Provision Language
4.0 EXPLOITATION OF LICENSED RIGHTS
4.1 Business Plan. The Company shall submit a business plan to Canada by no later than December 31, 2017, containing Company’s then-current development plans for the Licensed Products and commercial plans. Company shall provide Canada with an update to the business plan at least once every twelve (12) months to reflect Company’s then-current plans. Canada shall have the right to request amendments to the business plan in order to ensure maximum commercial return to the Company and Canada in accordance with this Article 4 (Exploitation of Licensed Rights). The Company shall use commercially reasonable efforts to ensure that the business plan submitted to Canada pursuant to this section 4.1 includes Merck’s (and its affiliates’ and sub-licensees’) then-current development plans for the Licensed Products and, if available, commercial plans.
4.2 Disclosure Requirements. The business plan shall provide sufficient detail to show how the Company plans to diligently research, Develop and promote and make commercially reasonable efforts to Commercialize. This business plan shall also disclose any
4.2.1 distribution and agency arrangements contemplated by the Company;
4.2.2 market studies pertinent to the Licensed Rights;
4.2.3 pro forma financial statements of sufficient detail to allow a thorough financial analysis of the Company’s assumptions, projected revenue streams and costs.
4.3 Continuing Disclosure. During the term of the License Agreement, the Company shall promptly provide to Canada any amendments or updates to the business plan.
6.0 RECORDS AND AUDIT
6.1 Records Maintenance. The Company shall keep true and accurate records and maintain such records relating to Commercialization and all other obligations of the Company under the License Agreement during the term of the License Agreement and for ten (10) years following the termination or expiration of the License Agreement.
6.2 Record Type. For greater clarity and without limiting the generality of the foregoing, records cited in paragraph 6.1 (Records) shall comprehensively address:
6.2.1 financial, business, manufacturing and technical support, including without limitation sales reports, inventory reports, subcontractor and distributor agreements, tax returns, catalogues, price lists, shipping records, invoice registers, invoices, financial statements and ledgers; and
6.2.2 quality standards and monitoring reports and records.
6.3 Records, Access to those held by Off-Site Professionals. The Company irrevocably authorizes its independent accountants, KPMG LLP, to provide to Canada’s independent accountants any information it may have with respect to the Commercialization.
6.4 Audit Document Right. Upon the written request of Canada and with at least fifteen (15) calendar days prior notice, the Company shall permit an independent accountant, retained by Canada, to inspect all relevant records (whether held internally by the Company or at the offices of professional advisors or elsewhere) in order to ascertain the accuracy of such royalties, reports and Commercialization efforts. Such inspections shall be during business hours and in a manner that does not unduly disrupt the Company’s business. The Company shall allow the accountant to make any necessary copies of the records that the independent accountant deems fit.
6.5 Audit Interview Right. In addition to the rights in paragraph 6.4, upon the written request of Canada, the Company shall allow the independent accountant to interview key personnel of the Company. The independent accountant, in its unfettered discretion, shall determine who the key personnel are for the purposes of the interview. The Company acknowledges that the independent accountant may have more than one interview with key personnel.
6.6 Audit Confidentiality. The independent accountants retained by Canada shall inform Canada whether the Company has complied with its obligations under the License Agreement, including without limitation whether all royalties and consideration due and payable were paid as prescribed to Canada and marketing efforts and any inaccuracies in such payments. Subject to the information contained in the foregoing audit reports, the independent accountants shall neither reveal to Canada any of the Company’s internal documentation or records, nor disclose any notes or copies of the Company’s records made by the independent accountants, excluding anything necessary for the report.
6.7 Duration. The auditing and verification provisions herein shall continue for 10 years following the expiry or termination of this License Agreement.
6.8 No Waiver. Any royalty payment or report accepted by Canada shall not constitute a waiver by or estoppel against Canada concerning the contractual right to audit the Company, and Canada shall continue to have the right to audit as prescribed in the License Agreement. Furthermore, an audit shall not preclude Canada from conducting subsequent audit or audits.
6.9 Discrepancy Percentage. With respect to the earned royalties (paragraph 5.2, Royalty Rate; paragraph 5.4, Sub-License Fees) in the event of any discrepancy uncovered by the audit, in excess of five percent (5.0%) of the amounts paid during the audited period, the Company shall pay forthwith to Canada both the discrepancy and the cost of the audit. Overpayments shall be credited against the next payment due by the Company to Canada.
6.10 Breach of Records Audit Article Material. The record and audit requirements are a material term of the License Agreement.
7.0 REPORTS & QUALITY CONTROL
7.1 Report – Commercialization & Marketing. The Company shall, on or before the 45th day following each calendar quarter, during the term hereof and any renewal, submit to Canada written reports as to the Company’s activities with respect to the exercise of Licensed Rights during the preceding twelve (12) months. Such reports shall contain:
7.1.1 a description of the steps taken by the Company to Develop and Commercialize and sub-license;
7.1.2 a description of the marketing conditions for the products or processes created by the exercise of the Licensed Rights; and
7.1.3 a report on the production, use and sales of the products or processes created by the exercise of the Licensed Rights.
7.2 Report – Officer’s Certificate. The report from the Company shall also contain a certificate from either the CEO or CFO of the Company attesting to the fact that the Company has been using commercially reasonable efforts to Develop And Commercialize the products or processes created by the exercise of the Licensed Rights and that Commercialization is a material and active element of the Company’s business.
7.3 Report – Audited Statement & Remittances. In addition to the requirements of paragraphs 7.1 (Report Contents – General) and paragraph 7.2 (Report – Officer’s Certificate), the report from the Company to Canada shall also contain an audited statement, which includes, without limitation:
7.3.1 an audited statement, including the amount of the products or processes created by the exercise of Licensed Rights sold by the Company and the amount of royalties or other consideration payable;
7.3.2 the names and addresses of all Affiliates and sub-licensees to whom the Licensed Rights has been sub-licensed;
7.3.3 a full account of all revenues generated by such Affiliates and sub-licenses, including the amount of products or processes created by the exercise of Licensed Rights sold;
7.3.4 a calculation of the amount due to Canada for the royalties and consideration as stipulated herein as required under paragraphs 2.5 (Sublicensing Conditions) and paragraph 2.6 (Sub-licensee Consideration); and
7.3.5 subject to paragraph 5.7 (Payment to Canada) any remittances then payable to Canada, payable to the Receiver General for Canada, of the amount of royalties or other consideration so payable.
7.4 Report – Quality Control. In addition to the foregoing, the report shall also contain internal audit results, conducted quarterly, showing the quality standards of the products or processes created by the exercise of the Licensed Rights at all production sites and at the major sale or distribution sites.
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7.8 Annual Report. The Company shall, on or before the 31st day of May of each calendar year, during the term hereof and any renewal, submit to Canada a copy of:
7.8.1 the Company’s certified financial statements and evidence of renewal of the Company’s insurance policy under section 13 of the License Agreement;
7.8.2 the Company’s annual reports to shareholders; and
7.8.3 material revisions to the Company’s business plan.
7.9 Annual Meeting. The Company shall, on the 121st day of each calendar year, during the term of the License Agreement and any renewal, meet with Canada to provide a progress report on the activities carried out by the Company under the License Agreement.
7.10 Material terms. The reporting and quality requirements and audit rights are a material term of the License Agreement.
7.11 Non-Application of Article 7 to Merck. The Company may exempt its sub-licensee Merck (and its affiliates and sub-licensees) from the application of Article 7. If the Company provides such an exemption, it shall provide to Canada copies of reports provided by Merck (or its affiliates or sub-licensees) to the Company. Canada shall keep all such reports confidential in accordance with Article 11.
8.0 OWNERSHIP OF TECHNOLOGY / IMPROVEMENTS
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8.5 Company Improvements – Disclosure. The Company shall:
8.5.1 disclose to Canada forthwith all Improvements, innovations and discoveries Developed or created by or on behalf of the Company, solely or jointly with others (including Affiliates and sub-licensees), that are related to the Licensed Rights, together with any Intellectual Property rights residing therein; and
8.5.2 cause its sub-licensee, Merck to disclose to Canada (directly or through the Company) all Improvements, innovations and discoveries:
i) Developed or created by or on behalf of Merck, solely or jointly with others (including Merck’s affiliates, sub-sub-licensees and Merck Ordinary Course Sublicensees); and
ii) that are related to the Licensed Rights, together with any Intellectual Property rights residing therein.
Such disclosures shall be made no later than sixty (60) calendar days from the date the Improvements, innovations and discoveries have been disclosed within Merck by the inventors by written memorandum pursuant to Merck’s internal procedures for the disclosure of inventions and discoveries. Canada shall keep all such disclosures confidential in accordance with Article 11.