Common use of Third Party Royalties Clause in Contracts

Third Party Royalties. If Genentech or Connetics is required to pay any third party a royalty due to the manufacture, use, sale, offer for sale or importation of a Licensed Product in the Territory for or by Connetics or its sublicensees, Connetics shall be responsible for the payment of […***…] of such third-party royalty, provided however, that Connetics may deduct from the royalties otherwise payable to Genentech under Section 8.3 above, an amount equal to […***…] of such third party royalties incurred only due to use patents in the Field of Use or in the Gene Therapy Field of Use in the Territory, provided that the amount deducted shall not exceed […***…] of the royalties otherwise payable by Connetics to Genentech under Section 8.3. For purposes of clarification, such deductions shall not apply to […***…]. Attached hereto as Exhibit G is a list of all such royalty obligations to third parties known to Genentech as of the Effective Date without diligent search. No later than thirty (30) days from the Effective Date, Genentech shall complete a reasonable internal investigation of its records and update Exhibit G, as necessary, to accurately reflect all such royalty obligations to third parties to the best of Genentech’s knowledge; provided however, Connetics acknowledges that Genentech has no obligation to conduct due diligence or any investigation with respect to third party patent rights related to Licensed Products. Genentech shall notify Connetics in writing during the term of this Agreement if it becomes aware of any additional Genentech third party royalty obligations. 17. Section 8.5 of the License Agreement is hereby deleted and replaced in its entirety as follows:

Third Party Royalties. If Genentech or Connetics is required to pay any third party a royalty due to the manufacture, use, sale, offer for sale or importation of a Licensed Product in the Territory for or by Connetics or its sublicensees, Connetics shall be responsible for the payment of […***…] * of such third-party royalty, provided however, that Connetics may deduct from the royalties otherwise payable to Genentech under Section 8.3 above, an amount equal to […***…] * of such third party royalties incurred only due to use patents in the Field of Use or in the Gene Therapy Field of Use in the Territory, provided that the amount deducted shall not exceed […***…] * of the royalties otherwise payable by Connetics to Genentech under Section 8.3. For purposes of clarification, such deductions shall not apply to […***…]* . Attached hereto as Exhibit G is a list of all such royalty obligations to third parties known to Genentech as of the Effective Date without diligent search. No later than thirty (30) days from the Effective Date, Genentech shall complete a reasonable internal investigation of its records and update Exhibit G, as necessary, to accurately reflect all such royalty obligations to third parties to the best of Genentech’s knowledge; provided however, Connetics acknowledges that Genentech has no obligation to conduct due diligence or any investigation with respect to third party patent rights related to Licensed Products. Genentech shall notify Connetics in writing during the term of this Agreement if it becomes aware of any additional Genentech third party royalty obligations. 17. Section 8.5 of the License Agreement is hereby deleted and replaced in its entirety as follows:

Third Party Royalties. If Genentech or Connetics is required to pay any third party a royalty due to the manufacture, use, sale, offer for sale or importation of a Licensed Product in the Territory for or by Connetics or its sublicensees, Connetics shall be responsible for the payment of […***…[ * ] of such third-party royalty, provided howeverPROVIDED HOWEVER, that Connetics may deduct from the royalties otherwise payable to Genentech under Section 8.3 above, an amount equal to […***…[ * ] of such third party royalties incurred only due to use patents in the Field of Use or in the Gene Therapy Field of Use in the Territory, provided that the amount deducted shall not exceed […***…[ * ] of the royalties otherwise payable by Connetics to Genentech under Section 8.3. For purposes of clarification, such deductions shall not apply to […***…[ * ]. Attached hereto as Exhibit G is a list of all such royalty obligations to third parties known to Genentech as of the Effective Date without diligent search. No later than thirty (30) days from the Effective Date, Genentech shall complete a reasonable internal investigation of its records and update Exhibit G, as necessary, to accurately reflect all such royalty obligations to third parties to the best of Genentech’s 's knowledge; provided however, Connetics acknowledges that Genentech has no obligation to conduct due diligence or any investigation with respect to third party patent rights related to Licensed Products. Genentech shall notify Connetics in writing during the term of this Agreement if it becomes aware of any additional Genentech third party royalty obligations. 17. Section 8.5 of the License Agreement is hereby deleted and replaced in its entirety as follows:

Third Party Royalties. If Genentech or Connetics is required to pay any third party a royalty due to the manufacture, use, sale, offer for sale or importation of a Licensed Product in the Territory for or by Connetics or its sublicensees, Connetics shall be responsible for the payment of […***…] of such third-party royalty, provided however, that Connetics may deduct from the royalties otherwise payable to Genentech under Section 8.3 above, an amount equal to above […***…] of such third party royalties incurred only due to use patents in the Field of Use or in the Gene Therapy Field of Use in the Territory, provided that the amount deducted shall not exceed up to a maximum total deduction of […***…] of percentage points from the royalties otherwise payable by Connetics to Genentech under Section 8.3. For purposes of clarification, such deductions shall not apply to any benchmark payment under the […***…]] License made by Connetics pursuant to Section 5.2(c) above. Attached hereto as Exhibit G is a list of all such royalty obligations to third parties known to Genentech as of the Effective Date without diligent search. No later than thirty (30) days from the Effective Date, Genentech shall complete a reasonable internal investigation of its records and update Exhibit G, as necessary, to accurately reflect all such royalty obligations to third parties to the best of Genentech’s knowledge; provided however, Connetics acknowledges that Genentech has no obligation to conduct due diligence or any investigation with respect to third party patent rights related to Licensed Products. Genentech shall notify Connetics in writing during the term of this Agreement if it becomes aware of any additional Genentech third party royalty obligations. 17. Section 8.5 of the License Agreement is hereby deleted and replaced in its entirety as follows:

Third Party Royalties. If Genentech or Connetics is required to pay any third party a royalty due to the manufacture, use, sale, offer for sale or importation of a Licensed Product in the Territory for or by Connetics or its sublicensees, Connetics shall be responsible for the payment of […***…] * of such third-party royalty, provided however, that Connetics may deduct from the royalties otherwise payable to Genentech under Section 8.3 above, an amount equal to […above ***…] * of such third party royalties incurred only due to use patents in the Field of Use or in the Gene Therapy Field of Use in the Territory, provided that the amount deducted shall not exceed […up to a maximum total deduction of ***…] of * percentage points from the royalties otherwise payable by Connetics to Genentech under Section 8.3. For purposes of clarification, such deductions shall not apply to […any benchmark payment under the ***…]* License made by Connetics pursuant to Section 5.2(c) above. Attached hereto as Exhibit G is a list of all such royalty obligations to third parties known to Genentech as of the Effective Date without diligent search. No later than thirty (30) days from the Effective Date, Genentech shall complete a reasonable internal investigation of its records and update Exhibit G, as necessary, to accurately reflect all such royalty obligations to third parties to the best of Genentech’s knowledge; provided however, Connetics acknowledges that Genentech has no obligation to conduct due diligence or any investigation with respect to third party patent rights related to Licensed Products. Genentech shall notify Connetics in writing during the term of this Agreement if it becomes aware of any additional Genentech third party royalty obligations. *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission. 17. Section 8.5 of the License Agreement is hereby deleted and replaced in its entirety as follows:

Third Party Royalties. If Genentech or Connetics is required to pay any third party a royalty due to the manufacture, use, sale, offer for sale or importation of a Licensed Product in the Territory for or by Connetics or its sublicensees, Connetics shall be responsible for the payment of […***…] of such third-party royalty, provided however, that Connetics may deduct from the royalties otherwise payable to Genentech under Section 8.3 above, an amount equal to […***…] of such third party royalties incurred only due to use patents in the Field of Use or in the Gene Therapy Field of Use in the Territory, provided that the amount deducted shall not exceed […***…] of the royalties otherwise payable by Connetics to Genentech under Section 8.3. For purposes of clarification, such deductions shall not apply to […***…]. Attached hereto as Exhibit G is a list of all such royalty obligations to third parties known to Genentech as of the Effective Date without diligent search. No later than thirty (30) days from the Effective Date, Genentech shall complete a reasonable internal investigation of its records and update Exhibit G, as necessary, to accurately reflect all such royalty obligations to third parties to the best of Genentech’s 's knowledge; provided however, Connetics acknowledges that Genentech has no obligation to conduct due diligence or any investigation with respect to third party patent rights related to Licensed Products. Genentech shall notify Connetics in writing during the term of this Agreement if it becomes aware of any additional Genentech third party royalty obligations. 17. Section 8.5 of the License Agreement is hereby deleted and replaced in its entirety as follows: