Document:

<PAGE>

                                                                    EXHIBIT 10.1

Confidential treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as **. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

                                                                 EXECUTION COPY

                                    AGREEMENT

                                 by and between

                               ADOLOR CORPORATION

                                       and

                             TORAY INDUSTRIES, INC.

                                      dated

                                  March 5, 2002

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                        Page
<S>                                                                                     <C>
ARTICLE I   DEFINITIONS................................................................   1
   1.1.     Adolor Patent Rights.......................................................   1
   1.2.     Affiliate..................................................................   1
   1.3.     Agreement Term.............................................................   2
   1.4.     Business Day...............................................................   2
   1.5.     Compound...................................................................   2
   1.6.     FDA........................................................................   2
   1.7.     Field......................................................................   2
   1.8.     First Commercial Sale......................................................   2
   1.9.     GAAP.......................................................................   2
   1.10.    Japanese Fiscal Year.......................................................   2
   1.11.    NDA........................................................................   2
   1.12.    Net Sales..................................................................   3
   1.13.    Product....................................................................   3
   1.14.    Proprietary Information....................................................   3
   1.15.    Royalty Term...............................................................   3
   1.16.    Semi-Annual Period.........................................................   4
   1.17.    Territory..................................................................   4
   1.18.    Toray Patent Rights........................................................   4
   1.19.    USA........................................................................   4

ARTICLE II  COVENANT NOT TO SUE........................................................   4
   2.1.     Covenant Not To Sue........................................................   4

ARTICLE III CONFIDENTIALITY AND PUBLICITY..............................................   5
   3.1.     Non-Disclosure and Non-Use Obligations.....................................   5
   3.2.     Permitted Disclosure of Proprietary Information............................   5
   3.3.     Use of Names...............................................................   6

ARTICLE IV  PAYMENTS AND REPORTS.......................................................   6
   4.1.     Initial Payment............................................................   6
</TABLE>

Confidential                         Page i                        March 5, 2002

<PAGE>

<TABLE>
<S>                                                                                       <C>
   4.2.     Milestone Payments.........................................................    6
   4.3.     Royalties..................................................................    6
   4.4.     Records; Reports; Payment of Royalty.......................................    6
   4.5.     Method for Payment.........................................................    7
   4.6.     Late Payments..............................................................    7
   4.7.     Audits.....................................................................    7
   4.8.     Taxes......................................................................    8
   4.9.     Status Report..............................................................    8

ARTICLE V   TERM AND TERMINATION.......................................................    8
   5.1.     Term and Expiration........................................................    8
   5.2.     Termination, for Cause.....................................................    9
   5.3.     Effect of Expiration or Termination........................................    9
   5.4.     The Payment upon Termination...............................................   10

ARTICLE VI  MISCELLANEOUS..............................................................   10
   6.1.     Force Majeure..............................................................   10
   6.2.     Assignment.................................................................   10
   6.3.     Severability...............................................................   10
   6.4.     Notices....................................................................   11
   6.5.     Applicable Law.............................................................   11
   6.6.     Dispute Resolution.........................................................   11
   6.7.     Entire Agreement...........................................................   12
   6.8.     Independent Contractors....................................................   13
   6.9.     Interpretation; Negotiation................................................   13
   6.10.    Waiver.....................................................................   13
   6.11.    Headings...................................................................   13
   6.12.    Counterparts...............................................................   13
</TABLE>

Confidential                         Page ii                       March 5, 2002

<PAGE>

                                    AGREEMENT

     THIS AGREEMENT ("Agreement"), effective as of March 5, 2002 ("Effective
Date"), is made by and between Adolor Corporation, a corporation organized and
existing under the laws of the State of Delaware, United States, and having its
principal office at 620 Pennsylvania Drive, Exton, PA 19341 ("Adolor"), and
                                                              ------
Toray Industries, Inc., a corporation organized and existing under the laws of
Japan and having its principal office at 2-1, Nihonbashi-Muromachi 2-chome,
Chuo-ku, Tokyo 103-8666, Japan ("Toray") (each, a "Party," and collectively, the
                                 -----
"Parties").

                              W I T N E S S E T H:

     WHEREAS, Adolor is the owner of, or has certain rights to, the Adolor
Patent Rights as defined herein; and Toray is the owner of, or has certain
rights to, the Toray Patents as defined herein.

     WHEREAS, the United States patents included in the Adolor Patent Rights and
the Toray Patents Rights are presumed valid in the United States.

     WHEREAS, Toray and Adolor desire to enter into a covenant not to sue upon
the terms and conditions set forth herein.

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

                                   ARTICLE I

                                  DEFINITIONS

     Unless specifically set forth to the contrary herein, the following terms,
where used in the singular or plural, shall have the respective meanings set
forth below:

     1.1. "Adolor Patent Rights" shall mean United States Patent **, all
           --------------------
          reissues and reexaminations thereof, and all foreign equivalents
          thereof listed in Attachment 1 hereto, registrations, extensions, and
          any supplemental protection certificates and the like based thereon.
          Adolor represents and warrants that, Attachment 1 hereto is complete
          and accurate as of the date hereof.

     1.2. "Affiliate" shall mean any corporation or other business entity, in
           ---------
          whatever country organized and/or existing: (a) of which fifty percent
          (50%) or more of the securities or other ownership interests
          representing the equity, the voting stock or general partnership
          interest are owned, or otherwise controlled or held, directly or
          indirectly, by Toray or Adolor, as the case may be; (b) which,
          directly or

**=Certain information on this page has been omitted and filed separately with
   the Commission. Confidential treatment has been requested with respect to the
   omitted portions.

<PAGE>

           indirectly, owns, or otherwise controls or holds fifty percent (50%)
           or more of the securities or other ownership interests representing
           the equity, voting stock or general partnership interest of Toray or
           Adolor, as the case may be; or (c) of which fifty percent (50%) or
           more of the securities or other ownership interests representing the
           equity, voting stock or general partnership interest thereof is
           owned, or otherwise controlled or held by an entity which, directly
           or indirectly, also owns or otherwise controls or holds fifty percent
           (50%) or more of the securities or other ownership interests
           representing the equity, voting stock or general partnership interest
           in Adolor or Toray, as the case may be.

     1.3.  "Agreement Term" shall mean the period from the Effective Date
            --------------
           through the expiration of the last-to-expire of the patents within
           the Adolor Patent Rights.

     1.4.  "Business Day" shall mean any day that the New York Stock Exchange is
            ------------
           open and which is not a Saturday or a Sunday.

     1.5.  "Compound" shall mean any drug substance, including **, which
            --------
           usage is covered by the claims of United States Patent ** and
           any claims of equivalent scope contained in any foreign equivalent
           thereof included in the Adolor Patent Rights.

     1.6.  "FDA" shall mean the United States Food and Drug Administration and
            ---
           any successor agency having substantially the same functions.

     1.7.  "Field" shall mean the treatment of **.
            -----

     1.8.  "First Commercial Sale" shall mean the first transfer for value of
            ---------------------
           the Product or the Compound in the Field by Toray in the United
           States to another party (including any Affiliate of Toray) for end
           use or consumption.

