and BDSI shall take all actions
reasonably requested by Shionogi in connection therewith. All costs and expenses
relating to withdrawals or recalls of Symproic sold prior to the Effective Date
shall be borne by Shionogi and all costs and expenses relating to withdrawals or
recalls of Symproic sold in the Field in the Territory after the Effective Date
shall be borne by BDSI, except as otherwise set forth in the Transition Services
and Distribution Agreement, Supply Agreement, Quality Agreement or API Supply
Agreement. The preceding shall not be in lieu of or limit any obligation of
indemnity of any Party hereto pursuant to this Agreement or other Definitive
Agreements.

5.3    Pharmacovigilance and Safety Reporting Obligations. The Parties’
obligations with respect to exchanging and reporting adverse events and other
safety information relating to Symproic in the Field will be set forth in a
reasonable and customary form of pharmacovigilance agreement to be entered into
between the Parties effective as of the Effective Date. Pursuant to the terms of
the PVG Agreement, BDSI shall be primarily responsible for collecting
information related to adverse events in the Territory with respect to Symproic
in the Field and providing such information to Shionogi in a reasonably timely
fashion, all as set forth therein. Each Party shall comply with its obligations
under the PVG Agreement.

Article 6

Commercialization

6.1    Commercialization of Symproic. BDSI shall control, have sole
decision-making authority, and be solely responsible for, the Commercialization
(including marketing, strategy and implementation thereof, pricing, promotion,
physician targeting, reimbursement, branding and sale) of Symproic in the Field
in the Territory, including the costs associated therewith, the whole subject to
the rights and obligations that are specifically provided herein or in the other
Definitive Agreements. BDSI shall use Diligent Efforts to Commercialize Symproic
in the Field in the Territory during the AG Royalty Term and Branded Royalty
Term. For greater clarity, from the Effective Date of this Agreement, except as
contemplated by the Transition Services and Distribution Agreement, Shionogi
shall not engage in any Commercialization of Symproic in the Field in the
Territory, and accordingly shall not be responsible for any Promotional Activity
with respect to Symproic in the Field in the Territory. BDSI shall provide to
Shionogi at least [***] prior written notice before the launch of any AG Product
in the Territory by BSDI, any Affiliate of BDSI, any BDSI Licensee or any Third
Party; provided that if BDSI has less than [***] notice of an anticipated launch
of a Generic Equivalent, then BDSI shall provide Shionogi with such notice as is
reasonably practicable.

 

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6.2    Managed Care.

(a)    BDSI shall be responsible for market access, managed care and
reimbursement matters, including for the operational aspects of managing and
carrying out efforts related to obtaining reimbursement for Symproic in the
Territory and negotiation of market access and managed care arrangements with
respect thereto.

(b)    BDSI shall use commercially reasonable efforts to negotiate and enter
into an agreement with [***] for [***] of Symproic in the form substantially
similar to BDSI’s existing agreement with [***] for [***] of Symproic as soon as
possible following the Effective Date. In any event, BDSI shall reimburse
Shionogi within [***] of BDSI’s receipt of an invoice (with reasonable
supporting documentation) therefor all amounts paid by Shionogi in respect of
sales of Symproic made by BDSI (whether bearing BDSI’s, a BDSI Affiliate’s or a
BDSI Sublicensee’s NDC number) for which rebates and other amounts are due under
Shionogi’s existing agreement with [***] for [***] of Symproic.

6.3    Commercialization Standards. BDSI shall comply with all applicable laws
and regulations in Commercializing Symproic under this Agreement, including the
FD&C Act, the Prescription Drug Marketing Act of 1987, as amended, and the
rules, regulations and guidelines promulgated thereunder, the FDA Guidance for
Industry-Supported Scientific and Educational Activities, the Pharmaceutical
Research and Manufacturers of America Code on Interactions with Healthcare
Professionals, the Office of Inspector General Compliance Program Guidance for
Pharmaceutical Manufacturers, the Accreditation Council for Continuing Medical
Education Standards for Commercial Support of Continuing Medical Education, the
Pharmaceutical Marketing Research Group Guidelines on market research
activities, and all payor “fraud and abuse” and consumer protection and false
claims statutes and regulations, including the Medicare and Medicaid
Anti-Kickback Statute and the “Safe Harbor Regulations” found at 42 C.F.R.
§1001.952 et seq.

6.4    Commercialization Reports. From and after the Effective Date, within
[***] after the end of each Calendar Year during the Term, BDSI shall provide
Shionogi with a reasonably detailed written report (each, a “Commercialization
Report”) regarding the progress and results of Commercialization activities for
Symproic in the Territory and Field in the previous Calendar Year and plans for
the then current Calendar Year. Each Commercialization Report shall include an
annual review of results versus plans for Symproic in the Field and Territory,
[***] and all other material activities concerning such Commercialization of
Symproic occurring during the prior Calendar Year. Each Commercialization Report
shall also address plans for each of the items described in the foregoing
sentence with respect to the then current Calendar Year and shall indicate
whether BDSI intends to launch an AG Product during such period (and if so,
shall provide BDSI’s rationale for doing so). BDSI shall respond promptly and in
good faith to any reasonable questions Shionogi may have with respect to any
Commercialization Report provided by BDSI pursuant to this Section 6.4,
including by participating in one or more meetings (by teleconference) to review
and discuss the same.

 

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Article 7

Commercial Transition

7.1    Transition Services and Distribution Agreement. Shionogi shall perform
certain sales, distribution and related activities and certain transitional
services with respect to Symproic during the term of the Transition Services and
Distribution Agreement, all on the terms and conditions set forth therein.

Article 8

Manufacture and Supply

8.1    Transferred Sample Inventory. Shionogi shall sell and deliver to BDSI the
Transferred Sample Inventory as soon as reasonably practicable following the
Effective Date. In respect of the Transferred Sample Inventory, on the Effective
Date, BDSI shall pay Shionogi the amount set forth in EXHIBIT H by wire transfer
of immediately available funds into an account designated by Shionogi.

8.2    Supply Obligations. Shionogi shall supply Symproic to BDSI as set forth
in the Supply Agreement, provided that any failure to supply Symproic under the
Supply Agreement on the part of Shionogi shall not be considered a breach of
this Agreement. [***].

Article 9

Medical Affairs Activities; Alliance Manager

9.1    Global Medical Affairs. The Parties shall use Diligent Efforts to update
the MAC on a reasonably periodic basis (in accordance with the meeting scheduled
outlined in Section 9.2(d)) with respect to their respective Medical Affairs
Activities. The Parties hereby confirm that (a) Shionogi will retain the right
to complete, submit and publish scientific or medical publications as outlined
in its current publication plan (a copy of which has been provided to BDSI) with
respect to Symproic and (b) BDSI will have the right to complete, submit and
publish scientific or medical publications relating to the Current Phase 4
Studies.

9.2 Medical Affairs Committee.

(a)    Formation; Composition. BDSI and Shionogi hereby establish a committee to
facilitate communications between BDSI and Shionogi with respect to the conduct
of Medical Affairs Activities by or on behalf of either Party or any of their
Affiliates or Sublicensees occurring anywhere in the world (the “MAC”). BDSI’s
and Shionogi’s initial representative to the MAC are [***] (for Shionogi) and
[***] (for BDSI).

(b)    No Authority. The MAC shall not have any decision-making authority, power
to amend, modify or waive compliance with this Agreement, nor power or right to
govern the conduct of Medical Affairs Activities by or on behalf of either Party
or any of their Affiliates or Sublicensees.

 

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(c)    Representatives. Each Party shall initially appoint one
(1) representative to the MAC, with each representative having relevant
knowledge and expertise and having sufficient authority within the applicable
Party to make decisions arising within the scope of the MAC’s responsibilities.
The MAC may change its size from time to time by mutual written consent of the
Parties, provided that the MAC shall consist at all times of an equal number of
representatives of each Party. Each Party may replace its MAC representatives at
any time upon written notice to the other Party and may involve other
representatives from such Party at their discretion. Any member of the MAC may
designate a substitute to attend and perform the functions of that member at any
meeting of the MAC. Each Party may, in its sole discretion, choose to have its
Alliance Manager attend any meeting of the MAC.

(d)    Meetings. The MAC shall meet once per Quarter during the 2019 Calendar
Year and semi-annually each Calendar Year thereafter during the Term, unless the
Parties mutually agree to a different frequency. The MAC may meet by
videoconference or by teleconference, or in-person at the mutual agreement of
the Parties.

9.3    Discontinuation of the MAC. The MAC shall continue to exist until the
first to occur of (a) the Parties mutually agreeing in writing to disband the
MAC or (b) the expiration or termination of this Agreement. Once the MAC has
disbanded in accordance with the foregoing, the MAC shall have no further rights
or obligations under this Agreement.

