Common use of Adjustment Based on Development Costs Paid by Licensor Clause in Contracts

Adjustment Based on Development Costs Paid by Licensor. (a) Adjusted Royalty Rate. If Licensor exercises a Licensor Opt Out with respect to a Collaboration Program after it has shared a portion of Development Costs of Post Exercise Development Activities under Section 3.7.1(b) above, the royalty rate under Section 6.5.1 shall be increased with respect to such Collaboration Program by that number of percentage points equal to [***]. For such purposes, “Program Costs” means the amount of Core Development Costs (including Excess Costs) incurred prior to the first Regulatory Approval (or the amount later recalculated as set forth below) within the applicable Collaboration Program. The Base Royalty, as increased by this Section 6.5.2(a) is referred to as the “Adjusted Royalty Rate”, and the increase in the Adjusted Royalty Rate under this Section 6.5.2(a) over the Base Royalty Rate is referred to as the “Incremental Royalty.” For purposes of calculating the Incremental Royalty, [***]. The Adjusted Royalty Rate for a Collaboration Program is subject to further adjustment under Sections 6.5.2(b) and 6.5.2(c) below.