     1.9.  "GAAP" shall mean generally accepted accounting principles in the
            ----
           United States, consistently applied.

     1.10. "Japanese Fiscal Year" shall mean the period beginning on April 1 and
            --------------------
           ending on March 31.

     1.11. "NDA" shall mean any new drug application regarding the Product filed
            ---
           with the FDA, including a reactivation, refiling, resubmission and/or
           amendment of any new drug application previously filed with the FDA
           regarding the Product.

     1.12. "Net Sales" shall mean the gross sales of any Product and/or any
            ---------
           Compound invoiced in the Field in the United States for commercial
           uses by Toray or its Affiliates to unrelated third parties (herein
           after "Customers") calculated at fair market value, less deductions,
           in accordance with GAAP, for: (a) statutory or

**=Certain information on this page has been omitted and filed separately
   with the Commission. Confidential treatment has been requested with respect
   to the omitted portions.

Confidential                         Page 2                        March 5, 2002

<PAGE>

           contractual liability rebates to any governmental entity or Customer;
           (b) rebates paid to any state or governmental entity in the United
           States of America pursuant to medicaid or medicare rebate legislation
           and any other state or governmental rebate program; (c) cash
           discounts for prompt payment by Customers generally available at the
           time of sale; (d) adjustments, allowances, or credits to Customers
           for Products returned for any reason to Toray; and (e) chargebacks,
           floor stock price adjustments, or other trade discounts whether or
           not paid directly to the Customer.

     1.13. "Product" shall mean any finished pharmaceutical formulations
            -------
           containing the Compound in any dosage form.

     1.14. "Proprietary Information" shall mean any and all information or data,
            -----------------------
           including the terms of this Agreement, which is provided by one Party
           to the other Party in connection with this Agreement, whether
           communicated in writing, marked "Confidential," or communicated
           orally or by other means, and identified as confidential, then is
           summarized in reasonable detail in a writing marked "Confidential,"
           but not including information which:

           (a)  is known to the receiving Party at the time of its initial
                disclosure hereunder, as documented by the receiving Party's
                records;

           (b)  is in the public domain or knowledge, or comes into the public
                domain without breach of any duty hereunder by the receiving
                Party;

           (c)  the disclosing Party permits, in writing, the receiving Party to
                disclose; or

           (d)  is independently developed by or for the receiving Party without
                benefit of any Proprietary Information received from the other
                Party, as documented by the receiving Party's records.

     1.15. "Royalty Term" shall mean the period from the First Commercial Sale
            ------------
           of the Product or the Compound in the Field in the United States,
           continuing until the earlier of either the expiration of the
           last-to-expire of the patents within the Adolor Patent Rights in the
           United States or the termination of this Agreement.

     1.16. "Semi-Annual Period" shall mean the respective period of six
            ------------------
           consecutive calendar months ending on September 30 or March 31 of any
           consecutive twelve-month period, beginning on April 1, comprising a
           calendar year, or it shall mean the part of such six-month period at
           the beginning or end of the Royalty Term at issue that has been
           shortened due to the timing of the start or end of such Royalty Term.
           Notwithstanding the foregoing, in the case that this Agreement is
           terminated in the middle of such six-month period due to any breach
           by either

Confidential                         Page 3                        March 5, 2002

<PAGE>

               Party in accordance with Section 5.2, royalties shall be
               determined following Section 5.4.

     1.17. "Territory" shall mean all countries of the world.
            ---------

     1.18. "Toray Patent Rights" shall mean United States Patent **, all
            -------------------
           reissues and reexaminations thereof, and all foreign counterparts
           thereof, are included in patents listed in Attachment 2 hereto,
           registrations, extensions, and any supplemental protection
           certificates and the like based thereon. Toray represents and
           warrants that Attachment 2 hereto is complete and accurate as of the
           date hereof.

     1.19. "USA" shall mean the United States of America.
            ---
                                   ARTICLE II

                               COVENANT NOT TO SUE

     2.1.  Covenant Not To Sue. The Parties, on behalf of themselves and their
           -------------------
           respective Affiliates (including, but not limited to, their licensees
           or sublicensees under the Parties' respective Patent Rights) agree
           not to take, directly or indirectly, any steps or actions to
           challenge the validity of, revoke or oppose any patent included in
           the Adolor Patent Rights or the Toray Patent Rights, as the case may
           be, or to assist, procure or incite any person to do so in the
           Territory for the duration of the Agreement Term, unless earlier
           terminated. In consideration of Toray's payment referred to in
           Article IV, Adolor, on behalf of itself and its Affiliates
           (including, but not limited to, its licensees, sub-licensees or
           assigns under the Adolor Patent Rights) for the duration of the
           Agreement Term, unless earlier terminated in accordance with Article
           V, waives any claim anywhere in the Territory against Toray, on
           behalf of itself and its Affiliates (including, but not limited to,
           its licensees or sub-licensees under the Toray Patent Rights) prior
           to or after the Effective Date in respect of any Product
           manufactured, supplied, sold or offered for sale by or on behalf of
           Toray or Toray's Affiliates (including, but not limited to, their
           licensees or sub-licensees under the Toray Patent Rights) for damages
           or any other remedy for infringement of the Adolor Patent Rights in
           the Territory. In addition, Adolor, on behalf of itself and its
           Affiliates (including, but not limited to, its licensees,
           sub-licensees or assigns under the Adolor Patents Rights) agrees not
           to develop, sell or manufacture in the Territory any product in the
           Field using Toray Patent Rights for as long as this Agreement is in
           effect.

**=Certain information on this page has been omitted and filed separately
   with the Commission. Confidential treatment has been requested with respect
   to the omitted portions.

Confidential                         Page 4                        March 5, 2002

<PAGE>

                                   ARTICLE III

                          CONFIDENTIALITY AND PUBLICITY

     3.1.  Non-Disclosure and Non-Use Obligations. All Proprietary Information,
           --------------------------------------
           including but not limited to royalty reports and other reports
           required hereunder shall be maintained in confidence and shall not be
           disclosed to any independent third party or used for any purpose
           except as expressly permitted herein without the prior written
           consent of the Party that disclosed the Proprietary Information to
           the other Party or to which the information is otherwise Proprietary
           Information.

     3.2.  Permitted Disclosure of Proprietary Information. Notwithstanding the
           -----------------------------------------------
           provisions of Section 3.1, either Party may disclose the other
           Party's Proprietary Information:

           (a)  to obtain authorization to market, offer for sale or sell the
                Product, but such disclosure may be only to the extent
                reasonably necessary to obtain such authorizations;

           (b)  related to a Product to which it has rights, to a third party
                conducting a due diligence investigation of the disclosing
                Party's business in connection with a possible business
                combination, financing transaction, or the like, solely for the
                purpose of evaluating any such transaction, on the condition
                that any such third party agrees in writing to be bound to Toray
                or Adolor, as the case may be, in such a way that Toray or
                Adolor can fulfill its obligations hereunder; and/or

           (c)  if required to be disclosed by administrative or judicial
                authority of competent jurisdiction, provided that advance
                notice is promptly delivered to the original disclosing Party,
                or the other Party in the case of jointly-held Proprietary
                Information, in order to provide an opportunity for the original
                disclosing Party or the other Party to challenge or limit the
                disclosure obligations, with the reasonable cooperation of the
                Party immediately subject to such law or court order; provided,
                however, without limiting any of the foregoing, it is understood
                that either Party may make disclosure of this Agreement and the
                terms hereof in any filings required by the Securities and
                Exchange Commission ("SEC"), may file this Agreement,
                appropriately redacted, as an exhibit to any filing with the
                SEC, and may distribute any such filing in the ordinary course
                of its business.

