that STANFORD has provided
LICENSEE with written notice of each such obligation STANFORD must meet and a
description of each act LICENSEE must take to comply with such obligation.
5.
DILIGENCE
5.1
AS AN INDUCEMENT TO STANFORD TO ENTER INTO
THIS AGREEMENT, LICENSEE AGREES TO USE ALL REASONABLE EFFORTS AND DILIGENCE TO
SUBLICENSE THE LICENSED PATENT(S) AND/OR TO PROCEED WITH THE DEVELOPMENT,
MANUFACTURE, AND SALE OR LEASE OF LICENSED PRODUCT(S).
LICENSEE FURTHER AGREES
TO DILIGENTLY DEVELOP MARKETS FOR THE LICENSED PATENT(S) AND/OR LICENSED
PRODUCT(S).
LICENSEE AGREES THAT STANFORD MAY TERMINATE THIS AGREEMENT IF,
PRIOR TO JULY 1, 2000, LICENSEE HAS NEITHER SUBLICENSED THE LICENSED PATENT(S)
NOR MADE A LICENSED PRODUCT(S) AVAILABLE FOR COMMERCIAL SALE.
LICENSEE FURTHER
AGREES THAT STANFORD MAY TERMINATE THIS AGREEMENT IF, FOR ANY PERIOD OF ONE (1)
FULL YEAR AFTER FIRST SUBLICENSE OR COMMERCIAL SALE, LICENSEE HAS NEITHER
MAINTAINED AT LEAST ONE SUBLICENSE IN FORCE NOR SOLD ANY LICENSED PRODUCT(S).
5.2
PROGRESS REPORT - ON OR BEFORE SEPTEMBER 1
OF EACH YEAR UNTIL LICENSEE MARKETS A LICENSED PRODUCT(S) OR GRANTS A SUBLICENSE
UNDER THE LICENSED PATENT(S), LICENSEE SHALL MAKE A WRITTEN ANNUAL REPORT TO
STANFORD COVERING THE PRECEDING YEAR ENDING JUNE 30,
3
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential treatment under Rule 24b-2 of the Exchange Act.
REGARDING THE PROGRESS OF LICENSEE TOWARD COMMERCIAL USE OF LICENSED PRODUCT(S)
OR SUBLICENSING OF LICENSED PATENT(S).
SUCH REPORT SHALL INCLUDE, AS A MINIMUM,
INFORMATION SUFFICIENT TO ENABLE STANFORD TO SATISFY REPORTING REQUIREMENTS OF
THE U.S. GOVERNMENT AND FOR STANFORD TO ASCERTAIN PROGRESS BY LICENSEE TOWARD
MEETING THE DILIGENCE REQUIREMENTS OF THIS ARTICLE 5.
5.3
IN THE EVENT THAT LICENSEE FAILS TO MAKE
AVAILABLE FOR COMMERCIAL SALE A LICENSED PRODUCT BASED ON A PARTICULAR LICENSED
MATERIAL LISTED IN EXHIBIT A FOR ANY PERIOD OF ONE (1) FULL YEAR AFTER JULY 1,
2000, STANFORD MAY CONVERT THE EXCLUSIVE LICENSE GRANTED TO LICENSEE SOLELY WITH
RESPECT TO THAT PARTICULAR LICENSED MATERIAL (HEREINAFTER, THE "UNCOMMERCIALIZED
MATERIAL") TO A NON-EXCLUSIVE LICENSE, PROVIDED THAT STANFORD GIVES LICENSEE
WRITTEN NOTICE OF SUCH INTENT AND LICENSEE FAILS TO COMMERCIALIZE THE
UNCOMMERCIALIZED MATERIAL WITHIN NINETY (90) DAYS OF SUCH NOTICE.
STANFORD
AGREES THAT NOTHING IN THIS SECTION 5.3 SHALL HAVE ANY EFFECT ON THE EXCLUSIVE
LICENSE GRANTED TO LICENSEE UNDER ANY LICENSED MATERIAL(S) OR LICENSED
PRODUCT(S) OTHER THAN THE UNCOMMERCIALIZED MATERIAL.
STANFORD FURTHER AGREES
THAT NOTHING IN THIS SECTION 5.3 SHALL HAVE ANY EFFECT ON THE EXCLUSIVE LICENSE
GRANTED TO LICENSEE UNDER THE LICENSED PATENT(S) IN ARTICLE 3 HEREIN.
6.
ROYALTIES
6.1
BEGINNING JULY 1, 2000, AND EACH JULY 1
THEREAFTER, LICENSEE SHALL PAY TO STANFORD A YEARLY ROYALTY OF [***].
SAID
YEARLY ROYALTY PAYMENTS ARE NONREFUNDABLE, BUT THEY ARE CREDITABLE AGAINST
EARNED ROYALTIES TO THE EXTENT PROVIDED IN PARAGRAPH 6.4.
6.2
IN ADDITION, LICENSEE SHALL PAY STANFORD
EARNED ROYALTIES OF [***] OF NET SALES.
6.3
IN THE EVENT THAT A LICENSED PRODUCT IS SOLD
IN COMBINATION WITH OR CONTAINING