Common use of Minimum Royalties Clause in Contracts

Minimum Royalties. (a) Notwithstanding the provisions of Section 5.3, ▇▇▇▇▇▇▇ shall pay DTI minimum annual royalties after launch of the Initial Product in any country of the Territory in an amount equal to * of Forecast Net Sales (defined below) multiplied by the applicable royalty rate pursuant to Section 5.3. For example, if the Forecast Net Sales are $200 million, then the minimum royalties would be calculated as follows: $200,000,000 x * (Net Sales amount on which minimum royalties will be calculated) * Total Minimum Royalties Due: * All earned royalties paid by ▇▇▇▇▇▇▇ pursuant to Section 5.3 shall be fully creditable against minimum royalties. (b) As used in this Section 5.4, Forecast Net Sales shall be ▇▇▇▇▇▇▇'▇ projected Net Sales for the Licensed Products in the Territory during the relevant calendar year ("Commercialization Year"), with the first Commercialization Year being the calendar year of launch of the Initial Product in the first country of the Territory. ▇▇▇▇▇▇▇ shall deliver to DTI, not later than forty-five (45) days prior to launch of the Initial Product in such country, and thereafter on or before November 15 of each calendar year its projected Net Sales of Licensed Products in the Territory for the relevant Commercialization Year. Notwithstanding the foregoing, after the first Commercialization Year which includes a full calendar year, ▇▇▇▇▇▇▇'▇ minimum royalty obligation shall be calculated on Forecast Net Sales in an amount not less than * of ▇▇▇▇▇▇▇ actual Net Sales in the previous Commercialization Year. (c) ▇▇▇▇▇▇▇'▇ minimum royalty obligation shall expire as to a particular country in the event any of the following occur: (i) The expiration, lapse or invalidation of the last remaining DTI patents in such country which contains a valid and unexpired claim covering the sale of the Initial Product and a third party launches a generic form of the Initial Product delivered by a transdermal patch; -------------------------------------------------------------------------------- * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. -------------------------------------------------------------------------------- (ii) A third party launches a new product approved for marketing and sale in any country of the Territory for the treatment of ▇▇▇▇▇▇▇▇▇'▇ Disease, which achieves a 10% share of the total annual worldwide sales of products approved for marketing and sale for the treatment of ▇▇▇▇▇▇▇▇▇'▇ Disease as reported in the publication Data Monitor or an equivalent publication. (iii) ▇▇▇▇▇▇▇ has paid minimum royalties to DTI for ten (10) years. (d) At any time during the term of the Agreement, the parties agree to renegotiate, in good faith, the conditions of this Section 5.4 in the event of changes including, but not limited to, competition, pricing, reimbursement, and distribution in the therapeutic treatment of ▇▇▇▇▇▇▇▇▇'▇ Disease and or the ▇▇▇▇▇▇▇▇▇ Disease market.

Minimum Royalties. A. Provided that the Product developed under this Agreement, whether in [*] Format or any other format, for use in the Field does not have any identified or known design defect, and that no Product performance problem (aas determined based upon the Product specifications) Notwithstanding the provisions of Section 5.3, has arisen that affects C▇▇▇’▇ ability to sell such Product, C▇▇▇ will pay to Cardica during the Term of this Agreement a minimum royalty (“Minimum Royalty”) in an amount equal to the following one-time payments under this Agreement: (i) [*] for the first full calendar year following the earlier of FDA Approval or the grant of a CE M▇▇▇ for the Product in [*] Format for use in the Field, (ii) [*] for the first full calendar year following the later of FDA Approval or the grant of a CE M▇▇▇ for the Product in [*] Format for use in the Field, (iii) [*] for the second full calendar year following the later of FDA Approval or the grant of a CE M▇▇▇ for Product in [*] Format in the Field, (iv) [*] for the third full calendar year following the later of FDA Approval or the grant of a CE M▇▇▇ for the Product in [*] Format in the Field, and (v) in each calendar year of the next