Common use of Royalty Offsets Clause in Contracts

Royalty Offsets. In the event that MERCK, in order to practice the license granted to it under Section 7.2 of this Agreement in any country in the Territory, is required to and actually makes royalty, milestone or license fee payments to any Third Party (“Third Party Payments”) in order (A) to obtain a license to an issued patent or patents in the absence of which the Lead Compound portion of the Product could not legally be manufactured, imported, sold, exported, or otherwise exploited in such country and/or (B) to obtain a license to an issued patent or patents, in the absence of which the Licensed Patent Rights cannot legally be practiced in such country for making, using, importing, offering for sale, selling, exporting or otherwise exploiting such Product, then the royalties payable to ARCHEMIX for such Product under Section 5.5.1(a) with respect to such country may be reduced by [***] percent ([***]%) of the amount of such Third Party Payments. Notwithstanding the foregoing, (i) such reductions Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 406 of the Securities Act. shall in no event reduce the royalty that would otherwise be payable for such Product under Section 5.5.1 with respect to such country by more than [***] percent ([***]%) of the amount otherwise payable with respect to Net Sales of such Product in such country, (ii) MERCK shall be responsible for the payment of any royalty, milestone or license fee payments to any Third Party relating to methods or processes for making or manufacturing the Product and the royalties payable to ARCHEMIX pursuant to Section 5.5.1(a) [***], and (iii) in the event that MERCK requires that ARCHEMIX use in the Research Program molecules, methods and/or processes not identified in Schedule 11 or MERCK requires that ARCHEMIX use in the Research Program specific molecules, methods and/or processes where such molecules, methods and/or processes are generically identified in Schedule 11 (“Requested Chemistry”), thereby giving rise to the obligation to pay royalty, milestone or license fee payments to a Third Party (“Third Party Chemistry Payments”), MERCK [***] of such Third Party Chemistry Payments and the royalties payable to ARCHEMIX pursuant to Section 5.5.1(a) [***] Third Party Chemistry Payments.

Royalty Offsets. In the event that MERCK(a) Subject to Sections 10.4(b), in order to practice the license granted to it under Section 7.2 of this Agreement in any country in the Territory(c) and (d), is required to and actually makes royalty, milestone or license fee payments to any Third Party (“Third Party Payments”) in order (A) to obtain a license to an issued patent or patents in the absence of which the Lead Compound portion of the Product could not legally be manufactured, imported, sold, exported, or otherwise exploited in such country and/or (B) to obtain a license to an issued patent or patentsGenmab or, in the absence case of which a Unilateral Product (i.e., Genmab Products and SGI Products), the Licensed Patent Rights cannot legally Continuing Party (i.e., Genmab or SGI) shall be practiced in such solely responsible for paying all amounts, including any license fees, milestones and royalties owed to Third Parties by either Genmab or SGI on account of developing and commercializing Exclusive Products or Unilateral Products, including any royalties owed due to use of the SGI Technology or Genmab Technology. (b) Notwithstanding Section 10.4(a), on a Calendar Quarter-by-Calendar Quarter and country-by-country for makingbasis, using, importing, offering for sale, selling, exporting or otherwise exploiting such Product, then the royalties payable Genmab shall be entitled to ARCHEMIX for such Product under Section 5.5.1(a) with respect to such country may be reduced by [***offset [ * ] percent ([***[ * ]%) of any [ * ] for [ * ] that are [ * ] pursuant to Section 10.3.1 or 10.3.2 for such Exclusive Product, excluding any royalties owed under the amount of such Third Party PaymentsBMS Agreement. Notwithstanding the foregoing, (i) such reductions Portions of this Exhibit were omitted SGI represents and have been filed separately with the Secretary of the Commission warrants that all royalties owed to BMS pursuant to the Company’s application requesting confidential treatment under Rule 406 of BMS Agreement are described in this Agreement. Notwithstanding anything to the Securities Act. shall contrary in this Section 10.4, in no event reduce shall the royalty payments due and payable to SGI pursuant to Section 10.3.1 or 10.3.2 with respect to an Exclusive Product in any Calendar Quarter and country be reduced by more than [ * ] percent ([ * ]%) (on a tier-by-tier basis) of the royalty otherwise due to SGI if no royalties were payable to Third Parties. (c) Notwithstanding Section 10.4(a), on a Calendar Quarter-by-Calendar Quarter and country-by-country basis, Genmab shall be entitled to offset [ * ] percent ([ * ]%) of any royalties payable by Genmab to Third Parties for intellectual property rights that are necessary with respect to a Genmab Product against the royalties that would otherwise be payable to SGI pursuant to Section 10.3.3 or 10.3.4 for such Product Genmab Product, excluding any royalties owed under the BMS Agreement. Notwithstanding anything to the contrary in this Section 5.5.1 10.4, in no event shall the royalty payments due and payable to SGI pursuant to Section 10.3.3 or 10.3.4 with respect to such a Genmab Product in any Calendar Quarter and country be reduced by more than [***[ * ] percentage points on any royalty tier. For the avoidance of doubt the minimum royalty rate payable to SGI pursuant to Section 10.3.3 (a) is [ * ] percent ([***[ * ]%), the minimum royalty rate payable to SGI pursuant to Section 10.3.3(b) is [ * ] percent ([ * ]%), the minimum royalty rate payable to SGI pursuant to Section 10.3.4(a) is [ * ] percent ([ * ]%) and the minimum royalty rate payable to SGI pursuant to Section 10.3.4(b) is [ * ] hundredths percent ([ * ]%). (d) Notwithstanding Section 10.4(a), on a Calendar Quarter-by-Calendar Quarter and country-by-country basis, SGI shall be entitled to offset [ * ] of the amount otherwise any royalties payable by SGI to Third Parties for intellectual property rights that are necessary with respect to Net Sales of such a SGI Product in such country, (ii) MERCK shall be responsible for the payment of any royalty, milestone or license fee payments to any Third Party relating to methods or processes for making or manufacturing the Product and against the royalties that would otherwise be payable to ARCHEMIX Genmab pursuant to Section 5.5.1(a) [***][ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, and (iii) in the event that MERCK requires that ARCHEMIX use in the Research Program moleculesMARKED BY BRACKETS, methods and/or processes not identified in Schedule 11 or MERCK requires that ARCHEMIX use in the Research Program specific moleculesHAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, methods and/or processes where such molecules, methods and/or processes are generically identified in Schedule 11 (“Requested Chemistry”), thereby giving rise to the obligation to pay royalty, milestone or license fee payments to a Third Party (“Third Party Chemistry Payments”), MERCK [***] of such Third Party Chemistry Payments and the royalties payable to ARCHEMIX pursuant to Section 5.5.1(a) [***] Third Party Chemistry PaymentsAS AMENDED.