9.4    Alliance Manager. Each of Shionogi and BDSI shall appoint one
(1) representative who possesses a general understanding of this Agreement and
Symproic to act as its respective alliance manager for this relationship (each,
an “Alliance Manager”). The initial Alliance Managers are [***] (for Shionogi)
and [***] (for BDSI). Each of Shionogi and BDSI may replace its respective
Alliance Manager at any time upon written notice to the other. Any Alliance
Manager may designate a substitute to temporarily perform the functions of that
Alliance Manager. Each Alliance Manager shall be charged with creating and
maintaining a collaborative work environment concerning the subject matter of
this Agreement within and among the Parties.

Article 10

Intellectual Property

10.1    Ownership of Inventions. Subject to the licenses and other rights
granted herein, ownership of Information first made, conceived, developed or
reduced to practice during the course of the performance of activities pursuant
to this Agreement, and all intellectual property related thereto, shall follow
inventorship, as determined in accordance with applicable United States law,
including without limitation United States patent law.

10.2    Prosecution of Patents.

(a)    Shionogi Patents. Except as otherwise provided in this Section 10.2(a),
Shionogi and its Affiliates shall have the first right and authority to prepare,
file, prosecute (including any interferences, reissue applications, post-grant
proceedings and reexaminations) and maintain the Shionogi Patents in the
Territory, at its sole expense. Upon BDSI’s reasonable request, Shionogi shall
provide BDSI copies of, and update BDSI on the status of, any issued or
published, pending

 

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Shionogi Patents. If Shionogi determines in its sole discretion to abandon,
cease prosecution, or not maintain any Shionogi Patent in the Territory, then
Shionogi shall provide BDSI with written notice of such determination at least
[***] before any deadline for taking action to avoid abandonment (or other loss
of rights) and use Diligent Efforts to provide BDSI with a reasonable
opportunity, prior to such deadline, to discuss such proposed abandonment. Under
such circumstances, BDSI will have the right (but not the obligation), at BDSI’s
sole discretion and sole responsibility for all applicable patent costs, to
assume the prosecution and maintenance in the Territory of such Shionogi Patents
in BDSI’s own name (which right will include the right to file additional
Patents claiming priority to such Shionogi Patents). Upon such election,
Shionogi shall assign all right, title and interest in and to such Shionogi
Patent to BDSI. Shionogi will sign, or will use commercially reasonable efforts
to have signed, all legal documents as are reasonably necessary to assign such
Shionogi Patents to BDSI and for BDSI to assume the prosecution and maintenance
of such assumed Shionogi Patents in the Territory.

(b)    BDSI Patents. Except as otherwise provided in this Section 10.2(b), BDSI
and its Affiliates shall have the sole right and authority to prepare, file,
prosecute (including any interferences, reissue applications, post-grant
proceedings and reexaminations) and maintain the BDSI Patents in any
jurisdiction, at its sole expense. Upon Shionogi’s reasonable request, BDSI
shall provide Shionogi copies of, and update Shionogi on the status of, any
issued or published, pending BDSI Patents. If BDSI determines in its sole
discretion to abandon, cease prosecution, or not maintain any BDSI Patent
anywhere, then BDSI shall provide Shionogi with (i) written notice of such
determination at least [***] before any deadline for taking action to avoid
abandonment (or other loss of rights) and (ii) a reasonable opportunity, prior
to such deadline, to discuss such proposed abandonment. Under such
circumstances, Shionogi will have the right (but not the obligation), at
Shionogi’s sole discretion and sole responsibility for all applicable patent
costs, to assume the prosecution and maintenance of such BDSI Patents in
Shionogi’s own name (which right will include the right to file additional
Patents claiming priority to such BDSI Patents). Upon such election, BDSI shall
assign all right, title and interest in and to such BDSI Patent to Shionogi.
BDSI will sign, or will use commercially reasonable efforts to have signed, all
legal documents as are reasonably necessary to assign such BDSI Patents to
Shionogi and for Shionogi to assume the prosecution and maintenance of such
assumed BDSI Patents.

(c)    Cooperation in Prosecution. Each Party shall provide each other all
reasonable assistance and cooperation in the Patent prosecution efforts provided
above in this Section 10.2, including providing any necessary powers of attorney
and executing any other required documents or instruments for such prosecution,
at no charge to the other Party.

10.3    Infringement by Third Parties.

(a)    Notification. If there is any infringement, threatened infringement, or
alleged infringement in the Field and the Territory of the Shionogi Patents or
BDSI Patents, or any other intellectual property rights Controlled by a Party
and directly related to Symproic by a Third Party (in each case, a “Symproic
Infringement”), then each Party shall promptly notify the other Party in writing
of any such Symproic Infringement of which it becomes aware, and shall provide
evidence in such Party’s possession demonstrating such Symproic Infringement.

 

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(b)    Enforcement Rights in the Territory.

(i)    Shionogi Patents. Subject to the remainder of this Section 10.3(b)(i) and
Section 10.3(c), Shionogi shall have the exclusive first right, but not the
obligation, to bring a suit or other action against any person or entity
allegedly engaged in Symproic Infringement of any Shionogi Patents or Symproic
Marks in the Territory. Shionogi shall have a period of [***] after its receipt
or delivery of notice and evidence pursuant to Section 10.3(a), to elect to so
enforce any such Shionogi Patent or Symproic Mark in the Territory (or to settle
or otherwise secure the abatement of such Symproic Infringement). In the event
Shionogi does not so elect to bring a suit or other action against any person or
entity allegedly engaged in Symproic Infringement in the Field in the Territory
(or settle or otherwise secure the abatement of such Symproic Infringement), it
shall promptly so notify BDSI in writing, and BDSI shall have the right, at
BDSI’s expense, and if and as elected by BDSI in writing to Shionogi within
[***] of receipt of Shionogi’s notice that it will not make an election above,
to commence a suit or take action to enforce the applicable Shionogi Patents or
Symproic Marks with respect to such Symproic Infringement in the Field in the
Territory, and Shionogi shall have the right to join such action at its own
expense. Each Party shall provide to the Party enforcing any such rights under
this Section 10.3(b)(i) reasonable assistance in such enforcement, at such
enforcing Party’s request and at the enforcing Party’s expense (except as
otherwise provided above), including joining such action as a party plaintiff if
required by applicable law to pursue such action, making its personnel
available, providing any necessary Information, and executing documents. The
enforcing Party shall keep the other Party regularly informed of the status and
progress of such enforcement and settlement efforts and related filings, and
shall reasonably consider the other Parties’ comments on any such efforts and
related filings.

(ii)    BDSI Patents. Subject to the remainder of this Section 10.3(b)(ii) and
Section 10.3(c), BDSI shall have the exclusive first right, but not the
obligation, to bring a suit or other action against any person or entity
allegedly engaged in Symproic Infringement of any BDSI Patents or BDSI Marks in
the Territory. BDSI shall have a period of [***] after its receipt or delivery
of notice and evidence pursuant to Section 10.3(a), to elect to so enforce any
such BDSI Patent or BDSI Mark in the Territory (or to settle or otherwise secure
the abatement of such Symproic Infringement). Upon electing to bring, or to
forego bringing, any such suit or other action (or settle or otherwise secure
the abatement of such Symproic Infringement), BDSI shall promptly notify
Shionogi in writing of its decision. In the event BDSI does not so elect to
bring a suit or other action against any person or entity allegedly engaged in
Symproic Infringement in the Field in the Territory (or settle or otherwise
secure the abatement of such Symproic Infringement), Shionogi shall have the
right, at Shionogi’s expense, subject to BDSI’s prior written approval, such
approval not to be unreasonably withheld, if and as elected by Shionogi in
writing to BDSI within [***] of the later of (A) BDSI’s notice that it will not
make an election above or (B) the end of the above-referenced [***] period, to
commence a suit or take action to enforce the applicable BDSI Patents or BDSI
Marks with respect to such Symproic Infringement in the Field in the Territory,
and BDSI shall have the right to join such action at its own expense. Each Party
shall provide to the Party enforcing any such rights under this
Section 10.3(b)(ii) reasonable assistance in such enforcement, at such enforcing
Party’s request and at no cost to the enforcing Party (except as otherwise

 

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provided above), including joining such action as a party plaintiff if required
by applicable law to pursue such action, making its personnel available,
providing any necessary Information, and executing documents. The enforcing
Party shall keep the other Party regularly informed of the status and progress
of such enforcement efforts and related filings, and shall reasonably consider
the other Parties’ comments on any such efforts and related filings.

