Common use of Offset for Third Party Licenses Clause in Contracts

Offset for Third Party Licenses. (a) Appendix B sets forth the allocation between the parties of the costs associated with each Third Party License entered into prior to the Effective Date. Such costs include license fees and any other fixed costs associated with the Third Party License as well as any royalties. After the Effective Date, the parties shall, within [*] of the end of each [*], reimburse each other in accordance with this Section 7.4 to effect the agreed-on sharing of such license fees and other fixed costs. Both parties hereby acknowledge that [*] has obtained a required license from the [*] to use the [*] in order to carry out the activities anticipated by this Amended and Restated Worldwide Agreement and that [*] has reimbursed [*] under the 1989 Agreements so that the license fees and other fixed costs of the [*] license have been shared [*] (b) If PDL and Roche agree in writing, after the Effective Date, that either party must obtain an additional license from an independent Third Party in order for Roche or PDL to manufacture, use, import, offer for sale or sell Daclizumab and if PDL and Roche agree on the terms of such license, then such license shall be deemed a Third Party License and the parties shall, subject to Sections 2.3, 7.4(c) and 7.4(d), share the cost of such Third Party License [*]. Such cost includes license fees and any other fixed costs associated with such Third Party License as well as any royalties. The parties shall, within [*] of the end of each [*], reimburse each other in accordance with this Section 7.4 to effect a [*] of such license fees and other fixed costs. (c) Notwithstanding anything to the contrary herein, the following mechanism shall apply to the royalty portion of any Third Party Licenses to the extent such royalties arise due to sales of Daclizumab by Roche or its Affiliates or sublicensees during the time that Roche is obligated to pay royalties to PDL pursuant to Section 7.2(a): (i) PDL’s share of such Third Party royalties shall be accrued against and deducted from any amounts due to PDL from Roche pursuant to Section 7.2(a) if Roche pays the royalties due under the Third Party License to such Third Party, and (ii) Roche’s share of the royalties portion of the cost of any Third Party License shall be accrued in favor of and added to any amounts due to PDL from Roche pursuant to Section 7.2(a) if PDL pays the royalties due under the Third Party License to such Third Party; provided, however, that the total amounts of all deductions made by Roche pursuant to clause (i) above (without taking into account any additions made pursuant to clause (ii)) shall not exceed [*] of the amount that would otherwise be due to PDL, pursuant to Section 7.2(a), in any calendar quarter if no adjustments were permitted to account for payments made pursuant to Third Party Licenses; provided further that the sum of Roche’s royalty obligations to PDL under Section 7.2(a) in any calendar quarter, plus Roche’s share of those royalties payable for such calendar quarter to Third Parties pursuant to Third Party Licenses shall not exceed [*] of the amount that would otherwise be due to PDL, pursuant to Section 7.2(a), in such calendar quarter if no adjustments were permitted to account for payments made pursuant to Third Party Licenses. Royalty payments made by Roche or PDL pursuant to Third Party Licenses that, due to the limitations set forth in the preceding sentence, cannot be deducted from, or added to, the amount to be paid to PDL by Roche under Section 7.2(a), may be carried forward to subsequent calendar quarters. An example of the foregoing principles is set forth in Appendix D. (d) Notwithstanding anything to the contrary herein, the following mechanism shall apply to the royalty portion of any Third Party Licenses to the extent such royalties arise due to sales of Daclizumab by PDL or its Affiliates or sublicensees during the time that PDL is obligated to pay royalties to Roche, pursuant to Section 7.2(c): (i) Roche’s share of such Third Party royalties shall be accrued against and deducted from any amounts due to Roche from PDL pursuant to Section 7.2(c) if PDL pays the royalties due under the Third Party License to such Third Party, and (ii) PDL’s share of such Third Party royalties shall be accrued in favor of and added to any amounts due to Roche from PDL pursuant to Section 7.2(c) if Roche pays the royalties due under the Third Party License to such Third Party; provided, however, that the royalty payments made by PDL to Roche pursuant to Section 7.2(c) shall not, as a result of the adjustments set forth in this Section 7.4(d), be reduced to less than [*] of PDL Net Sales. Royalty payments made by Roche or PDL pursuant to Third Party Licenses that, due to the maximum royalty rate set forth in the preceding