in humans as
part of such Clinical Trial and (ii) the date upon which Licensee makes a public
announcement that such Clinical Trial has commenced.
3.1.2.
ROYALTY PAYMENTS.
LICENSEE SHALL PAY CHIRON ROYALTY PAYMENTS WITH
RESPECT TO NET SALES OF IDENTIFIED PRODUCTS IN ACCORDANCE WITH THE FOLLOWING
ROYALTY PAYMENT SCHEDULE:
For Aggregate Annual Worldwide Net
Sales of Identified Products:
Royalty Rate
Above $0 and up to *** million
***%
Above *** million
***%
Following the first commercial sale of an Identified Product, Licensee will make
royalty payments to Chiron on a quarterly basis.
Payments will be due within
forty-five (45) days of the end of each calendar quarter.
3.1.3.
NO VALID CLAIM.
IF DURING ANY TIME PERIOD, AN IDENTIFIED PRODUCT IS
EXPLOITED IN A COUNTRY OF THE LICENSED TERRITORY AND IS NOT COVERED BY A VALID
CLAIM UNDER ANY CHIRON PATENT RIGHTS IN SUCH COUNTRY, THE ROYALTY RATE PAYABLE
BY LICENSEE DURING THE TIME PERIOD IN WHICH THERE IS NO SUCH COVERAGE BY A VALID
CLAIM FOR SUCH IDENTIFIED PRODUCT SHALL BE AS FOLLOWS:
FOR AGGREGATE ANNUAL WORLDWIDE NET SALES OF IDENTIFIED PRODUCTS
Royalty Rate
ABOVE $0 AND UP TO *** MILLION
***%
ABOVE *** MILLION
***%
3.1.4.
PRIOR ACTIVITY.
ANY IDENTIFIED PRODUCTS THAT HAVE BEEN DEVELOPED
PRIOR TO THE EFFECTIVE DATE BY LICENSEE OR ITS SUBLICENSEES SHALL BE SET FORTH
IN EXHIBIT C HERETO, AND SHALL INCLUDE THE LATEST STAGE OF CLINICAL ACHIEVEMENT
FOR SUCH IDENTIFIED PRODUCTS.
ON THE EFFECTIVE DATE, LICENSEE SHALL PAY TO
CHIRON ANY MILESTONE OR ROYALTY PAYMENTS UNDER SECTIONS 3.1.1, 3.1.2 AND 3.1.3
FOR SUCH IDENTIFIED PRODUCTS RELATED TO PERIODS PRIOR TO THE EFFECTIVE DATE;
PROVIDED, HOWEVER, THAT IN LIEU OF RECEIVING THE FIRST MILESTONE PAYMENT WITH
RESPECT TO THAT CERTAIN IDENTIFIED PRODUCT DESCRIBED ON EXHIBIT C
8
AS HCV AUG (AVI-4065) AND DESCRIBED THEREIN AS HAVING COMMENCED A PHASE I/II
TRIAL, CHIRON HAS AGREED TO RECEIVE FROM LICENSEE CERTAIN COMMON STOCK OF
LICENSEE AS SET FORTH IN THAT CERTAIN STOCK PURCHASE AGREEMENT BETWEEN THE
PARTIES DATED OF EVEN DATE HEREWITH.
ANY BREACH OF SUCH AGREEMENT BY LICENSEE
SHALL CONSTITUTE A MATERIAL BREACH OF THIS AGREEMENT.
3.2.
MANNER OF PAYMENT.
ALL PAYMENTS HEREUNDER SHALL BE IN UNITED
STATES DOLLARS IN IMMEDIATELY AVAILABLE FUNDS AND SHALL BE MADE BY WIRE TRANSFER
TO SUCH BANK ACCOUNT AS MAY BE DESIGNATED FROM TIME TO TIME BY CHIRON.
3.2.1.
EXCHANGE RATE.
IN THE EVENT THAT IDENTIFIED PRODUCTS ARE SOLD IN
CURRENCIES OTHER THAN UNITED STATES DOLLARS, NET SALES SHALL BE CALCULATED BY
LICENSEE IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.
NET SALES
IN SUCH OTHER CURRENCIES SHALL BE CONVERTED INTO U.S. DOLLARS AT THE END OF EACH
ROYALTY REPORTING PERIOD USING AN EXCHANGE RATE EQUAL TO THE SIMPLE AVERAGE OF
THE DAILY "U.S. DOLLAR NOON BUYING RATES" ON EACH BUSINESS DAY OF THE APPLICABLE
ROYALTY REPORTING PERIOD, AS PUBLISHED AT 12:00PM DAILY NEW YORK TIME BY THE
FEDERAL RESERVE BANK OF NEW YORK (AVAILABLE ON BLOOMBERG & REUTERS).
ROYALTY
PAYMENTS DUE TO CHIRON PURSUANT TO SECTION 3.1.2 AND