LICENSE AGREEMENT

EXHIBIT 10.8

LICENSE AGREEMENT

between

EMORY UNIVERSITY

and

PHARMASSET, LTD.

(License of D-D4FC)

Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

TABLE OF CONTENTS

 

THIS LICENSE AGREEMENT is made and entered into as of this 30th day of December, 1998, by and between EMORY UNIVERSITY, a Georgia non-profit corporation with principal offices located at 1380 South Oxford Road, Atlanta, Georgia 30322 (hereinafter “EMORY”), and PHARMASSET, LTD., a Barbados corporation with corporate headquarters located at 1795 Peachtree Road, N.E., Suite 350, Atlanta, Georgia 30309-2339 (hereinafter “LICENSEE”).

WITNESSETH :

WHEREAS, EMORY, subject to any rights held by the United States Government, is the assignee of all right, title, and interest in inventions developed by employees of EMORY and is responsible for the protection and commercial development of such inventions; and

WHEREAS, Raymond F. Schinazi, Ph.D. and Dennis Liotta, Ph.D. did, during their course of employment with Emory University, develop certain inventions claimed in the issued patents and patent applications identified in Exhibit A of this Agreement; and

WHEREAS, LICENSEE represents that it, either directly or through its Affiliates or sublicensees, has the necessary expertise and resources to fully develop and commercialize the inventions; and

WHEREAS, LICENSEE wishes to obtain certain rights to pursue the development and commercialization of the inventions; and

WHEREAS, EMORY wishes to grant LICENSEE such rights in accordance with the terms and conditions of this Agreement.

NOW, THEREFORE, for and in consideration of the mutual covenants and the premises herein contained, the parties, intending to be legally bound, hereby agree as follows.

ARTICLE 1. DEFINITIONS

The following terms as used herein shall have the following meaning:

1.1 “Affiliate” shall mean any corporation, partnership or other business entity which is directly or indirectly controlled by LICENSEE or any entity which directly or indirectly controls LICENSEE. “Controls” as used herein means owns directly or indirectly at least thirty percent (30%) of the outstanding voting shares or, in the absence of such ownership or in the case of a non-corporate entity or a non-profit corporation, possession, directly or indirectly, of the power to materially influence the direction of the management and policies of such corporation or non-corporate entity.

 

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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

1.2 “Agreement” or “License Agreement” shall mean this Agreement, including all Exhibits attached to this Agreement.

1.3 “Effective Date” shall mean the later of (i) the date on which EMORY executes this Agreement, or (ii) the date on which LICENSEE executes this Agreement.

1.4 “EMORY Inventors” shall mean Raymond F. Schinazi, Ph.D., and Dennis Liotta, Ph.D.

1.5 “Field of Use” shall mean all medical applications and uses, including all pharmaceutical, therapeutic and diagnostic imaging applications and uses, of the Licensed Compounds.

1.6 “Indemnitees” shall mean EMORY, its trustees, employees, students, and their heirs, executors, administrators, successors and legal representatives.

1.7 “License Agreement Year” shall mean the period from the Effective Date of this Agreement through the following one-year period of each year during the term of this Agreement.

1.8 “Licensed Compounds” shall mean B-D-2’, 3’-DIDEOXY-2’, 3’-DIDEHYDRO-5-FLUOROCYTIDINE sometimes referred to as D-D4FC or D5FC and the [***] of D-D4FC, and any salts, esters and [***] derivatives thereof and [***] pro-drugs.

1.9 “Licensed Patents” shall mean the patent applications and patents identified in EXHIBIT A hereof, together with all divisionals, continuations, reissues, reexaminations and foreign counterparts of such applications or patents.

1.10 “Licensed Product(s)” shall mean any process, service, or product, the manufacture, use, or sale of which is covered by a Valid Claim or incorporates or uses any Licensed Technology.

 

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1.11 “Licensed Technology” shall mean all Licensed Compounds, designs, technical information, know-how, knowledge, data, specifications, test results and other information, whether or not patented, which is known to the EMORY Inventors on the date of this Agreement and is useful for the manufacture, use or sale of any Licensed Product.

1.12 “Licensed Territory” shall mean the world.

1.13 “LICENSEE’s Development Plan” shall mean EXHIBIT B of this Agreement.