sentence, cannot be deducted from, or added to, the amount to be paid to PDL by Roche under Section 7.2(c), may be carried forward to subsequent calendar years. (e) If PDL exercises the Transplant Reversion or Roche exercises the Roche Put Right, then commencing on the Reversion Effective Date or the Put Right Effective Date (as applicable): (i) Roche shall not have any further obligation pursuant to this Section 7.4 to share the costs of, or pay directly, any royalties pursuant to any Third Party Licenses on account of sales of Daclizumab by PDL or its Affiliates or sublicensees, and (ii) PDL shall thereafter have sole responsibility for paying such royalties. (f) If the Exercise Period expires without PDL exercising the Transplant Reversion or Roche exercising the Roche Put Right, then: (i) commencing on [*], with respect to sales of Daclizumab in the [*] by Roche and its Affiliates and sublicensees, or [*], with respect to sales of Daclizumab in the [*] by Roche and its Affiliates and sublicensees, (A) PDL shall not have any further obligation pursuant to this Section 7.4 to share the costs of, or pay directly, any royalties pursuant to any Third Party Licenses on account of sales of Daclizumab by Roche or its Affiliates or sublicensees, and (B) Roche shall thereafter have sole responsibility for paying such royalties. (ii) commencing on, a country-by-country basis, with the expiration of PDL’s obligations to pay royalties to Roche, pursuant to Section 7.2(c), in such country with respect to the sale of Daclizumab by PDL and its Affiliates and sublicensees, (A) Roche shall not have any further obligation pursuant to this Section 7.4 to share the costs of, or pay directly, any royalties pursuant to any Third Party Licenses on account of sales of Daclizumab by PDL or its Affiliates or sublicensees, and (B) PDL shall thereafter have sole responsibility for paying such royalties.

Offset for Third Party Licenses. (a) Appendix B sets forth If PDL and Roche agree in writing that either party must obtain a license from an independent third party in order for Roche to manufacture, use or sell a Licensed Product or for PDL to fulfill its obligations under the allocation between Research Program and if PDL and Roche agree upon the terms of such license ("Third Party License"), then the parties shall [ ] the cost of the costs associated with each Third Party License entered into prior to the Effective Datethat license [ ]. Such costs include cost includes license fees and any other fixed costs associated with the Third Party License as well as any royalties. After the Effective Date, the The parties then shall, within [*] of the end of each [*]thirty (30) days, reimburse each other in accordance with this Section 7.4 the manner necessary to effect the agreed-on sharing a [ ] of such license fees and other fixed costs. Both parties hereby acknowledge that [*] PDL has obtained a required license from the [*] National Technical Information Service ("NTIS") to use the [*] anti-Tac antibody prepared against the IL-2R in order to carry out the activities anticipated by this Amended and Restated Worldwide Agreement Agreement, and that [*] has reimbursed [*] under Roche will reimburse PDL within thirty (30) days of the 1989 Agreements Effective Date so that the license fees and other fixed costs of the [*] NTIS license will have been shared [*[ ]. (b) If PDL and Roche agree in writing, after PDL's share of the Effective Date, that either party must obtain an additional license from an independent Third Party in order for Roche or PDL to manufacture, use, import, offer for sale or sell Daclizumab and if PDL and Roche agree on the terms royalties portion of such license, then such license shall be deemed a Third Party License and the parties shall, subject to Sections 2.3, 7.4(c) and 7.4(d), share the cost of such Third Party License [*]. Such cost includes license fees and any other fixed costs associated with such Third Party License as well as any royalties. The parties shall, within [*] of the end of each [*], reimburse each other in accordance with this Section 7.4 to effect a [*] of such license fees and other fixed costs. (c) Notwithstanding anything to the contrary herein, the following mechanism shall apply to the royalty portion of any Third Party Licenses to License, including the extent such royalties arise due to sales of Daclizumab by Roche or its Affiliates or sublicensees during the time that Roche is obligated to pay royalties to PDL pursuant to Section 7.2(a): aforementioned license from NTIS, shall be (i) PDL’s share of such Third Party royalties shall be accrued against and deducted from any amounts royalties due to PDL from Roche pursuant to Section 7.2(a) Sections 4.01 and 4.02 if Roche pays the royalties due under the Third Party License to such Third Partythird party, and (ii) Roche’s share of the royalties portion of the cost of any Third Party License shall be accrued in favor of and added to any amounts royalties due to PDL from Roche pursuant to Section 7.2(a) Sections 4.01 and 4.02 if PDL pays the royalties due under the Third Party License to such Third Partythird party; provided, however, that the total amounts of all deductions made by Roche pursuant to clause (i) above (without taking into account any additions made pursuant to clause (ii)) this addition or offset shall not exceed [*cause PDL's royalties to be reduced under the schedule set forth in Section 4.01 to less than [ ] of the amount that would otherwise be due to PDL, pursuant to Section 7.2(a), Net Sales in any calendar quarter year, or under Sections 4.01(b) and 4.02 to less than [ ] if no adjustments were permitted to account for payments made pursuant to Third Party Licenses; Roche has de facto exclusivity and [ ] if Roche does not have de facto exclusivity, and provided further further, that the sum of Roche’s 's total royalty obligations to PDL under Section 7.2(a) in any calendar quarter, plus Roche’s share of Sections 4.01 and 4.02 when added to those royalties payable for such calendar quarter to Third Parties third parties pursuant to Third Party Licenses shall not exceed [*[ ] of the amount that would otherwise be due to PDL, pursuant to Section 7.2(a), Net Sales in such calendar quarter if no adjustments were permitted to account for payments made pursuant to Third Party Licenses. Royalty payments made by Roche or PDL pursuant to Third Party Licenses that, due to the limitations set forth in the preceding sentence, cannot be deducted from, or added to, the amount to be paid to PDL by Roche under Section 7.2(a), may be carried forward to subsequent calendar quarters. An example of the foregoing principles is set forth in Appendix D. (d) Notwithstanding anything to the contrary herein, the following mechanism shall apply to the royalty portion of any Third Party Licenses to the extent such royalties arise due to sales of Daclizumab by PDL or its Affiliates or sublicensees during the time that PDL is obligated to pay royalties to Roche, pursuant to Section 7.2(c): (i) Roche’s share of such Third Party royalties shall be accrued against and deducted from any amounts due to Roche from PDL pursuant to Section 7.2(c) if PDL pays the royalties due under the Third Party License to such Third Party, and (ii) PDL’s share of such Third Party royalties shall be accrued in favor of and added to any amounts due to Roche from PDL pursuant to Section 7.2(c) if Roche pays the royalties due under the Third Party License to such Third Party; provided, however, that the royalty payments made by PDL to Roche pursuant to Section 7.2(c) shall not, as a result of the adjustments set forth in this Section 7.4(d), be reduced to less than [*] of PDL Net Sales. Royalty payments made by Roche or PDL pursuant to Third Party Licenses that, due to the maximum royalty rate set forth in the preceding sentence, cannot be deducted from, or added to, the amount to be paid to PDL by Roche under Section 7.2(c), may be carried forward to subsequent calendar yearsyear. (e) If PDL exercises the Transplant Reversion or Roche exercises the Roche Put Right, then commencing on the Reversion Effective Date or the Put Right Effective Date (as applicable): (i) Roche shall not have any further obligation pursuant to this Section 7.4 to share the costs of, or pay directly, any royalties pursuant to any Third Party Licenses on account of sales of Daclizumab by PDL or its Affiliates or sublicensees, and (ii) PDL shall thereafter have sole responsibility for paying such royalties. (f) If the Exercise Period expires without PDL exercising the Transplant Reversion or Roche exercising the Roche Put Right, then: (i) commencing on [*], with respect to sales of Daclizumab in the [*] by Roche and its Affiliates and sublicensees, or [*], with respect to sales of Daclizumab in the [*] by Roche and its Affiliates and sublicensees, (A) PDL shall not have any further obligation pursuant to this Section 7.4 to share the costs of, or pay directly, any royalties pursuant to any Third Party Licenses on account of sales of Daclizumab by Roche or its Affiliates or sublicensees, and (B) Roche shall thereafter have sole responsibility for paying such royalties. (ii) commencing on, a country-by-country basis, with the expiration of PDL’s obligations to pay royalties to Roche, pursuant to Section 7.2(c), in such country with respect to the sale of Daclizumab by PDL and its Affiliates and sublicensees, (A) Roche shall not have any further obligation pursuant to this Section 7.4 to share the costs of, or pay directly, any royalties pursuant to any Third Party Licenses on account of sales of Daclizumab by PDL or its Affiliates or sublicensees, and (B) PDL shall thereafter have sole responsibility for paying such royalties.

Offset for Third Party Licenses. (a) Appendix B sets forth If PDL and X. Xxxxx agree in writing that either party must obtain a license from an independent third party in order for X. Xxxxx to manufacture, use or sell a Licensed Product in the allocation between ROW Territory and if PDL and X. Xxxxx agree upon the terms of such license ("Third Party License"), then the parties of the costs associated with each Third Party License entered into prior to the Effective Dateshall [CONFIDENTIAL TREATMENT REQUESTED]. Such costs include cost includes license fees and any other fixed costs associated with the Third Party License as well as any royalties. After the Effective Date, the The parties then shall, within [*] of the end of each [*]thirty (30) days, reimburse each other in accordance with this Section 7.4 to effect the agreed-on sharing of such license fees and other fixed costs. Both parties hereby acknowledge that [*] has obtained a required license from the [*] to use the [*] in order to carry out the activities anticipated by this Amended and Restated Worldwide Agreement and that [*] has reimbursed [*] under the 1989 Agreements so that the license fees and other fixed costs of the [*] license have been shared [*] (b) If PDL and Roche agree in writing, after the Effective Date, that either party must obtain an additional license from an independent Third Party in order for Roche or PDL to manufacture, use, import, offer for sale or sell Daclizumab and if PDL and Roche agree on the terms of such license, then such license shall be deemed a Third Party License and the parties shall, subject to Sections 2.3, 7.4(c) and 7.4(d), share the cost of such Third Party License [*]. Such cost includes license fees and any other fixed costs associated with such Third Party License as well as any royalties. The parties shall, within [*] of the end of each [*], reimburse each other in accordance with this Section 7.4 manner necessary to effect a [*CONFIDENTIAL TREATMENT REQUESTED] sharing of such license fees and other fixed costs. (c) Notwithstanding anything to the contrary herein, the following mechanism shall apply to the royalty portion of any Third Party Licenses to the extent such royalties arise due to sales of Daclizumab by Roche or its Affiliates or sublicensees during the time that Roche is obligated to pay royalties to PDL pursuant to Section 7.2(a): (ib) PDL’s share of such Third Party royalties shall be accrued against and deducted from any amounts due to PDL from Roche pursuant to Section 7.2(a) if Roche pays the royalties due under the Third Party License to such Third Party, and (ii) Roche’s 's share of the royalties portion of the cost of any Third Party License License, shall be (i) accrued against and deducted from any royalties due to PDL from X. Xxxxx pursuant to Sections 3.1, 3.2 and 3A.4 if X. Xxxxx pays the royalties due under the Third Party License to such third party, and (ii) accrued in favor of and added to any amounts royalties due to PDL from Roche X. Xxxxx pursuant to Section 7.2(a) Sections 3.1, 3.2 and 3A.4 if PDL pays the royalties due under the Third Party License to such Third Partythird party; provided, however, that the total amounts of all deductions made by Roche pursuant to clause (i) above (without taking into account any additions made pursuant to clause (ii)) this addition or offset shall not exceed cause PDL's royalties to be reduced under the schedule set forth in Section 3.1 to less [*CONFIDENTIAL TREATMENT REQUESTED] of the amount that would otherwise be due to PDL, pursuant to Section 7.2(a), Net Transplant Sales in any calendar quarter year, or under Sections 3.1(b) and 3.2 to less [CONFIDENTIAL TREATMENT REQUESTED] if no adjustments were permitted to account for payments made pursuant to Third Party Licenses; X. Xxxxx has de facto exclusivity and [CONFIDENTIAL TREATMENT REQUESTED] if X. Xxxxx does not have de facto exclusivity, and provided further further, that the sum of Roche’s X. Xxxxx'x total royalty obligations to PDL under Section 7.2(a) in any calendar quarter, plus Roche’s share of Sections 3.1 and 3.2 when added to those royalties payable for such calendar quarter to Third Parties third parties pursuant to Third Party Licenses shall not exceed [*CONFIDENTIAL TREATMENT REQUESTED] of the amount that would otherwise be due to PDL, pursuant to Section 7.2(a), Net Transplant Sales in such calendar quarter if no adjustments were permitted to account for payments made pursuant to Third Party Licenses. Royalty payments made by Roche or PDL pursuant to Third Party Licenses that, due to the limitations set forth in the preceding sentence, cannot be deducted from, or added to, the amount to be paid to PDL by Roche under Section 7.2(a), may be carried forward to subsequent calendar quarters. An example of the foregoing principles is set forth in Appendix D. (d) Notwithstanding anything to the contrary herein, the following mechanism shall apply to the royalty portion of any Third Party Licenses to the extent such royalties arise due to sales of Daclizumab by PDL or its Affiliates or sublicensees during the time that PDL is obligated to pay royalties to Roche, pursuant to Section 7.2(c): (i) Roche’s share of such Third Party royalties shall be accrued against and deducted from any amounts due to Roche from PDL pursuant to Section 7.2(c) if PDL pays the royalties due under the Third Party License to such Third Party, and (ii) PDL’s share of such Third Party royalties shall be accrued in favor of and added to any amounts due to Roche from PDL pursuant to Section 7.2(c) if Roche pays the royalties due under the Third Party License to such Third Party; provided, however, that the royalty payments made by PDL to Roche pursuant to Section 7.2(c) shall not, as a result of the adjustments set forth in this Section 7.4(d), be reduced to less than [*] of PDL Net Sales. Royalty payments made by Roche or PDL pursuant to Third Party Licenses that, due to the maximum royalty rate set forth in the preceding sentence, cannot be deducted from, or added to, the amount to be paid to PDL by Roche under Section 7.2(c), may be carried forward to subsequent calendar yearsyear. (e) If PDL exercises the Transplant Reversion or Roche exercises the Roche Put Right, then commencing on the Reversion Effective Date or the Put Right Effective Date (as applicable): (i) Roche shall not have any further obligation pursuant to this Section 7.4 to share the costs of, or pay directly, any royalties pursuant to any Third Party Licenses on account of sales of Daclizumab by PDL or its Affiliates or sublicensees, and (ii) PDL shall thereafter have sole responsibility for paying such royalties. (f) If the Exercise Period expires without PDL exercising the Transplant Reversion or Roche exercising the Roche Put Right, then: (i) commencing on [*], with respect to sales of Daclizumab in the [*] by Roche and its Affiliates and sublicensees, or [*], with respect to sales of Daclizumab in the [*] by Roche and its Affiliates and sublicensees, (A) PDL shall not have any further obligation pursuant to this Section 7.4 to share the costs of, or pay directly, any royalties pursuant to any Third Party Licenses on account of sales of Daclizumab by Roche or its Affiliates or sublicensees, and (B) Roche shall thereafter have sole responsibility for paying such royalties. (ii) commencing on, a country-by-country basis, with the expiration of PDL’s obligations to pay royalties to Roche, pursuant to Section 7.2(c), in such country with respect to the sale of Daclizumab by PDL and its Affiliates and sublicensees, (A) Roche shall not have any further obligation pursuant to this Section 7.4 to share the costs of, or pay directly, any royalties pursuant to any Third Party Licenses on account of sales of Daclizumab by PDL or its Affiliates or sublicensees, and (B) PDL shall thereafter have sole responsibility for paying such royalties.

