Common use of Milestone Payment Clause in Contracts

Milestone Payment. (a) Subject to the terms and conditions of this Agreement and in further consideration of the sale, conveyance, delivery, transfer and assignment of the Purchased Assets to Buyer and Seller’s other convents and obligations hereunder, Buyer shall make a one-time, non-refundable, non-creditable milestone payment of $20,000,000 to Seller upon the filing and acceptance of an NDA for, or other equivalent application to sell, a Product in the United States (the “Milestone Payment”). (b) Buyer shall notify Seller in writing within 10 Business Days after the achievement of the milestone described in Section 2.5(a) above by Buyer or any of its Affiliates, and Buyer shall pay Seller the Milestone Payment on the date the first milestone payment described under “Milestone Event” in Section 7.02(a) of the License Agreement is due, and in any event not later than 60 days after such notification to Seller. Payment of the Milestone Payment to Seller shall be made by wire transfer of immediately available funds to the account set forth on Schedule 2.1(b)(i) or otherwise specified in writing by Seller. (c) Notwithstanding anything to the contrary set forth in this Section 2.5, it is the intention of the Parties that the Exploitation of the Compound shall be exercised by Buyer and its Affiliates in accordance with their own business judgment and in their sole and absolute discretion. Accordingly, the following shall apply (and Seller hereby acknowledges, understands and agrees as follows): (i) Buyer and its Affiliates shall have complete control and sole discretion with respect to decisions concerning the Exploitation of the Compound and such control and discretion by Buyer and its Affiliates could result in Seller receiving no Milestone Payment whatsoever; (ii) neither Buyer nor any of its Affiliates has any duty to Exploit the Compound, to exert any level of efforts in Exploiting the Compound or to achieve the milestone described in Section 2.5(a) above; (iii) whether or not Buyer or any of its Affiliates Exploit the Compound, neither Buyer nor any of its Affiliates is prohibited from Exploiting any other compounds or products that may compete with the Compound, or prioritizing other compounds or products over the Compound; (iv) personnel of Buyer and its Affiliates are only required to take actions in connection with the Exploitation of the Compound that such personnel believe to be in the best interests of Buyer and its Affiliates and they are not required to take into account the interests of Seller at all; and (v) Seller shall not challenge in any subsequent Action any decision regarding the Exploitation of the Compound made by any director, officer, employee or agent of Buyer or any of its Affiliates in what such individual subjectively believes to be the best interests of Buyer (or such Affiliate), unless such Action constitutes a breach by Buyer of any of its express obligations to make the Milestone Payment under this Section 2.5. For the avoidance of doubt, any obligations assumed by Buyer relating to or arising out of the License Agreement shall have no effect on the foregoing provisions of this Section 2.5, and nothing herein, expressed or implied, shall give or be construed to give the Seller or any of its Affiliates any rights as a third party beneficiary of the License Agreement after the Closing.

Milestone Payment. (a) 2.5.1. Subject to the terms and conditions of this Agreement and in further consideration of the saleSection 2.5.2, conveyance, delivery, transfer and assignment of the Purchased Assets to Buyer and Seller’s other convents and obligations hereunder, Buyer shall make a one-time, non-refundable, non-creditable milestone payment of $20,000,000 to Seller upon the filing and acceptance of an NDA for, or other equivalent application to sell, a Product in the United States (the “Milestone Payment”). (b) Buyer shall notify Seller in writing within 10 [**] Business Days after the achievement occurrence of the milestone described in Section 2.5(a) above by Buyer or any First Commercial Sale of its Affiliatesthe Product (the “First Commercial Sale Date”), and Buyer shall pay Seller the Milestone Payment on the date the first milestone payment described under “Milestone Event” in Section 7.02(a) of the License Agreement is due, and in any event not later than 60 days after such notification to Seller. Payment of the Milestone Payment to Seller shall be made (by wire transfer of immediately available federal funds to the account set forth furnished by the Seller), without demand or offset, the Milestone Payment; provided, however, that the Buyer may, in its sole discretion, elect to defer payment of all or portion of the Milestone Payment for period of up to five years from the First Commercial Sale Date upon written notice thereof to the Seller and the execution and delivery to the Seller, within such [**] Business Day period, of promissory note in favor of the Seller in the form attached hereto as Exhibit 2.5.1 in the principal amount of the Milestone Payment being so deferred (the “Promissory Note”). 