1.14 “Net Selling Price” of Licensed Products shall mean the gross invoiced price paid to LICENSEE, its Affiliates, or sublicensees by a purchaser of a Licensed Product less the following discounts: a) customary trade, quantity and cash discounts actually allowed and taken; b) credits actually given for rejected or returned Licensed Products; c) freight and insurance costs, if separately itemized on the invoice paid by the customer; d) custom and excise taxes included in the invoiced amount, and e) to the extent separately stated on purchase orders, invoices or other documents of Sale, all taxes including VAT, and sales or similar taxes. Where a Sale is deemed consummated by a gift, use, or other disposition of Licensed Products for other than a selling price stated in cash, the term “Net Selling Price” shall mean the average gross selling price paid to LICENSEE in consideration of Sales of the same quantity of Licensed Products during the six (6) month period immediately preceding such Sale, without reduction of any kind (other than as provided for in a) - d) above). If no Sales of Licensed Products have occurred in the preceding six (6) months, then sales of comparable products shall be used in such determination.

 

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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

“Net Selling Price” with respect to any Combination Product (a Licensed Product incorporating additional active ingredients) shall be negotiated in good faith by the parties with the intention of agreeing upon a fair and equitable formula; provided, however, that if the parties are unable to agree upon such definition within a reasonable period of time, Net Selling Price with respect to such Combination Product shall mean the gross selling price of such Product paid by independent customers, less all the allowances, adjustments, reductions, discounts, taxes, duties, rebates or other charges referred to in the above definition of Net Selling Price multiplied by a fraction, the numerator of which shall be the average invoice price per gram of compound contained in the most comparable stock keeping unit of a Licensed Product having the compound as the sole active ingredient during the applicable royalty period in a country of the Licensed Territory, when such comparable Licensed Product is Sold for the same indication as such Combination Product, and the denominator of which shall be the average invoice price per gram of the compound sold alone as described immediately above plus the average invoice price(s) per gram of the other active ingredient(s) contained in such Combination Product in such country during the applicable royalty period when such active ingredients are Sold alone for the same indication as such Combination Product. If there is no average invoice price per gram in a given country for a compound or for one or more of the active ingredients comprising a Combination Product, Net Selling Price with respect to such Combination Product shall be deemed to be [***] Percent ([***]%) of the gross Sales price of such Combination Product paid by independent customers, less all the allowances, adjustments, reductions, discounts, taxes, duties, rebates or other charges referred to in the above definition of Net Selling Price.

1.15 “Major Market” shall mean the following countries: United States, Great Britain, France, Spain, Italy, Germany and Japan.

 

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1.16 “NDA” shall mean new drug application relating to Licensed Patents and Licensed Technology.

1.17 “IND” shall mean investigational new drug application relating to Licensed Patents and Licensed Technology.

1.18 “Registration” shall mean the approval to market or sell any Licensed Compound by the United States Food and Drug Administration (FDA) or any successor, agency or authority with similar approval powers.

1.19 “Sale” or “Sold” shall mean the sale, transfer, exchange, or other disposition of Licensed Products whether by gift or otherwise, including, but not limited to, the use of Licensed Products by any person authorized by LICENSEE other than LICENSEE. None of: (a) the provision of Licensed Products, prior to the approval of Licensed Products in a country and pursuant to a requirement issued by the appropriate governmental agency in that country, for consumption by or administration to persons for humanitarian purposes or compassionate use, (b) the provision of Licensed Products for use in clinical trials, nor (c) the provision of samples in reasonable quantities without charge for promotional purposes shall be deemed Sales for the purposes of this Agreement. Sales of Licensed Products shall be deemed consummated upon the first to occur of: (a) receipt of payment from the purchaser; (b) delivery of Licensed Products to the purchaser or a common carrier; (c) release of Licensed Products from consignment; (d) if deemed Sold by use, when first put to such use; or (e) if otherwise transferred, exchanged, or disposed of whether by gift or otherwise when such transfer, exchange, gift, or other disposition occurs.

 

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1.20 “U.S. Government Licenses” shall mean the non-exclusive licenses to the U.S. Government or agencies thereof, copies of which licenses are attached hereto as EXHIBIT “C”.

1.21 “Valid Claim” shall mean a claim included among the Licensed Patents so long as such claim shall not have been irrevocably abandoned or held invalid in an unappealable decision of a court or other authority of competent jurisdiction.