ten (10) calendar years following the third anniversary of the later of FDA Approval or the grant of a CE M▇▇▇ for Products in [*] Format in the Field, an amount equal to the sum of the minimum royalty for the previous calendar year plus [*] of the minimum royalty for the previous calendar year. Any amount paid by C▇▇▇ in any calendar year as Earned Royalty that exceeds the minimum royalty due for that calendar year may be applied and accumulated by C▇▇▇ to satisfy the minimum royalties for any of the subsequent calendar years provided above. B. In the event that Product meets the relevant specifications, but C▇▇▇ has experienced Unexpectedly Low Sales of Product in [*] consecutive calendar quarters not by reason of any substantial lack of diligence by C▇▇▇ in [*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. WITH RESPECT TO ATTACHMENT A, SIX PAGES OF INFORMATION HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS. commercializing Products in accordance with Section 2.4, C▇▇▇ shall pay DTI minimum annual royalties after launch only a portion of the Initial Minimum Royalty (“Interim Period Payment”) for a time period (“Interim Period”) beginning upon the last day of those [*] consecutive calendar quarters of Unexpectedly Low Sales. During the Interim Period, each Interim Period Payment shall be spent by Cardica solely on improvements to the Product, with the amount of each Interim Period Payment to be approved by C▇▇▇ and not to exceed the actual amount spent by Cardica in the Interim Period on improvements to the Product plus [*] percent ([*]) overhead. C▇▇▇’▇ obligation to pay Minimum Royalties under this Agreement will resume in any country the first full calendar year after the cessation of the Territory Interim Period, which occurs at the end of the first quarter in an amount equal to * which sales are no longer Unexpectedly Low. If sales of Forecast Net Sales (defined belowProduct continue during the Interim Period, then Minimum Royalties do not increase under Section 5.5(A) multiplied by during the applicable royalty rate pursuant to Section 5.3Interim Period. For example, if an Interim Period occurs in the Forecast Net Sales second year of this Agreement, and Product is sold during the Interim Period, the Minimum Royalties due after cessation of the Interim Period are $200 millionthe Minimum Royalties due in the second year under Section 5.5A, regardless of the duration of the Interim Period. C▇▇▇ is still obligated to pay Cardica Earned Royalties during the Interim Period based on its sales of Product. If no sales of Product are made during the Interim Period, then after the Interim Period the Minimum Royalties revert to those set forth above in either Section 5.5A(i) or 5.5A(ii), based on the status of the relevant approvals. Further, the determination of the Minimum Royalty due in subsequent calendar years under Section 5.5A is then calculated based on the date of cessation of the Interim Period. For example, if an Interim Period occurs in the second year of this Agreement, and Product is not sold during the Interim Period, and if both FDA approval and a CE m▇▇▇ have been granted for the Product, then the Minimum Royalty due for the first full calendar year after the Interim Period is as set forth in Section 5.5A(ii). The Minimum Royalty due in the subsequent full calendar year would be as set forth in Section 5.5A(iii), and so on. C. In the event C▇▇▇ pays Cardica more than zero but less than the minimum royalties would be calculated as follows: $200,000,000 x * (Net Sales amount on which minimum royalties will be calculated) * Total Minimum Royalties Due: * All earned royalties paid by set forth above for a period of [*] years, other than during an Interim Period, then upon Cardica’s written notice to C▇▇▇▇, Cardica may in its sole discretion terminate this Agreement for breach by C▇▇▇ pursuant to Section 5.3 shall be fully creditable against minimum royalties. (b) As used in this Section 5.4, Forecast Net Sales shall be ▇▇▇▇▇▇▇'▇ projected Net Sales for the Licensed Products in the Territory during the relevant calendar year ("Commercialization Year"), with the first Commercialization Year being the calendar year