Common use of Royalty Reduction Clause in Contracts

Royalty Reduction. The royalties due under Section 4.8 or 4.9 above, as applicable, may be reduced on a country-by-country basis in the Territory by the amount of royalties paid or payable with respect to Necessary Third Party IP; provided, however, that royalties due under Section 4.8 or 4.9 above, as applicable, may not be reduced by more than [Redacted – percentage] of the royalties otherwise due (and will not in any case be reduced below [Redacted – percentage] of the amount of royalties that would otherwise be due, e.g., for Net Sales of a Tekmira Product up to and including [Redacted – amount], the minimum effective royalty rate would be [Redacted – percentage]%). For purposes of illustration only, if Aggregate Annual Net Sales of a Tekmira Product are [Redacted – amount] and royalties due to Third Parties in respect of the sale of such product total [Redacted – percentage] of Net Sales (or [Redacted – amount]), royalties due to Alnylam may be reduced only by [Redacted – amount] which is determined as follows: maximum reduction is [Redacted – percentage] of the royalty due on Net Sales of [Redacted – amount], calculated by [Redacted – calculation formula]. For the avoidance of doubt, royalties paid or payable by Alnylam pursuant to the Supplemental Agreement or the Sponsored Research Agreement shall constitute royalties paid or payable to Third Parties with respect to Necessary Third Party IP for purposes of this Section 4.10, notwithstanding any assignment or transfer of the rights to receive such payments to Tekmira or any of its Affiliates; provided, however, that royalties paid or payable pursuant to the Supplemental Agreement or the Sponsored Research Agreement on Aggregate Annual Net Sales greater than [Redacted – amount] of any Alnylam Product, where such royalties are paid or payable only because such Alnylam Product is Covered by a Valid Claim within the Category 1 Patents (i.e., where such royalties would not be paid or payable based on other patent rights in the absence of such Category 1 Patents), shall not result in a reduction to royalties under this Agreement pursuant to this Section 4.10 of more than [Redacted – percentage]% of such Aggregate Annual Net Sales greater than [Redacted – amount] in respect of any such Alnylam Product.

Royalty Reduction. The royalties due under Section 4.8 or 4.9 above, as applicable, may be reduced on a country-by-country basis in the Territory by the amount of royalties paid or payable with respect to Necessary Third Party IP; provided, however, that royalties due under Section 4.8 or 4.9 above, as applicable, may not be reduced by more than [Redacted – percentage**] of the royalties otherwise due (and will not in any case be reduced below [Redacted – percentage**] of the amount of royalties that would otherwise be due, e.g., for Net Sales of a Tekmira Product up to and including $[Redacted – amount**], the minimum effective royalty rate would be [Redacted – percentage]%**]%). For purposes of illustration only, if Aggregate Annual Net Sales of a Tekmira Product are $[Redacted – amount**] and royalties due to Third Parties in respect of the sale of such product total [Redacted – percentage**] percent ([**]%) of Net Sales (or $[Redacted – amount**]), royalties due to Alnylam may be reduced only by $[Redacted – amount**] which is determined as follows: maximum reduction is [Redacted – percentage**] of the royalty due on Net Sales of $[Redacted – amount**], calculated by [Redacted – calculation formula**]. For the avoidance of doubt, royalties paid or payable by Alnylam pursuant to the Supplemental Agreement or the Sponsored Research Agreement shall constitute royalties paid or payable to Third Parties with respect to Necessary Third Party IP for purposes of this Section 4.10, notwithstanding any assignment or transfer of the rights to receive such payments to Tekmira or any of its Affiliates; provided, however, that royalties paid or payable pursuant to the Supplemental Agreement or the Sponsored Research Agreement on Aggregate Annual Net Sales greater than $[Redacted – amount**] of any Alnylam Product, where such royalties are paid or payable only because such Alnylam Product is Covered by a Valid Claim within the Category 1 Patents (i.e., where such royalties would not be paid or payable based on other patent rights in the absence of such Category 1 Patents), shall not result in a reduction to royalties under this Agreement pursuant to this Section 4.10 of more than [Redacted – percentage]% **]% of such Aggregate Annual Net Sales greater than $[Redacted – amount**] in respect of any such Alnylam Product.