(c)    Hatch-Waxman Act Litigation. Notwithstanding anything herein to the
contrary, should a Party receive a certification pursuant to the Drug Price
Competition and Patent Term Restoration Act of 1984 (Public Law 98-417), as
amended (the “Hatch-Waxman Act”), including any notice under 21 U.S.C.
§355(b)(2)(A)(iv) or 355(j)(2)(A)(vii)(IV) or a similar notice (the
“Certification”) relating to any Orange Book Patent in the Field in the
Territory, then such Party shall immediately (and in any event no later than
within [***] after such receipt) provide the other Party with a copy of such
Certification. Shionogi shall have [***] from the date on which it receives a
Certification to provide written notice to BDSI (“H-W Suit Notice”) stating
whether it will bring suit within a [***] period from the date of such
Certification, including any patent infringement suit (or other applicable time
limit for bringing such suit) and, if Shionogi or any Affiliate thereof does
bring such suit within such period, BDSI shall have the right to join such
action using its own counsel and at its own expense. Should such [***] expire
without Shionogi providing such H-W Suit Notice, then BDSI shall be free to
bring suit at BDSI’s expense. Each Party shall reasonably assist the other Party
in such enforcement, including joining such action as a party plaintiff if
required by applicable law to pursue such action, making its personnel
available, providing any necessary Information, and executing documents.

(d)    Enforcement Rights Outside the Territory. Subject to the remainder of
this Section 10.3(d), Shionogi shall have the sole and exclusive right, but not
the obligation, with respect to the Shionogi Patents and Symproic Marks to bring
a suit or other action against any person or entity allegedly engaged in
infringement of the Shionogi Patents or Symproic Marks outside the Territory,
outside the Field, or with respect to any product other than Symproic. Subject
to Section 10.3(a) and the remainder of this Section 10.3(d), BDSI shall have
the sole and exclusive right, but not the obligation, with respect to the BDSI
Patents and BDSI Marks to bring a suit or other action against any person or
entity allegedly engaged in infringement of the BDSI Patents outside the
Territory or outside the Field. Each Party shall provide to the Party enforcing
any such rights under this Section 10.3(d) reasonable assistance in such
enforcement, at such enforcing Party’s request and at no cost to the enforcing
Party, including joining such action as a party plaintiff if required by
applicable law to pursue such action, making its personnel available, providing
any necessary Information, and executing documents. The enforcing Party shall
keep the other Party regularly informed of the status and progress of such
enforcement efforts, and shall reasonably consider the other Party’s comments on
any such efforts.

(e)    Settlement. Subject to the remainder of this Section 10.3(e), the Party
enforcing any claim, suit or action that it brought under this Section 10.3 with
respect to any BDSI Patents, Shionogi Patents, or Symproic Marks in the Field in
the Territory shall be entitled to settle, voluntarily dispose of or otherwise
resolve any such matter without the prior written consent of the other Party,
notwithstanding that the other Party may have joined the action with its own
counsel at its own expense. Notwithstanding the foregoing, (i) no Party shall
take any action in the course of exercising its rights under this Section 10.3
(including entering into any settlement, voluntary

 

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disposition or other resolution of any claim, suit or action) that admits fault
or wrongdoing, or incurs liability, on the part of any other Party without the
prior written consent of such other Party, which such other Party may withhold
in its sole discretion; and (ii) BDSI shall not take any action in the course of
exercising its rights under this Section 10.3 (including entering into any
settlement, voluntary disposition or other resolution of any claim, suit or
action) that (A) materially limits the scope, validity, or enforceability of any
Shionogi Patents or (B) could reasonably be expected to materially adversely
affect the ability of BDSI, Shionogi, any Affiliate of any of the foregoing, or
any licensee or sublicensee of any of the foregoing to develop, manufacture, or
commercialize Symproic, Naldemedine (or any analog or derivative thereof), or
any product (other than Symproic) to the extent incorporating Naldemedine (or
any analog or derivative thereof) without, in either case, Shionogi’s prior
written consent.

(f)    Expenses and Recoveries. Except as otherwise explicitly set forth in
Sections 10.3(b), 10.3(c) and 10.3(d), the Party bringing a claim, suit or
action under Section 10.3(b), 10.3(c) or 10.3(d) shall be solely responsible for
any expenses incurred by such Party as a result of such claim, suit or action.
If such enforcing Party recovers monetary damages from such Third Party in such
suit or action or in settlement of any Symproic Infringement pursuant to
Section 10.3(e), (i) such recovery shall be allocated first to the reimbursement
of all expenses incurred by the other Party in such litigation (including, for
this purpose, reasonable, documented expenses of counsel and, in the case of
BDSI, any amounts reimbursed to Shionogi pursuant to Section 10.3(b)(i) or
10.3(c)), second to the reimbursement of all expenses incurred by such enforcing
Party in such litigation (including, for this purpose, reasonable, documented
expenses of counsel), (ii) any remaining amount with respect to any Symproic
Infringement in the Field in the Territory shall be allocated [***] to BDSI
(which amounts should be treated as Net Sales under this Agreement), and
(iii) any remaining amount with respect to any other alleged or actual
infringement of any Shionogi Patents, Symproic Marks, or Shionogi Corporate
Marks outside the Field or outside the Territory shall be allocated [***] to
Shionogi.

10.4    Defense of Infringement Actions. During the term of this Agreement, each
Party shall notify the other Parties of all information regarding potential
infringement of Third Party intellectual property rights in connection with the
development, manufacture, production, use, importation, offer for sale, sale or
other Development or Commercialization of Symproic in the Field in the
Territory. The Parties shall, in good faith, diligently discuss such information
and decide how to handle such matter. Except as set forth below and subject to
Article 12, Shionogi shall have the first right to defend, and to control the
settlement or voluntary disposition of, any action, suit, or other proceeding
brought against any Party alleging that the development, manufacture,
production, use, importation, offer for sale, sale or other Development or
Commercialization of Symproic in the Field in the Territory infringes any Third
Party intellectual property rights. In the event Shionogi does not so elect
within [***] of it becoming aware of such action, suit or proceeding, it shall
so notify BDSI in writing, and BDSI shall have the right to defend such suit,
action or proceeding at BDSI’s expense, provided that (a) BDSI shall reasonably
consult with Shionogi with respect to the conduct of such defense and (b) BDSI
shall not (and shall ensure that its Affiliates and BDSI Licensees do not), in
the course of conducting such defense or settling any litigation or dispute
related thereto, take any actions, make any statements, or enter into any
settlement or voluntary disposition of such matter that would (A) would
reasonably be anticipated to adversely affect any Shionogi Patent (or the
validity or enforceability thereof), either Party’s ability to develop,
manufacture, or commercialize Symproic, or Shionogi’s, its Affiliates’,

 

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or any of its or their licensees’ ability to develop, manufacture, or
commercialize Naldemedine (or any analog or derivative thereof) or any other
product to the extent incorporating Naldemedine (or any analog or derivative
thereof), (B) admit any liability, fault, or wrongdoing by Shionogi or any
Affiliate thereof or (C) impose any liability or obligation to pay money damages
on Shionogi or any Affiliate thereof.

10.5    Patent Marking. BDSI shall, and shall require its Affiliates and BDSI
Licensees, to mark Symproic sold by it, its Affiliates, and BDSI Licensees
hereunder (in a reasonable manner consistent with industry custom and practice)
with appropriate patent numbers or indicia to the extent permitted or required
by applicable law and regulations, in those jurisdictions in which such markings
or such notices impact recoveries of damages or equitable remedies available
with respect to infringements of patents.

10.6    Personnel Obligations. Prior to beginning work relating to Symproic,
each employee, agent or independent contractor of BDSI, its Affiliates, and BDSI
Licensees shall be bound by nondisclosure and invention assignment obligations
which are consistent with the obligations of BDSI in this Article 10, including:
(a) promptly reporting any invention, discovery, process or other intellectual
property right; (b) assigning to BDSI or its Affiliate, as appropriate, all of
his or her right, title and interest in and to any invention, discovery, process
or other intellectual property right; (c) cooperating in the preparation,
filing, prosecution, maintenance, enforcement and defense of any patent and
patent application; (d) performing all acts and signing, executing,
acknowledging and delivering any and all documents required for effecting the
obligations and purposes of this Agreement; and (e) abiding by the obligations
of confidentiality and non-use set forth in Article 13. It is understood and
agreed that such nondisclosure and invention assignment agreement need not
reference or be specific to this Agreement.

10.7    Trademarks. Subject to Sections 2.2 and 14.3 of this Agreement, BDSI
shall be responsible for the selection, registration, maintenance and defense of
any trademarks, logos, or trade dress used in connection with the
Commercialization of Symproic in the Field in the Territory hereunder, other
than the Symproic Marks or Shionogi Corporate Marks (the “BDSI Marks”), as well
as all expenses associated therewith. All uses by BDSI, any Affiliate thereof,
or any BDSI Licensee of the BDSI Marks, Symproic Marks, and Shionogi Corporate
Marks shall comply with all applicable laws and regulations. BDSI shall not,
without Shionogi’s prior written consent, use any trademarks or house marks of
Shionogi (including Shionogi’s corporate name), or marks confusingly similar
thereto, in connection with its Commercialization of Symproic under this
Agreement, except as set forth in Section 2.2 of this Agreement or may be
expressly authorized by Shionogi in writing, and except to the extent required
to comply with applicable laws and regulations. Shionogi and its Affiliates, as
applicable, shall retain sole ownership of the Symproic Marks, and registrations
or applications therefor, and all Shionogi Corporate Marks.

 

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Article 11

Representations, Warranties, and Covenants

11.1    Mutual Representations and Warranties. Each Party hereby represents,
warrants, and covenants (as applicable) to the other Party as follows:

(a)    Corporate Existence and Power. As of the Effective Date, it is a company
or corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction in which it is incorporated or organized, as
applicable, and has full corporate power and authority and the legal right to
own and operate its property and assets and to carry on its business as it is
now being conducted and as contemplated in this Agreement, including the right
to grant the licenses granted by it and perform its obligations hereunder.

(b)    Authority and Binding Agreement. As of the Effective Date, (i) it has the
corporate power and authority and the legal right to enter into this Agreement
and the other Definitive Agreements and perform its obligations hereunder and
thereunder; (ii) it has taken all necessary corporate action on its part
required to authorize the execution and delivery of this Agreement and the other
Definitive Agreements and the performance of its obligations hereunder and
thereunder; and (iii) this Agreement and the other Definitive Agreements have
been duly executed and delivered on behalf of such Party, and each constitutes a
legal, valid, and binding obligation of such Party that is enforceable against
it in accordance with its terms.

(c)    No Conflict. As of the Effective Date, it is not a party to, and it will
not enter into during the Term, any agreement that would prevent it from
granting the rights granted to the other Party under this Agreement or the other
Definitive Agreements or performing its obligations under this Agreement or the
other Definitive Agreements. The execution, delivery and performance of this
Agreement and the other Definitive Agreements by such Party: (i) is not
prohibited or limited by, and will not result in the breach of or a default
under, any provision of the charter documents or bylaws of such Party, (ii) does
not conflict with, result in a breach of, constitute (with or without due notice
or lapse of time or both) a default under, result in the acceleration of
obligations under, create in any party the right to terminate, modify or cancel,
or require any notice, consent or waiver not otherwise obtained prior to the
Effective Date under any material agreement or instrument binding on such Party,
and (iii) does not necessitate any consent or other approval from any Third
Party.

(d)    No Debarment. None of such Party’s employees, consultants or contractors:

(i)    is debarred under Section 306(a) or 306(b) of the FD&C Act or by the
analogous applicable laws, rules, and regulations of any Governmental Authority;

(ii)    has, to such Party’s knowledge, been charged with, or convicted of, any
felony or misdemeanor within the ambit of 42 U.S.C. §§ 1320a-7(a),
1320a-7(b)(l)-(3), or pursuant to any analogous applicable laws, rules, and
regulations, or is proposed for exclusion, or is the subject of exclusion or
debarment proceedings by a Governmental Authority; or

(iii)    is excluded, suspended or debarred from participation, or is otherwise
ineligible to participate, in any U.S. or non-U.S. healthcare programs, or is
excluded, suspended or debarred by any Governmental Authority from
participation, or is otherwise ineligible to participate, in any procurement or
non-procurement programs, (the foregoing (i) through (iii), collectively, the
“Debarment Laws”).

 

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11.2    Representations and Warranties by Shionogi. Shionogi hereby represents
and warrants to BDSI as of the Effective Date as follows:

(a)    Title; Encumbrances. As of the Effective Date, it has sufficient legal
and/or beneficial title, ownership or license, free and clear from any
mortgages, pledges, liens, security interests, encumbrances, options or third
party rights, to (i) the Shionogi Technology, Symproic Marks, and Shionogi
Corporate Marks to grant the licenses to BDSI as set forth in and pursuant to
this Agreement and (ii) the Symproic Domain Names and the Assigned NDA to comply
with its assignment obligations with respect thereto under this Agreement and
the other Definitive Agreements.

(b)    Validity; Enforceability. As of the Effective Date, none of the issued
Shionogi Patents existing as of the Effective Date has been adjudged, in a final
and non-appealable decision, invalid, unenforceable or unpatentable in whole or
part by any Governmental Authority of competent jurisdiction, and to the actual
knowledge of Shionogi, all such issued Shionogi Patents existing as of the
Effective Date are valid and enforceable.

(c)    Adequacy. The Shionogi Technology constitutes all of the Patents and
Information Controlled by Shionogi or any of its Affiliates as of the Effective
Date that are necessary for the sale of Symproic (as Symproic exists and is sold
as of the Effective Date). The Shionogi Know-How constitutes all Information
Controlled by Shionogi or any of its Affiliates as of the Effective Date that is
incorporated in the Promotional Materials (as such Promotional Materials are
used by Shionogi in the Promotion of Symproic in the Field in the Territory as
of the Effective Date).

(d)    No Notice of Infringement or Misappropriation. As of the Effective Date,
Shionogi has not received any written notice from any Third Party asserting or
alleging that any manufacture, sale, offering for sale, import or other
Commercialization of Symproic by Shionogi in the Territory prior to or as of the
Effective Date infringed or misappropriated the intellectual property rights of
such Third Party.

(e)    Non-infringement of Third Party Rights. As of the Effective Date, to
Shionogi’s actual knowledge, the Development, use, Manufacture, or
Commercialization of Symproic (as such Symproic exists as of the Effective Date)
in the Territory does not infringe any patents or other intellectual property
rights owned or controlled by a Third Party or any Affiliate of Shionogi.

(f)    No Proceedings. As of the Effective Date, there are no pending, and to
Shionogi’s actual knowledge, no threatened, actions, suits or proceedings
against Shionogi involving the ownership or use of the Shionogi Technology or
any product liability or other cause of action relating to Symproic.

(g)    Third-Party Activities. As of the Effective Date, to Shionogi’s actual
knowledge, there are no activities by Third Parties that would constitute
infringement or misappropriation of the Shionogi Technology in the Field in the
Territory.

11.3    Governmental Approvals. No consents or approvals of or filings or
registrations with any Governmental Authority are necessary for the execution
and delivery by the Parties or their applicable Affiliates of this Agreement and
each of the other Definitive Agreements to which it is

 

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a party, the performance by the Parties and their applicable their applicable
Affiliates of their obligations hereunder and thereunder, including under the
Hart Scott Rodino Antitrust Improvements Act of 1976 and all rules and
regulations promulgated thereunder from time to time, in each case as amended.

11.4    Disclaimer. EXCEPT AS EXPRESSLY STATED IN THIS Article 11, NO
REPRESENTATIONS OR WARRANTIES WHATSOEVER, WHETHER EXPRESS OR IMPLIED, INCLUDING
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NON-INFRINGEMENT, OR NON-MISAPPROPRIATION OF THIRD PARTY INTELLECTUAL PROPERTY
RIGHTS, IS MADE OR GIVEN BY OR ON BEHALF OF A PARTY. EXCEPT AS EXPRESSLY STATED
IN THIS AGREEMENT, ALL REPRESENTATIONS AND WARRANTIES, WHETHER ARISING BY
OPERATION OF LAW OR OTHERWISE, ARE HEREBY EXPRESSLY EXCLUDED.

11.5    Compliance with Laws. Each Party shall comply, and shall ensure that its
Affiliates and, with respect to BDSI, all BDSI Licensees, comply with all
applicable laws, rules, and regulations in the exercise of their rights and
performance of their obligations under this Agreement and the other Definitive
Agreements. Without limiting the foregoing, neither Party will use in connection
with the Development or Commercialization of Symproic, during the Term, any
employee, consultant or contractor who has been or is subject to debarment,
exclusion, or suspension under any Debarment Laws.

Article 12

Indemnification; Insurance; Limit of Liability

12.1    Indemnification by Shionogi. Shionogi shall defend, indemnify, and hold
BDSI, its Affiliates, and its and their respective officers, directors,
employees, and agents (the “BDSI Indemnitees”) harmless from and against any and
all damages, losses, costs and expenses or other amounts payable to a Third
Party claimant, as well as any reasonable attorneys’ fees and costs of
litigation of such BDSI Indemnitees (collectively, “BDSI Damages”), all to the
extent resulting from claims, suits, proceedings or causes of action brought by
such Third Party (“BDSI Claims”) against such BDSI Indemnitees that arise from
or are based on: (a) a breach of any of Shionogi’s representations, warranties,
covenants or obligations under this Agreement or the other Definitive
Agreements, (b) willful misconduct or grossly negligent acts or omissions on the
part of Shionogi, its Affiliates, or the officers, directors, employees, or
agents of Shionogi or its Affiliates, or (c) any breach by Shionogi of the [***]
Service Agreement occurring prior to the Effective Date or liability of Shionogi
arising under or in respect of the [***] Service Agreement prior to the
Effective Date. The foregoing indemnity obligation shall not apply to the extent
Shionogi’s ability to perform the preceding obligations is prejudiced by any
BDSI Indemnitees’ material failure to comply with the indemnification procedures
set forth in Section 12.3, or as and to the extent that any BDSI Claim is based
on or alleges: (i) a breach of any of BDSI’s representations, warranties,
covenants or obligations under this Agreement or any Definitive Agreement; or
(ii) the willful misconduct, grossly negligent acts or omissions, or failure to
comply with applicable laws, rules or regulations on the part of BDSI, its
Affiliates, any BDSI Licensees, or their respective officers, directors,
employees, or agents; or (iii) infringement or misappropriation of any Third
Party’s intellectual property rights in the exercise by or on behalf of BDSI,
any Affiliate thereof, or any

 

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BDSI Licensee of the rights granted to BDSI under this Agreement (except to the
extent such BDSI Claim directly results from a breach by Shionogi of
Section 11.2(e)); or (iv) in the case of clause (c) above, any breach by BDSI of
the [***] Service Agreement following the Effective Date.

12.2    Indemnification by BDSI. BDSI shall defend, indemnify, and hold
Shionogi, its Affiliates, and its and their respective officers, directors,
employees, and agents (the “Shionogi Indemnitees”) harmless from and against any
and all damages, losses, costs and expenses or other amounts payable to a Third
Party claimant, as well as any reasonable attorneys’ fees and costs of
litigation incurred by such Shionogi Indemnitees (collectively, “Shionogi
Damages”), all to the extent resulting from claims, suits, proceedings or causes
of action brought by such Third Party (collectively, “Shionogi Claims”) against
such Shionogi Indemnitee that arise from or are based on: (a) the Development,
Manufacture, storage, handling, use, sale, offer for sale, importation, or
Commercialization of Symproic by or on behalf of BDSI, its Affiliates, BDSI
Licensees, or its or their distributors after the Effective Date;
(b) infringement or misappropriation of any Third Party’s intellectual property
rights in the exercise of the rights granted under this Agreement, or
Development, Manufacture, use, or Commercialization of Symproic, by or on behalf
of BDSI, its Affiliates, or BDSI Licensees after the Effective Date; (c) a
breach of any of BDSI’s representations, warranties, covenants or obligations
under this Agreement or the other Definitive Agreements; (d) any breach of the
[***] Service Agreement occurring following the Effective Date or liability
arising under or in respect of the [***] Service Agreement after the Effective
Date; or (e) willful misconduct or grossly negligent acts or omissions on the
part of BDSI, its Affiliates, BDSI Licensees (other than Shionogi and its
Affiliates), or the officers, directors, employees, or agents of any of the
foregoing. The foregoing indemnity obligation shall not apply to the extent
BDSI’s ability to perform the preceding obligations is prejudiced by any
Shionogi Indemnitees’ material failure to comply with the indemnification
procedures set forth in Section 12.3, or as and to the extent that any Shionogi
Claim is based on or alleges: (i) a breach of Shionogi’s representations,
warranties, and obligations under this Agreement or any Definitive Agreement,
(ii) the willful misconduct, grossly negligent acts or omissions, or failure to
comply with applicable laws, rules or regulations on the part of Shionogi, its
Affiliates, or its or their officers, directors, employees, or agents, or
(iii) in the case of clause (d) above, any breach by Shionogi of the [***]
Service Agreement prior to the Effective Date.

12.3    Indemnification Procedures. Each Party’s agreement to indemnify, defend,
and hold harmless under this Article 12, as applicable, is conditioned upon the
indemnified Party (a) providing written notice to the indemnifying Party of any
Shionogi Claim or BDSI Claim (each, a “Claim”) or Shionogi Damages or BDSI
Damages, as applicable, arising out of the indemnified matter as soon as
reasonably possible, and in any event no later than [***] after the indemnified
Party has actual knowledge of such Claim or Shionogi Damages or BDSI Damages, as
applicable; provided that the failure to give such notice will not relieve the
indemnifying Party of its indemnity obligation hereunder except to the extent
that such failure materially prejudices the indemnifying Party, and
(b) permitting the indemnifying Party to participate (at its expense) in the
investigation of, preparation and defense against, and settlement or voluntary
disposition of any Claim; it being understood and agreed that the indemnifying
Party shall have the right to assume control over (at its expense) the
investigation of, preparation and defense against, and settlement or voluntary
disposition of any Claim, if the Claim is solely a monetary Claim and the
indemnifying Party agrees to cover all Shionogi Damages or BDSI Damages, as
applicable, and

 

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provides the indemnified Party with reasonable guaranty with respect to same. No
Party shall compromise, settle, or enter into any voluntary disposition of any
such Claim without the other Party’s prior written consent, which consent shall
not be unreasonably withheld, except if such compromise or settlement solely
involves payment obligations and such payment obligations are fulfilled in full
upon the entering into of the compromise or settlement; provided, however, that,
if the Party entitled to indemnification fails to promptly notify the
indemnifying Party pursuant to the foregoing clause (a), the indemnifying Party
will only be relieved of its indemnification obligation under this Article 12 to
the extent materially prejudiced by such failure. In no event may BDSI settle,
compromise, or agree to any voluntary disposition of any matter subject to
indemnification hereunder in any manner which would reasonably be anticipated to
have a material likelihood of adversely affecting (i) any portion of the
Shionogi Technology, Symproic Marks, or Shionogi Corporate Marks or
(ii) Shionogi’s, BDSI’s, any of their respective Affiliates’, or any of their
respective licensees’ or sublicensees’ ability to manufacture, develop, or
commercialize Symproic or, in the case of Shionogi, its Affiliates, and its and
their licensees or sublicensees, Naldemedine or any product (other than
Symproic) to the extent incorporating Naldemedine (or any analog or derivative
thereof) without, in the case of (i) or (ii), Shionogi’s prior written consent.
In no event may Shionogi settle, compromise, or agree to any voluntary
disposition of any matter subject to indemnification hereunder in any manner
which would reasonably be anticipated to have a material likelihood of adversely
affecting (A) any portion of the BDSI Technology or BDSI Marks or (B) BDSI’s,
any of its Affiliates’, or any of their respective licensees’ or sublicensees’
ability to manufacture, develop, or commercialize Symproic in Field and in the
Territory in accordance with this Agreement without, in the case of (A) or (B),
BDSI’s prior written consent.

12.4    Insurance.

(a)    Shionogi and BDSI shall each procure and maintain insurance, including
product liability insurance, with respect to its activities hereunder and under
the other Definitive Agreements and which are consistent with normal business
practices of prudent companies similarly situated at all times during which
Symproic is being commercially distributed or sold. It is understood that such
insurance shall not be construed to create a limit of a Party’s liability with
respect to its indemnification obligations under this Article 12 or otherwise
under this Agreement or the other Definitive Agreements. Shionogi and BDSI shall
each provide the other with written evidence of such insurance upon request.
Shionogi and BDSI shall each provide the other with written notice at least
[***] prior to the cancellation or non-renewal in such insurance or
self-insurance which materially adversely affects the rights of the other
hereunder.

(b)    In addition to, and without limitation of the foregoing, and except as
otherwise set forth below, BDSI shall maintain insurance, including commercial
general liability, product liability and workers compensation and employer’s
liability, with respect to its activities under this Agreement regarding
Symproic in such amount as it customarily maintains with respect to similar
activities for its other products, but not less than the greater of (i) [***]
each occurrence and aggregate for commercial general liability, (ii) [***] each
occurrence and aggregate for product liability, and (iii) [***] each occurrence
and aggregate for workers compensation and employer’s liability. Such coverage
shall be maintained for not less than [***] following expiration or termination
of this Agreement or if such coverage is of the “claims made” type, for [***]
following expiration or termination of this Agreement. Upon written request,
BDSI shall provide Shionogi with written evidence of the required coverage.
Coverage may be in the form of primary insurance or a combination of primary and
excess insurance.

