Common use of Royalty Adjustments Clause in Contracts

Royalty Adjustments. (i) During any part of the Royalty Term for a Licensed Product in a country in which there is no Valid Claim of the vTv Patents Covering such Licensed Product or the Compound contained therein, or the manufacture or use of such Licensed Product or Compound contained therein, in such country, but there is Regulatory Exclusivity for such Licensed Product in such country, the royalty payable with respect to Net Sales of such Licensed Product in such country shall be reduced by [***]. During any part of the Royalty Term for a Licensed Product in a country in which (A) there is no Valid Claim of the vTv Patents Covering such Licensed Product or the Compound contained therein, or the manufacture or use of such Licensed Product or Compound contained therein, in such country, and (B) there is no Regulatory Exclusivity for such Licensed Product in such country, the royalty payable with respect to Net Sales of such Licensed Product in such country shall be reduced by [***]. The foregoing reductions will be calculated by determining the portion of total Net Sales of the relevant Licensed Product in a calendar quarter that is attributable to the country in which such reduction applies, and determining the total royalties for such Licensed Product without reduction, and then reducing by [***] or [***], as applicable, the applicable portion (based on Net Sales of such Licensed Product in such country as a percentage of total Net Sales of such Licensed Product) of total royalties attributable to such Licensed Product in such country. (ii) If Reneo or any of its Affiliates or Sublicensees, as applicable, determines, in its reasonable judgment, that it is necessary to obtain a license from any Third Party (each a “Third Party License”) under any Patents in order to manufacture, use, sell, offer for sale or import a Licensed Product in a country, then Reneo may deduct [***] of any royalty amount (or comparable payment based on sales of Licensed Product) paid by Reneo or its Affiliate or Sublicensee in any calendar quarter to such Third Party with respect to sales of such Licensed Product in such country under such Third Party License from the royalty payment that would otherwise be due with respect to Net Sales of such Licensed Product in such country in such calendar quarter pursuant to Section 3.5(a); provided, however, that in no event shall any royalty payment to vTv on Net Sales of any Licensed Product in any country in any calendar quarter be reduced to less than [***] of the royalties that would otherwise be owed to vTv with respect to Net Sales of such Licensed Product under Section 3.5(a). Any amount of royalties paid to such Third Party which is entitled to be deducted under this Section 3.5(e)(ii) but is not deducted as a result of the foregoing limitation shall be carried over and applied against royalties payable to vTv in respect of such Licensed Product in such country in subsequent calendar quarters until the full deduction is taken.

Royalty Adjustments. (a) The royalty tiers with respect to Net Sales described in items 6.9(i)-(iii) (each, a “Royalty Tier”) shall be adjusted, on a Licensed Product-by-Licensed Product basis, such that the Net Sales threshold(s) for each Royalty Tier shall be reduced to (i) During any part [***]of the Net Sales threshold(s) that would otherwise be applicable to such Royalty Term Tier for a each Licensed Product in directed to an Additional Target related to a country in which there is no Valid Claim Rare Indication and (ii) [***] of the vTv Patents Covering Net Sales threshold(s) that would otherwise be applicable to such Royalty Tier for each Licensed Product or the Compound contained therein, or the manufacture or use of such Licensed Product or Compound contained therein, in such country, but there is Regulatory Exclusivity for such Licensed Product in such country, the royalty directed to an Additional Target related to a Very Rare Indication. (b) The royalties payable by Spark with respect to Net Sales of Licensed Products shall be reduced, on a Licensed Product-by-Licensed Product and country-by-country basis, to [***] of the amounts otherwise due to Selecta pursuant to Section 6.9 (Royalties) during any portion of the Royalty Term when (i) no Valid Claim included in (A) the Selecta Background