Royalty Reduction. The royalties due under Section 4.8 or 4.9 above, as applicable, may be reduced on a country-by-country basis in the Territory by the amount of royalties paid or payable with respect to Necessary Third Party IP; provided, however, that royalties due under Section 4.8 or 4.9 above, as applicable, may not be reduced by more than [Redacted – percentage**] of the royalties otherwise due (and will not in any case be reduced below [Redacted – percentage**] of the amount of royalties that would otherwise be due, e.g., for Net Sales of a Tekmira Product up to and including [Redacted – amount**], the minimum effective royalty rate would be [Redacted – percentage]%**]%). For purposes of illustration only, if Aggregate Annual Net Sales of a Tekmira Product are [Redacted – amount**] and royalties due to Third Parties in respect of the sale of such product total [Redacted – percentage**] of Net Sales (or [Redacted – amount**]), royalties due to Alnylam may be reduced only by [Redacted – amount**] which is determined as follows: maximum reduction is [Redacted – percentage**] of the royalty due on Net Sales of [Redacted – amount**], calculated by [Redacted – calculation formula**]. For the avoidance of doubt, royalties paid or payable by Alnylam pursuant to the Supplemental Agreement or the Sponsored Research Agreement shall constitute royalties paid or payable to Third Parties with respect to Necessary Third Party IP for purposes of this Section 4.10, notwithstanding any assignment or transfer of the rights to receive such payments to Tekmira or any of its Affiliates; provided, however, that royalties paid or payable pursuant to the Supplemental Agreement or the Sponsored Research Agreement on Aggregate Annual Net Sales greater than [Redacted – amount**] of any Alnylam Product, where such royalties are paid or payable only because such Alnylam Product is Covered by a Valid Claim within the Category 1 Patents (i.e., where such royalties would not be paid or payable based on other patent rights in the absence of such Category 1 Patents), shall not result in a reduction to royalties under this Agreement pursuant to this Section 4.10 of more than [Redacted – percentage]% **]% of such Aggregate Annual Net Sales greater than [Redacted – amount**] in respect of any such Alnylam Product.

Royalty Reduction. The royalties due under (i) On a Licensed Product-by-Licensed Product, country-by-country, and Calendar Quarter-by-Calendar Quarter basis, subject to Section 4.8 or 4.9 above6.3(c)(iv), as applicableduring any Calendar Quarter in which such Licensed Product is not Covered by a Valid Claim of a Licensed Patent in such country, may the royalty rate with respect to such Licensed Product in such country for such Calendar Quarter will be reduced to [**] percent ([**]%) of the applicable rate set forth in Section 6.3(a). (ii) On a Licensed Product-by-Licensed Product basis, subject to Section 6.3(c)(iv), Astria may deduct [**] percent ([**]%) of any Deductible Third Party Payments paid by Astria or any of its Affiliates with respect to such Licensed Product from the royalties otherwise owed to Ichnos pursuant to Section 6.3(a). (iii) If, on a Licensed Product-by-Licensed Product, country-by-country basis in the Territory by the amount of royalties paid or payable and Calendar Quarter-by-Calendar Quarter basis, there is Biosimilar Competition with respect to Necessary Third Party IP; providedsuch Licensed Product in such country during such Calendar Quarter, howeverthen, that royalties due under subject to Section 4.8 or 4.9 above, as applicable, may not be reduced by more than [Redacted – percentage] of the royalties otherwise due (and will not in any case be reduced below [Redacted – percentage] of the amount of royalties that would otherwise be due, e.g., for Net Sales of a Tekmira Product up to and including [Redacted – amount]​ 6.3(c)(iv), the minimum effective royalty rate would be [Redacted – percentage]%). For purposes of illustration only, if Aggregate Annual Net Sales of a Tekmira Product are [Redacted – amount] and royalties due to Third Parties in respect of the sale of such product total [Redacted – percentage] of Net Sales (or [Redacted – amount]), royalties due to Alnylam may be reduced only by [Redacted – amount] which is determined as follows: maximum reduction is [Redacted – percentage] of the royalty due on Net Sales of [Redacted – amount], calculated by [Redacted – calculation formula]. For the avoidance of doubt, royalties paid or payable by Alnylam pursuant to the Supplemental Agreement or the Sponsored Research Agreement shall constitute royalties paid or payable to Third Parties with respect to Necessary Third Party IP such Licensed Product in such country for purposes such Calendar Quarter will be reduced to [**] percent ([**]%) of the applicable rate set forth in Section 6.3. (iv) In no event shall the royalty reductions described in this Section 6.3(c), alone or together, reduce the royalties payable by Astria for a given Licensed Product in a given Calendar Quarter to less than [**] percent ([**]%) of the amounts otherwise payable by Astria for such Licensed Product in such Calendar Quarter pursuant to Section 6.3. Astria may carry over and apply any such royalty reductions that are accrued in a Calendar Quarter and are not deducted in such Calendar Quarter due to the limitation set forth in the first sentence of this Section 4.106.3(c)(iv) to any subsequent Calendar Quarter(s) and shall begin applying such reductions to such royalties as soon as practicable and continue applying such reductions on a Calendar Quarter basis thereafter until fully deducted, notwithstanding any assignment or transfer of the rights to receive such payments to Tekmira or any of its Affiliates; provided, however, that royalties paid or payable pursuant in all cases subject to the Supplemental Agreement or the Sponsored Research Agreement on Aggregate Annual Net Sales greater than [Redacted – amount] of any Alnylam Product, where such royalties are paid or payable only because such Alnylam Product is Covered by a Valid Claim within the Category 1 Patents (i.e., where such royalties would not be paid or payable based on other patent rights limitation set forth in the absence first sentence of such Category 1 Patents), shall not result in a reduction to royalties under this Agreement pursuant to this Section 4.10 of more than [Redacted – percentage]% of such Aggregate Annual Net Sales greater than [Redacted – amount] in respect of any such Alnylam Product6.3(c)(iv).

Royalty Reduction. The royalties due under Section 4.8 (a) If in any country or 4.9 aboveother jurisdiction in the Territory during the Initial Term or a Subsequent Term, as applicable, may a Generic Product is launched in such country or other jurisdiction: (i) the applicable royalty rate(s) set forth in Appendix A for Net Sales of the Licensed Product in such country or jurisdiction following such launch will be reduced by [***] for the remainder of the Initial Term; and (ii) if following such launch the average Net Sales of Licensed Product in any [***] Calendar Quarters in that country or other jurisdiction are, in comparison to the average Net Sales of Licensed Product in the same [***] Calendar Quarters of the immediately preceding calendar year in that country or other jurisdiction, reduced by [***] the applicable royalty rate(s) set forth in Appendix A will be reduced by an additional [***] for the remainder of the Initial Term. (b) Licensee will be entitled to deduct against royalties otherwise payable to X4 hereunder up to [***] of royalty payments that Licensee makes to Third Parties in exchange for a license to intellectual property rights that are necessary to commercialize the Licensed Product in the Territory, provided that with respect to any such Third Party payments that are attributable to the X4’s breach of this Agreement, Licensee will be entitled to deduct an amount equal to [***] of such Third Party payments. (c) If, on a country-by-country basis in county basis, (i) the Territory by the amount composition of royalties paid matter or payable with respect to Necessary Third Party IP; provided, however, that royalties due under Section 4.8 or 4.9 above, as applicable, may not be reduced by more than [Redacted – percentage] method of the royalties otherwise due (and will not in any case be reduced below [Redacted – percentage] of the amount of royalties that would otherwise be due, e.g., for Net Sales use of a Tekmira Licensed Product up to and including [Redacted – amount], (as reflected on the minimum effective royalty rate would be [Redacted – percentage]%). For purposes of illustration only, if Aggregate Annual Net Sales of a Tekmira Product are [Redacted – amount] and royalties due to Third Parties in respect of the sale of approved label for such product total [Redacted – percentage] of Net Sales (or [Redacted – amount]), royalties due to Alnylam may be reduced only by [Redacted – amount] which Licensed Product) is determined as follows: maximum reduction is [Redacted – percentage] of the royalty due on Net Sales of [Redacted – amount], calculated by [Redacted – calculation formula]. For the avoidance of doubt, royalties paid or payable by Alnylam pursuant to the Supplemental Agreement or the Sponsored Research Agreement shall constitute royalties paid or payable to Third Parties with respect to Necessary Third Party IP for purposes of this Section 4.10, notwithstanding any assignment or transfer of the rights to receive such payments to Tekmira or any of its Affiliates; provided, however, that royalties paid or payable pursuant to the Supplemental Agreement or the Sponsored Research Agreement on Aggregate Annual Net Sales greater than [Redacted – amount] of any Alnylam Product, where such royalties are paid or payable only because such Alnylam Product is not Covered by a Valid Claim within of the Category 1 Licensed Patents and (i.e.ii) expiry of the regulatory market exclusivity (including any orphan designation exclusivity) for the Licensed Product, where whichever is later, the royalty rates set forth in Appendix A for Net Sales of the Licensed Product in such royalties would not country shall be paid or payable based on other patent rights in reduced by [***]for the absence remainder of such Category 1 Patents), shall not result the Initial Term. (d) Following expiry of the Initial Term in a reduction to royalties under this Agreement pursuant to this Section 4.10 country, the royalty rates set forth in Appendix A for Net Sales of more than the Licensed Product in such country shall no longer be payable and instead Licensee shall pay, in consideration for the Licensed Know-How and the X4 Trademark, a royalty on Net Sales of Licensed Product by the Licensee and its Affiliates at a rate of [Redacted – percentage]% ***]of such Aggregate Annual Net Sales greater than [Redacted – amount] of Licensed Product in respect the Territory. For clarity, no other royalty reductions shall apply following expiry of any such Alnylam Productthe Initial Term.

Royalty Reduction. The royalties due under In the event that, or from and after the date after which, no Valid Claim of Improvement Patent Rights covering a Product exists in a particular country, the royalty described in Section 4.8 or 4.9 above, as applicable, may 3.4(a) shall be reduced on a country-by-by [**] in such country basis in the Territory by the amount of royalties paid or payable with respect to Necessary Third Party IP; provided, however, that royalties due under Section 4.8 or 4.9 above, as applicable, may (but shall not be reduced by more to less than [Redacted – percentage] of the royalties otherwise due (**]) and will not in any case be reduced below [Redacted – percentage] of the amount of royalties that would otherwise be due, e.g., payable for Net Sales of a Tekmira such Product up to in such country until the later of(i) the date which is five (5) years after the date of First Commercial Sale of the first Product in such country, and including [Redacted – amount], (ii) the minimum effective royalty rate would be [Redacted – percentage]%). For purposes date of illustration only, if Aggregate Annual Net Sales expiration of a Tekmira Product are [Redacted – amount] and royalties due to Third Parties Lilly's regulatory exclusivity in respect of such Product in such country. Additionally, as regards Combination Product not covered by a Valid Claim of Improvement Patent Rights but covered by a Valid Claim of a patent owned or controlled by Lilly, which Valid Claim claims, generically or specifically, (i) a non-R-fluoxetine active ingredient of such Combination Product as a composition of matter, (ii) the labeled use of a non-R-fluoxetine active ingredient of such Combination Product, (iii) the Combination Product itself as a composition of matter, or (iv) the labeled use of such Combination Product, the royalty of Section 3.4(a) shall be eliminated from and after the date of launch in the country in question of a generic equivalent of Native R-fluoxetine Product by a third party not authorized by Lilly. Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. The provisions of this Section 3.4 that call for reduction or elimination of royalties when particular Patent Rights are rendered invalid, unenforceable, or not patentable to Sepracor shall be referred to as "patent invalidation royalty reduction provisions". The parties further agree that royalties on a Product that at the time of sale is not, but once was, covered by a Valid Claim of Improvement Patent Rights shall not be reduced or eliminated pursuant to the patent invalidation royalty reduction provisions of this Section 3.4 concerning Improvement Patent Rights if such Valid Claim was rendered invalid, unenforceable, or not patentable to Sepracor in an administrative or legal action (including but not limited to reexamination, reissue, opposition, or interference) brought by, on behalf of or at the direction of, or in whole or in part by, Lilly or a Permitted Sublicensee, or involving Lilly or a Permitted Sublicensee as a party provided that Lilly or Permitted Sublicensee is not made a party to such administrative or legal action due to the actions of another party thereto. For the purposes of this Section, a Valid Claim of Improvement Patent Rights shall be deemed to cover a Product if the sale of such product total [Redacted – percentage] Product would be within the scope of Net Sales (or [Redacted – amount]), royalties due to Alnylam may be reduced only by [Redacted – amount] which is determined as follows: maximum reduction is [Redacted – percentage] such Valid Claim in accordance with the established principles of patent claim interpretation of the royalty due on Net Sales of [Redacted – amount], calculated by [Redacted – calculation formula]. For jurisdiction where the avoidance of doubt, royalties paid or payable by Alnylam pursuant to the Supplemental Agreement or the Sponsored Research Agreement shall constitute royalties paid or payable to Third Parties with respect to Necessary Third Party IP for purposes of this Section 4.10, notwithstanding any assignment or transfer of the rights to receive such payments to Tekmira or any of its Affiliates; provided, however, that royalties paid or payable pursuant to the Supplemental Agreement or the Sponsored Research Agreement on Aggregate Annual Net Sales greater than [Redacted – amount] of any Alnylam Product, where such royalties are paid or payable only because such Alnylam Product is Covered by a Valid Claim within the Category 1 Patents (i.e., where such royalties would not be paid or payable based on other patent rights in the absence of such Category 1 Patents), shall not result in a reduction to royalties under this Agreement pursuant to this Section 4.10 of more than [Redacted – percentage]% of such Aggregate Annual Net Sales greater than [Redacted – amount] in respect of any such Alnylam Productapplies.

Royalty Reduction. The royalties due under (i) On a Licensed Product-by-Licensed Product, country-by-country, and Calendar Quarter-by-Calendar Quarter basis, subject to Section 4.8 or 4.9 above5.3(c)(iv), as applicableduring any Calendar Quarter in which (A) such Licensed Product in such country is not Covered by a Valid Claim of a GFB Patent in such country and (B) there is no Regulatory Exclusivity with respect to such Licensed Product in such country, may the royalty rate with respect to such Licensed Product in such country for such Calendar Quarter will be reduced to [***] of the applicable rate set forth in Section 5.3(a). (ii) On a Licensed Product-by-Licensed Product basis, subject to Section 5.3(c)(iv), Karuna may deduct [***] of any Deductible Third Party Payments paid by Karuna with respect to such Licensed Product from the royalties otherwise owed to GFB pursuant to Section 5.3(a). (iii) If, on a Licensed Product-by-Licensed Product, country-by-country basis in the Territory by the amount of royalties paid or payable and Calendar Quarter-by-Calendar Quarter basis, there is Generic Competition with respect to Necessary Third Party IP; providedsuch Licensed Product in such country during such Calendar Quarter, howeverthen, that royalties due under subject to Section 4.8 or 4.9 above5.3(c)(iv), as applicable, may not the royalty rate with respect to such Licensed Product in such country for such Calendar Quarter will be reduced by more than to [Redacted – percentage***] of the applicable rate set forth in Section 5.3(a). (iv) In no event shall the royalty reductions described in this Section 5.3(c), alone or together, reduce the royalties otherwise due (and will not payable by Karuna for a given Licensed Product in any case be reduced below a given Calendar Quarter to less than [Redacted – percentage***] of the amount of royalties that would amounts otherwise be due, e.g., payable by Karuna for Net Sales of a Tekmira such Licensed Product up in such Calendar Quarter pursuant to and including [Redacted – amount], the minimum effective royalty rate would be [Redacted – percentage]%Section 5.3(a). For purposes of illustration only, if Aggregate Annual Net Sales of Karuna may carry over and apply any such royalty reductions that are accrued in a Tekmira Product Calendar Quarter and are [Redacted – amount] and royalties not deducted in such Calendar Quarter due to Third Parties the limitation set forth in respect of the sale of such product total [Redacted – percentage] of Net Sales (or [Redacted – amount]), royalties due to Alnylam may be reduced only by [Redacted – amount] which is determined as follows: maximum reduction is [Redacted – percentage] of the royalty due on Net Sales of [Redacted – amount], calculated by [Redacted – calculation formula]. For the avoidance of doubt, royalties paid or payable by Alnylam pursuant to the Supplemental Agreement or the Sponsored Research Agreement shall constitute royalties paid or payable to Third Parties with respect to Necessary Third Party IP for purposes first sentence of this Section 4.105.3(c)(iv) to any subsequent Calendar Quarter(s) and shall begin applying such reductions to such royalties as soon as practicable and continue applying such reductions on a Calendar Quarter basis thereafter until fully deducted, notwithstanding any assignment or transfer of the rights to receive such payments to Tekmira or any of its Affiliates; provided, however, that royalties paid or payable pursuant in all cases subject to the Supplemental Agreement or the Sponsored Research Agreement on Aggregate Annual Net Sales greater than [Redacted – amount] of any Alnylam Product, where such royalties are paid or payable only because such Alnylam Product is Covered by a Valid Claim within the Category 1 Patents (i.e., where such royalties would not be paid or payable based on other patent rights limitation set forth in the absence first sentence of such Category 1 Patents), shall not result in a reduction to royalties under this Agreement pursuant to this Section 4.10 of more than [Redacted – percentage]% of such Aggregate Annual Net Sales greater than [Redacted – amount] in respect of any such Alnylam Product5.3(c)(iv).