     3.3.  Use of Names. Neither Party shall use the name of the other Party in
           ------------
           any publicity or advertising campaign without the prior written
           approval of the other

Confidential                         Page 5                        March 5, 2002

<PAGE>

          Party. Upon execution of this Agreement, either Party may issue a
          written press release in a form mutually agreed upon by the Parties in
          writing, in advance. Any consent required hereunder shall not be
          untimely or unreasonably withheld by either Party.

                                   ARTICLE IV

                              PAYMENTS AND REPORTS

     4.1. Initial Payment. Toray shall pay Adolor, within thirty (30) days after
          ---------------
          the Effective Date and Toray's receipt of an invoice from Adolor
          referred to in Article 4.5, a non-refundable initial payment of Two
          Hundred Thousand Dollars ($200,000.00).

     4.2. Milestone Payments. Toray shall pay Adolor a milestone payment of
          ------------------
          ** Dollars ($**) within thirty (30) days after the ** for any Product
          and Toray's receipt of an invoice from Adolor referred to in Article
          4.5. Toray shall notify Adolor of such ** in writing within ten (10)
          Business Days after the receipt of **.

     4.3. Royalties. During the Royalty Term, Toray shall pay to Adolor a
          ---------
          royalty of **% of annual Net Sales for the first ** Dollars ($**)
          in annual Net Sales and a royalty of **% of annual Net Sales in excess
          of ** Dollars ($**).

     4.4. Records; Reports; Payment of Royalty. Toray shall keep complete and
          ------------------------------------
          accurate records in sufficient detail to enable the royalties due
          hereunder to be calculated. During the Royalty Term, Toray shall
          furnish to Adolor a reasonably-detailed, semiannually written reports
          showing the Net Sales in the Territory of all Products and Compounds
          sold by Toray during the reporting period and the royalties due on
          account of such sales. If all of such information was not reasonably
          available to Toray by the reporting date, estimated gross sales will
          be utilized for the purpose of calculating the royalties due for that
          period. Any overpayments or underpayments based on actual gross sales
          will be reconciled during the next Semi-Annual Period. These reports
          shall be due on the 45/th/ day following the close of each Semi-Annual
          Period and the Royalties shall be paid within thirty (30) days after
          such reports are received by Adolor and Toray's receipt of an invoice
          from Adolor referred to in Article 4.5.

     4.5. Method for Payment. All payments shall be made in U.S. dollars by wire
          ------------------
          transfer to the account identified below upon Toray's receipt of an
          invoice which specifies the amount of the payment:

**=Certain information on this page has been omitted and filed separately
   with the Commission. Confidential treatment has been requested with respect
   to the omitted portions.

Confidential                         Page 6                        March 5, 2002

<PAGE>

                               Bank Name and Address:        **

                               ABA Route Number:             **

                               For Account Number:           **

                               Remittance Name:              **

                               International Wires:          **

     4.6. Late Payments. Any payments due hereunder to Adolor shall bear
          --------------
          interest from and after the date when such payment is due up to and
          including the date when such payment is paid by Toray at a rate,
          compounded daily, equal to the prime rate plus ** per annum (but in no
          event in excess of the maximum rate then allowed by law), using the
          prime interest rate as quoted in The Wall Street Journal (or, if The
          Wall Street Journal ceases to publish such information, Reuters
          Information Service, or, if neither publishes such information,
          another similar service or source reasonably acceptable to Toray and
          Adolor) on the date such payment is due, or if such date is not a
          Business Day, the first Business Day following such date.

     4.7. Audits. Upon the written request of Adolor and not more than twice in
          -------
          any 12-month period, Toray shall permit an independent certified
          public accounting firm selected and paid by Adolor, and reasonably
          acceptable to Toray, to have access, during normal business hours,
          upon twenty-one (21) days notice to Toray, to such of the records of
          Toray as may be reasonably necessary to verify the accuracy of the
          royalties due hereunder for any Japanese Fiscal Year ending not more
          than 36 months prior to the date of such request. The accounting firm
          shall disclose to Adolor only whether the royalty reports are correct
          or incorrect and the specific details concerning any discrepancies.

          If such accounting firm concludes that additional royalties were owed
          during such period, Toray shall pay the additional royalties to Adolor
          within thirty (30) Business Days following the date Adolor delivers to
          Toray such accounting firm's written report so concluding and Toray's
          receipt of an invoice from Adolor referred to in Article 4.5, and if
          such deficiency was ** percent (**%) or more of the amount actually
          paid, Toray shall pay the reasonable costs and expenses of the

**=Certain information on this page has been omitted and filed separately
   with the Commission. Confidential treatment has been requested with respect
   to the omitted portions.

Confidential                         Page 7                        March 5, 2002

<PAGE>

          accounting firm; provided, however, that, in the event that Toray
          shall not be in agreement with the conclusion of such report, such
          matter shall be resolved pursuant to the provisions of Section 6.6. In
          the event such accounting firm concludes that Toray overpaid the
          amounts actually due Adolor for such period, Toray shall have a credit
          against future royalties payable to Adolor in the amount of such
          overpayment. Subject to the determination of fraud and/or other
          criminal wrongdoing, upon the expiration of thirty-six (36) months
          following the end of any Japanese Fiscal Year during which royalties
          were due from Toray to Adolor hereunder, the calculation of royalties
          payable by Toray with respect to such year shall be binding and
          conclusive upon Adolor and Toray, and Toray shall be released from any
          liability or accountability with respect to additional royalties for
          such year.

     4.8. Taxes. All payments due from Toray under this Article IV are gross and
          -----
          inclusive of any and all income, transfer, remittance or patent taxes,
          fees or assessments of whatever kind or nature (including any interest
          or penalties assessed thereon) now or hereafter required by any
          governmental authority to be paid or withheld for or on account of any
          such payments ("Taxes"). Toray shall provide Adolor with a receipt
          certificate of tax payments made by Toray pursuant to this Agreement.

     4.9. Status Report. Toray will provide Adolor with a status report at the
          -------------
          end of each Japanese Fiscal Year, which summarizes the progress of
          Compounds or Products in development in United States. The status
          report will include a description of the progress of clinical studies
          and a projected date for an NDA submission.

                                    ARTICLE V

                              TERM AND TERMINATION

     5.1. Term and Expiration. This Agreement shall commence as of the Effective
          -------------------
          Date and continue through the Agreement Term, unless terminated
          earlier pursuant to Section 5.2 below.

     5.2. Termination, for Cause. Either Party may terminate this Agreement by
          ----------------------
          thirty (30) days prior written notice to the other Party at any time
          during the Agreement Term, as follows:

          (a)  if the other Party is in material breach of any material
               obligation hereunder and has not cured such breach within thirty
               (30) days after notice from the non-breaching Party, requesting
               cure of the breach and threatening to terminate this Agreement if
               such breach is not cured; provided, however,

Confidential                         Page 8                        March 5, 2002

<PAGE>

               that if the breach is not capable of being cured within thirty
               (30) days of such written notice, the Agreement may not be
               terminated so long as the breaching Party commences and is taking
               commercially reasonable actions to the satisfaction of the
               non-breaching Party to cure such breach as promptly as
               practicable; or

          (b)  upon the filing or institution of bankruptcy, reorganization,
               liquidation or receivership proceedings, or upon an assignment of
               a substantial portion of the assets for the benefit of creditors,
               in either case, by the other Party; provided, however, in the
               case of any involuntary bankruptcy, reorganization, liquidation,
               receivership or assignment proceeding against the other Party,
               such right to terminate by the first Party shall only become
               effective if the Party against which the action was taken
               consents to the involuntary proceeding or such proceeding is not
               dismissed within 60 days after the filing thereof. If either
               Party is a debtor in a bankruptcy proceeding, whether voluntary
               or involuntary, all rights and licenses granted pursuant to this
               Agreement are, and shall otherwise be deemed to be, for purposes
               of Section 365(n) of 11 U.S.C.(S)101 et seq. (the "Bankruptcy
               Code"), licenses of rights to "intellectual property" as defined
               under Section 101(35A) of the Bankruptcy Code; provided that, the
               non-breaching Party shall be entitled to all applicable rights
               under Section 365 of the Bankruptcy Code, including but not
               limited to, the right to receive a complete duplicate of (or
               complete access to, as appropriate) any relevant intellectual
               property and all embodiments of such intellectual property, upon
               written request therefor by the non-breaching Party.

     5.3. Effect of Expiration or Termination. The provisions of Article III
          -----------------------------------
          shall survive the expiration or termination of this Agreement. Any
          expiration or termination of this Agreement shall be without prejudice
          to the rights of any Party against the other accrued or accruing under
          this Agreement prior to termination.

     5.4. The Payment upon Termination. In the case that this Agreement is
          ----------------------------
          terminated in accordance with Section 5.2(a) hereinabove and,

          i)   such termination is caused by the breach of Adolor during the
               Semi-Annual Period, Toray shall be exempt from the royalty
               obligation set forth in Section 4.3 during the Semi-Annual Period
               when such Adolor breach occurred;

          ii)  such termination is caused by the breach of Toray during the
               Semi-Annual Period, Toray shall make the royalty payment set
               forth in Section 4.3 during the Semi-Annual Period when such
               Toray breach occurred.

Confidential                        Page 9                         March 5, 2002

<PAGE>

                                   ARTICLE VI

                                  MISCELLANEOUS

     6.1. Force Majeure. Except for payment of monetary amounts due hereunder,
          -------------
          neither Party shall be held liable or responsible to the other Party,
          nor be deemed to have defaulted under, or materially breached, this
          Agreement for failure or delay in fulfilling or performing any term of
          this Agreement, but shall be excused to the extent and for the
          duration of time when such failure or delay is caused by or results
          from causes beyond the reasonable control of the affected Party,
          provided, however, that the duration is not more than three (3)
          months, and the affected Party shall have used its reasonable best
          efforts to have avoided, and be using its reasonable best efforts to
          remove, such cause(s), and such Party shall perform its obligation(s)
          under the terms of this Agreement with the utmost dispatch when the
          cause is removed.

     6.2. Assignment. This Agreement may not be assigned or otherwise
          ----------
          transferred; provided, however, that Adolor may assign this Agreement
          to an Affiliate or to any successor in connection with the transfer or
          sale of all or substantially all of its business assets related to the
          Adolor Patent Rights or its total business, or in the event of its
          merger, consolidation, or change of control, so long as such assignee
          or transferee agrees in writing to abide by the terms and conditions
          hereof.

     6.3. Severability. In the event that any provision contained in this
          ------------
          Agreement is held invalid, illegal or unenforceable in any respect,
          the validity, legality and enforceability of the remaining provisions
          contained herein shall not, in any way, be affected or impaired
          thereby, and, if the absence of the invalidated provision(s) adversely
          affect(s) the substantive rights of the Parties, the Parties shall
          replace the invalid, illegal or unenforceable provision(s) with valid,
          legal and enforceable provision(s) which, insofar as practical,
          implement the purposes of this Agreement.

     6.4. Notices. All notices or other communications which are required or
          -------
          permitted hereunder shall be in writing and sufficient, if delivered
          personally, if sent by nationally-recognized overnight courier or sent
          by registered or certified mail, postage prepaid, return receipt
          requested, addressed as follows:
          if to Adolor:

Confidential                        Page 10                        March 5, 2002

<PAGE>

                           Adolor Corporation
                           620 Pennsylvania Drive
                           Exton, PA 19341
                           Attention:  President & CEO

                  with copies to:

                           Dechert
                           4000 Bell Atlantic Tower
                           1717 Arch Street
                           Philadelphia, PA 19103
                           Attention:  James A. Lebovitz, Esq.

                  if to Toray:

                           Toray Industries, Inc.
                           2-1, Nihonbashi-Muromachi 2-chome
                           Chuo-ku, Tokyo 103-8666
                           Japan
                           Attention:  Masanobu Naruto, Ph.D.
                           General Manager, Pharmaceuticals Planning Department

                  or to such other address as the Party to whom notice is to be
                  given may have furnished to the other Party, in writing, in
                  accordance herewith. Any such communication shall be deemed to
                  have been given when delivered, if personally delivered or
                  sent by courier; or on the fifth (5/th/) Business Day
                  following the date of mailing, if sent by registered or
                  certified mail.

          6.5.    Applicable Law. This Agreement shall be governed by and
                  --------------
                  construed in accordance with the laws of the United States of
                  America and the State of New York, without reference to any
                  conflict of laws principles.