Patents, (B) the Selecta-Invented Improvement Patents or (C) any Spark Field-Specific Improvement Patent that Covers a Spark Field-Specific Improvement Invention jointly invented by Selecta, in each case, Covers such Licensed Product in such country shall be reduced by [***]. During any part of the Royalty Term for a Licensed Product in a country in which (A) there is no Valid Claim of the vTv Patents Covering such Licensed Product or the Compound contained therein, or the manufacture or use of such Licensed Product or Compound contained therein, in such country, and (Bii) there is no Regulatory Exclusivity for such Licensed Product in such country, the royalty payable with respect to Net Sales of such Licensed Product in such country shall be reduced by [***]. The foregoing reductions will be calculated by determining the portion of total Net Sales of the relevant Licensed Product in a calendar quarter that is attributable to the country in which such reduction applies, and determining the total royalties for such Licensed Product without reduction, and then reducing by [***] or [***], as applicable, the applicable portion (based on Net Sales of such Licensed Product in such country as a percentage of total Net Sales of such Licensed Product) of total royalties attributable does not apply to such Licensed Product in such country. (iic) If Reneo Without limiting Section 2.10 (Future In-License Agreements) or any Section 6.12 (Existing License Agreements), the royalties payable by Spark with respect to Net Sales of its Affiliates or SublicenseesLicensed Products shall be reduced, as applicable, determines, in its reasonable judgment, that it is necessary to obtain a license from any Third Party (each a “Third Party License”) under any Patents in order to manufacture, use, sell, offer for sale or import on a Licensed Product-by-Licensed Product in a and country-by-country basis, then Reneo may deduct by an amount equal to [***] of any royalty amount (or comparable payment based on sales of Licensed Product) paid by Reneo or its Affiliate or Sublicensee in any calendar quarter to such Third Party the [***] with respect to sales of license [***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions rights to Third Party Patents that Cover the Licensed Particle in such Licensed Product in such country under such Third Party License from the royalty payment country, provided that would otherwise be due with respect to Net Sales any such [***] to a Third Party for the license of rights both inside and outside the Field, only the portion of such payments that are reasonably allocable to the Development, Manufacture or Commercialization of Licensed Product Products in such country in such calendar quarter the Field may be deducted pursuant to this Section 6.10(c). (d) Notwithstanding the foregoing, all credits and reductions pursuant to Section 3.5(a); provided, however, that in no event 6.10(b) (Royalty Adjustments) and 6.10(c) (Royalty Adjustments) shall any royalty payment not reduce the royalties payable to vTv on Net Sales of Selecta with respect to any Licensed Product in any country in any calendar quarter be reduced to less than [***] of the royalties that would otherwise be owed due to vTv with respect Selecta pursuant to Section 6.9 (Royalties). For the avoidance of doubt, however, this Section 6.10(d) shall not limit Selecta’s indemnification obligations or Spark’s right to offset such indemnification oblations pursuant to ARTICLE 11 (Indemnification, Insurance and Liability). (e) Notwithstanding the royalty rates set forth in Section 6.9 and the credits and reductions pursuant to Sections 6.10(b) and 6.10(c) (Royalty Adjustments), in no event shall the royalties payable by Spark to Selecta hereunder on Net Sales (as defined in this Agreement) of such Licensed Product under Section 3.5(a)be less than [***]. Any amount For the avoidance of royalties paid to such Third Party which is entitled to be deducted under doubt, however, this Section 3.5(e)(ii6.10(e) but is shall not deducted as a result of the foregoing limitation shall be carried over limit Selecta’s indemnification obligations pursuant to ARTICLE 11 (Indemnification, Insurance and applied against royalties payable to vTv in respect of such Licensed Product in such country in subsequent calendar quarters until the full deduction is takenLiability).

