Common use of Adjustment of Net Sales for Combination Products Clause in Contracts

Adjustment of Net Sales for Combination Products. For purposes of determining royalty payments on sales of Combination Products, “Net Sales” shall be adjusted by multiplying the actual Net Sales of such Combination Product during the applicable royalty reporting period, by the fraction A/(A+B) where: “A” is the average sale price of the Licensed Product contained in the Combination Product when sold separately by Company or its Subsidiary in such country; and “B” is the average sale price of the other Additional Ingredients included in the Combination Product when sold separately by its supplier in such country, in each case during the applicable royalty reporting period or if sales of both the Licensed Product and/or other Additional Ingredients did not occur in such country during such period, then in the most recent royalty reporting period in which sales of both occurred. In the event that such average sale price cannot be determined for both the Licensed Product and all other Additional Ingredients included in the Combination Product, Net Sales for the purpose of determining royalty payments shall be calculated by multiplying the Net Sales of the Combination Products by the fraction of C/(C+D) where “C” is the fair market value of the Licensed Product and “D” is the fair market value of all other Additional Ingredients included in the Combination Product. In such event, the parties shall negotiate in good faith to arrive at a determination of the respective fair market values of the Licensed Product and all other Additional Ingredients included in the Combination Product. Notwithstanding the foregoing, no adjustment of Net Sales shall be made pursuant to this subsection where the Company obtained a license to such Additional Ingredient under a cross-license and where the sole consideration paid by Company for the license to use the Additional Ingredient was a sublicense of rights in Licensed Technology.