of launch of the Initial Product in the first country of the Territory. ▇▇▇▇▇▇▇ shall deliver to DTI, not later than forty-five (45) days prior to launch of the Initial Product in such country, and thereafter on or before November 15 of each calendar year its projected Net Sales of Licensed Products in the Territory for the relevant Commercialization Year. Notwithstanding the foregoing, after the first Commercialization Year which includes a full calendar year, ▇▇▇▇▇▇▇'▇ minimum royalty obligation shall be calculated on Forecast Net Sales in an amount not less than * of ▇▇▇▇▇▇▇ actual Net Sales in the previous Commercialization Year. (c) ▇▇▇▇▇▇▇'▇ minimum royalty obligation shall expire as to a particular country in the event any of the following occur: (i) The expiration, lapse or invalidation of the last remaining DTI patents in such country which contains a valid and unexpired claim covering the sale of the Initial Product and a third party launches a generic form of the Initial Product delivered by a transdermal patch; -------------------------------------------------------------------------------- * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. -------------------------------------------------------------------------------- (ii) A third party launches a new product approved for marketing and sale in any country of the Territory for the treatment of ▇▇▇▇▇▇▇▇▇'▇ Disease, which achieves a 10% share of the total annual worldwide sales of products approved for marketing and sale for the treatment of ▇▇▇▇▇▇▇▇▇'▇ Disease as reported in the publication Data Monitor or an equivalent publication. (iii) ▇▇▇▇▇▇▇ has paid minimum royalties to DTI for ten (10) years. (d) At any time during the term of the Agreement, the parties agree to renegotiate, in good faith, the conditions 8.3 of this Section 5.4 in the event of changes including, but not limited to, competition, pricing, reimbursement, and distribution in the therapeutic treatment of ▇▇▇▇▇▇▇▇▇'▇ Disease and or the ▇▇▇▇▇▇▇▇▇ Disease marketAgreement.

Minimum Royalties. (a) Notwithstanding Exhibit F attached hereto and incorporated herein by reference sets out, for the provisions of Section 5.3, ▇▇▇▇▇▇▇ shall pay DTI minimum annual royalties first [**] years after launch Marketing Approval of the Initial Licensed Product in any country the United States and one of the Territory in an amount equal Key European Countries, the minimum royalties to * of Forecast Net Sales be paid to BA during such [**] years (defined below) multiplied by the applicable royalty rate pursuant to Section 5.3"MINIMUM ROYALTIES"). For example[**] years thereafter (or until the expiration of the last-to-expire Valid Claim of a Patent Right owned or Controlled by BA Covering the Licensed Product, if earlier, in which case the Forecast Net Sales Minimum Royalty shall be pro rated for the Calendar Year in which such expiration occurs), Minimum Royalties shall be [**] Dollars ($[**]) annually on a world-wide basis. In the event that royalty payments under Section 4.3 for a Calendar Year for which Minimum Royalties are $200 millionowed fall below the Minimum Royalty amounts for territories in which a Licensed Product has obtained Marketing Approval, BLSI shall remit to BA the amount of the shortfall within [**] days of the end of such Calendar Year. If Marketing Approval of the first Licensed Product in a territory occurs during the first six (6) months of a Calendar Year, then the minimum royalties would payable Minimum Royalty for such territory for the first Calendar Year shall be calculated as follows: $200,000,000 x * pro-rated in accordance with the number of days remaining in such Calendar Year. If Marketing Approval of the first Licensed Product in a territory occurs during the last six (Net Sales amount on which minimum royalties will 6) months of a Calendar Year, then the Minimum Royalty for such territory for the first Calendar Year shall be calculated) * Total shifted one year forward and no Minimum Royalty shall be due for that first Calendar Year. Minimum Royalties Due: * All earned royalties paid by ▇▇▇▇▇▇▇ pursuant to Section 5.3 for the United States and the Key European Countries shall be fully creditable against minimum royalties. (b) As used in this Section 5.4, Forecast Net Sales shall be ▇▇▇▇▇▇▇'▇ projected Net Sales due for the Licensed Products in the Territory during the relevant calendar year ("Commercialization Year"), with only the first Commercialization Year being the calendar year of launch of the Initial Product in the first country of the Territory. ▇▇▇▇▇▇▇ shall deliver to DTI, not later than forty-five (45) days prior to launch of the Initial Product in such country, and thereafter on or before November 15 of each calendar year its projected Net Sales of Licensed Products in the Territory for the relevant Commercialization Year. Notwithstanding the foregoing, after the first Commercialization Year which includes a full calendar year, ▇▇▇▇▇▇▇'▇ minimum royalty obligation shall be calculated on Forecast Net Sales in an amount not less than * of ▇▇▇▇▇▇▇ actual Net Sales in the previous Commercialization Year. (c) ▇▇▇▇▇▇▇'▇ minimum royalty obligation shall expire as to a particular country in the event any of the following occur: (i) The expiration, lapse or invalidation of the last remaining DTI patents in such country which contains a valid and unexpired claim covering the sale of the Initial Product and a third party launches a generic form of the Initial Product delivered by a transdermal patch; -------------------------------------------------------------------------------- * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. -------------------------------------------------------------------------------- (ii) A third party launches a new product approved for marketing and sale in any country of the Territory for the treatment of ▇▇▇▇▇▇▇▇▇'▇ Disease, which achieves a 10% share of the total annual worldwide sales of products approved for marketing and sale for the treatment of ▇▇▇▇▇▇▇▇▇'▇ Disease as reported in the publication Data Monitor or an equivalent publication. (iii) ▇▇▇▇▇▇▇ has paid minimum royalties to DTI for ten (10) years. (d) At any time during Calendar Years after the term first Marketing Approval of the Agreementfirst Licensed Product in either the United States or one of the Key European Countries (or until the expiration of the last-to-expire Valid Claim of a Patent Right owned or Controlled by BA Covering the Licensed Product, if earlier), but shall be due irrespective of whether or when a Launch of the parties agree to renegotiate, in good faith, the conditions of this Section 5.4 Licensed Product occurs in the event of changes including, but not limited to, competition, pricing, reimbursement, and distribution in the therapeutic treatment of ▇▇▇▇▇▇▇▇▇'▇ Disease and or the ▇▇▇▇▇▇▇▇▇ Disease marketdescribed territories.

Minimum Royalties. (a) Notwithstanding the provisions of Section 5.3, ▇▇▇▇▇▇▇ TranS1 shall pay DTI minimum annual to Licensor royalties after launch of as stated in Section 4.4.1, but in no event will royalties paid to Licensor for a Contract Year during the Initial Product in any country of the Territory in an amount equal to * of Forecast Net Sales (defined below) multiplied by the applicable royalty rate pursuant to Section 5.3. For example, if the Forecast Net Sales are $200 million, then Royalty Term be less than the minimum royalties would be calculated as follows: $200,000,000 x * (Net Sales amount on which indicated below. A “Contract Year” means the period of twelve consecutive calendar months following the last day of the month of the start of the Full Commercial Launch, and each twelve-month period thereafter. Year 1 US $ [***] US $ [***] Year 2 US $ [***] US $ [***] Year 3 US $ [***] US $ [***] Year 4 US $ [***] US $ [***] Year 5 US $ [***] US $ [***] Years 6-8 US $ [***] US $ [***] No minimum royalties will be calculated) * Total Minimum Royalties Due: * All earned due for years following Contract Year 8 No minimum royalties paid by ▇▇▇▇▇▇▇ pursuant to Section 5.3 shall be fully creditable against minimum royalties.due for years following Contract Year 8 (b) As used in this Section 5.4, Forecast Net Sales shall be ▇▇▇▇▇▇▇'▇ projected Net Sales for In the Licensed Products in event that the Territory during the relevant calendar year ("Commercialization Year"), with the first Commercialization Year being the calendar year of launch of the Initial Product in the first country of the Territory. ▇▇▇▇▇▇▇ shall deliver to DTI, not later than forty-five (45) days prior to launch of the Initial Product in such country, and thereafter actual royalties paid by TranS1 on or before November 15 of each calendar year its projected Net Sales of Licensed Products Product with respect to Net Sales during a Contract Year are not equal to or more than the Minimum Royalty set forth above for such Contract Year, TranS1 shall pay the difference between the actual royalties paid to Licensor based on Net Sales during such year and the applicable Minimum Royalty in order to satisfy its minimum royalty obligations. Such payment shall be made within ninety (90) days of the Territory for end of the relevant Commercialization Contract Year. Notwithstanding the foregoing, after the first Commercialization Year which includes a full calendar year, ▇▇▇▇▇▇▇'▇ minimum royalty obligation shall be calculated on Forecast Net Sales in an amount not less than * of ▇▇▇▇▇▇▇ actual Net Sales in the previous Commercialization Year. (c) ▇▇▇▇▇▇▇'▇ minimum royalty obligation shall expire as [***] Confidential treatment requested pursuant to a particular country in the event any of the following occur: (i) The expiration, lapse or invalidation of the last remaining DTI patents in such country which contains a valid and unexpired claim covering the sale of the Initial Product and a third party launches a generic form of the Initial Product delivered by a transdermal patch; -------------------------------------------------------------------------------- * Certain information on this page has been omitted and request for confidential treatment filed separately with the Securities and Exchange Commission. Confidential treatment has Omitted portions have been requested filed separately with respect to the omitted portions. -------------------------------------------------------------------------------- (ii) A third party launches a new product approved for marketing and sale in any country of the Territory for the treatment of ▇▇▇▇▇▇▇▇▇'▇ Disease, which achieves a 10% share of the total annual worldwide sales of products approved for marketing and sale for the treatment of ▇▇▇▇▇▇▇▇▇'▇ Disease as reported in the publication Data Monitor or an equivalent publicationCommission. (iiic) ▇▇▇▇▇▇▇ has paid minimum royalties to DTI If for ten (10) years. (d) At any time period of three consecutive Contract Years during the term Royalty Term, the actual royalties paid by TranS1 on Net Sales of Product during each Contract Year (not including any Minimum Royalty payment made by TranS1 pursuant to Section 4.4.2(b)) are not equal to or more than the Minimum Royalty requirement set forth above for such Contract Year (other than due to a Force Majeure Event), Licensor may elect to modify the license granted in Section 3.1 from exclusive to non-exclusive by providing TranS1 written notice no later than ninety (90) days following the end of the third (3rd) year of such period. If Licensor elects to convert the license to a non-exclusive license, TranS1’s obligation to make any Minimum Royalty payments for subsequent Contract Years shall terminate; provided, however, that all other payments required to be made by TranS1 in this Agreement shall continue to apply, and TranS1 shall continue to make commercially reasonable efforts to commercialize one or more Products. Licensor acknowledges and agrees that provided TranS1 is not in material breach of any other material obligations set forth in this Agreement, the parties agree such right to renegotiate, in good faith, the conditions of modify this Section 5.4 license to a non-exclusive license shall be Licensor’s sole and exclusive remedy in the event TranS1 shall fail to achieve Net Sales of changes including, but not limited to, competition, pricing, reimbursement, and distribution in Product sufficient to meet the therapeutic treatment Minimum Royalty obligations set forth herein. No minimum royalties shall be due for any period after the termination of ▇▇▇▇▇▇▇▇▇'▇ Disease and or the ▇▇▇▇▇▇▇▇▇ Disease marketthis Agreement.