          6.6.    Dispute Resolution. This Section governs any dispute,
                  ------------------
                  disagreement, claim or controversy between the Parties arising
                  from or related to this Agreement (a "Disputed Matter"). All
                  Disputed Matters shall be submitted to the following dispute
                  resolution process:

                  a)   Internal Escalation.   First, the Disputed Matter
                       -------------------
                       shall be referred jointly to senior executives of each of
                       the Parties. If such executives do not agree upon a
                       resolution within ten (10) Business

Confidential                        Page 11                        March 5, 2002

<PAGE>

                           Days after referral of the matter to them, the
                           complaining Party shall proceed to the next stage of
                           this dispute resolution procedure.

                  b)       Mediation. The complaining Party shall, upon written
                           ---------
                           notice and within ten (10) Business Days after the
                           conclusion of the internal escalation procedure,
                           elect to have the Disputed Matter referred to
                           non-binding mediation before a single impartial
                           mediator to be jointly agreed upon by the Parties.
                           The mediation meeting shall be attended by executives
                           of both parties possessing authority to resolve the
                           Dispute Matter, and shall be conducted no more than
                           twenty (20) Business Days after a Party serves a
                           written notice of an intention to mediate. The
                           mediation shall be held in accordance with
                           International Chamber of Commerce ADR Rules in USA if
                           initiated by Toray and shall be conducted in Japan if
                           initiated by Adolor.  The Parties shall share equally
                           all costs of such mediation.

                  c)       Arbitration. In the event mediation proves
                           -----------
                           unsuccessful, the Disputed Matter shall be finally
                           submitted to the International Chamber of Commerce
                           and settled under the rules of arbitration of the
                           International Chamber of Commerce. Such arbitration
                           proceedings shall be conducted in USA using the
                           Commercial Law of the United States if initiated by
                           Toray and shall be conducted in Japan using the
                           Commercial Law of Japan if initiated by Adolor. The
                           award and the final decision of the arbitrator(s)
                           shall be conclusive and binding upon all parties
                           hereto and judgement upon the award may be entered
                           into any court of general jurisdiction. Each Party
                           shall be responsible for its own expenses related to
                           such procedure, and shall share equally in the costs
                           and expenses related to the site, the arbitrator(s),
                           and filing the final resolution(s), unless the
                           arbitrator(s) shall award otherwise.

                  This Agreement to resolve a Disputed Matter shall continue in
                  full force and effect subsequent to and notwithstanding the
                  expiration or termination of this Agreement.

          6.7.    Entire Agreement. This Agreement contains the entire
                  ----------------
                  understanding of the Parties with respect to the subject
                  matter hereof. All express or implied agreements and
                  understandings, either oral or written, heretofore made, are
                  expressly merged in and made a part of this Agreement. This
                  Agreement may be amended, or any term hereof modified, only by
                  a written instrument duly executed by both Parties hereto.

Confidential                        Page 12                        March 5, 2002

<PAGE>

          6.8.    Independent Contractors. It is expressly agreed that the
                  -----------------------
                  Parties shall be independent contractors and that the
                  relationship between the Parties shall not constitute a
                  partnership, joint venture or agency. Neither Party shall have
                  the authority to make any statements, representations or
                  commitments of any kind, or to take any action, which shall be
                  binding on the other Party, without the prior consent of such
                  other Party.

          6.9.    Interpretation; Negotiation. Each Party acknowledges that it
                  ---------------------------
                  has participated in the negotiation of this Agreement and no
                  provision of this Agreement shall be construed against or
                  interpreted to the disadvantage of either Party hereto by
                  any court or other governmental or judicial authority by
                  reason of such Party having or being deemed to have
                  structured, dictated or drafted such provision. Each party
                  at all times has had access to an attorney in the negotiation
                  of the terms of and in the preparation and execution of this
                  Agreement, and each Party has had the opportunity to review
                  and analyze this Agreement, for a sufficient period of time
                  prior to the execution and delivery thereof. All of the terms
                  of this Agreement were negotiated at arm's-length. This
                  Agreement was prepared and executed without fraud, duress,
                  undue influence or coercion of any kind exerted by either
                  Party upon the other. The execution and delivery of this
                  Agreement is the free and voluntary act of each of Adolor and
                  Toray.

          6.10.   Waiver. The waiver by a Party hereto of any right hereunder or
                  ------
                  the failure to perform or of a breach by the other Party
                  shall not be deemed a waiver of any other right hereunder or
                  of any other breach or failure by said other Party, whether of
                  a similar nature or otherwise.

          6.11.   Headings. The captions to the several Articles and Sections
                  --------
                  hereof are not a part of this Agreement, but are merely guides
                  or labels to assist in locating and reading the several
                  Articles and Sections hereof.

          6.12.   Counterparts. This Agreement may be executed in any number of
                  ------------
                  counterparts, each of which shall be deemed an original, but
                  all of which together shall constitute one and the same
                  instrument.

Confidential                        Page 13                        March 5, 2002

<PAGE>

         IN WITNESS WHEREOF, the Parties have executed this Agreement, effective
as of the Effective Date.

ADOLOR CORPORATION                    TORAY INDUSTRIES, INC.

By:/s/ John J. Farrar                 By:/s/ K. Wakasugi
   ------------------------              ----------------------------

Name: John J. Farrar                  Name: Kiyoteru Wakasugi

Title: President & CEO                Title: Senior Managing Director,
                                      General Manager, Pharmaceuticals & Medical
                                      Products Division

Confidential                        Page 14                        March 5, 2002

<PAGE>

Attachment 1:
------------

**

**=Certain information on this page has been omitted and filed separately with
   the Commission. Confidential treatment has been requested with respect to the
   omitted portions.

Confidential                        Page 15                        March 5, 2002

<PAGE>

Attachment 2:
------------

**

**=Certain information on this page has been omitted and filed separately with
   the Commission. Confidential treatment has been requested with respect to the
   omitted portions.

Confidential                        Page 16                        March 5, 2002Prepared by R.R. Donnelley Financial -- Employment Agreement-Micheal S. Battaglia

  
 Exhibit 10.1 
  
 EMPLOYMENT AGREEMENT 
  
 This Employment Agreement (“Agreement”) is made and
entered into as of April 3, 2002 by and between SmartDisk Corporation, a Delaware corporation (the “Company”), and Michael S. Battaglia (the “Executive”). 
  
 Recitals 
  
 A.    The Company desires to ensure
the Executive’s continued employment with the Company and to compensate him therefor. 
  
 B.    The Board
of Directors of the Company (the “Board”) has determined that this Agreement will reinforce and encourage the Executive’s attention and dedication to the Company. 
  
 C.    The Executive is willing to make his services available to the Company on the terms and conditions hereinafter set forth. 
  
 Agreement 
  
 NOW, THEREFORE, in
consideration of the premises and mutual covenants set forth herein, the parties agree as follows: 
  
 1.    Employment. 
  
 1.1    General.    The Company hereby agrees to employ the Executive, and the Executive hereby agrees to serve the Company on the terms and conditions set forth herein. During the term of this
Agreement, which shall continue on an “at will” basis until terminated in accordance with Section 4 below, Executive shall render services at the Company’s principal executive offices in Naples, Florida. 
  
 1.2    Duties of Executive.    During the term of this Agreement, the Executive shall
serve as the Chief Executive Officer and President of the Company, shall diligently perform all services as may be assigned to him by or under the direction of the Board and shall exercise such power and authority as may from time to time be
delegated to him by the Board. The Executive shall devote substantially all of his business time and attention to the business and affairs of the Company, render such services to the best of his ability, and use his best efforts to promote the
interests of the Company. 
  
 2.    Compensation. 
  

2.1    Base Salary.    The Executive shall receive an initial base salary at the annual rate of $325,000 (the
“Base Salary”), with such Base Salary payable in installments consistent with the Company’s normal payroll schedule, subject to applicable withholding and other taxes. During each year of this Agreement, the Board shall consider the
performance of the Executive for a merit increase of such Base Salary. 
  
 2.2    Bonus
Compensation.    In addition to the Base Salary, the Executive shall be eligible to receive bonus compensation (the “Bonus Compensation”) each year during the term of this Agreement. The Board shall establish a
performance bonus formula pursuant to which the Executive will be able to receive the Bonus Compensation amount, which shall in no event be less than fifty percent of the Base Salary, if the Company achieves certain specified levels of financial
results. Accordingly, during the first year of this Agreement, Executive shall be eligible to receive the Bonus Compensation amount of $162,500. 

  
 3.    Expense Reimbursement and Other Benefits. 

 
 3.1    Reimbursable Expenses.    During the term of the Executive’s
employment hereunder, the Company, upon the submission of proper substantiation by the Executive, shall reimburse the Executive for all reasonable expenses actually and necessarily paid or incurred by the Executive in the course of and pursuant to
the business of the Company. 
  
 3.2    Other Benefits.    The
Executive shall be entitled to participate in all medical, dental and hospitalization, group life insurance, and any and all other plans as are presently and hereinafter provided by the Company to its executives. The Executive shall be entitled to
twenty days of paid vacation per year. In no event shall Executive be entitled to accrue and carry forward more than five (5) days of paid vacation from any calendar year to another. 
  
 3.3    Working Facilities.    The Company shall furnish the Executive with an office, secretarial help and such other
facilities and services suitable to his position and adequate for the performance of his duties hereunder. 
  
 4.    Termination. 
  
 4.1    Termination for
Cause.    The Company shall at all times have the right, upon written notice to the Executive, to terminate the Executive’s employment hereunder for “Cause” (as hereinafter defined). For purposes of this
Agreement, the term “Cause” shall mean (i) the failure or refusal of the Executive to perform the duties or render the services reasonably assigned to him from time to time by or under direction of the Board of Directors of the Company
(except during reasonable vacation periods or sick leave), which failure or refusal is not cured within 30 days of written notice (such notice to contain in detail the specific deficiencies observed by the Board); (ii) gross negligence or willful
misconduct by the Executive in the performance of his duties as an employee of the Company, (iii) the conviction of the Executive of a felony; (iv) the material breach by the Executive of any of the provisions of Section .1, 5.2, 5.3 or 5.4 hereof;
(v) the breach by the Executive of his fiduciary duty or duty of trust to the Company, including the commission by the Executive of an act of fraud or embezzlement against the Company, (vi) substance abuse, or (vii) any other material breach by the
Executive of any of the material terms or provisions of this Agreement or any other agreement between the Company and the Executive related to the Executive’s employment, which other material breach is not cured within thirty (30) business days
of written notice by the Company. Upon any termination pursuant to this Section 4.1, the Executive shall be entitled to receive any salary (other than Bonus Compensation) and employment benefits which shall have accrued prior to the date of
termination, but shall not be entitled to any bonus or severance payments, salary or employment benefits relating to periods subsequent to the date of termination, subject to Executive’s rights to continue medical and dental coverage under the
Company’s group policy, at Executive’s expense, as may be provided by law. 
  
 4.2    Disability.    The Company shall at all times have the right, upon written notice to the Executive, to terminate the Executive’s employment hereunder, if the Executive shall, as the
result of mental or physical incapacity, illness or disability, become unable to perform his duties hereunder for in excess of ninety (90) days in any 12-month period. Upon any termination pursuant to this Section 4.2, the Company shall pay to the
Executive (i) pay to the Executive any unpaid Base Salary accrued through the effective date of termination specified in such notice, (ii) pay Executive’s Base Salary in the manner set forth in Section 2.1 hereof until the date which is twelve
months following such effective date, (iii) pay a pro rata portion of any Bonus Compensation to which the Executive would be otherwise entitled under Section 2.2 based upon the ratio the number of months employed bears to the bonus period of twelve
(12) months. Following the effective date of such termination, the Company shall continue to pay for or provide to the Executive such benefits as may have been provided to the Executive in accordance with Section 3.2 immediately prior to such
termination (subject to changes in the terms of such coverage by the provider as may be applicable to the Company as a whole) for a period ending one year from the date of termination. In addition, the Company shall forgive and extinguish without
seeking satisfaction that portion of the obligation created under that certain promissory note dated April 3, 2002 from the Executive to the order of the Company that is in excess of the underlying collateral of said promissory note. Except as
expressly provided herein, the 

 
Company shall have no further liability hereunder (other than for reimbursement for reasonable business expenses incurred prior to the date of termination, subject, however to the provisions of
Section 3.1). 
  
 4.3    Death.    In the event of the death of
the Executive during the term of his employment hereunder, the Company shall pay to the estate of the deceased Executive (i) any unpaid Base Salary accrued through the date of Executive’s date of death, (ii) Executive’s Base Salary in the
manner set forth in Section 2.1 hereof until the date which is twelve months following such date of death, (iii) pay a pro rata portion of any Bonus Compensation to which the Executive would have otherwise been entitled under Section 2.2 based upon
the ratio the number of months employed bears to the bonus period of twelve (12) months. In addition, the Company shall forgive and extinguish without seeking satisfaction that portion of the obligation created under that certain promissory note
dated April 3, 2002 from the Executive to the order of the Company that is in excess of the underlying collateral of said promissory note. Except as expressly provided herein, the Company shall have no further liability hereunder (other than for
reimbursement for reasonable business expenses incurred prior to the date of termination, subject, however to the provisions of Section 3.1). 
  
 4.4    Termination by the Company Without Cause.    At any time, the Company shall have the right to terminate this Agreement and Executive’s employment with the
Company by providing at least 30 days prior written notice to the Executive; provided, however, that, the Company shall (i) pay to the Executive any unpaid Base Salary accrued through the effective date of termination specified in such notice, (ii)
pay Executive’s Base Salary in the manner set forth in Section 2.1 hereof until the date which is twelve months following such effective date, (iii) pay a pro rata portion of any Bonus Compensation to which the Executive would be otherwise
entitled under Section 2.2 based upon the ratio the number of months employed bears to the bonus period of twelve (12) months. Following the effective date of such termination, the Company shall continue to pay for or provide to the Executive such
benefits as may have been provided to the Executive in accordance with Section 3.2 immediately prior to such termination (subject to changes in the terms of such coverage by the provider as may be applicable to the Company as a whole) for a period
ending on the earliest of (A) the date of the Executive’s employment by a third party on a substantially full-time basis, (B) the death of the Executive and (C) one year from the date of termination. In addition, the Company shall forgive and
extinguish without seeking satisfaction that portion of the obligation created under that certain promissory note dated April 3, 2002 from the Executive to the order of the Company that is in excess of the underlying collateral of said promissory
note. Except as expressly provided herein, the Company shall have no further liability hereunder (other than for reimbursement for reasonable business expenses incurred prior to the date of termination, subject, however to the provisions of Section
3.1). 
  
