Common use of Royalty and Milestone Payments Clause in Contracts

Royalty and Milestone Payments. 7.1 In consideration of the rights granted under this Agreement, the Licensee shall pay Shire (or its nominee) the non-creditable and non-refundable sum of US$3 million within 3 Business Days from the Effective Date and the non-creditable and non-refundable sum of US$1 million within 5 Business Days of the first anniversary of the Effective Date, in accordance with the Milestone Payment Terms. 7.2 Upon the occurrence of each Milestone Event, the corresponding non-refundable Milestone Payment shall be made by the Licensee to Shire in accordance with the Milestone Payment Terms. For the avoidance of doubt, each Milestone Payment shall be made no more than once with respect to the achievement of a Milestone Event, but shall be payable the first time the Milestone Event is achieved. [...***...]% of any development Milestone Payments (but not sales Milestone Payments) shall be creditable against royalties due to Shire under sub-clauses 7.3(a), 7.3(b), 7.3(c), 7.3(d) (but not royalties under sub-clause 7.3(e)), and if applicable, sub-clauses 7.4(a), 7.4(b), 7.4(c), 7.4(d) (but not royalties under sub-clause 7.4(e)), provided that, in no event will the credit for such development Milestone Payments reduce the royalties payable to Shire in any Quarter by more than [...***...]%. Any amount that has not been so credited 15 ***CONFIDENTIAL TREATMENT REQUESTED may be credited against royalties due in subsequent Quarters, subject to the limitation described in the previous sentence. For the avoidance of doubt, upon expiry or termination of this Agreement, Shire shall not be liable to the Licensee for any credit amount accrued and not credited. 7.3 Subject to clauses 7.4, 7.7(b) and 8.2, during the term of this Agreement, the Licensee shall pay Shire: (a) a royalty of [...***...]% of the first US$[...***...] of Net Sales of the Licensed Product in the Territory in any calendar year; (b) a royalty of [...***...]% of any Net Sales in excess of US$[...***...] and up to US$[...***...] in the Territory in any calendar year; (c) a royalty of [...***...]% of any Net Sales in excess of US$[...***...] and up to US$[...***...] in the Territory in any calendar year; (d) a royalty of [...***...]% of any Net Sales in excess of US$[...***...] in the Territory in any calendar year; and (e) any royalties or other payments to be made by Shire or its Affiliates under the License Agreement or the Consultancy Agreement, incurred after the Effective Date, other than payments under Articles 4.5 and 4.6 of the License Agreement. [...***...]% of any payments made by the Licensee for milestone payments properly paid by the Licensee under Article 4.2(c) of the License Agreement shall be creditable against royalties in accordance with clause 7.2 above. 7.4 At any time during calendar year [...***...], Licensee shall have the right to pay to Shire the non-creditable and non-refundable sum of US$[...***...] in accordance with the Milestone Payment Terms and in such event, Licensee shall have no obligation to make any payments to Shire under clause 7.3, but instead shall pay Shire the following: (a) a royalty of [...***...]% of the first US$[...***...] of Net Sales of the Licensed Product in the Territory in any calendar year; (b) a royalty of [...***...]% of any Net Sales in excess of US$[...***...] and up to US$[...***...] in the Territory in any calendar year; (c) a royalty of [...***...]% of any Net Sales in excess of US$[...***...] and up to US$[...***...] in the Territory in any calendar year; (d) a royalty of [...***...]% of any Net Sales in excess of US$[...***...] in the Territory in any calendar year; and (e) any royalties or other payments to be made by Shire or its Affiliates under the License Agreement or the Consultancy Agreement, incurred after the Effective Date, other than payments under Articles 4.5 and 4.6 of the License Agreement. 16 ***CONFIDENTIAL TREATMENT REQUESTED 7.5 In the event that the Licensee supplies a Licensed Product to any customer as part of a package or combination of products, then the Net Sales of the Licensed Product shall be whichever is the higher of: (a) the fair market value of such Licensed Product when sold by itself; or (b) the proportion of the selling price of such package of products which is reasonably attributable to the Licensed Product. 7.6 For the purposes of clause 7.5, fair market value means the value of Licensed Product sold to similar customers in the Territory with similar pricing and reimbursement structures and for similar quantities. Any dispute as to the determination of fair market value or proportion of the selling price of a package of products attributable to the Licensed Product shall be resolved through the dispute resolution procedure set out in clause 24.2. 7.7 Subject to clauses 7.9 and 8.2, in the event that Licensee or its Affiliates enters into a Sub-License Agreement in any Territory, then Licensee shall pay to Shire in addition to the Milestone Payments: (a) subject to clause 7.10, [...***...]% of any Sub-License Income; and (b) in lieu of royalties under clauses 7.3 or 7.4 applicable to Net Sales by such Sub-Licensee in its particular territory, the greater of: (i) [...***...]% of any royalty payments received by Licensee or its Affiliates from the Sub-Licensee or its Affiliates for sales of Licensed Products by or on behalf of the Sub-Licensee; or (ii) [...***...]% of Net Sales by the Sub-Licensee and its Affiliates. 7.8 In the event that Sub-License Income corresponds to a Milestone Payment under this Agreement which has not already been paid by the Licensee and such Sub-License Income is greater than the respective Milestone Payment, the Licensee shall pay Shire on the occurrence of the Milestone Event the full Milestone Payment plus [...***...]% of the difference between the Sub-License Income and the relevant Milestone Payment. 7.9 In addition to any payments made by the Licensee under clause 7.7, the Licensee shall pay any royalties or other payments to be made by Shire or its Affiliates under the License Agreement and the Consultancy Agreement, incurred after the Effective Date, other than payments under Articles 4.5 and 4.6 of the License Agreement. 7.10 In the event that the Licensee or its Affiliates receives any Sub-License Income by way of cash consideration in relation to the acquisition of equity (or any form of security convertible into equity) in the Licensee or its Affiliates or non-cash consideration upon which payment would be due to Shire under clause 7.7, the Licensee shall pay Shire: (a) in relation to the acquisition of equity (or any form of security convertible into equity) in the Licensee or its Affiliates the greater of:

Royalty and Milestone Payments. 7.1 In consideration of the rights granted under this Agreement, the Licensee shall pay Shire (or its nominee) the non-creditable and non-refundable sum of US$3 million within 3 Business Days from the Effective Date and the non-creditable and non-refundable sum of US$1 million within 5 Business Days of the first anniversary of the Effective Date, in accordance with the Milestone Payment Terms. 7.2 Upon the occurrence of each Milestone Event, the corresponding non-refundable Milestone Payment shall be made by the Licensee to Shire in accordance with the Milestone Payment Terms. For the avoidance of doubt, each Milestone Payment shall be made no more than once with respect to the achievement of a Milestone Event, but shall be payable the first time the Milestone Event is achieved. [...***...]% of any development Milestone Payments (but not sales Milestone Payments) shall be creditable against royalties due to Shire under sub-clauses 7.3(a), 7.3(b), 7.3(c), 7.3(d) (but not royalties under sub-clause 7.3(e)), and if applicable, sub-clauses 7.4(a), 7.4(b), 7.4(c), 7.4(d) (but not royalties under sub-clause 7.4(e)), provided that, in no event will the credit for such development Milestone Payments reduce the royalties payable to Shire in any Quarter by more than [...***...]%. Any amount that has not been so credited 15 ***CONFIDENTIAL TREATMENT REQUESTED may be credited against royalties due in subsequent Quarters, subject to the limitation described in the previous sentence. For the avoidance of doubt, upon expiry or termination of this Agreement, Shire shall not be liable to the Licensee for any credit amount accrued and not credited. 7.3 Subject to clauses 7.4, 7.7(b) and 8.2, during the term of this Agreement, the Licensee shall pay Shire: (a) a royalty of [...***...]% of the first US$[...***...] of Net Sales of the Licensed Product in the Territory in any calendar year; (b) a royalty of [...***...]% of any Net Sales in excess of US$[...***...] and up to US$[...***...] in the Territory in any calendar year; (c) a royalty of [...***...]% of any Net Sales in excess of US$[...***...] and up to US$[...***...] in the Territory in any calendar year; (d) a royalty of [...***...]% of any Net Sales in excess of US$[...