COLLABORATION AGREEMENT

dated as of April 14, 2002

by and between

ADOLOR CORPORATION

and

GLAXO GROUP LIMITED

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ARTICLE 1 DEFINITIONS ............................................................ 1

ARTICLE 2 RIGHTS AND OBLIGATIONS ................................................. 16

2.1 License Grants from Adolor to GSK ........................................ 16

2.2 License Grant from GSK to Adolor ......................................... 17

2.3 Sublicensing and Subcontracting .......................................... 18

2.4 Trademarks and Housemarks ................................................ 19

2.5 Intellectual Property .................................................... 26

2.6 ** ....................................................................... 26

2.7 OTC Rights ............................................................... 27

ARTICLE 3 GOVERNANCE OF DEVELOPMENT AND COMMERCIALIZATION OF PRODUCTS ............ 27

3.1 Joint Steering Committee ................................................. 27

3.2 Joint Development Committee .............................................. 30

3.3 Joint Marketing Committee ................................................ 32

3.4 Joint Supply Committee ................................................... 34

3.5 Minutes of Committee Meetings ............................................ 36

3.6 Expenses ................................................................. 37

3.7 Initial Coordination Efforts ............................................. 37

ARTICLE 4 DEVELOPMENT OF PRODUCTS ................................................ 37

4.1 Responsibilities of the Parties .......................................... 37

4.2 Obligations for Development .............................................. 38

4.3 Additional Products ...................................................... 38

4.4 U.S. Development Plans ................................................... 40

4.5 Implementation of U.S. Development Plans ................................. 41

4.6 Development Funding ...................................................... 41

4.7 Development in the ROW ................................................... 43

4.8 Fulfillment of Obligations ............................................... 44

4.9 Transfer of Data ......................................................... 44

4.10 Right to Audit ........................................................... 44

ARTICLE 5 CO-PROMOTION, DETAILING AND COMMERCIALIZATION .......................... 45

5.1 U.S. Marketing Plans ..................................................... 45

5.2 Marketing Funding ........................................................ 47

5.3 Implementation of U.S. Marketing Plans ................................... 48

5.4 Obligations for Commercialization ........................................ 48

5.5 Commercialization Responsibilities ....................................... 49

5.6 Detailing Efforts ........................................................ 50

5.7 Detailing and Marketing Requirements ..................................... 51

5.8 Sales Force Incentive Compensation for POI Products ...................... 51

5.9 Detailing Reports ........................................................ 52

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5.10 Training .......................................................................... 52

5.11 Commercialization in the ROW ...................................................... 53

ARTICLE 6 FINANCIAL PROVISIONS ....................................................... 54

6.1 Upfront Payment ................................................................... 54

6.2 Milestone Payments ................................................................ 55

6.3 Marketing Contribution for Collaboration Products ................................. 55

6.4 Payment of Royalties on Net Sales in the ROW ...................................... 57

6.5 Payment of Royalties on Net Sales of GI Products in the United States ............. 57

6.6 Royalty Responsibilities; Net Sales Reports ....................................... 58

6.7 Reports ........................................................................... 59

6.8 Payment Upon Expiration of the Adolor Product Promotion Term ...................... 62

6.9 GAAP .............................................................................. 62

6.10 Currencies ........................................................................ 62

6.11 Manner of Payments ................................................................ 63

6.12 Interest on Late Payments ......................................................... 63

6.13 Tax Withholding ................................................................... 63

6.14 Financial Records; Audits ......................................................... 63

ARTICLE 7 Promotional Materials AND Samples .......................................... 64

7.1 Promotional Materials ............................................................. 64

7.2 Samples for the United States ..................................................... 66

ARTICLE 8 INFORMATION CONCERNING THE COLLABORATION Products .......................... 67

8.1 Statements Consistent with Labeling ............................................... 67

8.2 Medical Inquiries ................................................................. 67

8.3 Standard Operating Procedures ..................................................... 68

ARTICLE 9 REGULATORY MATTERS ......................................................... 68

9.1 Communications and Meetings with Governmental Authorities ......................... 68

9.2 Filings with Governmental Authorities ............................................. 70

9.3 In the ROW ........................................................................ 71

9.4 Approval of Labeling and Promotional Materials .................................... 72

9.5 Regulatory Information ............................................................ 72

9.6 Exchange of Drug Safety Information ............................................... 73

9.7 Recalls Or Other Corrective Action ................................................ 73

9.8 Events Affecting Integrity or Reputation .......................................... 75

9.9 Sharing of Regulatory Filings ..................................................... 75

ARTICLE 10 ORDERS; SUPPLY AND RETURNS ................................................. 75

10.1 Orders and Terms of Sale in the United States for Adolor Products ................. 75

10.2 Orders and Terms of Sale in the United States for GI Products ..................... 75

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10.3 Orders and Terms of Sale in the ROW ............................................. 76

10.4 Misdirected Orders .............................................................. 76

10.5 Product Returns ................................................................. 76

10.6 Supply of API Compound and Collaboration Product for Development

of Collaboration Products ....................................................... 77

10.7 Supply of API Compound for Commercialization of Collaboration Products .......... 78

10.8 Supply of Collaboration Products for Commercialization .......................... 79

10.9 Shortages ....................................................................... 80

10.10 Product Suppliers ............................................................... 81

10.11 Standard Terms of Supply ........................................................ 81

ARTICLE 11 GSK PRODUCT .............................................................. 84

11.1 GSK Product Right and License ................................................... 84

11.2 Adolor Selection Process and Timeframe .......................................... 84

11.3 GSK Product Agreement ........................................................... 85

11.4 No Selected GSK Product ......................................................... 85

ARTICLE 12 CONFIDENTIAL INFORMATION ................................................. 86

12.1 Confidential Information ........................................................ 86

12.2 Permitted Disclosure and Use .................................................... 86

12.3 Publications .................................................................... 87

12.4 Public Announcements ............................................................ 87

12.5 Confidentiality of this Agreement ............................................... 87

12.6 Survival ........................................................................ 87

ARTICLE 13 REPRESENTATIONS AND WARRANTIES; COVENANTS ................................ 87

13.1 Mutual Representations and Warranties ........................................... 87

13.2 Additional GSK Representations and Warranties ................................... 88

13.3 Additional Adolor Representations and Warranties ................................ 89

13.4 Covenants ....................................................................... 90

13.5 Disclaimer of Warranty .......................................................... 90

ARTICLE 14 INDEMNIFICATION .......................................................... 91

14.1 Indemnification by GSK .......................................................... 91

14.2 Indemnification by Adolor ....................................................... 91

14.3 Procedure for Indemnification ................................................... 92

14.4 Assumption of Defense ........................................................... 93

14.5 Product Liability Claims in the United States ................................... 93

14.6 Insurance ....................................................................... 94

14.7 Limitation of Liability ......................................................... 94

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ARTICLE 15 PATENT INFRINGEMENT .......................................................... 95

15.1 Prosecution and Maintenance of Patents .............................................. 95

15.2 Patent Infringement ................................................................. 98

15.3 Notice of Certification ............................................................. 99

15.4 Assistance .......................................................................... 100

ARTICLE 16 TERM AND TERMINATION ......................................................... 100

16.1 Term ................................................................................ 100

16.2 Extension of Adolor Product Promotion Term .......................................... 100

16.3 Termination for Breach .............................................................. 100

16.4 Termination for Safety Related Reasons .............................................. 100

16.5 Termination by GSK with Respect to ** ............................................... 101

16.6 Termination by GSK With Respect to ** ............................................... 102

16.7 Termination by GSK With Respect to ** ............................................... 103

16.8 Termination by Adolor ............................................................... 104

16.9 Effects of Expiration of the Adolor Product Promotion Term .......................... 106

16.10 Effects of Expiration of the GI Product Promotion Term .............................. 107

16.11 Effects of Expiration of the ROW Term ............................................... 108

16.12 Effect of Termination ............................................................... 109

16.13 Effect of Termination for Safety Related Reasons .................................... 111

16.14 General Effects of Termination ...................................................... 111

ARTICLE 17 LIMITATIONS ON PURCHASES OF EQUITY SECURITIES ................................ 111

17.1 Purchases of Equity Securities ...................................................... 111

17.2 Exceptions for Purchasing Securities of Adolor ...................................... 112

ARTICLE 18 MISCELLANEOUS ................................................................ 113

18.1 Relationship of the Parties ......................................................... 113

18.2 Registration and Filing of this Agreement ........................................... 113

18.3 Force Majeure ....................................................................... 113

18.4 Governing Law ....................................................................... 114

18.5 Dispute Resolution; Arbitration ..................................................... 114

18.6 Assignment .......................................................................... 115

18.7 Notices ............................................................................. 115

18.8 Severability ........................................................................ 117

18.9 Headings ............................................................................ 117

18.10 Waiver .............................................................................. 117

18.11 Entire Agreement .................................................................... 117

18.12 No License .......................................................................... 117

18.13 Third Party Beneficiaries ........................................................... 117

18.14 Counterparts ........................................................................ 118

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** = Certain information on this page has been omitted and filed separately with

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COLLABORATION AGREEMENT

This COLLABORATION AGREEMENT ("Agreement") dated as of April 14, 2002

---------

(the "Effective Date"), is made by and between ADOLOR CORPORATION, a Delaware

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

corporation and having its principal office at 620 Pennsylvania Drive, Exton,

Pennsylvania 19341 ("Adolor"), and GLAXO GROUP LIMITED, a United Kingdom

------

corporation, and having its principal office at Glaxo Wellcome House, Berkeley

Avenue, Greenford, Middlesex, UB6 0NN, United Kingdom ("GSK"). Adolor and GSK

---

may be referred to as a "Party" or together, the "Parties".

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

RECITALS

WHEREAS, Adolor is currently developing a compound known as alvimopan

for postoperative bowel dysfunction and other gastrointestinal disorders;

WHEREAS, GSK has significant experience in the development, marketing

and promotion of pharmaceutical products and believes it can make significant

contributions to the successful development and commercialization of alvimopan;

WHEREAS, GSK and Adolor have complementary technology, capabilities and

resources which are necessary for the development and commercialization of the

Collaboration Products;

WHEREAS, GSK and Adolor are willing to undertake such development and

commercialization activities and investment based on the coordination of such

activities and investment provided by this Agreement similar to that of a single

entity with respect to the Collaboration Products; and

WHEREAS, GSK and Adolor believe that a collaboration pursuant to this

Agreement for the development, promotion and commercialization of alvimopan

would be desirable and fully compatible with their respective business

objectives and provide the most effective and efficient means to ensure that the

Collaboration Products are developed and commercialized so as to maximize the

return on investment for GSK and Adolor.

NOW, THEREFORE, in consideration of the foregoing premises and the

representations, covenants and agreements contained herein, Adolor and GSK,

intending to be legally bound, hereby agree as follows:

ARTICLE 1

DEFINITIONS

For purposes of this Agreement, the following initially capitalized

terms, whether used in the singular or plural, shall have the following

meanings:

1.1 "AAA" shall have the meaning set forth in Section 18.5.2.

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1.2 "Additional Product" means a ** Product and any Product other

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

than a POI Product, an OBD Acute Product, an OBD Chronic Product, a ** Product

or an ** Product included by the Parties pursuant to Section 4.3.

1.3 "Adolor Housemark" means the name and logo of Adolor or an

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

Affiliate of Adolor as identified by Adolor to GSK from time to time.

1.4 "Adolor Invention" means an Invention that is conceived or reduced

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

to practice by an employee or agent of Adolor solely or jointly with a Third

Party.

1.5 "Adolor Know-How" means all present and future Know-How that

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

relates to the Collaboration Products, the Compound or the Adolor Inventions, to

the extent necessary for GSK to perform its obligations or enjoy its rights

under this Agreement, and which during the Term are in Adolor's or any of its

Affiliates' possession or control and are or become owned by, or otherwise may

be licensed by, Adolor. Adolor Know-How does not include any Adolor Patents.

1.6 "Adolor Patents" means all Patent Rights covering the

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

Collaboration Products, the Compound or the Adolor Inventions which are or

become owned by Adolor or Adolor's Affiliates, or as to which Adolor or Adolor's

Affiliates are or become licensed, now or in the future, with the right to grant

the sublicense rights granted to GSK under this Agreement, which Patent Rights

cover the making, having made, use, offer for sale, sale or importation of

Collaboration Products, and which existing Patent Rights are more specifically

set forth on Schedule 1.6.

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

1.7 "Adolor Product Marketing Contribution" means an amount equal to

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

** for Adolor Products in the applicable reporting period in the United States

less the following amounts: (a) ** of the Adolor Product constituting such **;

(b) the **; (c) royalties paid to ** on account of sales of Adolor Products in

**; and (d) **.

1.8 "Adolor Product Promotion Term" means the period of time beginning

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

on the Effective Date and ending ** years after First Commercial Sale of a POI

Product in the United States unless otherwise extended pursuant to the

provisions of Section 16.2.

1.9 "Adolor Product Trademarks" shall have the meaning set forth in

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Section 2.4.1.

1.10 "Adolor Products" means a POI Product, an OBD Acute Product or any

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Additional Product designated by the Parties as an Adolor Product pursuant to

Section 4.3.

1.11 "Adolor Reconciliation Report" shall have the meaning set forth in

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

Section 6.7.5(a).

1.12 "Adolor Report" shall have the meaning set forth in Section 6.7.3.

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1.13 "Adverse Drug Experience" means any of: an "adverse drug

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

experience," a "life-threatening adverse drug experience," a "serious adverse

drug experience," or an "unexpected adverse drug experience," as those terms are

defined at either 21 C.F.R.(S)312.32 or 21 C.F.R.(S)314.80.

** = 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.

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1.14 "Affiliate" of a Party means any Person, whether de jure or de

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facto, which directly or indirectly controls, is controlled by, or is under

common control with such Person for so long as such control exists, where

"control" means the decision-making authority as to such Person and, further,

where such control shall be presumed to exist where a Person owns more than

fifty percent (50%) of the equity (or such lesser percentage which is the

maximum allowed to be owned by a foreign corporation in a particular

jurisdiction) having the power to vote on or direct the affairs of the entity.

1.15 "API Compound" means bulk quantities of Compound prior to the

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

commencement of secondary manufacturing resulting in a Collaboration Product.

1.16 "API Compound Carrying Cost" means ** percent (**%) of the

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

dollar amount obtained by multiplying the average dollar value of API Compound

in a Calendar Quarter held in inventory by a Party for use in Development or

Commercialization of Collaboration Products by ** percent (**%).

1.17 "Applicable Committee" shall have the meaning set forth in

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Section 12.3.

1.18 "Auditing Party" shall have the meaning set forth in Section

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6.14.

1.19 "Breaching Party" shall have the meaning set forth in Section

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16.3.

1.20 "Business Day" means any day on which banking institutions in

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

both New York, New York, United States and London, England are open for

business

1.21 "Calendar Quarter" means for each Calendar Year, each of the

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

three month periods ending March 31, June 30, September 30 and December 31;

provided, however, that the first calendar quarter for the first Calendar Year

shall extend from the Effective Date to the end of the first complete calendar

quarter thereafter.

1.22 "Calendar Year" means, for the first calendar year, the period

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

commencing on the Effective Date and ending on December 31 of the calendar year

during which the Effective Date occurs, and each successive period beginning on

January 1 and ending twelve (12) consecutive calendar months later on December

31.

1.23 "Call" means a personal visit by a Sales Representative to a

----

member of the Target Audience legally permitted to prescribe prescription drugs

in the United States during which such Sales Representative Details a

Collaboration Product. The Parties may, by mutual agreement, designate

additional types of Calls.

1.24 "Claims" means all charges, complaints, actions, suits,

------

proceedings, hearings, investigations, claims and demands.

1.25 "Collaboration Products" means the Adolor Products and the GI

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

Products.

1.26 "** Product" shall have the meaning set forth in Section **.

----------

** = 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.

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1.27 "Commercialization" means any and all activities directed to

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

marketing, promoting, distributing, offering for sale and selling a

Collaboration Product, importing a Collaboration Product (to the extent

applicable) and conducting Phase IV Studies, including, without limitation and

where applicable, Co-Promoting. When used as a verb, "Commercialize" means to

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

engage in Commercialization.

1.28 **

1.29 "Compound" means the peripheral mu antagonist having molecular

--------

formula(+)-[[2(S)-[[4(R)-(3-hydroxyphenyl)-3(R),4-dimethyl-1-piperidinyl]-

methyl]-1-oxo-3-phenylpropyl]amino]acetic acid dihydrate, known generically as

"alvimopan", and all pharmaceutically acceptable salts and solvates thereof.

1.30 "Confidential Information" means all secret, confidential or

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

proprietary information or data, whether provided in written, oral, graphic,

video, computer or other form, provided by one Party (the "Disclosing Party") to

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

the other Party (the "Receiving Party") pursuant to this Agreement or generated

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

pursuant to this Agreement, including but not limited to, information relating

to the Disclosing Party's existing or proposed research, development efforts,

patent applications, business or products, the terms of this Agreement and any

other materials that have not been made available by the Disclosing Party to the

general public. Notwithstanding the foregoing sentence, Confidential Information

shall not include any information or materials that:

1.30.1 were already known to the Receiving Party (other than under

an obligation of confidentiality), at the time of disclosure by the Disclosing

Party to the extent such Receiving Party has documentary evidence to that

effect;

1.30.2 were generally available to the public or otherwise part of

the public domain at the time of its disclosure to the Receiving Party;

1.30.3 became generally available to the public or otherwise part

of the public domain after its disclosure or development, as the case may be,

and other than through any act or omission of a Party in breach of such Party's

confidentiality obligations under this Agreement;

1.30.4 were disclosed to a Party, other than under an obligation

of confidentiality, by a Third Party who had no obligation to the Disclosing

Party not to disclose such information to others; 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.

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1.30.5 were independently discovered or developed by or on behalf

of the Receiving Party without the use of the Confidential Information belonging

to the other Party and the Receiving Party has documentary evidence to that

effect.

1.31 "** Product" means a Product for the management of non-opioid

----------

induced forms of ** or ** which such Product is not an ** Product.

1.32 "Co-Promotion" means those promotional activities undertaken by a

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

pharmaceutical company's sales force in concert with at least one other

pharmaceutical company's sales force to implement the marketing plans and

strategies with respect to a particular prescription pharmaceutical product

under a single trademark. When used as a verb, "Co-Promote" shall mean to engage

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in such activities.

1.33 "Cost of Goods" means the total cost of API Compound and/or a

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Collaboration Product (in formulated and/or finished packaged and labeled form)

as invoiced by Third Parties, including without limitation the sum of the

following actual costs: **. In the event that GSK manufactures API Compound

and/or Collaboration Products pursuant to Article 10, Cost of Goods shall be

calculated in accordance with Schedule 1.33.

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1.34 "Country" means any generally recognized sovereign entity.

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1.35 "CRO(s)" shall have the meaning set forth in Section 2.3.2(b).

------

1.36 "Defaulting Party" shall have the meaning set forth in Section

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

6.3.4.

1.37 "Designated Foreign Filing" shall have the meaning set forth in

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

Section 15.1.2(b).

1.38 "Detail" or "Detailing" means, with respect to a Collaboration

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

Product, the communication by a Sales Representative during a Call to a member

of the Target Audience (a) involving face-to-face contact, (b) describing in a

fair and balanced manner the FDA-approved indicated uses and other relevant

characteristics of such Collaboration Product, (c) using the Promotional

Materials in an effort to increase the Target Audience prescribing and/or

hospital ordering preferences of a Collaboration Product for its FDA-approved

indicated uses, and (d) made at the Target Audience member's office, in a

hospital, at marketing meetings sponsored by a Party for the Collaboration

Products or other appropriate venues conducive to pharmaceutical product

informational communication where the principal objective is to place an

emphasis, either primary or secondary, on a Collaboration Product and not simply

to discuss a Collaboration Product with a member of the Target Audience. For the

avoidance of doubt, discussions at conventions shall not constitute "Details" or

"Detailing".

** = 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.

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1.39 "Detail Cost" means, unless otherwise agreed to by the Parties, **

-----------

dollars ($**) for each Major Detail, ** dollars ($**) for each Secondary Detail

and ** dollars ($**) if such Detail was conducted by a Specialist Sales

Representative, in each case adjusted for inflation beginning with respect to

Calendar Year beginning January 1, 2003, using the Producer Price Index as

published by the Bureau of Labor Statistics of the U.S. Department of Labor.

1.40 "Detail Requirements" shall have the meaning set forth in Section 5.7.

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1.41 "Development" or "Develop" means preclinical and clinical drug

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

development activities, including, among other things: test method development

and stability testing, toxicology, formulation, process development,

manufacturing scale-up, development-stage manufacturing, current Good

Manufacturing Practices audits, current Good Clinical Practices audits, current

Good Laboratory Practices audits, analytical method validation, manufacturing

process validation, cleaning validation, scale-up and post approval changes,

quality assurance/quality control development, statistical analysis and report

writing, preclinical and clinical studies, including, without limitation, **,

regulatory filing submission and approval, and regulatory affairs related to the

foregoing. When used as a verb, "Develop" means to engage in Development. For

-------

clarity, Development does not include **.

1.42 "Development Expenses" means, for all studies or activities performed

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

by or on behalf of either Party or any of its Affiliates to the extent provided

for in an approved U.S. Development Plan or otherwise approved in advance by the

Joint Development Committee or Joint Steering Committee, including without

limitation Phase III Studies, that are relevant to the Development of

Collaboration Products for Commercialization in the **:

1.42.1 ** costs and expenses incurred (i.e., paid or accrued) to a **,

in connection with all Development activities performed in accordance with the

U.S. Development Plan;

1.42.2 the cost of clinical supplies for such studies or activities as

agreed in the U.S. Development Plan, which costs shall be comprised of (i) the

cost of clinical and pre-clinical supplies, including Compound, utilized in

Development, (ii) out-of-pocket costs and expenses incurred in purchasing

comparator drug and in packaging comparator drug and/or the Collaboration

Products, shipping clinical supplies to centers or disposal of clinical

supplies, and (iii) actual costs of packaging comparator if done by a Party.

It is understood and agreed that development expenses relating to the

Collaboration Products in the United States incurred by Adolor after ** and

prior to the formation of the Joint Development Committee and the Joint

Steering Committee shall be included as Development Expenses.

1.43 "Development Milestone" shall have the meaning set forth in Section

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

6.2.1.

1.44 "Disclosing Party" shall have the meaning set forth in Section 1.30.

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

** = 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.

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1.45 "Dispute Detailing Audit Data" means the absolute number of Details

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

performed by a Party's Sales Representatives for a given Calendar Year, as

reflected in the Personal Selling Audit and Hospital Personal Selling Audit of

Scott-Levin Associates or IMS America. In the event the Personal Selling Audit

or Hospital Personal Selling Audit for any given period or periods does not

report details for the physician specialties which correspond to the Target

Audience, the Parties shall mutually agree upon an alternative methodology to

verify the internal Detailing records of a Party.

1.46 "Distribution Services Fee" shall have the meaning set forth in

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

Section 6.3.3.

1.47 "Exchange Act" shall have the meaning set forth in Section 17.1.1.

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

1.48 "FDA" means the United States Food and Drug Administration and any

---

successor agency thereto.

1.49 "Field" means all uses of Compound in human beings except in products

-----

or formulations containing **.

1.50 "First Commercial Sale" means the first shipment of commercial

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

quantities of any Collaboration Product sold to a Third Party by a Party or its

sublicensees in any Country after receipt of Marketing Authorization Approval

for such Collaboration Product in such Country. Sales for test marketing,

sampling and promotional uses, clinical trial purposes or compassionate or

similar uses shall not be considered to constitute a First Commercial Sale.

1.51 "Force Majeure Event" shall have the meaning set forth in Section

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

18.3.

1.52 "Generic Competition" means, on a Country-by-Country basis and

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Collaboration Product-by-Collaboration Product basis, the presence of a drug

product that contains the same active ingredient as the Collaboration Product

(inactive ingredients may vary), is identical to the Collaboration Product in

strength, dosage form and route of administration, is bioequivalent to the

Collaboration Product and is approved by the relevant Governmental Authority in

such Country and which has obtained sales greater than ** (**%) of the combined

sales of such Collaboration Product together with such generic drug products,

**, in any Calendar Quarter, and which generic drug product sales are evidenced

by independent market data (where available), such as that published by IMS.

1.53 "GI Product" means an OBD Chronic Product, a ** Product, an **

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Product, or any Additional Product designated by the Parties as a GI Product

pursuant to Section 4.3.

1.54 "GI Product Marketing Contribution" means an amount equal to Net Sales

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

for GI Products in the applicable reporting period in the United States less the

following amounts: (a) ** of the GI Product constituting such **; (b) the **;

(c) royalties paid to ** on account of sales of ** Products in the United

States; (d) **; and (e) ** for such ** Product.

** = 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.

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1.55 "GI Product Promotion Term" means, on a GI Product-by-GI Product

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

basis, the period from the Effective Date until the later of (a) the expiration

or termination of the last Valid Claim of a Patent Right covering such GI

Product in the United States, (b) ** (**) years from First Commercial Sale in

the United States, and (c) the existence of Generic Competition for ** for such

GI Product in the United States.

1.56 "GI Product Trademarks" shall have the meaning set forth in Section

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

2.4.2.

1.57 "Governmental Authority" means any court, tribunal, arbitrator,

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

agency, legislative body, commission, official or other instrumentality of (i)

any government of any Country, (ii) a federal, state, province, county, city or

other political subdivision thereof or (iii) any supranational body, including

without limitation the European Agency for the Evaluation of Medicinal Products.

1.58 "GSK Housemark" means the name and logo of GSK or an Affiliate of GSK

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

as identified by GSK to Adolor from time to time.

1.59 "GSK Invention" means an Invention that is conceived or reduced to

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

practice by an employee or agent of GSK solely or jointly with a Third Party.

1.60 "GSK Know-How" means all present and future Know-How that relates to

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

the Collaboration Products, the Compound or the GSK Inventions, to the extent

necessary for Adolor to perform its obligations or enjoy its rights under this

Agreement, and which during the Term are in GSK's or any of its Affiliates'

possession or control and are or become owned by, or otherwise may be licensed

by, GSK. GSK Know-How does not include any GSK Patents.

1.61 "GSK Other GI Product" shall have the meaning set forth in Section

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

4.3.3(b).

1.62 "GSK Patent" means all Patent Rights covering the Collaboration

----------

Products, the Compound or the GSK Inventions which are or become owned by GSK or

GSK's Affiliates, or as to which GSK or GSK's Affiliates otherwise are or become

licensed, now or in the future, with the right to grant the sublicense rights

granted to Adolor under this Agreement, which Patent Rights cover the making,

having made, use, offer for sale, sale or importation of the Collaboration

Products or the Compound.

1.63 "GSK Product" shall have the meaning set forth in Section 11.1.

-----------

1.64 "GSK Product Agreement" shall have the meaning set forth in Section

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

11.2.2.

1.65 "GSK Product Selection Period" shall have the meaning set forth in

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

Section 11.2.3.

1.66 "GSK Reconciliation Report" shall have the meaning set forth in

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

Section 6.7.5(b).

1.67 "GSK Report" shall have the meaning set forth in Section 6.7.2.

----------

1.68 "Hatch-Waxman Certification" shall have the meaning set forth in

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

Section 15.3.

** = 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.

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1.69 "Hostile Tender Offer" shall have the meaning set forth in Section

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

17.2.5.

1.70 "HSR Act" shall have the meaning set forth in Section 13.2.6.

-------

1.71 "** Product" means a Product for the management of ** which such

-----------

Product is not a ** Product.

1.72 "Indemnified Party" shall have the meaning set forth in Section

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

14.3.1.

1.73 "Indemnifying Party" shall have the meaning set forth in Section

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

14.3.1.

1.74 "Initial Incentive Period" shall have the meaning set forth in Section

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

5.8.

1.75 "Initial ** Year Period" shall have the meaning set forth in Section

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

6.3.1.

1.76 "Internal Detailing Report" shall have the meaning set forth in

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

Section 5.9.1.

1.77 "Invention" means any discovery (whether patentable or not) conceived

---------

or reduced to practice during the Term as a result of the Development or

Commercialization activities and related to, derived from or useful for the

manufacture, use or sale of the Compound or a Collaboration Product.

1.78 "Investigational Authorization" means, with respect to a Country, the

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

regulatory authorization required to investigate a Collaboration Product in such

Country as granted by the relevant Governmental Authority.

1.79 "Joint Development Committee" shall have the meaning set forth in

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

Section 3.2.1.

1.80 "Joint Invention" means an Invention that is conceived or reduced to

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

practice jointly by employees and/or agents of both Adolor and GSK.

1.81 "Joint Marketing Committee" shall have the meaning set forth in

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

Section 3.3.1.

1.82 "Joint Supply Committee" shall have the meaning set forth in Section

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

3.4.1.

1.83 "Joint Steering Committee" shall have the meaning set forth in Section

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

3.1.1.

1.84 "Know-How" means any technical information, know-how and materials,

--------

including without limitation all biological, chemical, pharmacological,

toxicological, clinical, assay and other information, data, discoveries,

inventions, improvements, processes, formulae and trade secrets, patentable or

otherwise.

1.85 "Laws" means all laws, statutes, rules, regulations (including,

----

without limitation, current Good Manufacturing Practice Regulations as specified

in 21 C.F.R. (S)(S) 210 and 211; Investigational New Drug Application

regulations at 21 C.F.R. (S) 312; NDA regulations at 21 C.F.R. (S) 314, relevant

provisions of the Federal Food, Drug and Cosmetic Act, and other laws and

regulations enforced by the FDA), ordinances and other pronouncements having the

binding effect of law of any Governmental Authority.

** = 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.

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1.86 "Lilly" means Eli Lilly and Company and its successors and permitted

-----

assigns.

1.87 "Litigation Condition" shall have the meaning set forth in Section

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

14.3.2.

1.88 "Losses" means any and all damages (including all incidental,

------

consequential, statutory and treble damages), awards, deficiencies, settlement

amounts, defaults, assessments, fines, dues, penalties, costs, fees,

liabilities, obligations, taxes, liens, losses, lost profits and expenses

(including without limitation court costs, interest and reasonable fees of

attorneys, accountants and other experts) incurred by or awarded to Third

Parties and required to be paid to Third Parties with respect to a Claim by

reason of any judgment, order, decree, stipulation or injunction, or any

settlement entered into in accordance with the provisions of this Agreement,

together with all documented out-of-pocket costs and expenses incurred in

complying with any judgments, orders, decrees, stipulations and injunctions that

arise from or relate to a Claim of a Third Party.

1.89 "Major Detail" means a Detail for a Collaboration Product in which

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

such Collaboration Product receives the predominant portion of emphasis and time

during the Call (i.e., no other product receives more emphasis or time during

the Call).

1.90 "Major Market Country" means each of ** and **.

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

1.91 "Major Region" means the Country or Countries in each of the following

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

geographic regions: **.

1.92 "Marketing Authorization" means, with respect to a Country, the

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

regulatory authorization required to market and sell a Collaboration Product in

such Country as granted by the relevant Governmental Authority.

1.93 "Marketing Authorization Approval" shall mean approval by a

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

Governmental Authority for sale of a Collaboration Product, including any

applicable pricing, final labeling or reimbursement approvals.

1.94 "Marketing Expenses" means, excluding any Development Expenses, all

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

** costs and expenses incurred (i.e., paid or accrued) to a **, whether

---

incurred by Adolor or its Affiliates, or GSK or its Affiliates, to the extent

provided for in an approved U.S. Marketing Plan or otherwise approved in advance

by the Joint Marketing Committee or the Joint Steering Committee, and solely to

the extent related to Collaboration Products, for Commercialization in the

United States in connection with:

1.94.1 Marketing, advertising, sampling and promoting a Collaboration

Product, including without limitation educational expenses, speakers' programs

and symposia, and joint marketing and sales meetings in accordance with Section

5.10.4, but excluding ** unless otherwise mutually agreed by the Parties;

** = 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.

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1.94.2 **;

1.94.3 Primary and secondary market research;

1.94.4 Promotional Materials; and

1.94.5 Samples (at Cost of Goods) distributed in the United States.

It is understood and agreed that marketing expenses relating to the

Collaboration Products in the United States incurred by Adolor after

** and prior to the formation of the Joint Marketing Committee and the

Joint Steering Committee shall be included as Marketing Expenses but

Marketing Expenses shall not include any: (a) costs associated with

distribution of Collaboration Products to be provided by GSK pursuant

to Section 5.5.2(b); or (b) costs or expenses incurred by a Party for

services that are performed by a Third Party if such services are of a

type that are normally performed by ** unless the Joint Marketing

Committee has designated such services be performed by external

personnel consistent with quality and timeliness objectives. It is

further understood and agreed that Marketing Expenses shall not

include the costs or expenses incurred by a Party for performance of

its Detailing obligations under Article 5.