2.5.2. The Buyer shall have the option, in the Buyer’s sole discretion, exercisable at any time by the Buyer commencing on Schedule 2.1(b)(ithe Closing Date and expiring on the earlier of (i) or otherwise specified [**] days prior to the date on which [**] for the Product, and (ii) [**] months following the [**] for the Product (the “Buyout Period”) to make one-time payment to the Seller in the amount of $20,000,000 in cash in lieu of, and in full satisfaction of, its obligation to pay the Milestone Payment (the “Milestone Buyout”). In any case, Buyer shall, promptly after becoming aware thereof, notify Seller in writing by Seller. of the date that the events described in clauses (ci) Notwithstanding anything to the contrary set forth in and (ii) of this Section 2.5, it is the intention 2.5.2 occur. Upon exercise of the Parties that Milestone Buyout, in the Exploitation of the Compound shall be exercised by Buyer and its Affiliates Buyer’s sole election in accordance with their own business judgment the provisions of this Section 2.5.2, and payment in their sole and absolute discretion. Accordinglyfull in cash of the Milestone Buyout to the Seller, the following shall apply (and Seller hereby acknowledges, understands and agrees as follows): (i) Buyer and its Affiliates shall have complete control and sole discretion with respect to decisions concerning the Exploitation of the Compound and such control and discretion by Buyer and its Affiliates could result in Seller receiving no Milestone Payment whatsoever; (ii) neither Buyer nor any of its Affiliates has any duty to Exploit the Compound, to exert any level of efforts in Exploiting the Compound or to achieve the milestone described in Section 2.5(a) above; (iii) whether or not Buyer or any of its Affiliates Exploit the Compound, neither Buyer nor any of its Affiliates is prohibited from Exploiting any other compounds or products that may compete with the Compound, or prioritizing other compounds or products over the Compound; (iv) personnel of Buyer and its Affiliates are only required to take actions in connection with the Exploitation of the Compound that such personnel believe to be in the best interests of Buyer and its Affiliates and they are not required to take into account the interests of Seller at all; and (v) Seller shall not challenge in any subsequent Action any decision regarding the Exploitation of the Compound made by any director, officer, employee or agent of Buyer or any of its Affiliates in what such individual subjectively believes to be the best interests of Buyer (or such Affiliate), unless such Action constitutes a breach by Buyer of any of its express Buyer’s obligations to make the Milestone Payment under this Section 2.52.5.1 shall automatically terminate and shall no longer be deemed due or payable by the Buyer. 2.5.3. For Subject to Section 12.2, if, after the avoidance of doubtClosing, and if any obligations assumed by Buyer relating to or arising out portion of the License Agreement shall have no effect on the foregoing provisions of this Section 2.5Purchase Price remains unpaid, and nothing herein, expressed or implied, shall give or be construed to give the Seller Buyer or any of its Affiliates permitted successors or assigns (a) effects Change of Control, or (b) sells, exclusively licenses, or otherwise transfers, or causes the Company to sell, exclusively license or otherwise transfer, all or substantially all of its or the Company’s rights, title and interest in and to the Product (a “Product Transfer”), such transaction shall be made only with Qualified Successor, except that such transaction may be made with Person that is not Qualified Successor with the Seller’s prior written consent; provided, however, that if the Buyer or any rights as a third party beneficiary of its permitted successors or assigns requests and receives such consent from the Seller, the per annum interest rate on the Promissory Note shall automatically increase to fourteen percent (14%). If permitted Change of Control or other permitted Product Transfer occurs pursuant to the foregoing sentence, the permitted acquirer or successor shall unconditionally assume all of the License Agreement after Buyer’s obligations under this Agreement, including the Closing.obligations set forth in Section 2.5, Section 6.8, and Section 6.9. As used in this Section, a “Qualified Successor” means Person having:

Milestone Payment. (a) Subject to If during any calendar year beginning with the terms calendar year in which the Closing occurs and conditions of this Agreement and in further consideration ending with the calendar year ending December 31, 2029 (the “Milestone Period”), Net Sales of the sale, conveyance, delivery, transfer and assignment Assigned Collaboration Products equal or exceed $5,000,000,000 (irrespective of the Purchased Assets to Buyer and Seller’s other convents and obligations hereunder, Buyer shall make a one-time, non-refundable, non-creditable milestone payment amount of $20,000,000 to Seller upon the filing and acceptance of an NDA forTrelegy Royalty actually paid or payable), or other equivalent application to sellthe Trelegy Royalty received by Purchaser or its Affiliates or designees or successors equals or exceeds *redacted*, a Product the Purchaser shall pay the Seller $50,000,000 in the United States cash (the “Milestone Payment”) in accordance with Section 2.4(e) below. For the avoidance of doubt, (i) the Milestone Payment shall be payable only once (if ever) during the term of this Agreement and (ii) any sale proceeds determined to be Net Sales, or any amounts that comprise Trelegy Royalty received after the calendar year during which the applicable sales occurred, including (A) any determination of Net Sales, or any payments received, a result of an audit of GSK, (B) delayed payments, (C) any determination that sale proceeds represent Net Sales or payments in lieu of Trelegy Royalty (whether by settlement, litigation or otherwise), and (D) amounts deemed to be Trelegy Royalty actually received by the Purchaser pursuant to Section 2.4(b) below, will be deemed to be Net Sales or amounts comprising Trelegy Royalty (as applicable) in respect of the calendar year during which the applicable sales giving rise to such Trelegy Royalty occurred for purposes of evaluating whether the Milestone Payment is payable in accordance with this Section 2.4. In the event that the Milestone Payment is payable, a “Milestone Event” shall be deemed to have occurred. (b) Buyer shall notify Seller in writing within 10 Business Days after In the achievement event that the Purchaser does not actually receive any Trelegy Royalty that is payable by GSK pursuant to the Collaboration Agreement with respect to the Milestone Period, to the extent resulting from (i) the Purchaser’s (or any of its Affiliates’) breach of the milestone described in Section 2.5(aCollaboration Agreement, (ii) above by Buyer any other finally adjudicated, settled or otherwise resolved dispute, (iii) any arrangement between the Purchaser or any of its Affiliates, on the one hand, and Buyer GSK or any of its Affiliates, or any of its or their licensees and sublicensees, on the other hand, or (iv) an act or omission of the Purchaser or any of its Affiliates, then any Trelegy Royalty withheld by GSK as a result thereof will be deemed a Trelegy Royalty actually received with respect to the applicable calendar year and added to any other applicable Trelegy Royalty for purposes of such applicable calendar year, for purposes of determining whether the Minimum Royalty Threshold has been met (any of the foregoing in Section 2.4(b)(i), (ii) or (iii), a “Withheld Trelegy Royalty”). (c) In the event of any Trelegy Royalty that is payable but not timely paid by GSK, the Purchaser shall pay notify the Seller of such and reasonably describe the withheld amount and material information regarding such withholding, within ten (10) Business Days following receipt of such payment, and, upon the written request of the Seller, the Purchaser shall reasonably cooperate with the Seller and provide reasonable details relating to such Withheld Trelegy Royalty to ascertain whether the Trelegy Royalty constitutes a Withheld Trelegy Royalty, subject to any confidentiality obligations to GSK (as such obligations are modified by the Master Consent and the Theravance Master Consent). (d) The Seller hereby agrees and acknowledges that the Milestone Payment on is a contingent payment obligation of the date Purchaser and there can be no assurance regarding the first milestone payment described under “occurrence of the Milestone Event” in Section 7.02(a. Without limiting the foregoing, the Purchaser covenants and agrees that: (i) it will not take any action, or fail to take any action with the intent or purpose that such action or inaction would have the effect of making it materially less likely for the Milestone Event to occur; (ii) until the expiration of the License Agreement is due, Milestone Period and in any event not later than 60 days after such notification to Seller. Payment the payment of the Milestone Payment (if payable) or the final determination that no Milestone Event has occurred during the Milestone Period, Purchaser shall not sell, assign or otherwise transfer, or grant any Lien upon or otherwise encumber, directly or indirectly, the equity interests in the Company, the Company’s right to the Royalty or any other rights under the Collaboration Agreement (any such transaction, a “Royalty Transfer”), unless Purchaser can establish to the satisfaction of the Seller (acting reasonably and in good faith) that the Purchaser has sufficient liquid assets to satisfy the Milestone Payment if due and that Seller’s rights to the Milestone Payment are not otherwise materially harmed by such transaction; it being understood and agreed that in the event of any Royalty Transfer made or proposed in violation of the foregoing, Seller shall be made immediately entitled to payment of the Milestone Payment and shall further be entitled to an injunction or other equitable relief (including a temporary restraining order) enjoining such Royalty Transfer until the Milestone Payment is paid; (iii) until the expiration of the Milestone Period and the payment of the Milestone Payment (if payable) or the final determination that no Milestone Event has occurred during the Milestone Period, Purchaser shall (A) provide to Seller on annual basis, a written report setting forth in reasonable detail the Net Sales, Royalty and withheld Royalty during the preceding and the current calendar year, and a summary of any dispute or disagreements with GSK regarding the calculation of Net Sales or the Royalty, (B) provide to Seller any information reasonably requested in connection with Seller’s evaluation of whether a Milestone Event has occurred, (C) use commercially reasonable efforts to prevent any limitation on the ability of Purchaser and its Affiliates to share information regarding Net Sales and the Royalty with Purchaser for purposes of this Section 2.4; and (iv) for purposes of this Section 2.4 only, any amendment after the Closing to the definition of Net Sales or the terms, provisions or procedures with regard to the determination of Net Sales and payment of the Royalty that would have the effect of reducing the likelihood that a Milestone Event shall occur shall be disregarded, and such terms, provisions and procedures in effect immediately prior to the Closing shall be deemed effective in connection with any determination under this Section 2.4. (e) The Milestone Payment owed to the Seller by the Purchaser in accordance with this Section 2.4 shall be paid to the Seller by wire transfer of immediately available funds to the account set forth specified by the Seller in a writing delivered to the Purchaser in accordance with Section 9.3 of this Agreement within ten (10) Business Days following receipt of the applicable Net Sales Report(s) by the Purchaser, or receipt of other reasonable evidence by the Purchaser, evidencing the occurrence of the Milestone Event. A late fee of four percent (4%) over the Prime Rate (calculated on Schedule 2.1(b)(ia per annum basis) or otherwise specified in writing by Sellerwill accrue on all unpaid amounts with respect to any Milestone Payment from the date such obligation was due. (cf) Notwithstanding anything to the contrary set forth Any dispute or disagreement in respect of this Section 2.5, it is the intention of the Parties that the Exploitation of the Compound 2.4 shall be exercised by Buyer and its Affiliates resolved in accordance with their own business judgment and in their sole and absolute discretion. Accordingly, the following shall apply (and Seller hereby acknowledges, understands and agrees as follows): (i) Buyer and its Affiliates shall have complete control and sole discretion with respect to decisions concerning the Exploitation of the Compound and such control and discretion by Buyer and its Affiliates could result in Seller receiving no Milestone Payment whatsoever; (ii) neither Buyer nor any of its Affiliates has any duty to Exploit the Compound, to exert any level of efforts in Exploiting the Compound or to achieve the milestone described in Section 2.5(a) above; (iii) whether or not Buyer or any of its Affiliates Exploit the Compound, neither Buyer nor any of its Affiliates is prohibited from Exploiting any other compounds or products that may compete with the Compound, or prioritizing other compounds or products over the Compound; (iv) personnel of Buyer and its Affiliates are only required to take actions in connection with the Exploitation of the Compound that such personnel believe to be in the best interests of Buyer and its Affiliates and they are not required to take into account the interests of Seller at all; and (v) Seller shall not challenge in any subsequent Action any decision regarding the Exploitation of the Compound made by any director, officer, employee or agent of Buyer or any of its Affiliates in what such individual subjectively believes to be the best interests of Buyer (or such Affiliate), unless such Action constitutes a breach by Buyer of any of its express obligations to make the Milestone Payment under this Section 2.5. For the avoidance of doubt, any obligations assumed by Buyer relating to or arising out of the License Agreement shall have no effect on the foregoing provisions of this Section 2.5, and nothing herein, expressed or implied, shall give or be construed to give the Seller or any of its Affiliates any rights as a third party beneficiary of the License Agreement after the Closing9.

