Provision Language
3. Fees and Royalties
3.1 Sublicense Grant Fees. In partial consideration for the Sublicense, Company will pay to Cellscript: (i) [***]; and (ii) [***] and(iii) [***]
3.2 Sublicense Maintenance Fees. In partial consideration of the Sublicense, Company will pay to Cellscript [***] on each anniversary of the Effective Date during the Term until the date of first Sale of the first Licensed Product in Field of Use B, regardless of whether the Sale is achieved by Company, Cellscript, or an affiliate or sublicensee of any of the foregoing. For clarity, the next annual sublicense maintenance fee under this Agreement is payable to Cellscript on [***] if no Sale of a Licensed Product in Field of Use B occurs prior to [***]
3.3 Milestone Payments. In partial consideration of the Sublicense, Company will pay to Cellscript any milestone payment that is applicable to a Licensed Product developed by the Company under any of the tables in this Section 3.3 the first time after achieving each milestone event for each said Licensed Product in Field of Use B, regardless of whether the milestone is achieved by Company, an Affiliate or a Third Party sublicensee. Company will provide Cellscript with written notice within [***] days after each milestone is achieved by Company or a sublicensee and Company will pay to Cellscript all applicable milestone payments owed therefor within [***] days of the end of the calendar quarter in which the milestone event is achieved. For clarity, each time a milestone is achieved with respect to a Licensed Product, then any other milestone payments with respect to earlier milestones that have not yet been paid will be due and payable together with the milestone payment that is actually achieved. For clarity, if a Licensed Product being developed by Company or its sublicensees does not fall into one of the categories in the tables below, Company will notify Cellscript promptly after identifying the Licensed Product and the Parties will negotiate in good faith appropriate milestones based on the relative value of the product category and the development pathway.
Section 3.3 Table A: Milestones for each Licensed Product for human therapeutic or prophylactic use in the In Vivo Field of Use
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3.4 Earned Royalties. In partial consideration of the Sublicense, Company will pay to Cellscript royalties on Net Sales of Licensed Products in the Sublicensed Fields of Use as stated below.
3.4.1 Earned Royalties on Licensed Products in Field of Use A. In partial consideration of the Sublicense, Company will pay to Cellscript a [***] royalty on Net Sales of Licensed Products by Company or its Affiliates or Third Party sublicensees for use in the Sublicensed Fields of Use in Field of Use A during the Quarter. For the avoidance of doubt, if Company or any Affiliate or Third Party sublicensee sells or is reimbursed for the costs of providing a Licensed Product for use in Field of Use A to another party with which it has a contract to collaborate or work together on researching, developing or screening related to a product for human therapeutic or prophylactic use in the In Vivo Field of Use, then Company will pay to Cellscript a[***] royalty on all such Net Sales of Licensed Products for use in Field of Use A by Company or by said sublicensees. For clarity, Company and its Affiliates or Third Party sublicensees shall only have the right to sell Licensed Products for use in Field of Use A to Third Parties that have either a sublicense from or a contract with Company or an Affiliate or Third Party sublicensee to research, develop, test, evaluate, screen, manufacture and/or commercialize a Licensed Product for use in the In Vivo Field of Use in Field of Use B.
3.4.2 Earned Royalties on Licensed Products Field of Use B. In partial consideration of the Sublicense, Company will pay to Cellscript a [***] royalty on Net Sales of Licensed Products in Field of Use B for all uses in the In Vivo Field of Use, including: (a) all therapeutic or prophylactic uses in humans; (b) all non–therapeutic or non–prophylactic uses in humans; and (c) all uses, including therapeutic and prophylactic uses (e.g., Veterinary Products), in non–human animals during the Quarter. For the avoidance of doubt, if Company or its Affiliates or Third Party sublicensees grant sublicenses to sell Licensed Products for any such uses in Field of Use B, Company will pay to Cellscript a [***] royalty on Net Sales of all such Licensed Products sold by said sublicensees. For clarity, no royalties are due under this Agreement for Sales of Licensed Products in the Diagnostic and Prognostic Field of Use, which are sublicensed to Company in the Sublicense Agreement from mRNA RiboTherapeutics.
3.4.3 Royalty Reduction. If Company or an Affiliate or Third Party sublicensee of Company is obligated to pay Third Party Royalties (defined below) for a Licensed Product in Field of Use B, then Company may deduct [***] of such Third Party Royalties from any royalties on Net Sales in Field of Use B due to Cellscript under Section 3.4.2 of this Agreement, provided that:
(a) On an ongoing basis and prior to reduction of any royalty on Net Sales for a given calendar quarter, Company first provides written evidence to Cellscript of Company’s or applicable sublicensee’s obligation to pay such Third Party Royalties; and
(b) In no event shall royalties on Net Sales due to Cellscript in any reporting period be so reduced to less than [***] for Licensed Productsfor use in the In Vivo Field of Use in Field of Use B.
“Third Party Royalties” means any royalty obligation in excess of [***] that Company or an Affiliate or a Third Party sublicensee owes to one or more other parties pursuant to one or more licenses for patent rights comprising [***] and that are determined to be necessary to avoid infringement–related litigation with respect to the manufacture, use or sale of any Licensed Product.
3.5 Related Definitions
3.5.1 The term “Sale” means any bona fide transaction for which consideration is received or expected by Company or its Affiliates or Third Party sublicensees for the sale, use, lease, transfer or other disposition of a Licensed Product to a Third Party. A Sale is deemed completed at the time that Company or an Affiliate or Third Party sublicensee invoices, ships or receives payment for a Licensed Product, whichever occurs first.
3.5.2 The term “Quarter” means each three–month period beginning on the first day of January, April, July or October.
3.5.3 The term “Net Sales” means the consideration received or expected from, or the fair market value attributable to, each Sale, less Qualifying Costs that are directly attributable to a Sale, specifically identified on an invoice or other documentation and actually borne by Company or its Affiliates or Third Party sublicensees. For purposes of determining Net Sales, the words “fair market value” mean the cash consideration that Company or its Affiliates or Third Party sublicensees would realize from an unrelated buyer in an arm’s length sale of an identical item sold in the same quantity and at the time and place of the transaction.
3.5.4 The term “Qualifying Costs” means: (a) credits or refunds for claims or returns that do not exceed the original invoice amount; (b) prepaid outbound transportation expenses and transportation insurance premiums; and (c) sales and use taxes and other fees imposed by and indefeasibly paid to a governmental agency.
3.6 Minimum Royalties. In partial consideration of the Sublicense, [***] Company will pay to Cellscript the amount, if any, by which the applicable minimum royalties listed in the tables below exceed Company’s or its Affiliates’ or Third Party sublicensees’ actual earned royalties under Section 3.4 for each Quarter after the first Sale of a Licensed Product by Company or its Affiliates or Third Party sublicensees in the applicable Categories. The minimum royalties are divided into two Categories and outlined in the tables below and are tiered, cumulative and individually payable after first Sale of Licensed Product in each of the three respective Categories. For clarity, the highest minimum royalty owed by Company to Cellscript under this Agreement would be [***] For additional clarification, Company is not obligated to pay minimum royalties to Cellscript for Licensed Products in Category 1 until after the first Sale of a Licensed Product in Field of Use A by Company or its Affiliates or Third Party sublicensees; Company is not obligated to pay minimum royalties to Cellscript for Licensed Products in Category 2 until after the first Sale of a Licensed Product in Field of Use B for human therapeutic or prophylactic use in the In Vivo Field of Use by Company or its Affiliates or Third Party sublicensees; and Company is not obligated to pay minimum royalties to Cellscript for Licensed Products in a Category 3 until after the first Sale of Licensed Product in Field of Use B that is not a humans therapeutic or prophylactic by Company or its Affiliates or Third Party sublicensees.