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Exhibit 4(a)(8)




EXECUTION COPY




JANSSEN ALZHEIMER IMMUNOTHERAPY

(F/K/A JUNO NEUROSCIENCES)

Little Island Industrial Estate, Little Island

County Cork, Republic of Ireland




September 17, 2009




Elan Pharma International Limited

Monksland, Athlone

County Westmeath, Ireland




Royalty Agreement




          Reference is made to the Asset Purchase Agreement dated as of July 2, 2009 among Janssen
Pharmaceutical, an Irish Unlimited Company (“Jupiter Parent”), Janssen Alzheimer
Immunotherapy (f/k/a Juno Neurosciences), an Irish Unlimited Company (the “Company”), Elan
Corporation, plc, an Irish Public Limited Company (“Lucky Parent”), Crimagua Limited, an
Irish Limited Company (“Lucky Sub-1”) and the other subsidiaries of Lucky Parent party
thereto (as amended from time to time, the “Asset Purchase Agreement”) and the transactions
contemplated thereby (collectively, the “Transactions”), including as set forth in: the
Shareholders’ Agreement dated as of the date hereof (as amended from time to time, the
“Shareholders’ Agreement”), by and among Jupiter Parent, Janssen Alzheimer Immunotherapy
(Holding) Limited (f/k/a Juno Neurosciences (Holding) Limited), an Irish Limited Company
(“Jupiter Sub-1”), Latam Properties Holdings, an Irish Unlimited Company, JNJ Irish
Investments ULC, a Canadian Unlimited Liability Company, Lucky Parent, Lucky Sub-1, Elan Pharma
International Limited, an Irish Limited Company (“Lucky Sub-2”) and the Company; and the
Research, Development and Commercialization Agreement dated as of March 17, 2000 among Lucky Sub-1
(as successor in interest to Lucky Sub-2, itself a successor in interest to Neuralab Limited) and
Wyeth (formerly known as American Home Products Corporation), a Delaware corporation (as assigned
to Company and amended as of the date hereof, and as further amended from time to time in
accordance with the Shareholders’ Agreement, the “Collaboration Agreement”).




          Capitalized terms used but not defined in this agreement (this “Royalty Agreement”)
shall have the meanings ascribed thereto in the Asset Purchase Agreement. Section 9 hereof sets
forth the definitions of certain capitalized terms used herein.



ARTICLE A. ROYALTIES ON PRODUCTS UNDER COLLABORATION AGREEMENT




1A. Royalty Rate.




          In consideration for the Transactions and the investment by Lucky Parent and its subsidiaries
in the research and development of Products under the Collaboration Agreement, the Company hereby
agrees that, subject to the terms and conditions of the Shareholders’ Agreement, which is
incorporated by reference herein, and to the other terms and conditions of this Royalty















 





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Agreement (including without limitation Section 4A), royalties shall accrue to Lucky Sub-2 on
Collaboration Product Net Sales during the Royalty Term as follows:




	 	 	 	 	 
	Calendar Year Collaboration Product Net Sales (US Dollars)	 	Royalty Rate
	Less than or equal to $1,000,000,000
	 	 	0	%
	Greater than $1,000,000,000 and less than or equal to $2,000,000,000
	 	 	5	%
	Greater than $2,000,000,000 and less than or equal to $5,000,000,000
	 	 	7	%
	Greater than $5,000,000,000
	 	 	9	%






          Notwithstanding the foregoing, (i) if the Activation Date is not January 1 of a calendar year
(such calendar year in which the Activation Date occurs, the “First Year”), the dollar
thresholds under the caption “Calendar Year Collaboration Product Net Sales” in the table above
shall, solely with respect to the applicable portion of the First Year, be proportionally reduced
based on the number of full Calendar Quarters in the First Year from and including the Activation
Date to and including the earlier of December 31 of the First Year and the Termination Date
(e.g., assuming the Termination Date does not occur during the First Year, a 75% reduction
if the Activation Date is October 1) and (ii) if the Termination Date is not December 31 of a
calendar year (such calendar year in which the Termination Date occurs, the “Last Year”),
the dollar thresholds under the caption “Calendar Year Collaboration Product Net Sales” in the
table above shall, solely with respect to the applicable portion of the Last Year, be
proportionally reduced based on the number of full Calendar Quarters from and including the later
of January 1 of the Last Year and the Activation Date to and including the Termination Date
(e.g., assuming the Activation Date does not occur in the Last Year, a 25% reduction if the
Termination Date is September 30).




2A. Applicability of Royalty Rate to Collaboration Product Net Sales.




          Royalties under this Royalty Agreement on Collaboration Product Net Sales in a calendar year
(or applicable portion thereof in the case of the First Year and Last Year) shall accrue at the
rate applicable to the portion of Collaboration Product Net Sales within each of the Collaboration
Product Net Sales levels set forth in the table above during such calendar year (as proportionately
reduced pursuant to the last paragraph in Section 1 hereof). For example, if, for a calendar year
during the Royalty Term, Collaboration Product Net Sales totaled $2,500,000,000, then (in the
absence of any adjustments pursuant to Section 4A) the royalties accruing hereunder for such
calendar year would equal the sum of (i) the royalties with respect to the first $1,000,000,000 of
Collaboration Product Net Sales at the first-level percentage of zero percent (0%) ($1,000,000,000
x 0.0 = $0), plus (ii) the royalties with respect to the next $1,000,000,000 of Collaboration
Product Net Sales at the second-level percentage of five percent (5%) ($1,000,000,000 x 0.05 =
$50,000,000), plus (iii) the royalties with respect to the remaining $500,000,000 of Collaboration
Product Net Sales at the third-level percentage of seven percent (7%) ($500,000,000 x 0.07 =
$35,000,000), for a total accrued royalty of $85,000,000.




3A. Royalty Term.
















 






3


          Royalties under this Royalty Agreement shall accrue in respect of Collaboration Product Net
Sales made during the Royalty Term. No other royalty or other consideration shall accrue under
this Royalty Agreement (or be payable under the Shareholders’ Agreement), including without
limitation in respect of Collaboration Product Net Sales made before the Activation Date or after
the Termination Date.




4A. Royalty Adjustments.




          Notwithstanding anything herein to the contrary, if, as of any date during the Royalty Term,
there shall be no Valid Claim of any Closing Date IP Covering a Product in a country where such
Product is sold by a Party or its Sublicensees, and no Valid Claim of any Closing Date IP Covering
the Manufacture of Product where the R&D Candidate or other active pharmaceutical ingredient of
such Product is manufactured by or on behalf of a Party or its Sublicensees, under the
Collaboration Agreement (the first such date, with respect to such Product in such country, being
the “Fall-Away Date”), then for purposes of calculating royalties on Collaboration Product
Net Sales under this Royalty Agreement, Collaboration Product Net Sales of such Product in such
country shall be excluded from and after the Fall-Away Date for such Product in such country;
provided that, in the event any Fall-Away Date does not occur on the last day of a Calendar
Quarter, such Fall-Away Date shall be deemed to have occurred with respect to the relevant Product
in the relevant country on the last day of the Calendar Quarter in which the Fall-Away Date occurs.




          In the event that a Party or any of its Sublicensees under the Collaboration Agreement shall
be required to pay any consideration or royalties for a license or rights to any Blocking Third
Party Intellectual Property or Enhancing Third Party Intellectual Property during any calendar
year, the Company shall be entitled to deduct fifty percent (50%) of such consideration or
royalties actually paid to any third party for such license or rights from the royalties otherwise
accruing under this Royalty Agreement in respect of such calendar year; provided that (i)
no such deduction shall apply for any consideration or royalties paid in respect of any patent
rights set forth on Schedule 4 hereto, including any Blocking Third Party Intellectual
Property or Enhancing Third Party Intellectual Property set forth on Schedule 4 hereto, and
(ii) the aggregate amount of any and all deductions under this sentence for any calendar year shall
not be greater than an amount which would have the effect of decreasing the royalties otherwise
accruing hereunder in respect of such calendar year by more than twenty-five percent (25%). Any
deduction the Company seeks from royalties accruing under this Royalty Agreement for non-monetary
consideration paid for Blocking Third Party Intellectual Property or Enhancing Third Party
Intellectual Property shall be at such consideration’s fair monetary value as mutually determined
by the Company and Lucky Sub-2 in good faith.




          Except as set forth in this Section 4A or as required by law, royalties accruing under this
Royalty Agreement shall not be subject to any downward adjustment.




5A. Subordination; Payments.




          Any and all royalties accruing hereunder shall be payable in the amounts and on the dates
provided therefor in clause 7 of the Shareholders’ Agreement. No interest or other premium shall
be payable in respect of any royalties accruing under this Royalty Agreement.
















 






4 


          Lucky Sub-2 acknowledges and agrees that at all times (including on a winding up of the
Company) its right to payment of accrued royalties hereunder shall be subordinated to the payments
in respect of the Aggregate Antidilution Amount, the Priority Dividend, Class C Shares, Class O-E
Shares and Class O-J Shares as and to the extent set forth in subclauses (a), (b), (c), (d) and (e)
of clause 7.1 of the Shareholders’ Agreement. Without limiting the foregoing, in the event Lucky
Sub-2 receives any payment in respect of a royalty accruing hereunder that is in conflict with the
priority of payments set forth in clause 7.1 of the Shareholders’ Agreement, Lucky Sub-2 agrees to
promptly pay over to the proper party such amount as is required to give effect to the priorities
contemplated by clause 7.1 of the Shareholders’ Agreement.




6A. Net Sales.




          Except as otherwise expressly provided in this Royalty Agreement, the determination of Net
Sales (and related calculations) by the Company and Wyeth for purposes of the Collaboration
Agreement shall be final and binding on Lucky Sub-2 for purposes of calculating the royalties
accruing hereunder.




7A. Reports, Inspection and Audit Rights.




          After the Activation Date during the Royalty Term hereof, the Company shall, within
seventy-five (75) days after the end of each Calendar Quarter, furnish to Lucky Sub-2:





     (i) any reports or notices delivered by or to the Company pursuant to Sections 7.4.1A
and 7.4.2A of the Collaboration Agreement in respect of all or any portion of such Calendar
Quarter;




     (ii) a royalty report showing any royalties accrued in respect of such Calendar
Quarter under this Royalty Agreement (or if none shall have accrued, a report so stating);




     (iii) a schedule showing any and all adjustments made under Section 4A hereof to the
royalties accrued in respect of such Calendar Quarter, which schedule shall contain
reasonable detail to support any such adjustment (including the relevant Product to which
the adjustment pertains); and




     (iv) the exchange rates used in converting all royalties accrued in such Calendar
Quarter to U.S. Dollars from the currencies in which the sales of Products were made.



          Royalties accruing on Collaboration Product Net Sales in countries other than the United
States shall be calculated in accordance with the standard exchange rate conversion practices used
by the Company for financial accounting purposes. The Company shall keep, and shall use reasonable
efforts to cause its Sublicensees to keep, complete and accurate books of account and records in
sufficient detail to properly reflect all Collaboration Product Net Sales made by the Company and
its Sublicensees or reported to the Company to enable the royalties accruing hereunder to be
determined. Such books and records shall be kept at the principal place of business of the Company
for at least thirty-six (36) months following the end of the Calendar Quarter to which they
pertain. Not more than once in each calendar year, upon Lucky Sub-2’s written request, the Company
shall permit employees of Lucky Sub-2 and its representatives (including an independent auditor)
(all of whom shall be reasonably acceptable to the Company), to have access, at mutually acceptable
date(s), during normal business hours to such of the records of the Company as may be reasonably
necessary to verify the accuracy of the royalty















 





5 


reports hereunder for any of the last eight Calendar Quarters prior to the date of such
inspection. Such representatives and employees shall execute a reasonable confidentiality
agreement prior to commencing any such inspection, which shall contain confidentiality provisions
no less stringent than those contained in the Collaboration Agreement. Inspections conducted under
this Section 7A shall be at the expense of Lucky Sub-2; provided that if an underpayment is
identified in an amount, for any four consecutive Calendar Quarters, exceeding ten percent (10%) of
the total amount required to have been paid for such four Calendar Quarters, the reasonable
out-of-pocket costs of Lucky Sub-2 relating to the applicable inspection shall be paid by Jupiter
Sub-1. Any underpayments or unpaid amounts discovered by such inspection shall constitute Accrued
and Unpaid Royalty Payments for purposes of clause 7.1 of the Shareholders’ Agreement, and shall be
paid pursuant to the priority of payments specified thereby.




          Notwithstanding anything to the contrary, in the event any provision of this Section 7A shall
conflict with the Collaboration Agreement, the Company shall not be in breach of this Section 7A to
the extent it determines in good faith that non-compliance with this Section 7A is necessary in
order to comply with the terms of and obligations under the Collaboration Agreement.




8A. Blocked Payments.




          If it becomes unlawful for the Company to pay royalties to Lucky Sub-2, the Company shall
promptly notify Lucky Sub-2 of the conditions preventing such payment and the royalties accruing
hereunder shall, when otherwise payable, be deposited in local currency in the relevant country to
the credit of Lucky Sub-2 in a recognized banking institution selected by the Company. The Company
shall use commercially reasonable efforts to ameliorate the circumstances which have made such
payment of royalties unlawful and to expedite the release thereof. Upon release and subject to
clause 7.1 of the Shareholders’ Agreement, any blocked payments shall be paid to Lucky Sub-2.



ARTICLE B. ROYALTIES ON COMPANY PRODUCTS OUTSIDE COLLABORATION AGREEMENT




1B. Royalty Rate.




