Common use of Royalty Rate Reduction Clause in Contracts

Royalty Rate Reduction. In the event that either party finds it necessary (in that party’s reasonable business judgment) to make payments (including without limitation royalties, option fees or license fees) to obtain a license or similar right from a third party in order to pursue the development of a Development Compound, Rejected Lead Compound or Excluded Area Compound or the commercialization of a corresponding Product, that party shall be entitled to offset the amount of such third party payment actually paid against royalties thereafter due under this Agreement, provided that in no event will the amount of the offset permitted exceed [**] percent ([**]%) of the royalty otherwise due for the Product.