Common use of Royalty Adjustments Clause in Contracts

Royalty Adjustments. (a) During each Calendar Year of the Co-Promotion Term in which ALLERGAN employs a sales force of at least *** fully-trained (as directed by the Territory Joint Commercial Committee), full-time sales representatives who actively detail and promote Product in the Field of Use in the Territory in at least a secondary detail position, which will be defined by the TJCC, and in accordance with all of the terms set forth in Exhibit D, and subject to Sections 3.6.1, 3.6.3(a), 3.6.4(a), 3.7, and 3.8, GSK will pay ALLERGAN an additional *** royalty on GSK's Net Sales in each such Calendar Year, or portion thereof if applicable. (b) The Parties acknowledge that, during the Term, one (1) or more royalty-bearing licenses may be necessary from one (1) or more Third Parties in order for GSK and its Affiliates to use, sell, offer for sale, and import Product in the Field of Use in the Territory, without infringing the intellectual property rights of one or more patent rights of such Third Parties in the Territory. In such an event, GSK will have the right but not the obligation, and only after prior consultation with ALLERGAN, to use Commercially Reasonable Efforts to *** Certain confidential information contained in this document, marked with 3 asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended. obtain and maintain such Third Party licenses solely with respect to the Territory. If, as a result of GSK obtaining and maintaining such Third Party licenses, it is necessary for GSK to make royalty payments and/or license fee payments to such Third Party (collectively, the "Third Party Payments") in order for GSK to practice the rights granted hereunder to the ALLERGAN Patent Rights and ALLERGAN Know-How without infringing such Third Party's rights, GSK will be entitled to offset *** of all such Third Party Payments against any royalties owed to ALLERGAN under this Agreement during the Term. (c) If, in any Calendar Year, the Standard Cost exceeds the Allowable Standard Cost, ALLERGAN will credit against the royalty payable under Section 3.2.1 of this Agreement in such Calendar Year, an amount equal to the difference between (i) the Standard Cost plus *** and (ii) the Allowable Standard Cost plus ***, multiplied by the number of Units of Product purchased by GSK during such Calendar Year; provided such difference was actually incurred by GSK.

Royalty Adjustments. (a) During each Calendar Year of the Co-Promotion Term in which ALLERGAN employs a sales force of at least **Exelixis shall bear all Third Party milestones and royalties owed on intellectual property that: [ * fully-trained (as directed by the Territory Joint Commercial Committee]. Subject to Sections 7.5(b), full-time sales representatives who actively detail 7.5(d) and promote Product in the Field of Use in the Territory in at least a secondary detail position, which will be defined by the TJCC, and in accordance with all of the terms set forth in Exhibit D, and subject to Sections 3.6.1, 3.6.3(a7.5(e), 3.6.4(a), 3.7, BMS shall bear all other Third Party milestones and 3.8, GSK will pay ALLERGAN an additional **royalties owed on intellectual property in connection with [ * royalty on GSK's Net Sales in ]; provided that each such Calendar Year, or portion thereof if applicableParty shall bear all Third Party royalties arising from [ * ]. (b) The Parties acknowledge thatSubject to Sections 7.5(d) and 7.5(e), during BMS may deduct from the Termroyalties it would otherwise owe pursuant to Section 7.4 for a particular Product, one (1) or more royalty-bearing licenses may be necessary from one (1) or more an amount equal to [ * ] of all amounts paid by BMS to Third Parties in order for GSK and its Affiliates to use, sell, offer for sale, and import Product in the Field of Use in the Territory, without infringing the intellectual property rights of one or more patent rights of such Third Parties in the Territory. In such an event, GSK will have the right but not the obligation, and only after prior consultation with ALLERGAN, to use Commercially Reasonable Efforts to *** Certain confidential information contained in this document, marked with 3 asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended. obtain and maintain such Third Party licenses solely with respect to licenses to Patents that claim [ * ], up to a maximum deduction of [ * ] of the Territoryroyalties due Exelixis for such Product. If[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, as a result of GSK obtaining and maintaining such Third Party licensesMARKED BY BRACKETS, it is necessary for GSK to make royalty payments and/or license fee payments to such Third Party (collectivelyIS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, the "Third Party Payments") in order for GSK to practice the rights granted hereunder to the ALLERGAN Patent Rights and ALLERGAN Know-How without infringing such Third Party's rights, GSK will be entitled to offset *** of all such Third Party Payments against any royalties owed to ALLERGAN under this Agreement during the TermAS AMENDED. (c) IfDuring the applicable Royalty Term (as defined below), in if any Calendar Year, the Standard Cost exceeds the Allowable Standard Cost, ALLERGAN will credit against the royalty payable under Section 3.2.1 of this Agreement in such Calendar Year, an amount equal to the difference between Third Parties are: (i) the Standard Cost plus *** selling a Generic Product in any given country in any year; and (ii) such sales of such Generic Product(s) in such country for such year are, in the Allowable Standard Cost plus ***aggregate (on a unit equivalent basis): (A) greater than [ * ], multiplied but less than or equal to [ * ]of the sum of the entire market for a Product in such country, then the royalties due to Exelixis for such country in such year shall be reduced by [ * ] from what would otherwise have been due under Section 7.4; or (B) greater than [ * ] of the number sum of Units the entire market for the Product in such country, then the royalties due to Exelixis for such country in such year shall be reduced by [ * ] from what would otherwise have been due under Section 7.4. (d) Notwithstanding anything to the contrary in this Agreement, the operation of Sections 7.5(b) and 7.5(c) for a given Product, whether singularly or in combination with each other, shall not reduce the royalties due to Exelixis for such Product purchased below [ * ] of what would otherwise have been due under Section 7.4. (e) BMS may deduct the Exelixis Equivalent Amount (defined below) from the royalties it would otherwise owe pursuant to Section 7.4 for a particular Product. The “Exelixis Equivalent Amount” means, with respect to amounts paid by GSK during such Calendar Year; provided such difference was actually incurred by GSKBMS to Third Parties for licenses to Non-Transferable Patents (defined below), the amounts that [ * ]. “Non-Transferable Patents” means Patents: [ * ]. BMS shall not be able to deduct under Section 7.5(b) any amounts that are paid to any Third Party for licenses to Non-Transferable Patents and that are [ * ].

Royalty Adjustments. 6.8.1 Notwithstanding anything to the contrary herein, if the Company or any Affiliate or Sublicensee obtains (aor has obtained) During each Calendar Year one or more licenses under patents or patent applications owned by a Third Party to avoid infringement thereof by the manufacture, use, or sale of any Licensed Product, to reasonably avoid infringement-related litigation regarding a Licensed Product, or to make, use or sell any technology that could improve, enhance, or modify a Licensed Product, as determined by the Co-Promotion Term Company in which ALLERGAN employs a sales force of at least its reasonable discretion, then the Company may deduct [*** fully-trained *] percent (as directed [***]%) of any fees, milestones or royalties paid by the Territory Joint Commercial CommitteeCompany or any Affiliate or Sublicensee under such license(s) (even if paid in settlement or judgment of any claim for infringement) from the payments otherwise due Licensor under this Agreement; provided, however, that, notwithstanding the foregoing, the total amount due Licensor under this Agreement in any particular calendar quarter shall not be reduced by more than [***] percent ([***]%) as a result of any such deduction, and any amounts not deducted in a calendar quarter shall be carried forward for deduction in the subsequent calendar quarter(s), full-time sales representatives who actively detail and promote Product subject to such [***]percent ([***]%) limitation in each case. 6.8.2 Should a compulsory license be granted, or be the Field subject of Use a possible grant, to a Third Party under the applicable laws of any country in the Territory under the rights licensed under this Agreement, the Company shall notify Licensor, including any material information concerning such compulsory license, and the running royalty rate payable under this Article 6 for sales of Licensed Products in at least a secondary detail position, which such country will be defined by the TJCC, and in accordance with all of the terms set forth in Exhibit D, and subject adjusted to Sections 3.6.1, 3.6.3(a), 3.6.4(a), 3.7, and 3.8, GSK will pay ALLERGAN an additional *** equal any lower royalty on GSK's Net Sales in each such Calendar Year, or portion thereof if applicable. (b) The Parties acknowledge that, during the Term, one (1) or more royalty-bearing licenses may be necessary from one (1) or more Third Parties in order for GSK and its Affiliates rate granted to use, sell, offer for sale, and import Product in the Field of Use in the Territory, without infringing the intellectual property rights of one or more patent rights of such Third Parties in the Territory. In such an event, GSK will have the right but not the obligation, and only after prior consultation with ALLERGAN, to use Commercially Reasonable Efforts to *** Certain confidential information contained in this document, marked with 3 asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended. obtain and maintain such Third Party licenses solely for such country with respect to the Territory. If, as a result sales of GSK obtaining such Licensed Products therein (the “Compulsory Royalty”) during such periods such third parties sell or offer for sale under the compulsory license articles that compete with the Licensed Products then marketed and maintaining such Third Party licenses, it is necessary for GSK to make royalty payments and/or license fee payments to such Third Party (collectively, the "Third Party Payments") in order for GSK to practice the rights granted hereunder to the ALLERGAN Patent Rights and ALLERGAN Know-How without infringing such Third Party's rights, GSK will be entitled to offset *** of all such Third Party Payments against any royalties owed to ALLERGAN under this Agreement during the Term. (c) If, in any Calendar Year, the Standard Cost exceeds the Allowable Standard Cost, ALLERGAN will credit against the royalty payable under Section 3.2.1 of this Agreement in such Calendar Year, an amount equal to the difference between (i) the Standard Cost plus *** and (ii) the Allowable Standard Cost plus ***, multiplied sold by the number of Units of Product purchased by GSK during Company, its Affiliates, or Sublicensees in that country, provided that such Calendar Year; provided such difference was actually incurred by GSKCompulsory Royalty shall remain subject to further adjustment consistent with this Article 6.

Royalty Adjustments. (aReductions of Royalty Rates and deductions from Royalty Payments made under this Section 5.3(c) During are referred to collectively as “Royalty Adjustments.” Subject to the last clause of this Section 5.3(c), each Calendar Year of the Cofollowing royalty adjustment mechanisms shall operate independently, on a Royalty Product-Promotion Term by-Royalty Product and country-by-country basis, and either or both may apply to a given Royalty Product in which ALLERGAN employs a sales force of at least particular country if a Royalty Payment is owed with respect to such Licensed Product in such country (i) if (A) one or more Third Parties, without a license from Genentech (or a Sublicensee), or Compulsory Sublicesee(s) sells a product that contains a compound that is the same as a Compound contained in a given Royalty Product sold by Genentech (or a Sublicensee), or [*** fully-trained *] of such Compound, in a particular country (as directed by for purposes of this Section, each such product, a “Non‑Licensed Product”) and (B) the Territory Joint Commercial Committee), full-time sales representatives who actively detail and promote quarterly Net Sales of such Royalty Product in the Field of Use in the Territory in at least a secondary detail position, which will be defined such country decrease by the TJCC, and in accordance with all of the terms set forth in Exhibit D, and subject to Sections 3.6.1, 3.6.3(a), 3.6.4(a), 3.7, and 3.8, GSK will pay ALLERGAN an additional [*** royalty on GSK's Net Sales in each such Calendar Year, or portion thereof if applicable. *] percent (b) The Parties acknowledge that, during the Term, one (1[***]%) or more royalty-bearing relative to the Net Sales of such Royalty Product in such country in the calendar quarter prior to the first commercial sale of the first Non‑Licensed Product in such country (for purposes of this Section, the “Threshold Net Sales”), the Royalty Rate for such Royalty Product in such country shall be reduced by [***] percent ([***]%) for such quarter and for as long as quarterly Net Sales of such Royalty Product in such country are less than the Threshold Net Sales; or (ii) if it is necessary for Genentech (or a Sublicensee) to obtain any licenses may be necessary from one or other rights under intellectual property owned or controlled by Third Party(ies) (1other than a Genentech Affiliate) or more Third Parties in order for GSK and its Affiliates to make, use, sell, offer for sale, and sell or import a given Royalty Product in a particular country (such as, for purposes of illustration only, an intellectual property right that covers or claims a delivery, formulation, manufacturing or other technology that would be necessary to commercialize a Royalty Product in the Field of Use in the Territoryapplicable jurisdiction), without infringing the intellectual property rights of one then Genentech (or more patent rights of such Third Parties in the Territory. In such an event, GSK will have a Sublicensee) has the right but not to deduct from the obligation, and only after prior consultation with ALLERGAN, Royalty Payments owed to use Commercially Reasonable Efforts PTI for such Royalty Product in such country any payments actually paid (using a true‑up mechanism to *** Certain confidential information contained in this document, marked with 3 asterisks, has been omitted and filed separately with be agreed to by the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended. obtain and maintain such Third Party licenses solely with respect to the Territory. If, as a result of GSK obtaining and maintaining such Third Party licenses, it is necessary for GSK to make royalty payments and/or license fee payments Parties’ respective finance representatives) by Genentech (or its Sublicensees) to such Third Party (collectivelyParty(ies) for such licenses and rights; provided, the "Third Party Payments") in order for GSK to practice the rights granted hereunder to the ALLERGAN Patent Rights and ALLERGAN Know-How without infringing such Third Party's rights, GSK will be entitled to offset *** of all such Third Party Payments against any royalties owed to ALLERGAN under this Agreement during the Term. (c) Ifhowever, in any Calendar Year, the Standard Cost exceeds the Allowable Standard Cost, ALLERGAN will credit against the royalty payable under Section 3.2.1 of this Agreement in such Calendar Year, an amount equal to the difference between (i) the Standard Cost plus *** and (ii) the Allowable Standard Cost plus no event shall a given quarterly Royalty Payment be less than [***, multiplied by the number ] percent ([***]%) of Units of Product purchased by GSK during such Calendar Year; provided such difference was actually incurred by GSKwhat would otherwise be owed (but for Royalty Adjustments).

Royalty Adjustments. (a) During each Calendar Year of If, during the Co-Promotion Term Term, Allos pays royalties to any Third Party (excluding any amounts to be paid under this Agreement or the Data Option Agreement) under patents owned or controlled by such Third Party in which ALLERGAN employs a sales force of at least *** fully-trained (as directed by the Territory Joint Commercial Committee), full-time sales representatives who actively detail and promote Product in the Field of Use any country in the Territory which Allos is required to obtain a license in at least a secondary detail positionorder to make, which will have made, use, sell, offer to sell or import the Patent Compounds, other than those licenses that may be defined by required with respect to the TJCCCurrent RH-1-Formulation pursuant to Section 4.7(b) below, that, in the good faith opinion of Allos, must be used to make the Patent Compounds commercially feasible, Allos shall, for the period and in accordance with all respect of the terms set forth country (or countries) in Exhibit Drespect of which such payment is made, and subject be entitled to Sections 3.6.1offset against royalties otherwise due under Section 4.6 above in such country (or countries) an amount equal to [*] of any royalties paid by Allos to such Third Party under such license; provided, 3.6.3(a)however, 3.6.4(a), 3.7, and 3.8, GSK will pay ALLERGAN an additional in no event shall such deduction reduce the royalties otherwise payable during any calendar year in such country (or countries) by more than [*** royalty on GSK's Net Sales in each ] of the total amount that would be otherwise owed under Section 4.6 but for such Calendar Year, or portion thereof if applicablededuction. (b) The Parties acknowledge thatIf, during the Term, one Allos pays royalties to any Third Party (1excluding any amounts to be paid under this Agreement or the Data Option Agreement) under patents owned or more royalty-bearing licenses may be necessary from one (1) or more controlled by such Third Parties Party in any country in the Territory which Allos is required to obtain a license in order for GSK and its Affiliates to make, have made, use, sell, offer to sell or import [*] for sale, and import Product use with the Patent Compounds in the Field Current RH-1 Formulation or the combination of Use the [*] with the Patent Compounds in the TerritoryCurrent RH-1 Formulation (or both), without infringing Allos shall, for the intellectual property rights of one or more patent rights of such Third Parties period and in the Territory. In such an event, GSK will have the right but not the obligation, and only after prior consultation with ALLERGAN, to use Commercially Reasonable Efforts to *** Certain confidential information contained in this document, marked with 3 asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended. obtain and maintain such Third Party licenses solely with respect to the Territory. If, as a result of GSK obtaining and maintaining such Third Party licenses, it is necessary for GSK to make royalty payments and/or license fee payments to such Third Party country (collectively, the "Third Party Payments"or countries) in order for GSK to practice the rights granted hereunder to the ALLERGAN Patent Rights and ALLERGAN Know-How without infringing respect of which such Third Party's rightspayment is made, GSK will be entitled to offset reduce the royalties otherwise payable to the Licensors hereunder during any calendar year in such country (or countries) by [*** ] of all such Third Party Payments against any royalties the total amount that would be otherwise owed to ALLERGAN under this Agreement during the TermSection 4.6 in each royalty tier. (c) IfIf during the Term in the reasonable opinion of Allos, a license is required under the patents described in any Calendar YearSection 4.7(b) above, and as a result Allos elects to develop an alternative formulation of RH-1 other than the Current RH-1 Formulation, the Standard Cost exceeds royalty rates set forth in Section 4.6 applicable to Allos’ subsequent Net Sales of the Allowable Standard Costalternative formulation shall be reduced by [*] in each royalty tier and in all countries of the Territory. (d) For the sake of clarity, ALLERGAN will credit against the royalty payable reductions described in Sections 4.7(a), 4.7(b) and 4.7(c) above are [*] shall Allos be entitled to reduce the royalties otherwise owed under Section 3.2.1 of this Agreement 4.6 in such Calendar Yearrelation to any Licensed Product [*] the mechanisms described in Sections 4.7(a), an amount equal to the difference between (i4.7(b) the Standard Cost plus *** and (ii) the Allowable Standard Cost plus ***, multiplied by the number of Units of Product purchased by GSK during such Calendar Year; provided such difference was actually incurred by GSKor 4.7(c).

Royalty Adjustments. (a) During each Calendar Year of In the Co-Promotion Term in which ALLERGAN employs event that BAXTXX xxxt license from a sales force of at least *** fully-trained (as directed by the Territory Joint Commercial Committee), full-time sales representatives who actively detail and promote Product in the Field of Use in the Territory in at least a secondary detail position, which will be defined by the TJCC, and in accordance with all of the terms set forth in Exhibit D, and subject to Sections 3.6.1, 3.6.3(a), 3.6.4(a), 3.7, and 3.8, GSK will pay ALLERGAN an additional *** royalty on GSK's Net Sales in each such Calendar Year, or portion thereof if applicable. (b) The Parties acknowledge that, during the Term, one (1) or more royalty-bearing licenses may be necessary from one (1) or more Third Parties in order for GSK and its Affiliates to use, sell, offer for sale, and import Product in the Field of Use in the Territory, without infringing the intellectual property rights of Party one or more pending patent rights applications or issued patents that claim a ZFP or the method of making or using a ZFP in any country in the Field, BAXTXX xxxll have the right to credit one hundred percent (100%) of such Third Parties Party royalty payments based upon sales of such Licensed Product in such country against the Territory. In royalties owing to SANGAMO under Clause 4.3.1 (a) above with respect to sales of such an eventLicensed Product in such country; provided, GSK will have however, that BAXTXX xxxll not reduce, pursuant to Clauses 4.4(a) and (b), the right but not amount of the obligationroyalties paid to SANGAMO under Clause 4.3.1(a) above, and only after prior consultation with ALLERGANrespect to sales of such Licensed Product in such country, to use Commercially Reasonable Efforts to **less than * * * of Net Sales of such Licensed Product in such country. * Certain confidential information contained in on this document, marked with 3 asterisks, page has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amendedCommission. obtain and maintain such Third Party licenses solely Confidential treatment has been requested with respect to the Territoryomitted portions. (b) In the event that BAXTXX xxxt license from a Third Party one or more pending patent applications or issued patents (other than those described in Clause 4.4(a)) in order to manufacture, have manufactured, import, use, sell and offer for sale a Licensed Product in any country for use in the Field. If, as a result BAXTXX xxxll have the right to credit fifty percent (50%) of GSK obtaining and maintaining such Third Party licenses, it is necessary for GSK to make royalty payments and/or license fee payments based upon sales of such Licensed Product in such country against the royalties owing to SANGAMO under Clause 4.3.1 (a) above with respect to sales of such Third Party Licensed Product in such country; provided, however, that BAXTXX xxxll not reduce, pursuant to Clauses 4.4(a) and (collectivelyb), the "Third Party Payments"amount of the royalties paid to SANGAMO under Clause 4.3.1(a) above, with respect to sales of such Licensed Product in order for GSK such country, to practice the rights granted hereunder to the ALLERGAN Patent Rights and ALLERGAN Know-How without infringing such Third Party's rights, GSK will be entitled to offset **less than * * * of all Net Sales of such Third Party Payments against any royalties owed to ALLERGAN under this Agreement during the TermLicensed Product in such country. (c) IfBAXTXX xxxll allow representatives of SANGAMO to examine any licenses that BAXTXX xxxerts justify the adjustment of royalties to verify that any adjustments made pursuant to this Clause 4.4 are consistent with the requirement set forth in this Clause 4.4. SANGAMO's representatives shall not copy the license or licenses and must keep confidential all information, including royalty rates, pertaining to the license or licenses. If the parties disagree whether or not a pending patent application or issued patent is consistent with the requirement set forth in any Calendar Yearthis Clause 4.4, the Standard Cost exceeds disagreement shall be resolved pursuant to Clause 12. (d) If the Allowable Standard Costmanufacture, ALLERGAN will credit against use, offer for sale, sale or import of any Licensed Product does not fall within the royalty payable under Section 3.2.1 scope of this Agreement in such Calendar Year, one or more claims of an amount equal issued and unexpired patent within the Patent Rights or Inventions Patents (other than Inventions Patents to the difference between extent they claim only BAXTXX Xxxentions), then the royalties owing under Clause 4.3.1 shall be reduced by one-half and shall be payable only for a period of five (i5) years after the Standard Cost plus **First Commercial Sale of such Licensed Product; provided, however, at such later time as the manufacture, use, offer for sale, sale or import of any Licensed Product falls within the scope of one or more claims of an issued and unexpired patent within the Patent Rights or Inventions Patents that was pending on the date of the First Commercial Sale thereof (other * Certain information on this page has been omitted and (ii) filed separately with the Allowable Standard Cost plus ***, multiplied by Commission. Confidential treatment has been requested with respect to the number of Units of Product purchased by GSK during such Calendar Year; provided such difference was actually incurred by GSKomitted portions.

Royalty Adjustments. (a) During each Calendar Year of In the Co-Promotion Term in which ALLERGAN employs event that BAXTXX xxxt license from a sales force of at least *** fully-trained (as directed by the Territory Joint Commercial Committee), full-time sales representatives who actively detail and promote Product in the Field of Use in the Territory in at least a secondary detail position, which will be defined by the TJCC, and in accordance with all of the terms set forth in Exhibit D, and subject to Sections 3.6.1, 3.6.3(a), 3.6.4(a), 3.7, and 3.8, GSK will pay ALLERGAN an additional *** royalty on GSK's Net Sales in each such Calendar Year, or portion thereof if applicable. (b) The Parties acknowledge that, during the Term, one (1) or more royalty-bearing licenses may be necessary from one (1) or more Third Parties in order for GSK and its Affiliates to use, sell, offer for sale, and import Product in the Field of Use in the Territory, without infringing the intellectual property rights of Party one or more pending patent rights applications or issued patents that claim a ZFP or the method of making or using a ZFP in any country in the Field, BAXTXX xxxll have the right to credit one hundred percent (100%) of such Third Parties Party royalty payments based upon sales of such Licensed Product in such country against the Territory. In royalties owing to SANGAMO under Clause 4.3.1 (a) above with respect to sales of such an eventLicensed Product in such country; provided, GSK will have however, that BAXTXX xxxll not reduce, pursuant to Clauses 4.4(a) and (b), the right but not amount of the obligationroyalties paid to SANGAMO under Clause 4.3.1(a) above, and only after prior consultation with ALLERGANrespect to sales of such Licensed Product in such country, to use Commercially Reasonable Efforts to **less than * * * of Net Sales of such Licensed Product in such country. * Certain confidential information contained in on this document, marked with 3 asterisks, page has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amendedCommission. obtain and maintain such Third Party licenses solely Confidential treatment has been requested with respect to the Territoryomitted portions. (b) In the event that BAXTXX xxxt license from a Third Party one or more pending patent applications or issued patents (other than those described in Clause 4.4(a)) in order to * * * * * * * * * * * * a Licensed Product in any country for use in the Field. If, as a result BAXTXX xxxll have the right to credit fifty percent (50%) of GSK obtaining and maintaining such Third Party licenses, it is necessary for GSK to make royalty payments and/or license fee payments based upon sales of such Licensed Product in such country against the royalties owing to SANGAMO under Clause 4.3.1 (a) above with respect to sales of such Third Party Licensed Product in such country; provided, however, that BAXTXX xxxll not reduce, pursuant to Clauses 4.4(a) and (collectivelyb), the "Third Party Payments"amount of the royalties paid to SANGAMO under Clause 4.3.1(a) above, with respect to sales of such Licensed Product in order for GSK such country, to practice the rights granted hereunder to the ALLERGAN Patent Rights and ALLERGAN Know-How without infringing such Third Party's rights, GSK will be entitled to offset **less than * * * of all Net Sales of such Third Party Payments against any royalties owed to ALLERGAN under this Agreement during the TermLicensed Product in such country. (c) IfBAXTXX xxxll allow representatives of SANGAMO to examine any licenses that BAXTXX xxxerts justify the adjustment of royalties to verify that any adjustments made pursuant to this Clause 4.4 are consistent with the requirement set forth in this Clause 4.4. SANGAMO's representatives shall not copy the license or licenses and must keep confidential all information, including royalty rates, pertaining to the license or licenses. If the parties disagree whether or not a pending patent application or issued patent is consistent with the requirement set forth in any Calendar Yearthis Clause 4.4, the Standard Cost exceeds disagreement shall be resolved pursuant to Clause 12. (d) If the Allowable Standard Cost, ALLERGAN will credit against * * * * * * * * of any Licensed Product does not fall within the royalty payable under Section 3.2.1 scope of this Agreement in such Calendar Year, one or more claims of an amount equal issued and unexpired patent within the Patent Rights or Inventions Patents (other than Inventions Patents to the difference between extent they claim only BAXTXX Xxxentions), then the royalties owing under Clause 4.3.1 shall be reduced by one-half and shall be payable only for a period of five (i5) years after the Standard Cost plus **First Commercial Sale of such Licensed Product; provided, however, at such later time as the * * * * * * * * * of any Licensed Product falls within the scope of one or more claims of an issued and unexpired patent within the Patent Rights or Inventions Patents that was pending on the date of the First Commercial Sale thereof (ii) other * Certain information on this page has been omitted and filed separately with the Allowable Standard Cost plus ***, multiplied by Commission. Confidential treatment has been requested with respect to the number of Units of Product purchased by GSK during such Calendar Year; provided such difference was actually incurred by GSKomitted portions.

Royalty Adjustments. (a) During each Calendar Year of the Co-Promotion Term in which ALLERGAN employs a sales force of at least *** fully-trained (as directed by the Territory Joint Commercial Committee), full-time sales representatives who actively detail and promote Product in the Field of Use in the Territory in at least a secondary detail position, which will be defined by the TJCC, and in accordance with all of the terms set forth in Exhibit DE, and subject to Sections 3.6.13.4.1, 3.6.3(a3.4.3(a), 3.6.4(a3.4.4(a), 3.73.5, and 3.83.6, GSK will pay ALLERGAN an additional *** royalty on GSK's Net Sales in each such Calendar Year, or portion thereof if applicable. (b) The Parties acknowledge that, during the Term, one (1) or more royalty-bearing licenses may be necessary from one (1) or more Third Parties in order for GSK and its Affiliates to use, sell, offer for sale, sale and import Product in the Field of Use in the Territory, without infringing the intellectual property rights of one or more patent rights of such Third Parties in the Territory. In such an event, GSK will have the right but not the obligation, and only after prior consultation with ALLERGAN, to use Commercially Reasonable Efforts to *** Certain confidential information contained in this document, marked with 3 asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended. obtain and maintain such Third Party licenses solely with respect to the Territory. If, as a result of GSK obtaining and maintaining such Third Party licenses, it is necessary for GSK to make royalty payments and/or license fee payments to such Third Party (collectively, the "Third Party Payments") in order for GSK to practice the rights granted hereunder to the ALLERGAN Patent *** Certain confidential information contained in this document, marked with 3 asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended. Rights and ALLERGAN Know-How without infringing such Third Party's rights, GSK will be entitled to offset *** of all such Third Party Payments against any royalties owed to ALLERGAN under this Agreement during the Term. (c) If, in any Calendar Year, the Standard Cost exceeds the Allowable Standard Cost, ALLERGAN will credit against the royalty payable under Section 3.2.1 3.1.1 of this Agreement in such Calendar Year, an amount equal to the difference between (i) the Standard Cost plus *** and (ii) the Allowable Standard Cost plus ***, multiplied by the number of Units of Product purchased by GSK during such Calendar Year; provided such difference was actually incurred by GSK.