Common use of Development Budgets Clause in Contracts

Development Budgets. Subject to this Section 3.2(b) and Article IX, HEC shall be solely responsible for paying the Development Costs incurred by HEC to conduct the activities set forth in Appendix 2 of the Development Plan (“HEC’s Financial Responsibility”) and Lannett shall pay Thirty-Two Million U.S. Dollars ($32,000,000) for Development Costs (excluding HEC’s Financial Responsibility) pursuant to the following schedule: (a) Five Million U.S. Dollars ($5,000,000) at the earlier of (1) successful completion of manufacturing of a cGMP batch of Insulin Aspart, or (2) July 30, 2021, provided that such payment shall be fully refundable in the event HEC is unable to successfully complete manufacturing of a cGMP batch of Insulin Aspart; and (b) the remaining balance between Thirty-Two Million U.S. Dollars ($32,000,000) minus the amount paid by Lannett for Development activities plus the Five Million U.S. Dollars ($5,000,000) to be paid by Lannett to HEC in two equal payments, with the first payment occurring at the First Commercial Sale of the Product and the second payment occurring twelve (12) months after the first payment (“Lannett’s Financial Responsibility”).. Each Calendar Quarter, Lannett shall provide to HEC a written summary report of the Development activities conducted by Lannett in the previous Calendar Quarter pursuant to the Development Plan 121186093.v1 ​ (including the portion of Lannett’s Financial Responsibility expended in the previous Calendar Quarter) and the Parties shall arrange a mutually convenient time to discuss each such report. Until such time as Lannett has fulfilled Lannett’s Financial Responsibility, an annual budget (to be incurred by both parties) for the Product as provided in this Section 3.2(b) (the “Development Budget”) shall be prepared as follows: (x) before such time as Lannett has fulfilled Lannett’s Financial Responsibility, Lannett shall prepare the Development Budget (provided that, Lannett shall not be entitled to amend HEC’s Financial Responsibility) and (y) after such time Lannett has fulfilled Lannett’s Financial Responsibility, the Parties shall jointly prepare the Development Budget (provided that, neither party shall be entitled to amend Lannett’s Financial Responsibility or HEC’s Financial Responsibility). For Development Costs to be incurred from and after the Effective Date, the Parties will review and approve the Development Budget reasonably in advance of the applicable Development Costs being incurred (with the intent being to obtain such approval at least six (6) months in advance of such costs being incurred, where practicable). Thereafter, Lannett will update and provide HEC with a copy of the Development Budget, including the budgeted , each Calendar Year sufficiently in advance of the next Calendar Year so as to provide the Parties with an opportunity approve the Development Budget and to budget accordingly, but in any event no later than November 1st of each Calendar Year during the Term. HEC may request at any time that Lannett consider other updates to the Development Budget.

Development Budgets. Subject to this Section 3.2(b) and Article IX, HEC shall be solely responsible for paying the Development Costs incurred by HEC to conduct the activities set forth in Appendix 2 of the Development Plan (“HEC’s Financial Responsibility”) and Lannett ▇▇▇▇▇▇▇ shall pay up to Thirty-Two Million U.S. Dollars ($32,000,000) for Development Costs (excluding HEC’s Financial Responsibility) pursuant to the following schedule: (aDevelopment Plan, including those Out-of-Pocket Costs spent by ▇▇▇▇▇▇▇ beginning on April 1, 2018 set forth on Schedule 3.2(b) Five Million U.S. Dollars ($5,000,000) at the earlier of (1) successful completion of manufacturing of a cGMP batch of Insulin Aspart, or (2) July 30, 2021, provided that such payment shall be fully refundable in the event HEC is unable to successfully complete manufacturing of a cGMP batch of Insulin Aspart; and (b) the remaining balance between Thirty-Two Million U.S. Dollars ($32,000,000) minus the amount paid by Lannett for Development activities plus the Five Million U.S. Dollars ($5,000,000) to be paid by Lannett to HEC in two equal payments, with the first payment occurring at the First Commercial Sale of the Product and the second payment occurring twelve (12) months after the first payment (“Lannett▇▇▇▇▇▇▇’s Financial Responsibility”).. . Each Calendar Quarter, Lannett ▇▇▇▇▇▇▇ shall provide to HEC a written summary report of the Development activities conducted by Lannett ▇▇▇▇▇▇▇ in the previous Calendar Quarter pursuant to the Development Plan 121186093.v1 ​ (including the portion of Lannett▇▇▇▇▇▇▇’s Financial Responsibility expended in the previous Calendar Quarter) and the Parties shall arrange a mutually convenient time to discuss each such report. Until such time as Lannett ▇▇▇▇▇▇▇ has fulfilled Lannett▇▇▇▇▇▇▇’s Financial Responsibility, an annual budget (to be incurred by both parties) for the Product as provided in this Section 3.2(b) (the “Development Budget”) shall be prepared as follows: (x) before such time as Lannett ▇▇▇▇▇▇▇ has fulfilled Lannett▇▇▇▇▇▇▇’s Financial Responsibility, Lannett ▇▇▇▇▇▇▇ shall prepare the Development Budget (provided that, Lannett ▇▇▇▇▇▇▇ shall not be entitled to amend HEC’s Financial Responsibility) and (y) after such time Lannett ▇▇▇▇▇▇▇ has fulfilled Lannett▇▇▇▇▇▇▇’s Financial Responsibility, the Parties shall jointly prepare the Development Budget (provided that, neither party shall be entitled to amend Lannett▇▇▇▇▇▇▇’s Financial Responsibility or HEC’s Financial Responsibility). For Development Costs to be incurred from and after the Effective Date, the Parties will review and approve the Development Budget reasonably in advance of the applicable Development Costs being incurred (with the intent being to obtain such approval at least six (6) months in advance of such costs being incurred, where practicable). Thereafter, Lannett ▇▇▇▇▇▇▇ will update and provide HEC with a copy of the Development Budget, including the budgeted Shared Development Costs, each Calendar Year sufficiently in advance of the next Calendar Year so as to provide the Parties with an opportunity approve the Development Budget and to budget accordingly, but in any event no later than November 1st of each Calendar Year during the Term. HEC may request at any time that Lannett ▇▇▇▇▇▇▇ consider other updates to the Development Budget. Both parties will review and approve the portion of the Development Budget that qualifies as Shared Development Costs and any such update or any other amendment to the portion of the Development Budget that qualifies as Shared Development Costs. Subject to this Section 3.2(b), after ▇▇▇▇▇▇▇’s Financial Responsibility is expended on Development Costs in accordance with the Development Budget, all reasonable Direct Costs (including Out-of-Pocket Costs) arising from either Party’s conduct of Development with respect to the Product in accordance with the Development Plan and the Development Budget that qualify as Shared Development Costs shall be subject to the Development Cost Share pursuant to Section 9.1.