Provision Language
4. PAYMENTS
4.1 Research Funding by the Foundation. For the conduct of the Research, and subject to the completion of the applicable Research Milestones described in Exhibit B (attached hereto), the Foundation shall pay a total of US$[**] to Company on the schedule specified below:
(a) within [**] days after the Effective Date, the Foundation will pay to Company US$[**];
(b) within [**] days after the Foundation’s receipt of notice from Company of the achievement of Milestone 1 in Exhibit B attached hereto, the Foundation will pay Company US$[**];
(c) within [**] days after the Foundation’s receipt of notice from Company of the achievement of Milestone 2 in Exhibit B attached hereto, the Foundation will pay Company US$[**]; and
(d) within [**] days after the Foundation’s receipt of notice from Company of the achievement of Milestone 3 in Exhibit B attached hereto, the Foundation will pay Company US$[**].
The Foundation may delay any payment until such time as the milestones in the Research Plan are met (or as may otherwise be mutually agreed in writing). For purposes of clarification, the foregoing payments shall be non-refundable, and each of the foregoing payments shall be payable only once. The Foundation acknowledges that the foregoing payments represent only a portion of the total cost of performing the Research. Notwithstanding the foregoing, except as agreed pursuant to Section 4.2, the Foundation will not be obligated to pay any additional amounts in connection with the Research.
4.2 Additional Payments. In addition to the amounts specified in Section 4.1, upon mutual written agreement of the parties, the Foundation may make, or cause to be made, additional research funding payments to Company in connection with any modification of the Research Plan.
4.3 Milestone Donation by Company. Within [**] days after the end of the first fiscal quarter in which Company has received an aggregate of US$[**] in Product Revenues, Company shall make a payment to the Foundation (or, at the Foundation’s option, one or more other non-profit organizations or academic or research institutions designated by the Foundation in writing) in the applicable amount set forth below pursuant to clause (a), (b) or (c), whichever one (and only one) of the following applies:
[Details redacted]
In addition to the foregoing milestone payments, and provided that the Foundation provided funding for Lead Optimization of Products hereunder at the level set forth in the first paragraph of 4.3(c), within [**] days after the end of the first calendar year during which Company has received an annual aggregate in that year of US$[**] in Product Revenues, Company shall make a payment to the Foundation equal to 100% of the sum of the Research Funds and the Additional Payments. For the avoidance of doubt, such additional payment shall be a one-time payment only, regardless of any additional Product Revenues.
If [**] in good faith believes that making the applicable payment(s) specified in this Section 4.3 on the schedule set forth above will prevent Company from achieving a reasonable profit margin on commercial sales of Products, [**] may reduce any such payments due in the applicable calendar or fiscal quarter by [**]%, or such other reduction as the parties shall in good faith agree, with any reduction carried forward on a quarter-by-quarter basis (subject to the same reductions in each subsequent quarter) until paid in full.
AMENDMENT No. 2 TO SPONSORED RESEARCH AGREEMENT
2. Continuing Research
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(d) The parties will fund the overall total cost of the DC Research based on the Research Plan and related budget attached as Exhibit SA-1, with Foundation contributing approximately [**]% and Company contributing approximately [**]% of such overall total cost of the DC Research as more explicitly specified in such budget, such overall total cost not to exceed $[**] (the “Research Cap”) and the Foundation’s share of such total cost not to exceed $[**]. During the Research Term, Company will invoice Foundation on a quarterly basis for Foundation’s share of the costs incurred in connection with the Research Plan for the preceding calendar quarter, payable within [**] days of receipt by Foundation, subject to Second Amendment Sections 2(d)(i) and 2(d)(ii). Such invoices shall include: (A) an accounting, in reasonable detail sufficient to evaluate performance of the Research Plan by Company, of Company’s activities over the applicable period, (B) a breakout of FTEs and other resources allocated to each Research Project and (C) an itemization in reasonable detail of the categories of out-of-pocket costs incurred by Company that are included in such invoice. When invoicing Foundation or developing or presenting any budget related to the Research Plan, Company will in all cases apply the FTE rates specified in Exhibit SA-1 to the applicable category of FTE, and no additions or changes to the FTE categories or rates specified in Exhibit SA-1 shall be made by Company absent prior written consent of Foundation. Company will promptly respond to all requests by Foundation for additional information regarding such out-of-pocket costs. Company’s commitment, between [**] and [**], of [**] dollars ($[**]) in funding towards the DC Research shall be available to Company in the form of an invoice credit against Company’s share of the cost of the DC Research until expended and shall count towards the Research Cap. Promptly after the Second Amendment Effective Date, Company will provide Foundation with an invoice for [**] percent ([**]%) of the amount that Company spent between [**] and the Second Amendment Effective Date to perform the DC Research. Such invoice shall include the information specified in (A), (B) and (C) within this Second Amendment Section 2(d) and shall be payable within [**] days of receipt by Foundation. The entire amount paid by Foundation pursuant to such invoice shall count towards the Research Cap and towards Foundation’s share of the Research Cap.
(i) Subject to Second Amendment Section 2(d)(ii), Foundation shall not be responsible for its share of any DC Research costs that exceed the budget for any calendar quarter unless:
(1) such costs exceed the budget for such calendar quarter by less than [**] dollars ($[**]) or [**] percent ([**]%) (whichever is less);
(2) such costs exceed the budget for such calendar quarter by more than [**] dollars ($[**]) or [**] percent ([**]%) (whichever is less) but less than [**] percent ([**]%) and Company provided written notice to Foundation prior to incurring such budget overrun; or
(3) such costs exceed the budget for such calendar quarter by more than [**] percent ([**]%) and Foundation approved such budget overrun in writing before it was incurred.
(ii) If at any time during the Second Amendment Term, the total cost incurred in the performance of the DC Research during the period from the Second Amendment Effective Date until the end of the most recent calendar quarter exceeds the cumulative budget for such period by [**] dollars ($[**]) or more, then Second Amendment Section 2(d)(i) shall not apply to any subsequent cost overruns and Foundation shall not be responsible for its share of any additional costs that exceed the applicable budget for any subsequent quarter unless Foundation approved such budget overrun in writing before it was incurred.
(e) Foundation may provide its share of the budget under the Research Plan via other sources of funding, subject to prior agreement of the parties and the existing terms of the Agreement. One hundred percent (100%) of all funds, if any, received by Company during the Second Amendment Term from the Department of Defense directed to the DC Research or the Development of a Development Candidate as a result of the advocacy of the Foundation will count toward the Foundation’s share of the costs incurred in connection with the Research Plan; provided, however, that [**] in the [**] pursuant to [**] of the Agreement. At Foundation’s request, Company shall promptly complete all paperwork required or reasonably useful to secure receipt by Company of such funds from the Department of Defense.
(f) Company may provide its share of the budget via government grants or grants from nonprofit organizations; provided however, that, except for mandatory licenses and similar or related rights granted to government entities, Company’s acceptance of such grants shall not have any effect on Foundation’s rights pursuant to this Agreement; further provided, however, that with respect to any nonprofit organizations that have as a specific aspect of their general mission the funding of research on SMA, Company shall first seek Foundation’s written consent and the parties shall negotiate in good faith any required amendments to this Agreement or separate agreements to accommodate grants from such organizations, with the guiding principle that this Agreement remain the primary document governing the conduct of the DC Research by the parties. Company shall use Commercially Reasonable Efforts to obtain additional funding for the Secondary Research Project from government grants or grants from nonprofit organizations (subject to the provisions set forth in the preceding sentence with respect to funding from any nonprofit organizations that have as a specific aspect of their general mission the funding of research on SMA); provided however, that, except for mandatory licenses and similar or related rights granted to government entities, Company’s acceptance of such grants shall not have any effect on Foundation’s rights pursuant to this Agreement. If Company obtains such funding in an amount that exceeds Company’s share of the budget for the Secondary Research Project, Company shall notify Foundation in writing and the JSC shall revise the Research Plan and related budget to reflect the additional work to be performed on the Secondary Research Project with such funds, (i) which additional work shall be under the purview of the JSC and the compounds resulting from such work shall remain Drug Candidates, Reversion Candidates, or Development Candidates, as the case may be, and (ii) which revised budget shall not require the Foundation to contribute any money to pay for or reimburse Company for research performed with respect to any aspect of the revised Research Plan for which Company has received such grant funds.
(g) If (i) it becomes evident to either party at any time, based on budget forecasts or progress in the Research Plan, that a [**] may [**] for [**], or that the [**], or (ii) the [**] is [**] (each of the foregoing, a “Cost/Timeline Issue”), then either party may, on written notice to the other, call a special meeting of the JSC to address such Cost/Timeline Issue. At such meeting, representatives of each party shall present information in their control with respect to the reasons for such Cost/Timeline Issue, and( if applicable) each party’s plan or recommendation for addressing such Cost/Timeline Issue. The JSC shall review and address such Cost/Timeline Issue, and shall determine which of the following actions the parties shall pursue:
(1) develop, approve, and follow an amendment to the Research Plan (such amendment, the “Corrective Plan”) to address the Cost/Timeline Issue, which may (subject to the written consent of the affected party in such party’s sole discretion) require either party to [**] the DC Research, or provide that the [**] in which case (x) the [**] shall be [**] and/or, if the [**] is more than [**] years after the Second Amendment Effective Date, then the Research Term shall be deemed amended to extend until the earliest of (i) the date upon which the JSC first designates a Development Candidate, (ii) the [**], or (iii) the effective date of any termination of the Research Term pursuant to Second Amendment Section 3, and (y) in addition to their other obligations under the Agreement, the parties shall duly perform their respective obligations pursuant to such Corrective Plan; provided, however, that after the adoption of a Corrective Plan, failure to achieve the [**] or [**] shall not be deemed, by itself, to be a breach of this Agreement, but shall entitle either party to terminate the Research Term pursuant to Second Amendment Section 3;
(2) restructure the Research Plan and related budget in a manner that resolves the Cost/Timeline Issue; provided, however, that such restructuring shall not obligate either party to [**] of the [**] or be deemed to [**]; or
(3) determine that continuation of the DC Research would be futile, in which case the JSC shall recommend to the parties that they terminate the DC Research; provided further, that following such recommendation either party shall have the right to terminate the Research Term pursuant to Second Amendment Section 3.