Offset for Third Party Licenses. (a) Subject to Appendix B sets forth B, if PDL and Roche agree in writing that either party must obtain a license from an independent third party in order for Roche or PDL to manufacture, use or sell a Licensed Product and if PDL and Roche agree upon the allocation between terms of such license ("Third Party License"), then the parties of shall share the costs associated with each Third Party License entered into prior to the Effective Datecost [CONFIDENTIAL TREATMENT REQUESTED]. Such costs include cost includes license fees and any other fixed costs associated with the Third Party License as well as any royalties. After the Effective Date, the The parties then shall, within [*] of the end of each [*]thirty (30) days, reimburse each other in accordance with this Section 7.4 the manner necessary to effect the agreed-on a [CONFIDENTIAL TREATMENT REQUESTED] sharing of such license fees and other fixed costs. Both parties hereby acknowledge that [*CONFIDENTIAL TREATMENT REQUESTED] has obtained a required license from the [*] to use the [*] in order to carry out the activities anticipated by this Amended and Restated Worldwide Agreement and that [*] has reimbursed [*] under the 1989 Agreements so that the license fees and other fixed costs of the [*] license have been shared [*] (b) If PDL and Roche agree in writing, after the Effective Date, that either party must obtain an additional license from an independent Third Party in order for Roche or PDL to manufacture, use, import, offer for sale or sell Daclizumab and if PDL and Roche agree on the terms of such license, then such license shall be deemed a Third Party License and the parties shall, subject to Sections 2.3, 7.4(c) and 7.4(d), share the cost of such Third Party License [*]. Such cost includes license fees and any other fixed costs associated with such Third Party License as well as any royalties. The parties shall, within [*] of the end of each [*], reimburse each other in accordance with this Section 7.4 to effect a [*] of such license fees and other fixed costs. (c) Notwithstanding anything to the contrary herein, PDL's share of the following mechanism shall apply to royalties portion of the royalty portion cost of any Third Party Licenses to the extent such royalties arise due to sales of Daclizumab by Roche or its Affiliates or sublicensees during the time that Roche is obligated to pay royalties to PDL pursuant to Section 7.2(a): License, including [CONFIDENTIAL TREATMENT REQUESTED], shall be (i) PDL’s share of such Third Party royalties shall be accrued against and deducted from any amounts due to PDL from Roche pursuant to Section 7.2(a) Article IV and Article IV-A if Roche pays the royalties due under the Third Party License to such Third Partythird party, and (ii) Roche’s share of the royalties portion of the cost of any Third Party License shall be accrued in favor of and added to any amounts due to PDL from Roche pursuant to Section 7.2(a) Article IV and Article IV-A if PDL pays the royalties due under the Third Party License to such Third Partythird party; provided, however, that this addition or offset shall not cause the total amounts of all deductions made amount paid by Roche pursuant to clause (i) above (without taking into account any additions made pursuant to clause (ii)) shall not exceed [*] of the amount that would otherwise be due to PDL, pursuant to Section 7.2(a), in any calendar quarter if no adjustments were permitted to account for payments made pursuant to Third Party Licenses; provided further that the sum of Roche’s royalty obligations to PDL under Section 7.2(a) in any calendar quarter, plus Roche’s share of those royalties payable for such calendar quarter to Third Parties pursuant to Third Party Licenses shall not exceed [*] of the amount that would otherwise be due to PDL, pursuant to Section 7.2(a), in such calendar quarter if no adjustments were permitted to account for payments made pursuant to Third Party Licenses. Royalty payments made by Roche or PDL pursuant to Third Party Licenses that, due to the limitations set forth in the preceding sentence, cannot be deducted from, or added to, the amount to be paid to PDL by Roche under Section 7.2(a), may be carried forward to subsequent calendar quarters. An example of the foregoing principles is set forth in Appendix D. (d) Notwithstanding anything to the contrary herein, the following mechanism shall apply to the royalty portion of any Third Party Licenses to the extent such royalties arise due to sales of Daclizumab by PDL or its Affiliates or sublicensees during the time that PDL is obligated to pay royalties to Roche, pursuant to Section 7.2(c): (i) Roche’s share of such Third Party royalties shall be accrued against and deducted from any amounts due to Roche from PDL pursuant to Section 7.2(c) if PDL pays the royalties due under the Third Party License to such Third Party, and (ii) PDL’s share of such Third Party royalties shall be accrued in favor of and added to any amounts due to Roche from PDL pursuant to Section 7.2(c) if Roche pays the royalties due under the Third Party License to such Third Party; provided, however, that the royalty payments made by PDL to Roche pursuant to Section 7.2(c) shall not, as a result of the adjustments set forth in this Section 7.4(d), be reduced to less than [*] of PDL Net Sales. Royalty payments made by Roche or PDL pursuant to Third Party Licenses that, due to the maximum royalty rate set forth in the preceding sentence, cannot be deducted from, or added to, the amount to be paid to PDL by Roche under Section 7.2(c), may be carried forward to subsequent calendar years. (e) If PDL exercises the Transplant Reversion or Roche exercises the Roche Put Right, then commencing on the Reversion Effective Date or the Put Right Effective Date (as applicable): (i) Roche shall not have any further obligation pursuant to this Section 7.4 to share the costs of, or pay directly, any royalties pursuant to any Third Party Licenses on account of sales of Daclizumab by PDL or its Affiliates or sublicensees, and (ii) PDL shall thereafter have sole responsibility for paying such royalties. (f) If the Exercise Period expires without PDL exercising the Transplant Reversion or Roche exercising the Roche Put Right, then: (i) commencing on [*], with respect to sales of Daclizumab in the [*] by Roche and its Affiliates and sublicensees, or [*], with respect to sales of Daclizumab in the [*] by Roche and its Affiliates and sublicensees, (A) PDL shall not have any further obligation pursuant to this Section 7.4 to share the costs of, or pay directly, any royalties pursuant to any Third Party Licenses on account of sales of Daclizumab by Roche or its Affiliates or sublicensees, and (B) Roche shall thereafter have sole responsibility for paying such royalties. (ii) commencing on, a country-by-country basis, with the expiration of PDL’s obligations to pay royalties to Roche, pursuant to Section 7.2(c), in such country with respect to the sale of Daclizumab by PDL and its Affiliates and sublicensees, (A) Roche shall not have any further obligation pursuant to this Section 7.4 to share the costs of, or pay directly, any royalties pursuant to any Third Party Licenses on account of sales of Daclizumab by PDL or its Affiliates or sublicensees, and (B) PDL shall thereafter have sole responsibility for paying such royalties.

Offset for Third Party Licenses. (a) Appendix B sets forth the allocation between the parties of the costs associated with each Third Party License entered into prior to the Effective Date. Such costs include license fees and any other fixed costs associated with the Third Party License as well as any royalties. After the Effective Date, the parties shall, within [*CONFIDENTIAL TREATMENT REQUESTED] of the end of each [*CONFIDENTIAL TREATMENT REQUESTED], reimburse each other in accordance with this Section 7.4 to effect the agreed-on sharing of such license fees and other fixed costs. Both parties hereby acknowledge that [*CONFIDENTIAL TREATMENT REQUESTED] has obtained a required license from the [*CONFIDENTIAL TREATMENT REQUESTED] to use the [*CONFIDENTIAL TREATMENT REQUESTED] in order to carry out the activities anticipated by this Amended and Restated Worldwide Agreement and that [*CONFIDENTIAL TREATMENT REQUESTED] has reimbursed [*CONFIDENTIAL TREATMENT REQUESTED] under the 1989 Agreements so that the license fees and other fixed costs of the [*CONFIDENTIAL TREATMENT REQUESTED] license have been shared [*CONFIDENTIAL TREATMENT REQUESTED]. (b) If PDL and Roche agree in writing, after the Effective Date, that either party must obtain an additional license from an independent Third Party in order for Roche or PDL to manufacture, use, import, offer for sale or sell Daclizumab and if PDL and Roche agree on the terms of such license, then such license shall be deemed a Third Party License and the parties shall, subject to Sections 2.3, 7.4(c) and 7.4(d), share the cost of such Third Party License [*CONFIDENTIAL TREATMENT REQUESTED]. Such cost includes license fees and any other fixed costs associated with such Third Party License as well as any royalties. The parties shall, within [*CONFIDENTIAL TREATMENT REQUESTED] of the end of each [*CONFIDENTIAL TREATMENT REQUESTED], reimburse each other in accordance with this Section 7.4 to effect a [*CONFIDENTIAL TREATMENT REQUESTED] of such license fees and other fixed costs. (c) Notwithstanding anything to the contrary herein, the following mechanism shall apply to the royalty portion of any Third Party Licenses to the extent such royalties arise due to sales of Daclizumab by Roche or its Affiliates or sublicensees during the time that Roche is obligated to pay royalties to PDL pursuant to Section 7.2(a): (i) PDL’s share of such Third Party royalties shall be accrued against and deducted from any amounts due to PDL from Roche pursuant to Section 7.2(a) if Roche pays the royalties due under the Third Party License to such Third Party, and (ii) Roche’s share of the royalties portion of the cost of any Third Party License shall be accrued in favor of and added to any amounts due to PDL from Roche pursuant to Section 7.2(a) if PDL pays the royalties due under the Third Party License to such Third Party; provided, however, that the total amounts of all deductions made by Roche pursuant to clause (i) above (without taking into account any additions made pursuant to clause (ii)) shall not exceed [*CONFIDENTIAL TREATMENT REQUESTED] of the amount that would otherwise be due to PDL, pursuant to Section 7.2(a), in any calendar quarter if no adjustments were permitted to account for payments made pursuant to Third Party Licenses; provided further that the sum of Roche’s royalty obligations to PDL under Section 7.2(a) in any calendar quarter, plus Roche’s share of those royalties payable for such calendar quarter to Third Parties pursuant to Third Party Licenses shall not exceed [*CONFIDENTIAL TREATMENT REQUESTED] of the amount that would otherwise be due to PDL, pursuant to Section 7.2(a), in such calendar quarter if no adjustments were permitted to account for payments made pursuant to Third Party Licenses. Royalty payments made by Roche or PDL pursuant to Third Party Licenses that, due to the limitations set forth in the preceding sentence, cannot be deducted from, or added to, the amount to be paid to PDL by Roche under Section 7.2(a), may be carried forward to subsequent calendar quarters. An example of the foregoing principles is set forth in Appendix D. (d) Notwithstanding anything to the contrary herein, the following mechanism shall apply to the royalty portion of any Third Party Licenses to the extent such royalties arise due to sales of Daclizumab by PDL or its Affiliates or sublicensees during the time that PDL is obligated to pay royalties to Roche, pursuant to Section 7.2(c): (i) Roche’s share of such Third Party royalties shall be accrued against and deducted from any amounts due to Roche from PDL pursuant to Section 7.2(c) if PDL pays the royalties due under the Third Party License to such Third Party, and (ii) PDL’s share of such Third Party royalties shall be accrued in favor of and added to any amounts due to Roche from PDL pursuant to Section 7.2(c) if Roche pays the royalties due under the Third Party License to such Third Party; provided, however, that the royalty payments made by PDL to Roche pursuant to Section 7.2(c) shall not, as a result of the adjustments set forth in this Section 7.4(d), be reduced to less than [*CONFIDENTIAL TREATMENT REQUESTED] of PDL Net Sales. Royalty payments made by Roche or PDL pursuant to Third Party Licenses that, due to the maximum royalty rate set forth in the preceding sentence, cannot be deducted from, or added to, the amount to be paid to PDL by Roche under Section 7.2(c), may be carried forward to subsequent calendar years. (e) If PDL exercises the Transplant Reversion or Roche exercises the Roche Put Right, then commencing on the Reversion Effective Date or the Put Right Effective Date (as applicable): (i) Roche shall not have any further obligation pursuant to this Section 7.4 to share the costs of, or pay directly, any royalties pursuant to any Third Party Licenses on account of sales of Daclizumab by PDL or its Affiliates or sublicensees, and (ii) PDL shall thereafter have sole responsibility for paying such royalties. (f) If the Exercise Period expires without PDL exercising the Transplant Reversion or Roche exercising the Roche Put Right, then: (i) commencing on [*CONFIDENTIAL TREATMENT REQUESTED], with respect to sales of Daclizumab in the [*CONFIDENTIAL TREATMENT REQUESTED] by Roche and its Affiliates and sublicensees, or [*CONFIDENTIAL TREATMENT REQUESTED], with respect to sales of Daclizumab in the [*CONFIDENTIAL TREATMENT REQUESTED] by Roche and its Affiliates and sublicensees, (A) PDL shall not have any further obligation pursuant to this Section 7.4 to share the costs of, or pay directly, any royalties pursuant to any Third Party Licenses on account of sales of Daclizumab by Roche or its Affiliates or sublicensees, and (B) Roche shall thereafter have sole responsibility for paying such royalties. (ii) commencing on, a country-by-country basis, with the expiration of PDL’s obligations to pay royalties to Roche, pursuant to Section 7.2(c), in such country with respect to the sale of Daclizumab by PDL and its Affiliates and sublicensees, (A) Roche shall not have any further obligation pursuant to this Section 7.4 to share the costs of, or pay directly, any royalties pursuant to any Third Party Licenses on account of sales of Daclizumab by PDL or its Affiliates or sublicensees, and (B) PDL shall thereafter have sole responsibility for paying such royalties.