Common use of Royalty Offset Clause in Contracts

Royalty Offset. RPRP and Introgen understand and recognize that RPRP is a party to consulting, license and/or research funding agreements (but not agreements where third party non-government investors finance the research or development of technology for RPRP) with other commercial and research institutions ("collaborators") which agreements provide for RPRP's payment of royalties on products manufactured, used or sold by RPRP based on the contribution of said collaborators to the discovery and development of said products. Consequently, it is foreseeable that a Collaboration Product developed with Introgen may become subject to multiple royalty obligations as the result of more than one collaborator's contribution to the development of, or ownership of patent rights covering, the Collaboration Product. In order to avoid the development of a dispute over royalty entitlements and to provide RPRP with the incentive to invest in and commercialize products which might otherwise not be commercialized due to excess royalty obligations, RPRP and Introgen agree that the royalty rates applicable to any specific Collaboration Product pursuant to the first sentence of Section 8.1 (the "Introgen Royalty") or pursuant to an agreement with a third party collaborator not an Affiliate at the time of agreement or the payment of a royalty (the "Third Party Royalties") may be reduced to provide reasonable royalty income to each contributing collaborator. RPRP shall make reasonable and diligent efforts to establish agreements and amend its existing royalty-bearing agreements with said collaborators so as to ensure the fair distribution of royalty income based on Collaboration Products for which more than one royalty claim is made, provided the Introgen Royalty paid to Introgen shall in no event be adjusted to [*] on a country by country basis (notwithstanding any other provision of this Agreement). It is understood that this Section shall not be invoked by RPRP as regards Introgen until the sum of the Introgen Royalty and Third Party Royalties payable by RPRP for a Collaboration Product ("Total Royalty") is greater than [*] on a country by country basis. Thereafter, royalty reduction shall be applied equitably in accordance with the formula in this Section 8.2, taking into account each collaborator's minimum royalty rate, to reduce on a percentage basis the royalty rates specified in all collaborator agreements having an applicable royalty adjustment provision therein and thereby adjust, to the extent possible, RPRP's Total Royalty burden to no more than [*] on a country by country basis. (a) Royalty payment reductions shall be calculated quarterly, based on the Total Royalties payable by RPRP with respect to Net Sales for such quarter. Within ninety (90) days after the end of each calendar year, RPRP and Introgen shall reconcile the calculation of royalty reductions under this Section 8.2 for the preceding calendar year, based upon the total Net Sales for such year and the Total Royalties with respect to such Net Sales. If the amount deducted from the Introgen Royalty exceed the amount of such reconciled reduction, the difference shall be paid to Introgen within thirty (30) days; if the amount actually deducted from the Introgen Royalty is less than the amount of such reconciled reduction, the difference may be applied by RPRP as a credit against royalties owed to Introgen in the then-current calendar year, in equal quarterly installments. (b) Unless a more equitable procedure is agreed to by all participating parties to whom RPRP owes a royalty on a Collaboration Product, the reduction in the Introgen Royalty and each of the other Third Party Royalties shall be calculated and applied to royalty payment obligations on a country by country basis as follows: (i) Calculate the effective overall Royalty rate for each collaborator (i.e., Introgen and each of the other collaborators receiving Third Party Royalties) based on total worldwide Net Sales for the quarter or year, as applicable ("EFF RATE"); (ii) On a country by country basis, total the EFF RATE of all collaborators ("TOTAL RATE"); (iii) On a country by country basis, [*]; If [*] is greater than [*]: (iv) Calculate the adjustable portions of [*]; (v) Calculate [*]; (vi) Multiply the [*] for each collaborator by the [*]; (vii) Subtract the product obtained in (vi) from the [*] for each collaborator [*]; and (viii) Calculate for each collaborator their reduced royalty rate by adding the [*] on a country by country basis. (c) Notwithstanding the foregoing calculation, in no event shall the Introgen Royalty with respect to a Collaboration Product in any country be reduced by an amount greater than [*] of the amount by which the Total Royalty for such Collaboration Product in such country exceeds [*] (prior to any reduction under a provision substantially identical to Section 8.2(b) above). However, it is understood that at such time as third parties have agreed to be bound by the calculation in this Section 8.2, and Introgen approves the resulting impact on the Introgen Royalty, Introgen may agree to waive this paragraph (c). (d) At least ninety (90) days prior to entering into any agreement that would require the payment of any royalty to a third party with respect to a patent right or technology specifically intended for use in a Collaboration Product, RPRP or Introgen (as the case may be) agrees to notify the other of such fact and the party with whom it proposes to enter into such agreement. Following such notice, RPRP and Introgen (respectively) agree to keep the other reasonably informed as to the progress of its negotiations with such third party, including the proposed principal terms of the agreement, as they reasonably progress. It is understood that the terms of the agreement will not have been finalized at the time of the initial notice under this Section 8.2(c), and that such notice is only to inform the other party of an intention to enter into such an agreement.

Royalty Offset. RPRP and Introgen understand and recognize that RPRP is a party to consulting, license and/or research funding agreements (but not agreements where third party non-government investors finance the research or development of technology for RPRP) with other commercial and research institutions ("collaborators") which agreements provide for RPRP's payment of royalties on products manufactured, used or sold by RPRP based on the contribution of said collaborators to the discovery and development of said products. Consequently, it is foreseeable that a Collaboration Product developed with Introgen may become subject to multiple royalty obligations as the result of more than one collaborator's contribution to the development of, or ownership of patent rights covering, the Collaboration Product. In order to avoid the development of a dispute over royalty entitlements and to provide RPRP with the incentive to invest in and commercialize products which might otherwise not be commercialized due to excess royalty obligations, RPRP and Introgen agree that the royalty rates applicable to any specific Collaboration Product pursuant to the first sentence of Section 8.1 (the "Introgen Royalty") or pursuant to an agreement with a third party collaborator not an Affiliate at the time of agreement or the payment of a royalty (the "Third Party Royalties") may be reduced to provide reasonable royalty income to each contributing collaborator. RPRP shall make reasonable and diligent efforts to establish agreements and amend its existing royalty-bearing agreements with said collaborators so as to ensure the fair distribution of royalty income based on Collaboration Products for which more than one royalty claim is made, provided the Introgen Royalty paid to Introgen shall in no event be adjusted to [*] on a country by country basis (notwithstanding any other provision of this Agreement). It is understood that this Section shall not be invoked by RPRP as regards Introgen until the sum of the Introgen Royalty and Third Party Royalties payable by RPRP for a Collaboration Product ("Total Royalty") is greater than [*] on a country by country basis. Thereafter, royalty reduction shall be applied equitably in accordance with the formula in this Section 8.2, taking into account each collaborator's minimum royalty rate, to reduce on a percentage basis the royalty rates specified in all collaborator agreements having an applicable royalty adjustment provision therein and thereby adjust, to the extent possible, RPRP's Total Royalty burden to no more than [*] on a country by country basis. (a) Royalty payment reductions shall be calculated quarterly, based on the Total Royalties payable by RPRP with respect to Net Sales for such quarter. Within ninety (90) days after the end of each calendar year, RPRP and Introgen shall reconcile the calculation of royalty reductions under this Section 8.2 for the preceding calendar year, based upon the total Net Sales for such year and the Total Royalties with respect to such Net Sales. If the amount deducted from the Introgen Royalty exceed the amount of such reconciled reduction, the difference shall be paid to Introgen within thirty (30) days; if the amount actually deducted from the Introgen Royalty is less than the amount of such reconciled reduction, the difference may be applied by RPRP as a credit against royalties owed to Introgen in the then-current calendar year, in equal quarterly installments. (b) Unless a more equitable procedure is agreed to by all participating parties to whom RPRP owes a royalty on a Collaboration Product, the reduction in the Introgen Royalty and each of the other Third Party Royalties shall be calculated and applied to royalty payment obligations on a country by country basis as follows:: [*] Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. (i) Calculate the effective overall Royalty rate for each collaborator (i.e., Introgen and each of the other collaborators receiving Third Party Royalties) based on total worldwide Net Sales for the quarter or year, as applicable ("EFF RATE"); (ii) On a country by country basis, total the EFF RATE of all collaborators ("TOTAL RATE"); (iii) On a country by country basis, [*]; If [*] is greater than [*]: (iv) Calculate the adjustable portions of [*]; (v) Calculate [*]; (vi) Multiply the [*] for each collaborator by the [*]; (vii) Subtract the product obtained in (vi) from the [*] for each collaborator [*]; and (viii) Calculate for each collaborator their reduced royalty rate by adding the [*] on a country by country basis. (c) Notwithstanding the foregoing calculation, in no event shall the Introgen Royalty with respect to a Collaboration Product in any country be reduced by an amount greater than [*] of the amount by which the Total Royalty for such Collaboration Product in such country exceeds [*] (prior to any reduction under a provision substantially identical to Section 8.2(b) above). However, it is understood that at such time as third parties have agreed to be bound by the calculation in this Section 8.2, and Introgen approves the resulting impact on the Introgen Royalty, Introgen may agree to waive this paragraph (c). (d) At least ninety (90) days prior to entering into any agreement that would require the payment of any royalty to a third party with respect to a patent right or technology specifically intended for use in a Collaboration Product, RPRP or Introgen (as the case may be) agrees to notify the other of such fact and the party with whom it proposes to enter into such agreement. Following such notice, RPRP and Introgen (respectively) agree to keep the other reasonably informed as to the progress of its negotiations with such third party, including the proposed principal terms of the agreement, as they reasonably progress. It is understood that the terms of the agreement will not have been finalized at the time of the initial notice under this Section 8.2(c), and that such notice is only to inform the other party of an intention to enter into such an agreement. [*] Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

Royalty Offset. RPRP and Introgen understand and recognize that RPRP is a party to consulting, license and/or research funding agreements (but not agreements where third party non-government investors finance the research or development of technology for RPRP) with other commercial and research institutions ("collaborators") which agreements provide for RPRP's payment of royalties on products manufactured, used or sold by RPRP based on the contribution of said collaborators to the discovery and development of said products. Consequently, it is foreseeable that a Collaboration Product developed with Introgen may become subject to multiple royalty obligations as the result of more than one collaborator's contribution to the development of, or ownership of patent rights covering, the Collaboration Product. In order to avoid the development of a dispute over royalty entitlements and to provide RPRP with the incentive to invest in and commercialize products which might otherwise not be commercialized due to excess royalty obligations, RPRP and Introgen agree that the royalty rates applicable to any specific Collaboration Product pursuant to the first sentence of Section 8.1 (the "Introgen Royalty") or pursuant to an agreement with a third party collaborator not an Affiliate at the time of agreement or the payment of a royalty (the "Third Party Royalties") may be reduced to provide reasonable royalty income to each contributing collaborator. RPRP shall make reasonable and diligent efforts to establish agreements and amend its existing royalty-bearing agreements with said collaborators so as to ensure the fair distribution of royalty income based on Collaboration Products for which more than one royalty claim is made, provided the Introgen Royalty paid to Introgen shall in no event be adjusted to [*] on a country by country basis (notwithstanding any other provision of this Agreement). It is understood that this Section shall not be invoked by RPRP as regards Introgen until the sum of the Introgen Royalty and Third Party Royalties payable by RPRP for a Collaboration Product ("Total Royalty") is greater than [*] Certain information on a country by country basis. Thereafter, royalty reduction shall be applied equitably in accordance this page has been omitted and filed separately with the formula in this Section 8.2, taking into account each collaborator's minimum royalty rate, to reduce on a percentage basis the royalty rates specified in all collaborator agreements having an applicable royalty adjustment provision therein and thereby adjust, Commission. Confidential treatment has been requested with respect to the extent possible, RPRP's Total Royalty burden to no more than [*] on a country by country basisomitted portions. (a) Royalty payment reductions shall be calculated quarterly, based on the Total Royalties payable by RPRP with respect to Net Sales for such quarter. Within ninety (90) days after the end of each calendar year, RPRP and Introgen shall reconcile the calculation of royalty reductions under this Section 8.2 for the preceding calendar year, based upon the total Net Sales for such year and the Total Royalties with respect to such Net Sales. If the amount deducted from the Introgen Royalty exceed the amount of such reconciled reduction, the difference shall be paid to Introgen within thirty (30) days; if the amount actually deducted from the Introgen Royalty is less than the amount of such reconciled reduction, the difference may be applied by RPRP as a credit against royalties owed to Introgen in the then-current calendar year, in equal quarterly installments. (b) Unless a more equitable procedure is agreed to by all participating parties to whom RPRP owes a royalty on a Collaboration Product, the reduction in the Introgen Royalty and each of the other Third Party Royalties shall be calculated and applied to royalty payment obligations on a country by country basis as follows: (i) Calculate the effective overall Royalty rate for each collaborator (i.e., Introgen and each of the other collaborators receiving Third Party Royalties) based on total worldwide Net Sales for the quarter or year, as applicable ("EFF RATE"); (ii) On a country by country basis, total the EFF RATE of all collaborators ("TOTAL RATE"); (iii) On a country by country basis, [*]; If [*] is greater than [*]: (iv) Calculate the adjustable portions of [*]; (v) Calculate [*]; (vi) Multiply the [*] for each collaborator by the [*]; (vii) Subtract the product obtained in (vi) from the [*] for each collaborator [*]; andand [*] Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. (viii) Calculate for each collaborator their reduced royalty rate by adding the [*] on a country by country basis. (c) Notwithstanding the foregoing calculation, in no event shall the Introgen Royalty with respect to a Collaboration Product in any country be reduced by an amount greater than [*] of the amount by which the Total Royalty for such Collaboration Product in such country exceeds [*] (prior to any reduction under a provision substantially identical to Section 8.2(b) above). However, it is understood that at such time as third parties have agreed to be bound by the calculation in this Section 8.2, and Introgen approves the resulting impact on the Introgen Royalty, Introgen may agree to waive this paragraph (c). (d) At least ninety (90) days prior to entering into any agreement that would require the payment of any royalty to a third party with respect to a patent right or technology specifically intended for use in a Collaboration Product, RPRP or Introgen (as the case may be) agrees to notify the other of such fact and the party with whom it proposes to enter into such agreement. Following such notice, RPRP and Introgen (respectively) agree to keep the other reasonably informed as to the progress of its negotiations with such third party, including the proposed principal terms of the agreement, as they reasonably progress. It is understood that the terms of the agreement will not have been finalized at the time of the initial notice under this Section 8.2(c), and that such notice is only to inform the other party of an intention to enter into such an agreement.

Royalty Offset. RPRP and Introgen understand and recognize that RPRP is a party to consulting, license and/or research funding agreements (but not agreements where third party non-government investors finance the research or development of technology for RPRP) with other commercial and research institutions ("collaborators") which agreements provide for RPRP's payment of royalties on products manufactured, used or sold by RPRP based on the contribution of said collaborators to the discovery and development of said products. Consequently, it is foreseeable that a Collaboration Product developed with Introgen may become subject to multiple royalty obligations as the result of more than one collaborator's contribution to the development of, or ownership of patent rights covering, the Collaboration Product. In order to avoid the development of a dispute over royalty entitlements and to provide RPRP with the incentive to invest in and commercialize products which might otherwise not be commercialized due to excess royalty obligations, RPRP and Introgen agree that the royalty rates applicable to any specific Collaboration Product pursuant to the first sentence of Section 8.1 (the "Introgen Royalty") or pursuant to an agreement with a third party collaborator not an Affiliate at the time of agreement or the payment of a royalty (the "Third Party Royalties") may be reduced to provide reasonable royalty income to each contributing collaborator. RPRP shall make reasonable and diligent efforts to establish agreements and amend its existing royalty-bearing agreements with said collaborators so as to ensure the fair distribution of royalty income based on Collaboration Products for which more than one royalty claim is made, provided the Introgen Royalty paid to Introgen shall in no event be adjusted to [*] on a country by country basis (notwithstanding any other provision of this Agreement). It is understood that this Section shall not be invoked by RPRP as regards Introgen until the sum of the Introgen Royalty and Third Party Royalties payable by RPRP for a Collaboration Product ("Total Royalty") is greater than [*] on a country by country basis. Thereafter, royalty reduction shall be applied equitably in accordance with the formula in this Section 8.2, taking into account each collaborator's minimum royalty rate, to reduce on a percentage basis the royalty rates specified in all collaborator agreements having an applicable royalty adjustment provision therein and thereby adjust, to the extent possible, RPRP's Total Royalty burden to no more than [*] on a country by country basis. (a) Royalty payment reductions shall be calculated quarterly, based on the Total Royalties payable by RPRP with respect to Net Sales for such quarter. Within ninety (90) days after the end of each calendar year, RPRP and Introgen shall reconcile the calculation of royalty reductions under this Section 8.2 for the preceding calendar year, based upon the total Net Sales for such year and the Total Royalties with respect to such Net Sales. If the amount deducted from the Introgen Royalty exceed the amount of such reconciled reduction, the difference shall be paid to Introgen within thirty (30) days; if the amount actually deducted from the Introgen Royalty is less than the amount of such reconciled reduction, the difference may be applied by RPRP as a credit against royalties owed to Introgen in the then-current calendar year, in equal quarterly installments. (b) Unless a more equitable procedure is agreed to by all participating parties to whom RPRP owes a royalty on a Collaboration Product, the reduction in the Introgen Royalty and each of the other Third Party Royalties shall be calculated and applied to royalty payment obligations on a country by country basis as follows: (i) Calculate the effective overall Royalty rate for each collaborator (i.e., Introgen and each of the other collaborators receiving Third Party Royalties) based on total worldwide Net Sales for the quarter or year, as applicable ("EFF RATE"); (ii) On a country by country basis, total the EFF RATE of all collaborators ("TOTAL RATE"); (iii) On a country by country basis, [*]; If [*] is greater than [*]: (iv) Calculate the adjustable portions of [*]; (v) Calculate [*]; (vi) Multiply the [*] for each collaborator by the [*]; (vii) Subtract the product obtained in (vi) from the [*] for each collaborator [*]; and (viii) Calculate for each collaborator their reduced royalty rate by adding the [*] on a country by country basis. (c) Notwithstanding the foregoing calculation, in no event shall the Introgen Royalty with respect to a Collaboration Product in any country be reduced by an amount greater than [*] of the amount by which the Total Royalty for such Collaboration Product in such country exceeds [*] (prior to any reduction under a provision substantially identical to Section 8.2(b) above). However, it is understood that at such time as third parties have agreed to be bound by the calculation in this Section 8.2, and Introgen approves the resulting impact on the Introgen Royalty, Introgen may agree to waive this paragraph (c). (d) At least ninety (90) days prior to entering into any agreement that would require the payment of any royalty to a third party with respect to a patent right or technology specifically intended for use in a Collaboration Product, RPRP or Introgen (as the case may be) agrees to notify the other of such fact and the party with whom it proposes to enter into such agreement. Following such notice, RPRP and Introgen (respectively) agree to keep the other reasonably informed as to the progress of its negotiations with such third party, including the proposed principal terms of the agreement, as they reasonably progress. It is understood that the terms of the agreement will not have been finalized at the time of the initial notice under this Section 8.2(c), and that such notice is only to inform the other party of an intention to enter into such an agreement.