ARTICLE 2. GRANT OF LICENSE

2.1 License . EMORY hereby grants LICENSEE an exclusive right and license under the Licensed Patents to make, have made, use, import, offer for Sale, and Sell Licensed Products and to practice Licensed Technology for the Field of Use in the Licensed Territory during the term of this Agreement. If any Affiliate exercises any rights granted by EMORY hereunder, LICENSEE shall remain primarily liable to EMORY for the duties and obligations of any Affiliate hereunder, and any breach hereof by an Affiliate is deemed to be a breach by LICENSEE of this Agreement. Except for the right to grant sublicenses under Article 2.3 (as qualified by Articles 2.4 through 2.9), no other rights or licenses are granted.

2.2 Retained License . EMORY retains on behalf of itself, and any research collaborators, a royalty-free right and license to make and use Licensed Products and to practice Licensed Technology for research and educational purposes only.

2.3 Sublicenses . Provided that written approval of EMORY is obtained in advance, which approval shall not be unreasonably withheld, (provided that if the approval of EMORY is withheld solely on the basis of the fact that the financial obligations of the sublicensee under the sublicense would be materially less favorable to EMORY than those of LICENSEE hereunder, such withholding of approval shall not be deemed to be unreasonable), LICENSEE shall have the right to grant sublicenses (including further sublicenses thereunder), consistent with this Agreement (the parties acknowledging that such sublicenses may, subject to EMORY’s right to

 

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consent, contain provisions which differ from this Agreement (e.g. the definition of “Net Selling Price” in respect of Combination Products may be cast in terms of selling price per unit other than weight). If EMORY has not responded to LICENSEE within ten (10) business days after receipt of a proposed sublicense agreement, it will be assumed to be approved.

2.4 Sublicensee Performance . EMORY agrees that any sublicensee’s performance of its diligence obligations as set forth in the sublicense agreement shall be deemed to be performance by LICENSEE of any of its diligence obligations under the License Agreement, including, but not limited to, those set forth in Article 3 hereof. LICENSEE further agrees to attach redacted copies of pertinent portions of this Agreement to sublicense agreements.

2.5 Sublicense Restrictions . The right to sublicense granted to LICENSEE under Article 2.3 is subject to the following conditions:

2.5.1 Within thirty (30) days after LICENSEE enters into any sublicense, LICENSEE must deliver to EMORY a complete copy of the sublicense written in the English language.

2.5.2 In the event of a termination hereof under Article 12.2, all payments then or thereafter due to LICENSEE from each of its sublicensees shall, upon notice from EMORY to any such sublicensee, become owed directly to EMORY for the account of LICENSEE; provided that EMORY shall remit to LICENSEE the amount by which such payments in the aggregate exceed the total amount owed by LICENSEE to EMORY.

2.5.3 Even if LICENSEE enters into sublicenses, LICENSEE shall remain primarily liable to EMORY for all of LICENSEE’s duties and obligations contained in this Agreement, and in the event of any act or omission of a sublicensee that would be a breach of its sublicense, LICENSEE shall be liable for the performance of its duties and obligations under this Agreement in respect of those matters as to which such breach by sublicensee has occurred.

 

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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

2.6 Form of Sublicensee Payments . Except as provided for in Article 2.8, LICENSEE shall not receive from sublicensees anything of value in lieu of cash payments in consideration for any sublicense under this Agreement without the prior written permission of EMORY.

2.7 Delivery of Sublicense Agreements . LICENSEE agrees to forward to EMORY a copy of any and all sublicense agreements promptly upon execution by the parties, which disclosure shall be subject to Section 9.1 hereof.

2.8 Sharing of Sublicensee Payments . LICENSEE and EMORY agree to share cash actually received from sublicensing Licensed Patents and Licensed Technology in the following manner:

 

 

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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

2.9 Taxes . LICENSEE further agrees that all sublicenses shall contain an agreement substantially similar to Article 5.2 of this Agreement. If a sublicensee shall fail to comply with such provision (or the sublicense does not provide for such provision), then EMORY’s percentage, as determined in Article 2.8, shall be adjusted so that EMORY shall receive an amount equal to [***] Percent ([***]%) of the royalty, as calculated without reduction for Taxes withheld or due to be withheld on the payment.

2.10 Sublicense Royalty Floor . LICENSEE agrees that payments to EMORY in respect of royalties received by LICENSEE from any sublicensee shall not be less than [***] percent ([***]%) of the Net Selling Price of all Licensed Products Sold by the sublicensee.

