Common use of Sublicensee Net Sales Clause in Contracts

Sublicensee Net Sales. Any and all Net Sales by Sublicensees shall be excluded from the royalty calculations in Section 7.3, including the Net Sales thresholds and ceilings, except that with respect to Net Sales of Licensed Products by Sublicensees (other than a Sublicensee that is granted a sublicense to settle litigation related to the alleged infringement of the Patents claiming such Licensed Product or to avoid any such litigation with respect to any Third Party that (x) does not Commercialize such Licensed Product or (y) has submitted an application to a Regulatory Authority to market a Generic Product with respect to such Licensed Product) to Third Parties, royalties to Morphic hereunder with respect to such Net Sales, for any period, shall equal: (a) with respect to such Net Sales in the United States, the amount of royalties with respect to such sales during such period that result from the royalty calculations under Section 7.3; (b) with respect to such Net Sales in [***]: (1) on a country-by-country basis, with respect to sublicenses with respect to a Licensed Product granted to Sublicensees prior to completion of the first pivotal clinical trial for such country for such Licensed Product, the amount of royalties with respect to such sales during such period that result from the royalty calculations under Section 7.3; and (2) on a country-by-country basis, with respect to sublicenses granted with respect to a Licensed Product to Sublicensees after the completion of the first pivotal clinical trial for such country for such Licensed Product, at AbbVie’s election, on a country-by-country basis, to be made by written notice to Morphic on a country-by-country basis within [***] after the later of AbbVie’s entering into such sublicense and the First Commercial Sale of such Licensed Product in a country, either (i) [***] of any Sublicense Income received by AbbVie or its Affiliates with respect to such Licensed Product in such country from such Sublicensees during such period or (ii) the amount of royalties with respect to such sales of such Licensed Product in such country during such period that result from the royalty calculations under Section 7.3 (without application of this Section 7.4); provided that if, with respect to such a sublicense, AbbVie elects to pay [***] of any Sublicense Income received by AbbVie or its Affiliates with respect to such Licensed Product in such country in accordance with clause (i), any and all Net Sales by the applicable Sublicensee in such country under such sublicense shall be excluded from Net Sales for purposes of the Milestone Events set forth in Section 7.2.3 or the royalty calculations under Section 7.3, and any sale by such Sublicensee in such country shall not trigger any Milestone Event set forth in Section 7.2.