Royalty Adjustments. (i) During any part applicable Royalty Term, following the expiration of the Royalty Term for a Licensed Product in a country in which there is no Valid Claim of the vTv Patents Covering such Licensed Product or the Compound contained therein, or the manufacture or use of such Licensed Product or Compound contained therein, in such country, but there is Regulatory Exclusivity for such any Licensed Product in such on a country-by-country basis, the royalty payable with respect rates in Table 3.4(a) applicable to Net Sales of such Licensed Product Products in such country shall will be reduced by [***]. During any part of the Royalty Term for a Licensed Product in a country in which ] percent (A) there is no Valid Claim of the vTv Patents Covering such Licensed Product or the Compound contained therein, or the manufacture or use of such Licensed Product or Compound contained therein, in such country, and (B) there is no Regulatory Exclusivity for such Licensed Product in such country, the royalty payable with respect to Net Sales of such Licensed Product in such country shall be reduced by [***]. The foregoing reductions will be calculated by determining the portion of total Net Sales of the relevant Licensed Product in a calendar quarter that is attributable to the country in which such reduction applies, and determining the total royalties for such Licensed Product without reduction, and then reducing by [***] or [***], as applicable, the applicable portion (based on Net Sales of such Licensed Product in such country as a percentage of total Net Sales of such Licensed Product) of total royalties attributable to such Licensed Product in such country%). (ii) If Reneo Fulcrum or any of its Affiliates or Sublicensees, as applicable, determines, in its reasonable judgment, that it is necessary to obtain a license from any Third Party (each a “Third Party License”) under any Patents in order to manufacture, use, sell, offer for sale or import Exploit a Licensed Product in a country, then Reneo Fulcrum may deduct [**] percent ([*] *]%) of any royalty amount (license fees under such Third Party License payable by Fulcrum or comparable payment based on sales of Licensed Product) paid by Reneo or its any Affiliate or Sublicensee in any calendar quarter Calendar Quarter to such Third Party with respect to sales of such Licensed Product in such country under such Third Party License from the royalty payment that would otherwise be due with respect to Net Sales of such Licensed Product in such country in such calendar quarter Calendar Quarter pursuant to Section 3.5(a3.4(a) (as adjusted by Section 3.4(c)(i), as applicable); provided, however, that in no event shall any royalty payment to vTv GSK on Net Sales of any Licensed Product in any country in any calendar quarter Calendar Quarter be reduced to less than [**] percent ([*] *]%) of the royalties that would otherwise be owed to vTv GSK with respect to Net Sales of such Licensed Product under Section 3.5(a3.4(a) (as adjusted by Section 3.4(c)(i), if applicable). Any amount of royalties paid to such Third Party which is entitled to be deducted under this Section 3.5(e)(ii3.4(c)(ii) but is not deducted as a result of the foregoing limitation shall be carried over and applied against royalties payable to vTv GSK in respect of such Licensed Product in such country in subsequent calendar quarters Calendar Quarters until the full deduction is taken.

Royalty Adjustments. Upon request by Kidde from time to time, the parties agree to enter into good faith discussions to determine whether the royalty rate set forth in subsection (a) above should be reduced, on a product by product and/or worldwide or country by country basis, either: (i) During any part of the Royalty Term for a Licensed Product in a country in which there is no Valid Claim of the vTv Patents Covering such Licensed Product or the Compound contained therein, or the manufacture or use of such Licensed Product or Compound contained therein, in such country, but there is Regulatory Exclusivity for such Licensed Product in such country, the royalty payable with respect to Net Sales of such Licensed Product in such country shall be reduced by [***]. During any part of the Royalty Term for a Licensed Product in a country in which (A) there is no Valid Claim of the vTv Patents Covering such Licensed Product specific large contracts or the Compound contained therein, or the manufacture or use of such Licensed Product or Compound contained therein, in such country, and (B) there is no Regulatory Exclusivity for such Licensed Product in such country, the royalty payable with respect to Net Sales of such Licensed Product in such country shall be reduced by [***]. The foregoing reductions will be calculated by determining the portion of total Net Sales of the relevant Licensed Product in a calendar quarter that is attributable to the country in which such reduction applies, and determining the total royalties for such Licensed Product without reduction, and then reducing by [***] or [***], as applicable, the applicable portion (based on Net Sales of such Licensed Product in such country as a percentage of total Net Sales of such Licensed Product) of total royalties attributable to such Licensed Product in such country. (ii) If Reneo or any of its Affiliates or Sublicensees, as applicable, determines, in its reasonable judgment, that it is necessary to obtain a license from any Third Party (each a “Third Party License”) under any Patents in order to manufacture, use, sell, offer for sale or import a Licensed Product in a country, then Reneo may deduct [***] of any royalty amount (or comparable payment based on sales of Licensed Product) paid by Reneo or its Affiliate or Sublicensee in any calendar quarter to such Third Party with respect to sales of such Licensed Product in such country under such Third Party License from the royalty payment that would otherwise be due with respect to Net Sales of such Licensed Product in such country in such calendar quarter pursuant to Section 3.5(a)opportunities; provided, however, that in the event a such a reduced royalty rate is agreed to, any Equivalized Gallons of Product Sold under any such contract or opportunity shall not count towards the volume breakpoints set forth in Section 6.3(a), until such time as the royalty rate established under 6.3(a) is *** the royalty rate under such contract or opportunity, at which point the total cumulative amount of Equivalized Gallons of Product previously Sold under such contract or opportunity shall count (and any additional Equivalized Gallons of Product Sold shall continue to count) towards such volume breakpoints; and/or (ii) because of material changes or developments in the commercial environment adversely affecting profitability. Material changes or developments in the commercial environment would include, but not be limited to, situations where (i) lower selling prices are necessary to effectively compete with competitive products, and as a result reduce profitability; (ii) the co-ownership by any United States government agency or other Third Party in the USGN Patent Rights, the Joint Patent Rights and/or the USGN Know-How legally or effectively reduces or limits Kidde's ability to derive the full benefit of the rights granted to Kidde under Section 2.1 of this Agreement, and/or (iii) any Third Party's patent *** CONFIDENTIAL TREATMENT REQUESTED or patent application legally or effectively reduces or limits Kidde's ability to derive the full benefit of the rights granted to Kidde under Section 2.1 of this Agreement. Notwithstanding the foregoing, in the event that (i) the USGN Patent Rights or Joint Patent Rights do not Cover the manufacture, import, use, sale or offer for sale of a Product and/or (ii) no event shall any royalty payment to vTv on Net Sales of any Licensed Product in any country in any calendar quarter be reduced to less than [patents have issued by ***] of the royalties that would otherwise be owed to vTv , with respect to Net Sales Product covered by the information and discoveries claimed in ***, the parties shall in good faith, *** the rate of such Licensed Product under Section 3.5(a). Any amount of royalties paid to such Third Party which is entitled the Royalty on a product by product basis and/or worldwide or country by country basis, to be deducted under this Section 3.5(e)(ii) but is not deducted as a result commercially competitive with the cost of the foregoing limitation shall be carried over and applied against royalties payable to vTv in respect alternative sources of such Licensed Product in such country in subsequent calendar quarters until the full deduction is takensupply.

Royalty Adjustments. (i) During Notwithstanding anything herein to the contrary, if, as of any part of date during the Royalty Term for Term, there shall be no Valid Claim of any Closing Date IP Covering a Licensed Product in a country in which there where such Product is sold by a Party or its Sublicensees, and no Valid Claim of any Closing Date IP Covering the vTv Patents Covering such Licensed Manufacture of Product where the R&D Candidate or the Compound contained therein, or the manufacture or use other active pharmaceutical ingredient of such Licensed Product is manufactured by or Compound contained thereinon behalf of a Party or its Sublicensees, in under the Collaboration Agreement (the first such countrydate, but there is Regulatory Exclusivity for with respect to such Licensed Product in such country, being the royalty payable with respect to “Fall-Away Date”), then for purposes of calculating royalties on Collaboration Product Net Sales under this Royalty Agreement, Collaboration Product Net Sales of such Licensed Product in such country shall be reduced by [***]. During any part of excluded from and after the Royalty Term for a Licensed Product in a country in which (A) there is no Valid Claim of the vTv Patents Covering such Licensed Product or the Compound contained therein, or the manufacture or use of such Licensed Product or Compound contained therein, in such country, and (B) there is no Regulatory Exclusivity Fall-Away Date for such Licensed Product in such country; provided that, in the royalty payable event any Fall-Away Date does not occur on the last day of a Calendar Quarter, such Fall-Away Date shall be deemed to have occurred with respect to Net Sales of such Licensed the relevant Product in such the relevant country shall be reduced by [***]. The foregoing reductions will be calculated by determining on the portion of total Net Sales last day of the relevant Licensed Product in a calendar quarter that is attributable to the country Calendar Quarter in which such reduction applies, and determining the total royalties for such Licensed Product without reduction, and then reducing by [***] or [***], as applicable, Fall-Away Date occurs. In the applicable portion (based on Net Sales of such Licensed Product in such country as event that a percentage of total Net Sales of such Licensed Product) of total royalties attributable to such Licensed Product in such country. (ii) If Reneo Party or any of its Affiliates Sublicensees under the Collaboration Agreement shall be required to pay any consideration or Sublicensees, as applicable, determines, in its reasonable judgment, that it is necessary to obtain royalties for a license from or rights to any Blocking Third Party (each a “Intellectual Property or Enhancing Third Party License”) under any Patents in order to manufacture, use, sell, offer for sale or import a Licensed Product in a country, then Reneo may deduct [***] of any royalty amount (or comparable payment based on sales of Licensed Product) paid by Reneo or its Affiliate or Sublicensee in Intellectual Property during any calendar quarter year, the Company shall be entitled to such Third Party with respect to sales deduct fifty percent (50%) of such Licensed Product in consideration or royalties actually paid to any third party for such country under such Third Party License license or rights from the royalty payment that would royalties otherwise be due with respect to Net Sales of such Licensed Product in such country in such calendar quarter pursuant to Section 3.5(a); provided, however, that in no event shall any royalty payment to vTv on Net Sales of any Licensed Product in any country in any calendar quarter be reduced to less than [***] of the royalties that would otherwise be owed to vTv with respect to Net Sales of such Licensed Product under Section 3.5(a). Any amount of royalties paid to such Third Party which is entitled to be deducted accruing under this Section 3.5(e)(ii) but is not deducted as a result of the foregoing limitation shall be carried over and applied against royalties payable to vTv Royalty Agreement in respect of such Licensed Product calendar year; provided that (i) no such deduction shall apply for any consideration or royalties paid in respect of any patent rights set forth on Schedule 4 hereto, including any Blocking Third Party Intellectual Property or Enhancing Third Party Intellectual Property set forth on Schedule 4 hereto, and (ii) the aggregate amount of any and all deductions under this sentence for any calendar year shall not be greater than an amount which would have the effect of decreasing the royalties otherwise accruing hereunder in respect of such country calendar year by more than twenty-five percent (25%). Any deduction the Company seeks from royalties accruing under this Royalty Agreement for non-monetary consideration paid for Blocking Third Party Intellectual Property or Enhancing Third Party Intellectual Property shall be at such consideration’s fair monetary value as mutually determined by the Company and Lucky Sub-2 in subsequent calendar quarters until the full deduction is takengood faith. Except as set forth in this Section 4A or as required by law, royalties accruing under this Royalty Agreement shall not be subject to any downward adjustment.

Royalty Adjustments. (a) The royalty tiers with respect to Net Sales described in items 6.9(i)-(iii) (each, a “Royalty Tier”) shall be adjusted, on a Licensed Product-by-Licensed Product basis, such that the Net Sales threshold(s) for each Royalty Tier shall be reduced to (i) During any part [**] of the Net Sales threshold(s) that would otherwise be applicable to such Royalty Term Tier for a each Licensed Product in directed to an Additional Target related to a country in which there is no Valid Claim Rare Indication and (ii) [**] of the vTv Patents Covering Net Sales threshold(s) that would otherwise be applicable to such Royalty Tier for each Licensed Product or the Compound contained therein, or the manufacture or use of such Licensed Product or Compound contained therein, in such country, but there is Regulatory Exclusivity for such Licensed Product in such country, the royalty directed to an Additional Target related to a Very Rare Indication. (b) The royalties payable by Spark with respect to Net Sales of Licensed Products shall be reduced, on a Licensed Product-by-Licensed Product and country-by-country basis, to [**] of the amounts otherwise due to Selecta pursuant to Section 6.9 (Royalties) during any portion of the Royalty Term when (i) no Valid Claim included in (A) the Selecta Background Patents, (B) the Selecta-Invented Improvement Patents or (C) any Spark Field-Specific Improvement Patent that Covers a Spark Field-Specific Improvement Invention jointly invented by Selecta, in each case, Covers such Licensed Product in such country shall be reduced by [***]. During any part of the Royalty Term for a Licensed Product in a country in which (A) there is no Valid Claim of the vTv Patents Covering such Licensed Product or the Compound contained therein, or the manufacture or use of such Licensed Product or Compound contained therein, in such country, and (Bii) there is no Regulatory Exclusivity for such Licensed Product in such country, the royalty payable with respect to Net Sales of such Licensed Product in such country shall be reduced by [***]. The foregoing reductions will be calculated by determining the portion of total Net Sales of the relevant Licensed Product in a calendar quarter that is attributable to the country in which such reduction applies, and determining the total royalties for such Licensed Product without reduction, and then reducing by [***] or [***], as applicable, the applicable portion (based on Net Sales of such Licensed Product in such country as a percentage of total Net Sales of such Licensed Product) of total royalties attributable does not apply to such Licensed Product in such country. (iic) If Reneo Without limiting Section 2.10 (Future In-License Agreements) or any of its Affiliates or SublicenseesSection 6.12 (Existing License Agreements), as applicable, determines, in its reasonable judgment, that it is necessary to obtain a license from any Third Party (each a “Third Party License”) under any Patents in order to manufacture, use, sell, offer for sale or import a Licensed Product in a country, then Reneo may deduct [***] of any royalty amount (or comparable payment based on sales of Licensed Product) paid the royalties payable by Reneo or its Affiliate or Sublicensee in any calendar quarter to such Third Party with respect to sales of such Licensed Product in such country under such Third Party License from the royalty payment that would otherwise be due Spark with respect to Net Sales of Licensed Products shall be reduced, on a Licensed Product-by-Licensed Product and country-by-country basis, by an amount equal to [**] of the [**] with respect to license rights to Third Party Patents that Cover the Licensed Particle in such Licensed Product in such country country, provided that with respect to any such [**] to a Third Party for the license of rights both inside and outside the Field, only the portion of such payments that are reasonably allocable to the Development, Manufacture or Commercialization of Licensed Products in such calendar quarter the Field may be deducted pursuant to this Section 6.10(c). (d) Notwithstanding the foregoing, all credits and reductions pursuant to Section 3.5(a); provided, however, that in no event 6.10(b) (Royalty Adjustments) and 6.10(c) (Royalty Adjustments) shall any royalty payment not reduce the royalties payable to vTv on Net Sales of Selecta with respect to any Licensed Product in any country in any calendar quarter be reduced to less than [***] of the royalties that would otherwise be owed due to vTv with respect Selecta pursuant to Section 6.9 (Royalties). For the avoidance of doubt, however, this Section 6.10(d) shall not limit Selecta’s indemnification obligations or Spark’s right to offset such indemnification oblations pursuant to ARTICLE 11 (Indemnification, Insurance and Liability). (e) Notwithstanding the royalty rates set forth in Section 6.9 and the credits and reductions pursuant to Sections 6.10(b) and 6.10(c) (Royalty Adjustments), in no event shall the royalties payable by Spark to Selecta hereunder on Net Sales (as defined in this Agreement) of such Licensed Product under Section 3.5(a). Any amount be less than [**] For the avoidance of royalties paid to such Third Party which is entitled to be deducted under doubt, however, this Section 3.5(e)(ii6.10(e) but is shall not deducted as a result of the foregoing limitation shall be carried over limit Selecta’s indemnification obligations pursuant to ARTICLE 11 (Indemnification, Insurance and applied against royalties payable to vTv in respect of such Licensed Product in such country in subsequent calendar quarters until the full deduction is takenLiability).