2.11 Milestone Payment . LICENSEE shall pay EMORY as additional partial consideration, a Marketing Milestone of [***] ($[***]) Dollars provided that notwithstanding anything to the contrary contained herein, such Marketing Milestone shall be payable only if Licensee performs all development, commercialization, marketing and sales activities itself and not through any sublicensee. Subject to the foregoing sentence, the Marketing Milestone shall be payable as follows: on each [***] ($[***]) Dollars in Net Sales (up to a cumulative total of [***] ($[***]) Dollars) in Net Sales within the Licensed Territory, a Marketing Milestone Payment of [***] ($[***]) Dollars will be due (up to an aggregate of [***] ($[***]) Dollars). Upon payment of the final [***] ($[***]) Dollars in respect of the first [***] ($[***]) Dollars in cumulative Net Sales within the Licensed Territory, the Marketing Milestone Payment obligation shall terminate. Each Marketing Milestone Payment shall be due at the same time the royalty report covering the royalty period in which such incremental [***] ($[***]) Dollars in Net Sales has been achieved, is due.

 

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2.12 No Implied License . The license and right granted in this Agreement shall not be construed to confer any rights upon LICENSEE by implication, estoppel, or otherwise as to any technology not specifically identified in this Agreement as Licensed Patents or Licensed Technology.

2.13 Government Rights . The Licensed Patents, Licensed Technology, or portions thereof were developed with financial or other assistance through grants or contracts funded by the United States government. LICENSEE acknowledges that in accordance with Public Law 96-517 and other statutes, regulations, and Executive Orders as now exist or may be amended or enacted and the U.S. Government Licenses, the United States government has certain rights in the Licensed Patents and Licensed Technology. LICENSEE shall take all action necessary to enable EMORY to satisfy its obligations under any federal law relating to the Licensed Patents or Licensed Technology. If the United States government should take action which renders it impossible or impractical for EMORY to grant the rights and license granted herein to LICENSEE under this Agreement or otherwise perform EMORY’s obligations under this Agreement, EMORY or LICENSEE may terminate this Agreement immediately by notice to the other party. LICENSEE shall not have any right to the return of any payments of any kind made by it to EMORY prior to the date of termination.

2.14 Cooperation . During the term of this License Agreement, EMORY shall, at LICENSEE’s expense, fully cooperate with LICENSEE in dealing with any persons or entities who may have been previously granted any rights, including manufacturing rights, in respect to any Licensed Patents, Licensed Products or Licensed Technology (all as defined in this License Agreement) including visits to the facilities of any such persons and entities if deemed advisable by EMORY.

 

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2.15 Access to Materials . During the term of this License Agreement, EMORY shall provide LICENSEE with full access upon reasonable notice to all documents and samples, including reagents, which may be in the possession or control of EMORY relating to both the Licensed Patents and Licensed Technology provided to LICENSEE hereunder and shall, within a reasonable period, provide LICENSEE with a true and complete list thereof.

2.16 Cooperation in Regulatory Activities . During the term of this License Agreement, EMORY shall cooperate fully with LICENSEE in respect of LICENSEE’s pursuit of all regulatory approvals to market and sell any Licensed Compound, provided that all such activities shall be undertaken at the sole expense of LICENSEE.

2.17 U.S. Manufacture . LICENSEE, either directly or through Affiliates or sublicensees, agrees to use its best efforts to manufacture Licensed Products for United States Sales substantially in the United States.

ARTICLE 3. DILIGENCE AND COMMERCIALIZATION

3.1 Diligence and Commercialization . LICENSEE shall use its reasonable best efforts, either directly or through Affiliates or sublicensees, throughout the term of this Agreement to comply with LICENSEE’s Development Plan and to bring Licensed Products to market in accordance with LICENSEE-Development Plan through a thorough, vigorous, and diligent program for exploitation of the right and license granted in this Agreement to LICENSEE and to create, supply, and service in the Licensed Territory as extensive a market as possible. In no instance shall LICENSEE’s reasonable best efforts be less than efforts customary in LICENSEE’s industry.

3.2 Lack of Diligence . If EMORY concludes that LICENSEE is not diligent in development or Sales of Licensed Products pursuant to Article 3.1 for any reason other than a) the withholding by a regulatory agency of marketing approval despite LICENSEE’s diligent

 

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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

effort to obtain such approval; or b) unanticipated technical or scientific problems which have been promptly reported to EMORY in writing; or c) other causes beyond the reasonable control of LICENSEE which have been promptly reported to EMORY in writing; then EMORY may give notice to LICENSEE stating the basis for its conclusion and, upon the request of EMORY, LICENSEE shall show cause why the license granted hereunder should not be terminated. If within ninety (90) days after LICENSEE’s receipt of said notice, the parties have not resolved the matter through good faith negotiations in a mutually acceptable manner, the parties shall submit the dispute to arbitration under the provisions of Article 14 of this Agreement.

ARTICLE 4. CONSIDERATION FOR LICENSE

4.1 Purchased Shares . In partial consideration for the license granted to LICENSEE under this Agreement, LICENSEE shall issue to EMORY such number of shares (the “Purchased Shares”) of LICENSEE’s Common Stock, no par value (“Common Stock”), as will cause EMORY to own shares of Common Stock representing [***] percent ([***]%) (in addition to any percentage owned at the date hereof by virtue of any other extant license agreement between EMORY and LICENSEE) of the outstanding shares of the capital stock of LICENSEE on a fully diluted basis, assuming the exercise, conversion and/or exchange of all outstanding securities of LICENSEE for or into shares of Common Stock, all on the terms and conditions as set forth in the stock purchase agreement between LICENSEE and EMORY (“Stock Purchase Agreement”), a copy of which is attached as Exhibit D.

4.2 Antidilution . In partial consideration for the license granted to LICENSEE under this Agreement, and until LICENSEE has received [***] ($[***]) cash in equity financing, prior to (and excluding) the initial underwritten public offering for cash of LICENSEE’s equity securities. LICENSEE shall issue to EMORY, for no additional consideration, from time to time, such number of additional shares of Common Stock (collectively, the “Additional

 

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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

Purchased Shares”) as will cause EMORY to continue to hold shares of Common Stock representing such additional [***] percent ([***]%) of the outstanding capital stock of LICENSEE (referenced in Section 4.1 hereof) on a fully diluted basis, assuming the exercise, conversion and/or exchange of all outstanding securities of LICENSEE for or into shares of Common Stock.

4.3 Royalties . As partial consideration for the license granted to LICENSEE under this Agreement, LICENSEE or Affiliates which are not also sublicensees, shall pay EMORY a royalty equal to [***] percent ([***]%) of the Net Selling Price of all Licensed Products Sold by LICENSEE or such Affiliates during the term of this Agreement. Royalties shall be due and payable on a semi-annual basis on December 31 and June 30 of each year.

4.4 Minimum Royalties . LICENSEE shall pay annual minimum royalties to EMORY in accordance with the following schedule:

Year after NDA Registration in the First Major Market

 

If the actual royalties due under Article 4.3 in any year are greater than the minimum royalty payment due for that year, the minimum royalty will be credited against actual royalties due in that year.

If the minimum royalties due in any year are greater than the actual royalties due for that year, the difference shall become a future credit against [***] percent ([***]%) of each earned royalty payment which LICENSEE would be required to pay pursuant to Article 4.3 hereof until the entire credit is exhausted. In no event shall LICENSEE make a payment less than the minimum royalty due in that year.

 

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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

Minimum royalties shall be paid for a period of [***] ([***]) years after NDA registration in the first Major Market. After such [***] ([***]) year period, minimum royalties shall be paid only so long as the manufacture, use, offer for Sale, Sale or importation of Licensed Products in the Licensed Territory would, in the absence of this license, infringe a Valid Claim.

4.5 Reimbursement for Patent Expenses . LICENSEE shall reimburse EMORY for all reasonable external out-of-pocket fees, costs, and expenses heretofore and hereafter during the term of this Agreement paid or incurred by EMORY in filing, prosecuting, and maintaining the Licensed Patents in the Licensed Territory (excluding any currently pending legal proceedings), which expenses are not required to be reimbursed by any other licensee. LICENSEE shall deliver such reimbursement to EMORY within ninety (90) days after EMORY notifies LICENSEE of out-of-pocket fees, costs and expenses and provides LICENSEE with documentation, including copies of invoices, from time to time of the amount of such fees, costs, and expenses which have been paid or incurred by EMORY.

ARTICLE 5. REPORTS AND PAYMENTS

5.1 Payments . Unless otherwise specified, all payments required under this Agreement shall be payable within thirty (30) days of the due date for each payment. All payments due under this Agreement shall be made in person or via the United States mail or private courier to the following address:

Director, Office of Technology Transfer

Emory University

2009 Ridgewood Drive

Atlanta, Georgia 30322

5.2 Tax Matters . All payments made to EMORY under the terms of this Agreement (without limitation including the delivery of the Purchased Stock and the Additional Purchased Stock, the royalties, the minimum royalties and the amounts due under Articles 2.8 and 2.11) shall be made free and clear of any tax, withholding or other governmental charge or levy (other

 

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than taxes imposed on the net income of EMORY), all such non-excluded amounts being “Taxes.” Should the LICENSEE be obligated by law to withhold any Taxes, the payment due hereunder shall be increased such that after the withholding of the appropriate amount EMORY receives the amount that would have been paid but for the Taxes withheld. Should EMORY be obligated to pay such Taxes, and such Taxes were not satisfied by way of withholding, LICENSEE shall promptly reimburse EMORY for such payment, in an amount such that after the payment of the Taxes, EMORY has received the same amount that it would have received had such Taxes not been payable.

5.3 Progress Reports . LICENSEE will provide EMORY with semi-annual progress reports detailing the activities of LICENSEE relevant to LICENSEE’s Development Plan.

5.4 Royalty Reports . Once royalties are due, within thirty (30) days of December 31 and June 30 of each year, throughout the term of this Agreement and of the year following the termination or expiration of this Agreement, LICENSEE shall render a written report setting forth for the preceding period in question, the following as may be applicable:

(a) all Sales (including Net Selling Price of each product sold) of Licensed Products or Combination Products by LICENSEE, its sublicensees, and its Affiliates on a country-by-country basis throughout the Licensed Territory; and

(b) the amount of royalty payable hereunder; and

(c) any other information reasonably necessary to show the basis on which such royalty has been computed, and

(d) any payments due EMORY pursuant to Article 4.4; and

(e) other income received by LICENSEE from sublicensees and the amounts thereof due to EMORY pursuant to Article 2.7, accompanied by an explanation of the basis of said income and the amount of such income due EMORY; and

(f) in case no payment is due, LICENSEE shall so report.

 

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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

Each royalty report shall be accompanied by the payment of all royalties due for the period in question. Any minimum royalty payment due under Article 4.4 shall accompany the report for the period ending on December 31 of the applicable License Agreement Year.

5.5 Currency Conversion . If any Licensed Products are Sold for monies other than United States dollars, the Net Selling Price of such Licensed Products shall first be determined in the foreign currency of the country in which such Licensed Products are Sold and then converted to United States dollars at the spot rate published by the Wall Street Journal (U.S. edition) for conversion of that foreign currency into United States dollars on the last day of the six month period for which such payment is due.

5.6 Interest . Payments required under this Agreement shall, if overdue, bear interest until payment at a per annum rate [***] percent ([***] %) above the prime rate in effect as published in the Wall Street Journal on the due date. The payment of such interest shall not foreclose EMORY from exercising any other rights it may have because any payment is late.

ARTICLE 6. RECORDS

6.1 Records of Sales . During the term of this Agreement and for a period of three (3) years thereafter, LICENSEE shall keep at its principal place of business true and accurate records of all Sales in accordance with generally accepted accounting principles in the respective country where such Sales occur and in such form and manner so that all royalties and other payments owed to EMORY may be readily and accurately determined. LICENSEE shall furnish EMORY copies of such records upon EMORY’s request, which shall not be made more often than once per License Agreement Year.

 

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6.2 Audit of Records . EMORY shall have the right, from time to time at reasonable times during normal business hours through an independent certified public accountant, to examine the records of LICENSEE in order to verify the calculation of any royalties payable under this Agreement. Such examination and verification shall not occur more than once each License Agreement Year and the calendar year immediately following termination of this Agreement. Unless otherwise agreed in writing by LICENSEE, the fees and expenses of performing such examination and verification shall be borne by EMORY. LICENSEE shall, subject to Article 14 hereof, immediately pay EMORY any underpayment identified by such independent certified public account. In addition, if such examination reveals an underpayment by LICENSEE of more than five percent (5%) for any period examined, LICENSEE shall reimburse EMORY for all expenses of the accountant reasonably incurred in performing the examination.