Minimum Royalties. (a) Notwithstanding the provisions of Section 5.3, ▇▇▇▇▇▇▇ shall pay DTI minimum annual royalties after launch of the Initial Product in any country of the Territory in an amount equal to * of Forecast Net Sales (defined below) multiplied by the applicable royalty rate pursuant to Section 5.3. For example, if the Forecast Net Sales are $200 million, then the minimum royalties would be calculated as follows: $200,000,000 x * (Net Sales amount on which minimum royalties will be calculated) * Total Minimum Royalties Due: * All earned royalties paid by ▇▇▇▇▇▇▇ pursuant to Section 5.3 shall be fully creditable against minimum royalties. (b) As used in this Section 5.4, Forecast Net Sales shall be ▇▇▇▇▇▇▇'▇ projected Net Sales for the Licensed Products in the Territory during the relevant calendar year ("Commercialization Year"), with the first Commercialization Year being the calendar year of launch of the Initial Product in the first country of the Territory. ▇▇▇▇▇▇▇ shall deliver to DTI, not later than forty-five (45) days prior to launch of the Initial Product in such country, and thereafter on or before November 15 of each calendar year its projected Net Sales of Licensed Products in the Territory for the relevant Commercialization Year. Notwithstanding the foregoing, after the first Commercialization Year which includes a full calendar year, ▇▇▇▇▇▇▇'▇ minimum royalty obligation shall be calculated on Forecast Net Sales in an amount not less than * of ▇▇▇▇▇▇▇ actual Net Sales in the previous Commercialization Year. (c) ▇▇▇▇▇▇▇'▇ minimum royalty obligation shall expire as to a particular country in the event any of the following occur: (i) The expiration, lapse or invalidation of the last remaining DTI patents in such country which contains a valid and unexpired claim covering the sale of the Initial Product and a third party launches a generic form of the Initial Product delivered by a transdermal patch; -------------------------------------------------------------------------------- * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. -------------------------------------------------------------------------------- (ii) A third party launches a new product approved for marketing and sale in any country of the Territory for the treatment of ▇▇▇▇▇▇▇▇▇'▇ Disease, which achieves a 10% share of the total annual worldwide sales of products approved for marketing and sale for the treatment of ▇▇▇▇▇▇▇▇▇'▇ Disease as reported in the publication Data Monitor or an equivalent publication. (iii) ▇▇▇▇▇▇▇ has paid minimum royalties to DTI for ten (10) * years. (d) At any time during the term of the Agreement, the parties agree to renegotiate, in good faith, the conditions of this Section 5.4 in the event of changes including, but not limited to, competition, pricing, reimbursement, and distribution in the therapeutic treatment of ▇▇▇▇▇▇▇▇▇'▇ Disease and or the ▇▇▇▇▇▇▇▇▇ Disease market.

Minimum Royalties. A. Provided that the Product developed under this Agreement for use in the Field does not have any identified or known design defect, and that no Product performance problem (aas determined based upon the Product specifications) Notwithstanding the provisions of Section 5.3, has arisen that affects C▇▇▇▇’▇ ability to sell such Product, C▇▇▇ shall will pay DTI to Cardica during the Term of this Agreement a minimum annual royalties after launch of the Initial Product in any country of the Territory royalty (“Minimum Royalty”) in an amount equal to the following one-time payments under this Agreement: (i) [ * ] for the first full calendar year following the first commercial sale of Forecast Net Sales the first and only the first Product for use in the Field, (defined belowii) multiplied by [ * ] for the applicable royalty rate pursuant second full calendar year following the first commercial sale of the first and only the first Product for use in the Field, (iii) [ * ] for the third full calendar year following the first commercial sale of the first and only the first Product in the Field, (iv) [ * ] for the fourth full calendar year following the first commercial sale of the first and only the first Product for use in the Field, and (v) in each calendar year of the next ten (10) calendar years following the third anniversary of the first commercial sale of first and only the first Product for use in the Field, an amount equal to Section 5.3. For example, if the Forecast Net Sales are $200 million, then sum of the minimum royalties would be calculated as follows: $200,000,000 x royalty for the previous calendar year plus [ * (Net Sales ] of the minimum royalty for the previous calendar year. Any amount on which minimum royalties will be calculated) * Total Minimum Royalties Due: * All earned royalties paid by ▇▇▇▇C▇▇▇ pursuant to Section 5.3 shall be fully creditable against minimum royalties. (b) As used in any calendar [ * ] = Certain confidential information contained in this Section 5.4document, Forecast Net Sales shall be ▇▇▇▇▇▇▇'▇ projected Net Sales for the Licensed Products in the Territory during the relevant calendar year ("Commercialization Year")marked by brackets, with the first Commercialization Year being the calendar year of launch of the Initial Product in the first country of the Territory. ▇▇▇▇▇▇▇ shall deliver to DTI, not later than forty-five (45) days prior to launch of the Initial Product in such country, and thereafter on or before November 15 of each calendar year its projected Net Sales of Licensed Products in the Territory for the relevant Commercialization Year. Notwithstanding the foregoing, after the first Commercialization Year which includes a full calendar year, ▇▇▇▇▇▇▇'▇ minimum royalty obligation shall be calculated on Forecast Net Sales in an amount not less than * of ▇▇▇▇▇▇▇ actual Net Sales in the previous Commercialization Year. (c) ▇▇▇▇▇▇▇'▇ minimum royalty obligation shall expire as to a particular country in the event any of the following occur: (i) The expiration, lapse or invalidation of the last remaining DTI patents in such country which contains a valid and unexpired claim covering the sale of the Initial Product and a third party launches a generic form of the Initial Product delivered by a transdermal patch; -------------------------------------------------------------------------------- * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect Commission pursuant to the omitted portions. -------------------------------------------------------------------------------- (ii) A third party launches a new product approved for marketing and sale in any country Rule 24b-2 of the Territory Securities Exchange Act of 1934, as amended year as Earned Royalty that exceeds the minimum royalty due for the treatment of that calendar year may be applied and accumulated by C▇▇▇▇▇▇▇▇▇'▇ Disease, which achieves a 10% share to satisfy the minimum royalties for any of the total annual worldwide sales of products approved for marketing and sale for the treatment of ▇▇▇▇▇▇▇▇▇'▇ Disease as reported in the publication Data Monitor or an equivalent publicationsubsequent calendar years provided above. (iii) ▇▇▇▇B. In the event that Product meets the relevant specifications, but C▇▇▇ has paid minimum royalties to DTI for ten (10) years. (d) At experienced Unexpectedly Low Sales of Product not by reason of any time during the term substantial lack of diligence by C▇▇▇ in commercializing Products in accordance with Section 2.4, C▇▇▇ shall pay only a portion of the AgreementMinimum Royalty (“Interim Period Payment”) for a time period (“Interim Period”) beginning upon the last day of those [ * ] consecutive calendar quarters of Unexpectedly Low Sales. During the Interim Period, each Interim Period Payment shall be spent by Cardica solely on improvements to the parties agree Product, with the amount of each Interim Period Payment to renegotiatebe approved by C▇▇▇ and not to exceed the actual amount spent by Cardica in the Interim Period on improvements to the Product plus [ * ] overhead. One or more Interim Period Payments may exceed the Minimum Royalty that would have been payable for that period, in good faith, the conditions of this Section 5.4 in the event that the cost of changes including, but not limited to, competition, pricing, reimbursement, and distribution in improvements to the therapeutic treatment of Product plus overhead for that period is greater than the Minimum Royalty that would have been payable for that period. C▇▇▇’▇ obligation to pay Minimum Royalties under this Agreement will resume in the first full calendar year after the cessation of the Interim Period, which occurs at the end of the first quarter in which there are no longer Unexpectedly Low Sales. If sales of Product continue during the Interim Period, then Minimum Royalties shall not increase under Section 5.5(A) during the Interim Period. For example, if an Interim Period occurs in the second year of this Agreement, and Product is sold during the Interim Period, the Minimum Royalties due after cessation of the Interim Period are the Minimum Royalties due in the second year under Section 5.5A, regardless of the duration of the Interim Period. C▇▇▇ is still obligated to pay Cardica Earned Royalties during the Interim Period based on its sales of Product. If no sales of Product are made during the Interim Period, then after the Interim Period the Minimum Royalties revert to those set forth above in Section 5.5A calculated based on the date of cessation of the Interim Period. For example, if an Interim Period occurs in the second year of this Agreement, and Product is not sold during the Interim Period, and if the first commercial sale of the Product after the Interim Period then occurs in the third year of the this Agreement, then the Minimum Royalty due for the first full calendar year after the Interim Period is as set forth in Section 5.5A(ii). The Minimum Royalty due in the subsequent full calendar year would be as set forth in Section 5.5A(iii), and so on. C. In the event C▇▇▇ pays Cardica more than zero but less than the minimum royalties set forth above for a period of [ * ], other than during an Interim Period, then upon Cardica’s written notice to C▇▇▇▇▇▇'▇ Disease and or the ▇▇▇▇▇▇, Cardica may in its sole discretion terminate this Agreement for breach by C▇▇▇ Disease market.pursuant to Section 8.3 of this Agreement. [ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended