Common use of Milestone Consideration Clause in Contracts

Milestone Consideration. (a) Subject to Section 2.2(e) and Section 10.6, Cypress shall be obligated to pay to Cellatope $3,000,000 (as such amount may be offset pursuant to the provisions of Section 2.2(e) and Section 10.6, the “Milestone Consideration”) upon the First Commercial Sale by Cypress, any of its Affiliates or any Licensee of a Product for monitoring of Systemic Lupus Erythematosus (a “Lupus Monitoring Product”) (the “Milestone”), with any such payment to be made in accordance with the provisions of Section 2.2(d). For avoidance of doubt, only a Product for monitoring of Systemic Lupus Erythematosus, and not any Product designed for diagnosis of Systemic Lupus Erythematosus without a monitoring function, shall constitute a Lupus Monitoring Product. Upon the achievement of the Milestone, Cypress shall notify Cellatope in writing (the “Milestone Notice”) within 10 business days that the Milestone has been achieved and the date on which it was achieved. Within 20 business days of achievement of the Milestone, Cypress shall pay to Cellatope the Milestone Consideration in cash, as may be reduced pursuant to the terms of Section 2.2(e) and Section 10.6, by wiring or causing to be wired the Milestone Consideration to an account designated by Cellatope for such purpose in writing not less than two business days prior to the date on which the Milestone Consideration is to be paid. (b) Cypress shall act in good faith and use commercially reasonable efforts to cause the Milestone to be achieved; provided, however, that the obligation of Cypress to use commercially reasonable efforts to achieve the Milestone shall not require that the Milestone ever be achieved if doing so, in any case, would require Cypress to use more than commercially reasonable efforts and, provided, further, that a termination of development by Cypress of all Lupus Monitoring Products pursuant to Section 2.2(c) below shall not be deemed a failure by Cypress to use, or otherwise violate Cypress’ obligations to use, commercially reasonable efforts to develop a Lupus Monitoring Product, The parties acknowledge and agree that Cypress may terminate development of all Lupus Monitoring Products at any time if achieving the Milestone would require Cypress to use more than commercially reasonable efforts to do so, and that any such termination may occur without requiring that Cypress also terminate the Amended Pittsburgh License in accordance with Section 2.2(c) below. Cypress shall provide notice to Cellatope of its determination to terminate development of all Lupus Monitoring Products because achieving the Milestone would require Cypress to use more than commercially reasonable efforts to do so within 15 days of making such determination, including reasonable details supporting such determination and, in such case, Cypress shall comply with the provisions of Section 2.2(c)(ii) below. The parties further acknowledge and agree that nothing in this Agreement shall prohibit Cypress from engaging in a change of control-type transaction or a sale or license of all or any of the Acquired Assets, provided that in the event that Cypress desires to consummate a Change of Control after the Closing Date while the Milestone has not been attained but remains eligible to be attained, Cypress shall cause the Entity acquiring Cypress (or acquiring substantially all of its assets) with respect to a Change of Control (the “Acquirer”) to assume Cypress’ obligations under Section 2.2 of this Agreement, subject to all of the limitations and qualifications contained in Section 2.2 of this Agreement (including that such Acquirer use commercially reasonable efforts and the right of such Acquirer to terminate development of all Lupus Monitoring Products). With respect to any Change of Control, Cypress shall not consummate such Change of Control unless (i) Cypress remains liable for Cypress’ payment obligations with respect to the Annual Payments and the Milestone Consideration and the Acquirer otherwise assumes Cypress’ obligations in Section 2.2 in a form and substance reasonably acceptable to Cellatope (provided, that Cellatope’s prior acceptance or approval shall not be required if such assumption is unqualified), in which case the parties acknowledge and agree that, following any such assumption (unless Cypress is merged with the Acquirer and remains the surviving Entity or becomes a subsidiary of the Acquirer), Cypress shall have no further liability or obligation, whether primarily or secondarily, with respect to the obligations in Section 2.2 hereunder, except for the payment obligations with respect to the Annual Payments and the Milestone Consideration or (ii) the Acquirer is an Applicable Public Company and assumes Cypress’ obligations under Section 2.2 of this Agreement in a form and substance reasonably acceptable to Cellatope (provided, that Cellatope’s prior acceptance or approval shall not be required if such assumption is unqualified), in which case the parties acknowledge and agree that, following any such assumption (unless Cypress is merged with the Acquirer and remains the surviving Entity or becomes a subsidiary of the Acquirer), Cypress shall have no further liability or obligation, whether primarily or secondarily, with respect to the obligations in Section 2.2 hereunder, including the payment obligations with respect to the Annual Payments and the Milestone Consideration. (i) For purposes of this Section 2.2(b), “commercially reasonable efforts” means the use of efforts, expertise and resources normally used by Cypress for other product candidates, which, as compared with the Product candidates for Lupus Monitoring Products acquired by Cypress in connection with the Transactions (the “Lupus Monitoring Product Candidates”), are of similar market potential at a similar stage in their development, taking into account all reasonable relevant factors affecting the cost, risk and timing of development and the total potential of the Lupus Monitoring Product Candidates, all as measured by the facts and circumstances at the time such efforts are due. (ii) Cellatope may allege that Cypress is not using commercially reasonable efforts