3. LICENSE GRANT
3.2 Term of Sublicense grant. The Sublicense granted to the Sublicensee in Section 3.1 with respect to Sublicensed Rights will expire upon the expiry of the Term, subject to an earlier termination in accordance with Section 12.
12. TERM AND TERMINATION
(a) This Sublicense Agreement will commence as of the Effective Date and, unless sooner terminated in accordance with the terms of this Sublicense Agreement or by mutual written consent, will expire upon the date of expiry of the last to expire of the patents set forth on Schedule B in the last country in the Territory in which there is such a patent; provided that, if at such date any Commercial Sublicensee is pursuing the Commercialization of Licensed Product Manufactured by the Sublicensee, the Sublicense Agreement will survive for so long as the Commercialization of Licensed Product Manufactured by the Sublicensee is being pursued (the period from the Effective Date until such last patent expiry date or as applicable the date on which the Commercialization of Licensed Product is no longer being pursued, being the “Term”, subject to early termination as contemplated below).
(b) The Sublicense Agreement shall also terminate automatically upon the termination of the Shionogi License Agreement; provided that, in such a case, GARDP will if requested by the Sublicensee and if the Sublicensee is in material compliance with its obligations under this Sublicense Agreement, request that Shionogi negotiate in good faith with the intent to enter into a new and separate license agreement directly between Shionogi and the Sublicensee on terms reasonably acceptable to Shionogi and the Sublicensee, it being understood and agreed that Shionogi reserves the right to require additional terms to be included in such license as may be needed to protect its interests.
12.2 Termination by either Party. Either Party will have the right to terminate this Sublicense Agreement, at its sole discretion, upon delivery of written notice to the other Party, upon the occurrence of any of the following:
(a) the other Party becomes bankrupt, insolvent or cannot pay its debts when due; or
(b) a material breach of this Sublicense Agreement by the other Party that is not cured within ninety (90) days after written notice of such breach is given.
12.3 Additional termination rights
(a) GARDP will have the right to terminate this Sublicense Agreement upon delivery of written notice to the Sublicensee upon the occurrence of any of the following:
(i) the failure of the Sublicensee to use its reasonable best efforts to diligently implement the Manufacturing of, and to obtain and maintain all required Manufacturing Approvals for, the Manufacture of quality Licensed Compound and Licensed Product at the Facility(ies) and to Manufacture sufficient and affordable quantities of quality Licensed Compound and of Licensed Product to supply in a timely manner the requirements of Commercial Sublicensees and of GARDP for patients in need in the Territory.
(ii) the failure of the Sublicensee to diligently implement a Manufacturing Action Plan agreed in accordance with Section 5.3(e);
(iii) the failure of the Sublicensee to comply with GARDP’s or Shionogi’s reasonable requests under Sections 2.3(n) through (q) of the Shionogi License Agreement;
(iv) any failure by the Sublicensee to ensure compliance with relevant OFAC regulations under Section 3.8 of this Sublicense Agreement;
(v) the occurrence of any material safety issue that Shionogi or GARDP reasonably believes makes it inadvisable to proceed or continue with the Commercialization of the Licensed Product in the Territory;
(vi) without prejudice to Section 3.7, a cross border diversion of the Licensed Product whereby the Sublicensee uses, offers for sale, sells, or has sold Licensed Products for use in any country outside of the Territory, whether directly or indirectly or through a Third Party, located in or out of the Territory, except in cases where such diversion outside of the Territory results from the action of a Commercial Sublicensee without knowledge of the Sublicensee, and where the Sublicensee, upon becoming aware of such diversion, takes all appropriate action and uses diligent efforts to cause such diversion to cease;
(vii) any failure by the Sublicensee to comply with the quality requirements under Section 6.2 of this Sublicense Agreement for any Licensed Product Manufactured by Sublicensee;
(viii) the failure of the Sublicensee to diligently implement an Access Action Plan agreed in accordance with Section 3.3;
(ix) the occurrence of a direct or indirect Change of Control of the Sublicensee (with control having the meaning set out in the definition of Affiliate), unless Shionogi and GARDP have previously confirmed in writing that they would not terminate the Sublicense Agreement based on such change of control;
(x) in the event of any serious or intentional violation of any laws and regulations or misappropriation of a Third Party’s intellectual property rights by the Sublicensee anywhere in the world, which in GARDP’s or Shionogi’s judgment, may reflect unfavorably on GARDP or Shionogi, their reputation or the Licensed Product.
(b) GARDP may terminate this Sublicense Agreement without cause at any time upon a fifteen (15) month advance written notice given to the Sublicensee. If the effective date of termination were to occur during the first 5 years of commercialization of the Licensed Product in the Territory, Orchid will, in accordance with the principles relating thereto agreed by the Parties in writing, be entitled to a reimbursement by GARDP of the remaining balance (if any) of its capital expenditure investments specifically made to Manufacture Licensed Product, after deducting any grants or subsidies received and all recoupment fees received and/or depreciation amounts accrued for such investments by the Sublicensee.
12.4 Scope of termination. Except as otherwise expressly provided in this Sublicense Agreement, any termination of this Sublicense Agreement pursuant to this Section 12 will be as to all Licensed Compound and Licensed Product.
12.5 Effect of termination or expiration
(a) Upon termination or expiration of this Sublicense Agreement, all rights and licenses granted to the Sublicensee under Section 3 will terminate, and all rights, licenses and cross-references will revert to GARDP, and the Sublicensee will cease all use of the Sublicensed Rights and the Sublicensed Manufacturing Know-How ; provided, however, that Sublicensee may make use of the Sublicensed Rights and Sublicensed Manufacturing Know-How solely to perform its obligations under section 12.5 (c).
(b) Upon termination of this Sublicense Agreement, Sublicensee will immediately cease all Manufacturing of the Licensed Compound and/or Licensed Product, and upon GARDP’s request and with Shionogi’s prior written consent, Sublicensee will (x) sell to designated Customer(s), or (y) destroy at Sublicensee’s cost and expense, remaining Licensed Product and/or Licensed Compound.
(c) Upon termination of the Sublicense Agreement for any reason, GARDP retains the right to compel the Sublicensee to conduct a technical transfer to a Third Party manufacturer in accordance with Section 4.4.
(d) It is understood and agreed that GARDP will be entitled to specific performance as a remedy to enforce the provisions of this Section 12.5, in addition to any other remedy to which it may be entitled by applicable law.
(e) Neither Party will be relieved of any obligation that accrued prior to the effective date of termination.
The Parties acknowledge that the right of either Party to terminate this Sublicense Agreement is not intended to be an exclusive right and shall not preclude the right to claim damages in accordance with the terms of the Agreement for any breach of this License Agreement that occurred prior to the termination (including the breach that gave rise to the termination), or affect any other right or remedy available under applicable law to either of the Parties or to Shionogi.
12.6 Survival. The following provisions will survive termination or expiration of this Sublicense Agreement, as well as any other provisions which by their nature are intended to survive termination or expiration: Section 1 (as applicable), Sections 7.4, 7.5, 7.6, 8, 9, 10, 11, 12, 13 and 14.
12.7 Termination cooperation. Upon the termination or expiration of this Sublicense Agreement, the Parties will cooperate with one another to provide for an orderly wind-down of the transactions contemplated in this Sublicense Agreement, including as applicable an orderly management of any remaining inventory of the Licensed Compound and the Licensed Product in accordance with Section 12.5(b).