ON THE
TERMS PROPOSED IN THE SONUS TERM SHEET.
IF, WITHIN THREE MONTHS OF RECEIPT BY
SONUS OF THE ORIGINAL WRITTEN NOTICE FROM SCHERING, THE PARTIES HAVE NOT AGREED
UPON THE TERMS OF ANY LICENSING AGREEMENT WITH RESPECT TO THE SCHERING PRODUCT,
SCHERING SHALL BE FREE TO NEGOTIATE AND ENTER INTO A LICENSING AGREEMENT WITH
ANY THIRD PARTY WITH RESPECT TO THE SCHERING PRODUCT, PROVIDED HOWEVER, THAT
SCHERING MAY NOT ENTER INTO SUCH A LICENSING AGREEMENT WITH A THIRD PARTY ON
TERMS LESS FAVORABLE TO SCHERING (TAKEN AS A WHOLE) THAN THE TERMS PROPOSED BY
SONUS WITHOUT FIRST OFFERING SONUS THE OPPORTUNITY TO ENTER INTO SUCH LICENSE
AGREEMENT ON SUCH TERMS LESS FAVORABLE TO SCHERING.
ARTICLE XIV
PRODUCT RECALL
SECTION 14.01
PRODUCT RECALLS OR WITHDRAWAL.
IF AT ANY
TIME OR FROM TIME TO TIME ANY GOVERNMENTAL AUTHORITY OF ANY COUNTRY REQUESTS
EITHER PARTY OR AN AFFILIATE OF EITHER PARTY OR A SUBLICENSEE OF SCHERING TO
RECALL THE PRODUCT, OR IF A VOLUNTARY RECALL IS CONTEMPLATED (A "RECALL"), THE
PARTY TO WHOM SUCH REQUEST IS MADE OR THE PARTY CONTEMPLATING SUCH RECALL, AS
THE CASE MAY BE, SHALL IMMEDIATELY NOTIFY THE OTHER PARTY, IT BEING UNDERSTOOD
AND AGREED THAT EACH PARTY SHALL HAVE RIGHTS TO INITIATE A RECALL IF REQUIRED BY
APPLICABLE LAWS.
ANY RECALL IN THE TERRITORY INVOLVING INVESTIGATIONAL CLINICAL
TRIAL ACTIVITIES CONDUCTED BY SONUS SHALL BE CARRIED OUT BY SONUS IN AS
EXPEDITIOUS A MANNER AS REASONABLY POSSIBLE TO PRESERVE THE GOODWILL AND
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REPUTATION OF THE PRODUCT AND THE GOODWILL AND REPUTATION OF THE PARTIES.
ANY
OTHER RECALL IN THE TERRITORY SHALL BE CARRIED OUT BY SCHERING IN AS EXPEDITIOUS
A MANNER AS REASONABLY POSSIBLE TO PRESERVE THE GOODWILL AND REPUTATION OF THE
PRODUCT AND THE GOODWILL AND REPUTATION OF THE PARTIES.
UNLESS OTHERWISE
REQUIRED BY LAW, SCHERING SHALL IN ALL EVENTS BE RESPONSIBLE FOR CONDUCTING ANY
RECALLS IN THE TERRITORY, MARKET WITHDRAWALS OR CORRECTIONS WITH RESPECT TO THE
PRODUCT IN CONSULTATION WITH SONUS.
SCHERING OR ITS DESIGNEE SHALL MAINTAIN
RECORDS OF ALL SALES AND DISTRIBUTION OF PRODUCT, AS APPLICABLE, AND CUSTOMERS
SUFFICIENT TO ADEQUATELY ADMINISTER A RECALL, MARKET WITHDRAWAL OR CORRECTION
FOR A PERIOD EQUAL TO THE SHELF-LIFE OF THE PRODUCT PLUS ONE YEAR AFTER THE DATE
THE RECORD IS CREATED.
SECTION 14.02
RECALL COSTS.
THE COST AND EXPENSE OF A
RECALL SHALL BE ALLOCATED AS FOLLOWS:
(A)
IF SUCH RECALL IS A VOLUNTARY RECALL OR
SHALL BE DUE TO TAMPERING OR OTHER CAUSE, OTHER THAN A MANUFACTURER'S DEFECT,
BUT NOT DUE TO THE.
NEGLIGENCE OR MISCONDUCT OF THE PARTIES, THEN THE PARTIES
SHALL SHARE EQUALLY THE COSTS AND EXPENSES INCURRED BY THE PARTY CONDUCTING THE
RECALL IN CONNECTION WITH SUCH RECALL, INCLUDING, WITHOUT LIMITATION, ALL
PRODUCT CREDITS AND RETURNS, FREIGHT AND SHIPPING COSTS AND PRODUCT DISPOSAL
EXPENSES;
(B)
IF SUCH RECALL IS DUE TO THE NEGLIGENCE,
BREACH OF CONTRACT OR MISCONDUCT OF SONUS, ALL SUCH COSTS AND EXPENSES SHALL BE
BORNE AND PAID SOLELY BY SONUS; AND
(C)
IF SUCH RECALL IS DUE TO THE