***...] in the Territory in any calendar year; and (e) any royalties or other payments to be made by Shire or its Affiliates under the License Agreement or the Consultancy Agreement, incurred after the Effective Date, other than payments under Articles 4.5 and 4.6 of the License Agreement. [...***...]% of any payments made by the Licensee for milestone payments properly paid by the Licensee under Article 4.2(c) of the License Agreement shall be creditable against royalties in accordance with clause 7.2 above. 7.4 At any time during calendar year [...***...], Licensee shall have the right to pay to Shire the non-creditable and non-refundable sum of US$[...***...] in accordance with the Milestone Payment Terms and in such event, Licensee shall have no obligation to make any payments to Shire under clause 7.3, but instead shall pay Shire the following: (a) a royalty of [...***...]% of the first US$[...***...] of Net Sales of the Licensed Product in the Territory in any calendar year; (b) a royalty of [...***...]% of any Net Sales in excess of US$[...***...] and up to US$[...***...] in the Territory in any calendar year; (c) a royalty of [...***...]% of any Net Sales in excess of US$[...***...] and up to US$[...***...] in the Territory in any calendar year; (d) a royalty of [...***...]% of any Net Sales in excess of US$[...***...] in the Territory in any calendar year; and (e) any royalties or other payments to be made by Shire or its Affiliates under the License Agreement or the Consultancy Agreement, incurred after the Effective Date, other than payments under Articles 4.5 and 4.6 of the License Agreement. 16 ***CONFIDENTIAL TREATMENT REQUESTED 7.5 In the event that the Licensee supplies a Licensed Product to any customer as part of a package or combination of products, then the Net Sales of the Licensed Product shall be whichever is the higher of: (a) the fair market value [...***...] of such Licensed Product when sold by itself[...***...]; or (b) the proportion of [...***...] the selling price of such package of products which is reasonably attributable to the Licensed Product[...***...]. 7.6 For the purposes of clause 7.5, fair market value [...***...] means the value of Licensed Product sold to similar customers in the Territory with similar pricing and reimbursement structures and for similar quantities. Any dispute as to the determination of fair market value [...***...] or proportion of the selling price of a package of products attributable to the Licensed Product shall be resolved through the dispute resolution procedure set out in clause 24.2. 7.7 Subject to clauses 7.9 and 8.2, in the event that Licensee or its Affiliates enters into a Sub-License Agreement in any Territory, then Licensee shall pay to Shire in addition to the Milestone Payments: (a) subject to clause 7.10, [...***...]% of any Sub-License Income; and (b) in lieu of royalties under clauses 7.3 or 7.4 applicable to Net Sales by such Sub-Licensee in its particular territory, the greater of: (i) [...***...]% of any royalty payments received by Licensee or its Affiliates from the Sub-Licensee or its Affiliates for sales of Licensed Products by or on behalf of the Sub-Licensee; or (ii) [...***...]% of Net Sales by the Sub-Licensee and its Affiliates. 7.8 In the event that Sub-License Income corresponds to a Milestone Payment under this Agreement which has not already been paid by the Licensee and such Sub-License Income is greater than the respective Milestone Payment, the Licensee shall pay Shire on the occurrence of the Milestone Event the full Milestone Payment plus [...***...]% of the difference between the Sub-License Income and the relevant Milestone Payment. 7.9 In addition to any payments made by the Licensee under clause 7.7, the Licensee shall pay any royalties or other payments to be made by Shire or its Affiliates under the License Agreement and the Consultancy Agreement, incurred after the Effective Date, other than payments under Articles 4.5 and 4.6 of the License Agreement. 7.10 In the event that the Licensee or its Affiliates receives any Sub-License Income by way of cash consideration in relation to the acquisition of equity (or any form of security convertible into equity) in the Licensee or its Affiliates or non-cash consideration upon which payment would be due to Shire under clause 7.7, the Licensee shall pay Shire: (a) in relation to the acquisition of equity (or any form of security convertible into equity) in the Licensee or its Affiliates the greater of: