Common use of Royalty Offsets Clause in Contracts

Royalty Offsets. In the event that ELAN, in order to successfully research, Develop and Commercialize a Product, or practice the licenses granted to it hereunder in any country, reasonably determines that it is legally or commercially necessary to make and actually makes any payments to any Third Party (“Third Party Payments”) in order to obtain a license or other right, title or interest in and to an issued patent and/or, solely to the extent described in the last sentence of this Section 5.4.1(c), a pending patent application (a “Third Party License”), then the royalties payable to ARCHEMIX for such Product under Section 5.4.1(a) with respect to such country may be reduced by [***] percent ([***]%) of the amount of such Third Party Payments; provided that such reductions shall not reduce the royalty that would otherwise be payable for such Product under Section 5.4.1 by more than [***] percent ([***]%) of the amount otherwise payable with respect to Net Sales of such Product in such country (the “[***] Offset”). Unused [***] Offset credits may be carried over from one royalty period to the next, subject to the latter [***] ([***]%) limitation set forth above; provided, that (i) unused [***] Offset credits may only be applied in a subsequent royalty period after the reductions to be applied in such period pursuant to the first sentence of this Section 5.4.1(c) have been fully applied and (ii) any unused [***] Offset credits that have not been offset against royalty payments under this Section 5.4.1(c) within [***] years following accrual may not be carried over to any future royalty periods; provided, that, unused [***] Offset credits accrued prior to the First Commercial Sale of a Product may be applied as provided above for a period of [***] years commencing on the date of First Commercial Sale. Notwithstanding the foregoing, ELAN shall Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 406 of the Securities Act. 76 be solely responsible for, and the royalties payable to ARCHEMIX pursuant to Section 5.4.1 shall not be reduced by, any Third Party Payments solely to obtain a Third Party License to either (a) a proprietary method of administering or packaging a pharmaceutical (for clarity, excluding proprietary molecules, methods and/or processes of formulation and drug delivery technologies such as controlled release, transdermal delivery, nanotechnology and lyophilizing, all of which may be technologies for which such [***] Offset is available), or (b) a patent that had issued, or a patent application that was published and pending in the United States or a Major Market Country or with the European Patent Office or as a PCT application, at the time a Target was designated a Program Target by ELAN, and which then contained a valid or patentable claim that covered the Program Target (as agreed by the Patent Coordinators or, in the event they cannot reach agreement in good faith, a mutually-selected neutral Third Party patent attorney). For purposes of clarity, the [***] Offset shall apply to (i) all Third Party Payments for Third Party Licenses related to IL-23, which was chosen as a Target by ARCHEMIX prior to the Effective Date, and (ii) all Third Party Payments for Third Party Licenses relating to a Program Target, where such Third Party License is (1) for issued patents or pending patent applications that issued, were published or otherwise became publicly available after the date that ELAN designated that Program Target, or (2) pending patent applications that were published and pending in a country other than the United States or a Major Market Country or with the European Patent Office or as a PCT application on or before the date that ELAN designated that Program Target or (3) in settlement of litigation with respect to such Program Target.

Royalty Offsets. In the event that ELANMERCK, in order to successfully research, Develop and Commercialize a Product, or practice the licenses license granted to it hereunder under Section 8.2 of this Agreement in any countrycountry in the Territory, reasonably determines that it is legally or commercially necessary required to make and actually makes any royalty, milestone or license fee payments to any Third Party (“Third Party Payments”) in order (A) to obtain a license or other right, title or interest in and to an issued patent and/or, solely to the extent described or patents in the last sentence absence of this Section 5.4.1(c)which the Lead Compound portion of the Royalty-Bearing Product could not legally be manufactured, imported, sold, exported, or otherwise exploited in such country and/or (B) to obtain a pending license to an issued patent application (a “Third Party License”)or patents, in the absence of which the Licensed Patent Rights cannot legally be practiced in such country for making, using, importing, offering for sale, selling, exporting or otherwise exploiting such Royalty-Bearing Product, then the royalties payable to ARCHEMIX for such Product under Section 5.4.1(a6.6.1(a) with respect to such country may be reduced by [***] percent ([***]%) of the amount of such Third Party Payments; provided that . Notwithstanding the foregoing, (i) such reductions shall not in no event reduce the royalty that would otherwise be payable for such Royalty-Bearing Product under Section 5.4.1 6.6.1 with respect to such country by more than [***] percent ([***]%) of the amount otherwise payable with respect to Net Sales of such Product in such country (the “[***] Offset”). Unused [***] Offset credits may be carried over from one royalty period to the nextcountry, subject to the latter [***] ([***]%) limitation set forth above; provided, that (i) unused [***] Offset credits may only be applied in a subsequent royalty period after the reductions to be applied in such period pursuant to the first sentence of this Section 5.4.1(c) have been fully applied and (ii) MERCK shall be responsible for the payment of any unused [***] Offset credits that have not been offset against royalty royalty, milestone or license fee payments under this Section 5.4.1(c) within [***] years following accrual may not be carried over to any future royalty periods; provided, that, unused [***] Offset credits accrued prior Third Party relating to methods or processes for making or manufacturing the First Commercial Sale of a Royalty-Bearing Product may be applied as provided above for a period of [***] years commencing on the date of First Commercial Sale. Notwithstanding the foregoing, ELAN shall Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 406 of the Securities Act. 76 be solely responsible for, and the royalties payable to ARCHEMIX pursuant to Section 5.4.1 shall not be reduced by6.6.1(a) [***], any Third Party Payments solely to obtain a Third Party License to either and (aiii) a proprietary method of administering or packaging a pharmaceutical (for clarity, excluding proprietary in the event that MERCK requires that ARCHEMIX use in the Research Program molecules, methods and/or processes of formulation and drug delivery technologies not identified in Schedule 10 or MERCK requires that ARCHEMIX use in the Research Program specific molecules, methods and/or processes where such as controlled releasemolecules, transdermal deliverymethods and/or processes are generically identified in Schedule 10 (“Requested Chemistry”), nanotechnology and lyophilizingthereby giving rise to the obligation to pay royalty, all of which may be technologies for which such milestone or license fee payments to a Third Party (“Third Party Chemistry Payments), MERCK [***] Offset is available), or (b) a patent that had issued, or a patent application that was published and pending in the United States or a Major Market Country or with the European Patent Office or as a PCT application, at the time a Target was designated a Program Target by ELAN, and which then contained a valid or patentable claim that covered the Program Target (as agreed by the Patent Coordinators or, in the event they cannot reach agreement in good faith, a mutually-selected neutral of such Third Party patent attorney). For purposes of clarity, Chemistry Payments and the royalties payable to ARCHEMIX pursuant to Section 6.6.1(a) [***] Offset shall apply to (i) all Third Party Payments for Third Party Licenses related to IL-23, which was chosen as a Target by ARCHEMIX prior to the Effective Date, and (ii) all Third Party Payments for Third Party Licenses relating to a Program Target, where such Third Party License is (1) for issued patents or pending patent applications that issued, were published or otherwise became publicly available after the date that ELAN designated that Program Target, or (2) pending patent applications that were published and pending in a country other than the United States or a Major Market Country or with the European Patent Office or as a PCT application on or before the date that ELAN designated that Program Target or (3) in settlement of litigation with respect to such Program TargetChemistry Payments.

Royalty Offsets. In the event that ELANMERCK, in order to successfully research, Develop and Commercialize a Product, or practice the licenses license granted to it hereunder under Section 7.2 of this Agreement in any countrycountry in the Territory, reasonably determines that it is legally or commercially necessary required to make and actually makes any royalty, milestone or license fee payments to any Third Party (“Third Party Payments”) in order (A) to obtain a license or other right, title or interest in and to an issued patent and/or, solely to the extent described or patents in the last sentence absence of this Section 5.4.1(c)which the Lead Compound portion of the Product could not legally be manufactured, imported, sold, exported, or otherwise exploited in such country and/or (B) to obtain a pending license to an issued patent application (a “Third Party License”)or patents, in the absence of which the Licensed Patent Rights cannot legally be practiced in such country for making, using, importing, offering for sale, selling, exporting or otherwise exploiting such Product, then the royalties payable to ARCHEMIX for such Product under Section 5.4.1(a5.5.1(a) with respect to such country may be reduced by [***] percent ([***]%) of the amount of such Third Party Payments; provided that such reductions shall not reduce the royalty that would otherwise be payable for such Product under Section 5.4.1 by more than [***] percent ([***]%) of the amount otherwise payable with respect to Net Sales of such Product in such country (the “[***] Offset”). Unused [***] Offset credits may be carried over from one royalty period to the next, subject to the latter [***] ([***]%) limitation set forth above; provided, that (i) unused [***] Offset credits may only be applied in a subsequent royalty period after the reductions to be applied in such period pursuant to the first sentence of this Section 5.4.1(c) have been fully applied and (ii) any unused [***] Offset credits that have not been offset against royalty payments under this Section 5.4.1(c) within [***] years following accrual may not be carried over to any future royalty periods; provided, that, unused [***] Offset credits accrued prior to the First Commercial Sale of a Product may be applied as provided above for a period of [***] years commencing on the date of First Commercial Sale. Notwithstanding the foregoing, ELAN shall (i) such reductions Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 406 of the Securities Act. 76 38 shall in no event reduce the royalty that would otherwise be solely payable for such Product under Section 5.5.1 with respect to such country by more than [***] percent ([***]%) of the amount otherwise payable with respect to Net Sales of such Product in such country, (ii) MERCK shall be responsible forfor the payment of any royalty, milestone or license fee payments to any Third Party relating to methods or processes for making or manufacturing the Product and the royalties payable to ARCHEMIX pursuant to Section 5.4.1 shall not be reduced by5.5.1(a) [***], any Third Party Payments solely to obtain a Third Party License to either and (aiii) a proprietary method of administering or packaging a pharmaceutical (for clarity, excluding proprietary in the event that MERCK requires that ARCHEMIX use in the Research Program molecules, methods and/or processes of formulation and drug delivery technologies not identified in Schedule 11 or MERCK requires that ARCHEMIX use in the Research Program specific molecules, methods and/or processes where such as controlled releasemolecules, transdermal deliverymethods and/or processes are generically identified in Schedule 11 (“Requested Chemistry”), nanotechnology and lyophilizingthereby giving rise to the obligation to pay royalty, all of which may be technologies for which such milestone or license fee payments to a Third Party (“Third Party Chemistry Payments”), MERCK [***] Offset is available), or (b) a patent that had issued, or a patent application that was published and pending in the United States or a Major Market Country or with the European Patent Office or as a PCT application, at the time a Target was designated a Program Target by ELAN, and which then contained a valid or patentable claim that covered the Program Target (as agreed by the Patent Coordinators or, in the event they cannot reach agreement in good faith, a mutually-selected neutral of such Third Party patent attorney). For purposes of clarity, Chemistry Payments and the royalties payable to ARCHEMIX pursuant to Section 5.5.1(a) [***] Offset shall apply to (i) all Third Party Payments for Third Party Licenses related to IL-23, which was chosen as a Target by ARCHEMIX prior to the Effective Date, and (ii) all Third Party Payments for Third Party Licenses relating to a Program Target, where such Third Party License is (1) for issued patents or pending patent applications that issued, were published or otherwise became publicly available after the date that ELAN designated that Program Target, or (2) pending patent applications that were published and pending in a country other than the United States or a Major Market Country or with the European Patent Office or as a PCT application on or before the date that ELAN designated that Program Target or (3) in settlement of litigation with respect to such Program TargetChemistry Payments.