EXHIBIT 10.1
CONFIDENTIAL TREATMENT REQUESTED . Confidential portions of
this
document have been redacted and have been separately filed with the
Commission.
AMENDED & RESTATED
LICENSE AGREEMENT
THIS AMENDED & RESTATED LICENSE AGREEMENT
(the
“Agreement”), effective as of this 17th day of March,
2008 (the “Effective Date”), by and between Panion
& BF Biotech, Inc., with offices at 16F No. 3, Yuanqu Street,
Nangang District, Taipei, Taiwan, ROC (hereinafter "Licensor"), and
Keryx Biopharmaceuticals, Inc, with offices at 750 Lexington,
20
th Floor,
New York, NY 10022 (hereinafter "Licensee").
WHEREAS ,
Dr. Chen Hsing Hsu (the "Inventor"), an employee of the University
of Michigan (the "Institution"), is the named inventor on U.S.
Patent No. 5,753,706, issued May 19, 1998 and entitled "Methods for
Treating Renal Failure" (the "Licensed Patent
Property"),
WHEREAS ,
the Institution has transferred to the Inventor all of the
Institution's right, title, and interest in and to the Licensed
Patent Property (subject to certain non-commercial applications,
specified below), by an Agreement for the Reassignment of
Intellectual Property, with a last-signed date of August 16,
2000,
WHEREAS ,
the Inventor has granted the Licensor the exclusive license,
throughout the world (except the People's Republic of China) to
make, use, and sell products embodying the inventions described in
the Licensed Patent Properties, as well as rights to the Patent
Rights (as hereinafter defined) (as specified below) (the
"Exclusive License"),
WHEREAS ,
Licensor has developed certain Licensor Know-How (as hereinafter
defined),
WHEREAS ,
by operation of this exclusive license, Licensor is the sole and
exclusive licensee of the entire right, title and interest in and
to the Patent Rights (with the exception of the People's Republic
of China) and Licensor Know-How,
WHEREAS, effective
November 7, 2005 Licensor and Licensee entered into a License
Agreement (“License Agreement”) under which Licensee
obtained an exclusive license
under such Patent Rights and Licensor Know-How to develop, have
developed, make, have made, use, have used, offer to sell, sell,
have sold, import and export the Compound and Product in the
Territory (as hereinafter defined),
*****Confidential material redacted and filed separately with the
Commission.
WHEREAS ,
under the terms of the License Agreement Licensee has paid to
Licensor the following sums: (i) a non-refundable, non-creditable
license fee of *****; (ii) a milestone payment for completion of a
Phase II clinical trial in the amount of ***** and (iii) the amount
of ***** in reimbursement of ***** of Licensor’s development
costs associated with its Phase II clinical trial,
WHEREAS ,
on or about September 26, 2007 Licensee entered into a Sublicense
Agreement with Japan Tobacco Inc. and Torii Pharmaceutical Co., Ltd
(“Japan Sublicense”),
WHEREAS ,
Licensor has the authority and is willing to grant such license to
Licensee, and Licensee is willing to accept such license from
Licensor, under the terms and conditions set forth in this
Agreement, and
WHEREAS ,
the parties now wish to amend and restate the License Agreement in
its entirety on the terms and conditions set forth
herein.
NOW THEREFORE ,
in consideration of the mutual promises and covenants set forth
herein and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1. DEFINITIONS
As
used in this Agreement, the following terms, whether used in
the singular or the plural, shall have the following
meanings:
1.1
"
Affiliate "
means any corporation or non-corporate business entity, which
controls, is controlled by, or is under common control with a party
to this Agreement. A corporation or non-corporate business entity
shall be regarded as in control of another corporation if it owns
or directly or indirectly controls at least fifty-one percent (51%)
of the voting stock of the other corporation, or (i) in the absence
of the ownership of at least fifty-one percent (51%) of the voting
stock of a corporation, or (ii) in the case of a non-corporate
business entity, if it possesses, directly or indirectly, the power
to direct or cause
the direction of the management and policies of the corporation or
non-corporate business entity, as applicable.