 4.5    Termination by Employee.    At any time, the
Executive may terminate this Agreement and Executive’s employment with the Company by providing at least 30 days prior written notice to the Company. Upon termination of this Agreement pursuant to this Section 4.5, the Executive shall be
entitled to receive any salary (other than Bonus Compensation) and employment benefits which shall have accrued prior to the date of termination, but shall not be entitled to any bonus or severance payments, salary or employment benefits relating to
periods subsequent to the date of termination, subject to Executive’s rights to continue medical and dental coverage under the Company’s group policy at Executive’s expense, as may be provided by law. 
  
 5.    Restrictive Covenants. 
  
 5.1    Non-competition.    While employed by the Company and for a period of one year following the date of termination
of this Agreement pursuant to Section 4.1, 4.4 or 4.5, the Executive shall not, directly or indirectly (whether as owner, principal, agent, shareholder, employee, partner, lender, venturer with or consultant to any person, firm, partnership,
corporation, limited liability company or other entity), whether or not compensation is received, engage or participate in any activity for any business or entity which is or plans to engage in the marketing and sale of any products or services
which are under active development or are marketed or sold by the Company and/or their respective subsidiaries and affiliates during the term of this Agreement anywhere in the United States; provided, however, that nothing herein shall be deemed to
prevent the Executive from acquiring through market purchases and owning, solely as an investment, less than three percent in the aggregate of the equity securities of any class of any issuer whose shares are registered under §12(b) or 12(g) of
the Securities Exchange Act of 1934, as 

  
 amended, and are listed or admitted for trading on any United States national securities
exchange or are quoted on the National Association of Securities Dealers Automated Quotations System, or any similar system of automated dissemination of quotations of securities prices in common use, so long as the Executive is neither involved in
the management or conduct of the business affairs of such issuer nor a member of any “control group” (within the meaning of the rules and regulations of the United States Securities and Exchange Commission) of any such issuer. The
Executive acknowledges and agrees that the covenants provided for in this Section 5.1 are reasonable and necessary in terms of time, area and line of business to protect the Company’s “Trade Secrets” (as hereinafter defined). The
Executive further acknowledges and agrees that such covenants are reasonable and necessary in terms of time, area and line of business to protect the Company’s legitimate business interests, which include their interests in protecting the
Company’s (i) valuable confidential business information, (ii) substantial relationships with customers throughout the United States, and (iii) customer goodwill associated with the ongoing business of the Company. The Executive expressly
authorizes the enforcement of the covenants provided for in this Section 5.1 by (A) the Company and its subsidiaries, (B) the Company’s permitted assigns, and (C) any successors to the Company’s business. To the extent that the covenant
provided for in this Section 5.1 may later be deemed by a court to be too broad to be enforced with respect to its duration or with respect to any particular activity or geographic area, the court making such determination shall have the power to
reduce the duration or scope of the provision, and to add or delete specific words or phrases to or from the provision. The provision as modified shall then be enforced. 
  
 5.2    Nondisclosure.    Executive shall not divulge, communicate, use to the detriment of the Company or for the benefit
of any other person or persons, or misuse in any way, any “Confidential Information” pertaining to the Company. Any confidential information or data now known or hereafter acquired by the Executive with respect to the Company shall be
deemed a valuable, special and unique asset of the Company that is received by the Executive in confidence and as a fiduciary, and Executive shall remain a fiduciary to the Company with respect to all of such information. For purposes of this
Agreement, the following terms when used in this Agreement have the meanings set forth below: 
  
 “Confidential Information” means confidential data and confidential information relating to the business of the Company (which does not rise to the status of a Trade Secret under applicable law) which is or has been
disclosed to the Executive or of which the Executive became aware as a consequence of or through his employment with the Company and which has value to the Company and is not generally known to the competitors of the Company. Confidential
Information does not include (a) information that is or becomes generally available to the public other than as a result of the Executive’s disclosure of such information, (b) information that was within the Executive’s possession prior to
it being furnished to the Executive by or on behalf or its affiliates, including the Company, provided that the source of such information was not known to the Executive to be bound by a confidentiality agreement with or other contractual, legal or
fiduciary obligation of confidentiality to the Company or its affiliates, or any other party with respect to such information, (c) information that becomes available to the Executive on a non-confidential basis from a source other than the Company
or any of its affiliates, provided that such source is not known to the Executive to be bound by a confidentiality agreement with or other contractual, legal or fiduciary obligation of confidentiality to the Company or its affiliates, or any other
party with respect to such information, (d) information the disclosure of which is required by applicable law or judicial process, or (e) general technical skills or general experience gained by the Executive during the Executive’s employment
with the Company. 
  
 “Trade Secrets” means information of the Company including, but not
limited to, technical or nontechnical data, formulas, patterns, compilations, programs, financial data, financial plans, product or service plans or lists of actual or potential customers or suppliers which (i) derives economic value, actual or
potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy. 
  
 In addition, during the Initial Term and during the periods described in the last
sentence of this Section 5.2, the Executive (a) will receive and hold all Confidential Information and Trade Secrets (collectively “Company Information”) in trust and in strictest confidence, (b) will take reasonable steps to protect the
Company Information from disclosure and will in no event take any action causing, or fail to take 

  
 any action reasonably necessary to prevent, any Company Information to lose its character as Company Information, and
(c) except as required by the Executive’s duties in the course of his employment by the Company, will not, directly or indirectly, use, disseminate or otherwise disclose any Company Information to any third party without the prior written
consent of the Company, which may be withheld in the Company’s absolute discretion. The provisions of this Section 5.2 shall survive the termination of the Executive’s employment (i) for a period of five years with respect to Confidential
Information, and (ii) with respect to Trade Secrets, for so long as any such information qualifies as a Trade Secret under applicable law. 
  
 5.3    Nonsolicitation of Employees and Customers.    While employed by the Company and for a period of two years following the later of the date his employment is
terminated hereunder by either the Company or the Executive, the Executive shall not, directly or indirectly, for himself or for any other person, firm, corporation, partnership, association or other entity, (i) attempt to employ or enter into any
contractual arrangement with any employee or former employee of the Company, unless such employee or former employee has not been employed by the Company for a period in excess of three months, and/or (ii) divert or take away, or attempt to divert
or take away, the business or prospects of any of the actual or targeted prospective customers or clients of the Company, nor shall the Executive make known the names and addresses of such customers or any information relating in any manner to the
Company’s trade or business relationships with such customers. 
  
 5.4    Assignment
Of Inventions. 
  
 (a)    Original Development.    The
Executive represents and warrants to the Company that all work that the Executive performs for or on behalf of the Company and its clients, and all work product that the Executive produces in such capacity, including but not limited to software,
documentation, memoranda, ideas, designs, inventions, processes, algorithms, etc. (“Work Product”), will not knowingly infringe upon or violate any patent, copyright, trade secret, or other property right of any of his former employers or
of any other third party. The Executive will not disclose to the Company, or use in any of his Work Product, any confidential or proprietary information belonging to others, unless both the owner thereof and the Company have consented in writing.

  
 (b)    Disclosure.    The Executive will promptly disclose to
the Company all Work Product developed by him within the scope of his employment with the Company or which relates directly to, or involve the use of, any Company Information, including but not limited to all software, concepts, ideas and designs,
and all documentation, manuals, letters, pamphlets, drafts, memoranda and other writings or tangible things of any kind. The Executive will not disclose them to anyone other than authorized Company personnel. 
  