to achieve the Milestone at any time by providing written notice to Cypress to such effect, including reasonable details supporting such allegation, and setting forth specific reasonable actions that Cellatope requests that Cypress take with respect to its efforts to achieve the Milestone. If Cellatope provides any such notice, each party shall appoint an executive officer or other authorized person to discuss, and attempt to resolve, the alleged failure to perform to both parties’ satisfaction. These Persons shall, by phone or in person, discuss the alleged failure to perform in good faith within 15 days after Cellatope provides the applicable notice. If, within 30 days after Cellatope provides the applicable notice, the two executive officers have not reached a mutually acceptable resolution to the alleged failure to perform, Cellatope may submit the matter to arbitration conducted by one arbitrator mutually agreeable to Cypress and Cellatope, In the event that, within 30 days after submission of any dispute to arbitration, Cypress and Cellatope cannot mutually agree on one arbitrator, then the parties shall arrange for the American Arbitration Association to designate a single arbitrator in accordance with the rules of the American Arbitration Association. Any such arbitration shall be held in San Diego County, California, under the rules and procedures then in effect of the American Arbitration Association. The arbitrator shall determine how all expenses relating to the arbitration shall be paid, including the respective expenses of each party, the fees of the arbitrator and the administrative fee of the American Arbitration Association. The arbitrator shall set a limited time period and establish procedures designed to reduce the cost and time for discovery while allowing Cypress and Cellatope an opportunity, adequate in the sole judgment of the arbitrator, to discover relevant information from the opposing party about the alleged failure to perform. The arbitrator shall rule upon motions to compel or limit discovery and shall have the authority to impose sanctions, including attorneys’ fees and costs, to the same extent as a competent court of law or equity, should the arbitrator determine that discovery was sought without substantial justification or that discovery was refused or objected to without substantial

Milestone Consideration. (a) Subject to Section 2.2(e) and Section 10.6, Cypress shall be obligated to pay to Cellatope $3,000,000 (as such amount may be offset pursuant to the provisions of Section 2.2(e) and Section 10.6, the “Milestone Consideration”) upon Within 10 business days after the First Commercial Sale by Cypress, any of its Affiliates or any Licensee of a Product for monitoring of Systemic Lupus Erythematosus (a “Lupus Monitoring Product”) (the “Milestone”), with Cypress shall notify Cellatope in writing (the “Milestone Notice”) that the Milestone has been achieved and the date on which it was achieved. Within 20 business days of achievement of the Milestone, Cypress shall issue to Cellatope a promissory note (the “Note”) in the principal amount of $[***] (subject to any reduction in such payment amount pursuant to be made in accordance Section 10.6), the form of which is attached *** Certain information on this page has been omitted and filed separately with the provisions Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. hereto as Exhibit A-1. The Note shall be unsecured and shall bear interest at the rate of [***]% per annum. Interest shall accrue for the twelve-month period following issuance of the Note. On the first anniversary of the date of issuance of the Note, accrued interest for the previous 12 months shall be added to the principal amount of the Note, which adjusted amount shall thereafter bear interest at [***]% per annum. Thereafter, Cypress shall make equal monthly payments representing principal and accrued interest, each month continuing for 48 months after such first anniversary, at which point any unpaid balance of the Note will be due and payable in full. Notwithstanding anything herein to the contrary, the parties acknowledge and agree that in the event the Milestone is not achieved or if Cypress terminates development pursuant to Section 2.2(d)2.2(c) below, no payments shall be due under this Agreement and Cypress shall not be required to issue the Note. Amounts payable pursuant to the Note are referred to herein as the “Milestone Consideration.” For avoidance of doubt, only a Product for monitoring of Systemic Lupus Erythematosus, and not any Product designed for diagnosis of Systemic Lupus Erythematosus without a monitoring function, shall constitute a Lupus Monitoring Product. Upon the achievement of the Milestone, Cypress shall notify Cellatope in writing (the “Milestone Notice”) within 10 business days that the Milestone has been achieved and the date on which it was achieved. Within 20 business days of achievement of the Milestone, Cypress shall pay to Cellatope the Milestone Consideration in cash, as may be reduced pursuant to the terms of Section 2.2(e) and Section 10.6, by wiring or causing to be wired the Milestone Consideration to an account designated by Cellatope for such purpose in writing not less than two business days prior to the date on which the Milestone Consideration is to be paid. (b) Cypress shall act in good faith and use commercially reasonable efforts to cause the Milestone to be achieved; provided, however, that the obligation of Cypress to use commercially reasonable efforts to achieve the Milestone shall not require that the Milestone ever be achieved if doing so, in any case, would require Cypress to use more than commercially reasonable efforts and, provided, further, that a termination of development by Cypress of all Lupus Monitoring Products pursuant to Section 2.2(c) below shall not be deemed a failure by Cypress to use, or otherwise violate Cypress’ obligations to use, commercially reasonable efforts to develop a Lupus Monitoring Product, The parties acknowledge and agree that Cypress may terminate development of all Lupus Monitoring Products at any time if achieving the Milestone would require Cypress to use more than commercially reasonable efforts to do so, and that any such termination may occur without requiring that Cypress also terminate the Amended Pittsburgh License in accordance with Section 2.2(c) below. Cypress shall provide notice to Cellatope of its determination to terminate development of all Lupus Monitoring Products because achieving the Milestone would require Cypress to use more than commercially reasonable efforts to do so within 15 days of making such determination, including reasonable details supporting such determination and, in such case, Cypress shall comply with the provisions of Section 2.2(c)(ii) below. The parties further acknowledge and agree that nothing in this Agreement shall prohibit Cypress from engaging in a change of control-type transaction or a sale or license of all or any of the Acquired Assets, provided that in the event that Cypress desires to consummate a Change of Control after the Closing Date while the Milestone has not been attained but remains eligible to be attained, Cypress shall cause the Entity acquiring Cypress (or acquiring substantially all of its assets) with respect to a Change of Control (the “Acquirer”) to assume Cypress’ obligations under Section 2.2 of this Agreement, subject to all of the limitations and qualifications contained in Section 2.2 of this Agreement (including that such Acquirer use commercially reasonable efforts and the right of such Acquirer to terminate development of all Lupus Monitoring Products). With respect to any Change of Control, Cypress shall not consummate such Change of Control unless (i) Cypress remains liable for Cypress’ payment obligations with respect to the Annual Payments and the Milestone Consideration and the Acquirer otherwise assumes Cypress’ obligations in Section 2.2 in a form and substance reasonably acceptable to Cellatope (provided, that Cellatope’s prior acceptance or approval shall not be required if such assumption is unqualified), in which case the parties acknowledge and agree that, following any such assumption (unless Cypress is merged with the Acquirer and remains the surviving Entity or becomes a subsidiary of the Acquirer), Cypress shall have no further liability or obligation, whether primarily or secondarily, with respect to the obligations in Section 2.2 hereunder, except for the payment obligations with respect to the Annual Payments and the Milestone Consideration or (ii) the Acquirer is an Applicable Public Company and assumes Cypress’ obligations under Section 2.2 of this Agreement in a form and substance reasonably acceptable to Cellatope (provided, that Cellatope’s prior acceptance or approval shall not be required if such assumption is unqualified), in which case the parties acknowledge and agree that, following any such assumption (unless Cypress is merged with the Acquirer and remains the surviving Entity or becomes a subsidiary of the Acquirer), Cypress shall have no further liability or obligation, whether primarily or secondarily, with respect to the obligations in Section 2.2 hereunder, including the payment obligations with respect to the Annual Payments and the Milestone Consideration. (i) For purposes of this Section 2.2(b), “commercially reasonable efforts” means the use of efforts, expertise and resources normally used by Cypress for other product candidates, which, as compared with the Product candidates for Lupus Monitoring Products acquired by Cypress in connection with the Transactions (the “Lupus Monitoring Product Candidates”), are of similar market potential at a similar stage in their development, taking into account all reasonable relevant factors affecting the cost, risk and timing of development and the total potential of the Lupus Monitoring Product Candidates, all as measured by the facts and circumstances at the time such efforts are due. (ii) Cellatope may allege that Cypress is not using commercially reasonable efforts to achieve the Milestone at any time by providing written notice to Cypress to such effect, including reasonable details supporting such allegation, and setting forth specific reasonable actions that Cellatope requests that Cypress take with respect to its efforts to achieve the Milestone. If Cellatope provides any such notice, each party shall appoint an executive officer or other authorized person to discuss, and attempt to resolve, the alleged failure to perform to both parties’ satisfaction. These Persons shall, by phone or in person, discuss the alleged failure to perform in good faith within 15 days after Cellatope provides the applicable notice. If, within 30 days after Cellatope provides the applicable notice, the two executive officers have not reached a mutually acceptable resolution to the alleged failure to perform, Cellatope may submit the matter to arbitration conducted by one arbitrator mutually agreeable to Cypress and Cellatope, In the event that, within 30 days after submission of any dispute to arbitration, Cypress and Cellatope cannot mutually agree on one arbitrator, then the parties shall arrange for the American Arbitration Association to designate a single arbitrator in accordance with the rules of the American Arbitration Association. Any such arbitration shall be held in San Diego County, California, under the rules and procedures then in effect of the American Arbitration Association. The arbitrator shall determine how all expenses relating to the arbitration shall be paid, including the respective expenses of each party, the fees of the arbitrator and the administrative fee of the American Arbitration Association. The arbitrator shall set a limited time period and establish procedures designed to reduce the cost and time for discovery while allowing Cypress and Cellatope an opportunity, adequate in the sole judgment of the arbitrator, to discover relevant information from the opposing party about the alleged failure to perform. The arbitrator shall rule upon motions to compel or limit discovery and shall have the authority to impose sanctions, including attorneys’ fees and costs, to the same extent as a competent court of law or equity, should the arbitrator determine that discovery was sought without substantial justification or that discovery was refused or objected to without substantial