ARTICLE 7. PATENT PROSECUTION

7.1 Prosecution and Maintenance of Licensed Patents Assigned Solely to EMORY .

(a) EMORY shall be primarily responsible for all patent prosecution activities pertaining to Licensed Patents assigned solely to EMORY. LICENSEE shall be afforded reasonable opportunities to advise EMORY and cooperate with EMORY in such Patent Prosecution Activities pertaining to such Licensed Patents. EMORY shall select counsel, reasonably acceptable to LICENSEE, to prosecute, acquire from the relevant patent offices, defend and maintain and handle any litigation, interference, opposition or other action pertaining to the validity, enforceability, allowability or subsistance (all of the foregoing activities being referred to as “Patent Prosecution Activities”) of all such Licensed Patents and shall provide LICENSEE with copies of all filings and correspondence pertaining to such Patent Prosecution

 

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Activities (pre and post the date hereof), in a timely manner, so as to give LICENSEE an opportunity to comment thereon. To the extent reasonably possible, EMORY shall pursue Patent Prosecution Activities in respect of such Licensed Patents in at least the following countries: United States, EPO countries, Japan, Canada and Australia. EMORY shall, upon LICENSEE’s request, pursue Patent Prosecution Activities for Licensed Patents in additional countries. If EMORY decides to abandon or allow to lapse any patent application or patent within the Licensed Patents or discontinue any other Patent Prosecution Activities in respect thereof in any country of the Licensed Territory, EMORY shall promptly so inform LICENSEE and LICENSEE shall be given the opportunity, with patent attorneys selected by it, to assume Patent Prosecution Activities in respect thereof. In all cases, each party hereto shall give due consideration to the other party’s or its sublicensees’ position with respect to Patent Prosecution Activities and provide the other party with copies of all domestic and foreign patent office correspondence with respect to such Licensed patents as well as such additional documentation as a party hereto may reasonably request relating to such Licensed Patents.

(b) LICENSEE reserves the right to terminate its obligations pursuant to Section 7.1 with respect to any patent application or patent included in the Licensed Patents in any country or countries upon at least thirty (30) days’ prior written notice to EMORY. After the date specified in such notice on which LICENSEE’s obligation to pay further expenses for Patent Prosecution Activities terminates, such patent application or patent as the case may be, shall no longer be included in the Licensed Patents in those countries in which LICENSEE has exercised its rights to terminate such obligations.

7.2 Licensed Patents Jointly Assigned to LICENSEE and EMORY . Any invention relating to a Licensed Compound, the invention of which under applicable patent law is attributable jointly to at least one employee of EMORY and at least one employee of LICENSEE

 

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(who is not also an employee of EMORY) shall be assigned by such employees jointly to LICENSEE and EMORY. Any such jointly assigned patents or patent application which includes claims to any Licensed Product shall be considered a Licensed Patent and subject to the terms of this Agreement Licensee shall be primarily responsible for all Patent Prosecution Activities pertaining to Licensed Patents jointly assigned to EMORY and LICENSEE. LICENSEE shall select counsel, acceptable to EMORY, to pursue Patent Prosecution Activities in respect of all such Licensed Patents and shall provide EMORY with copies of all filings and correspondence pertaining to such Patent Prosecution Activities, in a timely manner, so as to give EMORY an opportunity to comment thereon. LICENSEE shall advise such counsel in writing that for purposes of such Patent Prosecution Activities, such counsel represents both EMORY and LICENSEE. LICENSEE shall further inform EMORY of any decision by LICENSEE to discontinue any Patent Prosecution Activities in respect of any pending patent application or issued patent promptly upon reaching such decision and in any case, no less than thirty (30) days before the discontinuance thereof. LICENSEE shall be solely responsible for all expenses incurred by LICENSEE and prosecuting and maintaining such patents. LICENSEE shall pursue Patent Prosecution Activities of such Licensed Products in those countries it deems reasonably appropriate after consultation with EMORY. If LICENSEE fails to timely pursue Patent Prosecution Activities in respect of any patent application or issued patent jointly assigned to LICENSEE and EMORY in any country in which EMORY wishes to pursue such Patent Prosecution Activities, EMORY shall be free at its sole expense, to continue or discontinue any or all the Patent Prosecution Activities in respect of such patent application or issued patent in such country or grant its rights to such patent application or issued patent to third parties. Thereafter EMORY’s rights to such patent application and issued patent shall no longer be in