 

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12.5    Limitation of Liability. NO PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR
ANY SPECIAL, INCIDENTAL, PUNITIVE, OR INDIRECT DAMAGES ARISING FROM OR RELATING
TO ANY BREACH OF THIS AGREEMENT OR ANY TORT CLAIMS ARISING HEREUNDER, REGARDLESS
OF ANY NOTICE OF THE POSSIBILITY OF SUCH DAMAGES. NOTWITHSTANDING THE FOREGOING,
NOTHING IN THIS SECTION 12.5 IS INTENDED TO OR SHALL LIMIT OR RESTRICT (A) THE
INDEMNIFICATION RIGHTS OR OBLIGATIONS OF ANY PARTY UNDER THIS ARTICLE 12, (B)
DAMAGES AVAILABLE AS A RESULT OF THE FRAUD OR GROSS NEGLIGENCE OF A PARTY,
(C) DAMAGES AVAILABLE FOR A PARTY’S BREACH OF ARTICLE 13, OR (D) DAMAGES
AVAILABLE FOR A PARTY’S BREACH OF SECTION 2.7.

12.6    Direct Damages. This Article 12 shall in no way limit the Parties
ability to seek remedies for direct damages suffered not resulting from claims,
suits, proceedings or causes of action brought by a Third Party.

12.7    Set-Off. Notwithstanding anything to the contrary, and without limiting
either Party’s obligations under Section 12.1 and 12.2, should a Party be in
material breach of any of its obligations under this Agreement or any other
Definitive Agreement, including in default of paying, when due, any amount
payable to any other Party under this Agreement or any other Definitive
Agreement, such other Party shall have the right to withhold payments to be made
to the breaching Party hereunder or thereunder until such breach is remedied.

Article 13

Confidentiality

13.1    Confidentiality. Except to the extent expressly authorized by this
Agreement or otherwise agreed in writing by the Parties, each Party agrees that,
for the Term and for [***] thereafter, it shall keep confidential and shall not
publish or otherwise disclose and shall not use for any purpose other than as
provided for in this Agreement and the other Definitive Agreements (which
includes the exercise of any rights or the performance of any obligations
hereunder and thereunder) any Confidential Information furnished to it by any
other Party pursuant to this Agreement except for that portion of such
information or materials that the receiving Party can demonstrate by competent
written proof:

(a)    was already known to the receiving Party or its Affiliate, other than
under an obligation of confidentiality, at the time of disclosure by such other
Party;

(b)    was generally available to the public or otherwise part of the public
domain at the time of its disclosure to the receiving Party;

(c)    became generally available to the public or otherwise part of the public
domain after its disclosure and other than through any act or omission of the
receiving Party in breach of this Agreement;

 

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(d)    is subsequently disclosed to the receiving Party or its Affiliate by a
Third Party without obligations of confidentiality with respect thereto; or

(e)    is subsequently independently discovered or developed by the receiving
Party or its Affiliate without the aid, application, or use of the disclosing
Party’s Confidential Information.

Notwithstanding the definition of “Confidential Information” in Section 1.34,
all Information generated under this Agreement, whether generated by one or both
of the Parties, shall be deemed the Confidential Information of all Parties. In
addition, the exceptions set forth in subsections (a) and (e) shall not apply to
Information generated during or resulting from activities under this Agreement
or the other Definitive Agreements, which Information shall be deemed
Confidential Information regardless of whether such Information satisfies the
criteria set forth in one or both subsections. For clarity, any Information
generated by a Party under this Agreement may be used by such Party for any
purpose that does not violate applicable law, but the disclosure of such
Information shall be governed by this Section 13.1.

13.2    Authorized Disclosure. Each Party may disclose Confidential Information
belonging to another Party to the extent such disclosure is reasonably necessary
in the following situations:

(a)    filing or prosecuting patent applications in accordance with
Section 10.2;

(b)    regulatory filings and other filings with Governmental Authorities
(including Regulatory Authorities), including filings with the SEC or FDA, with
respect to Symproic;

(c)    prosecuting or defending litigation, provided that, to the extent
reasonably possible, a suitable protective order is in place, documents are
filed under seal, or other reasonable measures are taken to maintain the
confidentiality of such Confidential Information;

(d)    complying with applicable laws and regulations, including regulations
promulgated by securities exchanges;

(e)    disclosure to its Affiliates, its and their employees, agents, and
independent contractors, BDSI Licensees (in the case of BDSI), and Shionogi
Licensees (in the case of Shionogi) on a need-to-know basis and solely in
connection with the performance of this Agreement or the other Definitive
Agreements or exercise of rights under this Agreement or the other Definitive
Agreements, provided that each disclosee must be bound by obligations of
confidentiality and non-use materially as protective as those set forth in this
Section 13.2 prior to any such disclosure; and

(f)    disclosure on a need-to-know basis to any bona fide potential or actual
investor, investment banker, acquirer, acquisition target, merger partner,
licensee, licensor, or other potential or actual financial or strategic partner;
provided that in connection with such disclosure, the disclosing Party shall use
reasonable efforts to inform each disclosee of the confidential nature of such
Confidential Information and cause each disclosee to treat such Confidential
Information as confidential.

Notwithstanding the foregoing, in the event a Party is required to make a
disclosure of the other Party’s Confidential Information pursuant to
Section 13.2(a), 13.2(b), 13.2(c) or 13.2(d), it will use reasonable efforts to
secure confidential treatment of such information. In any event, the Parties
agree to take all reasonable action to avoid disclosure of the other Party’s
Confidential Information hereunder.

 

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13.3    Publicity; Terms of Agreement.

(a)    The Parties agree that the material terms of this Agreement are the
Confidential Information of all Parties, subject to the authorized disclosure
provisions set forth in Section 13.2 and this Section 13.3. The Parties (and/or
their Affiliates, as applicable) have agreed to each make a public announcement
of the execution of this Agreement substantially in the forms of the press
release attached as EXHIBIT J-1 and EXHIBIT J-2 within [***] of the Effective
Date, but in no event later than as may be required by applicable law, rule or
regulation.

(b)    After release of such press release, if any Party desires to make a
public announcement concerning the material terms of this Agreement, such Party
shall give reasonable prior advance notice of the proposed text of such
announcement to the other Parties for their prior review and approval (except as
otherwise provided herein), such approval not to be unreasonably withheld,
except that in the case of a press release or governmental filing required by
law or the rules of any securities exchange to which a Party is subject, the
disclosing Party shall provide the other Parties with such advance notice as it
reasonably can and shall not be required to obtain approval therefor but shall
reasonably consider and incorporate the other Parties’ comments to the extent
reasonably practicable. A Party commenting on such a proposed press release
shall provide its comments, if any, within [***] after receiving the press
release for review. No Party shall be required to seek the permission of any
other Party to repeat any information regarding the terms of this Agreement that
have already been publicly disclosed by such Party, or by any other Party, in
accordance with this Section 13.3.

(c)    If a Party or one of its Affiliates, as applicable, is obligated to file
a copy of this Agreement with any Governmental Authority(ies) (e.g., the SEC),
such Party or its Affiliate, as applicable, shall be entitled to make such a
required filing, provided that it requests confidential treatment of at least
the commercial terms and sensitive technical terms of this Agreement to the
extent such confidential treatment is reasonably available to such Party or its
Affiliate. In the event of any such filing, each Party will provide the other
Party with a copy of the Agreement marked to show provisions for which such
Party or its Affiliate intends to seek confidential treatment and shall
reasonably consider and incorporate the other Party’s reasonable, good faith
comments thereon to the extent consistent with the legal requirements governing
redaction of information from material agreements that must be publicly filed.

Article 14

Term and Termination

14.1    Term. This Agreement shall become effective on the Effective Date and,
unless earlier terminated pursuant to this Article 14, shall remain in effect
until the later of (a) the expiration of the Branded Royalty Term and (b) the
expiration of the AG Royalty Term (the period from the Effective Date until the
later of clause (a) or (b), the “Term”). Upon expiration of the Term, all
licenses granted under Article 2 shall survive such expiration and become
fully-paid, royalty-free, perpetual, and irrevocable.

 

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14.2    Termination for Breach. Each Party shall have the right to terminate
this Agreement upon written notice to the other Party if such other Party (or
any of its Affiliates) materially breaches its obligations under this Agreement
and, after receiving written notice from the non-breaching Party identifying
such material breach in reasonable detail, fails to cure such material breach
within [***] from the date of such notice (or within [***] from the date of such
notice in the event such material breach is solely based upon failure to pay any
amounts due (and not subject to a bona fide dispute memorialized in writing)
hereunder).

14.3    Effects of Termination of the Agreement by Shionogi. Upon termination of
this Agreement by Shionogi pursuant to Section 14.2, the following shall apply
(in addition to any other rights and obligations under this Agreement with
respect to such termination):

(a)    Licenses. The licenses granted to BDSI in Article 2 (and any sublicenses
granted thereunder to Affiliates or Third Parties) shall terminate.

