THE PURPOSE OF DETERMINING
THE CORRECTNESS OF VIVUS' COMPUTATION AND PAYMENT OF THE ROYALTY. SUCH AUDIT MAY
NOT BE CONDUCTED MORE THAN ONCE IN ANY CALENDAR YEAR AND SHALL BE CONDUCTED
DURING NORMAL BUSINESS HOURS BY AN ACCOUNTING FIRM ENGAGED BY ED AT ITS COST,
PROVIDED THAT SUCH ACCOUNTING FIRM ENTERS INTO A REASONABLE CONFIDENTIALITY
AGREEMENT PRIOR TO COMMENCING ANY SUCH AUDIT. VIVUS SHALL PROVIDE ED, ITS
OFFICERS, AGENTS AND ACCOUNTANTS WITH ACCESS TO ALL PERTINENT BOOKS AND RECORDS
AND SHALL REASONABLY COOPERATE WITH ED'S EFFORTS TO CONDUCT SUCH AUDITS. IF SUCH
AUDIT DISCLOSES AN UNDERPAYMENT OF THE ROYALTY BY VIVUS OF MORE THAN $35,000,
VIVUS SHALL REIMBURSE ED FOR THE REASONABLE OUT-OF-POCKET COSTS (INCLUDING THE
ACCOUNTANTS' FEES) INCURRED BY ED IN PERFORMING SUCH AUDIT. IN THE EVENT ED
CLAIMS THAT ANY SUCH AUDIT REVEALS AN UNDERPAYMENT OF THE ROYALTY, ED WILL MAKE
ITS AUDIT PAPERS FOR THE RELEVANT PERIOD AVAILABLE TO VIVUS UPON VIVUS' REQUEST.
4.
Assignment or Sublicense. VIVUS shall
continue to pay, or cause to be paid, the Royalty on all Net Sales of Royalty
Products by any direct or indirect licensee or assignee of VIVUS.
5.
Security Interest. In order to secure
the full and punctual payment of the Royalty in accordance with the terms of
this Agreement, VIVUS shall execute and deliver to ED a security agreement in
the form attached hereto as Exhibit A.
(8) *** Indicates that confidential treatment has been sought for this
information.
(9) *** INDICATES THAT CONFIDENTIAL TREATMENT HAS BEEN SOUGHT FOR THIS
INFORMATION.
(10) *** Indicates that confidential treatment has been sought for this
information.
5
6.
Covenants of VIVUS.
(A)
MAINTENANCE OF REGISTRATIONS AND OTHER
RIGHTS. VIVUS SHALL USE COMMERCIALLY REASONABLE EFFORTS TO TAKE APPROPRIATE
ACTIONS, AT ITS SOLE COST AND EXPENSE, TO MAINTAIN THE REGISTRATIONS AND ALL
OTHER REGULATORY RIGHTS AND ALL PATENTS, TRADEMARKS AND OTHER INTELLECTUAL
PROPERTY RIGHTS NECESSARY FOR VIVUS TO DEVELOP, MANUFACTURE, DISTRIBUTE,
PROMOTE, OFFER FOR SALE AND SELL THE ROYALTY PRODUCTS THROUGHOUT THE UNITED
STATES.
(B)
PROMOTION OF MUSE. FROM THE DATE HEREOF
THROUGH THE EIGHTH (8TH) ANNIVERSARY OF SUCH DATE, VIVUS SHALL (I) MANUFACTURE
OR HAVE MANUFACTURED, PROMOTE AND SELL MUSE THROUGHOUT THE UNITED STATES USING A
SIMILAR LEVEL OF COMMERCIAL EFFORT AS EMPLOYED BY VIVUS IMMEDIATELY PRIOR TO THE
DATE HEREOF; PROVIDED, HOWEVER, THAT THIS CLAUSE (I) SHALL NOT REQUIRE VIVUS TO
MAINTAIN ANY PARTICULAR SPENDING LEVELS, AND (II) NOT MANUFACTURE, HAVE
MANUFACTURED, PROMOTE OR SELL ANY PRODUCT THAT COMPETES WITH MUSE IN THE UNITED
STATES OTHER THAN AVANAFIL.
(C)
DEVELOPMENT AND PROMOTION OF AVANAFIL.
VIVUS SHALL USE COMMERCIALLY REASONABLE EFFORTS TO OBTAIN FDA APPROVAL OF
AVANAFIL. FROM THE DATE ON WHICH THE FDA APPROVES A NEW DRUG APPLICATION FOR
AVANAFIL THROUGH THE EIGHTH (8TH) ANNIVERSARY OF THIS AGREEMENT, VIVUS SHALL
(I) MANUFACTURE OR HAVE MANUFACTURED, PROMOTE AND SELL AVANAVIL THROUGHOUT THE
UNITED STATES USING COMMERCIALLY REASONABLE EFFORTS SIMILAR TO THOSE EFFORTS
EMPLOYED BY VIVUS FOR ITS OTHER APPROVED DRUG PRODUCTS; PROVIDED, HOWEVER, THAT
THIS CLAUSE (II) SHALL NOT