 (c)    Copyright Ownership.    The Executive acknowledges and agrees that all Work
Product which is made by him (solely or jointly with others) within the scope of his employment and which is protectable by copyright is being created at the instance of the Company and is “work made for hire,” as that term is defined in
the United States Copyright Act (17 USCA, Section 101). 
  
 (d)    Assignment.    The Executive hereby assigns to the Company all of his other rights, title and interest (including but not limited to all patent, copyright and trade secret rights) in and
to all Work Products prepared by him, whether patentable or not, made or conceived in whole or in part by him within the scope of his employment hereunder, or that relates directly to, or involves the use of Company Information. 

 
 (e)    Documents.    The Executive agrees to execute all documents
reasonably requested by the Company to further evidence the foregoing assignment and to provide all reasonable assistance to the Company (at the Company’s expense) in perfecting or protecting any or all of the Company’s rights in his Work
Product. 
  
 (f)    Pre-existing Inventions Not Assigned.    The
Executive represents that the Executive has indicated on Annex I to this Agreement all inventions, expression of ideas or other Work Product related to the Company’s business and created prior to his employment by the 

  
 Company in which the Executive has any right, title or interest that the Executive does not
assign to the Company. If the Executive does not have any such inventions, expressions of ideas, or work product to indicate, the Executive will write “none” on Annex I. The Executive will not assert any rights under any inventions as
having been made or acquired by him prior to his being employed by the Company, unless such inventions are identified on Annex I. 
  
 5.5    Books and Records.    All books, records, reports, writings, notes, notebooks, computer programs, sketches, drawings, blueprints, prototypes, formulas,
photographs, negatives, models, equipment, chemicals, reproductions, proposals, flow sheets, supply contracts, customer lists and other documents and/or things belonging to the Company or embodying or relating to any Confidential Information or
Trade Secrets, whether prepared by the Executive or otherwise coming into the Executive’s possession shall not be copied, duplicated, replicated, transformed, modified or removed from the premises of the Company except pursuant to the business
of the Company and shall be returned immediately to the Company on termination of the Executive’s employment hereunder or on the Company’s request at any time. 
  
 5.6    No Conflict.    The Executive represents to the Company that his execution and performance of this Agreement does
not violate the provisions of any employment, non-competition, confidentiality or other material agreement to which he is a party or by which he is bound. The Executive also agrees to indemnify and hold harmless the Company from any and all damages
and other obligations or liabilities incurred by the Company in connection with any breach of the foregoing representation. 
  
 6.    Injunction.    It is recognized and hereby acknowledged by the parties hereto that a breach by the Executive of any of the covenants contained in Section 5 of this Agreement will cause
irreparable harm and damage to the Company, the monetary amount of which may be virtually impossible to ascertain. As a result, the Executive recognizes and hereby acknowledges that the Company shall be entitled to seek an injunction from any court
of competent jurisdiction (without posting a bond or other security) enjoining and restraining any violation of any or all of the covenants contained in Section 5 of this Agreement by the Executive or any of his affiliates, associates, partners or
agents, either directly or indirectly, and that such right to injunction shall be cumulative and in addition to whatever other remedies the Company or the Company may possess. 
  
 7.    Governing Law.    This Agreement shall be governed by and construed in accordance with the laws of the State of Florida without
regard to conflicts of laws principles thereof and all questions concerning the validity and construction hereof shall be determined in accordance with the laws of said state. 
  
 8.    Entire Agreement.    This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter
hereof and, upon its effectiveness, shall supersede all prior agreements, understandings and arrangements, both oral and written, between the Executive and the Company (or any of its affiliates) with respect to such subject matter. Except for the
obligation to pay all accrued but unpaid salary due the Executive, all such prior agreements, understandings and arrangements for the provision of services by the Executive to the Company and the compensation of the Executive in any form are hereby
terminated, and the Executive hereby releases and forever discharges the Company (as well as its affiliates) from any and all liabilities and obligations of any nature arising out of or in connection with any and all such prior agreements,
understandings or arrangements. This Agreement may not be modified in any way unless by a written instrument signed by both the Company and the Executive. 
  
 9.    Notices.    Any notice required or permitted to be given hereunder shall be deemed given when delivered by hand or when deposited in the United States mail, by
registered or certified mail, return receipt requested, postage prepaid, (i) if to the Company, c/o SmartDisk Corporation, 3506 Mercantile Avenue, Naples, Florida 34104, Attention: Daniel E. Reed, Vice President, and (ii) if to the Executive, to his
address as reflected on the payroll records of the Company, or to such other address as either party hereto may from time to time give notice of to the other. 
  
 10.    Benefits; Binding Effect.    This Agreement shall be for the benefit of and binding upon the parties hereto and their respective heirs, personal representative,
legal representatives, successors and, where applicable, assigns, including, without limitation, any successor to the Company, whether by merger, 

  
 consolidation, sale of stock, sale of assets or otherwise; provided, however that the Executive shall not delegate his
employment obligations hereunder, or any portion thereof, to any other person. 
  
 11.    Severability.    The invalidity of any one or more of the words, phrases, sentences, clauses or sections contained in this Agreement shall not affect the enforceability of the remaining
portions of this Agreement or any part thereof, all of which are inserted conditionally on their being valid in law, and, in the event that any one or more of the words, phrases, sentences, clauses or sections contained in this Agreement shall be
declared invalid, this Agreement shall be construed as if such invalid word or words, phrase or phrases, sentence or sentences, clause or clauses, or section or sections had not been inserted. If such invalidity is caused by length of time or size
of area, or both, the otherwise invalid provision will be considered to be reduced to a period or area which would cure such invalidity. 
  
 12.    Waivers.    The waiver by either party hereto of a breach or violation of any term or provision of this Agreement shall not operate nor be construed as a waiver of any subsequent breach
or violation. 
  
 13.    Damages.    Nothing contained herein shall be construed to
prevent the Company or the Executive from seeking and recovering from the other damages sustained by either or both of them as a result of its or his breach of any term or provision of this Agreement. In the event that either party hereto brings
suit for the collection of any damages resulting from, or for the injunction of any action constituting, a breach of any of the terms or provisions of this Agreement, then the party found to be at fault shall pay all reasonable court costs and
attorneys’ fees of the other. 
  
 14.    Section Headings.    The section
headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 
  
 15.    No Third Party Beneficiary.    Nothing expressed or implied in this Agreement is intended, or shall be construed, to confer upon or give any person other than the
Company, the parties hereto and their respective heirs, personal representatives, legal representatives, successors and assigns, any rights or remedies under or by reason of this Agreement. 
  
 IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written. 
  
 
	 SMARTDISK CORPORATION
 
	 
	 By:
 	 	 /s/    PETER J. QUINN      
 

	  	 	 Peter J. Quinn
 
	 
	  	 	 /s/    MICHAEL S. BATTAGLIA        
 

	  	 	 Michael S. Battaglia
 

 

  
 ANNEX I 
  
 PRE-EXISTING INVENTIONS 
  
 None

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