1.2
“
Combination Product ”
means a Product containing one or more therapeutically active
ingredients in addition to the Compound.
1.3
"
Compound "
means ferric citrate or any other iron-based compound.
1.4
"
FDA "
means the United States Food and Drug Administration.
1.5
Intentionally
omitted.
1.6
“
First Commercial Sale ”
means with respect to a Product, the first sale for end use or
consumption of such Product in a country after all Registrations in
such country have been obtained.
1.7
"
IND "
means an Investigational New Drug Application in the United
States.
1.8
"
Indication "
means any therapeutic application for a Product that is covered by
the Patent Rights.
1.9
“
Improvements ”
means any and all improvements, materials, technical data and
information whether patented or unpatented, including but not
limited to any changes to the Compound, to the Product or in the
Licensor Know-How or Licensee Know-How including, but not limited
to any analogues, or derivatives of the Compound, and changes in
the manufacturing process for the Compound or the Product which are
conceived or reduced to practice during the term of this
Agreement.
1.10
“
Licensee Development Data ”
means and includes all data relating to the Compound or the Product
and all chemistry, manufacturing and control data relating to the
development and manufacture of the Compound or the Product, results
of pre-clinical and clinical studies and all other documentation
containing or embodying any pre-clinical, clinical, chemistry,
manufacturing and control data relating to any application for
Registrations for a Product, which is generated by Licensee, its
agents, or any Sublicensees during the term of this
Agreement.
1.11
“
Licensee Know-How ”
means all information and materials, including but not limited to,
discoveries, processes, instructions, formulas, data, inventions,
know-how and trade secrets, patentable or otherwise, which arise
out of the development, manufacture and commercialization by
Licensee of the Compound or the Product, including, without
limitation, all biological, chemical, pharmacological,
toxicological, pharmaceutical, physical, analytical, clinical,
safety, manufacturing and quality control data and information
related thereto, and all applications, registrations, licenses
authorizations, documents, approvals and correspondence relating to
the Compound or the Product, including without limitation,
correspondence submitted to Regulatory Authorities, and all
information and data contained in Registrations. Licensee Know-How
shall also include Licensee’s interest in Improvements
.
1.12
“
Licensor Development Data ”
means and includes all data to which Licensor has rights relating
to the Compound or the Product and all chemistry, manufacturing and
control data relating to the development and manufacture of the
Compound or the Product, results of pre-clinical and clinical
studies and all other documentation containing or embodying any
pre-clinical, clinical, chemistry, manufacturing and control data
relating to any application for Registrations for the Product,
whether such Licensor Development Data is in existence as of the
Effective Date or generated by Licensor during the term of this
Agreement.
1.13
"
Licensor Know-How ” means all information and
materials to which Licensor has rights, including but not
limited to, discoveries, processes, formulas, instructions,
data, inventions, know-how and trade secrets, patentable or
otherwise, in each case, which as of the Effective Date and
during the term of this Agreement are necessary or useful to
Licensee in connection with the development, registration,
manufacture, marketing, use or sale of a Product. Licensor
Know-How shall also include without limitation, all
biological, chemical, pharmacological, toxicological,
pharmaceutical, physical, analytical, clinical, safety,
manufacturing and quality control data and information related
thereto, and all applications, registrations, licenses,
authorizations, documents, approvals and correspondence
relating to a Licensed Compound or a Product.
Licensor
Know-How shall also include Licensor’s interest in
Improvements.
1.
14 "
NDA "
means a New Drug Application in the United States.
1.15
"
Net Sales "
with respect to any Product other than a Combination Product means
the gross sales (i.e. gross invoice prices) of such Product billed
by Licensee and its Sublicenses to Third Party customers on all
sales of a Product, and exclusive of inter-company transfer or
sales, less the reasonable and customary deductions from such gross
sales, including:
(i)
actual credited allowances to such Third Party customers for
spoiled, damaged, outdated and returned Product and for
retroactive price reductions,
(ii)
the amounts of trade, cash discounts and rebates, to the
extent such discounts and rebates were not deducted by
Licensee or its Sublicensees at the time of invoice in order
to arrive at the gross invoice prices,
(iii)
all transportation, handling charges and freight insurance,
sales taxes, excise taxes, use taxes or import/export duties
paid, and
(iv)
all other reasonable and customary allowances and adjustments
actually credited to customers whether during the specific
royalty period or not.
The
sale of a Product between Licensee and any of its Sublicensees
solely for the research or clinical testing of such Product
shall be excluded from the computation of Net Sales of such
Product, provided that Licensee's sale of the Product was at
cost, and such Product was used for research or clinical
testing.
1.16
"
Net Sales "
with respect to any Combination Product means the gross sales of
such Product billed by Licensee and its Sublicensees to Third Party
customers, on all sales of a Combination Product, and exclusive of
inter-company transfer or sales, less all the allowances,
adjustment, reductions, discounts, taxes, duties and other charges
referred to in Section 1.15
multiplied
by a fraction to
be determined
by
Licensor and Licensee at such time when the Combination Product
becomes available.
The
sale of a Combination Product between Licensee and any of its
Sublicensees solely for the research or clinical testing of
such Product shall be excluded from the computation of Net
Sales for such Combination Product, provided that Licensee's
sale of the Combination Product was at cost, and such
Combination Product was used for research or clinical
testing.
1.17
"
Patent Rights "
means the Licensed Patent Property
,
and the patents and patent applications set forth in
Exhibit 1 (which
shall be updated from time to time by Licensor), all other patents
and patent applications that are directed to the Compound or its
manufacture or use and in which Licensor holds rights, including,
without limititation, those patents and patent applications that
are directed to Licensor’s interest in Improvements, and any
and all patents in which Licensor holds rights and that may issue
from any of the foregoing patent applications, including any and
all divisions, continuations, continuations-in-part, extensions,
substitutions, renewals, registrations, supplementary protection
certificates, revalidations, reissues or additions of or to any of
the aforesaid patents and patent applications, and any additional
patents or patent applications to which Licensor acquires rights
during the term of this Agreement which pertain in any way to the
Compound or the Product or their manufacture or use.
1.18
“Payment Default” means
Licensee’s failure to pay Licensor the license fee and
milestone payments under Article 4, and the royalties under Article
5 for more than 90 days past the date on which these amounts are
due.
1.19
"
Product "
means the Compound or any pharmaceutical product containing the
Compound as an active ingredient, either alone or in combination
with other active ingredients.
1.20
“
Proprietary Information ”
means all information, including without limitation all Licensee
Know-How, Licensor Know-How, and all other scientific, clinical,
regulatory, marketing, financial and commercial information or
data, whether communicated in writing, orally or electronically
which is provided by one party to the other party in connection
with this Agreement.
1.21
"
Registration "
in relation to any Product means such approvals by a Regulatory
Authority in a country or community or association of countries as
may be legally required before such Product may be commercialized
in such country or community or association of
countries.
1.22
“
Regulatory Authority ”
means the applicable government regulatory authority in each
country in the Territory involved in granting regulatory approval
for the Product. Such term includes, without limitation, the FDA
and any successor agency thereto and Committee on Proprietary
Medicinal Products of the European Community and any successor
agency thereto.
1.23
“
Sublicensee ”
means a Third Party to which Licensee has granted sublicense rights
under the license granted Licensee hereunder, which rights include
at least the right to sell the Product. Third Parties that are
permitted to manufacture the Compound or the Product for supply
only to Licensee or only to Sublicensees are not
“Sublicensees” and such transaction shall be deemed a
transfer and not a sale of the Product.
1.24
"
Territory "
means the entire world, provided that (a) excluded from the
Territory are China,
Korea, and all other countries in the Asian Pacific Region, except
that (b) included within the Territory is Japan.
1.25
"
Third Party "
means any party other than Licensor or Licensee or their respective
Affiliates, or Sublicensees of Licensee or its
Sublicensees.
1.26
"
Valid Claim "
means a claim of an issued and unexpired patent included within the
Patent Rights which has not been held unenforceable or invalid in
the applicable jurisdiction by a decision of a court or other
governmental agency of competent jurisdiction, unappealable or
unappealed within the time allowed for appeal, and which has not
been admitted to be invalid or unenforceable through dedication,
disclaimer or otherwise.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES
2.1
Each
party represents and warrants to the other party that it has
the full right and authority to enter into this Agreement, and
that, to the best of its knowledge, there are no prior
agreements, commitments or other obstacles which could prevent
it from carrying out all of its obligations
hereunder.
2.2
Licensor
represents to Licensee that:
(a)
it
is the exclusive licensee of the entire right, title and
interest in and to the Patent Rights, and to the best of its
knowledge, there
are no charges, encumbrances, licenses, options,
restrictions, liens, rights of others, disputes, proceedings
or claims relating to, affecting, or limiting its rights or
the rights of
Licensee under this Agreement, with the exception of
non-commercial uses of the Licensed Patent Properties reserved
to the Institution;
(b)
there
is no claim, pending
or threatened, of infringement, interference or invalidity
regarding any
part or all of the Patent Rights and their use as contemplated
in this Agreement, and it has no present knowledge from which
it can be inferred that the Patent Rights are invalid or that
their exercise would infringe the patent rights of any Third
Party;
(c)
it
has the right to enter into this Agreement and to grant the
licenses granted herein, and
there
is nothing in any Third Party agreement Licensor has entered
into as of the Effective Date, which in any way, will limit
the ability of Licensor to perform any and all
of
the obligations undertaken by Licensor hereunder;
(d)
it
will not enter into any agreement after the Effective Date
which will limit its ability to perform any and all of the
obligations undertaken by Licensor hereunder;
(e)
it
has delivered to Licensee all Licensor Development Data and
Licensor Know-how; and
(f)
to
the best of its knowledge neither
this Agreement, nor any document or piece of Licensor
Development Data, Licensor Know-How or Patent Rights contains
any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements
contained herein or therein misleading.
2.3
Licensee
represents to Licensor that:
(a)
it
has the right to enter into this Agreement and to the best of
its knowledge, there
is nothing in any Third Party agreement Licensee
has
entered into as of the Effective Date, which in any way, will
limit the ability of Licensee
to perform any and all of the obligations undertaken by
Licensee hereunder, and
(b)
it
will not enter into any agreement after the Effective Date
which will limit its ability to perform any and all of the
obligations undertaken by Licensee hereunder.
*****Confidential material redacted and filed separately with the
Commission.
ARTICLE 3. LICENSE GRANT
3.1
Grant .
Subject to the terms and conditions of this Agreement, Licensor
hereby grants to Licensee an exclusive license, in the Territory,
with the right to sublicense, to develop, have developed, make,
have made, use, have used, offer to sell, sell, have sold, and
import and export the Product in the Territory under the Licensor
Know-How, and the Patent Rights for all Indications.
3.2
Sublicensing.
Sublicensees
of
Licensee shall be entitled to sublicense to third parties the right
to manufacture the Product, provided such third party manufacturers
are permitted to sell only to Licensee or its immediate
Sublicensees. Sublicensees of Licensee may not grant sublicenses
under this Agreement without the written consent of Licensor, which
consent shall
not
be unreasonably withheld or delayed. Should Licensee or any
Sublicensee of Licensee
grant
any sublicenses, the terms and conditions of such sublicenses and
the identity of sublicensees shall be at the sole discretion of
Licensee and no consent shall be required from Licensor in
connection with the terms and conditions of such sublicenses or the
identity of sublicensees, provided however, that such sublicenses
shall be co-terminated with this Agreement.
3.3
Consent of Inventor .