1.95 "NDA" means a new drug application or supplemental new drug

---

application or any amendments thereto submitted to the FDA in the United States.

1.96 "NDA Acceptance" shall mean the written notification by the FDA

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

that the NDA has met all the criteria for filing acceptance pursuant to 21

C.F.R.(S)314.101.

1.97 **

** = 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.

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**

1.98 "Net Sales Report" shall have the meaning set forth in Section

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

6.6.2.

1.99 "OBD Acute Product" means a Product for the management of opioid

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

induced bowel dysfunction in hospitalized patients or patients discharged from a

hospital for whom prescriptions or **.

1.100 "OBD Chronic Product" means a Product for the management of

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

patients with bowel dysfunction caused by the ** administration of opioids.

1.101 "Officers" shall have the meaning set forth in Section 3.1.4(b).

--------

1.102 "OTC" means the over-the-counter, non-prescription market as

---

opposed to prescription sales.

1.103 "Patent Infringement Claim" shall have the meaning set forth in

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

Section 15.2.1.

1.104 "Patent Infringement Notice" shall have the meaning set forth in

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

Section 15.2.2.

1.105 "Patent Rights" means all existing patents and patent

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

applications and all patent applications hereafter filed, including any

continuations, continuations-in-part, divisions, provisionals or any substitute

applications, any patent issued with respect to any such patent applications,

any reissue, reexamination, renewal or extension (including any supplementary

protection certificate) of any such patent, and any confirmation patent or

registration patent or patent of addition based on any such patent, and all

foreign counterparts of any of the foregoing, or as applicable portions thereof

or individual claims therein.

1.106 "PDM Act" shall have the meaning set forth in Section 7.2.3.

-------

** = 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.

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1.107 "Person" means any natural person, corporation, general

------

partnership, limited partnership, joint venture, proprietorship or other

business organization.

1.108 "Pharmacovigilance Agreement" means the Pharmacovigilance and

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

Global Safety Reporting Agreement to be entered into by the Parties pursuant to

Section 9.6.

1.109 "Phase I Studies" means that portion of the U.S. Development

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

Plan, ROW Development Plan or Development relating to each Collaboration Product

which provides for the first introduction into humans of such Collaboration

Product including small scale clinical studies conducted in normal volunteers or

patients to obtain information on such Collaboration Product's safety,

tolerability, pharmacological activity, pharmacokinetics, drug metabolism and

mechanism of action, as well as early evidence of effectiveness, as more fully

defined in 21 C.F.R. (S) 312.21(a).

1.110 "Phase II Studies" means that portion of the clinical U.S.

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

Development Plan, ROW Development Plan or Development relating to each

Collaboration Product which provides for well controlled clinical trials of such

Collaboration Product in patients, including clinical studies conducted in

patients with the condition, and designed to evaluate clinical efficacy and

safety for such Collaboration Product for one or more indications, as well as to

obtain an indication of the dosage regimen required, as more fully defined in 21

C.F.R. (S) 312.21(b).

1.111 "Phase III Studies" means that portion of the clinical U.S.

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

Development Plan, ROW Development Plan or Development relating to each

Collaboration Product which provides for large scale, pivotal, clinical studies

conducted in a sufficient number of patients and whose primary objective is to

obtain a definitive evaluation of the therapeutic efficacy and safety of the

Collaboration Product in patients for the particular indication in question that

is needed to evaluate the overall risk-benefit relationship of Collaboration

Product and to provide adequate basis for obtaining requisite regulatory

approval(s) and product labeling, as more fully defined in 21 C.F.R. (S)

312.21(c).

1.112 "Phase IV Studies" means a study for a Collaboration Product that

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

is initiated in a Country after receipt of a Marketing Authorization for a

Collaboration Product in the United States and which is expected to be completed

with respect to an Adolor Product during the Adolor Product Promotion Term and

with respect to a GI Product during the GI Product Promotion Term and is

principally intended to support the marketing and Commercialization of such

Collaboration Product in the United States, including without limitation

investigator initiated trials, clinical experience trials and studies conducted

to fulfill local commitments made as a condition of any Marketing Authorization.

1.113 "POI Contract Product Profile" means the contract product profile

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

for the POI Product attached hereto as Schedule 1.113.

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

1.114 "POI Product" means a Product for the prevention, treatment or

-----------

management of post-operative ileus or post-operative bowel dysfunction.

1.115 "** Product" means a Product for the management of ** 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.

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1.116 "Product" means a prescription pharmaceutical product that

-------

contains Compound as the sole active ingredient for use in the Field. For the

avoidance of doubt, Product shall not include products sold in the OTC market.

1.117 "Product Liability Claim" shall have the meaning set forth in

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

Section 14.5.1.

1.118 "Product Supplier" means any manufacturer, packager or processor

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

of Compound or a Collaboration Product for development, promotion and sale.

1.119 "Promotional Materials" means all written, printed, video or

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

graphic advertising, promotional, educational and communication materials (other

than Collaboration Product labeling) for marketing, advertising and promotion of

the Collaboration Products for use in the United States by (a) a Sales

Representative or (b) advertisements or direct mail pieces, in accordance with

the terms of the applicable U.S. Marketing Plan.

1.120 "Receiving Party" shall have the meaning set forth in Section

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

1.30.

1.121 "Recording Party" shall have the meaning set forth in Section

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

6.14.

1.122 "ROW" means Countries other than the United States.

---

1.123 "ROW Development Plan" shall have the meaning set forth in

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

Section 4.7.2.

1.124 "ROW Net Sales Forecast" shall have the meaning set forth in

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

Section 5.11.2(c).

1.125 "ROW Term" means, on a Country-by-Country and Collaboration

--------

Product-by-Collaboration Product basis, the period from the Effective Date until

the later of (a) the expiration or termination of the last Valid Claim of a

Patent Right covering such Collaboration Product in such Country, (b) ** (**)

years from First Commercial Sale in such Country, and (c) the existence of

Generic Competition for ** for such Collaboration Product in such Country.

1.126 "ROW Trademarks" shall have the meaning set forth in Section

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

2.4.3.

1.127 "Royalty Conversion Election" shall have the meaning set forth in

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

Section 6.3.5.

1.128 "Sales Representative" means a professional pharmaceutical sales

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

representative engaged or employed by either Party to conduct, among other sales

responsibilities, Detailing and other promotional efforts with respect to the

Collaboration Products and who has been trained by either Party in accordance

with a training protocol to be agreed upon by the Parties.

1.129 "Samples" means Collaboration Product packaged and distributed to

-------

members of the Target Audience as a complementary trial for use with patients in

the United States and in accordance with the PDM Act.

1.130 "SEC" shall have the meaning set forth in Section 17.1.2.

---

** = 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.

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1.131 "Secondary Detail" means a Detail for a Collaboration Product in

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

which such Collaboration Product receives the second most emphasis and time

during the Call (i.e., at most, only one other product receives greater emphasis

and time during the Call).

1.132 "Selected GSK Product" shall have the meaning set forth in

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

Section 11.2.2.

1.133 "Shire" means Shire Pharmaceuticals Group plc and its successors

-----

and permitted assigns.

1.134 "Specialist Sales Representative" means a Sales Representative

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

who has specialist skills and/or knowledge in relation to the practice areas of

some or all of those physician groups which make up the Target Audience and who,

as a result of such skills and/or knowledge, has as one of his or her principal

functions the promotion of pharmaceutical products to such physician groups.

1.135 "Standard Terms" shall have the meaning set forth in Section

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

10.6.4.

1.136 "Target Audience" means (a) for the POI Product, the physician

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

specialties set forth on Schedule 1.136 with authority to prescribe a

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

pharmaceutical product or issue hospital orders for a pharmaceutical product in

the United States, and (b) for each other Collaboration Product, the physician

specialties identified in the U.S. Marketing Plan for such Collaboration

Product, in each case as may be amended from time to time by the Joint Marketing

Committee.

1.137 "Taxes" shall have the meaning set forth in Section 6.13.

-----

1.138 "Term" means the longer of the United States Term and the ROW

----

Term.

1.139 "Terminated Collaboration Product" shall have the meaning set

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

forth in Section 16.12.

1.140 "Testing Protocol" shall have the meaning set forth in Section

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

3.4.2(a).

1.141 "Third Party" means a Person who is not a Party or an Affiliate

-----------

of a Party.

1.142 "Third Party Claim" shall have the meaning set forth in Section

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

14.3.1.

1.143 "Trademark Infringement Claim" shall have the meaning set forth

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

in Section 2.4.8(a).

1.144 "Trademark Infringement Notice" shall have the meaning set forth

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

in Section 2.4.8(b).

1.145 "United States" means the United States, its territories and

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

possessions.

1.146 "U.S. Development Plan" means the plan for each Collaboration

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

Product designed to achieve the Development for such Collaboration Product for

the United States, including, without limitation, the budget and nature, number

and schedule of Development activities. The initial U.S. Development Plans for

the POI Product and the OBD Chronic Product are attached hereto as Schedule

--------

1.146, and as they may be amended in accordance with the terms of this

-----

Agreement.

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1.147 "U.S. Marketing Plan" means for each Collaboration Product a plan

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

and budget for the promotion and marketing of the Collaboration Products in the

United States as developed and approved under Section 5.1.

1.148 "United States Term" means the longer of the Adolor Product

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

Promotion Term and the GI Product Promotion Term.

1.149 "Valid Claim" means any claim of a pending patent application

-----------

which has not been abandoned or finally rejected without the right of appeal or

which is not knowingly patentable, or any claim from an issued and unexpired

patent included within the Patent Rights which has not been revoked or held

unenforceable or invalid by a decision of a court or other Governmental

Authority of competent jurisdiction, and which has not been disclaimed, denied

or admitted to be invalid or unenforceable through reissue or disclaimer or

otherwise.

1.150 "Withholding Party" shall have the meaning set forth in Section

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

6.13.

ARTICLE 2

RIGHTS AND OBLIGATIONS

2.1 License Grants from Adolor to GSK.

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

2.1.1 United States Development License. Subject to the terms of

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

this Agreement, Adolor grants to GSK, and GSK accepts, an exclusive (except as

to Adolor and its Affiliates) and non-transferable (except in accordance with

Section 2.3) license under the Adolor Patents, Adolor Know-How and Adolor's

rights in the Joint Inventions (a) during the Adolor Product Promotion Term, to

use and Develop Adolor Products for Commercialization in the United States, and

(b) during the GI Product Promotion Term, to make, have made (subject to Section

2.3), use and Develop GI Products for Commercialization in the United States. In

the event the Parties agree pursuant to Article 10 that GSK will manufacture

Adolor Products for sale in the United States, the license grant in Section

2.1.1(a) shall also include rights to make and have made (subject to Section

2.3) Adolor Products in the United States.

2.1.2 ROW Development License. Subject to the terms of this

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

Agreement,during the ROW Term, Adolor grants to GSK, and GSK accepts, an

exclusive and non-transferable (except in accordance with Section 2.3) license

under the Adolor Patents, Adolor Know-How and Adolor's rights in the Joint

Inventions to make, have made (subject to Section 2.3), use and Develop

Collaboration Products for Commercialization in the ROW.

2.1.3 United States Co-Promotion Rights. Subject to the terms of

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

this Agreement, Adolor grants to GSK, and GSK accepts, an exclusive (except as

to Adolor and its Affiliates) and non-transferable (except in accordance with

Section 2.3) right under the Adolor Patents, Adolor Know-How and Adolor's rights

in the Joint Inventions to Co-Promote (a) during the Adolor Product Promotion

Term, Adolor Products with Adolor in the United States, and (b) during the GI

Product

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<PAGE>

Promotion Term, OBD Chronic Product, and other GI Products where Adolor has

elected to fund Development under Section 4.6.5 and where Adolor has not made a

Royalty Conversion Election, with Adolor in the United States.

2.1.4 Commercialization License in United States. Subject to the

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

terms of this Agreement, and in addition to the Co-Promotion rights granted

under Section 2.1.3, during the GI Product Promotion Term, Adolor hereby grants

to GSK, and GSK accepts, an exclusive (except as to Adolor and its Affiliates)

and non-transferable (except in accordance with Section 2.3) license under the

Adolor Patents, Adolor Know-How and Adolor's rights in the Joint Inventions to

make, have made (subject to Section 2.3), use, sell, offer for sale and import

GI Products in the United States.

2.1.5 Commercialization License in ROW. Subject to the terms of

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

this Agreement, during the ROW Term, Adolor hereby grants to GSK, and GSK

accepts, an exclusive and non-transferable (except in accordance with Section

2.3) license under the Adolor Patents, Adolor Know-How and Adolor's rights in

the Joint Inventions to make, have made (subject to Section 2.3), use, sell,

offer for sale and import Collaboration Products in the ROW.

2.1.6 Manufacturing License in the Event of a Shortage. In the

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

event that GSK assumes manufacturing responsibility in accordance with Section

10.9, Adolor, subject to the terms of this Agreement, grants to GSK a

non-exclusive and non-transferable (except in accordance with Section 2.3)

license under the Adolor Patents, Adolor Know-How and Adolor's rights in the

Joint Inventions to make and have made API Compound or formulated Collaboration

Product.

2.1.7 ** Products. Subject to the terms of this Agreement, Adolor

-----------

retains the exclusive right to develop, make, use, import, distribute, sell,

offer for sale and have sold products containing **.

2.2 License Grant from GSK to Adolor. Subject to the terms of this

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

Agreement, GSK grants to Adolor, and Adolor accepts, an exclusive (except as to

GSK and its Affiliates), irrevocable, non-transferable (except in accordance

with Section 2.3) ** license under the GSK Patents, GSK Know-How and GSK's

rights in the Joint Inventions (a) at all times during ** the Adolor Product

Promotion Term, to make, have made, use, sell, have sold, offer for sale and

import Adolor Products in the United States, (b) during the GI Product Promotion

Term, for the OBD Chronic Product and, where Adolor has elected to fund

Development of another GI Product under Section 4.6.5 and in each case where

Adolor has not made a Royalty Conversion Election, to Co-Promote the OBD Chronic

Product and such other GI Products in the United States, (c) **, to make, have

made, use, sell, have sold, offer for sale and import GI Products in the United

States, (d) **, to make, have made, use, sell, have sold, offer for sale

** = 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.

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<PAGE>

and import such Collaboration Product in such Country in the ROW, and (e)**, to

make, have made, use, sell, offer for sale, have sold and import, Combination

Products and Compound in all Countries of the world.

2.3 Sublicensing and Subcontracting. Subject to this Section 2.3,

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

neither Party may sublicense or subcontract its rights under this Agreement to

an Affiliate or a Third Party without the prior written consent of the other

Party.

2.3.1 GSK Sublicensing or Subcontracting to Affiliates. GSK may

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

sublicense or subcontract its rights to Develop or Commercialize in whole or in

part to one or more of its Affiliates, provided that the rights sublicensed or

subcontracted to such Affiliate shall automatically terminate upon a change of

control of such Affiliate in connection with which such Affiliate ceases to be

an Affiliate of GSK.

2.3.2 GSK Sublicensing or Subcontracting to Third Parties.

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

(a) With respect to the Major Market Countries, GSK shall be

prohibited from sublicensing or subcontracting to any Third Party any of GSK's

rights to Commercialize the Collaboration Products without the prior written

consent of Adolor, such consent not to be unreasonably withheld or delayed. With

respect to all Countries of the **, GSK shall be entitled to sublicense or

subcontract to any Third Party any of GSK's rights to Commercialize the

Collaboration Products on a Country-by-Country basis to the extent and only to

the extent where such activity is in accordance with GSK's usual business

practices as applied in such Country.

(b) If set forth in an agreed upon U.S. Development Plan or U.S.

Marketing Plan, or in GSK's discretion with respect to the ROW, GSK shall be

permitted to subcontract its Development activities or Phase IV Studies to one

or more Third Party contract research organizations ("CRO(s)"), or equivalent

---

Third Party entities, to carry out certain Development activities on behalf of

GSK in relation to any Collaboration Product under this Agreement and, for the

avoidance of doubt, such CRO or equivalent Third Party entities shall not be

considered a sublicensee for the purposes of this Section 2.3.

2.3.3 Adolor Sublicensing or Subcontracting to Affiliates. Adolor may

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

sublicense or subcontract its responsibilities to be performed under this

Agreement in whole or in part to one or more of its Affiliates, provided that

the rights sublicensed or subcontracted to such Affiliate shall automatically

terminate upon a change of control of such Affiliate in connection with which

such Affiliate ceases to be an Affiliate of Adolor.

2.3.4 Adolor Sublicensing or Subcontracting to Third Parties. If set

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

forth in the applicable U.S. Development Plan or U.S. Marketing Plan, Adolor may

sublicense or subcontract its Development or Commercialization activities (other

** = 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.

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<PAGE>

than Detailing except as provided in this Section 2.3.4) to a Third Party. The

Parties agree that Adolor may request that GSK provide Sales Representatives to

perform Adolor's Details of Collaboration Products. In the event that GSK

provides such Sales Representatives, the related costs of and/or remuneration

for such Details so performed by GSK shall be agreed in good faith by the

Parties at such time, taking into account both the prevailing Detail Cost and

the cost of Details that could be provided by a Third Party contract sales

organization (whose primary business is to detail pharmaceutical products on

behalf of another party) for comparable number of Details and Sales

Representatives; provided that if GSK performs such Details, Adolor shall not be

considered a Defaulting Party and there shall be no adjustment pursuant to

Section 6.3.4. In the event that GSK does not provide such Sales

Representatives, Adolor may engage a contract sales organization (whose primary

business is to detail pharmaceutical products on behalf of another party) to

perform such Details. In addition, it is understood that Adolor may utilize a

contract sales organization (whose primary business is to detail pharmaceutical

products on behalf of another party) to recruit Sales Representatives for

Adolor.

2.3.5 Liability for Affiliates, Sublicensees and Subcontractors. Each

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

Party shall ensure that each of its Affiliates and permitted sublicensees or

subcontractors accepts and complies with all of the terms and conditions of this

Agreement as if such Affiliates or permitted sublicensees or subcontractors were

a party to this Agreement and each Party shall guarantee its Affiliates' and

permitted sublicensees' or subcontractors' performance under this Agreement.

2.4 Trademarks and Housemarks.

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

2.4.1 United States Trademarks for Adolor Products; Adolor Trade

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

Dress. The Adolor Products shall be Commercialized in the United States under

-----

trademarks and trade dress selected by the Joint Marketing Committee and

approved by the Joint Steering Committee (the "Adolor Product Trademarks"). It

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

is understood that Adolor has submitted to the FDA for consideration the

trademarks "Entereg" and "Alvanop" for possible use with the POI Product. If the

Joint Marketing Committee or the Joint Steering Committee selects a GI Product

Trademark for use in connection with an Adolor Product in the United States, GSK

shall license such GI Product Trademark for use by Adolor in connection with the

Commercialization of such Adolor Product in the United States, in which case

such GI Product Trademark will remain a GI Product Trademark and will not be

deemed an Adolor Product Trademark. The Adolor Product Trademarks shall be owned

by Adolor and GSK agrees to assign any rights it may have in the Adolor Product

Trademarks to Adolor. GSK shall have no rights under this Agreement in or to the

Adolor Product Trademarks or the goodwill pertaining thereto except as

specifically provided herein. GSK and its Affiliates shall utilize the Adolor

Product Trademarks only for the purposes contemplated herein. GSK agrees that

upon termination or expiration of the Adolor Product Promotion Term, it will

discontinue forthwith all use of the Adolor Product Trademarks except for

permitted use in the United States with a GI Product in the United States as set

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forth in the license grant at Section 2.4.2 or with a Collaboration Product in

the ROW under its assigned rights in the ROW as set forth in Section 2.4.3.

Subject to Sections 16.10.2 and 16.11.2, to the extent Adolor licenses any of

its intellectual property to GSK under this Agreement for trade dress purposes

GSK acknowledges that nothing in this Agreement shall give it any right, title

or interest in such intellectual property.

2.4.2 United States Trademarks for GI Products; GSK Trade Dress.

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

The GI Products shall be Commercialized in the United States under trademarks

and trade dress selected by the Joint Marketing Committee and approved by the

Joint Steering Committee (the "GI Product Trademarks"). If an Adolor Product

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

Trademark is so selected for use with a GI Product in the United States, Adolor

shall license such Adolor Product Trademark for use by GSK in connection with

the Commercialization of such GI Product in the United States, in which case

such Adolor Product Trademark will remain an Adolor Product Trademark and will

not be deemed a GI Product Trademark. The GI Product Trademarks shall be owned

by GSK and Adolor agrees to assign any rights it may have in the GI Product

Trademarks to GSK. Adolor shall have no rights under this Agreement in or to the

GI Product Trademarks or the goodwill pertaining thereto except as specifically

provided herein. Adolor and its Affiliates shall utilize the GI Product

Trademarks only for the purposes contemplated herein. Adolor agrees that upon

termination or expiration of the GI Product Promotion Term, it will discontinue

forthwith all use of the GI Product Trademarks with the GI Products, except in

the event a GI Product Trademark is assigned to Adolor pursuant to Section

16.10.4 or 16.12.4 or in the event that a GI Product Trademark is used in

connection with another GI Product or an Adolor Product in the United States

pursuant to Section 2.4.1. Subject to Sections 16.9.5, 16.10.4 and 16.12.4, to

the extent GSK licenses any of its intellectual property to Adolor under this

Agreement for trade dress purposes, Adolor acknowledges that nothing in this

Agreement shall give it any right, title or interest in such intellectual

property.

2.4.3 ROW Trademarks. The Collaboration Products shall be

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

Commercialized in the ROW under trademarks and trade dress selected by GSK (the

"ROW Trademarks"). GSK may select an Adolor Product Trademark or a GI Product

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

Trademark for use in connection with a Collaboration Product in the ROW,

provided that GSK shall use its Commercially Reasonable Efforts to ensure that

such use is consistent with the use of such Adolor Product Trademark or GI

Product Trademark in the United States in connection with Collaboration

Products. In such case Adolor shall promptly take all steps necessary, at the

expense and direction of GSK, to assign the Adolor Product Trademarks for the

Country or Countries in the ROW for which GSK notifies Adolor it wishes to

utilize such Adolor Product Trademark in connection with such Collaboration

Product. After such assignment has been effected, the Adolor Product Trademark

to be used in such Country or Countries shall be deemed a ROW Trademark. Adolor

shall have no rights under this Agreement in or to the ROW Trademarks or the

goodwill pertaining thereto except as specifically provided herein.

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2.4.4 Trademark and Housemark Licenses.

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

(a) Adolor hereby grants to GSK (i) a non-exclusive,

non-transferable (except in accordance with Section 2.3) license to use the

Adolor Housemark in the United States during the Adolor Product Promotion Term

solely in conjunction with the Adolor Products, (ii) an exclusive (except as to

Adolor and its Affiliates), non-transferable (except in accordance with Section

2.3) license to use the Adolor Product Trademarks in the United States during

the Adolor Product Promotion Term solely in conjunction with the Adolor

Products, (iii) a non-exclusive, non-transferable (except in accordance with

Section 2.3) license to use the Adolor Housemark in the United States during the

GI Product Promotion Term solely in conjunction with the GI Products, (iv) an

exclusive (except as to Adolor and its Affiliates), non-transferable (except in

accordance with Section 2.3) license to use the Adolor Product Trademarks in the

United States during the GI Product Promotion Term to the extent selected by GSK

in accordance with Sections 2.4.2 solely in conjunction with the GI Products,

and (v) a non-exclusive, non-transferable (except in accordance with Section

2.3) license to use the Adolor Housemark in the ROW solely in conjunction with

the Collaboration Products. All rights not expressly granted in the Adolor

Housemark and the Adolor Product Trademarks are reserved by Adolor and GSK

acknowledges that nothing in this Agreement shall give it any right, title or

interest in the Adolor Housemark or the Adolor Product Trademarks other than the

licenses granted herein.

(b) GSK hereby grants to Adolor (i) a non-exclusive,

non-transferable (except in accordance with Section 2.3) license to use the GSK

Housemark in the United States during the GI Product Promotion Term solely in

conjunction with the GI Products, (ii) an exclusive (except as to GSK and its

Affiliates), non-transferable (except in accordance with Section 2.3) license to

use the GI Product Trademarks in the United States during the GI Product

Promotion Term solely in conjunction with the GI Products, (iii) a

non-exclusive, non-transferable (except in accordance with Section 2.3) license

to use the GSK Housemark in the United States during the Adolor Product

Promotion Term solely in conjunction with the Adolor Products, and (iv) an

exclusive (except as to GSK and its Affiliates), non-transferable (except in

accordance with Section 2.3) license to use the GI Product Trademarks in the

United States to the extent selected by Adolor in accordance with Section 2.4.1,

subject to Section 16.9.5, solely in conjunction with the Adolor Products. All

rights not expressly granted in the GSK Housemark and the GI Product Trademarks

are reserved by GSK and Adolor acknowledges that nothing in this Agreement shall

give it any right, title or interest in the GSK Housemark or the GI Product

Trademarks other than the license granted herein.

(c) The Parties shall use the Adolor Housemark, GSK

Housemark, the Adolor Product Trademarks, the GI Product Trademarks and the ROW

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Trademarks with the necessary trademark designations and the Parties shall use

Commercially Reasonable Efforts to use the respective Adolor Housemark or GSK

Housemark, the Adolor Product Trademarks, the GI Product Trademarks and the ROW

Trademarks in a manner that does not derogate from the Parties' rights in the

respective trademarks, names and logos and the Parties will take no action that

will interfere or diminish the Parties' rights in their respective trademarks,

names and logos. The Parties agree that all use of the other's trademarks, names

and logos will inure to the benefit of the owner of such trademarks, names and

logos.

2.4.5 Marking of Promotional Materials.

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

(a) In the United States, to the extent permitted by

applicable Laws, the Adolor Housemark and the GSK Housemark shall be given equal

exposure and prominence on all Promotional Materials, labeling, package inserts

or outserts and packaging for the Adolor Products or samples of Adolor Products

during the Adolor Product Promotion Term and GI Products or samples of GI

Products during the GI Product Promotion Term.

(b) In the ROW, to the extent permitted by applicable Laws,

the Adolor Housemark and the GSK Housemark shall be given equal exposure and

prominence on all labeling, package inserts or outserts and packaging for the

Collaboration Products or Samples during the ROW Term.

(c) If any Claim for infringement is brought against a Party

alleging that its use of the other Party's housemark infringes the intellectual

property of a Third Party, the Party with the alleged infringing housemark shall

be responsible for defending such claim and for paying all costs associated with

such defense and shall indemnify and hold harmless the other Party and its

Affiliates and each of their officers, directors, shareholders, employees,

successors and assigns from and against all Losses arising out of or relating to

such Claim.

2.4.6 Non-Use of Similar Marks. Notwithstanding any other provision

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

in this Agreement, during each of the Adolor Product Promotion Term, GI Product

Promotion Term or ROW Term, neither Party nor its Affiliates shall market,

promote, sell and/or distribute any product (other than the Adolor Product, GI

Products or Collaboration Products, as the case may be) under the Adolor Product

Trademarks, the GI Product Trademarks or the ROW Trademarks or any substantially

similar trade names or trademarks.

2.4.7 Trademark Filings and Expenses. Adolor shall be solely

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

responsible for the filing and maintenance of the Adolor Product Trademarks in

the United States and all costs and expenses related thereto. GSK shall be

solely responsible for the filing and maintenance of (a) the GI Product

Trademarks in the United States, and (b) the ROW Trademarks in the ROW, and all

costs and expenses related thereto.

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2.4.8 Trademark Infringement.

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

(a) Infringement Claims by Third Parties. With respect to any

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

and all Claims instituted by Third Parties against Adolor or GSK or any of their

respective Affiliates for trademark infringement involving the use, sale,

license or marketing of a Collaboration Product in the United States during the

United States Term (each, a "Trademark Infringement Claim"), ** and Adolor and

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

GSK will assist one another and cooperate in the defense and settlement of such

Trademark Infringement Claims at the other Party's request; provided, however,

that in all cases referred to in this Section 2.4.8, neither Party shall be

liable for any proportion of its share of the Losses in relation to the

Trademark Infringement Claim **.

(b) Infringement of Adolor Product Trademarks. In the event

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

that Adolor or GSK becomes aware of actual or threatened infringement of an

Adolor Product Trademark during the Term, that Party will promptly notify the

other Party in writing (a "Trademark Infringement Notice"). Adolor will have the

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

right but not the obligation to bring an action with respect to such

infringement against any Third Party for infringement of an Adolor Product

Trademark. ** During the Term, in the event that Adolor does not undertake such

an infringement action with respect to an Adolor Product Trademark, upon

Adolor's written consent, which shall not be unreasonably withheld, refused,

conditioned or delayed, GSK shall be

** = 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.

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permitted to do so. If Adolor has consented to an infringement action but GSK is

not recognized by the applicable court or other relevant body as having the

requisite standing to pursue such action, then GSK may join Adolor as

party-plaintiff. **.

(c) Infringement of GI Product Trademarks. In the event that

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

GSK or Adolor becomes aware of actual or threatened infringement of a GI Product

Trademark during the Term, that Party will promptly notify the other Party in

writing. GSK will have the right but not the obligation to bring an action with

respect to such infringement against any Third Party for infringement of a GI

Product Trademark. **. During the Term, in the event that GSK does not undertake

such an infringement action with respect to a GI Product Trademark, upon GSK's

written consent, which shall not be unreasonably withheld, refused, conditioned

or delayed, Adolor shall be permitted to do so. If GSK has consented to an

infringement action but Adolor is not recognized by the applicable court or

other relevant body as having the requisite standing to pursue such action, then

GSK may be joined as a party-plaintiff. **

** = 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.

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**.

(d) Infringement of ROW Trademarks.

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

(i) In the event that GSK or Adolor becomes aware of

actual or threatened infringement of a ROW Trademark during the ROW Term, that

Party will promptly notify the other Party in writing.

(ii) **.

(iii) **. During the Term, in the event that GSK does not

undertake such an infringement action **, upon GSK's written consent, which

shall not be unreasonably withheld, refused, conditioned or delayed, Adolor

shall be permitted to do so. If GSK has consented to an infringement action but

Adolor is not recognized by the applicable court or other relevant body as

having the requisite standing to pursue such action, then GSK may be joined as a

party-plaintiff. If Adolor elects to pursue such infringement action, GSK may **

** = 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.

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**

(e) Infringement of Adolor Housemark or GSK Housemark. In the

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

event that GSK or Adolor becomes aware of actual or threatened infringement of

the other Party's housemark during the Term, that Party will promptly notify the

other Party in writing. Each Party will have the right but not the obligation to

bring an infringement action against any Third Party in relation to such

infringement of their respective housemark. **

2.5 Intellectual Property.

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

2.5.1 No Other GSK Rights. Except for the express rights granted to

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

GSK in this Agreement, GSK shall not enjoy or exercise any proprietary or

property right or otherwise have any other right, title or interest in the

Adolor Product Trademarks, the Adolor Housemark, the Adolor Inventions, the

Adolor Patents, the Adolor Know-How or in any copyright owned by Adolor or any

of its Affiliates, and GSK shall not represent to any Third Party that it has

any such proprietary or property right, or any other right, title or interest.

2.5.2 No Other Adolor Rights. Except for the express rights granted

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

to Adolor in this Agreement, Adolor shall not enjoy or exercise any proprietary

or property right or otherwise have any other right, title or interest in the

GSK Housemark, the GI Product Trademarks, the ROW Trademarks, the GSK

Inventions, the GSK Patents, the GSK Know-How or in any copyright owned by GSK

or any of its Affiliates, and Adolor shall not represent to any Third Party that

it has any such proprietary or property right, or any other right, title or

interest.

