2.1 The Award Amount will be payable in Tranches as set out in Schedule 3. Any Tranche may be paid in smaller instalments as may be determined by the Trust.
2.2 The Trust shall pay the first instalment of the first Tranche of the Award Amount to PTC within [**] Business Days of the Commencement Date. PTC undertakes to commence the Programme within [**] months of receipt of the first instalment of the first Tranche of the Award Amount.
2.3 When PTC considers that any Milestone has been achieved by the relevant Milestone Date:
(a) PTC shall as soon as reasonably practicable provide the Trust with a detailed report (the “Milestone Report”) setting out how the Milestone was achieved and requesting payment of the next Tranche of the Award Amount; and
(b) The Trust shall confirm to PTC in writing, within [**] Business Days of receipt by the Trust of the Milestone Report either that:
(i) the Milestone has been achieved by the Milestone Date to the Trust’s reasonable satisfaction, in which case the Trust shall make payment of the next Tranche of the Award Amount within [**] Business Days of the date of such written confirmation in the amount determined by the Trust from time to
(ii) the Milestone has not been achieved to the Trust’s reasonable satisfaction by the relevant Milestone Date and that the payment shall not take place, in which case the Trust shall provide PTC with reasonable details of the grounds on which it has reached this decision.
2.4 The Trust may, at its sole discretion, grant PTC a reasonable period of time (“Milestone Extension”), in order to address the reasons why the Trust has judged that a particular Milestone has not been met. Upon the expiry of a Milestone Extension, the Trust shall, at its sole discretion, decide whether or not to permit full or partial payment of the relevant Tranche of funding to PTC.
2.5 PTC shall complete and submit a detailed report on the work done and outcomes of the Programme (“End of Award Report”) in the prescribed form to the Trust, such report to be presented to the Trust within [**] days after the completion of the Programme (or such other date as may be agreed with the Trust). The Trust will evaluate theEnd of Award Report and will notify PTC within [**] Business Days of receipt whether the report is acceptable to the Trust. If the End of Award Report is not acceptable to the Trust, it shall notify PTC of its reasons at the same time, which may include that the report is incomplete or insufficiently detailed and the Trust shall have the right to withhold further funding until the Trust receives an End of Award Report which the Trust deems to be acceptable.
2.6 The Trust will only be obliged to pay any Tranche to PTC if, at the time of request for payment from PTC or the due date for payment of the Tranche:
(a) none of the events described in Clauses 20.2, 20.3, 20.4(a), or 20.5 have occurred or would result from the proposed payment;
(b) PTC is not in breach of any of any of the Conditions;
(c) the Warranties are true and correct in all respects, subject to the matters set out in the relevant Disclosure Letter;
(d) the Trust has received the relevant Disclosure Letter and the contents of such Disclosure Letter are reasonably acceptable to the Trust; and/or
(e) the Site Visit Group has conducted a review of PTC’s facilities in accordance with Clause 6 and such visit has not been completed to the reasonable satisfaction of the Trust.
2.7 If any Milestones have not been achieved by [**] years from the Commencement Date, unless agreed otherwise in writing by the Trust, the Trust shall have no obligation to pay any Tranche (or part thereof) which has not been paid prior to that date.
2.9 The Trust shall not be under any obligation to pay any part of the Award Amount to PTC unless PTC operates a treasury policy that is approved by the Trust.
2.10 Each of the Trust and PTC shall (and PTC shall procure that relevant members of the PTC Group shall) pay any and all taxes levied in respect of all payments it receives or makes under this Agreement. Any withholding or other taxes that is required by law to be withheld or paid, with respect to any payments to it under this Agreement, shall be deducted from such payments and paid contemporaneously with the remittance, together with evidence of such withholding or payment. Such withholding and payment shall fully discharge the party making the payment and no further payment shall be required by the payor to the payee. The party withholding or making such payment shall furnish the other party with appropriate documents to secure application of the most favourable rate of withholding tax under applicable law.
2.11 PTC undertakes to use all funding received from the Trust pursuant to this Agreement solely for the purposes of the Programme as described in the Application. PTC shall obtain the Trust’s prior written consent to any other use of any funding received from the Trust pursuant to this Agreement.
2.12 Subject to Clause 2.13 below, PTC undertakes that it shall not (and PTC shall procure that other members of the PTC Group shall not) seek to apply for or accept without the Trust’s prior written consent (such consent not to be unreasonably withheld) any other funding or support (whether in kind or otherwise) for the programme of research agreed for the Programme, whether commercial or non–commercial, during the period of the Programme.
2.13 PTC hereby grant to the Trust a first option to consider any further requirements of PTC for the funding of the programme of research agreed for the Programme or any further development of the results of the Programme for a period of [**] years following the end of the Programme Term. Any such further funding requirements shall be notified to the Trust by PTC (as the case may be), and the Trust shall within [**] days of such notification indicate to PTC whether the Trust wishes to so further fund (in whole or in part), subject to the proper Trust funding application and review process being carried out. If the Trust does not so elect, then the option shall lapse. For clarity, this Clause 2.13 is not intended to restrict PTC from engaging in general capital raising activities provided that such funds are not specifically earmarked for the Programme.
11.3 Prior to any member of the PTC Group (whether itself or through any other member of the PTC Group, or by granting a license or in collaboration with any Third Party) (the “Exploiting Party”), commencing the Development and/or Exploitation of any Programme Intellectual Property and/or Products both inside and outside the Field, PTC or the relevant the member of the PTC Group shall obtain the prior written consent of the Trust to such Development and Exploitation by sending written notice to the Trust and the following information:
(a) reasonable details of the relevant Programme Intellectual Property, the Products and the activity proposed;
(b) details of whether the proposed Exploitation will be on a For–Profit and/or Not–For–Profit Basis; and
(c) if applicable, amounts of any milestones payments and royalties that would be payable to the Trust pursuant to Schedule 6 and any other applicable terms.
11.4 Where Exploitation is to be on a For–Profit Basis, the grant of the Trust’s consent pursuant to Clause 11.6 shall be conditional on the payments to the Trust of amounts calculated pursuant to Schedule 6, and the Trust and PTC agreeing an appropriate share of any revenue payable to the Trust pursuant to Schedule 6.
11.5 In the event that the relevant member of the PTC Group Develops and/or Exploits the Programme Intellectual Property and/or Products in the Field on a Not for Profit Basis, no amounts shall be payable to the Trust in respect of such Development and/or Exploitation.
SCHEDULE 6: REVENUE SHARING TERMS
a) This Schedule 6 sets out the revenue sharing terms (“Revenue Sharing Terms”) agreed between the Parties.
b) Each scenario below shall apply based on the description of the scenario.
2) Scenario 1: PTC exploits the Programme Intellectual Property on a For–Profit Basis alone (or in collaboration with a Distributor or marketing/sales agent under which PTCretains overall control of worldwide commercialization).
a) PTC shall pay the following stage–based milestones based on multiples of the total Trust Contribution through Regulatory Approval:
i) Milestone triggering events and amounts:[**]
ii) Worked Example: assumes Trust funds $5.4 million US and PTC does not elect to defer payment of the Phase 3 milestone:
(1) Phase 1 milestone amount = $[**]
(2) Phase 2 milestone amount = $[**]
(3) Phase 3 milestone amount = $[**]
(4) Regulatory Approval milestone amount = $[**]
(5) Total of all milestone amounts= $[**]
iii) Worked Example: assumes Trust funds $5.4 million and PTC defers at Phase 3:
(1) Phase 1 milestone amount = $[**]
(2) Phase 2 milestone amount = $[**]
(3) Phase 3 milestone amount = $[**]
(4) Regulatory Approval milestone amount = $[**]
(5) Total of all milestone amounts = $35,640,000
iv) Payment of milestones
(1) Phase 1–Phase 3 milestones shall be payable in equal quarterly installments over expected term of study, with the first installment payment due within [**]Business Days of the milestone triggering event. PTC may by written notice to the Trust elect to defer payment of the Phase 3 milestone until after completion of the first Phase 3 study to be completed in either the USA or the EAA (whichever is the sooner) required for Regulatory Approval (the “Trigger Phase 3”), in which case PTC shall pay such Phase 3 milestone (including additional 1x due for the deferral option) within [**] of completion of the Trigger Phase 3 study. For clarity, if deferred, the payment of Phase 3 milestone is due regardless of outcome of Phase 3 trial(s); provided, that the Trust agrees to accept alternative consideration, such as equity, in the event a cash payment after a Phase 3 trial failure would place PTC in financial distress.
(2) For clarity, milestones are payable only for the first Product to reach the applicable milestone.