The Inventor has provided his written consent to the terms and
conditions of the License Grant and the terms and conditions of the
License Agreement. The Written Consent of the Inventor is set forth
in
Exhibit 2 hereto.
ARTICLE 4. LICENSE FEE; MILESTONE PAYMENTS
4.1
Intentionally
omitted.
4.2
Milestone Payments .
Licensee will pay to Licensor the milestone payments as
follows:
(a)
Intentionally omitted.
(b)
Within one hundred twenty (120) days following submission to
the FDA of the first New Drug Application for a Product:
*****;
(c)
Within one hundred and twenty (120) days following a first FDA
marketing approval for a Product: *****;
*****Confidential material redacted and filed separately with the
Commission.
(d)
Within one hundred and twenty (120) days following a first
marketing approval for a Product in any country in Europe:
*****; and
(e)
Within one hundred and twenty (120) days following a first
marketing approval for a Product in Japan: *****.
4.3
Limitations .
It is understood and agreed that Licensee shall pay the milestone
payments set forth in Section 4.2 only with respect to
the
first Indication for
which a Product achieves a particular milestone event, and
regardless of the number of Products which achieve a particular
milestone event.
4.4
Payment in Equity .
At Licensee’s option, up to ***** or such greater amount as
may be mutually agreed by Licensor and Licensee of any milestone
payment due pursuant to Sections 4.2(b) and (c) can be made in
shares of unrestricted, unlegended and freely tradable common stock
of Licensee, based on a per share price equal to the average
closing price as listed in the Wall Street Journal over the last
thirty (30) business days immediately preceding the date of a
particular milestone payment is due; provided that (i) the
Licensee’s common stock is traded on the NASDAQ National
Market or other national stock exchange in the U.S. at the time the
payment is made; (ii) the average trading price of such shares of
common stock on the NASDAQ National Market or other
national stock exchange in the U.S. in the three (3) months period
immediately preceding the last day of a
particular milestone payment pursuant to Sections 4.2(b) or (c) is
due exceeds *****, and (iii) the *****
immediately
preceding the payment due date exceeds *****. It
is understood and agreed that the Licensee has the right to refuse
any or all payment in the form of stock by the Licensor pursuant to
this Section 4.4 if the Licensor has reasons to believe that the
stock delivered is not unrestricted, unlegended or freely
tradable.
*****Confidential material redacted and filed separately with the
Commission.
4.5
Sublicense Payments .
In the event that Licensee enters into a sublicense agreement other
than the Japan Sublicense, Licensee shall pay to Licensor a
sublicense payment in an amount equal to ***** of any Sublicense
Income within thirty (30) days of receipt thereof by Licensee. For
purposes of this Section 4.5, Sublicense Income shall mean
consideration in any form received by Licensee or an Affiliate of
Licensee in connection with a grant to any third party or parties
of a sublicense or other right, license, privilege or immunity to
make, have made, use, sell, have sold, distribute, import or export
Products or to practice licensed methods. Sublicense Income shall
include, without limitation, any license signing fee, license
maintenance fee, unearned portion of any minimum royalty payment
received by Licensee, equity, distribution or joint marketing fee,
research and development funding in excess of Licensee’s cost
of performing such research and development, and any consideration
received for an equity interest in, extension of credit to or other
investment in Licensee to the extent such consideration exceeds the
fair market value of the equity or other interest received as
determined by agreement of the parties or by an independent
appraiser mutually agreeable to the parties. Notwithstanding the
foregoing, Sublicense Income shall not include (i) sales-based
milestones; (ii) royalty payments; or (iii) sublicense income
received by Licensee under the Japan Sublicense. Nothing in this
Section 4.5 shall affect the milestone payments otherwise owed to
Licensor under Section 4.2 of this Agreement, except that to the
extent that a payment is owed to Licensor under Section 4.2, then
any sublicense payment that is triggered by the same event (i.e.,
submission to the FDA of the first New Drug Application, first FDA
marketing approval, first marketing approval for a Product in
Europe and first marketing approval for a Product in Japan) shall
be waived and shall not be owed to Licensor under this Section
4.5.
ARTICLE 5. ROYALTIES
5.1
Royalties. In
consideration of the license rights granted to Licensee hereunder,
Licensee shall pay or cause any
Sublicensee
to
pay to
Licensor a royalty on their
respective Net
Sales ,
as follows: for
each Product where the manufacture, use or sale of such Product
would but for the license granted hereunder, infringe a Valid Claim
a royalty of *****
on
Net Sales.
5.2
Limitation .
If the laws of any country where royalties are payable under
Section 5.1 limit the amount of royalty or the duration of such
royalty payments to less than the amount specified herein, then the
royalty payment to Licensor shall be limited to that permitted by
law.
5.3
Accrual of Royalties. No
royalty shall be payable on a Product made, sold, or used for
testing or development purposes or distributed as samples, provided
such samples are sold by Licensee (or its Sublicensee) at cost. No
royalties shall be payable on sales among Licensee and its
Sublicensees, but royalties shall be payable on subsequent sales by
Licensee or its Sublicensees to a Third Party. No multiple royalty
shall be payable because the manufacture, use, or sale of a Product
is covered by more than one Valid Claim.
5.4
Royalty
Withheld
due to Invalid Claims. In
the event that all applicable claims of a patent included within
the Patent Rights under which Licensee is paying a royalty
according to Section 5.1 shall be held invalid or unenforceable by
a court of competent jurisdiction in a given country of the
Territory, Licensee may withhold payments of royalties which would
otherwise have been due on Net Sales in that country by reason of
Section 5.1 until such judgment shall be finally reviewed by an
unappealed or unappealable decree of a higher court of competent
jurisdiction in such country. The Licensee shall promptly repay
Licensor any withheld royalty payments upon
a final adjudication that the applicable claims of a patent
included within the Patent Rights under which Licensee is paying a
royalty under Section 5.1 are valid and enforceable.
5.5
Compulsory Licenses .
If Licensee is caused to grant a compulsory license to any Third
Party with respect to a Product in any country in the Territory,
then the royalty rate to be paid by Licensee on Net Sales due on
such Product in that country under Section 5.1 shall be reduced to
the rate paid by such Third Party compulsory licensee on such
Product.
ARTICLE 6. ROYALTY REPORTS AND ACCOUNTING
6.1
Royalty Reports and Records. Beginning
with the First Commercial Sale by Licensee or any Sublicensee as
the case may be of a Product in any country of the Territory, and
continuing thereafter during the term of this Agreement, Licensee
shall furnish ,
and shall cause any Sublicensee to furnish, to
Licensor a written report covering each calendar quarter (the
"Reporting Period") showing (a) the Net Sales of each Product in
each country of the Territory where royalties are payable under
Section 5.1 during the Reporting Period; (b) the royalties, payable
in United States Dollars, which shall have accrued hereunder in
respect of such sales with a summary computation of such royalties;
(c) withholding taxes, if any required by law to be deducted in
respect of such sales; and (d) the exchange rates used in
determining the amount of United States Dollars payable in respect
of sales outside the United States. With respect to sales of a
Product invoiced in a currency other than United States Dollars,
the Net Sales and royalty payable shall be expressed in the
domestic currency of the party making the sale together with the
United States Dollars equivalent of the royalty payable, calculated
using the simple average of the exchange rate published in the Wall
Street Journal on the last day of each month of the Reporting
Period. If any Sublicensee makes any sale invoiced in a currency
other than its domestic currency, the Net Sales shall be converted
to its domestic currency in accordance with its normal accounting
principles. Licensee's Sublicensees shall have the option of making
any royalty payment directly to Licensor. However, notwithstanding
anything to the contrary, the Licensee shall continue to be liable
for all royalties due under Section 5.1 until they are paid.
Licensee or its Sublicensee shall furnish to Licensor appropriate
evidence of payment of, and itemize any tax, credits or specific
amount deducted from any royalty payment.
6.2
Royalty Reports and Payments. Royalty
reports and payments shall be due sixty (60) days after the close
of each Reporting Period. Payment of royalties in whole or in part
may be made in advance of such due date. In case no royalty is due
for any given Reporting Period, Licensee shall so report to
Licensor. Licensee and its Sublicensees shall keep accurate records
in sufficient detail to enable the royalty payable hereunder to be
determined and confirmed. Licensee shall be responsible for all
royalties, late payments, and interest that are due but have not
been paid by Licensee's Sublicensees.
6.3
Right to Audit. Upon
written request of Licensor, but not more than once in each
calendar year nor more than once in respect to any given calendar
year, Licensee shall permit an independent public accountant,
selected by Licensor and acceptable to Licensee, which acceptance
shall not be unreasonable withheld, to have access during normal
business hours to those records of Licensee as may be reasonably
necessary to verify the accuracy of the royalty reports hereunder
in respect of any calendar year ending not more than thirty-six
(36) months prior to the date of such request. Licensee shall
include in each Sublicense granted by it pursuant to this Agreement
a provision requiring the Sublicensee to keep and maintain records
of sales made pursuant to such sublicense and to grant the same
right of access to such records to Licensor's independent
accountant. Upon the expiration of thirty-six (36) months following
the end of any calendar year, the calculation of royalties payable
with respect to such calendar year shall be binding and conclusive
upon the parties, and Licensee and its Sublicensees shall be
released from any liability or accountability with respect to
royalties (and
Licensor for an overpayment of royalties) for
such calendar year, unless (a) an audit requested by Licensor prior
to expiration of such thirty-six (36) months period has not yet
been completed, or (b) Licensor has notified Licensee prior to the
expiration of such thirty-six (36) months period that such audit
has revealed a discrepancy regarding such calculation. The report
prepared by such independent public accountant, a copy of which
promptly shall be provided to Licensee, shall disclose only the
amount of any underpayment or overpayment of royalties, if any,
without disclosure of or reference to supporting documentation. If
such independent accountant's report shows any underpayment of
royalties, Licensee shall remit or shall cause its Sublicensees to
remit to Licensor the amount of such underpayment within thirty
(30) days after Licensee's receipt of such report, and if such
underpayment exceeds five percent (5%) of the royalty due, Licensee
shall reimburse Licensor for its reasonable out-of-pocket expenses
for the audit, upon submission of supporting documentation.
Any
overpayment of royalties shall be creditable against future
royalties payable in subsequent royalty periods, allocated evenly
over the next-following two (2) royalty periods.
In the event this Agreement is terminated or expires before such
overpayment is fully credited, Licensor shall pay Licensee the
portion of such overpayment not credited within one hundred twenty
(120) days
after
the date of such termination or expiration.
*****Confidential material redacted and filed separately with the
Commission.
6.4
Confidentiality of Records .
Licensor agrees that all information subject to review under
Section 6.3 or under any sublicense agreement shall be deemed the
Proprietary Information of Licensee.
6.5
Late Payment Interest .
Royalties and other payments required to be paid by Licensee
pursuant to this Agreement shall, if overdue, bear interest at the
rate equal to two percent (2%) over the prime rate as quoted by
Citibank NA and not to exceed ten percent (10%) per annum
until
paid. The payment of such interest shall not preclude Licensor from
exercising any other rights it may have because any payment is
overdue.
ARTICLE 7. DEVELOPMENT AND MARKETING PROGRAM
7.1
Clinical Development Program. Licensee
shall use
commercially reasonable best efforts (a) to conduct a clinical
development program directed to obtaining FDA approval of at least
one Product for at least one Indication to be selected by Licensee
(the "Development Program"), and (b) if, in the opinion of
Licensee, the results of the Development Program so justify, to
diligently seek FDA approval for such Product for such Indication.
For purposes of this Section, "commercially reasonable best
efforts" shall mean efforts consistent with those used by Licensee
in its own
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