2.5.3 Ownership of Inventions. Each Party shall promptly disclose to

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

the other Party all Inventions made by it during the Term. Adolor shall own all

Adolor Inventions and GSK shall own all GSK Inventions. All Joint Inventions

shall be owned jointly by Adolor and GSK, and each Party hereby consents to the

assignment or license or other disposition by the other Party of its joint

interests in Joint Inventions without the need to seek the consent of the other

Party to such assignment or license or other disposition; provided that any such

assignment, license or other disposition shall at all times be subject to the

grant of rights under Sections 2.1 and 2.2. The determination of inventorship

for Inventions shall be made in accordance with applicable laws relating to

inventorship set forth in the patent laws of the United States (Title 35, United

States Code).

2.6 **

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the Commission. Confidential treatment has been requested with respect to the

omitted portions.

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**

2.7 OTC Rights. During the United States Term or ROW Term, as the case

----------

may be, on a Collaboration Product-by-Collaboration Product basis, Adolor will

not seek to switch a Collaboration Product from prescription status to OTC

status without the prior written consent of GSK. If Adolor intends to directly

or indirectly sell or offer for sale in collaboration with a Third Party (a) any

Collaboration Product as an OTC product in the United States within ** (**)

years following expiration of the United States Term or (b) any Collaboration

Product in the ROW within ** (**) years following expiration of the ROW Term,

then at least ** (**) days prior to taking substantial steps toward

developing such Collaboration Product as an OTC Product, Adolor shall give GSK

notice of such intention, and for the ** (**) day period following delivery

of such notice, the Parties shall negotiate exclusively with each other

commercial terms under which Adolor and GSK would Commercialize such

Collaboration Product as an OTC Product. Neither Party shall be obligated to

agree upon any such terms or to accept any terms proposed by the other Party.

ARTICLE 3

GOVERNANCE OF DEVELOPMENT AND

COMMERCIALIZATION OF PRODUCTS

3.1 Joint Steering Committee.

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

3.1.1 Members; Officers. Within thirty (30) days after the Effective

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

Date, the Parties shall establish a joint steering committee (the "Joint

-----

Steering Committee"), which shall consist of six (6) members, three (3) of whom

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

shall be designated by each of GSK and Adolor and shall have appropriate

expertise, with at least two (2) members from each Party being at least at a

vice president level. Each of GSK and Adolor may replace any or all of its

representatives on the Joint Steering Committee at any time upon written notice

to the other Party. A Party may designate a substitute to temporarily attend and

perform the functions of such Party's designee at any meeting of the Joint

Steering Committee. GSK and Adolor each may, on advance written notice to the

other Party, invite non-member representatives of such Party to attend meetings

of the Joint Steering Committee. The Joint Steering Committee shall be chaired

on an annual rotating basis by a representative of either Adolor or GSK, as

applicable, on the Joint Steering Committee, with Adolor providing the first

such chairperson. The chairperson shall appoint a secretary of the Joint

Steering Committee, who shall be a

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the Commission. Confidential treatment has been requested with respect to the

omitted portions.

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representative of the other Party and who shall serve for the same annual term

as such chairperson.

3.1.2 Responsibilities. The Joint Steering Committee shall

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

perform the following functions:

(a) Manage and oversee the Development and

Commercialization of the Collaboration Products in the United States pursuant to

the terms of this Agreement;

(b) Review and approve the U.S. Development Plans and the

U.S. Marketing Plans for Collaboration Products and any material amendments to

the U.S. Development Plans and U.S. Marketing Plans;

(c) Coordinate Development and Commercialization of the

Collaboration Products in the ROW with the Development and Commercialization of

the Collaboration Products in the United States with appropriate liaison with

the Joint Development Committee and the Joint Marketing Committee;

(d) At each meeting of the Joint Steering Committee,

review a comparison of actual Development Expenses and Marketing Expenses for

the United States to the budgeted Development Expenses and Marketing Expenses

for the United States for the year-to-date, as current as practicable to a date

immediately prior to the date of the meeting;

(e) Review and approve the progress of the other

committees;

(f) Review and approve the trademarks selected under

Section 2.4;

(g) Review and approve "go/no-go" decisions and other

matters referred to the Joint Steering Committee, including, without limitation,

the continued Development of a particular Collaboration Product or the inclusion

of Additional Products;

(h) Life cycle management of, and intellectual property

protection for, the Collaboration Products in the United States;

(i) Approve any and all ** policies and ** in the ** for

Collaboration Products, including **;

(j) In accordance with the procedures established in

Section 3.1.4, resolve disputes, disagreements and deadlocks unresolved by the

other committees; and

(k) Have such other responsibilities as may be assigned

to the Joint Steering Committee pursuant to this Agreement or as may be mutually

agreed upon by the Parties from time to time.

** = 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.

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3.1.3 Meetings. The Joint Steering Committee shall meet in

--------

person at least three (3) times during every Calendar Year, and more frequently

as GSK and Adolor deem appropriate or as required to resolve disputes,

disagreements or deadlocks in the other committees, on such dates, and at such

places and times, as such Parties shall agree; provided that the Parties shall

endeavor to have the first meeting of the Joint Steering Committee within thirty

(30) days after the establishment of the Joint Steering Committee. The Joint

Steering Committee shall arrange to meet in person or convene otherwise to

assess and approve any U.S. Development Plans or U.S. Marketing Plans, if any,

submitted to the Joint Steering Committee in each Calendar Year so that such

plans will be reviewed and approved within thirty (30) days following submission

to the Joint Steering Committee. To the extent any such U.S. Development Plans

or U.S. Marketing Plans are not approved and need to be reformulated by the

Joint Development Committee or Joint Marketing Committee, such plans shall be

reviewed by the Joint Steering Committee as soon as reasonably practicable after

resubmission of same. Meetings of the Joint Steering Committee that are held in

person shall alternate between offices of GSK and Adolor, or such other place as

such Parties may agree. The members of the Joint Steering Committee also may

convene or be polled or consulted from time to time by means of

telecommunications, video conferences, electronic mail or correspondence, as

deemed necessary or appropriate.

3.1.4 Decision-Making.

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

(a) The Joint Steering Committee may make decisions with

respect to any subject matter that is subject to the Joint Steering Committee's

decision-making authority and functions as set forth in Section 3.1.2. Except as

specified in Section 3.1.4(b), all decisions of the Joint Steering Committee

shall be made by unanimous vote or written consent, with GSK and Adolor each

having, collectively, among its respective members, one vote in all decisions.

The Joint Steering Committee shall use ** to resolve the matters within its

roles and functions or otherwise referred to it.

(b) With respect to any issue, if the Joint Steering

Committee cannot reach consensus within ten (10) Business Days after the matter

has been brought to the Joint Steering Committee's attention, then such issue

shall be referred to the Chief Executive Officer of Adolor and the Chairman R&D

of GSK for Development issues and the Chief Executive Officer of Adolor and the

President (U.S.) of GSK for Commercialization issues (the "Officers") for

--------

resolution.**

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the Commission. Confidential treatment has been requested with respect to the

omitted portions.

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**.

(c) Notwithstanding any other provision of this Agreement

to the contrary, the decision to ** shall require the unanimous consent of the

Joint Steering Committee, and such issue shall not be subject to the dispute

resolution provision of Sections 18.5.2 and 18.5.3.

3.2 Joint Development Committee.

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

3.2.1 Members; Officers. Within thirty (30) days after

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

the Effective Date, the Parties shall establish a Development Committee (the

"Joint Development Committee"), and GSK and Adolor shall designate an equal

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

number of representatives, up to a maximum total of eight (8) members on such

Joint Development Committee. Each of GSK and Adolor may replace any or all of

its representatives on the Joint Development Committee at any time upon written

notice to the other Party. Such representatives shall include individuals who

have clinical trial and regulatory experience and expertise in pharmaceutical

drug development. A Party may designate a substitute to temporarily attend and

perform the functions of such Party's designee at any meeting of the Joint

Development Committee. GSK and Adolor each may, on advance written notice to the

other Party, invite non-member representatives of such Party to attend meetings

of the Joint Development Committee. The Joint Development Committee shall be

chaired on an annual rotating basis by a representative of either Adolor or GSK,

as applicable, with Adolor providing the first such chairperson. The chairperson

shall appoint a secretary of the Joint Development Committee, who shall be a

representative of the other Party and who shall serve for the same annual term

as such chairperson.

3.2.2 Responsibilities. The Joint Development Committee

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

shall perform the following functions:

(a) Manage and oversee the preparation and

implementation of the U.S. Development Plans;

(b) As early as necessary in each year beginning

with the first full Calendar Year after the Effective Date, update and amend the

initial U.S. Development Plans and prepare the U.S. Development Plans for each

Collaboration Product for the following Calendar Year so that it can submit such

proposed U.S. Development Plans to the Joint Steering Committee no later than

** of such year for review and approval;

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the Commission. Confidential treatment has been requested with respect to the

omitted portions.

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(c) Prepare the Development strategy and develop

protocols for clinical studies for the Collaboration Products for

Commercialization in the United States;

(d) Review and recommend to the Joint Steering

Committee any material amendments or modifications to the U.S. Development

Plans;

(e) Coordinate and monitor regulatory strategy and

activities for the Collaboration Products in accordance with Article 9;

(f) At each meeting of the Joint Development

Committee, review a comparison of actual Development Expenses for the United

States to the budgeted Development Expenses for the United States in the U.S.

Development Plan for the year-to-date, as current as practicable to a date

immediately prior to the date of the meeting;

(g) Review and recommend to the Joint Steering

Committee "go/no-go" decisions for the Development of Collaboration Products in

the United States; and

(h) Have such other responsibilities as may be

assigned to the Joint Development Committee pursuant to this Agreement or as may

be mutually agreed upon by the Parties from time to time.

3.2.3 Meetings. The Joint Development Committee shall meet in

--------

person at least once during every Calendar Quarter, and more frequently as GSK

and Adolor deem appropriate or as reasonably requested by either such Party, on

such dates, and at such places and times, as such Parties shall agree; provided

that the Parties shall endeavor to have the first meeting of the Joint

Development Committee within thirty (30) days after the establishment of the

Joint Development Committee. Meetings of the Joint Development Committee that

are held in person shall alternate between the offices of GSK and Adolor, or

such other place as the Parties may agree. The members of the Joint Development

Committee also may convene or be polled or consulted from time to time by means

of telecommunications, video conferences, electronic mail or correspondence, as

deemed necessary or appropriate.

3.2.4 Development Budget. The Joint Development Committee shall

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

review on a quarterly basis the actual Development Expenses against the budget

for such expenses in the applicable Calendar Year. If in the course of its

quarterly review of Development Expenses, the Joint Development Committee should

determine for any Collaboration Product that for any study or activity the

actual amounts incurred are likely to be higher than budgeted, the Joint

Development Committee shall review the reasons for such potential overrun and

determine whether such overrun is appropriate. If the Joint Development

Committee determines that such overrun is appropriate, the Joint Development

Committee will assess whether such overrun is likely to result in an overrun of

the budget for Development

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Expenses for such Collaboration Product and if required, will agree on a revised

budget for such Development Expenses for such Collaboration Product for

subsequent approval by the Joint Steering Committee. If the Joint Development

Committee determines that such overrun is not appropriate, the Joint Development

Committee will take such actions as required to remedy the situation.

3.2.5 Decision-Making. The Joint Development Committee may make

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

decisions with respect to any subject matter that is subject to the Joint

Development Committee's decision-making authority and functions as set forth in

Section 3.2.2. All decisions of the Joint Development Committee shall be made by

unanimous vote or written consent, with GSK and Adolor each having collectively,

among its respective members, one vote in all decisions. If the Joint

Development Committee cannot reach consensus within ** (**) Business Days after

it has first met and attempted to reach such consensus, the matter shall be

referred on the ** (**) Business Day to the Joint Steering Committee for

resolution.

3.3 Joint Marketing Committee.

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

3.3.1 Members; Officers. Within thirty (30) days after the

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

Effective Date, the Parties shall establish a commercialization committee (the

"Joint Marketing Committee"), and GSK and Adolor shall designate an equal number

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

of representatives, up to a maximum total of eight (8) members on the Joint

Marketing Committee. Each of GSK and Adolor may replace any or all of its

representatives on the Joint Marketing Committee at any time upon written notice

to the other. Such representatives shall include individuals who have experience

and expertise in pharmaceutical product marketing, sales and regulatory matters.

A Party may designate a substitute to temporarily attend and perform the

functions of such Party's designee at any meeting of the Joint Marketing

Committee. GSK and Adolor each may, upon prior written notice to the other

Party, invite non-member representatives of such Party to attend meetings of the

Joint Marketing Committee. The Joint Marketing Committee shall be chaired on an

annual rotating basis by a representative of either Adolor or GSK, as applicable

with GSK providing the first such chairperson. The chairperson shall appoint a

secretary of the Joint Marketing Committee, who shall be a representative of the

other Party and who shall serve for the same annual term as such chairperson.

3.3.2 Responsibilities. The Joint Marketing Committee shall

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

perform the following functions:

(a) Manage and oversee the preparation and implementation

of the U.S. Marketing Plans;

(b) Review and recommend to the Joint Steering Committee

any material amendments or modifications to the U.S. Marketing Plans, including

those pursuant to Section 5.1.6;

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(c) Coordinate and monitor regulatory strategy and

activities for Phase IV Studies in support of Collaboration Products that are

Commercialized in the United States in accordance with Article 9;

(d) Make any changes to the Target Audience; provided,

however, the Parties shall not be required to implement such changes within one

hundred eighty (180) days of such change;

(e) Discuss the state of the markets for Collaboration

Products in the United States and opportunities and issues concerning the

Commercialization of the Collaboration Products in the United States, including

consideration of marketing and promotional strategy, marketing research plans,

labeling, Collaboration Product positioning and Collaboration Product profile

issues, to determine the kind of marketing and selling efforts that are

appropriate, in accordance with the U.S. Marketing Plans;

(f) Review data and reports arising from and generated in

connection with the Commercialization of the Collaboration Products in the

United States, including, but not limited to the U.S. Marketing Plans, marketing

budgets and sales forecasts;

(g) At each meeting of the Joint Marketing Committee,

review a comparison of actual sales and Marketing Expenses in the United States

to the budgeted Sales and Marketing Expenses in the relevant U.S. Marketing Plan

for the year-to-date, as current as practicable to a date immediately prior to

the date of the meeting;

(h) Review and approve the general guidelines applicable

to particular Collaboration Products to be followed for Promotional Materials to

be used by Adolor and GSK in the promotion of such Collaboration Products (such

guidelines to be consistent with then current U.S. Marketing Plan applicable to

such Collaboration Products); and

(i) Have such other responsibilities as may be assigned

to the Joint Marketing Committee pursuant to this Agreement or as may be

mutually agreed upon by the Parties from time to time.

3.3.3 Meetings. The Joint Marketing Committee shall meet in person

--------

at least once during every Calendar Quarter, and more frequently as GSK and

Adolor deem appropriate or as reasonably requested by either such Party, on such

dates, and at such places and times, as such Parties shall agree; provided that

the Parties shall endeavor to have the first meeting of the Joint Marketing

Committee within thirty (30) days after the establishment of the Joint Marketing

Committee. Meetings of the Joint Marketing Committee that are held in person

shall alternate between the offices of GSK and Adolor, or such other place as

such Parties may agree. The members of the Joint Marketing Committee also may

convene or be polled or

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consulted from time to time by means of telecommunications, video conferences,

electronic mail or correspondence, as deemed necessary or appropriate.

3.3.4 Marketing Budget. The Joint Marketing Committee shall review

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

on a quarterly basis the actual Marketing Expenses against the budget for such

expenses in the applicable Calendar Year. If in the course of its quarterly

review of Marketing Expenses, the Joint Marketing Committee should determine for

any Collaboration Product that for any study or activity the actual amounts

incurred are likely to be higher than budgeted, the Joint Marketing Committee

shall review the reasons for such potential overrun and determine whether such

overrun is appropriate. If the Joint Marketing Committee determines that such

overrun is appropriate, the Joint Marketing Committee will assess whether such

overrun is likely to result in an overrun of the budget for Marketing Expenses

for such Collaboration Product on an annual basis and if required, will agree on

a revised budget for such Marketing Expenses for such Collaboration Product for

subsequent approval by the Joint Steering Committee. If the Joint Marketing

Committee determines that such overrun is not appropriate, the Joint Marketing

Committee will take such actions as required to remedy the situation.

3.3.5 Decision-Making. The Joint Marketing Committee may make

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

decisions with respect to any subject matter that is subject to the Joint

Marketing Committee's decision-making authority and functions as set forth in

Section 3.3.2. All decisions of the Joint Marketing Committee shall be made by

unanimous vote or written consent, with GSK and Adolor each having collectively,

among its respective members, one vote in all decisions. If the Joint Marketing

Committee cannot reach consensus within ** (**) Business Days after it has first

met and attempted to reach such consensus, the matter shall be referred on the

** (**) Business Day to the Joint Steering Committee for resolution.

3.4 Joint Supply Committee.

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

3.4.1 Members; Officers. Within thirty (30) days after the Effective

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

Date, the Parties shall establish a supply committee (the "Joint Supply

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

Committee"), and GSK and Adolor shall designate an equal number of

---------

representatives, up to a maximum total of eight (8) members on such Joint Supply

Committee. Each of GSK and Adolor may replace any or all of its representatives

on the Joint Supply Committee at any time upon written notice to the other

Party. Such representatives shall include individuals who have supply chain

management experience. A Party may designate a substitute to temporarily attend

and perform the functions of such Party's designee at any meeting of the Joint

Supply Committee. GSK and Adolor each may, on advance written notice to the

other Party, invite non-member representatives of such Party to attend meetings

of the Joint Supply Committee. The Joint Supply Committee shall be chaired on an

annual rotating basis by a representative of either Adolor or GSK, as

applicable, with GSK providing the first such chairperson. The chairperson shall

appoint a secretary of the Joint Supply Committee, who shall be a representative

of the other Party and who shall serve for the same annual term as such

chairperson.

** = 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.

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3.4.2 Responsibilities. The Joint Supply Committee shall perform

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

the following functions:

(a) Manage and oversee the activities in relation to

manufacture and supply of API Compound and Collaboration Products for use in

Development and Commercialization and establish procedures and protocols for

testing API Compound and Collaboration Products to ensure that such API Compound

and Collaboration Products comply with the specifications (the "Testing

-------

Protocol"). The Parties will utilize such Testing Protocol with respect to API

--------

Compound and Collaboration Product that they may receive from Product Suppliers

to ensure that such API Compound or Collaboration Product meets specifications;

(b) Recommend and coordinate necessary adjustments to the

manufacturing schedule to ensure it is meeting the needs for all Collaboration

Products;

(c) Coordinate allocation of API Compound in the event of a

shortage between the United States and the ROW, it being understood that, in the

event of **;

(d) Review the quality of the manufacture of the

Collaboration Products, reviewing as appropriate reports of the manufacturers of

API Compound and Collaboration Products and reports as to the quality of any

packaging that bears the relevant trademarks or housemarks of the Parties (as

owned by or licensed to the relevant Party under Section 2.4) as prescribed by

this Agreement;

(e) Recommend and implement optimal inventory levels and

safety stock targets;

(f) Set improvement targets and monitor performance against

these targets for cost, yield, delivery and other appropriate measures;

(g) Establish guidelines to facilitate improved efficiencies

and compliance with current Good Manufacturing Practices by Product Suppliers;

and

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the Commission. Confidential treatment has been requested with respect to the

omitted portions.

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(h) Have such other responsibilities as may be assigned to

the Joint Supply Committee pursuant to this Agreement or as may be mutually

agreed upon by the Parties from time to time.

3.4.3 Meetings. The Joint Supply Committee shall meet in person at

--------

least once during every Calendar Quarter, and more frequently as GSK and Adolor

deem appropriate or as reasonably requested by either such Party, on such dates,

and at such places and times, as such Parties shall agree; provided that the

Parties shall endeavor to have the first meeting of the Joint Supply Committee

within thirty (30) days after the establishment of the Joint Supply Committee.

Meetings of the Joint Supply Committee that are held in person shall alternate

between the offices of GSK and Adolor, or such other place as the Parties may

agree. The members of the Joint Supply Committee also may convene or be polled

or consulted from time to time by means of telecommunications, video

conferences, electronic mail or correspondence, as deemed necessary or

appropriate.

3.4.4 Decision-Making. The Joint Supply Committee may make

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

decisions with respect to any subject matter that is subject to the Joint Supply

Committee's decision-making authority and functions as set forth in Section

3.4.2. All decisions of the Joint Supply Committee shall be made by unanimous

vote or written consent, with GSK and Adolor each having collectively, among its

respective members, one vote in all decisions. If the Joint Supply Committee

cannot reach consensus within ** (**) Business Days after it has first met and

attempted to reach such consensus, the matter shall be referred on the ** (**)

Business Day to the Joint Steering Committee for resolution. Notwithstanding the

foregoing, any matter relating to supply of API Compound or any Collaboration

Product assigned for decision-making to a Party in Article 10 or in the further

agreements between the Parties contemplated thereby shall not be subject to

referral to the Joint Steering Committee.

3.5 Minutes of Committee Meetings. Definitive minutes of all committee

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

meetings shall be finalized no later than thirty (30) days after the meeting to

which the minutes pertain as follows:

3.5.1 Distribution of Minutes. Within ten (10) days after a

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

committee meeting, the secretary of such committee shall prepare and distribute

to all members of such committee draft minutes of the meeting. Such minutes

shall provide a list of any issues yet to be resolved, either within such

committee or through the relevant resolution process.

3.5.2 Review of Minutes. The Party members of each committee shall

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

have ten (10) days after receiving such draft minutes to collect comments

thereon and provide them to the secretary of such committee.

3.5.3 Discussion of Comments. Upon the expiration of such second ten

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

(10) day period, the Parties shall have an additional ten (10) days to discuss

each other's comments and finalize the minutes. The secretary and chairperson(s)

of such

** = 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.

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committee shall each sign and date the final minutes. The signature of such

chairperson(s) and secretary upon the final minutes shall indicate each Party's

assent to the minutes.

3.6 Expenses. Each Party shall be responsible for all travel and related

--------

costs and expenses for its members and other representatives to attend meetings

of, and otherwise participate on, a committee.

3.7 Initial Coordination Efforts. The Parties intend, following the

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

Effective Date, to organize meetings of internal staff to communicate and

explain the provisions of this Agreement to ensure the efficient and timely

Development and Commercialization of the Collaboration Products.

ARTICLE 4

DEVELOPMENT OF PRODUCTS

4.1 Responsibilities of the Parties. Subject to the general oversight of

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

the Joint Development Committee, and subject in all instances to the specific

provisions relating to regulatory matters referred to in Article 9:

4.1.1 Adolor Products. Adolor shall have the overall responsibility

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

for the performance of all Development activities, including regulatory filings,

for each Adolor Product that is required to obtain Marketing Authorization for

the Adolor Products in the United States and, in furtherance thereof, the

Parties shall perform the Development activities, all in accordance with the

applicable U.S. Development Plan, for an Adolor Product. The Parties acknowledge

that Adolor is in the process of conducting clinical studies on the POI Product

necessary to file the NDA.

4.1.2 OBD Chronic Product. GSK shall have the overall responsibility

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

for the performance of all Development activities, including regulatory filings,

of the OBD Chronic Product that is required to obtain Marketing Authorization

for the OBD Chronic Product in the United States and, in furtherance thereof,

the Parties shall perform Development activities, all in accordance with the

applicable U.S. Development Plan, for the OBD Chronic Product. The Parties

acknowledge that Adolor is in the process of conducting clinical studies on the

OBD Chronic Product necessary to file the NDA and such activities **. To the

extent such transfer is not timely made, the time period of any delay in

transfer shall toll the timeline for Development of the OBD Chronic Product as

set forth in the applicable U.S. Development Plan.

4.1.3 Other GI Products. GSK shall be solely responsible for the

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

performance of all Development activities, including regulatory filings, for

each GI Product (other than the OBD Chronic Product covered in Section 4.1.2)

that is required to obtain Marketing Authorization in the United States for such

GI Products in accordance with the applicable U.S. Development Plan for such GI

Products.

** = 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.

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4.2 Obligations for Development.

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

4.2.1 General. The Parties shall use ** to Develop the Collaboration

-------

Products for Commercialization.

4.2.2 GSK's Obligations. In furtherance of the foregoing, and

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

subject to GSK's termination rights pursuant to Article 16 (including those

safety related termination rights pursuant to Section 16.4), **.

4.3 Additional Products. At any time after the Effective Date, either

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

Party may make a written proposal to the Joint Development Committee regarding

the Development of an Additional Product. Such proposal shall include (i) any

data and other information in its possession which may be relevant to the use of

the proposed Product, (ii) a reasonably detailed outline of the major

Development activities required to obtain Marketing Authorization for such

proposed Product in the United States, including a timeline for performing such

activities, (iii) an estimated budget for the expected Development Expenses and

Marketing Expenses for such proposed Product, (iv) an appropriate market

analysis of the proposed Product (including market size, competitive analysis,

etc.), and (v) preliminary sales forecasts and estimated Cost of Goods for the

proposed Product. Thereafter, the Joint Development Committee shall meet in

order to review such proposal.

4.3.1 Inclusion of Additional Products. With respect to a proposal

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

pursuant to Section 4.3, if the Joint Development Committee accepts, or if the

Joint Development Committee cannot agree and the Joint Steering Committee

unanimously accepts, such proposal, such proposed Product shall be an Additional

Product, and the Joint Development Committee shall prepare a U.S. Development

Plan for such Additional Product. The Joint Development Committee shall also at

the same time designate such Additional Product as either an Adolor Product or a

GI Product, it being understood that the ** Product and any other Additional

Product that is to be primarily promoted to or used by health care providers in

** = 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.

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hospitals shall be designated an Adolor Product, unless otherwise mutually

agreed by the Parties. In the event of disagreement between the Parties

regarding the inclusion of an Additional Product within the Joint Development

Committee such that the matter is referred to the Joint Steering Committee, the

Joint Steering Committee must agree unanimously upon its inclusion even if such

proposed Additional Product has already been designated by the Joint Development

Committee as an Adolor Product or a GI Product as contemplated under this

Section 4.3.1 and, therefore, the provisions of Section 3.1.4(b) shall not

apply.

4.3.2 Disagreement Regarding Additional Product. If the Joint

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

Development Committee or the Joint Steering Committee, as the case may be, does

not accept such proposal (unanimously in the case of the Joint Steering

Committee), such proposed Additional Product shall not become a Collaboration

Product; provided, however, if GSK proposes an Additional Product and Adolor

does not desire to Develop or Commercialize such proposed Additional Product in

the United States, GSK may Develop and Commercialize such proposed Additional

Product in the ROW subject to Section 4.3.3.

4.3.3 Independent Development and Commercialization of

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

Additional Products in the ROW.

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

(a) If GSK desires to Develop and Commercialize a

proposed Additional Product in the ROW pursuant to Section 4.3.2, GSK may do so,

provided that:

(i) the Development or Commercialization of such

Additional Product in ** does not ** on ** being Developed or Commercialized in

**; and

(ii) GSK takes into account the goal of optimizing

the best overall commercial potential of the Collaboration Products.

(b) Subject to this Section 4.3.3, if GSK elects to

Develop or Commercialize such proposed Additional Products in the ROW, then (i)

such proposed Additional Products shall be referred to herein as a "GSK Other GI

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

Product", (ii) GSK shall be solely responsible for all costs and expenses

-------

related to the Development and Commercialization in the ROW of such GSK Other GI

Product, and (iii) all provisions of this Agreement relating to Collaboration

Products in the ROW shall apply to such GSK Other GI Product.

(c) Notwithstanding anything in the foregoing to the

contrary, the Development and Commercialization of the GSK Other GI Product in

the ROW shall be subject to the oversight of the Joint Development Committee,

Joint Marketing Committee and the Joint Steering Committee in accordance with

Sections 3.1.2(c).

** = 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.

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4.4 U.S. Development Plans.

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

4.4.1 Initial U.S. Development Plan for POI Product. The

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

initial U.S. Development Plan for all Development activities for the POI

Product, which the Parties hereby approve, is attached to this Agreement as

Schedule 1.146.

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

4.4.2 Initial U.S. Development Plan for OBD Chronic Product.

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

The initial U.S. Development Plan for all Development activities for the OBD

Chronic Product, which the Parties hereby approve, is attached to this Agreement

as Schedule 1.146. In the United States, the average total daily dose of

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

Compound in an OBD Chronic Product recommended in the FDA approved label shall

be not more than one (1) milligram.

4.4.3 U.S. Development Plans for the ** Product and

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

** Product. **. In the United States, the total daily dose of Compound (in

----------

milligrams) in either the ** Product or the ** Product shall be less than **

percent (**%) of the average total daily dose of Compound (in milligrams)

recommended in the FDA approved label in the POI Product. In the event that a

Collaboration Product other than the POI Product receives the first Marketing

Authorization Approval in the United States, then such percentage limitation on

dose of Compound shall be redefined by the Parties.

4.4.4 U.S. Development Plan for OBD Acute Product. The

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

Parties acknowledge that Adolor is ** in connection with the Development of the

POI Product and the cost of such study will be included as a Development Expense

for the purposes of Section 4.6.2. **. If Adolor desires to proceed with the

Development of the OBD Acute Product and such Development will not or is not

likely to **, Adolor shall so notify the Joint Development Committee (of its

desire to proceed with Development of the OBD Acute Product and the reasons why

such Development will not significantly or adversely affect the commercial

viability of the POI Product), and thereafter, in accordance with Section 4.4.5,

the Parties shall proceed with the Development of the OBD Acute Product subject

to Section 4.6.1. In the United States, the total daily dose of Compound (in

milligrams) in the OBD Acute Product shall not be less than ** percent (**%) of

the average total daily dose of Compound (in milligrams) recommended in the FDA

approved label in the POI Product. In the event that a Collaboration Product

other than the POI Product receives the first Marketing Authorization Approval

in the United States, then such percentage limitation on dose of Compound shall

be redefined by the Parties.

** = 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.

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4.4.5 U.S. Development Plans for Additional Products. When an

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

Additional Product is added as a Collaboration Product pursuant to Section 4.3,

within sixty (60) days following the date of such inclusion, for those

Additional Products designated Adolor Products, Adolor shall prepare, and for

those Additional Products designated GI Products, GSK shall prepare, for review

by the Joint Development Committee and approval by the Joint Steering Committee,

a U.S. Development Plan for each such Additional Product.

4.4.6 Updates to the U.S. Development Plans. As early as

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

necessary in each year beginning with the first full Calendar Year after the

Effective Date, the Joint Development Committee shall update and amend the

initial U.S. Development Plans and prepare the U.S. Development Plans for each

Collaboration Product for the following Calendar Year so that it can submit such

proposed U.S. Development Plans to the Joint Steering Committee no later than

** of such year for review and approval.

4.4.7 Criteria for U.S. Development Plans. The U.S.

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

Development Plan for each Collaboration Product shall contain at a minimum a

list and description of preclinical and clinical activities, timelines for the

performance of studies in support of the Development activities for such

Collaboration Product and a budget for the Development Expenses to complete such

Development activities.

4.5 Implementation of U.S. Development Plans. Each Party will

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

inform the Joint Development Committee of ongoing implementation of the U.S.

Development Plan and consider timely recommendations for improving the U.S.

Development Plan. In connection with the preparation and implementation of the

U.S. Development Plan, Adolor and GSK will make available to the Joint

Development Committee any information then in their possession pertaining to the

Collaboration Products useful for such Development activities.

4.6 Development Funding.

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

4.6.1 Development Budgets. The Development budgets for each

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

Collaboration Product to be Commercialized in the United States shall be set

forth in the U.S. Development Plan for such Collaboration Product. Such

Development budget shall be sufficient to fund all necessary studies and related

activities necessary to obtain Marketing Authorization Approval for such

Collaboration Product. Notwithstanding the foregoing, unless otherwise agreed to

by the Parties, the total Development budget for an Adolor Product, the OBD

Chronic Product or for any other GI Product for which Adolor elects to fund

Development Expenses pursuant to Section 4.6.5, shall not ** percent (**%) of

the budget set forth in the most recently approved U.S. Development Plan for

such Collaboration Product. The budgets for the POI Product and the OBD Chronic

Product are set forth in the applicable U.S. Development Plan attached hereto as

Schedule 1.146. Subject to the percentage increase provisions of this Section

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

4.6.1, the initial Development budget for the OBD Acute Product shall not exceed

** United States Dollars (US$**).

** = 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.

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4.6.2 Adolor Products in the United States. Subject to

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

reconciliation as provided in Section 6.7.5, Adolor shall be responsible and pay

for ** percent (**%) and GSK shall be responsible and pay for ** percent (**%)

of the Development Expenses for each Adolor Product for Commercialization in the

United States incurred from January 1, 2002 through the First Commercial Sale

for such Adolor Product. Thereafter, Development Expenses, if any, for each

Adolor Product shall be shared in accordance with **. With respect to the OBD

Acute Product, Adolor shall be solely responsible for (and such expenses shall

not be deemed Development Expenses) expenses related to the Development of the

OBD Acute Product incurred prior to the determination to proceed with the

Development of the OBD Acute Product in accordance with Section 4.4.4 other than

those expenses associated with clinical study 14CL306 which are set forth in

Schedule 1.146.

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

4.6.3 OBD Chronic Product and Other GI Products in the United

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

States. Subject to reconciliation as provided in Section 6.7.5, Adolor shall be

------

responsible and pay for ** percent (**%) and GSK shall be responsible and pay

for ** percent (**%) of the Development Expenses in connection with the

Development of the OBD Chronic Product for Commercialization in the United

States incurred from January 1, 2002 through the First Commercial Sale for such

OBD Chronic Product as set forth in the U.S. Development Plan for the OBD

Chronic Product attached hereto as Schedule 1.146. Thereafter, Development

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

Expenses, if any, for the OBD Chronic Product shall be shared in accordance with

**. Subject to Section 4.6.5, GSK shall have sole responsibility to pay for all

Development Expenses incurred in connection with the Development of any and all

other GI Products.

4.6.4 Payment of Expenses; Development Expense Account.

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

Unless otherwise agreed to by the Joint Development Committee, all Development

Expenses for the POI Product for Commercialization in the United States shall be

incurred by Adolor, subject to reimbursement as provided for herein. Subject to

each Party's relative percentage to fund Development Expenses set forth in this

Section 4.6 and reconciliation as provided in Section 6.7.5 and as set forth in

the preceding sentence, each Party shall be responsible to pay for all

Development Expenses incurred in performing its obligations in connection with

any Development activities under a U.S. Development Plan. Each Party shall

charge all such expenses so incurred to a separate account created by it on its

books and records solely for the purpose of tracking Development Expenses,

identifying all Development Expenses by Collaboration Product being Developed.

4.6.5 Election to Fund GI Products in the United States.

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

(a) Notwithstanding Section 4.6.3, at Adolor's sole

and absolute discretion, Adolor may elect to fund ** percent (**%) of the

Development Expenses of any GI Product in the United States (other than the OBD

** = 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.

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Chronic Product, which is set forth in Section 4.6.3) incurred from the

commencement of any ** Study for such GI Product (it being understood that the

studies and activities for such GI Product of the type set forth on Schedule

--------

4.6.5A shall be included in the Development Expenses at ** percent (**%) of the

------

cost thereof in recognition of the applicability of such studies or activities

in the ROW as well as in the United States). As soon as practicable after

completion of all ** Studies, and a decision by GSK to proceed to a ** Study for

a GI Product, GSK shall provide Adolor for its review results of all such **

Studies and any updates to the most recent U.S. Development Plan, proposed **

Study protocols and a proposed U.S. Marketing Plan for such GI Product. Such

proposed U.S. Marketing Plan shall be subject to the procedures set forth in

Schedule 4.6.5B. Adolor's election to fund such Development Expenses of a GI

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

Product (which shall be made on a GI Product-by-GI Product basis) shall be made

by Adolor providing written notice to GSK of its election to fund Development

Expenses no more than thirty (30) Business Days after Adolor's receipt of all

such information. Adolor's obligations to fund such Development Expenses for any

GI Product pursuant to this Section 4.6.5 shall continue from the date of such

written notice unless and until Adolor makes a Royalty Conversion Election for

such GI Product as provided in Section 6.3.5. In the event that the dosage form

and strength for the ** Product and the ** Product are the same, then Adolor

shall make the same election with respect to funding Development Expenses in the

United States or making a Royalty Conversion Election for both the ** Product

and the ** Product.

(b) In the event that Adolor has elected not to fund

** percent (**%) of such Development Expenses of a GI Product, then, within

ninety (90) days following the NDA Acceptance date with respect to such GI

Product, GSK shall provide to Adolor a report of the actual Development Expenses

for such GI Product through the conclusion of ** Studies. In the event that such

actual Development Expenses are less than ** percent (**%) of the proposed

budget as set forth in the information submitted by GSK under subsection (a)

above, Adolor shall have thirty (30) days after receipt of such report to elect

to pay GSK an amount equal to ** percent (**%) of the actual Development

Expenses incurred from the commencement of any ** Study for such GI Product and

thereby share in the GI Product Marketing Contribution for such GI Product in

accordance with Section 6.3.2 and subject to Adolor's right to make a Royalty

Conversion Election for such GI Product.

4.7 Development in the ROW.

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

4.7.1 GSK Responsibility. GSK shall have sole responsibility

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

for Developing Collaboration Products for Commercialization in the ROW. GSK

shall bear all

** = 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.

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costs and expenses associated with the Development of Products for

Commercialization in the ROW.

4.7.2 ROW Development Plan; Coordination; Semi-Annual

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

Reports. As early as necessary in each year beginning with the first full

-------

Calendar Year after the Effective Date, GSK shall prepare a Development plan for

each Collaboration Product in the ROW (each, a "ROW Development Plan") so that

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

it can submit such ROW Development Plans to the Joint Steering Committee no

later than September 30 of such year for review. GSK shall coordinate its

Development activities for Collaboration Products in the ROW with the Joint

Development Committee and provide the Joint Development Committee semi-annual

reports within thirty (30) days after June 30 and December 31 of each Calendar

Year. Such reports shall set forth in summary form the results of GSK's

Development activities with respect to Collaboration Products for

Commercialization in the ROW performed during such semi-annual period and any

updates to such ROW Development Plan.

4.7.3 Decisions with Respect to Products in the ROW. Subject

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

to Section 3.1.4, GSK shall have the sole discretion with respect to Development

decisions for Collaboration Products for Commercialization in the ROW.

4.7.4 OBD Acute Product in the ROW. The total daily dose of

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

Compound (in milligrams) in the OBD Acute Product Commercialized in the ROW

shall be ** the total daily dose of Compound (in milligrams) in the

label approved by the relevant Governmental Authority for the GI Products

Commercialized in the ROW.

4.8 Fulfillment of Obligations. It is understood that, in

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

fulfilling its obligations under this Agreement, each Party shall be free to

fulfill its obligations within its existing organizational structure. Upon

mutual agreement of the Parties, representatives from a Party shall be entitled

to attend, on an observer basis, meetings of the other Party's internal working

groups responsible for the Development of the Collaboration Products.

4.9 Transfer of Data. As soon as practicable but in no event more

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

than thirty (30) days after the Effective Date, the Parties shall determine what

data and materials relating to Compound, GI Products and Adolor Products in the

ROW are necessary for GSK's Development obligations pursuant to this Article 4,

and establish a process for transferring copies of such data and material to GSK

(including, to the extent available, in appropriate electronic format) or

provide means of access thereto reasonably acceptable to GSK.

4.10 Right to Audit. Each Party shall use Commercially Reasonable

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

FEfforts to ensure that the other Party's authorized representatives, and shall

ensure that Governmental Authorities, in both cases to the extent permitted by

applicable Law, may, during regular business hours, (a) examine and inspect its

facilities or, subject to any Third Party confidentiality restrictions or

obligations, the facilities of any subcontractor or any investigator site used

by it in the performance of Development of a Collaboration Product, and (b)

inspect and

** = 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.

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copy all data, documentation and work products relating to the activities

performed by it or, subject to any Third Party confidentiality restrictions or

obligations, the subcontractor or investigator site, including, without

limitation, the medical records of any patient participating in any clinical

study. This right to inspect and copy all data, documentation, and work products

relating to a Collaboration Product may be exercised at any time during the Term

(subject to each Party's record retention policies then in effect), or such

longer period as shall be required by applicable Law.

ARTICLE 5

CO-PROMOTION, DETAILING AND COMMERCIALIZATION

5.1 U.S. Marketing Plans.

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

5.1.1 General. The Joint Marketing Committee shall be responsible for

-------

preparing and implementing a U.S. Marketing Plan for each Collaboration Product.

Each U.S. Marketing Plan shall define the goals and objectives for

Commercializing the Collaboration Products in the United States in the pertinent

Calendar Year consistent with the applicable U.S. Development Plan.

5.1.2 Initial U.S. Marketing Plan for the POI Product. Within

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

one-hundred fifty (150) days after the Effective Date, the Joint Marketing

Committee shall prepare the U.S. Marketing Plan for the Commercialization

activities for the POI Product for the ** and the ** (**) Calendar Years after

the projected date of First Commercial Sale of the POI Product in the United

States in accordance Section 5.1.6, which such U.S. Marketing Plan shall include

the minimum Detail Requirements set forth on Schedule 5.7, the minimum Marketing

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

Expenses set forth on Schedule 5.1.2 and the POI Contract Product Profile.

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

5.1.3 Updated U.S. Marketing Plan for the POI Product. As early as

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

necessary in each Calendar Year beginning with the ** full Calendar Year after

the Effective Date, the Joint Marketing Committee shall amend and update the

U.S. Marketing Plan for the POI Product for the for the pre-launch period and

the following ** (**) Calendar Years for submission of such proposed U.S.

Marketing Plan to the Joint Steering Committee no later than ** of such year for

review and approval.

5.1.4 U.S. Marketing Plan for OBD Chronic Product. Within ** (**)

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

days after filing the ** for the OBD Chronic Product, the Parties shall in good

faith review and mutually agree in good faith upon the content of a U.S.

Marketing Plan for the OBD Chronic Product. If no such mutual agreement is

reached, **. For purposes of this Section 5.1.4, in the situation where GSK is

not actively Developing or Commercializing the ** Product or ** Product in the

United States, "in good faith" means that Adolor has conducted and completed

such discussions with GSK on the content of such U.S. Marketing

** = 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.

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Plan, with Adolor waving as its primary objective retention of the OBD Chronic

Product within the scope of this Agreement.

5.1.5 Initial U.S. Marketing Plans for Other Collaboration Products.

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

Commencing at least ** (**) full Calendar Years prior to the projected First

Commercial Sale of a Collaboration Product (other than the POI Product), the

Joint Marketing Committee will commence preparing an initial ** (**) year U.S.

Marketing Plan for such Collaboration Product for the pre-launch period and the

three (3) Calendar Years after the projected date of First Commercial Sale for

review and approval by the Joint Steering Committee. As early as necessary in

each Calendar Year thereafter, the Joint Marketing Committee shall amend and

update each U.S. Marketing Plan for such other Collaboration Products for the

for the pre-launch period and the following ** (**) Calendar Years for

submission of such proposed U.S. Marketing Plan to the Joint Steering Committee

no later than ** of such year for review and approval.

5.1.6 Contents of Each U.S. Marketing Plan. Each U.S. Marketing Plan

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

shall encompass at least ** (**) Calendar Years and shall contain at a

minimum:

(a) **

(b) Market research and strategy, including market size,

dynamics, growth, customer segmentation, competitive analysis and Collaboration

Product positioning;

(c) Annual sales forecasts;

(d) Advertising and promotion programs and strategies, including

sales literature, promotional premiums, media plans, symposia and speaker

programs;

(e) Sales plans and activity, including sales force training,

projected Detailing in excess of the minimum Detail Requirements, where

applicable, and for each Party, development of appropriate sales training

materials, and strategy and budget for Samples;

** = 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.

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(f) Phase IV Studies to be conducted for use in the United

States, which studies shall be included in the then-current U.S. Marketing Plan

subject to Section 5.2.1; and

(g) Identification of the total minimum Details required to

support the Collaboration Product (other than the POI Product) during such **

(**) Calendar Years including, where applicable in relation to any GI Product, a

firm indication of the number of Sales Representatives and Details to be

provided by Adolor in such period.

5.1.7 Budget for Marketing Expenses. In addition to the items

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

enumerated in Section 5.1.6, each U.S. Marketing Plan shall set forth the total

budget for Marketing Expenses for such Collaboration Product. Such Marketing

Expense budget shall be sufficient to fund all necessary pre-launch, launch and

related activities necessary to optimize Commercialization of each Collaboration

Product. Notwithstanding the foregoing, unless otherwise agreed to by the

Parties, the total budget for the Marketing Expenses in a Calendar Year for an

Adolor Product or a GI Product for which Adolor is receiving a portion of the GI

Product Marketing Contribution shall not exceed ** percent (**%) of the budget

set forth in the most recently approved U.S. Marketing Plan for such

Collaboration Product. In the event that Marketing Expenses incurred by a Party

exceed the budgeted Marketing Expenses, the Party incurring such excess

Marketing Expenses shall be solely responsible for such expenses unless

otherwise mutually agreed in writing by the Parties.

5.2 Marketing Funding.

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

5.2.1 Adolor Products in the United States. Subject to reconciliation

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

as provided in Section 6.7.5, on an Adolor Product-by-Adolor Product basis,

Adolor shall be responsible and pay for ** percent (**%) and GSK shall be

responsible and pay for ** percent (**%) of the Marketing Expenses for each

Adolor Product for Commercialization in the United States incurred from **

through the First Commercial Sale for such Adolor Product. Thereafter, Marketing

Expenses for each Adolor Product shall be shared in accordance with the sharing

of the Adolor Product Marketing Contribution for such Adolor Product as adjusted

pursuant to Section 6.3.4. Notwithstanding the foregoing, if a ** Study for an

Adolor Product is not commenced earlier than ** (**) years prior to the

expiration of the Adolor Product Promotion Term and such ** Study has no

applicability to a Collaboration Product in any Country in the ROW, Adolor shall

be responsible and pay for ** (**%) of any such ** Study.

5.2.2 OBD Chronic Product in the United States. Subject to

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

reconciliation as provided in Section 6.7.5, Adolor shall be responsible and pay

for ** percent (**%) and GSK shall be responsible and pay for ** percent (**%)

of the Marketing Expenses in connection with the OBD Chronic Product for

Commercialization in the United States incurred from the Effective Date through

** = 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.

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the First Commercial Sale for such OBD Chronic Product. Thereafter, Marketing

Expenses for the OBD Chronic Product shall be shared in accordance with the

sharing of the GI Product Marketing Contribution for such OBD Chronic Product as

adjusted pursuant to Section 6.3.4. Notwithstanding the foregoing, upon notice

by Adolor to GSK of a Royalty Conversion Election, GSK shall be solely

responsible and pay for all Marketing Expenses relating to periods after such

notice for the OBD Chronic Product for which the Royalty Conversion Election was

made.

5.2.3 Other GI Products in the United States. Provided that Adolor

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

elects to fund Development Expenses for a GI Product (other than the OBD Chronic

Product) pursuant to Section 4.6.5 and subject to reconciliation as provided in

Section 6.7.5, Adolor shall, from and after the date of such election, be

responsible and pay for ** percent (**%) and GSK shall be responsible

and pay for ** percent (**%) of the Marketing Expenses for such GI Product

(other than the OBD Chronic Product) in the United States until the First

Commercial Sale occurs for such GI Product. Thereafter, Marketing Expenses for a

GI Product (other than the OBD Chronic Product) shall be shared in accordance

with the sharing of the GI Product Marketing Contribution for such GI Product

(other than the OBD Chronic Product) as adjusted pursuant to Section 6.3.4.

Notwithstanding the foregoing, upon notice by Adolor to GSK of a Royalty

Conversion Election, GSK shall be solely responsible and pay for all Marketing

Expenses relating to periods after such notice for such GI Product for which the

Royalty Conversion Election was made.

5.2.4 Marketing Expenses Incurred for the POI Product in the United

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

States. Unless otherwise agreed to by the Joint Marketing Committee, all

------

Marketing Expenses for the POI Product shall be incurred by Adolor, subject to

reimbursement as provided for herein.

5.3 Implementation of U.S. Marketing Plans. In implementing a U.S.

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

Marketing Plan, each Party will develop and maintain appropriate liaison with

the Joint Marketing Committee to resolve any questions regarding such

implementation and to communicate to the Joint Marketing Committee timely

suggestions for improving the U.S. Marketing Plan. In connection with the

preparation and implementation of the U.S. Marketing Plan, Adolor and GSK will

make available to the Joint Marketing Committee marketing intelligence and

market research information then in their possession pertaining to the

Collaboration Products, the usage of the Collaboration Products and market

trends.

5.4 Obligations for Commercialization.

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

5.4.1 General. The Parties shall use ** to Commercialize the

-------

Collaboration Products.

5.4.2 GSK's Obligations. In furtherance of the foregoing, and subject

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

to GSK's termination rights pursuant to Article 16 (including those safety

related

** = 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.

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termination rights pursuant to Section 16.4), GSK may not, either individually

or as a member of the Joint Steering Committee:

**

5.5 Commercialization Responsibilities.

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

5.5.1 Adolor Responsibilities.

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

(a) Adolor shall have the sole right and responsibility to

record and collect payment for sales of Adolor Products throughout the United

States.

(b) Adolor shall use its Commercially Reasonable Efforts to

employ an appropriate management infrastructure to supervise the Sales

Representatives required to oversee Adolor's obligations to perform Detail

Requirements and marketing staff of sufficient size to establish, maintain and

implement the U.S. Marketing Plan for the Adolor Products.

(c) In the event Adolor has not made a Royalty Conversion

Election for the OBD Chronic Product or another GI Product where Adolor has

elected to fund Development Expenses under Section 4.6.5, Adolor, **, may engage

Adolor Sales Representatives to Detail the relevant GI Product. In such event,

Adolor and GSK shall negotiate in good faith the minimum number of Details to be

conducted by the Parties to be included in the relevant U.S. Marketing Plan;

provided, however, in the event that Adolor elects to Detail such a GI Product,

Adolor must perform at least, and GSK shall not require Adolor to perform more

than, ** percent (**%) of the total Detail Requirements for such GI Product.

5.5.2 GSK Responsibilities.

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

(a) GSK shall have the sole right and responsibility to record

and collect payment for sales of GI Products throughout the United States.

(b) GSK will be responsible for storage, order receipt, order

fulfillment, shipping and invoicing of Collaboration Products. In the case of

Adolor Products in the United States, invoices shall be for the account of

Adolor using an acceptable Adolor invoicing form and Adolor letterhead. The

Joint Marketing Committee shall establish mechanisms for real-time data

** = 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.

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exchange, invoicing schedules, credit control and other necessary standard

operating procedures relating to the invoicing for the account of Adolor.

(c) In addition to the Detailing Requirements, GSK, at its sole

expense, commencing ** (**) months after the NDA Acceptance, and on an annual

basis for the period of the Adolor Product Promotion Term, shall provide, at a

minimum, the marketing and sales support for the POI Product as set forth on

Schedule 5.5.2.

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

(d) GSK shall have the sole right and responsibility to

distribute, sell, record sales and collect payments for Collaboration Products

in the ROW during the ROW Term.

(e) GSK shall have sole responsibility for establishing and

modifying the terms and conditions with respect to the sale of Collaboration

Products in the ROW, including, without limitation, the price or prices at which

the Collaboration Products in the ROW will be sold, any discount applicable to

payments or receivables, and similar matters.

(f) Within ** (**) days after ** for the POI Product, GSK will

be responsible, at the direction of the Joint Marketing Committee, for

developing and implementing the healthcare insurance company and third party

payor reimbursement strategy for the Collaboration Products; provided, however,

that within ** (**) days after the ** anniversary of the First Commercial Sale

of the POI Product and subject to the approval of the Joint Marketing Committee,

Adolor may assume responsibility for such activities for any or all of the

Adolor Products; provided further that such assumption of responsibilities by

Adolor will not have a material adverse effect on the sales in the United States

of the POI Product.

5.5.3 Conditions for Sales of Collaboration Products in the

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

United States. The Joint Marketing Committee shall establish and modify

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

conditions of sale of Collaboration Products to Third Parties in the United

States, including, without limitation, the price or prices at which the

Collaboration Products in the United States will be sold, any discount

applicable to payments or receivables, and similar matters.

5.6 Detailing Efforts. The Parties shall market, Detail and

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

Co-Promote the Collaboration Products in the United States in accordance with

the terms of this Agreement and the relevant U.S. Marketing Plan. No Party shall

be required to undertake any activity under this Agreement which it believes, in

good faith, would violate any Laws. GSK shall use Commercially Reasonable

Efforts to perform its annual Detail Requirements ** in each Calendar Quarter.

**. In any Calendar Year, no more than ** of all Detail Requirements of a

** = 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.

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Party for a GI Product in the United States, where Adolor has elected to fund

Development Expenses under Section 4.6.5 and has not made a Royalty Conversion

Election, shall be made by Specialist Sales Representatives.

5.7 Detailing and Marketing Requirements. The Joint Marketing

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

Committee shall determine the targeted number of total Details and Primary

Details to be performed by each Party in the United States during each Calendar

Year and the Target Audience for such Details (the "Detail Requirements"); **.

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

5.8 Sales Force Incentive Compensation for POI Products. Each

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

Party shall offer incentive compensation to its Sales Representatives with

respect to the sale of the POI Product in the United States for each Calendar

Year during the Adolor Product Promotion Term. Such incentive schemes shall be

adopted by each Party in a manner consistent with the way other incentive

schemes are adopted within their respective organizations; provided, however,

that **

** = 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.

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**. Each Party shall notify the other Party, prior to the First Commercial Sale

and prior to the commencement of each Calendar Year thereafter, of the

structure, formula and relative competitiveness of such arrangement (having

regard to other such arrangements adopted by GSK, Adolor, or other companies in

the pharmaceutical industry for a company similar in size and scope to such

Party).

5.9 Detailing Reports.

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

5.9.1 Reports. Within thirty (30) days following the end of

-------

each Calendar Quarter, each Party shall provide the Joint Marketing Committee

with a report setting forth, in such detail and form as the Joint Marketing

Committee shall require (the "Internal Detailing Report"), based upon each

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

Party's internal Call reporting and Detailing auditing system, the total number

of Details, Major Details and Secondary Details actually performed by such

Party, in the United States, segmented by physician specialty of the Target

Audience during the immediately preceding Calendar Quarter.

5.9.2 Records and Audits Pertaining to Details. At any time

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

during the Term of this Agreement, but not more than twice every Calendar Year,

each Party agrees to make available to the auditing Party, upon reasonable

advance notice, such books and records necessary to verify the accuracy of such

Internal Detailing Report with respect to any Calendar Quarter ending not more

than twelve (12) Calendar Quarters prior to the date of such request. Unless the

auditing Party has notified the other Party of an issue relating to verifying an

Internal Detailing Report for a particular Calendar Quarter, such other Party

shall be released from any liability or accountability to the auditing Party for

Detailing in any Calendar Quarter ending more than twelve (12) Calendar Quarters

prior to the initiation of such verification process by the auditing Party. In

the event of an unresolved dispute regarding the number of Details actually

performed by a Party based on such Party's internal Call reporting and Detail

auditing system, the Parties hereby agree that such Party's internal Call

reporting and Detail auditing system may be correlated (on a trend basis only)

with the Dispute Detailing Audit Data. Such correlation may be used by the

auditing Party in any court or arbitration proceeding with respect to any

dispute regarding Detailing under this Agreement.

5.10 Training.

--------

5.10.1 Training Plans. The Joint Marketing Committee shall

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

develop training plans at least ** (**) days ** a Collaboration Product. GSK and

Adolor shall, each at its own expense, comply with the training plan contained

in any U.S. Marketing Plan which is otherwise consistent with provisions of this

Agreement. Each Party will be responsible for

** = 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.

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supervising, training and maintaining its Sales Representatives as may be

required to Detail the Collaboration Products as provided herein or in the

applicable U.S. Marketing Plan, such training to include a reasonable

proficiency examination relevant to the Collaboration Products given at least

annually for all Sales Representatives who will be engaged in Detailing, at such

Party's own cost and expense. Adolor shall have the right to participate in the

training programs of GSK, and GSK shall have the right to participate in the

training programs of Adolor, for the purpose of ensuring overall consistency in

the training programs for the Collaboration Products.

5.10.2 Assistance. During the United States Term, each Party

----------

shall make available to the other for use in connection with Co-Promoting the

Collaboration Products in the United States, to the extent reasonable,

assistance and services relating to such Co-Promotion, including, but not

limited to, providing the other Party, free of charge and in a timely manner,

with a master copy of such training materials relating to Collaboration Products

as such Party has used and/or intends to use in connection with the training of

its Sales Representatives, including but not limited to learning units and any

other printed, audio and video training materials. To the extent the other Party

wishes to use such training materials in the training of its own Sales

Representatives, it will be responsible for reproducing such training materials.

5.10.3 Training of Sales Representatives. All Sales

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

Representatives of a Party have received, or will receive in a timely manner,

appropriate training on proper marketing and sales techniques to be used in

promoting pharmaceutical products in accordance with applicable Laws.

5.10.4 Joint Marketing and Sales Meetings. The Parties shall

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

plan and implement periodic joint sales and marketing meeting, including a

national launch meeting, for each Adolor Product, and the OBD Chronic Product

and each other GI Product where Adolor has elected to fund Development Expenses

under Section 4.6.5 and where Adolor has not made a Royalty Conversion Election,

in the United States. Costs and expenses attributable to individual attendees of

each Party, such as lodging and transportation, shall be borne by such Party and

shall not be deemed a Marketing Expense. All other expenses associated with such

meetings shall be deemed **.

5.11 Commercialization in the ROW.

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

5.11.1 GSK Responsibility. GSK shall have sole responsibility

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

for Commercialization of Collaboration Products for distribution and sale in the

ROW. **, GSK shall bear all costs and expenses associated with the

Commercialization of Collaboration Products for sale or distribution in the ROW.

** = 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.

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5.11.2 Coordination; Semi-Annual Reports.

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

(a) GSK shall coordinate through the Joint Steering

Committee the Commercialization of Collaboration Products in the ROW with the

Commercialization of Collaboration Products in the United States with the

objective of coordination of global product positioning and sharing of best

practices and strategies.

(b) GSK shall provide the Joint Steering Committee

reports semi-annually. Such reports shall set forth in summary form the results

of GSK's Commercialization activities performed during such semi-annual period.

(c) No later than ** of each Calendar Year, GSK shall

provide to Adolor in writing a good faith estimate of the projected Net Sales by

Calendar Quarter on a Country-by-Country basis for the Major Market Countries,

and a summary for the remainder of the ROW, of each Collaboration Product for at

least ** (**) full Calendar Years after the anticipated First Commercial Sale of

such Collaboration Product (the "ROW Net Sales Forecast").

GSK shall update each ROW Net Sales Forecast on a semi-annual basis. For the POI

Product in the ROW, the first ROW Net Sales Forecast shall be furnished to

Adolor within one hundred twenty (120) days after the Effective Date. For each

Collaboration Product (other than the POI Product) in the ROW, the first ROW Net

Sales Forecast shall be furnished to Adolor at least ** (**) full Calendar Years

prior to the projected First Commercial Sale in the ROW of such Collaboration

Product.

5.11.3 Decisions with Respect to Collaboration Products in

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

the ROW. GSK shall have the sole discretion with respect to Commercialization

-------

decisions for Collaboration Products in the ROW subject to Section 3.1.4(b) and

provided that GSK takes into account on a global basis the goal of realizing the

best overall commercial potential of the Products.

5.11.4 Exports to the United States. The Parties shall use

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

Commercially Reasonable Efforts to prevent the Collaboration Products

distributed for sale in a particular Country other than the United States from

being exported to the United States for sale.

ARTICLE 6

FINANCIAL PROVISIONS

6.1 Upfront Payment. In partial consideration for the acquisition

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

of license rights under the Adolor Patents and the Adolor Know-How by GSK under

this Agreement, GSK shall, within ** (**) Business Days after the Effective

Date, pay to Adolor a non-creditable, non-refundable amount of fifty million

United States Dollars (US $50,000,000) and Adolor shall issue GSK on the

Effective Date the invoice therefor attached hereto as Schedule 6.1.

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

** = 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.

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6.2 Milestone Payments.

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

6.2.1 In further consideration of the acquisition of license

rights under Adolor Patents and the Adolor Know-How by GSK under this Agreement,

GSK shall also pay to Adolor the payments set forth in Schedule 6.2 for each

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

such Development milestone referred to therein (each, a "Development

-----------

Milestone"); provided always that each such payment shall be made only one time

---------

for each Collaboration Product in accordance with Schedule 6.2 regardless of how

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

many times such Development Milestones are achieved for such Collaboration

Product, and no payment shall be owed for a Development Milestone which is not

reached (except that, upon achievement of a Development Milestone for a

particular Collaboration Product, any previous Development Milestone for that

Collaboration Product for which payment was not made shall be deemed achieved

and payment therefor shall be made); provided further that, in the event that

more than one Development Milestone is achieved with respect to the same

Collaboration Product at one time or from time to time, then all applicable

payments under Schedule 6.2 shall be made to Adolor. By way of example, if the

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

** Product and the ** Product are approved in the same Marketing Authorization

Approval, then, in addition to the relevant milestone for the ** Product, the

relevant milestone for the ** Product shall be paid simultaneously.

6.2.2 In the event a Party achieves a Development Milestone,

such Party shall promptly, but in no event more than five (5) days after the

achievement of each such Development Milestone, notify the other Party in

writing of the achievement of same. For all Development Milestones achieved, GSK

shall promptly, but in no event more than thirty (30) days after the achievement

of each such Development Milestone, remit payment to Adolor for such Development

Milestone.

6.3 Marketing Contribution for Collaboration Products.

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

6.3.1 Share of Adolor Product Marketing Contribution. During

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

the period beginning with the First Commercial Sale of each Adolor Product and

ending on the last day of the Calendar Quarter in which the ** anniversary of

such First Commercial Sale occurs (the "Initial ** Year Period"), Adolor shall

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

receive ** percent (**%) and GSK shall receive ** percent (**%) of the Adolor

Product Marketing Contribution of such Adolor Product, subject to adjustment as

set forth in Section 6.3.4 and reconciliation as set forth in Section 6.7.5.

After the Initial ** Year Period, each Party shall receive ** percent (**%) of

the Adolor Product Marketing Contribution for such Adolor Product, subject to

adjustment as set forth in Section 6.3.4 and reconciliation as set forth in

Section 6.7.5.

6.3.2 Share of GI Product Marketing Contribution. For the OBD

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

Chronic Product and for any other GI Product where Adolor has elected to fund

Development Expenses pursuant to Section 4.6.5, and provided further that Adolor

has not made a Royalty Conversion Election as provided in Section 6.3.5, Adolor

shall

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the Commission. Confidential treatment has been requested with respect to the

omitted portions.

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receive ** percent (**%) and GSK shall receive ** percent (**%) of the GI

Product Marketing Contribution for a GI Product, subject to adjustment as set

forth in Section 6.3.4 and reconciliation as set forth in Section 6.7.5.

6.3.3 Compensation for Distribution Services. GSK shall

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

receive ** percent (**%) of Net Sales in the United States as the sole

compensation to GSK for the services to be provided in the United States

pursuant to Section 5.5.2(b) (the "Distribution Services Fee") for Adolor

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

Products and for GI Products where Adolor funds Development of such GI Product

and has not made a Royalty Conversion Election, which amount shall be paid in

accordance with this Article 6. Within one hundred eighty (180) days after the

Effective Date, the Parties shall negotiate in good faith a distribution

services agreement with respect to the foregoing.

6.3.4 Adjustment of Marketing Contribution. On a Collaboration

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

Product-by-Collaboration Product basis, in the event that a Party only performs

between ** percent (**%) and ** percent (**%) of its Detail Requirements

(measured for both its total Details and Primary Details) in a Calendar Year

(the "Defaulting Party"), then the Defaulting Party's share of the Adolor

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

Product Marketing Contribution or GI Product Marketing Contribution, as

applicable, for such Calendar Year shall be reduced by ** percentage (**%)

points and the other Party's share of the Adolor Product Marketing Contribution

or the GI Product Marketing Contribution, as applicable, for such Calendar Year

shall be correspondingly increased. In the event the Defaulting Party performs

less than ** percent (**%) of its Detail Requirements (measured for both its

total Details and Primary Details) for a Collaboration Product in such Calendar

Year, then, in addition to the ** percentage (**%) point reduction, the

Defaulting Party's share of the Adolor Product Marketing Contribution or GI

Product Marketing Contribution, as applicable, for such Calendar Year shall also

be reduced ** percentage (**%) ** for each ** percentage (**%) ** that the

Defaulting Party's actual number of Details is less than ** percent (**%) of the

Defaulting Party's Detail Requirements (measured for both its total Details and

Primary Details) and the other Party's share of the Adolor Product Marketing

Contribution or the GI Product Marketing Contribution, as applicable, for such

Calendar Year shall be correspondingly increased. If a Party is a Defaulting

Party for a Collaboration Product for ** (**) **, then the Adolor Product

Marketing Contribution or the GI Product Marketing Contribution, as applicable,

shall be permanently reduced and correspondingly increased for the other Party,

by an amount equal to the average of the adjustments made for the ** (**) **. In

the event that a Party fails to perform at least ** percent (**%) of its Detail

Requirements (measured for both its total Details and Primary Details) for a

Collaboration Product in a Calendar Year, that Party shall be deemed to have

materially breached this Agreement and such breach shall be deemed incurable.

For purposes of this Section, the determination as to whether GSK has met its

minimum Detail Requirements shall be made with respect to both its Detail

Requirements to ** as a Target Audience and to GSK's total

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the Commission. Confidential treatment has been requested with respect to the

omitted portions.

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Detail Requirement. The provisions of this Section 6.3.4 shall apply even if

both Parties are a Defaulting Party.

6.3.5 Conversion to Royalty. On a GI Product-by-GI Product basis,

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

within ** (**) days ** for such GI Product, and within ** (**) months after each

** (**) year anniversary thereafter, Adolor shall have the right to convert its

right to receive a percentage of the GI Product Marketing Contribution to a

royalty, as set forth in Section 6.4.2 (the "Royalty Conversion Election"). The

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

Royalty Conversion Election shall be made in writing, and shall be irrevocable

once made. Upon making the Royalty Conversion Election, Adolor shall have no

further obligation to fund or otherwise be responsible for any expenses relating

to such GI Product for any time periods following the delivery of the Royalty

Conversion Election.

6.4 Payment of Royalties on Net Sales in the ROW.

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

6.4.1 Within thirty (30) days after the end of each Calendar Quarter,

GSK shall pay Adolor royalty payments based on Net Sales in such Calendar

Quarter in the ROW during the ROW Term as follows: (a) ** percent (**%) for GI

Products; and (b) ** percent (**%) for Adolor Products. The royalty payments

made under this Section 6.4.1 shall be based on actual Net Sales for the first

two (2) months of a Calendar Quarter and an estimate for the third month of the

Calendar Quarter based upon projected Net Sales. Within sixty (60) days after

the end of each Calendar Quarter, GSK shall calculate the actual amount of Net

Sales for the third month of such Calendar Quarter and either credit or debit

the difference between such actual and projected amount on the succeeding

Calendar Quarter's royalty payment to Adolor.

6.4.2 For Collaboration Products in the ROW where there is Generic

Competition and where the ROW Term has not expired pursuant to Section 1.125(a)

or 1.125(b), on a Country-by-Country and Collaboration Product-by-Collaboration

Product basis, royalty rates shall be reduced by ** percent **.

6.5 Payment of Royalties on Net Sales of GI Products in the United

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

States. Within thirty (30) days after the end of each Calendar Quarter, GSK

------

shall pay Adolor royalty payments based on Net Sales in such Calendar Quarter in

the United States during the GI Product Promotion Term as follows: (a) ** (** %)

for GI Products where Adolor has not elected to fund Development Expenses for

such GI Product; and (b) ** percent (** %) for the OBD Chronic Product, and

other GI Products where Adolor has elected to fund Development Expenses for such

GI Product and subsequently made a Royalty Conversion Election; provided that if

the First Commercial Sale in the United States for the OBD Chronic Product has

not occurred prior to the First Commercial Sale in the United States of either

the ** Product or the ** Product, then the royalty rate on such ** Product or **

Product shall be ** (**%) regardless of whether Adolor has funded Development

Expenses for such GI Product; provided further that if the OBD Chronic Product

is subsequently launched and Adolor has not elected to fund Development Expenses

for the ** Product and **

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the Commission. Confidential treatment has been requested with respect to the

omitted portions.

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Product the royalty rate on such ** Product or ** Product shall thereafter be

reduced to ** (**%). The royalty payments made under this Section 6.5 shall be

based on actual Net Sales for the first two (2) months of a Calendar Quarter and

an estimate for the third month of the Calendar Quarter based upon projected Net

Sales. Within sixty (60) days after the end of each Calendar Quarter, GSK shall

calculate the actual amount of Net Sales for the third month of such Calendar

Quarter and either credit or debit the difference between such actual and

projected amount on the succeeding Calendar Quarter's royalty payment to Adolor.

6.6 Royalty Responsibilities; Net Sales Reports.

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

6.6.1 Payments to Third Parties.

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

(a) Adolor shall pay any amounts owed Lilly and Shire as a

result of the use of the Adolor Patents or Adolor Know-How with respect to sales

of Collaboration Products. Any royalties paid to Lilly and Shire pursuant to

this Section 6.6.1(a) shall be subject to reconciliation pursuant to Section

6.7.5.

(b) GSK shall pay any amounts owed to a Third Party, other than

to Lilly and Shire, as a result of the use of the Adolor Patents or Adolor

Know-How (i) with respect to sales of GI Product in the United States on which

Adolor is receiving a royalty and Collaboration Products in the ROW and shall

deduct such amounts from Net Sales in such Country prior to calculating

royalties owed to Adolor and (ii) with respect to sales of GI Products in the

United States where Adolor has elected to fund Development Expenses under

Section 4.6.5, in each case where Adolor has not made a Royalty Conversion

Election, and subject to reconciliation pursuant to Section 6.7.5.

(c) The Parties shall each be responsible for ** percent

(**%) of royalty amounts, if any, owed to a Third Party relating to ** (except

for any royalty amounts pursuant to subsection (a) above) subject to

reconciliation pursuant to Section 6.7.5.

(d) GSK shall pay any amounts owed to a Third Party other than

as set forth in Section 6.6.1(a), 6.6.1(b) or 6.6.1(c) (i) with respect to sales

of GI Products in the United States for which Adolor is receiving a royalty and

Collaboration Products in the ROW and shall not deduct such amounts from Net

Sales prior to calculating royalties owed to Adolor and (ii) with respect to

sales of the OBD Chronic Product in the United States and other GI Products in

the United States where Adolor has elected to fund Development Expenses under

Section 4.6.5, in each case where Adolor has not made a Royalty Conversion

Election, and subject to reconciliation pursuant to Section 6.7.5.

** = 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.

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6.6.2 Net Sales Report. Within thirty (30) days after the end of each

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

Calendar Quarter, GSK shall submit to Adolor a written report setting forth Net

Sales in the ROW and the United States (but only if Adolor is receiving royalty

payments based on sales in the United States) on a Country-by-Country and

Collaboration Product-by-Collaboration Product basis during such Calendar

Quarter, total royalty payments due Adolor, relevant market share data

supporting the presence of Generic Competition, if any, and any payments made to

any Third Party pursuant to Section 6.6.1 (each a "Net Sales Report").

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

6.6.3 Basis for Royalty Payment. The Parties acknowledge that the

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

royalty payments provided for in Sections 6.4 and 6.5 are intended to provide

appropriate economic benefits to Adolor in recognition for **.

6.7 Reports.

-------

6.7.1 Estimate Reports. Within ten (10) days after the end of each

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

Calendar Quarter, GSK shall prepare and deliver to Adolor a report for internal

accounting purposes setting forth GSK's good faith estimate of Net Sales of GI

Products In the United States and Collaboration Products in the ROW and Adolor's

share of the GI Product Marketing Contribution. Within ten (10) days after the

end of each Calendar Quarter, Adolor shall prepare and deliver to GSK a report

for internal accounting purposes setting forth Adolor's good faith estimate of

Net Sales of Adolor Products and GSK's share of the Adolor Product Marketing

Contribution.

6.7.2 GSK Report. Within forty-five (45) days after the end of each

----------

Calendar Quarter, on a Collaboration Product-by-Collaboration Product basis in

the United States, GSK shall submit to Adolor a written report (each, a "GSK

---

Report") setting forth in reasonable detail the following items during such

------

Calendar Quarter:

(a) Development Expenses incurred by GSK for each: (i) Adolor

Product; and (ii) GI Product for which Adolor will receive a percentage of GI

Product Marketing Contribution;

(b) Marketing Expenses incurred by GSK for each: (i) Adolor

Product; and (ii) the OBD Chronic Product and each other GI Product for where

Adolor has elected to fund Development Expenses under Section 4.6.5, and where

Adolor has not made a Royalty Conversion Election;

(c) Cost of Goods for the OBD Chronic Product and each other GI

Product for where Adolor has elected to fund Development Expenses under Section

4.6.5, and where Adolor has not made a Royalty Conversion Election (except for

any ** under a supply agreement between the Parties);

(d) API Compound Carrying Cost;

** = 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.

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(e) Royalties, if any, paid by GSK to Third Parties in

accordance with Section 6.6.1;

(f) Detail Costs for the OBD Chronic Product and each other GI

Product for where Adolor has elected to fund Development Expenses under Section

4.6.5, and where Adolor has not made a Royalty Conversion Election; and

(g) Net Sales of Collaboration Products in the United States

and the ROW.

6.7.3 Adolor Report. Within forty-five (45) days after the end of

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

each Calendar Quarter, on a Collaboration Product-by-Collaboration Product basis

in the United States, Adolor shall submit to GSK a written report (each, an

"Adolor Report") setting forth in reasonable detail the following items during

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

such Calendar Quarter:

(a) Development Expenses incurred by Adolor for each: (i)

Adolor Product; and (ii) the OBD Chronic Product and each other GI Product for

where Adolor has elected to fund Development Expenses under Section 4.6.5, and

where Adolor has not made a Royalty Conversion Election;

(b) Marketing Expenses incurred by Adolor for each: (i) Adolor

Product; and (ii) the OBD Chronic Product and each other GI Product for where

Adolor has elected to fund Development Expenses under Section 4.6.5, and where

Adolor has not made a Royalty Conversion Election;

(c) Cost of Goods for each Adolor Product in the United States

(except for any Cost of Goods separately reimbursed under a supply agreement

between the Parties);

(d) Royalties, if any, paid by Adolor to Third Parties in

accordance with Section 6.6.1;

(e) API Compound Carrying Cost;

(f) Detail Costs for the OBD Chronic Product and each other GI

Product for where Adolor has elected to fund Development Expenses under Section

4.6.5, and where Adolor has not made a Royalty Conversion Election; and

(g) Net Sales of Adolor Product in the United States.

6.7.4 Reimbursements. In conjunction with the reconciliation set

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

forth in Section 6.7.5:

(a) Adolor shall reimburse GSK: (i) ** percent (**%) of

Marketing Expenses, Cost of Goods (except for any Cost of Goods separately

reimbursed under a supply agreement between the Parties), Distribution Services

Fees and royalties to Third Parties, in each case paid or incurred by GSK with

respect to Adolor Products sold in the United States for which Adolor is

recording sales and collecting payments; and

** = 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.

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(ii) API Compound Carrying Cost incurred by GSK for all Collaboration Products.

(b) GSK shall reimburse Adolor: (i) ** percent (**%)

of Marketing Expenses, Cost of Goods (except for any Cost of Goods separately

reimbursed under a supply agreement between the Parties) and royalties to Third

Parties, in each case paid or incurred by Adolor with respect to GI Products

sold in the United States for which GSK is recording sales and collecting

payments; (ii) API Compound Carrying Cost incurred by Adolor for all

Collaboration Products; and (iii) Detail Costs for the actual Details performed

by Adolor for the OBD Chronic Product and each other GI Product for where Adolor

has elected to fund Development Expenses under Section 4.6.5, and where Adolor

has not made a Royalty Conversion Election.

(c) The Parties shall determine the total Development Expenses

for the relevant reporting period and shall effect the reimbursement of the

Development Expenses as necessary consistent with each Party's share of such

Development Expenses pursuant to Section 4.6.

6.7.5 Financial Reconciliation.

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

(a) Within sixty (60) days after the end of each Calendar

Quarter, commencing with first Calendar Quarter during which the Effective Date

occurs (which shall include all periods since January 1, 2002, Adolor shall,

using the GSK Report and the Adolor Report, prepare a reconciliation report for

Adolor Products in the United States (the "Adolor Reconciliation Report") which

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

shall show the Development Expenses either Party may owe the other, the

calculation of the Adolor Product Marketing Contribution, each Party's share of

the Adolor Product Marketing Contribution, the reimbursements owed to GSK

pursuant to Section 6.7.4(a), and the resulting net amount owed by Adolor to GSK

or by GSK to Adolor as the case may be, in each case for Adolor Products in the

United States. Within twenty (20) days after receipt by GSK of the Adolor

Reconciliation Report, GSK or Adolor, as the case may be, shall pay the net

amount shown therein to the other Party.

(b) Within sixty (60) days after the end of each Calendar

Quarter, commencing with the first Calendar Quarter following the Effective

Date, GSK shall, using the GSK Report and the Adolor Report, prepare a

reconciliation report for GI Products in the United States (the "GSK

---

Reconciliation Report") which shall show the Development Expenses either Party

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

may owe the other, the calculation of the GI Product Marketing Contribution,

each Party's share of the GI Product Marketing Contribution, the reimbursements

owed to Adolor pursuant to Section 6.7.4(b) and the resulting net amount owed by

Adolor to GSK or by GSK to Adolor as the case may be, in each case for GI

Products in the United

** = 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.

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States. Within twenty (20) days after receipt by Adolor of the GSK

Reconciliation Report, GSK or Adolor, as the case may be, shall pay the net

amount shown therein to the other Party.

6.8 Payment Upon Expiration of the Adolor Product Promotion Term.

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

6.8.1 If the Adolor Product Promotion Term expires on the ** (**)

anniversary of the First Commercial Sale of the POI Product in the United

States, Adolor shall pay GSK an amount equal to the sum of: **.

6.8.2 If the Adolor Product Promotion Term expires on the ** (**)

anniversary of the First Commercial Sale of the POI Product in the United

States, Adolor shall pay GSK an amount equal to **.

6.8.3 No payment shall be made pursuant to this Section 6.8 if the

Adolor Product Promotion Term expires after the ** (**) anniversary of

the First Commercial Sale of the POI Product or is terminated prior to the

expiration of the Adolor Product Promotion Term.

6.9 GAAP. All financial terms and standards defined or used in this

----

Agreement for sales or activities occurring in the United States shall be

governed by and determined in accordance with United States generally accepted

accounting principles, consistently applied. Except as otherwise set forth

herein, all financial terms and standards defined or used in this Agreement for

sales or activities occurring in the ROW shall be governed by and determined in

accordance with United Kingdom generally accepted accounting principles,

consistently applied.

6.10 Currencies. Payments under this Agreement shall be made in United

----------

States Dollars. Revenues and expenses for each Country shall be converted into

United States Dollars using the applicable exchange rate for converting such

local currency to the United States Dollar in accordance with the exchange rates

used by GSK in producing its financial accounts at the time and detailed in its

annual report as agreed by its auditors.

** = 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.

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6.11 Manner of Payments. All sums due to either Party under this Article 6

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

shall be payable in United States Dollars by bank wire transfer in immediately

available funds to such bank account(s) as each of GSK and Adolor shall

designate. GSK shall notify Adolor as to the date and amount of any such wire

transfer to Adolor at least two (2) Business Days prior to such transfer. Adolor

shall notify GSK as to the date and amount of any such wire transfer to GSK at

least two (2) Business Days prior to such transfer.

6.12 Interest on Late Payments. If either Adolor or GSK shall fail to make

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

a timely payment pursuant to this Article 6, any such payment that is not paid

on or before the date such payment is due under this Agreement shall bear

interest, to the extent permitted by applicable law, at the average one-month

London Inter-Bank Offering Rate (LIBOR) for the United States Dollar as reported

from time to time in The Wall Street Journal, effective for the first date on

which payment was delinquent and calculated on the number of days such payment

is overdue or, if such rate is not regularly published, as published in such

source as the Joint Steering Committee agrees.

6.13 Tax Withholding. Any taxes, levies or other duties ("Taxes") paid or

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

required to be withheld under the appropriate local tax laws by one of the

Parties ("Withholding Party") on account of monies payable to the other Party

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

under this Agreement shall be deducted from the amount of monies otherwise

payable to the other Party under this Agreement. The Withholding Party shall

secure and send to the other Party within a reasonable period of time proof of

any such Taxes paid or required to be withheld by Withholding Party for the

benefit of the other Party. The Parties shall cooperate reasonably with each

other to ensure that any amounts required to be withheld by either Party are

reduced in amount to the fullest extent permitted by Law. No deduction shall be

made, or a reduced amount shall be deducted, if the other Party furnishes a

document from the appropriate tax Governmental Authorities to the Withholding

Party certifying that the payments are exempt from Taxes or subject to reduced

tax rates, according to the applicable convention for the avoidance of double

taxation.

6.14 Financial Records; Audits. Each Party shall keep, and shall cause its

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

Affiliates and sublicensees to keep, such accurate and complete records of Net

Sales and its Marketing Expenses and Development Expenses as are necessary to

determine the amounts due to GSK and Adolor under this Agreement. Such records

shall be retained by each Party or any of its Affiliates or sublicensees (in

such capacity, the "Recording Party"). During normal business hours and with

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

reasonable advance notice to the Recording Party, such records shall be made

available for inspection, review and audit, at the request and expense of the

other Party (the "Auditing Party"), by an independent certified public

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

accountant, or the local equivalent, appointed by such Auditing Party and

reasonably acceptable to the Recording Party for the sole purpose of verifying

the accuracy of the Recording Party's accounting reports and payments made or to

be made pursuant to this Agreement; provided, however that such audits may not

be performed by the Auditing Party more than once per Calendar Year and that

such Auditing Party shall not be permitted to audit the same period of time more

than once. Such accountants shall be instructed not to reveal to the Auditing

Party the details of its review, except for (i) such information as is required

to be disclosed under this Agreement and (ii) such information presented in a

summary fashion as is necessary to report the accountants' conclusions to

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the Auditing Party, and all such information shall be deemed Confidential

Information of the Recording Party; provided, however, that in any event such

information may be presented to the Auditing Party in a summary fashion as is

necessary to report the accountants' conclusions. All costs and expenses

incurred in connection with performing any such audit shall be paid by the

Auditing Party unless the audit discloses at least a ** percent (**%) shortfall,

in which case the Recording Party will bear the full cost of the audit for such

Calendar Year. The Auditing Party will be entitled to recover any shortfall in

payments due to it as determined by such audit, plus interest thereon calculated

in accordance with Section 6.12, or alternatively shall have the right to offset

and deduct any such shortfall in payments due to it against payments the

Auditing Party is otherwise required to make to the Reporting Party under this

Agreement. The documents from which were calculated the sums due under this

Article 6 shall be retained by the relevant Party during the United States Term

or the ROW Term, as applicable.

ARTICLE 7

PROMOTIONAL MATERIALS AND SAMPLES

7.1 Promotional Materials.

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

7.1.1 Creation of United States Promotional Materials. Subject to the

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

terms of Section 7.1.2 and applicable Law, for Adolor Products during the Adolor

Product Promotion Term and for GI Products during the GI Product Promotion Term,

in accordance with the direction of the Joint Marketing Committee, the Parties

will jointly, through consultation and with the assistance of each other, create

and develop Promotional Materials for the United States. GSK may use the

Promotional Materials for the United States as the promotional materials in the

ROW or GSK shall, subject to Sections 3.1.4(b) and 3.3.2, create and develop

promotional materials suitable for use in the ROW.

7.1.2 Adolor Ownership of United States Promotional Materials.

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

Subject to the terms of this Section 7.1, Adolor shall own all right, title and

interest in and to any Promotional Materials relating to the Adolor Products in

the United States, including without limitation applicable copyrights and

trademarks, and GSK hereby assigns all its right, title and interest to such

Promotional Materials to Adolor and agrees to execute all documents and take all

actions as are reasonably requested by Adolor to vest title to such Promotional

Materials in Adolor in the United States.

7.1.3 GSK Ownership of United States and ROW Promotional Materials.

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

Subject to the terms of this Section 7.1, GSK shall own all right, title and

interest in and to any Promotional Materials relating to GI Products in the

United States and to any promotional materials relating to Collaboration

Products in the ROW, including without limitation applicable copyrights and

trademarks, and Adolor hereby assigns all its right, title and interest to such

materials to GSK and agrees to execute all documents and take all actions as are

reasonably requested by GSK to vest title to such materials in GSK.

** = 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.

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7.1.4 Retention of Rights. GSK and Adolor, or their respective

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

Affiliates, shall retain all rights, including without limitation all copyrights

and trademarks, to all of their respective existing programs and materials in

all formats (print, video, audio, digital, computer, etc.) regarding sales

training, patient education and disease management programs owned by each at the

time such materials are shared with the other Party, as well as any

modifications of such programs each may develop in the future which are not

specific to a Collaboration Product. GSK and Adolor shall, from time to time,

each notify the other as to the identity of such proprietary programs that may

be relevant for purposes of this Agreement. In the event that Adolor desires

after the expiration or termination of this Agreement, to use any GSK program

which has been specifically adapted for, or directed to, a Collaboration Product

under this Agreement, the Parties shall negotiate in good faith to conclude, if

possible, an appropriate agreement under which Adolor would be permitted to

engage in such continued use (including without limitation the amount of

compensation to be paid to GSK for such use). In addition, all such new programs

hereafter jointly developed by GSK and Adolor pursuant to this Agreement shall

be jointly owned by GSK and Adolor, and each Party shall have the right to use

such jointly developed programs free of charge after the Term, subject to the

remaining obligations imposed on the Parties under this Agreement.

7.1.5 Review of Promotional Materials in the United States. The

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

relevant legal or regulatory personnel of each Party shall have the opportunity

to review and comment on all Promotional Materials in the United States prior to

use and such comments shall be considered by Joint Marketing Committee in the

preparation of such Promotional Materials.

7.1.6 Use of Promotional Materials in the United States. Except as

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

provided in Section 7.1.1, neither Party shall produce (other than as concepts

for consideration by the other Party), distribute or otherwise use any

Promotional Materials in the United States in connection with Co-Promoting the

Collaboration Products unless and until such Promotional Materials have been

approved in accordance with this Agreement.

7.1.7 Markings of Promotional Materials in the ROW. To the extent

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

required by applicable Law, and further to the extent reasonably practicable,

all promotional materials used in the ROW will indicate that the Collaboration

Products are sold under license from Adolor.

7.1.8 Discontinued Use.

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

(a) Promptly after the termination or expiration of the Adolor

Product Promotion Term, GSK shall (a) immediately cease use of all Promotional

Materials relating to the Adolor Products in the United States, (b) return, or

otherwise dispose of in accordance with instructions from Adolor, all

Promotional Materials relating to the Adolor Products in the United States that

remain in GSK's or its Affiliates' possession or control, and (c) upon written

request by Adolor provide Adolor with a certified statement that

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all such remaining Promotional Materials relating to the Adolor Products in the

United States have been returned or otherwise properly disposed of, and that GSK

is no longer in possession or control of any such Promotional Materials relating

to the Adolor Products in the United States.

(b) Promptly after the termination of the GI Product Promotion

Term, GSK shall (a) immediately cease use of all Promotional Materials relating

to the GI Products in the United States, (b) return, or otherwise dispose of in

accordance with instructions from Adolor, all Promotional Materials relating to

the GI Products in the United States that remain in GSK's or its Affiliates'

possession or control, and (c) upon written request by Adolor provide Adolor

with a certified statement that all such remaining Promotional Materials

relating to the GI Products have been returned or otherwise properly disposed

of, and that GSK is no longer in possession or control of any such Promotional

Materials relating to the GI Products in the United States.

7.1.9 Discontinued Use of Promotional Materials in the ROW. On a

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

Collaboration Product-by-Collaboration Product and Country-by-Country basis in

the ROW, in the event this Agreement is terminated prior to expiration of the

ROW Term, GSK shall (a) immediately cease use of all promotional materials in

such Country in the ROW, (b) return, or otherwise dispose of in accordance with

instructions from Adolor, all promotional materials in such Country in the ROW

that remain in GSK's or its Affiliates' or sublicensees' possession or control,

and (c) upon written request by Adolor provide Adolor with a certified statement

that all such remaining promotional materials in such Country in the ROW have

been returned or otherwise properly disposed of, and that GSK is no longer in

possession or control of any such promotional materials in such Country in the

ROW.

7.2 Samples for the United States.

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

7.2.1 Make-Up of Package and Package Inserts of Samples. In the

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

United States, packaging, package inserts and outserts, Sample labels and

labeling shall each contain appropriate reference to Adolor and GSK with equal

exposure and prominence as may be permitted under applicable FDA rules and

regulations including, without limitation, 21 C.F.R. (S) 201.1(h). The Parties

agree to cooperate and use Commercially Reasonable Efforts to secure such

approval from the FDA.

7.2.2 Shipment, Storage and Allocation of Samples. Reasonable

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

requirements of Samples for the United States shall be shipped to each Party's

or its designee's distribution facility in a timely manner in accordance with

the schedule for distribution as outlined in the U.S. Marketing Plan. Each Party

shall be responsible for supplying its Sales Representatives in the United

States with Samples from such Party's or its designee's distribution facility.

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7.2.3 Sampling in the United States. Each Party shall use Samples in

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

the United States strictly in accordance with the then-current U.S. Marketing

Plan and shall distribute Samples in full compliance with all applicable Laws,

including the requirements of the Prescription Drug Marketing Act of 1987, as

amended (the "PDM Act"). Specifically, the Parties shall establish, maintain and

-------

adhere to written procedures to assure that each Party and its professional

representatives comply with all requirements of the PDM Act. Such procedures

shall include a requirement that each Party notify the other immediately upon

learning that any Samples shipped by to a Party have been lost or have not been

received as scheduled. Each Party will maintain records as required by the PDM

Act and all other Laws and shall allow representatives of the other Party to

inspect such records on request. Each Party shall be responsible for the filing

of any necessary reports to FDA in connection with the PDM Act, and a Party

shall provide the other Party in a timely fashion with any necessary information

in connection with such reporting under the PDM Act.

7.2.4 Audit Rights in the United States in Relation to Sampling. Upon

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

reasonable advance notice to a Party, the other Party shall be entitled, at such

Party's expense, to conduct an inspection and audit of the other Party's Sample

distribution practices by its Sales Representatives in the United States and any

of such Party's owned or controlled facilities where Samples are stored. Such

inspection and audit shall be made in accordance with the applicable provisions

of the PDM Act and with the provisions of this Agreement.

ARTICLE 8

INFORMATION CONCERNING THE COLLABORATION PRODUCTS

8.1 Statements Consistent with Labeling. Neither Party shall make, nor

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

permit its Sales Representatives to make, any promotional statement,

representation or warranty, oral or written, concerning Collaboration Products

inconsistent with, or contrary to, the approved Collaboration Product labeling

or Promotional Materials. In addition, each Party shall insure that its Sales

Representatives Detail the Collaboration Products in a fair and balanced manner

in the United States and the ROW and consistent with the requirements of the

Federal Food, Drug and Cosmetic Act of the United States, as amended, including,

but not limited to, the regulations at 21 C.F.R. (S) 202 in the United States.

8.2 Medical Inquiries. Adolor shall identify to GSK the Person or Persons

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

to whom GSK and its Affiliates shall refer all medical questions or inquiries

from members of the medical and paramedical professions and consumers regarding

the Adolor Products in the United States that GSK and its Affiliates cannot

readily answer by reference to the Adolor Product literature. GSK shall identify

to Adolor the Person or Persons to whom Adolor and its Affiliates shall refer

all medical questions or inquiries from members of the medical and paramedical

professions and consumers regarding the GI Product in the United States and the

Collaboration Products in the ROW that Adolor and its Affiliates cannot readily

answer by reference to the GI Product literature or Collaboration Product

literature, as applicable. Each Party shall use Commercially Reasonable Efforts

to refer,

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and to cause its Affiliates to refer, all such medical questions or inquiries to

such identified Person or Persons.

8.3 Standard Operating Procedures. Within ninety (90) days after the

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

Effective Date, the Parties shall develop a set of standard operating procedures

for responding promptly to medical questions or inquiries in the United States

from members of the medical and paramedical professions and consumers relating

to the Collaboration Products. In addition, the Parties will develop processes

to train personnel of each Party to respond consistently to such questions or

inquiries. For Collaboration Products in the ROW, GSK will follow appropriate

standard operating procedures consistent with all applicable Laws.

ARTICLE 9

REGULATORY MATTERS

9.1 Communications and Meetings with Governmental Authorities.

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

9.1.1 By GSK. Subject to the provisions of the Pharmacovigilance

------

Agreement, GSK shall not, without the consent of Adolor, correspond or

communicate with any Governmental Authority in the United States concerning the

Adolor Products, or otherwise take any action with any Governmental Authority in

the United States concerning any Investigational Authorization or Marketing

Authorization or permission under which the Adolor Products are sold or any

application for the same, except as may be required by Law. Furthermore, GSK

shall, promptly upon receipt of any material contact with or communication from

any Governmental Authority relating to a Collaboration Product, but in no event

more than two (2) Business Days after such receipt or contact, forward a copy or

description of the same to Adolor and respond to all reasonable inquiries by

Adolor relating thereto. GSK shall notify Adolor of any meeting with a

Governmental Authority relating to a Collaboration Product and Adolor may elect

one person reasonably acceptable to GSK (such approval not to be unreasonably

withheld, refused, conditioned or delayed) to participate as an observer (at

Adolor's cost and expense) in such meeting. If GSK is advised by its counsel

that it must communicate with any Governmental Authority, then GSK shall

promptly, but in no event more than two (2) Business Days, advise Adolor of the

same and provide Adolor in advance with a copy of any proposed written

communication with such Governmental Authority and comply with any and all

reasonable requests of Adolor concerning any meeting or written or oral

communication with such Governmental Authority.

9.1.2 By Adolor. Subject to the provisions of the Pharmacovigilance

---------

Agreement, Adolor shall not, without the consent of GSK, correspond or

communicate with any Governmental Authority in the United States concerning the

GI Products, or otherwise take any action with any Governmental Authority in the

United States concerning any Marketing Authorization or permission under which

the GI Products are sold or any application for the same, except as may be

required by Law. Furthermore, Adolor shall, promptly upon receipt of any

material contact

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with or communication from any Governmental Authority relating to a

Collaboration Product, but in no event more than two (2) Business Days after

such receipt or contact, forward a copy or description of the same to GSK and

respond to all reasonable inquiries by GSK relating thereto. Adolor shall notify

GSK of any meeting with a Governmental Authority relating to a Collaboration

Product and GSK may elect one person reasonably acceptable to Adolor (such

approval not to be unreasonably withheld, refused, conditioned or delayed) to

participate as an observer (at GSK's cost and expense) in such meeting. If

Adolor is advised by its counsel that it must communicate with any Governmental

Authority, then Adolor shall promptly, but in no event more than two (2)

Business Days, advise GSK of the same and provide GSK in advance with a copy of

any proposed written communication with such Governmental Authority and comply

with any and all reasonable requests of GSK concerning any meeting or written or

oral communication with such Governmental Authority.

9.1.3 Notification by Adolor of any Governmental Actions. Adolor

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

shall promptly, but in no event more than two (2) Business Days after receipt of

any inspections, proposed regulatory actions, investigations or requests by any

Governmental Authority with respect to the Adolor Products in the United States,

as well as any corrective actions initiated by Adolor with respect thereto,

notify GSK in detail with respect thereto and will provide GSK with copies of

all material related documentation. GSK shall have the right to participate in

all material preparation, internal caucus, and debriefing sessions related to

meetings or discussions to the extent practicable, whether in person, by

teleconference or otherwise, between Adolor or its agents and any Governmental

Authority with respect to the Adolor Products in the United States, and Adolor

shall provide GSK with reasonable prior written notice of any such sessions and

copies of meeting minutes with respect thereto.