Royalty Adjustments. (iReductions of Royalty Rates and deductions from Royalty Payments made under this Section 5.3(d) During any part are referred to collectively as “Royalty Adjustments.” Subject to the last clause of Section 5.3(d)(ii), each of the Royalty Term for following royalty adjustment mechanisms shall operate independently, and either or both may apply to a given Licensed Product in a particular country in which there if a Royalty Payment is no Valid Claim of the vTv Patents Covering such Licensed Product or the Compound contained therein, or the manufacture or use of such Licensed Product or Compound contained therein, in such country, but there is Regulatory Exclusivity for owed with respect to such Licensed Product in such country: (i) if (A) one or more Third Parties (other than a Genentech Affiliate), without a license from Genentech (or a Sublicensee), sells a product that contains a compound that is the royalty payable with respect to same as a Compound contained in a given Licensed Product sold by Genentech (or a Sublicensee) in a particular country (for purposes of this Section 5.3(d)(i), each such product, a “Generic Competitor”) and (B) the quarterly Net Sales of such Licensed Product in such country shall be reduced by [***]. During any part decrease to less than [ * ] of the Royalty Term for a Licensed Product in a country in which (A) there is no Valid Claim of the vTv Patents Covering such Licensed Product or the Compound contained therein, or the manufacture or use of such Licensed Product or Compound contained therein, in such country, and (B) there is no Regulatory Exclusivity for such Licensed Product in such country, the royalty payable with respect to Net Sales of such Licensed Product in such country shall be reduced by [***]. The foregoing reductions will be calculated by determining the portion of total Net Sales of the relevant Licensed Product in a calendar quarter that is attributable to the country in which such reduction applies, and determining the total royalties for such Licensed Product without reduction, and then reducing by [***] or [***], as applicable, the applicable portion (based on Net Sales of such Licensed Product in such country as a percentage of total Net Sales of such Licensed Product) of total royalties attributable to such Licensed Product in such country. (ii) If Reneo or any of its Affiliates or Sublicensees, as applicable, determines, in its reasonable judgment, that it is necessary to obtain a license from any Third Party (each a “Third Party License”) under any Patents in order to manufacture, use, sell, offer for sale or import a Licensed Product in a country, then Reneo may deduct [***] of any royalty amount (or comparable payment based on sales of Licensed Product) paid by Reneo or its Affiliate or Sublicensee in any calendar quarter to such Third Party with respect to sales of such Licensed Product in such country under such Third Party License from the royalty payment that would otherwise be due with respect to Net Sales of such Licensed Product in such country in such the calendar quarter pursuant prior to the first commercial sale of the first Generic Competitor in such country (for purposes of this Section 3.5(a5.3(d)(i); provided, howeverthe “Generic Threshold Net Sales”), that in no event shall any royalty payment to vTv on Net Sales of any the Royalty Rate for such Licensed Product in any such country in any calendar quarter shall be reduced to less than [***to[ * ] of the royalties that would otherwise be owed to vTv with respect to for as long as quarterly Net Sales of such Licensed Product under Section 3.5(a). Any amount of royalties paid to such Third Party which is entitled to be deducted under this Section 3.5(e)(ii) but is not deducted as a result of the foregoing limitation shall be carried over and applied against royalties payable to vTv in respect of such Licensed Product in such country are less than the Generic Threshold Net Sales (and a Royalty Payment is otherwise owed to Array); and (ii) if it is necessary for Genentech (or a Sublicensee) to obtain any licenses or other rights under intellectual property owned or controlled by Third Party(ies) (other than a Genentech Affiliate) in subsequent calendar quarters until order to make, use, offer for sale, sell or import a given Licensed Product in a particular country, Genentech (or a Sublicensee) shall have the full deduction is takenright to deduct from the Royalty Payments owed for such Licensed Product in a such country [ * ] of any payments actually paid (using a true-up mechanism to be agreed to by the Parties’ respective finance representatives) by Genentech (or its Sublicensees) to such Third Party(ies) for such licenses and rights (“Third Party Payments”); provided, however, in no event shall a given Royalty Payment (A) be less than [ * ] of what would otherwise be owed (but for such deduction) or (B) result in an effective royalty rate of less than [ * ] of Net Sales.

