FOR RANK IS NOT AGREED BY THE PARTIES, THE RANK SHOULD
BE "A" RANK.
IF SO DESIGNATED, SUCH PARTY SHALL PROMPTLY PROVIDE THE OTHER
PARTY WITH SUCH INFORMATION CONCERNING THE SPECIAL MATERIAL, FORMULA, OR PROCESS
AS IS NECESSARY TO ENABLE THE OTHER PARTY TO DETERMINE IF SUCH SPECIAL MATERIAL,
FORMULA, OR PROCESS WOULD BE USEFUL TO IT.
EACH TRANSFER OF A SPECIAL MATERIAL,
FORMULA OR PROCESS SHALL BE MADE PURSUANT TO A SEPARATE TRANSFER AGREEMENT,
SUBSTANTIALLY IN THE FORM OF EXHIBIT A HERETO, WHICH SHALL BE EXECUTED AT THE
TIME OF TRANSFER BY THE PARTIES INVOLVED.
THE PARTIES ENTERED INTO SEPARATE
TRANSFER AGREEMENTS PURSUANT TO THE 1997 AGREEMENT.
SUCH AGREEMENTS SHALL
CONTINUE IN EFFECT AFTER EXECUTION OF THIS AGREEMENT IN ACCORDANCE WITH THE
TERMS OF THIS AGREEMENT.
4.03
QUALITY ASSURANCES.
THE LICENSOR MAY PROVIDE A CERTIFICATE OF
EQUIVALENCY SATISFACTORY IN FORM AND SUBSTANCE TO THE LICENSEE OR TO ITS
SUBLICENSEE WITH RESPECT TO LICENSED PRODUCTS MANUFACTURED USING A SPECIAL
MATERIAL, FORMULA, OR
5
PROCESS AFTER THE LICENSEE HAS DEMONSTRATED THAT LICENSED PRODUCTS USING THE
SPECIAL MATERIAL, FORMULA, OR PROCESS MEET THE FINISHED PRODUCT SPECIFICATIONS
PROVIDED BY THE LICENSOR.
4.04
ROYALTIES PAYABLE IN RESPECT OF A SPECIAL MATERIAL, FORMULA OR
PROCESS.
(A)
IF THE LICENSEE ELECTS TO UTILIZE THE SPECIAL MATERIAL, FORMULA,
OR PROCESS IN THE MANUFACTURE AND SALE OF LICENSED PRODUCTS, IT SHALL PAY
ROYALTIES TO THE LICENSOR ACCORDING TO THE TABLE SET FORTH BELOW.
IF THE
SPECIAL MATERIAL, FORMULA, OR PROCESS INVOLVES BOTH KNOW-HOW AND IS WHOLLY OR
PARTIALLY COVERED BY ONE OR MORE LICENSED PATENTS, SEPARATE ROYALTIES MAY BE
ASSIGNED TO THE KNOW-HOW AND LICENSED PATENT(S), AS SPECIFIED IN THE SEPARATE
TRANSFER AGREEMENT.
Royalty Payments Table
[Percentages are of Net Sales]
Material, Formula,
or Process Rank
Quantities
[**]
[**]
[**]
S
[**]
[**]
[**]
A
[**]
[**]
[**]
B
[**]
[**]
[**]
C
[**]
[**]
[**]
D
[**]
[**]
[**]
Month "1" of the royalty payment schedule begins with the first month in which
the First Commercial Sale of a Product occurs.
(A)
NOTWITHSTANDING THE FOREGOING PROVISIONS, IF MORE THAN ONE SPECIAL
MATERIAL, FORMULA, OR PROCESS IS USED TOGETHER IN THE MANUFACTURE OF A SINGLE
LICENSED PRODUCT, THE TOTAL ROYALTIES DUE PURSUANT TO THIS SECTION 4.04 WILL BE
AGGREGATED, BUT IN NO EVENT SHALL SUCH ROYALTIES EXCEED [**] OF NET SALES.
(B)
INITIAL LICENSE FEES DUE PURSUANT TO SECTION 4.04 SHALL BE PAID
WITHIN 30 DAYS FOLLOWING EXECUTION OF THE TRANSFER AGREEMENT, AND ALL OTHER
ROYALTIES SHALL BE PAID QUARTERLY WITHIN 25 DAYS AFTER THE END OF EACH CALENDAR
QUARTER.
ALL AMOUNTS DUE ARE PAYABLE IN THE CURRENCY OF THE LICENSOR'S
COUNTRY.
PAYMENTS SHALL BE ACCOMPANIED BY A STATEMENT IDENTIFYING THE SPECIAL
MATERIAL, FORMULA, OR PROCESS AND SHOWING, IN REASONABLE DETAIL, THE CALCULATION
OF THE PAYMENT.
6
4.05
EXCEPTIONS TO PAYMENT OF ROYALTIES.
NOTWITHSTANDING THE PROVISIONS
OF THIS AGREEMENT, THE SPECIAL MATERIALS, FORMULAS, OR PROCESSES SET FORTH ON
SCHEDULE B AND LICENSED TO THE LICENSEE PRIOR TO THE DATE OF THIS AGREEMENT
SHALL BE SUBJECT TO