9.1.4 Notification by GSK of any Governmental Actions. GSK shall

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

promptly, but in no event more than two (2) Business Days after receipt of any

inspections, proposed regulatory actions, investigations or requests by any

Governmental Authority with respect to the GI Products in the United States and

with respect to the Collaboration Product in ROW, as well as any corrective

actions initiated by GSK with respect thereto, notify Adolor in reasonable

detail with respect thereto and will provide Adolor with copies of all material

related documentation. Adolor shall have the right to participate in all

material preparation, internal caucus, and debriefing sessions related to

meetings or discussions to the extent practicable, whether in person, by

teleconference or otherwise, between GSK or its agents and any Governmental

Authority with respect to the GI Products in the United States and with respect

to the Collaboration Product in ROW, and GSK shall provide Adolor with

reasonable prior written notice of any such sessions and copies of meeting

minutes with respect thereto.

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9.2 Filings with Governmental Authorities.

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

9.2.1 Adolor Products in the United States. Adolor will be solely

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

responsible for and will use Commercially Reasonable Efforts in applying for,

obtaining and maintaining Investigational Authorizations and Marketing

Authorizations for the Adolor Products in the United States, including without

limitation the responsibility for applying for price approvals for the Adolor

Products if required. Upon request by Adolor, GSK shall use Commercially

Reasonable Efforts to assist Adolor in applying for, obtaining and maintaining

such Investigational Authorizations and Marketing Authorizations (including,

with respect to price approvals, as requested by Adolor) for the Adolor Products

in the United States. Adolor will be the sole owner of any Investigational

Authorizations and Marketing Authorizations for the Adolor Products in the

United States. Upon receipt of the initial Investigational Authorizations and

Marketing Authorization for the Adolor Products in the United States, Adolor

shall have exclusive authority and responsibility to and will use Commercially

Reasonable Efforts to maintain and seek appropriate revisions of the conditions

of each such Investigational Authorization and Marketing Authorization for the

Adolor Products, provided any such revisions are not inconsistent with the

provisions of this Agreement or the U.S. Marketing Plan. Adolor shall promptly

and in accordance with applicable Law provide to GSK copies of any material

documents or correspondence received from any Governmental Authority in the

United States, but in no event more than two (2) Business Days after such

receipt, that pertains to the Adolor Products (including without limitation any

minutes from a meeting with respect thereto). In addition, Adolor shall provide

GSK with drafts of any material documents or correspondence to be submitted to

any Governmental Authority in the United States that pertains to the Adolor

Products. Adolor will consult in advance with, and consider in good faith any

comments of, GSK with respect to any filings made or other actions taken by

Adolor in accordance with the terms of this Section 9.2, including without

limitation any such filings or actions with respect to any changes or

modification to labeling for or the indications of the Adolor Products.

9.2.2 GI Products in the United States. Subject to Sections 4.2 and

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

5.4, GSK will be solely responsible for and will use Commercially Reasonable

Efforts in applying for, obtaining and maintaining Investigational

Authorizations and Marketing Authorizations for the GI Products in the United

States, including without limitation the responsibility for applying for price

approvals for the GI Products if required. Upon request by GSK, Adolor shall use

Commercially Reasonable Efforts to assist GSK in applying for, obtaining and

maintaining such Investigational Authorizations and Marketing Authorizations

(including, with respect to price approvals, as requested by GSK) for the GI

Products in the United States. GSK will be the sole owner of any Investigational

Authorizations and Marketing Authorizations for the GI Products in the United

States. Upon receipt of the initial Investigational Authorization and Marketing

Authorization for the GI Products in the United States, GSK shall have exclusive

authority and responsibility to and will use Commercially Reasonable Efforts to

maintain and

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seek appropriate revisions of the conditions of each such Investigational

Authorization and Marketing Authorization for the GI Products, provided any such

revisions are not inconsistent with the provisions of this Agreement or the U.S.

Marketing Plan. GSK shall promptly and in accordance with applicable Law provide

to Adolor copies of any material documents or correspondence received from any

Governmental Authority in the United States, but in no event more than two (2)

Business Days after such receipt, that pertains to the GI Products (including

without limitation any minutes from a meeting with respect thereto). In

addition, GSK shall provide Adolor with drafts of any material documents or

correspondence to be submitted to any Governmental Authority in the United

States that pertains to the GI Products. GSK will consult in advance with, and

consider in good faith any comments of, Adolor with respect to any filings made

or other actions taken by GSK in accordance with the terms of this Section 9.2,

including without limitation any such filings or actions with respect to any

changes or modification to labeling for or the indications of the GI Products.

9.2.3 Disputes Concerning Regulatory Matters. All disputes concerning

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

regulatory matters shall be resolved by the appropriate committee in accordance

with Article 3.

9.3 In the ROW. Subject to Sections 4.2 and 5.4, GSK will be solely

----------

responsible for and will use Commercially Reasonable Efforts in applying for,

obtaining and maintaining Investigational Authorizations and Marketing

Authorizations for the Collaboration Products in the ROW, including without

limitation the responsibility for applying for price approvals for the

Collaboration Products if required. GSK will be the sole owner of any

Investigational Authorizations and Marketing Authorizations for the

Collaboration Products in the ROW. Upon receipt of the initial Investigational

Authorization and Marketing Authorization for the Collaboration Products in the

ROW, GSK shall have exclusive authority and responsibility to and will use

Commercially Reasonable Efforts to maintain and seek appropriate revisions of

the conditions of each such Investigational Authorization and Marketing

Authorization for the Collaboration Products, provided any such revisions are

not inconsistent with the provisions of this Agreement or the Commercialization

of Products in the United States. GSK shall promptly and in accordance with

applicable Laws, but in no event more than five (5) Business Days after such

receipt, provide to Adolor copies of any material documents or correspondence

received from any Governmental Authority in ** relating to the Adolor Products

(including without limitation any minutes from a meeting with respect thereto).

In addition, GSK shall provide Adolor with drafts of any material documents or

correspondence to be submitted to any Governmental Authority in a ** that

pertains to the Adolor Products. GSK will consult in advance with and, subject

to the terms of Section 9.1 and the Pharmacovigilance Agreement, and consistent

with this Section 9.2, GSK will not file any such material document with any

Governmental Authority in a ** relating to the Collaboration Products that could

have an effect on the Adolor Products in the United States without the prior

written consent of Adolor, such consent not to be unreasonably withheld,

refused, conditioned or delayed; provided that if Adolor does not respond to GSK

within

** = 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.

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two (2) Business Days after receipt of a copy of such material document, GSK

shall be permitted to file such material document without the prior written

consent of Adolor.

9.4 Approval of Labeling and Promotional Materials.

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

9.4.1 By Adolor. Subject to the provisions of this Article 9, Adolor,

---------

in the United States, shall have sole authority and responsibility to seek

and/or obtain any necessary Governmental Authority approvals of any label,

labeling, package inserts or outserts, monographs and packaging, and Promotional

Materials that are approved by the Joint Marketing Committee for use in

connection with the Adolor Products, and for determining whether the same

requires Governmental Authority approval. Upon request by Adolor, GSK shall use

Commercially Reasonable Efforts to assist Adolor in its efforts to seek and

obtain such Governmental Authority approvals.

9.4.2 By GSK. Subject to the provisions of this Article 9, GSK, in

------

the United States, shall have sole authority and responsibility to seek and/or

obtain any necessary Governmental Authority approvals of any label, labeling,

package inserts or outserts, monographs and packaging, and Promotional Materials

that are approved by the Joint Marketing Committee for use in connection with

the GI Products, and for determining whether the same requires Governmental

Authority approval. Upon request by GSK, Adolor shall use Commercially

Reasonable Efforts to assist GSK in its efforts to seek and obtain such

Governmental Authority approvals.

9.4.3 Committee Approval. Subject to Section 3.1.4(b), no

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

Collaboration Product label, labeling, package inserts or outserts, monographs,

packaging or Promotional Materials may be used or distributed by either Party in

the United States unless such label, labeling, package inserts or outserts,

monographs, packaging or Promotional Materials have been approved in advance by

the Joint Marketing Committee or the Joint Steering Committee.

9.5 Regulatory Information.

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

9.5.1 Assistance. Subject to the terms of Section 9.1, in the United

----------

States, each Party agrees to provide the other with all reasonable assistance

and take all actions reasonably requested by the other Party that are necessary

or desirable to enable the other Party to comply with any Law applicable to the

Collaboration Products, including, but not limited to, Adolor meeting its

reporting and other obligations to maintain and update any Marketing

Authorizations for the Collaboration Products.

9.5.2 Notice. Each Party shall provide the other Party with notice,

------

in a sufficiently timely basis to enable the other Party to comply in all

material respects with applicable Laws, of notification or other information

which it receives (directly or indirectly) from, any Governmental Authority (and

providing, as soon as reasonably possible, copies of any associated written

requests) that (i) raises any

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material concerns regarding the safety or efficacy of a Collaboration Product,

(ii) indicates or suggests a Claim of a Third Party arising in connection with a

Collaboration Product, or (iii) is reasonably likely to lead to a recall or

market withdrawal of a Collaboration Product, provided that neither Party shall

be obliged to disclose information in breach of any contractual restriction

which it could not reasonably have avoided. Information that shall be disclosed

pursuant to this Section 9.5.2 shall include, but not be limited to:

(a) Inspections by a Governmental Authority of manufacturing,

distribution or other related facilities concerning a Collaboration Product;

(b) Inquiries by a Governmental Authority concerning clinical

investigation activities (including without limitation inquiries regarding

investigators, clinical monitoring organizations and other related parties) with

respect to a Collaboration Product;

(c) Any communication from a Governmental Authority involving

the manufacture, sale, promotion or distribution of a Collaboration Product, or

any other Governmental Authority reviews or inquiries relating to a any event

set forth in this Section 9.5.2;

(d) An initiation of any Governmental Authority investigation,

detention, seizure or injunction concerning a Collaboration Product; and

(e) Any other regulatory action (e.g., proposed labeling or

other registrational dossier changes and recalls) which would affect a

Collaboration Product in any Country.

9.6 Exchange of Drug Safety Information. Within ninety (90) days after the

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

Effective Date, the Parties shall enter into the Pharmacovigilance Agreement.

Each Party shall ensure that, in the Development or Commercialization of the

Collaboration Products, it and each of its respective Affiliates will record,

investigate, summarize, notify, report and review all Adverse Drug Experiences

in accordance with Law and the Pharmacovigilance Agreement. Each Party shall

require that such Affiliates (i) adhere to all requirements of applicable Laws

which relate to the reporting and investigation of Adverse Drug Experiences, and

(ii) keep the Parties informed of such events.

9.7 Recalls Or Other Corrective Action.

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

9.7.1 In the United States.

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

(a) Adolor shall promptly notify GSK of any material actions

to be taken by Adolor with respect to any recall or market withdrawal or other

corrective action related to the Adolor Products in the United States prior to

such action so as to permit GSK a reasonable opportunity to consult with Adolor

with respect thereto. Adolor agrees to consider GSK's consultation; provided,

however, nothing in this Section is intended to limit Adolor's ability to

recall, withdraw or take any other corrective

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action relating to the Adolor Products in the United States. At Adolor's

request, GSK shall provide reasonable assistance to Adolor in conducting such

recall, market withdrawal or other corrective action in the United States. In

accordance with the foregoing, Adolor shall make all decisions with respect to

any recall, market withdrawals or any other corrective action related to the

Adolor Products in the United States.

(b) GSK shall promptly notify Adolor of any material actions

to be taken by GSK with respect to any recall or market withdrawal or other

corrective action related to the GI Products in the United States prior to such

action so as to permit Adolor a reasonable opportunity to consult with GSK with

respect thereto. To the extent Adolor reasonably believes any such action is

likely to adversely affect the POI Product in the United States, Adolor shall

notify GSK and GSK shall not take any action without the prior written consent

of Adolor unless otherwise required by Law. In accordance with the foregoing,

GSK shall have sole responsibility for and shall make all decisions with respect

to any recall, market withdrawals or any other corrective action related to the

GI Products in the United States.

(c) Each Party shall, as soon as practicable, notify the other

Party of any recall information received by it in sufficient detail to allow the

Parties to comply with any and all applicable Laws.

(d) Any documented, direct, out-of-pocket costs incurred

(i.e., paid or accrued) by a Party with respect to participating in such recall,

market withdrawal or other corrective action in the United States shall be

deemed a Marketing Expense of such Party; provided, however, that if such

recall, market withdrawal or other corrective action was caused by a Party's

negligence, willful misconduct or breach of this Agreement occurring while the

Collaboration Product was under such Party's or its distributors or

manufacturers' control (e.g., mishandling or adulteration of the Collaboration

Product in such Party's or its distributor's or manufacturers' warehouse), such

Party shall reimburse the other Party for such costs and they shall not be

deemed a Marketing Expense. In no event shall a Party or its Affiliates or

sublicensees be deemed a distributor or manufacturer of the other Party under

the preceding sentence.

9.7.2 In the ROW. GSK shall promptly notify Adolor of any material

----------

actions to be taken by GSK with respect to any recall or market withdrawal or

other corrective action related the Collaboration Products in the ROW prior to

such action to permit Adolor a reasonable opportunity to consult with GSK with

respect thereto. To the extent Adolor reasonably believes any such action is

likely to adversely affect the POI Product in the United States, Adolor shall

notify GSK and GSK shall not take any action without the prior written consent

of Adolor unless otherwise required by Law. All costs and expenses with respect

to a recall, market withdrawal or other corrective action in the ROW shall be

borne by GSK unless such recall, market withdrawal or other corrective action

was due solely to

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the negligence, willful misconduct or breach of this Agreement by Adolor. In

accordance with the foregoing, GSK shall have sole responsibility for and shall

make all decisions with respect to any recall, market withdrawals or any other

corrective action related to the Collaboration Products in the ROW.

9.8 Events Affecting Integrity or Reputation. During the Term, the Parties

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

shall notify each other immediately of any circumstances of which they are aware

and which could impair the integrity and reputation of the Collaboration

Products or if a Party is threatened by the unlawful activity of any Third Party

in relation to the Collaboration Products, which circumstances shall include, by

way of illustration, deliberate tampering with or contamination of the

Collaboration Products by any Third Party as a means of extorting payment from

the Parties or another Third Party. In any such circumstances, the Parties shall

use Commercially Reasonable Efforts to limit any damage to the Parties and/or to

the Collaboration Products. The Parties shall promptly call a Joint Steering

Committee meeting to discuss and resolve such circumstances.

9.9 Sharing of Regulatory Filings. GSK shall permit Adolor access to and

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

grant Adolor the right to reference and use, in association with the

Collaboration Products and the Combination Products, all data, regulatory

filings and regulatory communications associated with any submissions for

Investigational Authorization or Marketing Authorization or other issues

associated with any Collaboration Product or GSK Other GI Product that is or

would be relevant to Adolor's Development or Commercialization of a

Collaboration Product or Combination Product. Adolor shall permit GSK access to

and grant GSK the right to reference and use, in association with the

Collaboration Products, all data, regulatory filings and regulatory

communications associated with any submissions for Investigational Authorization

or Marketing Authorization or other issues associated with any Collaboration

Product or, subject to any Third Party Rights, Combination Products, that is or

would be relevant to GSK's Development or Commercialization of a Collaboration

Product. To the extent that any such data, regulatory filings or regulatory

communications are held by a Third Party, then Adolor or GSK, as the case may

be, shall endeavor to arrange direct access to the portions of such data,

regulatory filings or regulatory communications that are relevant to the

activities of the other Party that are contemplated by this Agreement.

ARTICLE 10

ORDERS; SUPPLY AND RETURNS

10.1 Orders and Terms of Sale in the United States for Adolor Products.

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

Except as otherwise expressly set forth in Section 5.5.2(b) or the distribution

services agreement contemplated in Section 6.3.3, Adolor shall have the sole

right in the United States to (i) receive, accept and fill orders for the Adolor

Products, (ii) control invoicing, order

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processing and collection of accounts receivable for the sales of the Adolor

Products and (iii) record the sales of the Adolor Products in its books of

account.

10.2 Orders and Terms of Sale in the United States for GI Products. Except

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

as otherwise expressly stated in this Agreement, GSK shall have the sole right

in the United States to (i) receive, accept and fill orders for the GI Products,

(ii) control invoicing, order processing and collection of accounts receivable

for the sales of the GI Products and (iii) record the sales of the GI Products

in its books of account.

10.3 Orders and Terms of Sale in the ROW. Except as otherwise expressly

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

stated in this Agreement, GSK shall have the sole right in the ROW to (i)

receive, accept and fill orders for the Collaboration Products, (ii) control

invoicing, order processing and collection of accounts receivable for the

Collaboration Products sales, (iii) record the Collaboration Products sales in

its books of account, and (iv) establish and modify the commercial terms and

conditions with respect to the sale and distribution of the Collaboration

Products, including without limitation matters such as the price at which the

Collaboration Products will be sold and whether any discounts, rebates or other

deductions should be made, paid or allowed.

10.4 Misdirected Orders. If, for any reason, GSK receives orders for the

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

Adolor Products in the United States, GSK shall forward such orders to Adolor

(or if directed by Adolor to Adolor's wholesalers) as soon as practicable. If,

for any reason, Adolor receives orders for the GI Products in the United States

or for the Collaboration Products in the ROW, Adolor shall forward such orders

to GSK (or if directed by GSK to GSK's wholesalers) as soon as practicable.

10.5 Product Returns.

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

10.5.1 Adolor Product Returns. If any quantities of an Adolor Product

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

are returned to GSK in the United States, GSK shall immediately notify Adolor

and ship them to the facility designated by Adolor, with any reasonable or

authorized shipping or other documented direct cost to be paid by Adolor. GSK,

at its option, may advise the customer who made the return that the Adolor

Product should have been returned to Adolor, but shall take no other steps in

respect of any return without the consent of Adolor, such consent not to be

unreasonably withheld, refused, conditioned or delayed. At Adolor's request, GSK

shall destroy the Adolor Product, the cost of such destruction to be deemed a

Marketing Expense; provided, however, that in the event the Adolor Product is

returned as a result of Adolor's breach of this Agreement, or otherwise as a

result of Adolor's negligence, than any costs associated with such destruction

shall be the sole responsibility of Adolor.

10.5.2 GI Product Returns. If any quantities of an GI Product are

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

returned to Adolor in the United States, Adolor shall immediately notify GSK and

ship them to the facility designated by GSK, with any reasonable or authorized

shipping or other documented direct cost to be paid by GSK. Adolor, at its

option, may advise the customer who made the return that the GI Product should

have been returned to GSK, but shall take no other steps in respect of any

return without the consent of GSK, such consent not to be unreasonably withheld,

refused, conditioned or delayed. At GSK's request, Adolor shall destroy the GI

Product, the cost of such destruction to be deemed a Marketing Expense;

provided, however, that in the event the GI Product is returned as a result of

GSK's breach of this Agreement, or

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otherwise as a result of GSK's negligence, than any costs associated with such

destruction shall be the sole responsibility of GSK.

10.6 Supply of API Compound and Collaboration Product for Development of

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

Collaboration Products.

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

10.6.1 Supply of API Compound for Development. Subject to the terms

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

and conditions of this Agreement, Adolor shall be responsible to supply, or to

obtain supply, for worldwide requirements of API Compound to enable the Parties

to fulfill their obligations to Develop Collaboration Products under this

Agreement. API Compound requirements for Development activities shall be set

forth in the relevant U.S. Development Plans and ROW Development Plans and shall

be periodically updated by the Joint Supply Committee in coordination with the

Joint Development Committee and the Joint Steering Committee.

10.6.2 Supply of Formulated Collaboration Products for Development.

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

Subject to the terms and conditions of this Agreement, Adolor shall be

responsible to supply, or to obtain supply, for GSK's worldwide requirements of

formulated GI Products and GSK's ROW requirements of formulated Adolor Products

to enable GSK to fulfill its obligations to Develop Collaboration Products until

such time as GSK can supply such formulated Collaboration Products alone or with

Third Parties. Formulated Collaboration Product requirements for Development

activities shall be set forth in the relevant U.S. Development Plans and ROW

Development Plans and shall be periodically updated by the Joint Supply

Committee in coordination with the Joint Development Committee and the Joint

Steering Committee.

10.6.3 Cost of Supply. Adolor shall supply such API Compound and such

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

formulated Collaboration Products to GSK at Adolor' Cost of Goods therefor and

GSK shall be responsible for shipping, insurance and other related expenses. For

the time period from the Effective Date through **, the Cost of Goods for API

Compound shall **, unless otherwise mutually agreed between the Parties.

Thereafter, Adolor will use Commercially Reasonable Efforts to provide a Cost of

Goods for API Compound **, unless otherwise mutually agreed between the Parties,

to be adjusted for inflation commencing with the Calendar Year beginning January

1, 2004, using the Producer Price Index as published by the Bureau of Labor

Statistics of the U.S. Department of Labor; provided Adolor will use

Commercially Reasonable Efforts to decrease the cost of such API Compound and

formulated Collaboration Products. GSK shall pay for such API Compound in

advance to the extent that Adolor is required to make payments in advance to its

Product Supplier.

10.6.4 Clinical Supply Agreement. Within ** (**) days after the

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

Effective Date, the Parties shall negotiate and agree in good faith a

supply agreement relating to supply to GSK of its worldwide requirements of API

Compound and its short-term requirements of formulated Collaboration Products

for Development activities, addressing the standard terms of supply set forth in

** = 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.

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Section 10.11 (the "Standard Terms") and relevant other terms relating to

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

specifications and quantities required. The Parties acknowledge that Product

Suppliers engaged by Adolor will carry out such manufacture and supply on

Adolor's behalf. Upon receipt of any API Compound supplied under such supply

agreement, GSK shall have thirty (30) days to perform the Testing Protocol to

determine if such API Compound conforms to the specifications and GSK shall

promptly notify Adolor of any API Compound that does not conform to the

specifications. On an interim basis pending effectiveness of such a supply

agreement, Adolor shall use Commercially Reasonable Efforts to supply GSK with

GSK's supply requirements of API Compound and formulated Collaboration Products

for Development activities under this Agreement in the following amounts and

timeframes (a) ** grams as capsules in the ** Calendar Quarter of Calendar Year

200**, (b) ** grams as capsules at the end of ** Calendar Quarter of Calendar

Year 200**, (c) ** grams of API Compound in the ** Calendar Quarter of Calendar

Year 200**, (d) ** grams of API Compound in the ** Calendar Quarter of Calendar

Year 200**, and (e) ** kilograms at times to be agreed upon by the Joint Supply

Committee; provided, however, that GSK shall provide in conjunction with such

supply requirements more detail to Adolor in writing, sufficiently in advance of

the date needed and with sufficient regard to the lead times involved to enable

Adolor to procure such supply; provided, further, that such request from GSK

shall be subject to the condition that the requirements of API Compound and

formulated Collaboration Products for use in POI Products for Development and

Commercialization in the United States shall have first priority.

10.7 Supply of API Compound for Commercialization of Collaboration

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

Products.

--------

10.7.1 Commercial Requirements for API Compound. Subject to the terms

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

and conditions of this Agreement, Adolor shall be responsible to supply, or to

obtain supply, of API Compound to enable the Parties to fulfill their

obligations to Commercialize Collaboration Products under this Agreement. Such

API Compound shall be supplied in accordance with the principles set out in the

Standard Terms and relevant other terms relating to specifications and

quantities required. A forecast for API Compound requirements for

Commercialization of the Collaboration Products shall be prepared and

periodically updated by the Joint Supply Committee and coordinated with the

applicable U.S. Marketing Plans for Collaboration Products through the Joint

Marketing Committee and through the Joint Steering Committee for

Commercialization in the ROW.

10.7.2 Cost of Supply. Adolor shall supply such API Compound to GSK at

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

** and GSK shall be responsible for shipping, insurance and other related

expenses. Adolor will use Commercially Reasonable Efforts to provide a Cost of

Goods for API Compound not to **, unless otherwise mutually agreed between the

Parties, to be adjusted for inflation commencing with the Calendar Year

beginning January 1, 200**, using the Producer Price Index as published by the

Bureau of Labor Statistics of the U.S. Department of Labor; provided Adolor will

use Commercially Reasonable Efforts

** = 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.

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to decrease the cost of such API Compound. GSK shall pay for such API Compound

in advance to the extent that Adolor is required to make payments in advance to

its Product Supplier.

10.7.3 Supply Agreement. Within one hundred eighty (180) days after

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

the Effective Date, the Parties shall negotiate and agree in good faith a supply

agreement relating to supply to GSK of its worldwide commercial requirements of

API Compound incorporating the Standard Terms and relevant other terms relating

to specifications and quantities required. The Parties acknowledge that Product

Suppliers engaged by Adolor will carry out such manufacture and supply on

Adolor's behalf. Upon receipt of such API Compound, GSK shall have thirty (30)

days to perform the Testing Protocol to determine if such API Compound conforms

to the specifications and GSK shall promptly notify Adolor of any API Compound

that does not conform to the specifications.

10.7.4 Right of First Negotiation. Subject to Adolor's existing

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

obligations to its Product Suppliers, GSK shall have a right of first

negotiation to become an alternative or primary source of supply of API Compound

for Commercialization of all Collaboration Products, at GSK's Cost of Goods

therefor, which shall not be greater than the applicable Product Supplier's Cost

of Goods, and Adolor shall consider any such proposal by GSK in good faith. The

Parties shall enter into a separate supply agreement if, in accordance with the

foregoing, GSK is chosen to become an alternative or primary Product Supplier of

API Compound; provided, however, that GSK's Cost of Goods for API Compound shall

in no event exceed the cost of API Compound as supplied, or as could be supplied

by a Third Party, as measured at the request of Adolor and no more frequently

than once per Calendar Year. In the event that GSK is established as a Product

Supplier, GSK shall be responsible for all costs and expenses related to any

necessary transfer of technology.

10.8 Supply of Collaboration Products for Commercialization.

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

10.8.1 Supply of Adolor Products in the United States. Subject to the

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

terms and conditions of this Agreement, Adolor shall be responsible to supply,

or to obtain supply, of commercial requirements of formulated, packaged and

labeled Adolor Products for the United States during the Adolor Product

Promotion Term. Such formulated, packaged and labeled Adolor Products for the

United States shall be supplied in accordance with the principles set out in the

Standard Terms and relevant other terms relating to specifications and

quantities required. The Joint Marketing Committee shall prepare and update

quarterly a rolling three (3) year forecast of the demand for the Adolor

Products by Calendar Quarter for the United States, which will be provided to

and monitored by the Joint Supply Committee. Notwithstanding the foregoing, the

Parties may determine that some or all of any aspect of secondary manufacturing

activity, including but not limited to formulation manufacturing, labeling and

packaging, of the Adolor Products may be performed by GSK on terms to be

determined by the Parties.

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10.8.2 Supply of GI Products in the United States. Subject to the

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

terms and conditions of this Agreement, GSK shall be responsible to supply, or

to obtain supply, of the Parties' commercial requirements of formulated,

packaged and labeled GI Products for the United States during the GI Product

Promotion Term. Such formulated, packaged and labeled GI Products for the United

States shall be manufactured and supplied in accordance with the principles set

out in the Standard Terms and relevant other terms relating to specifications

and quantities required; provided, however, that GSK's Cost of Goods for

formulated, packaged and labeled GI Products for the United States shall in no

event exceed the cost of formulated, packaged and labeled GI Products as

supplied, or as could be supplied by a Third Party, as measured at the request

of Adolor and no more frequently than once per Calendar Year. The Joint

Marketing Committee shall prepare and update quarterly a rolling ** (**) year

forecast of the demand for the GI Products by Calendar Quarter for the United

States, which will be provided to and monitored by the Joint Supply Committee.

10.8.3 Supply of Collaboration Products for the ROW. Subject to the

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

terms and conditions of this Agreement, GSK shall be responsible to supply, or

to obtain supply, of the commercial requirements of formulated, packaged and

labeled Collaboration Products for the ROW during the ROW Term. Such formulated,

packaged and labeled Collaboration Products for the ROW shall be manufactured

and supplied in accordance with all applicable Laws and current Good

Manufacturing Practices. GSK shall be solely responsible for secondary

manufacture, packaging and labeling of the GI Products for Commercialization in

the United States and for Collaboration Products in the ROW. In order to give

effect to the foregoing, Adolor shall be responsible to supply, or to obtain

supply, for GSK's requirements of API Compound pursuant to Section 10.7.

10.9 Shortages. Adolor shall give GSK written notice as soon as reasonably

---------

practicable if Adolor becomes aware that its Product Suppliers will not be able

to substantially satisfy the Parties' requirements for API Compound, and the

Parties shall give each other written notice as soon as reasonably practicable

if either Party becomes aware that its Product Suppliers will not be able to

substantially satisfy the Parties' requirements for formulated Collaboration

Products, for whatever reason. In the event that there is a failure to

substantially satisfy the Parties' requirements of API Compound or formulated

Collaboration Product, provided that such requirements cannot be satisfied by

the Parties' inventories of API Compound or formulated Collaboration Product,

and additionally provided that such failure will or does result in an

interruption of supply of Collaboration Products to the commercial market, then

GSK and Adolor will immediately work together, in good faith, to identify an

appropriate alternative source of API Compound or formulated Collaboration

Products supply, provided that:

10.9.1 Efforts to Supply Requirements. Adolor shall use its

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

Commercially Reasonable Efforts to supply the Parties' requirements for API

Compound in accordance with Section 3.4.2(c), and the Parties shall use their

Commercially Reasonable Efforts to supply the Parties' requirements for

formulated Collaboration Product; and

** = 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.

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10.9.2 Manufacturing by GSK During Shortage. GSK shall be entitled to

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

assume responsibility for supply and manufacture of API Compound or formulated

Collaboration Product for such period as the shortage may exist to address and

satisfy the Parties' requirements for such API Compound or formulated

Collaboration Product in the interim and, in order to facilitate same, Adolor

shall grant GSK the licenses set forth in Section 2.1.6 and, upon request,

effect any transfer of applicable data and information immediately forthwith.

The foregoing right of GSK to assume responsibility for supply and manufacture

of API Compound or formulated Collaboration Product shall also apply in the

event that Adolor's supply of API Compound or such Collaboration Product

repeatedly does not meet the respective specifications therefor.

10.10 Product Suppliers. In order to fulfill their respective obligations

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

under this Article 10, and without prejudice to the terms and conditions of this

Article 10, Adolor and GSK shall each be responsible for: (a) entering into

appropriate supply agreements with Product Suppliers; (b) transferring

technology to such Product Suppliers; (c) where such Product Suppliers have not

already been appointed as of the Effective Date, obtaining approval from the

other Party, such approval not to be unreasonably withheld, refused, conditioned

or delayed and, for the avoidance of doubt, this requirement for consent shall

apply to the appointment of all Product Suppliers under or in connection with

this Agreement except Product Suppliers appointed by GSK in the ROW; and (d)

obtaining any necessary regulatory approval for the use of such Product

Suppliers. Adolor shall make payments to Product Suppliers under its control for

Adolor Products for sale and distribution in the United States. GSK shall make

payments to Product Suppliers under its control for GI Products for sale and

distribution in the United States and for Collaboration Products for sale and

distribution in the ROW.

10.11 Standard Terms of Supply.

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

10.11.1 Product Supplier Representations.**

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

** = 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.

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**

10.11.2 Manufacturing Regulatory Matters. **

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

** = 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.

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**

** = 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.

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**

10.11.3 Continuous Improvement. Both Parties agree to use

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

Commercially Reasonable Efforts to continuously improve its performance and its

Product Suppliers' performance, including, but not limited to, cost of

Collaboration Products and API Compound, yield and delivery timing. The Parties

shall agree on targets to measure such performance improvements.

10.11.4 Inventories. Both Parties, and their respective Product

-----------

Suppliers, shall maintain an inventory of API Compound and Collaboration

Products in accordance with their normal practices and so as to ensure

fulfillment of their respective supply obligations herein.

ARTICLE 11

GSK PRODUCT

11.1 GSK Product Right and License. Subject to the terms of this

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

Agreement, GSK grants to Adolor, and Adolor accepts, the exclusive (except as to

GSK and its Affiliates) right, under the Patent Rights and Know-How of GSK and

under any copyrights or trademarks owned or controlled by GSK, to detail and

co-promote, or if appropriate, and the Parties mutually agree, to sell, through

itself or its Affiliates or subcontractors, ** prescription pharmaceutical

products of GSK that are, at the time of being proposed to Adolor, either being

marketed in the United States or in development for commercialization in the

United States and which shall be selected pursuant to Section 11.2 (the "GSK ---

Products"). --------

11.2 Adolor Selection Process and Timeframe.

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

**

** = 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.

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**

11.3 GSK Product Agreement. **

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

11.4 No Selected GSK Product. **

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

** = 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.

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**

ARTICLE 12

Confidential Information

12.1 Confidential Information. Each of GSK and Adolor shall keep all

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

Confidential Information received from the other Party with the same degree of

care it maintains the confidentiality of its own Confidential Information.

Neither Party shall use such Confidential Information for any purpose other than

in performance of this Agreement or disclose the same to any other Person other

than to such of its agents who have a need to know such Confidential Information

to implement the terms of this Agreement or enforce its rights under this

Agreement. A Receiving Party shall advise any agent who receives such

Confidential Information of the confidential nature thereof and of the

obligations contained in this Agreement relating thereto, and the Receiving

Party shall ensure that all such agents comply with such obligations as if they

had been a Party hereto. Upon termination of this Agreement, the Receiving Party

shall use Commercially Reasonable Efforts to return or destroy all documents,

tapes or other media containing Confidential Information of the Disclosing Party

that remain in the Receiving Party's or its agents' possession, except that the

Receiving Party may keep one copy of the Confidential Information in the legal

department files of the Receiving Party, solely for archival purposes. Such

archival copy shall be deemed to be the property of the Disclosing Party, and

shall continue to be subject to the provisions of this Article 12.

Notwithstanding anything to the contrary in this Agreement, the Receiving Party

shall have the right to disclose any Confidential Information provided hereunder

if, in the reasonable opinion of the Receiving Party's legal counsel, such

disclosure is necessary to comply with the terms of this Agreement, or the

requirements of any Law. Where possible, the Receiving Party shall notify the

Disclosing Party of the Receiving Party's intent to make such disclosure of

Confidential Information pursuant to the provision of the preceding sentence

sufficiently prior to making such disclosure so as to allow the Disclosing Party

adequate time to take whatever action the Disclosing Party may deem to be

appropriate to protect the confidentiality of the information.

12.2 Permitted Disclosure and Use. Notwithstanding Section 12.1, a Party

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

may disclose Confidential Information belonging to the other Party only to the

extent such disclosure is reasonably necessary to: (a) obtain Marketing

Authorization of a Collaboration Product; (b) enforce the provisions of this

Agreement; or (c) comply with Laws. If a Party deems it necessary to disclose

Confidential Information of the other Party pursuant to this Section 12.2, such

Party shall give reasonable advance notice of such disclosure to the other Party

to permit such other Party sufficient opportunity to object to such disclosure

or to take measures to ensure confidential treatment of such information.

** = 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.

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12.3 Publications. Subject to any Third Party rights existing as of the

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

Effective Date, each Party shall submit to the Joint Development Committee or

Joint Marketing Committee, as applicable (hereinafter referred to as the

"Applicable Committee") for review and approval all proposed academic,

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

scientific and medical publications and public presentations relating to a

Collaboration Product or any research or Development activities under this

Agreement for review in connection with preservation of Patent Rights, and trade

secrets and/or to determine whether Confidential Information should be modified

or deleted from the proposed publication or public presentation. Written copies

of such proposed publications and presentations shall be submitted to the

Applicable Committee no later than sixty (60) days before submission for

publication or presentation and the Applicable Committee shall provide its

comments with respect to such publications and presentations within ten (10)

Business Days of its receipt of such written copy. The review period may be

extended for an additional thirty (30) days if a representative of the

non-publishing Party on the Applicable Committee can demonstrate a reasonable

need for such extension including, but not limited to, the preparation and

filing of patent applications. By mutual agreement of the Parties, this period

may be further extended. The Parties will each comply with standard academic

practice regarding authorship of scientific publications and recognition of

contribution of other parties in any publications relating to the Collaboration

Products or any research or Development activities under this Agreement.

12.4 Public Announcements. Except as may be expressly permitted under

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

Section 12.3 or required by applicable Laws, neither Party will make any public

announcement of any information regarding this Agreement, the Collaboration

Products or any research or Development activities under this Agreement without

the prior written approval of the other Party. Once any written statement is

approved for disclosure by the Parties or information is otherwise made public

in accordance with the preceding sentence, either Party may make a subsequent

public disclosure of the contents of such statement without further approval of

the other Party.

12.5 Confidentiality of this Agreement. The terms of this Agreement shall

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

be Confidential Information of each Party and, as such, shall be subject to the

provisions of this Article 12.

12.6 Survival. The obligations and prohibitions contained in this Article

--------

12 shall survive the expiration or termination of this Agreement for a period of

ten (10) years.

ARTICLE 13

REPRESENTATIONS AND WARRANTIES; COVENANTS

13.1 Mutual Representations and Warranties. Adolor and GSK each represents

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

and warrants to the other as of the Effective Date that:

13.1.1 Such Party (a) is a company duly organized, validly existing,

and in good standing under the Laws of its incorporation; (b) is duly qualified

as a corporation and in good standing under the Laws of each jurisdiction where

its ownership or lease of property or the conduct of its business requires such

qualification, where

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the failure to be so qualified would have a material adverse effect on its

financial condition or its ability to perform its obligations hereunder; (c) has

the requisite corporate power and authority and the legal right to conduct its

business as now conducted and hereafter contemplated to be conducted; (d) has or

will obtain all necessary licenses, permits, consents, or approvals from or by,

and has made or will make all necessary notices to, all Governmental Authorities

having jurisdiction over such Party, to the extent required for the ownership

and operation of its business, where the failure to obtain such licenses,

permits, consents or approvals, or to make such notices, would have a material

adverse effect on its financial condition or its ability to perform its

obligations hereunder; and (e) is in compliance with its charter documents;

13.1.2 The execution, delivery and performance of this Agreement by

such Party and all instruments and documents to be delivered by such Party

hereunder (a) are within the corporate power of such Party; (b) have been duly

authorized by all necessary or proper corporate action; (c) do not conflict with

any provision of the charter documents of such Party; (d) will not, to the best

of such Party's knowledge, violate any law or regulation or any order or decree

of any court of governmental instrumentality; (e) will not violate or conflict

with any terms of any indenture, mortgage, deed of trust, lease, agreement, or

other instrument to which such Party is a party, or by which such Party or any

of its property is bound, which violation would have a material adverse effect

on its financial condition or on its ability to perform its obligations

hereunder;

13.1.3 This Agreement has been duly executed and delivered by such

Party and constitutes a legal, valid and binding obligation of such Party,

enforceable against such Party in accordance with its terms, except as such

enforceability may be limited by applicable insolvency and other Laws affecting

creditors' rights generally, or by the availability of equitable remedies; and

13.1.4 All of its employees, officers, and consultants have executed

agreements or have existing obligations under law requiring assignment to such

Party of all Inventions made by such individuals during the course of and as the

result of their association with such Party, and obligating such individuals to

maintain as confidential such Party's Confidential Information, as well as the

Confidential Information of Persons doing business with such Party that such

individuals may receive during the course of and as the result of their

association with such Party, to the extent required to support such Party's

obligations under this Agreement.

13.2 Additional GSK Representations and Warranties. GSK further represents,

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

warrants and covenants to Adolor that:

13.2.1 It has utilized its own scientific, marketing and distribution

expertise and experience to analyze and evaluate both the scientific and

commercial value of the Compound and the Collaboration Products and has solely

relied on such analysis and evaluations in deciding to enter into this

Agreement;

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13.2.2 Neither GSK nor any of its Affiliates is a party to or

otherwise bound by any oral or written contract or agreement that will result in

any Person obtaining any interest in, or that would give to any Person any right

to assert any claim in or with respect to, any of GSK's rights under this

Agreement;

13.2.3 GSK shall retain ownership or control of the right to permit

Adolor to promote or detail any GSK Product;

13.2.4 There is no claim or demand of any person or entity pertaining

to, or any proceeding which is pending or, to the knowledge of GSK, threatened,

that challenges the rights of Adolor in respect of any GSK Know-How or GSK

Patents, or that claims that any default exists under any license with respect

to any GSK Know-How or GSK Patents to which GSK is a party, except where such

claim, demand or proceeding would not materially and adversely affect the

ability of GSK to carry out its obligations under this Agreement;

13.2.5 As of the Effective Date, GSK and its Affiliates beneficially

own **, in addition to such other shares which may be held as trust assets of

pension plan trusts maintained by GSK and its Affiliates and managed by Third

Party investment managers; and

13.2.6 Pursuant to the Hart Scott Rodino Antitrust Improvements Act of

1976 (the "HSR Act"), GSK has made the good faith determination that this

-------

transaction does not satisfy the size of the transaction test as defined under

the HSR Act, and therefore, no filing is required under the HSR Act for this

transaction.

13.3 Additional Adolor Representations and Warranties. Adolor further

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

represents and warrants to GSK as of the Effective Date that:

13.3.1 Adolor has not received notice from any Third Party of a claim

that an issued patent of such Third Party in the United States or the ROW would

be infringed by the manufacture, distribution, marketing or sale of the

Collaboration Products under this Agreement;

13.3.2 To Adolor's knowledge, the Adolor Patents are not subject

anywhere in the United States or the ROW to any pending or any threatened,

re-examination, opposition, interference or litigation proceedings and Adolor

has requested and received confirmation of the same from Lilly;

13.3.3 Adolor has not received notice from any Third Party of a claim

asserting the invalidity, misuse, unregisterability or unenforceability of any

of the Adolor Patents, or challenging its right to use or ownership of any of

the Adolor Patents or the Adolor Know-How, or making any adverse claim of

ownership thereof;

13.3.4 Adolor has not received notice from any Third Party that any

trade secrets or other intellectual property rights of such Third Party in the

United States or the ROW would be misappropriated by the development and

reduction to practice of the Adolor Patents and Adolor Know-How;

** = 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.

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13.3.5 Adolor has, up to and including the Effective Date, endeavored

in good faith to furnish GSK with all material information requested by GSK

concerning the quality, toxicity, safety and/or efficacy concerns that may

materially impair the utility and/or safety of the API Compound or Collaboration

Products;

13.3.6 Pursuant to that certain License Agreement between Lilly and

Roberts Laboratories Inc. dated November 5, 1996 (the "Lilly Agreement") as

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

assigned to Adolor by Roberts Laboratories Inc. pursuant to that certain Option

and License Agreement dated June 10, 1998, Adolor's licensor, **; and

13.3.7 To Adolor' knowledge, the Lilly Agreement is valid, binding

and enforceable in accordance with its respective terms and Adolor has not

received any written notice of any material and continuing defaults, breaches or

violations under the Lilly Agreement.

13.4 Covenants.

---------

13.4.1 Each Party hereby covenants and agrees during the Term that it

shall carry out the Commercialization of the Collaboration Products and its

other obligations or activities hereunder in accordance with (i) the terms of

this Agreement and (ii) all applicable Laws.

13.4.2 Each Party hereby covenants and agrees during the Term that it

will not enter into any agreement with a Third Party or undertake other

activities or commitments, including any such agreement or any such activities

or commitments related to any Combination Product, which would have a material

adverse effect on (i) its ability to perform all of the obligations undertaken

by it and/or (ii) any of the rights granted to the other Party hereunder and/or

(iii) the commercial value of any of the Collaboration Products being Developed

and/or Commercialized under this Agreement. The Parties acknowledge that this

Section 13.4.2 shall not prevent Adolor from entering into an agreement with a

Third Party relating to a Combination Product. For purposes of clarity, it is

understood that any Collaboration Product which has been terminated in

accordance with this Agreement shall not be subject to the provisions of this

Section 13.4.2.

13.4.3 Adolor hereby covenants and agrees during the Term that it

shall not knowingly and voluntarily take any action or refrain from taking any

action so as to give Lilly cause to terminate the Lilly Agreement.

13.5 Disclaimer of Warranty. Nothing in this Agreement shall be construed

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

as a warranty or representation by either Party (i) that any Collaboration

Product made, used, sold or otherwise disposed of under this Agreement is or

will be free from infringement of patents, copyrights, trademarks, industrial

design or other intellectual property rights of

** = 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.

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any Third Party, (ii) regarding the effectiveness, value, safety, non toxicity,

patentability, or non-infringement of any patent technology, the Collaboration

Products or any information or results provided by either Party pursuant to this

Agreement or (iii) that any Collaboration Product will obtain Marketing

Authorization or appropriate pricing approval. Each Party explicitly accepts all

of the same as experimental and for development purposes, and without any

express or implied warranty from the other Party. EXCEPT AS OTHERWISE EXPRESSLY

SET FORTH IN THIS AGREEMENT, EACH PARTY EXPRESSLY DISCLAIMS, WAIVES, RELEASES,

AND RENOUNCES ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION,

ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

ARTICLE 14

INDEMNIFICATION

14.1 Indemnification by GSK. Subject to Sections 2.4.8, 14.5 and 15.2, GSK

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

shall defend, indemnify and hold harmless Adolor and its Affiliates and each of

their officers, directors, shareholders, employees, successors and assigns from

and against all Claims of Third Parties, and all associated Losses, to the

extent arising out of (a) GSK's negligence or willful misconduct in performing

any of its obligations under this Agreement, (b) a breach by GSK of any of its

representations, warranties, covenants or agreements under this Agreement, or

**.

14.2 Indemnification by Adolor. Subject to Sections 2.4.8, 14.5 and 15.2,

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

Adolor shall defend, indemnify and hold harmless GSK and its Affiliates and each

of their officers, directors, shareholders, employees, successors and assigns

from and against all Claims of Third Parties, and all associated Losses, to the

extent arising out of (a) Adolor's negligence or willful misconduct in

performing any of its obligations under this Agreement, (b) a breach by Adolor

of any of its representations, warranties, covenants or agreements under this

Agreement, **.

** = 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.

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14.3 Procedure for Indemnification.

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

14.3.1 Notice. Each Party will notify promptly the other if it

------

becomes aware of a Claim (actual or potential) by any Third Party (other than

any Product Liability Claim provided for under Section 14.5) (a "Third Party

-----------

Claim") for which indemnification may be sought by that Party and will give such

-----

information with respect thereto as the other Party shall reasonably request. If

any proceeding (including any governmental investigation) is instituted

involving any Party for which such Party may seek an indemnity under Section

14.1 or 14.2, as the case may be (the "Indemnified Party"), the Indemnified

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

Party shall not make any admission or statement concerning such Third Party

Claim, but shall promptly notify the other Party (the "Indemnifying Party")

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

orally and in writing and the Indemnifying Party and Indemnified Party shall

meet to discuss how to respond to any Third Party Claims that are the subject

matter of such proceeding. The Indemnifying Party shall not be obligated to

indemnify the Indemnified Party to the extent any admission or statement made by

the Indemnified Party or any failure by such Party to notify the Indemnifying

Party of the claim materially prejudices the defense of such claim.

14.3.2 Defense of Claim. If the Indemnifying Party elects to defend

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

or, if local procedural rules or laws do not permit the same, elects to control

the defense of a Third Party Claim, it shall be entitled to do so provided it

gives notice to the Indemnified Party of its intention to do so within

forty-five (45) days after the receipt of the written notice from the

Indemnified Party of the potentially indemnifiable Third Party Claim (the

"Litigation Condition"); provided, that the Indemnifying Party expressly agrees

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

the Indemnifying Party shall be responsible for satisfying and discharging any

award made to the Third Party as a result of such proceedings or settlement

amount agreed with the Third Party in respect of the Third Party Claim without

prejudice to any provision in this Agreement or right at law which will allow

the Indemnifying Party subsequently to recover any amount from the Indemnified

Party to the extent the liability under such settlement or award was

attributable to the Indemnified Party. Subject to compliance with the Litigation

Condition, the Indemnifying Party shall retain counsel reasonably acceptable to

the Indemnified Party (such acceptance not to be unreasonably withheld, refused,

conditioned or delayed) to represent the Indemnified Party and shall pay the

fees and expenses of such counsel related to such proceeding. In any such

proceeding, the Indemnified Party shall have the right to retain its own

counsel, but the fees and expenses of such counsel shall be at the expense of

the Indemnified Party. The Indemnified Party shall not settle any claim for

which it is seeking indemnification without the prior consent of the

Indemnifying Party which consent shall not be unreasonably withheld, refused,

conditioned or delayed. The Indemnified Party shall, if requested by the

Indemnifying Party, cooperate in all reasonable respects in the defense of such

claim that is being managed and/or controlled by the Indemnifying Party. The

Indemnifying Party shall not, without the written consent of the Indemnified

Party (which consent shall not be unreasonably withheld, refused, conditioned or

delayed), effect any settlement of any pending or threatened proceeding in which

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the Indemnified Party is, or based on the same set of facts could have been, a

party and indemnity could have been sought hereunder by the Indemnified Party,

unless such settlement includes an unconditional release of the Indemnified

Party from all liability on claims that are the subject matter of such

proceeding. If the Litigation Condition is not met, then neither Party shall

have the right to control the defense of such Third Party Claim and the Parties

shall cooperate in and be consulted on the material aspects of such defense at

the each Party's own expense; provided that if the Indemnifying Party does not

satisfy the Litigation Condition, the Indemnifying Party may at any subsequent

time during the pendency of the relevant Third Party Claim irrevocably elect, if

permitted by local procedural rules or laws, to defend and/or to control the

defense of the relevant Third Party Claim so long as the Indemnifying Party also

agrees to pay the reasonable fees and costs incurred by the Indemnified Party in

relation to the defense of such Third Party Claim from the inception of the

Third Party Claim until the date the Indemnifying Party assumes the defense or

control thereof.

14.4 Assumption of Defense. Notwithstanding anything to the contrary

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

contained herein, an Indemnified Party shall be entitled to assume the defense

of any Third Party Claim with respect to the Indemnified Party, upon written

notice to the Indemnifying Party pursuant to this Section 14.4, in which case

the Indemnifying Party shall be relieved of liability under Section 14.1 or

14.2, as applicable, solely for such Third Party Claim and related Losses.

14.5 Product Liability Claims in the United States.

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

14.5.1 Except for such Claims for which GSK is obligated to indemnify

Adolor under Section 14.1 or Adolor is obligated to indemnify GSK under Section

14.2, each of Adolor and GSK shall be responsible for Losses **. All Product

Liability Claims shall be shared in proportion to **. Notwithstanding the

foregoing, Adolor shall not be responsible for any Losses arising out of or

resulting from Product Liability Claims in relation to Collaboration Product for

which it does not receive a percentage of the Adolor Product Marketing

Contribution or a percentage of the GI Product Marketing Contribution unless

such Loss is related to a Claim under Section 14.2(a) or 14.2(b).

14.5.2 Each Party shall give the other prompt written notice of any

Product Liability Claim (actual or potential), but the omission of such notice

shall not relieve either Party from its obligations under this Section 14.5,

except to the extent the other Party can establish actual prejudice and direct

damages as a result thereof. **

** = 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.

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**

14.5.3 The Party assuming the lead role shall consult with the other

Party on all material aspects of, and shall obtain the prior written consent of

the other Party (such consent not to be unreasonably withheld, refused,

conditioned or delayed) in respect of any material decisions to be taken with

regard to, the defense, including without limitation settlement of such Product

Liability Claim, and the other Party shall have a full opportunity to

participate in decision-making process with respect to the strategy of such

defense, and the Parties shall cooperate fully with each other in connection

therewith. The other Party shall also have the right to participate in the

defense of any Product Liability Claim utilizing attorneys of its choice, at its

own expense. In furtherance of the Parties' cooperation, the Party assuming the

lead role will consult with the other Party regarding strategic decisions,

including without limitation the retention of counsel and defense of each

Product Liability Claim. The Party assuming the lead role will otherwise keep

the other Party fully informed of the status and progress of the defense and any

settlement discussions concerning the Product Liability Claim.

14.6 Insurance. Immediately upon First Commercial Sale, during the Term

---------

and for a period of ** (**) years after the termination or expiration of this

Agreement, each Party shall obtain and/or maintain, respectively, at its sole

cost and expense, product liability insurance (including any self-insured

arrangements) in amounts, respectively, which are reasonable and customary in

the U.S. pharmaceutical industry for companies of comparable size and activities

at the respective place of business of each Party. Such product liability

insurance or self-insured arrangements shall insure against all liability,

including without limitation personal injury, physical injury, or property

damage arising out of the manufacture, sale, distribution, or marketing of the

Collaboration Products. Each Party shall provide written proof of the existence

of such insurance to the other Party upon request.

14.7 Limitation of Liability. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO

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

THE OTHER OR ANY OF ITS AFFILIATES FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT,

SPECIAL, PUNITIVE OR EXEMPLARY DAMAGES (INCLUDING, WITHOUT LIMITATION, LOST

PROFITS, BUSINESS OR GOODWILL) SUFFERED OR INCURRED BY SUCH OTHER PARTY OR ITS

AFFILIATES IN CONNECTION WITH A BREACH OR ALLEGED BREACH OF THIS AGREEMENT. THE

FOREGOING SENTENCE SHALL NOT LIMIT THE OBLIGATIONS OF EITHER PARTY TO INDEMNIFY

THE OTHER PARTY FROM AND AGAINST THIRD PARTY CLAIMS UNDER THIS ARTICLE 14 OR

INFRINGEMENT CLAIMS UNDER **.

** = 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.

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ARTICLE 15

PATENT INFRINGEMENT

15.1 Prosecution and Maintenance of Patents.

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

15.1.1 Prosecution and Maintenance of Adolor Patents. Adolor shall

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

have the exclusive right and the obligation to (subject to Adolor's election not

to file, prosecute, or maintain pursuant to Section 15.1.4) or to cause its

licensors to, prepare, file, prosecute in a diligent manner (including without

limitation by conducting interferences, oppositions and reexaminations or other

similar proceedings), maintain (by timely paying all maintenance fees, renewal

fees, and other such fees and costs required under applicable Laws) and extend

all Adolor Patents and related applications. Adolor shall consult with GSK prior

to abandoning any Adolor Patents or related applications that are material to

the matters contemplated in this Agreement. Adolor shall regularly advise GSK of

the status of all pending applications, including with respect to any hearings

or other proceedings before any Governmental Authority, and, at GSK's request,

shall provide GSK with copies of all documentation concerning such applications,

including all correspondence to and from any Governmental Authority. Adolor

shall solicit GSK's advice and review of the nature and text of such patent

applications and important prosecution matters related thereto in reasonably

sufficient time prior to filing thereof, and Adolor shall take into account

GSK's reasonable comments related thereto.

15.1.2 Prosecution and Maintenance of Patents Covering Joint

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

Inventions.

----------

(a) For Patents covering Joint Inventions, the Parties shall

agree, without prejudice to ownership, which Party shall have the right to

prepare and file a priority patent application, and prosecute such

application(s) and maintain any patents derived therefrom, with the Parties

equally sharing the reasonable out-of-pocket costs for the preparation, filing,

prosecution and maintenance of such priority patent application. Should the

agreed upon Party elect not to prepare and/or file any such priority patent

application, it shall (i) provide the other Party with written notice as soon as

reasonably possible after making such election but in any event no later than

sixty (60) days before the other Party would be faced with a possible loss of

rights, (ii) give the other Party the right, at the other Party's discretion and

sole expense, to prepare and file the priority application(s), and (iii) offer

reasonable assistance in connection with such preparation and filing at no cost

to the other Party except for reimbursement of reasonable out-of-pocket expenses

incurred by the agreed upon Party in rendering such assistance. The other Party,

at its discretion and cost, shall prosecute such application(s) and maintain any

patents derived therefrom.

(b) Within nine (9) months after the filing date of a priority

application directed to an Invention, the Party filing the priority application

shall request that the other Party identify those non-priority ("foreign")

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Countries in which the other Party desires that the Party filing the priority

application file corresponding patent applications. Within thirty (30) days

after receipt by the other Party of such request from the Party filing the

priority application, the other Party shall provide to the Party filing the

priority application a written list of such foreign countries in which the other

Party wishes to effect corresponding foreign patent applications filings.

Thereafter, within twelve (12) months after the filing date of the priority

application, the Party filing the priority application shall effect such

corresponding foreign filings in the countries selected by the other Party (the

filing in such foreign Country being hereinafter referred to as a "Designated

----------

Foreign Filing"). As to each Designated Foreign Filing, GSK shall bear the costs

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

for the filing and prosecutions of such Designated Foreign Filing. If GSK does

not request that an application be filed in a given foreign Country, and Adolor

nonetheless effects the filing of a patent application in this given Country,

then the costs for such filing and for maintaining such foreign application and

any patent issuing thereon shall be borne solely by Adolor. Should the Party

filing the priority application not agree to file or cause to be filed a

Designated Foreign Filing, the other Party will have the right to effect such

Designated Foreign Filing in its name at its own cost.

(c) Should the filing Party pursuant to Section 15.1.2(a) or

15.1.2(b) no longer wish to prosecute and/or maintain any patent application or

patent resulting from such application, the filing Party shall (i) provide the

non-filing Party with written notice of its wish no later than sixty (60) days

before the patent or patent applications would otherwise become abandoned, (ii)

give the non-filing Party the right, at the non-filing Party's election and sole

expense, to prosecute and/or maintain such patent or patent application, and

(iii) offer reasonable assistance to the non-filing Party in connection with

such prosecution and/or maintenance at not cost to the non-filing Party except

for reimbursement of the filing Party's reasonable out-of-pocket expenses

incurred by the filing Party in rendering such assistance.

(d) Should the non-filing Party pursuant to Section 15.1.2(c)

not wish to incur its share of preparation, filing, prosecution and/or

maintenance costs for a patent application filed pursuant to Section 15.1.2(a)

or 15.1.2(b) or patents derived therefrom, it shall (i) provide the filing Party

with written notice of its wish, and (ii) continue to offer reasonable

assistance to the filing Party in connection with such prosecution or

maintenance at no cost to the filing Party except for reimbursement of the

non-filing Party's reasonable out-of-pocket expenses incurred by the non-filing

Party in rendering such assistance.

(e) The Parties agree to cooperate in the preparation and

prosecution of all patent applications filed under Section 15.1.2(a) and

15.1.2(b), including obtaining and executing necessary powers of attorney and

assignments by

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the named inventors, providing relevant technical reports to the filing Party

concerning the invention disclosed in such patent application, obtaining

execution of such other documents which shall be needed in the filing and

prosecution of such patent applications, and, as requested, updating each other

regarding the status of such patent applications.

15.1.3 Prosecution and Maintenance of GSK Patents. GSK shall have the

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

exclusive right and obligation to (subject to GSK's election not to file,

prosecute or maintain pursuant to Section 15.1.5) or to cause its licensors to,

prepare, file and prosecute in a diligent manner (including without limitation

by conducting interferences, oppositions and reexaminations or other similar

proceedings), maintain (by timely paying all maintenance fees, renewal fees, and

other such fees and costs required under applicable Laws) and extend all GSK

Patents and related applications. GSK shall consult with Adolor prior to

abandoning any GSK Patents or related applications that are material to the

matters contemplated in this Agreement. GSK shall regularly advise Adolor of the

status of all pending applications, including with respect to any hearings or

other proceedings before any Governmental Authority, and, at Adolor's request,

shall provide Adolor with copies of documentation relating to such applications,

including all correspondence to and from any Governmental Authority. GSK shall

solicit Adolor's advice and review of the nature and text of such patent

applications and important prosecution matters related thereto in reasonably

sufficient time prior to filing thereof, and GSK shall take into account

Adolor's reasonable comments related thereto.

15.1.4 GSK Step-In Rights. If Adolor elects not to file, prosecute or

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

maintain the Adolor Patents or claims encompassed by such Adolor Patents

necessary for GSK to exercise its rights hereunder in any Country, Adolor shall

give GSK notice thereof within a reasonable period prior to allowing such Adolor

Patents, or such claims encompassed by such Adolor Patents, to lapse or become

abandoned or unenforceable, and GSK shall thereafter have the right, at its sole

expense, to prepare, file, prosecute and maintain such Adolor Patents in such

Country.

15.1.5 Adolor Step-In Rights. If GSK elects not to file, prosecute or

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

maintain the GSK Patents or claims encompassed by such GSK Patents necessary for

Adolor to exercise its rights hereunder in any Country, GSK shall give Adolor

notice thereof within a reasonable period prior to allowing such GSK Patents, or

such claims encompassed by such GSK Patents, to lapse or become abandoned or

unenforceable, and Adolor shall thereafter have the right, at its sole expense,

to prepare, file, prosecute and maintain such GSK Patents in such Country.

15.1.6 Execution of Documents by Agents. Each of the Parties shall

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

execute or have executed by its appropriate agents such documents as may be

necessary to obtain, perfect or maintain any Patent Rights filed or to be filed

pursuant to this Agreement, and shall cooperate with the other Party so far as

reasonably necessary with respect to furnishing all information and data in its

possession reasonably necessary to obtain or maintain such Patent Rights.

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15.2 Patent Infringement.

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

15.2.1 Infringement Claims. With respect to any and all Claims

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

instituted by Third Parties against Adolor or GSK or any of their respective

Affiliates for patent infringement involving the use, sale, license or marketing

of a Collaboration Product in the United States during the United States Term,

** (each, a "Patent Infringement Claim"), **, as applicable, and Adolor and GSK

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

will assist one another and cooperate in the defense and settlement of such

Patent Infringement Claims at the other Party's request.

15.2.2 Infringement of Adolor Patents. In the event that Adolor or GSK

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

becomes aware of actual or threatened infringement of an Adolor Patent during

the Term, that Party will promptly notify the other Party in writing (a "Patent

------

Infringement Notice"). Subject to any Third Party rights existing as of the

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

Effective Date and in accordance with the Lilly Agreement, Adolor will have the

right but not the obligation to bring an infringement action against any Third

Party. **. If Adolor elects to pursue such infringement action, Adolor shall be

solely responsible for the costs and expenses associated with such action and

retain all recoveries. During the Term and subject to any Third Party rights

existing as of the Effective Date, in the event that Adolor does not undertake

such an infringement action, upon Adolor's written consent, which shall not be

unreasonably withheld, refused, conditioned or delayed, GSK shall be permitted

to do so in Adolor's or the relevant Adolor Affiliate's name and on Adolor's or

the relevant Adolor Affiliate's behalf. If Adolor has consented to an

infringement action but GSK is not recognized by the applicable court or other

relevant body as having the requisite standing to pursue such action, then GSK

may join Adolor as party-plaintiff. If GSK elects to pursue such infringement

action, Adolor may **

** = 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.

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**

15.2.3 Infringement of GSK Patents. In the event that GSK or Adolor

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

becomes aware of actual or threatened infringement of a GSK Patent during the

United States Term, that Party will promptly notify the other Party in writing.

GSK will have the right but not the obligation to bring an infringement action

against any Third Party. **. If GSK elects to pursue such infringement action,

GSK shall be solely responsible for the costs and expenses associated with such

action and retain all recoveries. During the United States Term, in the event

that GSK does not undertake such an infringement action, upon GSK's written

consent, which shall not be unreasonably withheld, refused, conditioned or

delayed, Adolor shall be permitted to do so in GSK's or the relevant GSK

Affiliate's name and on GSK's or the relevant GSK Affiliate's behalf. If GSK has

consented to an infringement action but Adolor is not recognized by the

applicable court or other relevant body as having the requisite standing to

pursue such action, then GSK may be joined as a party-plaintiff. If Adolor

elects to pursue such infringement action, GSK may **.

15.3 Notice of Certification. GSK and Adolor each shall immediately give

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

notice to the other of any certification filed under the "U.S. Drug Price

Competition and Patent Term Restoration Act of 1984" (or its foreign equivalent)

claiming that a GSK Patent or an Adolor Patent is invalid or that infringement

will not arise from the manufacture, use or sale of any Collaboration Product by

a Third Party ("Hatch-Waxman Certification").

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

15.3.1 Notice. If a Party decides not to bring infringement

------

proceedings against the entity making such a certification, such Party shall

give notice to the other Party of its decision not to bring suit within

twenty-one (21) days after receipt of notice of such certification.

15.3.2 Option. Such other Party may then, but is not required to,

------

bring suit against the entity that filed the certification.

** = 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.

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15.3.3 Name of Party. Any suit by Adolor or GSK shall either be in the

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

name of Adolor or in the name of GSK, or jointly in the name of Adolor and GSK,

as may be required by law.

15.4 Assistance. For purposes of this Article 15, the Party not bringing

----------

suit shall execute such legal papers necessary for the prosecution of such suit

as may be reasonably requested by the Party bringing suit.

