CONFIDENTIAL TREATMENT REQUESTED UNDER RULE 24B-2
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
[*****] INDICATES OMITTED MATERIAL THAT IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST FILED SEPARATELY WITH THE COMMISSION. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE COMMISSION.
Payments and Reports. Lilly shall calculate all amounts payable to ACI pursuant to Section 7.2
and Section 7.3 at the end of each Calendar Quarter. Lilly shall pay to ACI the royalty amounts due with respect to
a given Calendar Quarter within sixty (60) days after the end of such Calendar Quarter. Each payment of royalties due to ACI shall
be accompanied by a statement of the amount of Net Sales of each Licensed Product in each country in the Territory during the
applicable Calendar Quarter and a calculation of the amount of royalty payment due on such Net Sales for such Calendar Quarter.
to Section 3.2 and this Section 7.6, Lilly shall reimburse ACI for its Development Costs incurred after the Effective
Date in connection with the performance of Joint Development Activities in accordance with the applicable Development Plan, (i)
except for the ACI Pre-Clinical and Phase 1 Activities, for which ACI shall bear all Development Costs (subject to Lilly’s
assumption of responsibility for the ACI Pre-Clinical and Phase 1 Activities in accordance with Section 3.1.2(iii), in which
case Lilly shall bear such Development Costs), or (ii) unless otherwise agreed by the Parties and set forth in the applicable
Development Plan. ACI shall record and account for its FTE efforts with respect to each Licensed Product to the extent that such
FTE efforts are included in Development Costs in accordance with the applicable Development Plan and shall report such FTE efforts
to the JSC [*****]. ACI shall calculate and maintain records of FTE efforts incurred by it consistent with past practice and in
the same manner as used for other products developed by ACI, unless otherwise agreed by the Parties in writing. [*****].
shall promptly inform Lilly upon ACI determining that it is likely to overspend or underspend by more than [*****] of its Development
Costs for an activity versus the amount agreed upon by the Parties as the budget for such activity (in the Development Plan or
otherwise in writing). If ACI exceeds its budgeted costs and expenses by more than [*****] for an activity, it shall provide to
Lilly an explanation for such overspend. Any overspend of ACI beyond the Development Costs allocated to ACI under the Development
Plan shall be borne by ACI and shall be excluded from Development Costs hereunder, except to the extent such overspend (i) is
less than or equal to [*****] of the budgeted costs and expenses for such activity, as set forth in the applicable Development
Plan, or (ii) (a) was outside the reasonable control of ACI and not caused by the negligence or willful misconduct of, or breach
of this Agreement by, ACI or a failure of ACI to adequately supervise a Third Party performing such activities, (b) was the subject
of a timely notice to Lilly pursuant to this first sentence of this Section 7.6.2 and (c) is the subject of reasonable efforts
by ACI to mitigate the size of such overspend.