Common use of Third Party Payment Obligations Clause in Contracts

Third Party Payment Obligations. Subject to this Section 4.3(c), FivePrime shall have the right to deduct *** percent (***%) of the amount of any upfront, milestone and royalty payments owed by FivePrime (or its sublicensees) to Third Parties for licenses to Third Party Patents that, but for such license, would be infringed by the making, using, selling, offering for sale or importation of a Therapeutic Product in the country in which such activity occurs (“Third Party In-Licenses”). Such deductions shall be made, on a Product-by-Product and country-by-country basis, from royalties otherwise payable for Net Sales of such Product in such country during a Calendar Quarter according to this Section 4.3, provided that (i) any such reduction in a Calendar Quarter shall not exceed *** percent (***%) of the Net Sales of any Therapeutic Product in such country during such Calendar Quarter, and (ii) the royalty reduction provided under this Section 4.3(c) shall not apply to payments under Third Party In-Licenses required as a result of FivePrime’s Incorporation of Third Party Technology into the Product.