Milestone Payment. (a) 2.5.1. Subject to the terms and conditions of this Agreement and in further consideration of the saleSection 2.5.2, conveyance, delivery, transfer and assignment of the Purchased Assets to Buyer and Seller’s other convents and obligations hereunder, Buyer shall make a one-time, non-refundable, non-creditable milestone payment of $20,000,000 to Seller upon the filing and acceptance of an NDA for, or other equivalent application to sell, a Product in the United States (the “Milestone Payment”). (b) Buyer shall notify Seller in writing within 10 [**] Business Days after the achievement occurrence of the milestone described in Section 2.5(a) above by Buyer or any First Commercial Sale of its Affiliatesthe Product (the “First Commercial Sale Date”), and Buyer shall pay Seller the Milestone Payment on the date the first milestone payment described under “Milestone Event” in Section 7.02(a) of the License Agreement is due, and in any event not later than 60 days after such notification to Seller. Payment of the Milestone Payment to Seller shall be made (by wire transfer of immediately available federal funds to the account set forth furnished by the Seller), without demand or offset, the Milestone Payment; provided, however, that the Buyer may, in its sole discretion, elect to defer payment of all or portion of the Milestone Payment for period of up to five years from the First Commercial Sale Date upon written notice thereof to the Seller and the execution and delivery to the Seller, within such [**] Business Day period, of promissory note in favor of the Seller in the form attached hereto as Exhibit 2.5.1 in the principal amount of the Milestone Payment being so deferred (the “Promissory Note”). 2.5.2. The Buyer shall have the option, in the Buyer’s sole discretion, exercisable at any time by the Buyer commencing on Schedule 2.1(b)(ithe Closing Date and expiring on the earlier of (i) or otherwise specified [**] days prior to the date on which [**] for the Product, and (ii) [**] months following the [**] for the Product (the “Buyout Period”) to make one-time payment to the Seller in the amount of $20,000,000 in cash in lieu of, and in full satisfaction of, its obligation to pay the Milestone Payment (the “Milestone Buyout”). In any case, Buyer shall, promptly after becoming aware thereof, notify Seller in writing by Seller. of the date that the events described in clauses (ci) Notwithstanding anything to the contrary set forth in and (ii) of this Section 2.5, it is the intention 2.5.2 occur. Upon exercise of the Parties that Milestone Buyout, in the Exploitation of the Compound shall be exercised by Buyer and its Affiliates Buyer’s sole election in accordance with their own business judgment the provisions of this Section 2.5.2, and payment in their sole and absolute discretion. Accordinglyfull in cash of the Milestone Buyout to the Seller, the following shall apply (and Seller hereby acknowledges, understands and agrees as follows): (i) Buyer and its Affiliates shall have complete control and sole discretion with respect to decisions concerning the Exploitation of the Compound and such control and discretion by Buyer and its Affiliates could result in Seller receiving no Milestone Payment whatsoever; (ii) neither Buyer nor any of its Affiliates has any duty to Exploit the Compound, to exert any level of efforts in Exploiting the Compound or to achieve the milestone described in Section 2.5(a) above; (iii) whether or not Buyer or any of its Affiliates Exploit the Compound, neither Buyer nor any of its Affiliates is prohibited from Exploiting any other compounds or products that may compete with the Compound, or prioritizing other compounds or products over the Compound; (iv) personnel of Buyer and its Affiliates are only required to take actions in connection with the Exploitation of the Compound that such personnel believe to be in the best interests of Buyer and its Affiliates and they are not required to take into account the interests of Seller at all; and (v) Seller shall not challenge in any subsequent Action any decision regarding the Exploitation of the Compound made by any director, officer, employee or agent of Buyer or any of its Affiliates in what such individual subjectively believes to be the best interests of Buyer (or such Affiliate), unless such Action constitutes a breach by Buyer of any of its express Buyer’s obligations to make the Milestone Payment under this Section 2.52.5.1 shall automatically terminate and shall no longer be deemed due or payable by the Buyer. 2.5.3. For Subject to Section 12.2, if, after the avoidance of doubtClosing, and if any obligations assumed by Buyer relating to or arising out portion of the License Agreement shall have no effect on the foregoing provisions of this Section 2.5Purchase Price remains unpaid, and nothing herein, expressed or implied, shall give or be construed to give the Seller Buyer or any of its Affiliates permitted successors or assigns (a) effects Change of Control, or (b) sells, exclusively licenses, or otherwise transfers, or causes the Company to sell, exclusively license or otherwise transfer, all or substantially all of its or the Company’s rights, title and interest in and to the Product (a “Product Transfer”), such transaction shall be made only with Qualified Successor, except that such transaction may be made with Person that is not Qualified Successor with the Seller’s prior written consent; provided, however, that if the Buyer or any rights as a third party beneficiary of its permitted successors or assigns requests and receives such consent from the Seller, the per annum interest rate on the Promissory Note shall automatically increase to fourteen percent (14%). If permitted Change of Control or other permitted Product Transfer occurs pursuant to the foregoing sentence, the permitted acquirer or successor shall unconditionally assume all of the License Agreement after Buyer’s obligations under this Agreement, including the Closingobligations set forth in Section 2.5, Section 6.8, and Section 6.9. As used in this Section, a “Qualified Successor” means Person having: (a) market capitalization in excess of $[**] (or in the case of privately held company, valuation of its total outstanding equity securities based on its most recently completed arms-length equity financing or an independent valuation of its equity pursuant to Rule 409A under the Internal Revenue Code, in excess of $[**]; and (b) a tangible net worth in excess of $[**]; and (c) a debt to equity ratio of no more than [**].