LICENSE AGREEMENT

CONFIDENTIAL TREATMENT REQUESTED: Certain portions of this document have been omitted pursuant to a request for confidential treatment and, where applicable, have been marked with an asterisk (“[*****]”) to denote where omissions have been made. The confidential material has been filed separately with the Securities and Exchange Commission.

This License Agreement ("Agreement") is entered into this day of May, 2008 (the "Execution Date") by and among INTELLECT NEUROSCIENCES, INC., a Delaware corporation, having offices at 7 West Street, 9th Floor, New York, NY 10011, U.S.A. together with its Affiliates (hereinafter, collectively referred to as "Licensor") and AHP MANUFACTURING BV, acting through its Wyeth Medica Ireland Branch, a corporation registered in the Netherlands with offices at Great Comell, Newbridge, County Kildare, Ireland (hereinafter "Wyeth"), and ELAN PHARMA INTERNATIONAL LIMITED, a private company limited by shares organized under the laws of Ireland with offices at Monksland, Athlone, County Westmeath, Ireland (hereinafter "Elan" and, together with Wyeth, referred to herein as "Licensees"). Licensor, Wyeth and Elan may each be referred to herein individually as a "Party" and collectively as the "Parties".

RECITALS

A. Licensor owns certain patents and patent applications relating to certain antibodies, such patents and patent applications designated herein as the Licensed Patents (as defined below);

B. Wyeth Parent and Elan have entered into a collaboration with respect to the treatment and/or prevention of neurodegenerative conditions in humans associated with P- amyloid deposition using immunological approaches directed at one or more epitopes of AP Peptide (as defined below); and

C. Licensor and Licensees desire to enter into this Agreement to provide Licensees with certain license rights under the Licensed Patents for the research, development, manufacture and commercialization of Licensed Products (as defined below) and Licensor is willing to license to Licensees such rights under the terms and conditions of this Agreement.

AGREEMENT

NOW THEREFORE, in consideration of the mutual covenants herein contained and intending to be legally bound, the Parties agree as follows:

1. DEFINITIONS

All references to Exhibits, Articles and Sections shall be references to Exhibits, Articles and Sections of this Agreement. In addition, except as otherwise expressly provided herein, the following terms in this Agreement shall have the following meanings:

1.01   "Aβ Peptide" s hall mean [*****]

1.02   "Affiliate" shall mean, with respect to any person or entity, any other person or entity which controls, is controlled by or is under common control with such person or entity. A person or entity shall be regarded as in control of another entity if it owns or controls at least fifty percent (50%) of the equity securities of the subject entity entitled to vote in the election of directors (or, in the case of an entity that is not a corporation, for the election of the corresponding managing authority), provided, however, that the term "Affiliate" shall not include subsidiaries or other entities in which a Party or its Affiliates owns a majority of the ordinary voting power necessary to elect a majority of the board of directors or other governing board, but is restricted from electing such majority by contract or otherwise, until such time as such restrictions are no longer in effect.

1.03   "Annual Net Sales" shall mean Net Sales for the period beginning January 1 and ending December 31 of the year in question.

1.04   "Antibody" shall mean any molecule, which (a) comprises one or more immunoglobulin variable domain proteins, including, without limitation, (i) human, murine, humanized, chimeric, complementarity determining region (CDR) grafted, monospecific and bispecific antibodies, (ii) less than full-length antibody forms, such as Fv, Fab, and F(ab')2, (iii) single-chain antibodies, and (iv) antibody conjugates bound to a toxin, label or other moiety, and (b) is directed against or binds to AP Peptide.

1.05   "[*****] Products" shall mean [*****] .

1.06   "Calendar Quarter" shall mean the respective periods of three (3) consecutive calendar months ending on March 31, June 30, September 30 or December 31, for so long as this Agreement is in effect.

1.07   "Combination Product(s)" shall mean any product containing both a pharmaceutically active agent or ingredient which constitutes a Licensed Product and one or more other pharmaceutically active agents or ingredients which do not constitute Licensed Products.

1.08     "Control" or "Controlled" shall mean with respect to any material, item of information or intellectual property right, the possession, whether by ownership, license or otherwise, of the right to grant a license, sublicense or other right with respect thereto.

1.09   "Covered Country(ies)" shall mean, with respect to a given Licensed Product, the country or countries in which there is then existing a Valid Claim covering the manufacture, use or sale of such Licensed Product.

1.10   "Field" shall mean the treatment, prevention and/or diagnosis of diseases and/or conditions in humans, including but not limited to [*****] and [*****] .

1.11   "First Commercial Sale" shall mean, with respect to a given Licensed Product in a given Covered Country in the Territory, the first sale of such Licensed Product by Licensees or their Affiliates or sublicensees for use in the Field to an independent Third Party who is not a sublicensee or an Affiliate of a sublicensee of Licensees following Regulatory Approval of such Licensed Product for use in the Field in such country.

1.12   "Intellect Products" shall mean any therapeutic or prophylactic product or composition, other than a [*****] Product, (a) that is or has been developed, conceived and/or reduced to practice by Licensor or (b) to which Licensor has acquired rights under a license or purchase from or through a Third Party and which is developed by Licensor. For the avoidance of doubt, Intellect Products include, but are not limited to, antibodies with specificity for a free amino or carboxy terminus of amyloid-beta protein, such as, without limitation, [*****] and variants thereof, and exclude any such antibodies contained in a [*****] Product.

1.13   "Licensed Patents" shall mean (a) all patents and patent applications in the Territory claiming the benefit of [*****], (b) all patents and patent applications listed in Exhibit A attached hereto, throughout the Territory, (c) all patents and patent applications deemed Licensed Patents pursuant to Section 2.03, and (d) all substitutions, continuations, continuations-in-part, divisions, renewals, patents-of-addition, reissues, re-examinations, extensions, restorations, supplemental protection certificates, patent applications and patents throughout the Territory arising from, relating to or claiming priority to any patents and/or patent applications described in clauses (a), (b) and/or (c) above, to the full extent that each of the foregoing is owned or otherwise Controlled by Licensor as of the Execution Date or comes under the Control of Licensor during the term of this Agreement.

1.14   "Licensed Products" shall mean any therapeutic, prophylactic and/or diagnostic product, the composition, manufacture or use of which would, but for the licenses granted by Licensor to Licensees herein, infringe a Valid Claim of a Licensed Patent owned or otherwise Controlled by Licensor.

1.15   "Licensor Third Party Agreement" shall mean any agreement between Licensor and any Third Party that relates to any Licensed Patent, including, without limitation, any license or assignment that relates to any Licensed Patent.

1.16   "[*****]" shall mean a state in which memory and/or cognition has declined and is abnormal for age and education, but the severity of which is insufficient to be consistent with [*****] and/or [*****] .

1.17   "Net Sales" shall mean, with respect to a Licensed Product, all proceeds actually received by Licensees, or their Affiliates or sublicensees, from the sale of such Licensed Product to unrelated Third Parties who are not sublicensees or Affiliates of sublicensees of the Licensees, less amounts actually paid or accrued therefore by Licensees, or such Affiliates or sublicensees, for reasonable and customary deductions from such gross amounts for the following:

(a) trade, cash, promotional and quantity discounts and wholesaler fees allowed and taken directly with respect to such sales;

(b) amounts repaid, credits or allowances granted for damaged goods, defects, expired dating, recalls, returns or rejections of Licensed Products and retroactive price reductions for Licensed Products;

(c) sales, excise, use, value added or similar taxes paid by or charged to the account of Licensees, or their Affiliates or sublicensees, (including, without limitation, duties or other governmental charges levied on, absorbed or otherwise measured by the billing amount, when included in billing, but not including franchise taxes or national, state or local taxes based on income);

(d) charge back payments and rebates granted to (i) managed health care organizations, (ii) federal, stated and/or local governments or their agencies, (iii) purchasers and reimbursers, and/or (iv) trade customers, including, without limitation, wholesalers and chain and pharmacy buying groups; and

(e) packing, freight, postage, shipping, customs duties and insurance charges to the extent included in the invoice price.

Net Sales shall be determined in accordance with GAAP, consistently applied.

If, on a country-by-country basis, a Licensed Product is sold as part of a bundle of distinct products (i.e. one price is charged for a number of distinct products that are not (i) packaged together with another Licensed Product or (ii) in a Combination Product form alone), the Net Sales for such Licensed Product shall be based on the ratio of the wholesale acquisition cost for such Licensed Product to the sum of the wholesale acquisition costs for each product in such bundle. By way of example, if the wholesale acquisition cost for such Licensed Product when sold separately is [*****], and the sum of the wholesale acquisition costs for each product in such bundle when sold separately if [*****], then the Net Sales attributable to the Licensed Product when sold as part of the bundle would be [*****] of the Net Sales of the bundle of products sold.

In the event that, on a country-by-country basis, a Licensed Product is sold in the form of a Combination Product, the Net Sales for such Combination Product will be calculated as follows.

(i)   If Licensees, their Affiliates and/or sublicensees, separately sell, in such country (a) Licensed Products containing as their sole active ingredient(s) the same Antibody as is contained in such Combination Product and (b) other products containing as their sole active ingredient(s) the other active component(s) in such Combination Product, [*****]. 

(ii)   If Licensees, their Affiliates and/or sublicensees separately sell, in such country, Licensed Products containing as their sole active ingredient(s) the same Antibody as is contained in such Combination Product but do not separately sell, in such country, other products containing as their sole active ingredient(s) the other active component(s) in such Combination Product, [*****].

(iii)   If Licensees, their Affiliates and/or sublicensees do not separately sell, in such country, Licensed Products containing as their sole active ingredient(s) the same Antibody as is contained in such Combination Product, but do separately sell other products containing as their sole active ingredient(s) the other active component(s) in such Combination Product, [*****].

(iv)   If Licensees, their Affiliates and/or sublicensees do not separately sell, in such country (a) Licensed Products containing as their sole active ingredient(s) the same Antibody as is contained in such Combination Product and (b) other products containing as their sole active ingredient(s) the other active component(s) in such Combination Product, [*****].

Notwithstanding any provision of this Section 1.17 to the contrary, transfers of Licensed Products for testing, pre-clinical, clinical or developmental purposes or as samples shall not be considered a "sale" hereunder for royalty or other purposes.

1.18   "Regulatory Approval" shall mean all technical, medical and scientific licenses, registrations, authorizations and approvals (including, without limitation, approvals of BLAs and NDAs or their foreign equivalents, supplements and amendments, pre- and post-approvals, pricing and third party reimbursement approvals, and labeling approvals) of any national, supra-national, regional, state or local regulatory agency, department, bureau, commission, council or other governmental agency, necessary for the commercial manufacture, distribution, marketing, promotion, offer for sale, use, import, export and sale of Licensed Product(s) in a given regulatory jurisdiction. For the sake of clarity, and without limiting the foregoing, Regulatory Approval shall not be achieved for a Licensed Product in a given country until any applicable pricing and governmental third party reimbursement approvals have also been obtained in such country.

1.19   "Territory" shall mean the entire world.

1.20   "Third Party(ies)" shall mean any person or entity other than Licensor or Licensees or their respective Affiliates.

1.21   "Valid Claim" shall mean an issued and unexpired claim in a patent within the Licensed Patents, which claim has not been dedicated to the public, disclaimed, canceled, withdrawn, abandoned, revoked, or held invalid or unenforceable by a decision of a court or government agency of competent jurisdiction in an unappealed or unappealable decision.

1.22   "Wyeth Parent" shall mean Wyeth, a Delaware corporation, the corporate parent of AHP Manufacturing BV.

2.   RIGHTS GRANTED

2.01   Exclusive License. Licensor hereby grants Licensees an exclusive (exclusive even as to Licensor) license, with the right to grant sublicenses, under the Licensed Patents to research, develop, use, have used, make, have made, offer for sale, sell, have sold, import and export [*****] Products in the Field in the Territory. For the avoidance of doubt, Licensor and any licensee, sublicensee, assignee, transferee or designee of Licensor shall, subject to the non-exclusive license granted to Licensees under Section 2.02, retain the right under the Licensed Patents to research, develop, use, have used, make, have made, offer for sale, sell, have sold, import and export Intellect Products, but shall not retain any right under the Licensed Patents to research, develop, use, have used, make, have made, offer for sale, sell, have sold, import and/or export any [*****] Product.

2.02   Non-Exclusive License. Licensor hereby grants each Licensee a non-exclusive license, with the right to grant sublicenses, under the Licensed Patents to research, develop, use, have used, make, have made, offer for sale, sell, have sold, import and export Licensed Products other than [*****] Products in the Field in the Territory. For the avoidance of doubt, the license granted under this Section 2.02 shall in no way limit Licensees' exclusive rights to [*****] Products under Section 2.01.

2.03   Additional Patents. Other than [*****] and [*****], and foreign counterparts of such applications, Licensor represents that, as of the Execution Date, it is not aware of any other patent or pending patent application owned or otherwise Controlled by Licensor, which patent or patent application (a) is not listed in Exhibit A and included within the Licensed Patents licensed to Licensees under this Agreement, and (b) which Licensor reasonably believes would cover any Antibody or Licensed Product or contains claims that, once issued, would be infringed by the manufacture, use, offer for sale, sale, import or export of any Antibody or Licensed Product by Licensees or their respective Affiliates or sublicensees. If, during the term of this Agreement, Licensor acquires or otherwise obtains the right to grant a license or sublicense to any patent or patent application that (i) is not a Licensed Patent hereunder and (ii) Licensor reasonably believes would be infringed by the manufacture, use, offer for sale, sale, import or export of an Antibody or a Licensed Product by Licensees or their respective Affiliates or sublicensees ("Additional Patent"), Licensor shall promptly notify Licensees in writing and Licensees shall have the first right to negotiate a license to such Additional Patent under commercially reasonable terms. If the Parties have not concluded license negotiations within [*****] , Licensor may then offer a Third Party the opportunity to license such Additional Patent.

2.04   Updates to List of Licensed Patents. No less frequently than once per calendar year, Licensor shall provide Licensees with a written update of Exhibit A, setting forth any change in the status of the previously listed Licensed Patents and listing any newly filed, developed or acquired patent rights that constitute Licensed Patents. Upon the written approval of Licensees, each such update shall constitute an amendment to Exhibit A. For the avoidance of doubt, Licensor's delay in or failure to update Exhibit A pursuant to this Section 2.04 shall not in any way limit or otherwise impact the scope of Licensees' rights under this Agreement.

2.05   Exclusive Option:

(a)   Option Grant. In partial consideration of payment by Licensees of the License and Option Fee specified in Section 3.01, Licensor hereby grants Licensees an exclusive option to receive ownership of all of Licensor's right, title and interest in and to the Licensed Patents (the "Option").

(b)   Option Exercise. If at any time during the term of this Agreement (i) Licensor and its sublicensees have abandoned all activities related to research, development and commercialization of all Intellect Products that are covered by the Licensed Patents ("Covered Intellect Program") and (ii) no licenses granted by Licensor under the Licensed Patents (other than the licenses granted to Licensees under this Agreement) remain in force, Licensor shall notify Licensees in writing (such notice referred to herein as a "Cessation Notice"). Licensor shall have sole discretion to identify the circumstances and timing that constitute an abandonment described in clause (i) above; provided, however, that a failure by Licensor to incur expenses relevant to such Covered Intellect Program of more than [*****] , shall constitute such an abandonment. Licensor shall deliver the Cessation Notice to Licensees within [*****] that the conditions set forth in clauses (i) and (ii) are met. The Option granted to Licensees under Section 2.05(a) above may be exercised by Licensees within [*****] (the "Option Period") after receipt of the Cessation Notice. If Licensees wish to exercise the Option, Licensees shall provide Licensor or its legal representatives with written notice (the "Option Exercise Notice") of an election to so exercise the Option. Following delivery of the Option Exercise Notice, Licensor shall and hereby does assign and agree to assign to Licensees all of Licensor's right, title and interest in and to the Licensed Patents and shall execute and deliver to Licensees one or more confirmatory patent assignments covering all such Licensed Patents in the form set forth in Exhibit B hereto, as such form may be revised by Licensees to reflect the specific filing requirements of each relevant patent authority in the Territory. Further, Licensor shall execute and deliver to Licensees all documents and perform all acts requested by Licensees for the purposes of (a) documenting and/or recording the assignment of the Licensed Patents to Licensees in all jurisdictions throughout the Territory and (b) enabling Licensees or their designated Affiliates to prosecute and maintain the Licensed Patents in all jurisdictions throughout the Territory.

2.06   Authority and Responsibility for Licensed Products. Licensees shall have sole and exclusive authority, control and responsibility in all matters relating to the research, development, Regulatory Approval, manufacture and commercialization of Licensed Products. Except as expressly provided in this Agreement, neither Licensee shall be deemed to have granted to Licensor or any of its licensees, sublicensees, assignees, transferees or designees any license or other right with respect to the Licensed Products or any intellectual property rights or other rights owned or otherwise Controlled by Licensees.

2.07   Covenant Not To Assert Certain Patent Rights. Licensor shall not, and Licensor shall not grant any Third Party any right to, assert against either or both Licensees, any Affiliates of either Licensee and/or any Third Party sublicensees of one or both Licensees (collectively, the "Non-Assert Parties") any United States or foreign patent issuing from, relating to or claiming priority to [*****],[*****],[*****],[*****] and/or [*****] (collectively, the "Non-Assert Patents"). Without limiting the foregoing, Licensor shall not, and Licensor shall not grant any Third Party any right to, bring any lawsuit or other action against any Non-Assert Party claiming that the research, development, manufacture, use, sale, offer for sale and/or importation of any Antibody or Licensed Product infringes any one or more Non-Assert Patents.

3.   PAYMENTS, ROYALTIES, REPORTS

3.01   License and Option Fee. Within [*****] days after the Execution Date, in consideration of the licenses granted under Section 2.01 and Section 2.02 and the Option granted under Section 2.05 hereof, Licensees collectively shall pay to Licensor  [*****] (the "License and Option Fee").

3.02   Patent Milestones. As consideration for Licensor's performance of its obligations under this Agreement, including, without limitation, the performance of Licensor's obligations under Article 5, promptly following successful completion of each of the following events, Licensor shall provide Licensees with written notice that such event has occurred (each such notice referred to herein as an "Issuance Notice"). Within [*****] following Licensees' receipt of an Issuance Notice for each such event, Licensees collectively shall pay Licensor the designated amount corresponding to such event:

Each payment described in clauses (a) and (b) above shall be payable one time only, regardless of the number of times each event occurs.

3.03   Sales Milestone. Within [*****] after Licensees achieve Annual Net Sales in excess of [*****] for any Licensed Product in the Covered Countries, Licensees collectively shall pay Licensor [*****] . Such payment is payable one time only, regardless of the number of Licensed Products that reach such Annual Net Sales in such Covered Countries.

3.04   Royalties.

(a) Subject to the reductions, offsets and withholdings specified in Sections 3.06, 3.09, 3.12 and 4.03, and in further consideration of the rights and licenses granted under Article 2, on a Licensed Product-by-Licensed Product and Covered Country-by-Covered Country basis during the applicable Royalty Term (as defined below), Licensees collectively shall pay Licensor the following marginal royalties on Annual Net Sales of each Licensed Product in each Covered Country:

(b) The percentages set forth above apply only to the amount of Annual Net Sales for a given Licensed Product that falls within the specified range. For example, if Annual Net Sales for such a Licensed Product in a given Covered Country were [*****] , Licensees would pay a royalty of [*****] on the first [*****] of such Net Sales in such Covered Country and a royalty of [*****] on the remaining [*****] of such Net Sales in such Covered Country.

(c) For the avoidance of doubt, Licensees shall not be required to pay any royalties to Licensor with respect to Net Sales of any Licensed Product in any country that is not a Covered Country with respect to such Licensed Product.

(d) The obligation to pay royalties under this Agreement shall be imposed only once with respect to the sale of the same unit of a Licensed Product, regardless of how many Valid Claims included within the Licensed Patents would, but for the licenses granted to Licensees under this Agreement, be infringed by the manufacture, use or sale of such Licensed Product in the Covered Countries.

3.05 Royalty Term.

(a) The royalty term shall be, on a Covered Country-by-Covered Country and Licensed Product-by-Licensed Product basis, the period [*****] (the "Royalty Term").

(b) At the end of the Royalty Term for a given [*****] Product in a given country, the licenses granted by Licensor to Licensees under this Agreement shall become fully paid-up, perpetual, irrevocable, royalty-free, exclusive licenses with respect to such [*****] Product in such country.

(c) At the end of the Royalty Term for a given Licensed Product other than a [*****] Product in a given country, the licenses granted by Licensor to Licensees under this Agreement shall become fully paid-up, perpetual, irrevocable, royalty-free, non-exclusive licenses with respect to such Licensed Product in such country.

3.06   Royalties to Third Parties. In the event that one or both Licensees are required to pay to one or more Third Parties any royalties based on the sale of any Licensed Product in any country ("Third Party Royalties"), Licensees may deduct [*****] of such Third Party Royalties from the royalties otherwise payable to Licensor under Section 3.04(a), provided, however, that in no event shall such deduction based on Third Party Royalties reduce the amount of the royalty otherwise payable to Licensor for the sale of such Licensed Product in such country by more than [*****] .

3.07   Most Favored Licensee. In the event that Licensor grants or has granted to any Third Party a license under the Licensed Patents, which license requires such Third Party to pay less than any of the payments and/or royalties set forth in this Article 3, such lesser payments and royalties shall be substituted for the payments and royalties payable by Licensees under this Agreement, and any amounts paid by Licensees prior to the issuance of such Third Party license in excess of such lesser payments and royalties shall be credited against future payments and/or royalties payable by Licensees to Licensor under this Agreement.

3.08   Sales Among Affiliates and Sublicensees. Sales or other transfers between and among Licensees and their Affiliates or sublicensees of Licensed Products which are subsequently resold by Licensees or their Affiliates or sublicensees shall not be subject to royalty, but in such cases royalties shall accrue and be calculated on the subsequent sale or other transfer of such Licensed Products to a Third Party, other than a sublicensee or their Affiliates.

3.09   Currency Conversion. All amounts payable to Licensor under this Agreement shall be payable in U.S. Dollars by wire transfer to a bank account designated in writing by Licensor. In the case of royalties payable pursuant to Section 3.04, all amounts payable shall first be calculated in the currency of the Covered Country of sale and then converted into U.S. Dollars in accordance with Licensee's customary and usual translation procedures, consistently applied. Notwithstanding the foregoing, if by reason of any restrictive exchange laws or regulations, Licensees shall be unable to convert to U.S. Dollars the amount, determined as provided above, which is equivalent to the amount due to Licensor hereunder (or if able to convert, where restricted or prohibited from remitting such royalties in U.S. Dollars) then Licensees shall notify Licensor promptly with a written explanation of the circumstances. In such event, all such payments, or the balance due hereunder shall be remitted in U.S. Dollars as soon as reasonably possible after and to the extent that such restrictive exchange laws or regulations are lifted to permit conversion of the above-mentioned amount to U.S. Dollars.

3.10   Royalty Report. Licensees agree to make written reports and royalty payments to Licensor within [*****] after the close of each Calendar Quarter during the term of this Agreement, beginning with the Calendar Quarter in which the date of the First Commercial Sale of a Licensed Product following Regulatory Approval occurs. These reports shall state for the Calendar Quarter in question: [*****] . No later than at the time of the making of each such report, Licensees shall make any payment due to Licensor of royalties for the Calendar Quarter covered by such report by wire transfer to the following account (or such other account as Licensor may designate in writing to Licensees from time to time):

Bank: [*****]

[*****]

Routing Number: [*****]

Account Number: [*****]

Account Holder: [*****]

All information contained in reports made by Licensees pursuant to this Section 3.10 shall be deemed to be Confidential Information of Licensees and shall be treated as such by Licensor in accordance with Article 7 hereof.

3.11   Inspection. Licensees agree to keep, and to require their applicable Affiliates and sublicensees to keep, clear and accurate records of Net Sales of Licensed Products for a period of at least [*****] after the Calendar Quarter during which such Net Sales were generated. Such records shall include sufficient detail to enable the royalties payable hereunder to be accurately determined. Licensees further agree to permit such records, and to require any of their applicable Affiliates or sublicensees to permit such records, to be examined by an independent accounting firm selected by Licensor and reasonably satisfactory to Licensees from time-to-time, but not more than once each calendar year and provided that such examination shall be limited to the records pertaining to the  [*****] period   preceding the examination. Licensees and their applicable Affiliates and sublicensees may require such independent accountant to sign a standard non-disclosure agreement prior to allowing such accountant to examine such records. Upon completion of such examination, the accountant shall report in writing to Licensor and Licensees only whether the royalty reports and royalties paid were correct or incorrect, the amount of any overpayment or underpayment and the basis for any discrepancies. No other information shall be provided to Licensor. Such examination shall occur during Licensees' and their applicable Affiliates' and sublicensees' normal business hours at one or more facilities reasonably designated by Licensees. Such examination is to be made at the expense of Licensor, except in the event that the results of the audit reveal that Licensees underpaid royalties to Licensor by [*****] or more, then the audit fees shall be paid by Licensees. Any payment discrepancy identified by the independent accountant will be promptly corrected by a payment or refund, as appropriate.

3.12   Withholding. Licensees may withhold from payments and royalties due to Licensor amounts for payment of any tax, duties, levies or other charges on Licensor that Licensees are required to withhold on Licensor's behalf in accordance with applicable laws and/or regulations. Proof of payment of such taxes shall be secured, if available, and sent to Licensor as evidence of such payment in such form as required by the taxing or other governmental authorities having jurisdiction over Licensees. Licensees agree to reasonably cooperate with Licensor to take advantage of any tax treaty, including without limitation, any double taxation agreements or similar agreements that may be available, in order to enable Licensees to make such payments to Licensor without any deduction or withholding.

3.13   Disclaimer. Licensor acknowledges and agrees that nothing in this Agreement shall be construed as representing any estimate or projection of either (a) the number of Licensed Products that will or may be successfully developed, manufactured or commercialized or (b) anticipated sales or the actual value of any Licensed Product. Licensees make no representation or warranty, either express or implied, that (i) Licensees will be able to successfully develop, manufacture or commercialize any Licensed Product, (ii) if commercialized, any Licensed Product will achieve any particular sales level, or (iii) Licensees will devote any level of diligence or resources to the development, manufacture or commercialization of any Licensed Product.

4.   THIRD PARTIES

4.01   Existing Agreements. Subject to the provisions of Section 3.06, Licensees shall be solely responsible for all of their existing contractual obligations to all Third Parties relating to the Licensed Products. Licensor shall be solely responsible for all of its existing contractual obligations to all Third parties relating to the Licensed Patents.

4.02   Future Licenses. In the event Licensees determine that it is necessary or useful to obtain additional licenses to intellectual property of Third Parties that relate to the Licensed Patents or the Licensed Products in order to research, develop, manufacture or commercialize the Licensed Product(s), Licensees shall, at their sole discretion, control the negotiation and procurement of any such license agreements, but Licensees would not be obligated to procure any such license agreements. Any royalties paid by one or both Licensees to one or more Third Parties under any such additional licenses shall be considered to be Third Party Royalties in accordance with Section 3.06.

4.03 Third Party Infringement.

(a) In the event a Party becomes aware of any possible or actual Third Party infringement of the Licensed Patents, that Party shall promptly notify the other Parties and provide each of them with full details.

(b) With respect to any Licensed Product made, used, sold, imported or exported by a Third Party which Licensees reasonably believe infringes a claim of one or more Licensed Patents, at the written request of Licensees ("Written Request"), Licensor shall, at Licensee's expense, commence suit or other proceedings and/or file any claims appropriate to abate such infringement ("Enforcement"), engaging legal counsel mutually acceptable to all Parties. Licensees, at their sole election, shall have the right, but not the obligation, to be joined as party plaintiffs in any such Enforcement to the full extent permitted by law in the relevant jurisdiction. In resolving any Enforcement (or related settlement) initiated by Licensor as described above, Licensor and Licensees shall first be reimbursed [*****] of any funds remaining from the sums recovered in the Enforcement or its settlement. In the event Licensor has not commenced Enforcement (through mutually agreed upon counsel) within thirty (30) days after receiving such Written Request from Licensees, then Licensees shall have the right, but not the obligation, to initiate Enforcement at their own expense and to join Licensor as a party plaintiff in any such suit or proceeding, if required by law in the relevant jurisdiction and at no cost or expense to Licensor. In resolving any such Enforcement initiated by Licensees, Licensees shall be entitled to receive and retain any and all sums recovered in the Enforcement or its settlement.

(c) With respect to any infringing activity set forth in clause b above, and any other infringement of Licensed Patents by a Third Party, if Licensor fails to commence any suit or proceeding or otherwise abate such infringement within [*****] of the date that Licensor first becomes aware of such infringement, all royalties and other payments payable by Licensees hereunder shall automatically be reduced by [*****] ("Infringement Abatement"). For the avoidance of doubt, any such Infringement Abatement shall be calculated independently of, and applied in addition to, any abatement for Third Party Royalties pursuant to Section 3.06.

(d) For the sake of clarity, it shall not be an act of infringement of Licensed Patents for Licensor or any licensee, sublicensee, assignee, transferee or designee of Licensor to research, develop, use, have used, make, have made, offer for sale, sell, have sold, import or export Intellect Products.

5.   PROSECUTION AND MAINTENANCE OF LICENSED PATENTS

Subject to the provisions of this Article 5, Licensor shall have the sole right and obligation to prepare, file, prosecute and maintain the Licensed Patents in the Territory. Licensor shall keep Licensees advised of the status of all patent filings, including, without limitation, the grant of Licensed Patents and shall promptly provide advance copies of any official correspondence received in respect of the filing, prosecution and maintenance of such patent filings for review