Royalty Offsets. In the event that MERCK, in order to practice the license granted to it under Section 7.2 8.2 of this Agreement in any country in the Territory, is required to and actually makes royalty, milestone or license fee payments to any Third Party (“Third Party Payments”) in order (A) to obtain a license to an issued patent or patents in the absence of which the Lead Compound portion of the Royalty-Bearing Product could not legally be manufactured, imported, sold, exported, or otherwise exploited in such country and/or (B) to obtain a license to an issued patent or patents, in the absence of which the Licensed Patent Rights cannot legally be practiced in such country for making, using, importing, offering for sale, selling, exporting or otherwise exploiting such Royalty-Bearing Product, then the royalties payable to ARCHEMIX for such Product under Section 5.5.1(a6.6.1(a) with respect to such country may be reduced by [***] percent ([***]%) of the amount of such Third Party Payments. Notwithstanding the foregoing, (i) such reductions Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 406 of the Securities Act. shall in no event reduce the royalty that would otherwise be payable for such Royalty-Bearing Product under Section 5.5.1 6.6.1 with respect to such country by more than [***] percent ([***]%) of the amount otherwise payable with respect to Net Sales of such Product in such country, (ii) MERCK shall be responsible for the payment of any royalty, milestone or license fee payments to any Third Party relating to methods or processes for making or manufacturing the Royalty-Bearing Product and the royalties payable to ARCHEMIX pursuant to Section 5.5.1(a6.6.1(a) [***], and (iii) in the event that MERCK requires that ARCHEMIX use in the Research Program molecules, methods and/or processes not identified in Schedule 11 10 or MERCK requires that ARCHEMIX use in the Research Program specific molecules, methods and/or processes where such molecules, methods and/or processes are generically identified in Schedule 11 10 (“Requested Chemistry”), thereby giving rise to the obligation to pay royalty, milestone or license fee payments to a Third Party (“Third Party Chemistry Payments”), MERCK [***] of such Third Party Chemistry Payments and the royalties payable to ARCHEMIX pursuant to Section 5.5.1(a6.6.1(a) [***] Third Party Chemistry Payments.

Royalty Offsets. In the event that MERCK(a) Subject to Sections 10.4(b), in order to practice the license granted to it under Section 7.2 of this Agreement in any country in the Territory(c) and (d), is required to and actually makes royalty, milestone or license fee payments to any Third Party (“Third Party Payments”) in order (A) to obtain a license to an issued patent or patents in the absence of which the Lead Compound portion of the Product could not legally be manufactured, imported, sold, exported, or otherwise exploited in such country and/or (B) to obtain a license to an issued patent or patentsGenmab or, in the absence case of which a Unilateral Product (i.e., Genmab Products and SGI Products), the Licensed Patent Rights cannot legally Continuing Party (i.e., Genmab or SGI) shall be practiced in such solely responsible for paying all amounts, including any license fees, milestones and royalties owed to Third Parties by either Genmab or SGI on account of developing and commercializing Exclusive Products or Unilateral Products, including any royalties owed due to use of the SGI Technology or Genmab Technology. (b) Notwithstanding Section 10.4(a), on a Calendar Quarter-by-Calendar Quarter and country-by-country for makingbasis, using, importing, offering for sale, selling, exporting or otherwise exploiting such Product, then the royalties payable Genmab shall be entitled to ARCHEMIX for such Product under Section 5.5.1(a) with respect to such country may be reduced by offset [***] percent ([***]%) of any [***] for [***] that are [***] pursuant to Section 10.3.1 or 10.3.2 for such Exclusive Product, excluding any royalties owed under the amount of such Third Party PaymentsBMS Agreement. Notwithstanding the foregoing, (i) such reductions Portions of this Exhibit were omitted SGI represents and have been filed separately with the Secretary of the Commission warrants that all royalties owed to BMS pursuant to the Company’s application requesting confidential treatment under Rule 406 of BMS Agreement are described in this Agreement. Notwithstanding anything to the Securities Act. shall contrary in this Section 10.4, in no event reduce shall the royalty that would otherwise be payments due and payable for such Product under to SGI pursuant to Section 5.5.1 10.3.1 or 10.3.2 with respect to such an Exclusive Product in any Calendar Quarter and country be reduced by more than [***] percent ([***]%) (on a tier-by-tier basis) of the amount royalty otherwise due to SGI if no royalties were payable with respect to Net Sales of such Product in such Third Parties. (c) Notwithstanding Section 10.4(a), on a Calendar Quarter-by-Calendar Quarter and country-by-country basis, (ii) MERCK Genmab shall be responsible for the payment of any royalty, milestone or license fee payments entitled to any Third Party relating to methods or processes for making or manufacturing the Product and the royalties payable to ARCHEMIX pursuant to Section 5.5.1(a) offset [***] percent ([***]%) of any royalties payable by Genmab to Third Parties for intellectual property rights that are necessary with respect to a Genmab Product against the royalties that would otherwise be payable to SGI pursuant to Section 10.3.3 or 10.3.4 for such Genmab Product, excluding any royalties owed under the BMS Agreement. Notwithstanding anything to the contrary in this Section 10.4, in no event shall the royalty payments due and payable to SGI pursuant to Section 10.3.3 or 10.3.4 with respect to a Genmab Product in any Calendar Quarter and country be reduced by more than [***] percentage points on any royalty tier. For the avoidance of doubt the minimum royalty rate payable to SGI pursuant to Section 10.3.3(a) is [***] percent (iii) in the event that MERCK requires that ARCHEMIX use in the Research Program molecules, methods and/or processes not identified in Schedule 11 or MERCK requires that ARCHEMIX use in the Research Program specific molecules, methods and/or processes where such molecules, methods and/or processes are generically identified in Schedule 11 (“Requested Chemistry”[***]%), thereby giving rise the minimum royalty rate payable to the obligation SGI pursuant to pay royalty, milestone or license fee payments to a Third Party Section 10.3.3(b) is [***] percent (“Third Party Chemistry Payments”[***]%), MERCK the minimum royalty rate payable to SGI pursuant to Section 10.3.4(a) is [***] percent ([***]%) and the minimum royalty rate payable to SGI pursuant to Section 10.3.4(b) is [***] hundredths percent ([***]%). (d) Notwithstanding Section 10.4(a), on a Calendar Quarter-by-Calendar Quarter and country-by-country basis, SGI shall be entitled to offset [***] of such any royalties payable by SGI to Third Party Chemistry Payments and Parties for intellectual property rights that are necessary with respect to a SGI Product against the royalties that would otherwise be payable to ARCHEMIX Genmab pursuant to Section 5.5.1(a) 10.3.2 for such SGI Product, excluding any royalties owed under the Genmab In-Licenses and any other agreements disclosed to SGI pursuant to Section 3.1 to the extent that the relevant royalty obligation was disclosed at such time. Genmab represents and warrants that as of the Effective Date all Third Party royalties owed pursuant to the Genmab In-Licenses are described in Schedule C. It is contemplated that Genmab will [***] Third Party Chemistry Paymentswith [***] for the use of [***] and [***] for [***]. Notwithstanding anything to the contrary in this Section 10.4, in no event shall the royalty payments due and payable to Genmab pursuant to Section 10.3.2 with respect to an SGI Product in any Calendar Quarter and country be reduced by more than [***] percentage points on any royalty tier. For the avoidance of doubt the minimum royalty rate payable to Genmab pursuant to Section 10.3.3(a) is [***] percent ([***]%), the minimum royalty rate payable to Genmab pursuant to Section 10.3.3(b) is [***] percent ([***]%), the minimum royalty rate payable to Genmab pursuant to Section 10.3.4(a) is [***] percent ([***]%) and the minimum royalty rate payable to Genmab pursuant to Section 10.3.4(b) is [***] percent ([***]%).

Royalty Offsets. In the event that MERCKELAN, in order to successfully research, Develop and Commercialize a Product, or practice the license licenses granted to it under Section 7.2 of this Agreement hereunder in any country in the Territorycountry, reasonably determines that it is required legally or commercially necessary to make and actually makes royalty, milestone or license fee any payments to any Third Party (“Third Party Payments”) in order (A) to obtain a license or other right, title or interest in and to an issued patent or patents and/or, solely to the extent described in the absence last sentence of which the Lead Compound portion of the Product could not legally be manufacturedthis Section 5.4.1(c), imported, sold, exported, or otherwise exploited in such country and/or a pending patent application (B) to obtain a license to an issued patent or patents, in the absence of which the Licensed Patent Rights cannot legally be practiced in such country for making, using, importing, offering for sale, selling, exporting or otherwise exploiting such Product“Third Party License”), then the royalties payable to ARCHEMIX for such Product under Section 5.5.1(a5.4.1(a) with respect to such country may be reduced by [***] percent ([***]%) of the amount of such Third Party Payments; provided that such reductions shall not reduce the royalty that would otherwise be payable for such Product under Section 5.4.1 by more than [***] percent ([***]%) of the amount otherwise payable with respect to Net Sales of such Product in such country (the “[***] Offset”). Unused [***] Offset credits may be carried over from one royalty period to the next, subject to the latter [***] ([***]%) limitation set forth above; provided, that (i) unused [***] Offset credits may only be applied in a subsequent royalty period after the reductions to be applied in such period pursuant to the first sentence of this Section 5.4.1(c) have been fully applied and (ii) any unused [***] Offset credits that have not been offset against royalty payments under this Section 5.4.1(c) within [***] years following accrual may not be carried over to any future royalty periods; provided, that, unused [***] Offset credits accrued prior to the First Commercial Sale of a Product may be applied as provided above for a period of [***] years commencing on the date of First Commercial Sale. Notwithstanding the foregoing, (i) such reductions ELAN shall Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 406 of the Securities Act. shall in no event reduce the royalty that would otherwise be payable for such Product under Section 5.5.1 with respect to such country by more than [***] percent ([***]%) of the amount otherwise payable with respect to Net Sales of such Product in such countrysolely responsible for, (ii) MERCK shall be responsible for the payment of any royalty, milestone or license fee payments to any Third Party relating to methods or processes for making or manufacturing the Product and the royalties payable to ARCHEMIX pursuant to Section 5.5.1(a5.4.1 shall not be reduced by, any Third Party Payments solely to obtain a Third Party License to either (a) [***]a proprietary method of administering or packaging a pharmaceutical (for clarity, and (iii) in the event that MERCK requires that ARCHEMIX use in the Research Program excluding proprietary molecules, methods and/or processes not identified in Schedule 11 or MERCK requires that ARCHEMIX use in the Research Program specific moleculesof formulation and drug delivery technologies such as controlled release, methods and/or processes where transdermal delivery, nanotechnology and lyophilizing, all of which may be technologies for which such molecules, methods and/or processes are generically identified in Schedule 11 (“Requested Chemistry”), thereby giving rise to the obligation to pay royalty, milestone or license fee payments to a Third Party (“Third Party Chemistry Payments”), MERCK [***] of such Offset is available), or (b) a patent that had issued, or a patent application that was published and pending in the United States or a Major Market Country or with the European Patent Office or as a PCT application, at the time a Target was designated a Program Target by ELAN, and which then contained a valid or patentable claim that covered the Program Target (as agreed by the Patent Coordinators or, in the event they cannot reach agreement in good faith, a mutually-selected neutral Third Party Chemistry Payments and patent attorney). For purposes of clarity, the royalties payable to ARCHEMIX pursuant to Section 5.5.1(a) [***] Offset shall apply to (i) all Third Party Chemistry PaymentsPayments for Third Party Licenses related to IL-23, which was chosen as a Target by ARCHEMIX prior to the Effective Date, and (ii) all Third Party Payments for Third Party Licenses relating to a Program Target, where such Third Party License is (1) for issued patents or pending patent applications that issued, were published or otherwise became publicly available after the date that ELAN designated that Program Target, or (2) pending patent applications that were published and pending in a country other than the United States or a Major Market Country or with the European Patent Office or as a PCT application on or before the date that ELAN designated that Program Target or (3) in settlement of litigation with respect to such Program Target.

Royalty Offsets. In the event that MERCK, in order to practice the license granted to it under Section 7.2 of this Agreement in any country in the Territory, is required to and actually makes royalty, milestone or license fee payments to any Third Party (“Third Party Payments”) in order (A) to obtain a license to an issued patent or patents in the absence of which the Lead Compound portion of the Product could not legally be manufactured, imported, sold, exported, or otherwise exploited in such country and/or (B) to obtain a license to an issued patent or patents, in the absence of which the Licensed Patent Rights cannot legally be practiced in such country for making, using, importing, offering for sale, selling, exporting or otherwise exploiting such Product, then the royalties payable to ARCHEMIX for such Product under Section 5.5.1(a) with respect to such country may be reduced by [***] percent ([***]%) of the amount of such Third Party Payments. Notwithstanding the foregoing, (i) such reductions Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 406 of the Securities Act. shall in no event reduce the royalty that would otherwise be payable for such Product under Section 5.5.1 with respect to such country by more than [***] percent ([***]%) of the amount otherwise payable with respect to Royalties on Net Sales of a Collaboration Compound in a particular country shall be paid at the applicable rate set forth in Section 6.4 during the specific Royalty Term, except that such rate may be adjusted as provided below: (a) If, in a given country during a calendar quarter for which royalties are being calculated under Section 6.4 for a particular Collaboration Product, Market Competition (as defined below) exists for such Collaboration Product in such country, (ii) MERCK shall be responsible for then the payment royalty rate applicable to the sales of any royalty, milestone or license fee payments to any Third Party relating to methods or processes for making or manufacturing the Collaboration Product and the royalties payable to ARCHEMIX pursuant to Section 5.5.1(a) [in such country during such quarter ***]***************** *. As used herein, “Market Competition” means, as to a Collaboration Product, that J&J has provided Arena with competent written evidence (based on commercially-available market research data such as IMS) that another product (which is not a Collaboration Product) competitive with such Collaboration Product is being lawfully marketed and sold by a Third Party (iiiwhich is not a Sublicensee) in the event that MERCK requires that ARCHEMIX use country at the applicable time, and such product contains as an active ingredient the Development Compound which is in the Research Program moleculesCollaboration Product, methods and/or processes not identified and the sales of such competitive product (in Schedule 11 or MERCK requires that ARCHEMIX use units sold) in such quarter in the Research Program specific moleculescountry *************************** of the total aggregate sales (in units sold) of such competitive product combined with sales of the Collaboration Product in such country during such quarter; provided that Arena may dispute the claim by J&J that Market Competition exists, methods and/or processes where by written notice within 45 days of J&J providing the above evidence, which dispute will be resolved under the terms of Article 13. (b) If J&J is required to make royalty payments, based on the sales of a particular Collaboration Product, to a Third Party under a patent license granted to J&J under a patent controlled by the Third Party that claims the Development Compound in the Collaboration Product or its use or its manufacture, then J&J may credit, against royalty payments otherwise due to Arena under Section 6.4 for sales of such moleculesCollaboration Product, methods and/or processes are generically identified in Schedule 11 (“Requested Chemistry”), thereby giving rise ******************** ******************************************* to the obligation Third Party based on such sales, but subject to pay royalty, milestone or license fee the limitation in sub clause (c) below. J&J will use Diligent Efforts to minimize the amount of any such royalty payments to a Third Party (“Party, and in particular, J&J is not permitted take a license under the Third Party Chemistry Payments”)patent where such license grants rights to products other than the Collaboration Products, MERCK [or where J&J is obtaining rights under other intellectual property of the Third Party, unless the amounts payable by J&J for such license rights are equitable across all the rights granted to J&J and are not biased towards payment obligations with respect to sales of the Collaboration Products. (c) In no event will the amount of royalties payable to Arena by J&J, for the sales in a country of a Collaboration Product in a country during a specific royalty period, be reduced by the operation of this Section 6.6 ***] of such Third Party Chemistry Payments and the royalties payable to ARCHEMIX pursuant to Section 5.5.1(a) [***] Third Party Chemistry Payments*********************************** otherwise be owed by J&J under Section 6.4, absent application of this Section 6.6.