(b)    Remaining Inventories. Shionogi shall have the right, but not the
obligation, to purchase from BDSI any or all of the inventory of Symproic held
by BDSI or any Affiliate thereof as of the date of termination (that are not
committed to be supplied to any Third Party or BDSI Licensee, in the ordinary
course of business, as of the date of termination) at a price [***] of such
cost, provided, however, in the case of Symproic acquired by BDSI from Shionogi
under the Supply Agreement, Shionogi’s price to acquire such Symproic hereunder
shall be the purchase price paid therefor by BDSI thereunder (with no markup of
[***]). All reasonable, documented, direct costs incurred in transporting and
transferring such inventory shall be at Shionogi’s sole expense. BDSI shall
provide Shionogi with a detailed report describing all such inventory within
[***] of termination, and Shionogi shall notify BDSI within [***] after receipt
of such notice to what extent, and with respect to which inventory, Shionogi
elects to exercise such right.

(c)    BDSI Technology. BDSI hereby grants to Shionogi, effective only upon such
termination, an exclusive, worldwide, fully-paid, perpetual, irrevocable,
royalty-free license, with the right to grant multiple tiers of sublicenses and
transferable with this Agreement pursuant to Section 16.5, under the BDSI
Technology to research, develop, make, have made, use, import, export, offer for
sale, sell, and commercialize Symproic and Naldemedine in the Field and in the
Territory.

(d)    BDSI Marks. BDSI shall, if and as requested by Shionogi within [***] of
termination, transfer and assign, and hereby assigns, to Shionogi all right,
title and interest in and to the BDSI Marks (excluding any such BDSI Marks that
include, in whole or part, any corporate name or logo of BDSI or its Affiliate
or BDSI Licensee).

(e)    Symproic Domain Names. BDSI shall, if and as requested by Shionogi within
[***] of termination, transfer and assign, and hereby assigns, free and clear of
all liens, claims, and encumbrances, to Shionogi all right, title and interest
in and to the Symproic Domain Names.

(f)    Regulatory Materials and Assigned Symproic Data. BDSI shall, if and as
requested by Shionogi within [***] of termination, promptly (but in no event
later than [***] following such

 

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request) transfer and assign, and hereby assigns, free and clear of all liens,
claims, and encumbrances, to Shionogi all right, title, and interest in
Regulatory Materials and Regulatory Approvals for Symproic in the Territory that
are owned or controlled by BDSI, its Affiliates or BDSI Licensees, including but
not limited to the Assigned NDA and Regulatory Materials with respect thereto.

(g)    Transition Assistance. BDSI shall, if and as requested by Shionogi within
[***] of termination, at no cost to Shionogi, provide reasonable consultation
and assistance for the purpose of promptly transferring or transitioning to
Shionogi all BDSI Know-How not already in Shionogi’s possession and, at
Shionogi’s request, all then-existing commercial arrangements relating
specifically to Symproic in the Field in the Territory that BDSI is able, using
reasonable commercial efforts, to assign, transfer or transition to Shionogi or
Affiliate thereof designated by Shionogi to the extent reasonably necessary or
useful for Shionogi or any Affiliate thereof to continue any Development in
progress at such time of termination, manufacture, or Commercialize Symproic in
the Territory. The foregoing shall include, but not be limited to, BDSI using
Diligent Efforts to assign or transfer, upon request of Shionogi, any agreements
with Third Party suppliers, contractors, or vendors that relate to such
development, manufacture, or Commercialization of Symproic in the Territory. If
any such contract between BDSI or an Affiliate thereof and a Third Party is not
assignable or transferable to Shionogi or an Affiliate of Shionogi (whether by
such contract’s terms or because such contract does not relate specifically or
solely to Symproic) but is otherwise reasonably necessary or useful for Shionogi
or any Affiliate thereof to continue any Development in progress at such time of
termination, manufacture, or Commercialize Symproic in the Territory, then BDSI
shall reasonably cooperate with Shionogi to negotiate for the continuation of
such services and/or supply from the applicable entity.

14.4    Other Remedies. Termination or expiration of this Agreement for any
reason shall not release either Party from any liability or obligation that
already has accrued prior to such expiration or termination, nor affect the
survival of any provision hereof to the extent it is expressly stated to survive
such termination. Termination or expiration of this Agreement for any reason
shall not constitute a waiver or release of, or otherwise be deemed to prejudice
or adversely affect, any rights, remedies or claims, whether for damages or
otherwise, that a Party may have hereunder or that may arise out of or in
connection with such termination or expiration.

14.5    Rights in Bankruptcy. All rights and licenses granted under or pursuant
to this Agreement by Shionogi and BDSI are, and shall otherwise be deemed to be,
for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of right to
“intellectual property” as defined under Section 101 of the U.S. Bankruptcy
Code. The Parties agree that each Party, as licensee of certain rights under
this Agreement, shall retain and may fully exercise all of its rights and
elections under the U.S. Bankruptcy Code. The Parties further agree that, in the
event of the commencement a bankruptcy proceeding by or against a Party (such
Party, the “Bankrupt Party”) under the U.S. Bankruptcy Code, the other Party
shall be entitled to a complete duplicate of (or complete access to, as
appropriate) any intellectual property licensed to such other Party and all
embodiments of such intellectual property, which, if not already in such other
Party’s possession, shall be promptly delivered to it (a) upon any such
commencement of a bankruptcy proceeding upon such other Party’s written request
therefor, unless the Bankrupt Party elects to continue to perform all of its
obligations under this Agreement or (b) if not delivered under clause (a),
following the rejection of this Agreement by the Bankrupt Party upon written
request therefor by the other Party.

 

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14.6    Survival. Termination or expiration of this Agreement shall not affect
rights or obligations of the Parties under this Agreement that have accrued
prior to the date of termination or expiration of this Agreement or that are
explicitly indicated by their terms to survive termination or expiration.
Notwithstanding anything to the contrary, the following provisions shall survive
and apply after expiration or termination of this Agreement: Section 1,
Section 2.5(b), Section 2.8, Section 3.4, Section 3.5, Section 3.6, Section 3.7,
Section 3.8, Section 5.1(c), Section 5.2, Section 5.3, Section 6.2(b) (with
respect to the second sentence thereof), Section 10.1, Section 11.4, Article 12,
Article 13, Section 14.3, Section 14.4, Section 14.5, this Section 14.6, Article
15 and Article 16, and the following provisions shall survive expiration, but
not termination, of this Agreement: Sections 2.1, 2.2, 2.3, 2.4, 2.6, 5.1(b),
6.1, 6.2(a), 6.3, 10.3 (with respect to infringements occurring prior to
expiration), 10.4, 10.5 and 10.7. All provisions not surviving in accordance
with the foregoing shall terminate upon expiration or termination of this
Agreement and be of no further force and effect.

Article 15

Governing Law and Venue

15.1    Governing Law. Resolution of all disputes arising out of or related to
this Agreement or the validity, construction, interpretation, enforcement,
breach, performance, application or termination of this Agreement and any
remedies relating thereto, shall be governed by and construed under the
substantive laws of the State of New York, excluding any conflicts or choice of
law rule or principle that might otherwise refer construction or interpretation
of this Agreement to the substantive law of another jurisdiction.

15.2    Venue. Each Party (a) irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in New York County, New York, with
respect to actions or proceedings arising in whole or in part out of, related
to, based upon or in connection with this Agreement or the subject matter
hereof; (b) agrees that all claims in respect of such actions or proceedings may
be heard and determined only in any such court; and (c) agrees not to bring any
action or proceeding arising out of or relating to this Agreement in any other
court. Each Party waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety or other
security that might be required of the other Party with respect thereto.

Article 16

Miscellaneous

16.1    Entire Agreement; Amendment. This Agreement and the other Definitive
Agreements, along with all exhibits, appendices, or schedules to any of the
foregoing and all other agreements between the Parties and/or their Affiliates
executed in conjunction therewith as referenced therein, set forth the complete,
final and exclusive agreement and all the covenants, promises, agreements,
warranties, representations, conditions and understandings between the Parties
hereto with respect to the subject matter hereof and supersedes, as of the
Effective Date, all prior agreements and

 

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understandings between the Parties with respect to the subject matter hereof.
There are no covenants, promises, agreements, warranties, representations,
conditions or understandings, either oral or written, between the Parties other
than as are set forth herein and therein. No subsequent alteration, amendment,
change or addition to this Agreement shall be binding upon the Parties unless
reduced to writing and signed by an authorized officer of each Party.

16.2    Force Majeure. Each Party shall be excused from the performance of their
obligations under this Agreement to the extent that such performance is
prevented or delayed by force majeure (as defined below) and the nonperforming
Party promptly provides notice thereof to the other Party. Such excuse shall be
continued so long as the condition constituting force majeure continues and the
nonperforming Party takes reasonable efforts to remove the condition. For
purposes of this Agreement, force majeure shall mean any event or condition
beyond the reasonable control of a Party, including, but not limited to, an act
of God, war, civil commotion, terrorist act, labor strike or lock-out, epidemic,
failure or default of public utilities or common carriers, destruction of
production facilities or materials by fire, earthquake, storm or like
catastrophe, and failure of plant or machinery (provided that such failure could
not have been prevented by the exercise of skill, diligence, and prudence that
would be reasonably and ordinarily expected from a skilled and experienced
person engaged in the same type of undertaking under the same or similar
circumstances). For clarity, force majeure shall not include a failure to commit
sufficient resources, financial or otherwise, to the performance of obligations
under this Agreement or general market or economic conditions not accompanied by
circumstances described in the immediately preceding sentence. Notwithstanding
the foregoing, a Party shall not be excused from making payments owed hereunder
because of a force majeure affecting such Party.

16.3    Notices. Any notice required or permitted to be given under this
Agreement shall be in writing, shall specifically refer to this Agreement, and
shall be addressed to the appropriate Party at the address specified below or
such other address as may be specified by such Party in writing in accordance
with this Section 16.3, and shall be deemed to have been given for all purposes
(a) when received, if hand-delivered or sent by a reputable international
expedited delivery service, or (b) [***] after mailing, if mailed by first class
certified or registered mail, postage prepaid, return receipt requested.

If to Shionogi:

Shionogi Inc.

300 Campus Drive

Florham Park, NJ 07932

Attn: General Counsel

With a copy (which shall not serve as notice) to:

Wyrick Robbins Yates & Ponton LLP

4101 Lake Boone Trail, Suite 300

Raleigh, NC 27607

Attn: Donald R. Reynolds

 

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If to BDSI:

BioDelivery Sciences International, Inc.

4131 ParkLake Avenue, Suite 225

Raleigh, NC 27612

Attn: Jim Vollins

With a copy (which shall not serve as notice) to:

Goodwin Procter LLP

100 Northern Avenue

Boston, MA 02210

Attn: Robert Crawford

Email: rcrawford@goodwinlaw.com

16.4    No Strict Construction; Headings. This Agreement has been prepared
jointly and shall not be strictly construed against either Party. Ambiguities,
if any, in this Agreement shall not be construed against any Party, irrespective
of which Party may be deemed to have authored the ambiguous provision. The
headings of each Article and Section in this Agreement have been inserted for
convenience of reference only and are not intended to limit or expand on the
meaning of the language contained in the particular Article or Section.

16.5    Assignment. Neither Party may assign its rights or delegate its
obligations under this Agreement, in whole or in part, without the prior written
consent of the other Party (which consent shall not be unreasonably withheld,
conditioned or delayed). Notwithstanding the foregoing, each Party shall be
permitted to assign, without the consent of the other Party, all (but not a
portion) of its rights and obligations under this Agreement to a successor of
all or substantially all of the assets or business of such Party to which this
Agreement relates (i.e., Symproic), whether by way of merger, sale of stock,
sale of assets or other transaction (or series of transactions); provided,
however, that except in the case of a Change of Control of a Party, at least
[***] prior to the effective date of any such assignment, the Party proposing
such assignment shall provide to the other Party, on a confidential basis, with
written notice of its intent to make such assignment, including (i) the identity
of the proposed assignee, (ii) if BDSI is the proposed assignor, a description
of the proposed assignee’s commercial capabilities sufficient to establish such
proposed assignee’s ability to comply with the obligation to use Diligent
Efforts to Commercialize Symproic in the Field in the Territory during the AG
Royalty Term and the Branded Royalty Term, and (iii) the rationale for the
proposed assignment. The Party proposing such assignment shall consider
diligently, reasonably and in good faith all input received from the other Party
within such [***] period (which for the avoidance of doubt, shall not begin
until the Party proposing assignment has provided to the other Party all
information required by the immediately preceding sentence) with respect to such
proposed assignment. For the avoidance of doubt, subject to the preceding and
foregoing, BDSI shall have final say on, and Shionogi shall not attempt to
interfere with, any assignment of its rights and obligations and the terms
thereunder. Any permitted successor or assignee of rights or obligations
hereunder shall, in writing to the other Party, expressly assume performance of
such rights or obligations, including but not limited to, with respect to an
assignment by BDSI, those relating to Diligent Efforts and Sections 2.7(a) and
2.7(c). Notwithstanding the foregoing, in the event of an assignment hereof to
an Affiliate of a

 

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Party, such Party shall remain responsible for any failure to perform on the
part of such Affiliate. Any assignment or attempted assignment by a Party in
violation of the terms of this Section 16.5 shall be null, void and of no legal
effect.

16.6    Performance by Affiliates. Subject to the limitations of Section 2.3,
each Party may discharge any obligations and/or exercise any right hereunder
through any of its Affiliates and in such case, each Party hereby guarantees the
performance by its Affiliates of such Party’s corresponding obligations under
this Agreement, and shall cause its Affiliates to comply with the provisions of
this Agreement in connection with such performance. Any breach by a Party’s
Affiliate of any such obligations under this Agreement shall be deemed a breach
by such Party, and the other Party may proceed directly against such Party
without any obligation to first proceed against such Party’s Affiliate.

16.7    Further Actions. Each Party agrees to execute, acknowledge and deliver
such further instruments, and to do all such other reasonable acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.

16.8    Severability. If any one or more of the provisions of this Agreement is
held to be invalid or unenforceable by an arbitrator or by any court of
competent jurisdiction from which no appeal can be or is taken, the provision
shall be considered severed from this Agreement and shall not serve to
invalidate any remaining provisions hereof. The Parties shall make a good faith
effort to replace any invalid or unenforceable provision with a valid and
enforceable one such that the objectives contemplated by the Parties when
entering this Agreement may be realized.

16.9    No Waiver. Any delay in enforcing a Party’s rights under this Agreement
or any waiver as to a particular default or other matter shall not constitute a
waiver of such Party’s rights to the future enforcement of its rights under this
Agreement, except with respect to an express written and signed waiver relating
to a particular matter for a particular period of time.

16.10    Independent Contractors. Each Party shall act solely as an independent
contractor, and nothing in this Agreement shall be construed to give either
Party the power or authority to act for, bind, or commit any other Party in any
way. Nothing herein shall be construed to create the relationship of partners,
principal and agent, or joint-venture partners between the Parties.

16.11    Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Scanned, pdf and
facsimile signatures will be as binding as original signatures.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have executed this Exclusive License Agreement
in duplicate originals by their duly authorized officers as of the
Effective Date.

 

SHIONOGI INC.     BIODELIVERY SCIENCES INTERNATIONAL, INC. BY:  

 

    BY:  

         

NAME:  

 

    NAME:  

 

TITLE:  

 

    TITLE:  

 

 

[Signature Page to Exclusive License Agreement]

--------------------------------------------------------------------------------

EXHIBIT A

FORMS OF ASSIGNED NDA LETTERS

[***]

 

Exhibit A

--------------------------------------------------------------------------------

EXHIBIT B

CURRENT PHASE 4 STUDIES

The post-approval, observational study required by FDA as a condition to
approval of the Assigned NDA comparing major adverse cardiovascular events
(MACE) between patients with chronic non-cancer pain taking Symproic and those
receiving other treatments for indications in the Field.

 

Exhibit B

--------------------------------------------------------------------------------

EXHIBIT C

NALDEMEDINE STRUCTURE

[***]

 

Exhibit C

--------------------------------------------------------------------------------

EXHIBIT D

[***]

 

Exhibit D

--------------------------------------------------------------------------------

EXHIBIT E

SHIONOGI PATENTS

US RE46,365

US RE46,375

US 9,108,975

[***]

 

Exhibit E

--------------------------------------------------------------------------------

EXHIBIT F

SYMPROIC DOMAIN NAMES

[***]

 

Exhibit F - 1

--------------------------------------------------------------------------------

EXHIBIT G

SYMPROIC MARKS

 

Trademark

 

Country

  Status   Serial No.   Registration No.

SYMPROIC

  United States   Registered   79168243   4887392 LOGO
[g695197g0410061310227.jpg]   United States   Registered   87003968   5169678

TABLET AND TRADE DRESS

 

LOGO [g695197g0410061310367.jpg]

 

Exhibit G

--------------------------------------------------------------------------------

EXHIBIT H

TRANSFERRED SAMPLE INVENTORY

[***]

 

Exhibit H

--------------------------------------------------------------------------------

EXHIBIT I

FORM OF DOMAIN NAME ASSIGNMENT

[***]

 

Exhibit I

--------------------------------------------------------------------------------

EXHIBIT J-1

BDSI PRESS RELEASE

[To be inserted once agreed upon.]

 

Exhibit J-1

--------------------------------------------------------------------------------

EXHIBIT J-2

SHIONOGI PRESS RELEASE

[To be inserted once agreed upon.]

 

Exhibit J-2