PRODUCT FOR WHICH AN IND HAS BEEN FILED, THEN AVI SHALL HAVE THE RIGHT
TO GRANT THE LICENSE OR SUBLICENSE IN ITS DISCRETION AND IF THE ARRANGEMENT
RELATES SOLELY OR PRIMARILY TO A BT PRODUCT FOR WHICH AN IND HAS BEEN FILED THEN
ERCOLE SHALL HAVE THE RIGHT TO GRANT THE LICENSE OR SUBLICENSE IN ITS
DISCRETION.
5.2
PROCEEDS.
THE PARTIES INTEND FOR THE NET PROCEEDS
FROM SUBLICENSING AND COMMERCIALIZATION OF PRODUCTS TO BE DIVIDED EQUALLY
BETWEEN THE PARTIES.
ACCORDINGLY, EXCEPT AS PROVIDED IN SECTION 2.7 RELATED TO
A PRODUCT ABANDONED BY A PARTY, THE PROCEEDS FROM ANY LICENSE OR SUBLICENSE
RELATED TO A PRODUCT SHALL BE DISBURSED IN THE FOLLOWING ORDER:
(A)
TO SATISFY ANY OBLIGATIONS UNDER THE AGDG
AGREEMENT, THE ISIS CLA, THE UNC LICENSE OR ANY OTHER BONA FIDE OBLIGATION TO A
THIRD PARTY RELATED TO RIGHTS COVERED BY THE SUBLICENSE;
(B)
TO A PARTY FOR COMPOUNDED DISPUTED COSTS
THAT HAVE ACCRUED UNDER SECTION 2.7 RELATED TO PRODUCT(S) COVERED BY THAT
SUBLICENSE; AND
(C)
TO REIMBURSE EACH PARTY FOR ALL SHARED
COSTS INCURRED UNDER THIS AGREEMENT RELATED TO PRODUCT(S) COVERED BY THAT
SUBLICENSE TO THE EXTENT SUCH COSTS HAVE NOT PREVIOUSLY BEEN REIMBURSED;
AND
(D)
50% OF THE REMAINING PROCEEDS SHALL BE PAID
TO EACH PARTY.
5.3
PRODUCTION. IF ERCOLE DESIRES TO MAKE OR HAVE MADE ANY
BT PRODUCT THAT INVOLVES THE USE OF ONE OR MORE CHEMICAL COMPOUNDS COVERED BY
THE AVI PATENTS, ERCOLE WILL SO NOTIFY AVI, AND ERCOLE AND AVI WILL NEGOTIATE
AND EXECUTE A SUPPLY AGREEMENT COVERING THE MANUFACTURE OF THAT PARTICULAR
COMPOUND TO SUPPORT ERCOLE'S DEVELOPMENT AND COMMERCIAL NEEDS ("SUPPLY PLAN").
THE SUPPLY AGREEMENT WILL PROVIDE FOR EITHER: A) THE SUPPLY OF MATERIAL TO
ERCOLE BY AVI (WITH FINANCIAL TERMS FOR COST RECOVERY BUT NO MANUFACTURING
MARGINS); OR B) THE TRANSFER OF THE MANUFACTURING PROCESS TO A THIRD-PARTY
REASONABLY ACCEPTABLE TO ERCOLE AND AVI.
5.4
COMPENSATION WAIVER.
THE PARTIES ACKNOWLEDGE THAT THE
JOINT ACTIVITIES CONTEMPLATED BY THIS AGREEMENT INVOLVE SUBSTANTIAL SHARING OF
RISK AND THAT THE COLLABORATION CONTEMPLATED BY THIS AGREEMENT REQUIRES MUTUAL
TRUST AND COOPERATION.
THE PARTIES FURTHER ACKNOWLEDGE THAT AN ESSENTIAL
ELEMENT OF THE COLLABORATION IS AN AGREEMENT TO RESPECT THE INTELLECTUAL
PROPERTY RIGHTS OF THE OTHER PARTY.
ACCORDINGLY, EACH PARTY AGREES THAT IF IT
DIRECTLY OR THROUGH A THIRD PARTY CONTESTS THE VALIDITY, SCOPE OR ENFORCEABILITY
OF ANY PATENT RIGHTS LICENSED OR SUBLICENSED TO IT BY THE OTHER PARTY UNDER THIS
AGREEMENT OR ASSISTS ANY THIRD PARTY IN DOING SO, THE PARTY THAT ENGAGES IN OR
ASSISTS IN THE CONDUCT OF SUCH CONTEST OR CHALLENGE (THE "CHALLENGING PARTY"):
(I) IRREVOCABLY WAIVES ALL RIGHTS TO ANY PAYMENT FROM THE OTHER PARTY UNDER THIS
AGREEMENT; (II) AGREES THAT THE OTHER PARTY MAY IMMEDIATELY TERMINATE ANY AND
ALL LICENSES GRANTED TO THE CHALLENGING PARTY UNDER THIS AGREEMENT OR UNDER ANY
OTHER AGREEMENT; (III) AGREES TO DISBURSE ALL PROCEEDS FROM ANY LICENSE OR
SUBLICENSE RELATED TO A PRODUCT TO THE OTHER PARTY, AFTER SATISFYING ANY THIRD
PARTY OBLIGATIONS PURSUANT TO SECTION 5.2(A); AND