ARTICLE 16

TERM AND TERMINATION

16.1 Term. Unless otherwise mutually agreed to by the Parties, this

----

Agreement shall commence on the Effective Date and shall end with respect to the

United States, upon expiration of the United States Term, and with respect to

the ROW, upon expiration of the last to expire ROW Term, unless terminated

sooner as permitted hereunder.

16.2 Extension of Adolor Product Promotion Term. If the Parties agree to

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

Develop the OBD Acute Product, or any Additional Product that becomes an Adolor

Product, the Adolor Product Promotion Term shall be extended until the sooner to

occur of (a) ** (**) years following the First Commercial Sale in the United

States of the OBD Acute Product or such Additional Product that is designated an

Adolor Product, or (b) ** (**) years after the First Commercial Sale of the POI

Product in the United States.

16.3 Termination for Breach. Either Party may, without prejudice to any

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

other remedies available to it at law or in equity, terminate this Agreement

with respect to the United States in the event that the other Party (as used in

this subsection, the "Breaching Party") shall have materially breached or

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

defaulted in the performance of any of its obligations in the United States and

with respect to ** in the event that the Breaching Party shall have materially

breached or defaulted in the performance of its obligations in such **; provided

that if such material breach occurs in **, the non-breaching Party may also

terminate the **. The Breaching Party shall, if such breach can be cured, have

sixty (60) days after written notice thereof was provided to the Breaching Party

by the non-breaching Party to remedy such default (or, if such default cannot be

cured within such 60-day period, if the Breaching Party must commence and

diligently continue actions to cure such default during such 60-day period). Any

such termination shall become effective at the end of such 60-day period unless

the Breaching Party has cured any such breach or default prior to the expiration

of such 60-day period (or, if such default is capable of being cured but cannot

be cured within such 60-day period, the Breaching Party has commenced and

diligently continued actions to cure such default provided always that, in such

instance, such cure must have occurred within one hundred twenty (120) days

after written notice thereof was provided to the Breaching Party by the

non-breaching Party to remedy such default).

16.4 Termination for Safety Related Reasons. GSK shall be entitled to

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

terminate this Agreement, in whole or in part, by giving Adolor sixty (60) days

prior written notice if (a) GSK's internal Company Safety Board determines in

good faith, consistent with its decision making principles and policies as

applied to GSK's internally developed

** = 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.

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products, to permanently cease all Development activities in respect of Compound

for one or more Collaboration Products due to an Adverse Drug Experience and/or

(ii) there are serious adverse events relating to Compound resulting in the

withdrawal of an Investigational Authorization or withdrawal of a Marketing

Authorization Approval of one or more Collaboration Products in the United

States.

16.5 Termination by GSK with Respect to **.

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

16.5.1 **.**

16.5.2 **.**

16.5.3 **.**

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the Commission. Confidential treatment has been requested with respect to the

omitted portions.

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**

16.5.4 **. **

16.6 Termination by Gsk with Respect to **.

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

16.6.1 **. **

16.6.2 **. **

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the Commission. Confidential treatment has been requested with respect to the

omitted portions.

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**

16.6.3 **.

**

16.6.4 **. **

16.7 Termination by GSK With Respect to **.

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

16.7.1 **. **

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the Commission. Confidential treatment has been requested with respect to the

omitted portions.

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16.7.2 **.**

16.7.3 **.**

16.8 Termination by Adolor. On a Collaboration Product-by-Collaboration

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

Product basis, Adolor shall be entitled to terminate this Agreement in the

following circumstances:

16.8.1 Adolor Products in the ROW.

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

**

** = 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.

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**

16.8.2 **.**

16.8.3 **.**

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the Commission. Confidential treatment has been requested with respect to the

omitted portions.

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**

16.8.4 **.**

16.8.5 Delays in Supply of API Compound. In the event that GSK fails

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

to achieve any of the timeline events set forth in this Section 16.8 or in the

U.S. Development Plan or ROW Development Plan, as applicable, due to a delay by

Adolor to supply API Compound necessary to achieve such timeline events, then

the timeline shall be extended by a period of time equal to the length of such

delay.

16.9 Effects of Expiration of the Adolor Product Promotion Term. Upon the

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

expiration of the Adolor Product Promotion Term, the following shall occur:

16.9.1 Return of Materials. GSK shall promptly transfer to Adolor, at

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

Adolor's cost, copies of all data, reports, records and materials for the United

States in its possession or control that relate to the Adolor Products and

return to Adolor, or destroy at Adolor's request, all relevant records and

materials in GSK's possession or control containing Confidential Information of

Adolor (provided that GSK may keep one copy of such Confidential Information of

Adolor for archival purposes only).

** = 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.

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16.9.2 Transfer of Regulatory Filings. GSK shall transfer to Adolor,

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

at Adolor's cost, or shall cause its designee(s) to transfer to Adolor,

ownership of all regulatory filings made or filed for such Adolor Products for

the United States (to the extent that any are held in GSK's or such

designee(s)'s name), if permitted by applicable Laws and regulations.

16.9.3 Return of GSK Confidential Information. Adolor shall promptly

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

return to GSK, at GSK's cost, or destroy at GSK's request all relevant records

and materials in Adolor's possession or control containing Confidential

Information of GSK for the United States relating to the Adolor Products

(provided that Adolor may keep one copy of such Confidential Information of GSK

for archival purposes only).

16.9.4 License Rights. All licenses granted by Adolor to GSK with

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

respect to the Adolor Products under this Agreement for the United States shall

be terminated, except for any trademark or trade dress licenses if GSK is

utilizing such Adolor Product Trademark with a GI Product being Commercialized

in the United States or with a Collaboration Product being utilized in the ROW.

16.9.5 GI Product Trademarks. In the event that Adolor is utilizing a

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

GI Product Trademark in connection with an Adolor Product being Commercialized

in the United States, Adolor shall receive a ** license to use such GI Product

Trademark solely in conjunction with such Adolor Products in the United States.

16.9.6 Use of GSK Housemark and GSK Trade Dress. Adolor's right to

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

use the GSK Housemark and GSK trade dress pursuant to Section 2.4.4(b) shall

survive expiration of the Adolor Product Promotion Term until such time as any

existing inventory of labeling, package inserts or outserts, monographs or

packaging materials or promotional materials for the Adolor Products in the

United States that contain the GSK Housemark or GSK trade dress have been

depleted, but in no event for longer than a period of ** (**) **.

16.10 Effects of Expiration of the GI Product Promotion Term. Upon the

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

expiration of the GI Product Promotion Term, the following shall occur:

16.10.1 Return of Confidential Information. Each Party, at its own cost,

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

shall promptly return to the other Party, or destroy at the

Disclosing Party's request, all relevant records and materials in

such Party's possession or control containing Confidential

Information of the other Party for GI Products in the United

States (provided that each Party may keep one copy of such

Confidential Information of the other Party for archival purposes

only).

16.10.2 License Rights. The licenses granted by Adolor to GSK pursuant to

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

Section 2.1 with respect to the GI Products in the United States

shall be considered fully-paid and royalty free and in the event

that GSK is utilizing an Adolor Product Trademark in connection

with a GI Product being Commercialized in the United States, GSK

shall receive a ** license to use such Adolor

** = 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.

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Product Trademark solely in conjunction with such GI Products in

the United States.

16.10.3 Use of Adolor Housemark and Adolor Trade Dress. GSK's right to use

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

the Adolor Housemark and Adolor trade dress pursuant to Section

2.4.4(a) shall survive expiration of the GI Product Promotion Term

until such time as any existing inventory of labeling, package

inserts or outserts, monographs or packaging materials or

promotional materials for the GI Products in the United States that

contain the Adolor Housemark or Adolor trade dress have been

depleted, but in no event for longer than a period of ** (**) **.

16.10.4 Assignment of GI Product Trademarks. In the event that GSK decides

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

to no longer Commercialize a GI Product in the United States, GSK

shall assign any rights it may have in the GI Product Trademark in

the United States to Adolor and Adolor shall pay to GSK a trademark

royalty of ** percent (**%) on Net Sales of GI Products in the

United States for so long as Adolor uses such assigned GI Product

Trademark in the United States in conjunction with the sale of GI

Products.

16.11 Effects of Expiration of the ROW Term. Upon the expiration of the ROW

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

Term, on a Collaboration Product-by-Collaboration Product and Country-by-Country

basis, the following shall occur:

16.11.1 Return of Confidential Information. Each Party, at its own cost,

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

shall promptly return to the other Party, or destroy at the

Disclosing Party's request, all relevant records and materials in

such Party's possession or control containing Confidential

Information of the other Party (provided that each Party may keep

one copy of such Confidential Information of the other Party for

archival purposes only).

16.11.2 License Rights. The licenses granted by Adolor to GSK pursuant to

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

Section 2.1 with respect to the Collaboration Products in the ROW

shall be considered **.

16.11.3 Adolor Product Trademarks.

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

(a) GSK shall, at its own expense, assign to Adolor the

Adolor Products Trademarks which were used in connection with a Collaboration

Product in respect to those applicable Countries in the ROW in which GSK owns

the Adolor Product Trademarks in such Country. Upon such assignment, Adolor

shall grant GSK an exclusive license to use such Adolor Product Trademarks in

connection with such Collaboration Product in respect to those applicable

Countries in the ROW on the terms set forth in Section 16.11.3(b).

(b) GSK shall pay Adolor a trademark royalty of ** percent

(**%) on Net Sales of Collaboration Products in the applicable Country of the

ROW for so long as GSK uses an Adolor Product Trademark in the ROW in

** = 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.

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conjunction with the sale of Collaboration Products under the license granted in

Section 16.11.3(a).

16.11.4 Use of Adolor Housemark or Adolor Trade Dress. GSK's right to use

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

the Adolor Product Trademark (having assigned the same to Adolor in

accordance with the terms of this Agreement), the Adolor Housemark

and the Adolor trade dress pursuant to Section 2.4.4(a) shall

survive expiration of the ROW Term until such time as any existing

inventory of labeling, package inserts or outserts, monographs or

packaging materials or promotional materials for the Collaboration

Products in the applicable Country of the ROW that contain the

Adolor Housemark, the Adolor Product Trademarks or Adolor trade

dress have been depleted, but in no event for longer than a period

of ** (**) **.

16.11.5 Assignment of ROW Trademarks. In the event that GSK decides to no

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

longer Commercialize a Collaboration Product in the ROW, GSK shall

assign, at Adolor's cost, any rights it may have in the GI Product

Trademarks or ROW Trademarks, as applicable, to Adolor and Adolor

shall pay to GSK a trademark royalty of ** percent (**%) on Net

Sales of Collaboration Products in the ROW for so long as Adolor

uses such assigned GI Product Trademark or ROW Trademark, as

applicable, in the ROW in conjunction with the sale of

Collaboration Products.

16.12 Effect of Termination. On a Collaboration Product-by-Collaboration

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

Product and/or on a ** and/or United States basis, in the event that this

Agreement is terminated (in which case such Collaboration Products so terminated

in such Major Region and/or the United States shall, for purposes of this

Section 16.12, be referred to as a "Terminated Collaboration Product"), the

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

following shall occur:

16.12.1 Return of Materials. GSK shall, at its sole expense,

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

promptly transfer to Adolor copies of all data, reports, records and materials

in its possession or control that relate to the Terminated Collaboration Product

and return to Adolor, or destroy at Adolor's request, all relevant records and

materials in its possession or control containing Confidential Information of

Adolor (provided that GSK may keep one copy of such Confidential Information of

Adolor for archival purposes only).

16.12.2 Transfer of Regulatory Filings. GSK shall, at its sole

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

expense, transfer to Adolor, or shall cause its designee(s) to transfer to

Adolor, ownership of all regulatory filings made or filed for the Terminated

Collaboration Product (to the extent that any are held in GSK's or such

designee(s)'s name), if permitted by applicable Laws and regulations.

16.12.3 License Rights. Subject to Section 16.12.6, all licenses

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

granted by Adolor to GSK with respect to the applicable Terminated Collaboration

Product in the applicable ** under this Agreement shall be terminated.

16.12.4 Assignment of Rights in the Adolor Product Trademarks, GI

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

Product Trademarks, ROW Trademarks and Promotional Material. GSK shall, at its

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

own expense,

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the Commission. Confidential treatment has been requested with respect to the

omitted portions.

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assign to Adolor any rights it may have in the GI Product Trademarks and/or the

ROW Trademarks and corresponding promotional materials to the extent that the

foregoing relate to the Terminated Collaboration Product, and all such

trademarks and rights in the promotional materials shall be owned by Adolor. GSK

shall, at its own expense, assign to Adolor the Adolor Product Trademarks which

were used in connection with a Terminated Collaboration Product in respect of

those Countries in the ROW in which GSK owns the Adolor Product Trademarks.

16.12.5 Manufacturing. For a Terminated Collaboration Product then

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

being manufactured by or on behalf of GSK, the Parties shall, at Adolor's sole

discretion, (a) negotiate, in good faith, a supply agreement for such Terminated

Collaboration Product on commercially reasonable terms, or (b) transfer any

required technology to Adolor or its designee to enable Adolor or such designee

to manufacture such Terminated Collaboration Product; provided that, in any

event, GSK shall ensure, for up to ** (**) **, that Adolor has a continuous

and uninterrupted supply of such Terminated Collaboration Product until such

supply agreement or transition is accomplished.

16.12.6 Transfer of Inventory. Adolor shall be entitled to decide,

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

within its reasonably exercised discretion, whether (i) GSK shall sell to Adolor

or its designee at cost all remaining inventory of the Terminated Collaboration

Product which are in good saleable condition, or (ii) GSK shall be entitled to

sell out such remaining inventory under the conditions set forth in this

Agreement, including all payment obligations, during a period of six (6) months

after termination. Inventory of the Terminated Collaboration Product not sold to

Adolor or inventory not sold out by GSK shall be destroyed at GSK's sole cost

and expense. If Adolor decides to elect for item (ii) herein, GSK's rights to

use the Adolor Housemark pursuant to Section 2.4.4(b) and, to the extent

applicable, and, without prejudice to any other provision of this Agreement, the

GI Product Trademarks and the Adolor Product Trademarks shall survive

termination until expiry of such six (6) month period or, if earlier, until such

time as any existing inventory of labeling, package inserts or outserts,

monographs or packaging materials or promotional materials for the Terminated

Collaboration Product that contain the Adolor Housemark has been depleted.

16.12.7 Transition During Notice Period. During the notice periods

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

required pursuant to Section 16.5.1, 16.5.2, 16.5.4, 16.6.1, 16.6.2, 16.6.4,

16.7.2, 16.7.3 or 16.8, GSK shall be obligated to maintain its Commercially

Reasonable Efforts to Develop or Commercialize the Terminated Collaboration

Product in accordance with the applicable U.S. Marketing Plans and undertake all

reasonable efforts to transition any such activities to Adolor to enable Adolor

to continue the Development or Commercialization of the Terminated Collaboration

Product after such applicable notice period.

16.12.8 Use of GSK Housemark or GSK Trade Dress. Adolor's right

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

to use the GSK Housemark and GSK trade dress pursuant to Section 2.4.4(b) shall

survive termination until such time as any existing inventory of labeling,

package inserts

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the Commission. Confidential treatment has been requested with respect to the

omitted portions.

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or outserts, monographs or packaging materials or promotional

materials for the Terminated Collaboration Product that contain the GSK

Housemark or GSK trade dress have been depleted, but in no event for longer than

a period of ** (**) **.

16.13 Effect of Termination for Safety Related Reasons. In the event that

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

GSK terminates this Agreement pursuant to Section 16.4, the Parties, in good

faith, shall cooperate and mutually agree as to the disposition of the

Collaboration Products.

16.14 General Effects of Termination.

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

16.14.1 Milestone Payments. GSK shall not be obligated to make a

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

Development Milestone payment under Section 6.2 which is triggered

by an event occurring after the effective date of termination of

this Agreement.

16.14.2 Accrued Rights; Surviving Obligations. Termination,

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

relinquishment or expiration of this Agreement for any reason shall be without

prejudice to any rights that shall have accrued to the benefit of any Party

prior to such termination, relinquishment or expiration. Such termination,

relinquishment or expiration shall not relieve any Party from obligations which

are expressly or by implication intended to survive termination, relinquishment

or expiration of this Agreement and shall not affect or prejudice any provision

of this Agreement which is expressly or by implication provided to come into

effect on, or continue in effect after, such termination, relinquishment or

expiration.

ARTICLE 17

LIMITATIONS ON PURCHASES OF EQUITY SECURITIES

17.1 Purchases of Equity Securities. During the Term and for a period of

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

one (1) year thereafter, except as permitted by Section 17.2, GSK and its

Affiliates will not (and will not assist or encourage others to) directly or

indirectly in any manner:

17.1.1 acquire, or agree to acquire, directly or indirectly, alone or

in concert with others, by purchase, gift or otherwise, any direct or indirect

beneficial ownership (within the meaning of Rule l3d-3 under the Securities

Exchange Act of 1934, as amended (the "Exchange Act")) or interest in any

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

securities or direct or indirect rights, warrants or options to acquire, or

securities convertible into or exchangeable for, any securities of Adolor;

17.1.2 make, or in any way participate in, directly or indirectly,

alone or in concert with others, any "solicitation" of "proxies" to vote (as

such terms are used in the proxy rules of the Securities and Exchange Commission

(the "SEC") promulgated pursuant to Section 14 of the Exchange Act); provided,

---

however, that the prohibition in this Section 17.1.2 shall not apply to

solicitations exempted from the proxy solicitation rules by Rule 14a-2 under the

Exchange Act as such Rule 14a-2 is in effect as of the date hereof;

17.1.3 form, join or in any way participate in a "group" within the

meaning of Section 13(d)(3) of the Exchange Act with respect to any voting

securities of Adolor;

**=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.

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<PAGE>

17.1.4 acquire or agree to acquire, directly or indirectly, alone or

in concert with others, by purchase, exchange or otherwise, (i) any of the

assets, tangible or intangible, of Adolor or (ii) direct or indirect rights,

warrants or options to acquire any assets of Adolor, except for such assets as

are then being offered for sale by Adolor;

17.1.5 enter into any arrangement or understanding with others to do

any of the actions restricted or prohibited under Sections 17.1.1, 17.1.2 or

17.1.3; or

17.1.6 otherwise act in concert with others, to seek to offer to

Adolor or any of its stockholders any business combination, restructuring,

recapitalization or similar transaction to or with Adolor or otherwise seek in

concert with others, to control, change or influence the management, board of

directors or policies of Adolor or nominate any person as a director of Adolor

who is not nominated by the then incumbent directors, or propose any matter to

be voted upon by the stockholders of Adolor.

17.2 Exceptions for Purchasing Securities of Adolor. Nothing herein shall

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

prevent:

17.2.1 GSK from purchasing additional equity security of Adolor if

after such purchase GSK and its Affiliates would own no greater percent of the

total voting power of all voting securities of Adolor then outstanding than GSK

owned immediately prior to the Effective Date.

17.2.2 GSK from acquiring securities of Adolor issued in connection

with stock splits or recapitalizations or on exercise of pre-emptive rights

afforded to Adolor stockholders generally.

17.2.3 GSK or GSK's employees from purchasing securities of Adolor

pursuant to (i) a pension plan established for the benefit of GSK's employees,

(ii) any employee benefit plan of GSK or (iii) any stock portfolios not

controlled by GSK or any of its Affiliates that invest in Adolor among other

companies.

17.2.4 GSK from acquiring securities of another biotechnology or

pharmaceutical company that beneficially owns any of Adolor's securities.

17.2.5 GSK or any of its Affiliates from acquiring equity securities

of Adolor without any limitation following initiation by a third party of an

unsolicited tender offer to purchase ** percent (**%) or more of any class or

service of Adolor's publicly traded voting securities (a "Hostile Tender

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

Offer"); provided that the exception provided by this Section 17.2.5 shall be

-----

limited to the classes or series of Adolor's securities that are the subject of

the Hostile Tender Offer; provided, further, that, in the event that either (a)

such Hostile Tender Offer is terminated or expires without the purchase of at

least ** percent (**%) of any class or series of Adolor's publicly traded voting

securities by such third party, or (b) the Adolor Board of Directors

subsequently recommends that such offer be accepted, then GSK shall divest in

one or more open-market transactions all shares of Adolor's securities so

acquired by it. Any such divestiture shall be completed as expeditiously as

possible consistent with applicable securities laws and

** = 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.

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<PAGE>

regulations and in a manner intended to shield GSK from liability for recovery

of short swing profits under Section 16 of the Exchange Act and the rules

promulgated thereunder.

ARTICLE 18

MISCELLANEOUS

18.1 Relationship of the Parties. Each Party shall bear its own costs

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

incurred in the performance of its obligations hereunder without charge or

expense to the other except as expressly provided in this Agreement. Neither

Party shall have any responsibility for the hiring, termination or compensation

of the other Party's employees or for any employee benefits of such employee. No

employee or representative of a Party shall have any authority to bind or

obligate the other Party to this Agreement for any sum or in any manner

whatsoever, or to create or impose any contractual or other liability on the

other Party without said Party's approval. For all purposes, and notwithstanding

any other provision of this Agreement to the contrary, GSK's legal relationship

under this Agreement to Adolor shall be that of independent contractor. This

Agreement is not a partnership agreement and nothing in this Agreement shall be

construed to establish a relationship of co-partners or joint venturers between

the Parties.

18.2 Registration and Filing of this Agreement. To the extent, if any, that

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

either Party concludes in good faith that it or the other Party is required to

file or register this Agreement or a notification thereof with any Governmental

Authority, including without limitation the U.S. Securities and Exchange

Commission, the Competition Directorate of the Commission of the European

Communities or the U.S. Federal Trade Commission, in accordance with Law, such

Party shall inform the other Party thereof. Should both Parties jointly agree

that either of them is required to submit or obtain any such filing,

registration or notification, they shall cooperate, each at its own expense, in

such filing, registration or notification and shall execute all documents

reasonably required in connection therewith. In such filing, registration or

notification, the Parties shall request confidential treatment of sensitive

provisions of this Agreement, to the extent permitted by Law. The Parties shall

promptly inform each other as to the activities or inquiries of any such

Governmental Authority relating to this Agreement, and shall reasonably

cooperate to respond to any request for further information therefrom on a

timely basis.

18.3 Force Majeure. The occurrence of an event which materially interferes

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

with the ability of a Party to perform its obligations or duties hereunder which

is not within the reasonable control of the Party affected or any of its

Affiliates, not due to malfeasance by such Party or its Affiliates, and which

could not with the exercise of due diligence have been avoided (each, a "Force

-----

Majeure Event"), including, but not limited to, an injunction, order or action

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

by a Governmental Authority, fire, accident, labor difficulty, strike, riot,

civil commotion, act of God, inability to obtain raw materials, delay or errors

by shipping companies or change in law, shall not excuse such Party from the

performance of its obligations or duties under this Agreement, but shall merely

suspend such performance during the continuation of the force majeure. The Party

prevented from performing its obligations or duties because of a Force Majeure

Event shall promptly notify the other Party of the occurrence and particulars of

such force majeure and shall provide the other

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<PAGE>

Party, from time to time, with its best estimate of the duration of such Force

Majeure Event and with notice of the termination thereof. The Party so affected

shall use Commercially Reasonable Efforts to avoid or remove such causes of

nonperformance as soon as is reasonably practicable. Upon termination of the

Force Majeure Event, the performance of any suspended obligation or duty shall

promptly recommence. The Party subject to the Force Majeure Event shall not be

liable to the other Party for any direct, indirect, consequential, incidental,

special, punitive, exemplary or other damages arising out of or relating to the

suspension or termination of any of its obligations or duties under this

Agreement by reason of the occurrence of a Force Majeure Event, provided such

Party complies in all material respects with its obligations under this Section

18.3.

18.4 Governing Law. This Agreement shall be construed, and the respective

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

rights of the Parties determined, according to the substantive law of the State

of Delaware notwithstanding the provisions governing conflict of laws under such

Delaware law to the contrary, except matters of intellectual property law which

shall be determined in accordance with the intellectual property laws relevant

to the intellectual property in question. The UNCITRAL Convention for the

International Sale of Goods, as well as any other unified law relating to the

conclusion and implementation of contracts for the international sale of goods,

shall not apply.

18.5 Dispute Resolution; Arbitration.

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

18.5.1 Dispute Resolution. For disputes not subject to Section 3.1.4,

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

any dispute, controversy or claim arising out of or relating to this Agreement

which the Parties are unable to amicably settle themselves shall first be

submitted to the Joint Steering Committee for resolution. The Joint Steering

Committee shall have thirty (30) days to attempt to resolve the dispute and will

set forth any resolution in writing. If the Joint Steering Committee is unable

to resolve the dispute within the thirty (30) day period, the dispute shall

automatically be referred to the Officers within seventy-two (72) hours, and

such Officers shall attempt to resolve the dispute within a reasonable time, but

in no case more than forty-five (45) days from the time that the Joint Steering

Committee forwards its resolution to the Officers. The Officers shall issue

their resolution in writing.

18.5.2 Arbitration. Any dispute, controversy or claim arising out of

-----------

or relating to this Agreement which the Parties have not resolved under Section

18.5.1, including, without limitation, disputes relating to (i) the validity,

inducement or breach of or the interpretation of any provision of this

Agreement, (ii) the interpretation or application of law or (iii) the ownership

of any intellectual property, shall be decided by arbitration in accordance with

the International Rules of the American Arbitration Association ("AAA") for

---

Commercial Arbitration in effect at the time the dispute arises, unless the

Parties hereto mutually agree otherwise. To the extent such rules are

inconsistent with this provision, this provision will control.

(a) Any demand for arbitration must be made in writing to the

other Party.

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<PAGE>

(b) There will be a panel of three arbitrators, one selected

by Adolor, one selected by GSK, and one selected by mutual agreement of the

arbitrators selected by Adolor and GSK. If the arbitrators selected by Adolor

and GSK cannot agree on a third arbitrator within thirty (30) days, then the AAA

shall select the third arbitrator. Any arbitration involving patent rights,

other intellectual property rights or intellectual property shall be heard by

arbitrators who are experts in such areas.

(c) The arbitration shall be held in Wilmington, Delaware, or

such other place as the Parties agree. The arbitrators shall apply the

substantive law of Delaware in accordance with Section 18.4, without regard to

conflicts of laws and except that the interpretation and enforcement of this

arbitration provision shall be governed by the Federal Arbitration Act.

(d) Neither Party shall have the right independently to seek

recourse from a court of law or other authorities in lieu of arbitration, but

each Party has the right before or during the arbitration to seek and obtain

from the appropriate court provisional remedies to avoid irreparable harm,

maintain the status quo or preserve the subject matter of the arbitration. There

shall be a stenographic record of the proceedings. The decision of the

arbitrators shall be made by majority vote and shall be final and binding upon

both Parties. The arbitrators shall render a written opinion setting forth

findings of fact and conclusions of law.

18.5.3 Expenses of Arbitration. The expenses of the arbitration shall

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

be borne by the Parties in proportion as to which each Party prevails or is

defeated in arbitration. Each Party shall bear the expenses of its counsel and

other experts.

18.6 Assignment. This Agreement may not be assigned by either Party without

----------

the prior consent of the other Party; provided, however that either Party may

assign this Agreement, in whole or in part, to any of its Affiliates if such

Party guarantees the performance of this Agreement by such Affiliate; and

provided further that either Party may assign this Agreement to a successor to

all or substantially all of the assets of such Party whether by merger, sale of

stock, sale of assets or other similar transaction. This Agreement shall be

binding upon, and subject to the terms of the foregoing sentence, inure to the

benefit of the Parties hereto, their permitted successors, legal representatives

and assigns.

18.7 Notices. All demands, notices, consents, approvals, reports, requests

-------

and other communications hereunder must be in writing and will be deemed to have

been duly given only if delivered personally, by facsimile with confirmation of

receipt, by mail (first class, postage prepaid), or by overnight delivery using

a globally-recognized carrier, to the Parties at the following addresses:

Adolor: Adolor Corporation

620 Pennsylvania Drive

Exton, Pennsylvania 19341

Facsimile: 484-595-1520

Attn: President

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<PAGE>

With a copy to: Morgan, Lewis & Bockius LLP

502 Carnegie Center

Princeton, NJ 08540

Attn: Randall B. Sunberg

Facsimile: 609-919-6639

and with a copy to: Dechert

4000 Bell Atlantic Tower

1717 Arch Street

Philadelphia, PA 19103

Attn: James A. Lebovitz

Facsimile: 215-994-2222

GSK: Glaxo Group Limited

Glaxo Wellcome House

Berkeley Avenue

Greenford

Middlesex

UB6 0NN

United Kingdom

Attn: Company Secretary

Facsimile: 011 44 208-047-6912

With a copy to: GlaxoSmithKline plc

980 Great West Road

Brentford

Middlesex

TW8 9GS

United Kingdom

Attn: Corporate Law

Facsimile: 011 44 208-047-6912

and with a copy to: GlaxoSmithKline plc

980 Great West Road

Brentford

Middlesex

TW8 9GS

United Kingdom

Attn: Vice President, Worldwide Business Development

Facsimile: 011 44 208-990-8142

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<PAGE>

or to such other address as the addressee shall have last furnished in

writing in accord with this provision to the addressor. All notices shall

be deemed effective upon receipt by the addressee.

18.8 Severability. In the event of the invalidity of any provisions of this

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

Agreement or if this Agreement contains any gaps, the Parties agree that such

invalidity or gap shall not affect the validity of the remaining provisions of

this Agreement. The Parties will replace an invalid provision or fill any gap

with valid provisions which most closely approximate the purpose and economic

effect of the invalid provision or, in case of a gap, the Parties' presumed

intentions. In the event that the terms and conditions of this Agreement are

materially altered as a result of the preceding sentences, the Parties shall

renegotiate the terms and conditions of this Agreement in order to resolve any

inequities. Nothing in this Agreement shall be interpreted so as to require

either Party to violate any applicable laws, rules or regulations.

18.9 Headings. The headings used in this Agreement have been inserted

--------

for convenience of reference only and do not define or limit the provisions

hereof.

18.10 Waiver. Any term or condition of this Agreement may be waived at

------

any time by the Party that is entitled to the benefit thereof, but no such

waiver shall be effective unless set forth in a written instrument duly executed

by or on behalf of the Party waiving such term or condition. No waiver by any

Party of any term or condition of this Agreement, in any one or more instances,

shall be deemed to be or construed as a waiver of the same or any other term or

condition of this Agreement on any future occasion. Except as expressly set

forth in this Agreement, all rights and remedies available to a Party, whether

under this Agreement or afforded by law or otherwise, will be cumulative and not

in the alternative to any other rights or remedies that may be available to such

Party.

18.11 Entire Agreement. This Agreement (including the exhibits and

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

schedules hereto) constitutes the entire agreement between the Parties hereto

with respect to the within subject matter and supersedes all previous agreements

and understandings between the Parties, whether written or oral. This Agreement

may be altered, amended or changed only by a writing making specific reference

to this Agreement and signed by duly authorized representatives of Adolor and

GSK.

18.12 No License. Nothing in this Agreement shall be deemed to constitute

----------

the grant of any license or other right in either Party, to or in respect of any

Collaboration Product, patent, trademark, Confidential Information, trade secret

or other data or any other intellectual property of the other Party, except as

expressly set forth herein.

18.13 Third Party Beneficiaries. None of the provisions of this Agreement

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

shall be for the benefit of or enforceable by any Third Party, including without

limitation any creditor of either Party hereto. No such Third Party shall obtain

any right under any provision of this Agreement or shall by reasons of any such

provision make any Claim in respect of any debt, liability or obligation (or

otherwise) against either Party hereto.

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18.14 Counterparts. This Agreement may be executed in any two

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

counterparts, each of which, when executed, shall be deemed to be an original

and both of which together shall constitute one and the same document.

[Signature Page Follows]

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<PAGE>

IN WITNESS WHEREOF, Adolor and GSK, by their duly authorized officers,

have executed this Agreement as of the Effective Date.

ADOLOR CORPORATION GLAXO GROUP LIMITED

By: /s/ John J. Farrar By: /s/ J.P. Garnier

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

Name: John J. Farrar Name: J.P. Garnier

Title: President and Title: Chief Executive

Chief Executive Officer

Officer

SIGNATURE PAGE TO COLLABORATION AGREEMENT