Royalty Adjustments. (i) During Notwithstanding anything herein to the contrary, if, as of any part of date during the Royalty Term for Term, there shall be no Valid Claim Covering a Licensed Company Product in a country in which there where such Company Product is sold by a Party or its Sublicensees, and no Valid Claim of any Closing Date IP Covering the vTv Patents Covering such Licensed Manufacture of Company Product or where the Compound contained therein, or the manufacture or use active pharmaceutical ingredient of such Licensed Company Product is manufactured by or Compound contained thereinon behalf of a Party or its Sublicensees (the first such date, in with respect to such country, but there is Regulatory Exclusivity for such Licensed Company Product in such country, being the royalty payable with respect to “Fall-Away Date”), then for purposes of calculating royalties on Company Product Net Sales under this Royalty Agreement, Company Product Net Sales of such Licensed Company Product in such country shall be reduced by [***]. During any part of excluded from and after the Royalty Term for a Licensed Product in a country in which (A) there is no Valid Claim of the vTv Patents Covering such Licensed Product or the Compound contained therein, or the manufacture or use of such Licensed Product or Compound contained therein, in such country, and (B) there is no Regulatory Exclusivity Fall-Away Date for such Licensed Company Product in such country; provided that, in the royalty payable event any Fall-Away Date does not occur on the last day of a Calendar Quarter, such Fall-Away Date shall be deemed to have occurred with respect to Net Sales of such Licensed the relevant Company Product in such the relevant country shall be reduced by [***]. The foregoing reductions will be calculated by determining on the portion of total Net Sales last day of the relevant Licensed Product in a calendar quarter that is attributable to the country Calendar Quarter in which such reduction applies, and determining the total royalties for such Licensed Product without reduction, and then reducing by [***] or [***], as applicable, Fall-Away Date occurs. In the applicable portion (based on Net Sales of such Licensed Product in such country as event that a percentage of total Net Sales of such Licensed Product) of total royalties attributable to such Licensed Product in such country. (ii) If Reneo Party or any of its Affiliates Sublicensees shall be required to pay any consideration or Sublicensees, as applicable, determines, in its reasonable judgment, that it is necessary to obtain royalties for a license from or rights to any Blocking Third Party (each a “Intellectual Property or Enhancing Third Party License”) under any Patents in order to manufacture, use, sell, offer for sale or import a Licensed Product in a country, then Reneo may deduct [***] of any royalty amount (or comparable payment based on sales of Licensed Product) paid by Reneo or its Affiliate or Sublicensee in Intellectual Property during any calendar quarter year, the Company shall be entitled to such Third Party with respect to sales deduct fifty percent (50%) of such Licensed Product in consideration or royalties actually paid to any third party for such country under such Third Party License license or rights from the royalty payment that would royalties otherwise be due with respect to Net Sales of such Licensed Product in such country in such calendar quarter pursuant to Section 3.5(a); provided, however, that in no event shall any royalty payment to vTv on Net Sales of any Licensed Product in any country in any calendar quarter be reduced to less than [***] of the royalties that would otherwise be owed to vTv with respect to Net Sales of such Licensed Product under Section 3.5(a). Any amount of royalties paid to such Third Party which is entitled to be deducted accruing under this Section 3.5(e)(ii) but is not deducted as a result of the foregoing limitation shall be carried over and applied against royalties payable to vTv Royalty Agreement in respect of such Licensed Product calendar year; provided that (i) no such deduction shall apply for any consideration or royalties paid in respect of any patent rights set forth on Schedule 4 hereto, including any Blocking Third Party Intellectual Property or Enhancing Third Party Intellectual Property set forth on Schedule 4 hereto, and (ii) the aggregate amount of any and all deductions under this sentence for any calendar year shall not be greater than an amount which would have the effect of decreasing the royalties otherwise accruing hereunder in respect of such country calendar year by more than twenty-five percent (25%). Any deduction the Company seeks from royalties accruing under this Royalty Agreement for non-monetary consideration paid for Blocking Third Party Intellectual Property or Enhancing Third Party Intellectual Property shall be at such consideration’s fair monetary value as mutually determined by the Company and Lucky Sub-2 in subsequent calendar quarters until the full deduction is takengood faith. Except as set forth in this Section 4B or as required by law, royalties accruing under this Royalty Agreement shall not be subject to any downward adjustment.