          In the event that Lucky Parent and Jupiter Parent equally co-fund the Company’s development of
any Company Products that are not Products under the Collaboration Agreement as provided for under
clause 18.10 of the Shareholders’ Agreement, the Company hereby agrees that, subject to the terms
and conditions of the Shareholders’ Agreement and to the other terms and conditions of this Royalty
Agreement, royalties shall accrue to Lucky Sub-2 on Company Product Net Sales on such Company
Products during the Royalty Term as follows:




	 	 	 	 	 
	Calendar Year Company Product Net Sales (US Dollars)	 	Royalty Rate
	Less than or equal to $1,000,000,000
	 	 	0	%
	Greater than $1,000,000,000 and less than or equal to $2,000,000,000
	 	 	5	%















 




6 


	 	 	 	 	 
	Calendar Year Company Product Net Sales (US Dollars)	 	Royalty Rate
	Greater than $2,000,000,000 and less than or equal to $5,000,000,000
	 	 	7	%
	Greater than $5,000,000,000
	 	 	9	%






          Notwithstanding the foregoing, (i) if the Activation Date is not January 1 of a calendar year
(such calendar year in which the Activation Date occurs, the “First Year”), the dollar
thresholds under the caption “Calendar Year Company Product Net Sales” in the table above shall,
solely with respect to the applicable portion of the First Year, be proportionally reduced based on
the number of full Calendar Quarters in the First Year from and including the Activation Date to
and including the earlier of December 31 of the First Year and the Termination Date (e.g.,
assuming the Termination Date does not occur during the First Year, a 75% reduction if the
Activation Date is October 1) and (ii) if the Termination Date is not December 31 of a calendar
year (such calendar year in which the Termination Date occurs, the “Last Year”), the dollar
thresholds under the caption “Calendar Year Company Product Net Sales” in the table above shall,
solely with respect to the applicable portion of the Last Year, be proportionally reduced based on
the number of full Calendar Quarters from and including the later of January 1 of the Last Year and
the Activation Date to and including the Termination Date (e.g., assuming the Activation
Date does not occur in the Last Year, a 25% reduction if the Termination Date is September 30).




2B. Applicability of Royalty Rate to Company Product Net Sales.




          Royalties under this Royalty Agreement on Company Product Net Sales in a calendar year (or
applicable portion thereof in the case of the First Year and Last Year) shall accrue at the rate
applicable to the portion of Company Product Net Sales within each of the Company Product Net Sales
levels set forth in the table above during such calendar year (as proportionately reduced pursuant
to the last paragraph in Section 1B hereof). For example, if, for a calendar year during the
Royalty Term, Company Product Net Sales totaled $2,500,000,000, then (in the absence of any
adjustments pursuant to Section 4B) the royalties accruing hereunder for such calendar year would
equal the sum of (i) the royalties with respect to the first $1,000,000,000 of Company Product Net
Sales at the first-level percentage of zero percent (0%) ($1,000,000,000 x 0.0 = $0), plus (ii) the
royalties with respect to the next $1,000,000,000 of Company Product Net Sales at the second-level
percentage of five percent (5%) ($1,000,000,000 x 0.05 = $50,000,000), plus (iii) the royalties
with respect to the remaining $500,000,000 of Company Product Net Sales at the third-level
percentage of seven percent (7%) ($500,000,000 x 0.07 = $35,000,000), for a total accrued royalty
of $85,000,000.




3B. Royalty Term.




          Royalties under this Royalty Agreement shall accrue in respect of Company Product Net Sales
made during the Royalty Term. No other royalty or other consideration shall accrue under this
Royalty Agreement (or be payable under the Shareholders’ Agreement), including without limitation
in respect of Company Product Net Sales made before the Activation Date or after the Termination
Date.




4B. Royalty Adjustments.




          Notwithstanding anything herein to the contrary, if, as of any date during the Royalty Term,
there shall be no Valid Claim Covering a Company Product in a country where















 





7 


such Company Product is sold by a Party or its Sublicensees, and no Valid Claim of any Closing
Date IP Covering the Manufacture of Company Product where the active pharmaceutical ingredient of
such Company Product is manufactured by or on behalf of a Party or its Sublicensees (the first such
date, with respect to such Company Product in such country, being the “Fall-Away Date”),
then for purposes of calculating royalties on Company Product Net Sales under this Royalty
Agreement, Company Product Net Sales of such Company Product in such country shall be excluded from
and after the Fall-Away Date for such Company Product in such country; provided that, in
the event any Fall-Away Date does not occur on the last day of a Calendar Quarter, such Fall-Away
Date shall be deemed to have occurred with respect to the relevant Company Product in the relevant
country on the last day of the Calendar Quarter in which the Fall-Away Date occurs.




          In the event that a Party or any of its Sublicensees shall be required to pay any
consideration or royalties for a license or rights to any Blocking Third Party Intellectual
Property or Enhancing Third Party Intellectual Property during any calendar year, the Company shall
be entitled to deduct fifty percent (50%) of such consideration or royalties actually paid to any
third party for such license or rights from the royalties otherwise accruing under this Royalty
Agreement in respect of such calendar year; provided that (i) no such deduction shall apply
for any consideration or royalties paid in respect of any patent rights set forth on Schedule
4 hereto, including any Blocking Third Party Intellectual Property or Enhancing Third Party
Intellectual Property set forth on Schedule 4 hereto, and (ii) the aggregate amount of any
and all deductions under this sentence for any calendar year shall not be greater than an amount
which would have the effect of decreasing the royalties otherwise accruing hereunder in respect of
such calendar year by more than twenty-five percent (25%). Any deduction the Company seeks from
royalties accruing under this Royalty Agreement for non-monetary consideration paid for Blocking
Third Party Intellectual Property or Enhancing Third Party Intellectual Property shall be at such
consideration’s fair monetary value as mutually determined by the Company and Lucky Sub-2 in good
faith.




          Except as set forth in this Section 4B or as required by law, royalties accruing under this
Royalty Agreement shall not be subject to any downward adjustment.




5B. Subordination; Payments.




          Any and all royalties accruing hereunder shall be payable in the amounts and on the dates
provided therefor in clause 7 of the Shareholders’ Agreement. No interest or other premium shall
be payable in respect of any royalties accruing under this Royalty Agreement.




          Lucky Sub-2 acknowledges and agrees that at all times (including on a winding up of the
Company) its right to payment of accrued royalties hereunder shall be subordinated to the payments
in respect of the Aggregate Antidilution Amount, the Priority Dividend, Class C Shares, Class O-E
Shares and Class O-J Shares as and to the extent set forth in subclauses (a), (b), (c), (d) and (e)
of clause 7.1 of the Shareholders’ Agreement. Without limiting the foregoing, in the event Lucky
Sub-2 receives any payment in respect of a royalty accruing hereunder that is in conflict with the
priority of payments set forth in clause 7.1 of the Shareholders’ Agreement, Lucky Sub-2 agrees to
promptly pay over to the proper party such amount as is required to give effect to the priorities
contemplated by clause 7.1 of the Shareholders’ Agreement.
















 





8 



6B. Inapplicability of Article A.




          For the avoidance of doubt, the provisions of Article A above shall not apply to any Company
Products for which royalties accrue under this Article B.




7B. Reports, Inspection and Audit Rights.




          After the Activation Date during the Royalty Term hereof, the Company shall, within
seventy-five (75) days after the end of each Calendar Quarter, furnish to Lucky Sub-2:





     (i) a royalty report showing any royalties accrued in respect of such Calendar Quarter
under this Royalty Agreement (or if none shall have accrued, a report so stating);




     (ii) a schedule showing any and all adjustments made under Section 4B hereof to the
royalties accrued in respect of such Calendar Quarter, which schedule shall contain
reasonable detail to support any such adjustment (including the relevant Company Product to
which the adjustment pertains); and




     (iii) the exchange rates used in converting all royalties accrued in such Calendar
Quarter to U.S. Dollars from the currencies in which the sales of Company Products were
made.



          Royalties accruing on Company Product Net Sales in countries other than the United States
shall be calculated in accordance with the standard exchange rate conversion practices used by the
Company for financial accounting purposes. The Company shall keep, and shall use reasonable
efforts to cause its Sublicensees to keep, complete and accurate books of account and records in
sufficient detail to properly reflect all Company Product Net Sales made by the Company and its
Sublicensees or reported to the Company to enable the royalties accruing hereunder to be
determined. Such books and records shall be kept at the principal place of business of the Company
for at least thirty-six (36) months following the end of the Calendar Quarter to which they
pertain. Not more than once in each calendar year, upon Lucky Sub-2’s written request, the Company
shall permit employees of Lucky Sub-2 and its representatives (including an independent auditor)
(all of whom shall be reasonably acceptable to the Company), to have access, at mutually acceptable
date(s), during normal business hours to such of the records of the Company as may be reasonably
necessary to verify the accuracy of the royalty reports hereunder for any of the last eight
Calendar Quarters prior to the date of such inspection. Such representatives and employees shall
execute a reasonable confidentiality agreement prior to commencing any such inspection.
Inspections conducted under this Section 7B shall be at the expense of Lucky Sub-2;
provided that if an underpayment is identified in an amount, for any four consecutive
Calendar Quarters, exceeding ten percent (10%) of the total amount required to have been paid for
such four Calendar Quarters, the reasonable out-of-pocket costs of Lucky Sub-2 relating to the
applicable inspection shall be paid by Jupiter Sub-1. Any underpayments or unpaid amounts
discovered by such inspection shall constitute Accrued and Unpaid Royalty Payments for purposes of
clause 7.1 of the Shareholders’ Agreement, and shall be paid pursuant to the priority of payments
specified thereby.




8B. Blocked Payments.
















 






9 


          If it becomes unlawful for the Company to pay royalties to Lucky Sub-2, the Company shall
promptly notify Lucky Sub-2 of the conditions preventing such payment and the royalties accruing
hereunder shall, when otherwise payable, be deposited in local currency in the relevant country to
the credit of Lucky Sub-2 in a recognized banking institution selected by the Company. The Company
shall use commercially reasonable efforts to ameliorate the circumstances which have made such
payment of royalties unlawful and to expedite the release thereof. Upon release and subject to
clause 7.1 of the Shareholders’ Agreement, any blocked payments shall be paid to Lucky Sub-2.




ARTICLE C. CERTAIN DEFINITIONS.




          For purposes of this Royalty Agreement, the terms below have the following meanings:




          “Accrued and Unpaid Royalty Payments” shall have the meaning given to such term in the
Shareholders’ Agreement.




          “Activation Date” means the first date (if any) on which (i) the Aggregate
Antidilution Amount (if any) has been paid in full to the Jupiter Shareholders (or their
successors), (ii) the Priority Dividend (if any) has been paid in full to the Jupiter Shareholders
(or their successors), (iii) there are no Class C Shares issued and outstanding and (iv) the
Jupiter Shareholders (or their successors) shall have received aggregate payments from the Company
pursuant to clause 7.1(e) of the Shareholders’ Agreement equal to five hundred million dollars
($500,000,000.00) minus the Priority Dividend Amount (if any); provided that, in
the event such first date is not the first day of a Calendar Quarter, the Activation Date shall not
occur until the first day of the Calendar Quarter commencing immediately following such first date.




          “Affiliate” shall have the meaning given to such term in the Shareholders’ Agreement.




          “Aggregate Antidilution Amount” shall have the meaning given to such term in the
Shareholders’ Agreement.




          “AHPC Patent Rights” shall mean the AHPC Patent Rights as defined in the Collaboration
Agreement that are assigned or licensed to the Company by virtue of the Transactions.




          “Blocking Third Party Intellectual Property” shall (i) in reference to a Product, have
the meaning given such term in the Collaboration Agreement and (ii) in reference to a Company
Product that is not a Product, have the same meaning as applicable mutatis
mutandis.




          “Calendar Quarter” shall have the meaning given to such term in the Collaboration
Agreement.




          “Class C Shares”, “Class O-E Shares” and “Class O-J Shares” shall have
the respective meanings given to such terms in the Shareholders’ Agreement.




          “Closing Date IP” has the meaning given to such term in the Shareholders’ Agreement.
















 






10 


          “Collaboration Patent Rights” shall mean the Collaboration Patent Rights as defined in
the Collaboration Agreement that are assigned or licensed to the Company by virtue of the
Transactions.




          “Collaboration Product Net Sales” means, with respect to any calendar year (or portion
thereof in the case of the First Year and Last Year), fifty percent (50%) of the aggregate
worldwide Net Sales of any and all Products under the Collaboration Agreement during such calendar
year (or portion thereof).




          “Company Product Net Sales” means, with respect to any calendar year (or portion
thereof in the case of the First Year and Last Year), one hundred percent (100%) of the aggregate
worldwide net sales of any and all Company Products that are not Products under the Collaboration
Agreement during such calendar year (or portion thereof), where such net sales shall have the same
meaning of Net Sales as defined in reference to Products under the Collaboration Agreement,
applicable mutatis mutandis to Company Products.




          “Covering a Company Product” means, with respect to a Company Product (other than a
Product) sold on a particular date in a country, (i) a Valid Claim in the country of sale that
literally encompasses, whether generically or specifically, such Company Product as an active
pharmaceutical ingredient or in finished form, or any labeled indication or use of the Company
Product, or (ii) a Valid Claim in a country (whether the country of sale or another country) where
such Company Product sold in the country of sale was manufactured that literally encompasses,
whether generically or specifically, the manufacture of the Company Product.




          “Covering a Product” means, with respect to a Product sold on a particular date in a
country, that (i) a Valid Claim in the country of sale that literally encompasses, whether
generically or specifically, such Product, the R&D Candidate or other active pharmaceutical
ingredient in such Product, or any labeled indication or use of the Product, or (ii) a Valid Claim
in a country (whether the country of sale or another country) where the R&D Candidate or other
active pharmaceutical ingredient of such Product sold in the country of sale was manufactured that
literally encompasses, whether generically or specifically, the manufacture of the R&D Candidate in
the Product.




          “Enhancing Third Party Intellectual Property” shall (i) in reference to a Product,
have the meaning given such term in the Collaboration Agreement and (ii) in reference to a Company
Product that is not a Product, have the same meaning as applicable mutatis
mutandis.




          “First Commercial Sale” shall (i) in reference to a Product, have the meaning given
such term in the Collaboration Agreement and (ii) in reference to a Company Product that is not a
Product, have the same meaning as applicable mutatis mutandis.




          “Jupiter Shareholders” shall have the meaning given to such term in the Shareholders’
Agreement.




          “Net Sales” shall (i) in reference to a Product, have the meaning given to such terms
in the Collaboration Agreement and (ii) in reference to a Company Product that is not a Product,
have the same meaning as applicable mutatis mutandis.




          “Obligatory Transfer Event” shall have the meaning given to such term in the
Shareholders’ Agreement.
















 





11 



          “Party” shall (i) as used in Article A, have the meaning given to such term in the
Collaboration Agreement and (ii) as used in Article B, mean the Company.




          “Product” shall have the meaning given to such term in the Collaboration Agreement.




          “Priority Dividend” shall have the meaning given to such term in the Shareholders’
Agreement.




          “R&D Candidate” shall have the meaning given to such term in the Collaboration
Agreement.




          “Royalty Term” shall mean the period commencing on the Activation Date and expiring on
the Termination Date.




          “Seller Disclosure Letter” shall have the meaning given to such term in the Asset
Purchase Agreement.




          “Shares” shall have the meaning given to such term in the Shareholders’ Agreement.




          “Sublicensee” shall (i) as used in Article A, have the meaning given to such term in
the Collaboration Agreement and (ii) as used in Article B, mean a Sublicensee of the Company.




          “Termination Date” means:





	 	(a)	 	as used in Article A, the earliest of: (i) the expiration of
the last Valid Claim Covering a Product, (ii) the date on which no R&D
Candidate is being developed and no Product is being sold pursuant to the
Collaboration Agreement, and (iii) the date on which neither Lucky Sub-1 nor
any Permitted Transferee holds any Shares (including as a result of an
Obligatory Transfer Event); provided that, in the event such earliest
date is not the last day of a Calendar Quarter, the Termination Date shall be
the last day of the Calendar Quarter in which such earliest date occurs. For
purposes of this clause (a), “Permitted Transferee” means any person
(other than any Jupiter Shareholder and any person to whom any Jupiter
Shareholder shall have transferred its Shares in compliance with the
Shareholders’ Agreement) to whom Lucky Sub-1 shall have Transferred its Shares
in compliance with the Shareholders’ Agreement; or
	 
	 	(b)	 	as used in Article B, the earliest of: (i) the expiration of
the last Valid Claim Covering a Company Product, (ii) the date on which no
Company Product is being developed or sold by the Company, and (iii) the date
on which neither Lucky Sub-1 nor any Permitted Transferee holds any Shares
(including as a result of an Obligatory Transfer Event); provided
that, in the event such earliest date is not the last day of a Calendar
Quarter, the Termination Date shall be the last day of the Calendar Quarter in
which such earliest date occurs. For purposes of this clause (b),
“Permitted Transferee” means any person (other than any Jupiter
Shareholder and any person to whom any Jupiter Shareholder shall have
transferred its Shares in compliance with the













 




12 


	 	 	 	Shareholders’ Agreement) to whom Lucky Sub-1 shall have Transferred its Shares
in compliance with the Shareholders’ Agreement.





          “Transfer” shall have the meaning given to such term in the Shareholders’ Agreement.




          “Valid Claim” means: (i) in reference to a particular time that a Product is sold in
a country, any claim that at such time is (a) granted in any unexpired and issued patent included
in the AHPC Patent Rights, the Collaboration Patent Rights, or the Patent Rights (as that term is
defined in the Asset Purchase Agreement) set forth in Schedule 1.02(a)(i)(A)(1) of the Seller
Disclosure Letter that has not been revoked or held unenforceable or invalid by a final decision of
a court or other governmental agency of competent jurisdiction, or that has not been disclaimed,
denied or admitted to be invalid or unenforceable through reissue or disclaimer or otherwise, or
(b) pending in a nonprovisional patent application included in the AHPC Patent Rights or the
Collaboration Patent Rights that has not lapsed or been cancelled, withdrawn or abandoned without
the possibility of revival, but excluding any such claim that is pending after the earlier of
fifteen (15) years from the earliest priority date claimed for such application and ten (10) years
from the First Commercial Sale of the Product in such country; and (ii) in reference to a
particular time that a Company Product (other than a Product) is sold in a country, any claim that
at such time is (a) granted in any unexpired and issued patent included in the Closing Date IP
that has not been revoked or held unenforceable or invalid by a final decision of a court or other
governmental agency of competent jurisdiction, or that has not been disclaimed, denied or admitted
to be invalid or unenforceable through reissue or disclaimer or otherwise, or (b) pending in a
nonprovisional patent application included in the Closing Date IP that has not lapsed or been
cancelled, withdrawn or abandoned without the possibility of revival, but excluding any such claim
that is pending after the earlier of fifteen (15) years from the earliest priority date claimed
for such application and ten (10) years from the First Commercial Sale of the Company Product in
such country.




D. OTHER PROVISIONS.




          In the event of any conflict between the express provisions of the Shareholders’ Agreement and
the express provisions of this Royalty Agreement, the provisions of the Shareholders’ Agreement
shall control with respect to the subject matter hereof. This Royalty Agreement is for the sole
benefit of the parties hereto and nothing herein expressed or implied shall give or be construed to
give to any person, other than the parties hereto, any legal or equitable rights hereunder.




          The representations and warranties of the parties set forth in the Asset Purchase Agreement
are expressly incorporated by reference herein.




          The Company may not assign or transfer this Royalty Agreement and its rights and obligations
hereunder without the prior written consent of Lucky Sub-2. Except as provided in the immediately
following sentence, this Royalty Agreement and the rights and obligations hereunder shall not be
assignable or transferable by Lucky Sub-2 (including by operation of law in connection with a
merger, consolidation or similar extraordinary transaction) to any person other than any wholly
owned subsidiary of Lucky Parent (and subsequent thereto each reference herein to Lucky Sub-2 shall
be construed as a reference to the applicable transferee) without the prior written consent of the
Company. In the event neither Lucky Sub-1 nor any of its Affiliates holds any Shares as a result
of one or more Transfers in compliance with the Shareholders’ Agreement, Lucky Sub-2 shall,
immediately following the last of such Transfers, assign this















 





13 


Royalty Agreement and its rights and obligations hereunder to the applicable transferee in
such last Transfer of Shares (and following any such assignment, each reference herein to Lucky
Sub-1 and Lucky Sub-2 shall be construed as a reference to the applicable permitted transferee).
Any attempted assignment of this Royalty Agreement in violation of the foregoing provisions shall
be void.




          This Royalty Agreement may not be amended and no provision hereof may be waived or modified
except in each case by an instrument in writing signed by the parties. All notices and
communications hereunder shall be made in accordance with the provisions set forth in Section 9.03
(Notices) of the Asset Purchase Agreement. The provisions of Sections 5.05(b) (Confidentiality),
9.04(a) (Interpretation), 9.07 (Severability), 9.08 (Consent to Jurisdiction), 9.09 (Governing Law)
and 9.10 (Waiver of Jury Trial) of the Asset Purchase Agreement shall apply to this Royalty
Agreement, mutatis mutandis, as though fully set forth herein.




          This Royalty Agreement may be executed in any number of counterparts, each of which shall be
deemed an original and all of which, when taken together, shall constitute one agreement. Delivery
of an executed counterpart of a signature page of this letter agreement by facsimile transmission
or other customary means of electronic transmission shall be effective as delivery of a manually
executed counterpart hereof.




          This Royalty Agreement shall be effective as of the later of the date of execution hereof or
the date of Closing; provided that, if the Asset Purchase Agreement is terminated prior to
the Closing, this Royalty Agreement shall terminate without further action by any party and all
rights and obligations of the parties hereunder shall terminate without liability of any party to
any other party.




[Remainder of page intentionally left blank]














 





 



          If the foregoing correctly sets forth our understanding, please indicate your acceptance of
the terms hereof by returning to us an executed counterpart hereof, whereupon this letter agreement
shall become a binding agreement.




	 	 	 	 	 	 
	 	Very truly yours,

 	 
	 	
	 	JANSSEN ALZHEIMER IMMUNOTHERAPY

 	 
		    by  	             /s/ Gerard Collins
 	 
	 		Name:  	Gerard Collins 	 
	 		Title:  	Director 	 
	 	
	 	Solely for purposes of the penultimate

sentence of the penultimate paragraph of Section 7A

and the last paragraph of 7B hereof:

 	 
	 	
	 	JANSSEN ALZHEIMER IMMUNOTHERAPY

(HOLDING) LIMITED

 	 
		    by  	/s/ Gerard Collins
 	 
	 		Name:  	Gerard Collins 	 
	 		Title:  	Director 	 
	 	



Signature Page to the Royalty Agreement






 









 








Accepted and agreed to as of the date first written
above:




ELAN PHARMA INTERNATIONAL LIMITED




	 	 	 	 	 	 	 
	 

	 	by
	 	/s/ William Daniel	 	 
	 

	 	 	 	 

Name: William Daniel
	 	 
	 

	 	 	 	Title: Director	 	 





Signature Page to the Royalty Agreement