Common use of Guidance Note for clause 5 Clause in Contracts

Guidance Note for clause 5. 3: Performance Criteria are intended to be clear, measurable achievements. This clause seeks to balance the consequences of failing to meet the Performance Criteria for both the Licensee and Licensor. Often the reason for failing to meet Performance Criteria is complex. Accordingly, the clause reflects a process to manage Licensee performance fairly. The initial consequences of a failure to meet the Performance Criteria are management actions that can be initiated by the Licensor (see clause 5.3(b)) to seek to explore why there has been a failure. If the management of these failures does not resolve the issues, the onus can be placed on the Licensee (see clause 5.3(c)) to either give up rights to the Licensed IPR, put in place mitigations, or compensate the Licensor for the revenue they would have otherwise obtained. Further guidance on the Performance Criteria is included in Schedule 4. The Licensee must, in Commercialising the Licensed IPR, throughout the Term to the extent permitted by any Licence, carry out the Commercialisation Business Plan. Consequences of failure to achieve Performance Criteria The Performance Criteria have been agreed in recognition of the circumstances of the Agreement and the parties' intentions for Commercialisation of the Licensed IPR. Without limiting the obligations in this clause 5, if at any time for which there are applicable Performance Criteria, the Licensee fails to achieve the Performance Criteria: the Licensor may send the Licensee written notice asking them to identify the reason that the Performance Criteria were not met, and the steps being taken to ensure the Performance Criteria are able to be met for future periods. The Licensee must respond to such request within 20 Business Days of receipt; and if the Licensor is not satisfied with the Licensee's response, the Licensor will offer to meet with the Licensee to discuss in good faith the reasons the Performance Criteria were not met, as well as any proposed adjustments to the Performance Criteria, or other measures that could ensure future performance in accordance with the Performance Criteria. If following the process set out in clause 5.3(b), the Licensee again fails to meet the Performance Criteria as they apply in any subsequent period for measurement of the Performance Criteria, the Licensor may require that the Licensee to: either, at the Licensee's option: pay any deficit in the Fees as a result of the Performance Criteria not being met, being the difference between the Fees that would have been payable for the relevant period if the Performance Criteria were met and the actual Fees payable; or agree to the Licensor terminating or reducing the Licence (as required by the Licensor); and put in place reasonable measures to attempt to ensure the Performance Criteria are achieved in future periods (but without limiting the Licensor's rights if the Performance Criteria are again failed). Nothing in this clause 5.3 limits the rights of the Licensor under the Agreement or requires the Licensor to agree to amend the Performance Criteria. Guidance Note for clauses 5.4, 5.5 and 5.6: Consistent with managing performance, these clauses include obligations to report and meet so that potential issues are able to be managed. Reporting Within 40 Business Days of the end of each Reporting Period, the Licensee will provide the Licensor an annual report setting out the Licensee’s progress in Commercialising the Licensed IPR over that Reporting Period and the commercialisation plans for, and any actual or potential issues that may arise in, Commercialising the Licensed IPR in the subsequent Reporting Period. The report must include a report against the Performance Criteria and the Commercialisation Business Plan.

Guidance Note for clause 5. 3: Performance Criteria are intended to be clear, measurable achievements. This clause seeks to balance the consequences of failing to meet the Performance Criteria for both the Licensee and Licensor. Often the reason for failing to meet Performance Criteria is complex. Accordingly, the clause reflects a process to manage Licensee performance fairly. The initial consequences of a failure to meet the Performance Criteria are management actions that can be initiated by the Licensor (see clause 5.3(b)) to seek to explore why there has been a failure. If the management of these failures does not resolve the issues, the onus can be placed on the Licensee (see clause 5.3(c)) to either give up rights to the Licensed IPR, put in place mitigations, or compensate the Licensor for the revenue they would have otherwise obtained. Further guidance on the Performance Criteria is included in Schedule 4. The Licensee must, in Commercialising the Licensed IPR, throughout the Term to the extent permitted by any Licence, carry out the Commercialisation Business Plan. Consequences of failure to achieve Performance Criteria Criteria (a) The Performance Criteria have been agreed in recognition of the circumstances of the Agreement and the parties' intentions for Commercialisation of the Licensed IPR. . (b) Without limiting the obligations in this clause 5, if at any time for which there are applicable Performance Criteria, the Licensee fails to achieve the Performance Criteria: : (i) the Licensor may send the Licensee written notice asking them to identify the reason that the Performance Criteria were not met, and the steps being taken to ensure the Performance Criteria are able to be met for future periods. The Licensee must respond to such request within 20 Business Days of receipt; and and (ii) if the Licensor is not satisfied with the Licensee's response, the Licensor will offer to meet with the Licensee to discuss in good faith the reasons the Performance Criteria were not met, as well as any proposed adjustments to the Performance Criteria, or other measures that could ensure future performance in accordance with the Performance Criteria. . (c) If following the process set out in clause 5.3(b), the Licensee again fails to meet the Performance Criteria as they apply in any subsequent period for measurement of the Performance Criteria, the Licensor may require that the Licensee to: : (i) either, at the Licensee's option: pay : X. xxx any deficit in the Fees as a result of the Performance Criteria not being met, being the difference between the Fees that would have been payable for the relevant period if the Performance Criteria were met and the actual Fees payable; or or B. agree to the Licensor terminating or reducing the Licence (as required by the Licensor), to allow the Licensor to license the Licensed IPR to an alternative licensee; and and (ii) put in place reasonable measures to attempt to ensure the Performance Criteria are achieved in future periods (but without limiting the Licensor's rights if the Performance Criteria are again failed). . (d) Nothing in this clause 5.3 limits the rights of the Licensor under the Agreement or requires the Licensor to agree to amend the Performance Criteria. Guidance Note for clauses 5.4, 5.5 and 5.6: Consistent with managing performance, these clauses include obligations to report and meet so that potential issues are able to be managed. Reporting Within 40 Business Days of the end of each Reporting Period, the Licensee will provide the Licensor an annual report setting out the Licensee’s progress in Commercialising the Licensed IPR over that Reporting Period and the commercialisation plans for, and any actual or potential issues that may arise in, Commercialising the Licensed IPR in the subsequent Reporting Period. The report must include a report against the Performance Criteria and the Commercialisation Business Plan.