(3) The Regulatory Approval milestone shall be payable on the [**]; provided, however, that the Trust will consider in good faith payment of the Regulatory Approval milestone in installments if PTC revenue from all products at the time of Regulatory Approval is less than $[**].
b) In addition to any milestones payable in accordance with the preceding section, PTC shall also pay royalties on Net Sales of Products, on a Product–by–Product basis; provided, that such royalties shall only be payable in the event the Trust Contribution represents at least [**]% of the proposed $5.4 million US funding amount, and shall be scaled proportionately in the event the Trust Contribution is greater than [**]% but less than 100% of the proposed $5.4 million US funding amount:
i) Royalty scale based on Net Sales of Product:
(1) First $[**]%
(2) Next $[**]%
(3) Next $[**]%
(4) Next $[**]%
(5) Over $[**]%
ii) Royalties payable shall be payable on a country–by–country basis until the longer of (a) the expiration last Valid Claim of a patent in the applicable country or region covering the Product, or (ii) the expiration of marketing exclusivity of a Product in the applicable country or region based on applicable law.
3) Scenario 2: PTC exploits the Programme Intellectual Property on a For–Profit Basis through outlicensing of a Product to a Third Party on a worldwide, exclusive basis prior to Regulatory Approval.
a) The parties shall hold an economic stake (“Base Shares”) in the Product calculated as of outlicensing effective date based on their respective economic contributions.
i) On the Commencement Date, PTC begins with $5.4 million Base Shares, and the Trust with zero.
ii) As the Trust pays the proposed the proposed $5.4 million US funding amount over the Programme Term, the Trust’s Base Share shall increase proportionately. By way of example, [**].
iii) Following the Programme Term, PTC’s ownership of Base Shares shall increase proportionately based on PTC’s continuing economic contribution. By way of example, [**].
b) All consideration attributable to outlicensing to a Third Party (other than debt at arm’s length interest rates or bona fide research funding) shall be divided between PTC and the Trust according to relative Base Share ownership at the time of such outlicensing. By way of example, [**].
c) For clarity, once outlicensing under this scenario has occurred, then the milestones provided for in scenario 1 shall no longer apply following the effective date of the outlicense; provided, that if a milestone trigger event occurred prior to the outlicense but installment payments are ongoing, PTC must complete such milestone payments.
d) For clarity, neither PTC nor the Third Party gaining the outlicense shall make any royalty payments to the Trust under this scenario.
e) License or access payments to Third Parties for enabling technologies required, in the good faith judgment of PTC, to develop and commercialize a Product shall be counted in the calculation of Base Shares under this scenario; provided, however, that such payments shall not include license or access payments made with respect to the composition of matter or method of use of those active ingredient(s) in the Product that incorporate, comprise or are derived from the Programme Intellectual Property.
4) Scenario 3: PTC exploits the Programme Intellectual Property on a For–Profit Basis by retaining development/commercialization rights to Product in some regions of the World or with respect to some uses of the Product (either alone or in a collaboration with a Distributor or marketing/sales agent under which PTC retains overall control of commercialization)), and outlicenses the Product on an exclusive basis in other regions of the World or with respect to other uses of the Product.
a) In this scenario, any consideration from outlicensing (other than debt at arm’s length interest rates or bona fide research funding) shall be divided between the parties according to Base Shares as of effective date of the outlicense.
b) In addition, following such outlicense, PTC shall pay milestones and royalties based on scenario 1 for those regions of the World or uses of the Product for which it retains rights, subject to the following adjustments:
i) PTC will prepare a written proposal for adjustment to milestones and royalties based on its modeling of the relative values of market share outlicensed vs. marketshare retained by PTC.
(1) The Trust shall consider PTC’s proposal in good faith, and prepare a written counterproposal if it wishes;
(2) The parties shall negotiate in good faith for reasonable allocation of relative value of markets based on their proposals;
(3) If the parties cannot agree within [**] days, then the matter shall be referred for final determination via arbitration pursuant to Clause 19.3(a).
(4) Once the relative value of the markets outlicensed versus the markets retained by PTC is determined, PTC’s obligation to make continuing milestone and royalty payments pursuant to Scenario 1 shall be reduced according to relative value of markets outlicensed versus the markets retained. By way of example, if PTC outlicensed [**] of the market value of a Product, then a milestone payment of $[**] owed under scenario 1 would be reduced to a milestone payment of $[**] under this scenario 3, and a [**]% Net Sales royalty under scenario 1 would become a [**]% Net Sales royalty under this scenario 3.
5) Other Scenarios:
a) If a situation arises that is not covered by any of the foregoing three scenarios, the parties will negotiate in good faith for an appropriate economic arrangement based on Base Shares.
i) If the parties cannot agree, each party shall prepare a written proposal and accompanying rationale for an appropriate economic arrangement.
ii) The parties shall then negotiate in good faith based on their respective proposals.
iii) If parties cannot agree within [**] days, then the matter shall be referred for final determination via arbitration pursuant to Clause 19.3(a).