Common use of Diligence Failures Clause in Contracts

Diligence Failures. (a) If Company envisages that it will fail to meet one of the obligations under Section 3.1, it will notify Hospital at least three (3) months before the respective obligation is due. Following Hospital’s receipt of such notice, the Parties will, in good faith, negotiate regarding Hospital granting an extension of the dates for the obligations set forth under Section 3.1. If Hospital grants an extension of diligence milestones such that FDA submission contemplated by Section 3.1(a)(iv) happens beyond [***], then diligence extension milestone fees as described below will be due upon FDA approval. (i) 1 year delay [***]; (ii) 2 year delay [***] (i.e., [***] for 2nd year of failure, if [***] for 1st year of extension has already been paid); (iii) 3 year delay [***] (i.e., [***] for 3rd year of failure, if [***] for 1st year of extension and [***] for 2nd year of extension has already been paid); and (iv) >3 years, royalty on Net Sales would equal [***] in addition to these above payment obligations. (b) Hospital’s determination regarding granting the above mentioned diligence extensions, as well as Hospital’s right to terminate this Agreement in the event that Company fails to meet any of its obligations under Section 3.1 shall be guided by the level of continued commitment by Company to bring a Product or Process to the market, the ability of Company relative to alternate opportunities available to Hospital to bring Products and Processes to the market to benefit patients, and by the level investment of money that Company has made in Hospital’s Patent Rights. (c) Subject to Section 3.2(b), if Hospital determines that Company has failed to fulfill any of its obligations under Section 3.1, then Hospital may treat such failure as a default and may terminate this Agreement and/or any license granted hereunder in accordance with Section 10.4.