Guidance Note for clause 5. 3: Performance Criteria are intended to be clear, measurable achievements. This clause seeks to balance the consequences of failing to meet the Performance Criteria for both the Licensee and Licensor. Often the reason for failing to meet Performance Criteria is complex. Accordingly, the clause reflects a process to manage Licensee performance fairly. The initial consequences of a failure to meet the Performance Criteria are management actions that can be initiated by the Licensor (see clause 5.3(b5.3(c)) to seek to explore why there has been a failure. If the management of these failures does not resolve the issues, the onus can be placed on the Licensee (see clause 5.3(c5.3(d)) to either give up rights to the Licensed IPR, put in place mitigations, or compensate the Licensor for the revenue they would have otherwise obtained. Further guidance on the Performance Criteria is included in Schedule 4. The Licensee must, in Commercialising the Licensed IPR, throughout the Term to the extent permitted by any Licence, carry out the Commercialisation Business Plan. Consequences of failure to achieve Performance Criteria Criteria (a) The Performance Criteria have been agreed in recognition of the circumstances of the Agreement and the parties' intentions for Commercialisation of the Licensed IPR, including: (i) the scope of the Licence granted to the Licensed IPR (including the Territory and Application); (ii) the anticipated market for the Products and interest in the underlying technology; (iii) any initial period required to promote a new Product or technology; (iv) any assistance that has been agreed to be provided by the Licensor; and (v) the steps agreed in the Commercialisation Business Plan. (b) The Licensor's expectations are for the Licensee to engage in Commercialisation of the Licensed IPR and to promote the Products and underlying technology in accordance with this Agreement. Where the Performance Criteria are not met, the parties recognise this may not be due to any conduct of the Licensee or a breach of this Agreement. However, the failure to meet the Performance Criteria may impact on the Licensor's financial return (if the Fee is set based on performance), and also on awareness and take up of the Licensed IPR and similar technologies more broadly, which can impact on the Licensor's business. (c) Without limiting the obligations in this clause 5, if at in any time Financial Year, or part of a Financial Year, for which there are applicable Performance Criteria, the Licensee fails to achieve the Performance Criteria: : (i) the Licensor may send the Licensee written notice asking them to identify the reason that the Performance Criteria were not met, and the steps being taken to ensure the Performance Criteria are able to be met for future periods. The Licensee must respond to such request within 20 Business Days 30 days of receipt; and and (ii) if the Licensor is not satisfied with the Licensee's response, the Licensor will offer to meet with the Licensee to discuss in good faith the reasons the Performance Criteria were not met, as well as any proposed adjustments to the Performance Criteria, or other measures that could ensure future performance in accordance with the Performance Criteria. . (d) If following the process set out in clause 5.3(b5.3(c), the Licensee again fails to meet the Performance Criteria as they apply in any subsequent period for measurement Financial Year, or part of the Performance Criteriaa Financial Year, the Licensor may require that the Licensee to: : (i) either, at the Licensee's option: pay : X. xxx any deficit in the Fees as a result of the Performance Criteria not being met, being the difference between the Fees that would have been payable for the relevant period if the Performance Criteria were met and the actual Fees payable; or or B. agree to the Licensor terminating terminate or reducing reduce the Licence (as required by the Licensor)) to allow the Licensor to license the Licensed IPR to an alternative licensee; and and (ii) put in place reasonable measures to attempt to ensure the Performance Criteria are achieved in future periods periods. (but without limiting the Licensor's rights if the Performance Criteria are again failed). e) Nothing in this clause 5.3 limits the rights of the Licensor under the Agreement or requires the Licensor to agree to amend the Performance Criteria. Guidance Note for clauses 5.4, 5.5 and 5.6: Consistent with managing performance, these clauses include obligations to report and meet so that potential issues are able to be managed. Reporting Within 40 Business Days of the end of each Reporting Period, the Licensee will provide the Licensor an annual report setting out the Licensee’s progress in Commercialising the Licensed IPR over that Reporting Period and the commercialisation plans for, and any actual or potential issues that may arise in, Commercialising the Licensed IPR in the subsequent Reporting Period. The report must include a report against the Performance Criteria and the Commercialisation Business Plan.