Echo/MTIA splits
7.1 Reimbursement for Development Costs. Upon the earlier of (i) Approval of the Product by CFDA; or (ii) termination of this Agreement by Echo pursuant to Section 11.3 (the “Reimbursement Date”), Echo shall reimburse MTIA for Project specific out-of-pocket costs incurred by MTIA in the performance of development activities for the Project to obtain CFDA Approval in China, up to a maximum of One Million Five Hundred Thousand dollars ($1,500,000) (the “Reimbursement Amount”), in the form of common stock of Echo, valued at the NASDAQ closing price on the date just prior to the Effective Date, provided that in order to be eligible for reimbursement by Echo such costs must be approved in writing by the JSC in advance of MTIA incurring such costs. Within thirty (30) days of the Reimbursement Date, Echo shall deliver to MTIA a stock certificate, issued in the name of MTIA, evidencing an amount of shares of the common stock of Echo, having an aggregate value equal to the Reimbursement Amount.
7.2 Commercialization Splits. Echo and MTIA shall split all Net Sales of the Product within the Licensed Territory, following the first commercial sale of the Product in the Licensed Territory, on the following basis: (i) seventy percent (70%) to MTIA and thirty percent (30%) to Echo on aggregate Net Sales less than or equal to One Hundred Million dollars ($100,000,000); and (ii) sixty percent (60%) to MTIA and forty percent (40%) to Echo on aggregate Net Sales greater than One Hundred Million dollars ($100,000,000).
7.3 Payments and Reporting.
7.3.1 Beginning with the Calendar Quarter in which the first commercial sale of a Product is made in the Licensed Territory, and for each Calendar Quarter thereafter, payments shall be made to Echo within forty-five (45) days following the end of each such Calendar Quarter. MTIA shall provide a report, on a monthly basis, summarizing, total unit sales, gross sales and total Net Sales during the relevant month (including an itemization of the deductions applied to such gross sales to derive such Net Sales), the cumulative Net Sales from the first commercial sale through such month, and the calculation of payments due thereon. In the event that payments are due in respect of a given Calendar Quarter, MTIA shall submit a report so indicating.
7.3.2 All other payments to be made under this Agreement shall be made in accordance with the terms set forth in the applicable Section(s) regarding such payments.
7.4 Mode of Payment. All payments required under this Agreement shall be made by MTIA in U.S. Dollars, via wire transfer of immediately available funds as directed by Echo from time to time. All such payments shall be without deduction of any out-of-pocket transfer costs or fees. For the sake of clarity, MTIA shall be responsible for collecting all payments due from its Affiliates and Distributors with respect to sales of Products by such Affiliates and Distributors and remitting such applicable payments to Echo.
7.5 Late Payments. All payments payable under this Article 7 not made when due shall bear interest, calculated from the date such payment was due, at the annual rate of the Bank Prime Loan rate plus one percent (1%) as quoted in Federal Reserve Bulletin H.15 or a successor bulletin thereto, from time to time. Further, if the initial payments are not paid within fifteen (15) days after the due date, MTIA will be deemed to have breached and defaulted in the performance of a material provision of this Agreement and such breach shall be subject to Section 11.2.
7.6 Records Retention.
7.6.1 Commencing with the first commercial sale of Product in the Licensed Territory, MTIA shall keep complete and accurate records pertaining to: (i) the sale of each Product, including gross sales of each Product and the deductions used to calculate Net Sales in sufficient detail to permit Echo to confirm the accuracy of the amounts paid by MTIA under this Agreement; and (ii) the information used to calculate the sales price for the Product in sufficient detail to permit Echo to confirm the accuracy of the statement provided by MTIA pursuant to Section 7.3.1; in each case, for a period not less than three (3) calendar years after the year in which such sales occurred.
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