Common use of Residual Payments Clause in Contracts

Residual Payments. In the event that both Novartis and Genentech terminate this Agreement as set forth in Section 18.3(c) and Tanox chooses to continue Development and Commercialization of Anti-IgE Products, Tanox shall pay to Novartis and Genentech, ***** in the aggregate: (i) For the period, if any, beginning as of the effective date of termination and ending on the date that is *****: (A) ***** of Worldwide net sales (calculated in a manner consistent with that set forth in the Financial Appendix) of Anti-IgE Antibodies and Anti-IgE Products sold by Tanox, an Affiliate or sublicensee; plus (B) ***** of Worldwide net profits (calculated in a manner consistent with the calculation of Net Profits (U.S.) minus Sales Costs (U.S.) set forth in the Financial Appendix) of Tanox and/or applicable Affiliates and sublicensees from Anti-IgE Products (where costs incurred by Tanox which are directly related to the transfer to Tanox of the continued Development and Commercialization of Anti-IgE Products shall be deducted in the calculation of such net profits); and (ii) For the period beginning on the date that is ***** and continuing thereafter: (A) ***** of net sales in any country (calculated in a manner consistent with that set forth in the Financial Appendix) of Anti-IgE Antibodies and Anti-IgE Products sold by Tanox, an Affiliate or sublicensee, the manufacture, use or sale of which would infringe a Valid Claim of an Anti-IgE Patent in such country Controlled by either or both of Genentech or Novartis and licensed to Tanox under Section 18.3(c) and Part 1 of Schedule D (it being understood that no such ***** royalty shall be due in the absence of any such Valid Claim); plus (B) ***** of Worldwide net profits (calculated in a manner consistent with the calculation of Net Profits (U.S.) minus Sales Costs (U.S.) set forth in the Financial Appendix) of Tanox and/or applicable Affiliates and sublicensees from Anti-IgE Products (where costs incurred by Tanox which are directly related to the transfer to Tanox of the continued Development and Commercialization of Anti-IgE Products shall be deducted in the calculation of such net profits). ***** -76-

Residual Payments. In the event that both Novartis and Genentech terminate this Agreement as set forth in Section 18.3(c) and Tanox chooses to continue Development and Commercialization of Anti-IgE Products, Tanox shall pay to Novartis and Genentech, ***** in the aggregate: (i) For the period, if any, beginning as of the effective date of termination and ending on the date that is *****: (A) ***** of Worldwide net sales (calculated in a manner consistent with that set forth in the Financial Appendix) of Anti-IgE Antibodies and Anti-IgE Products sold by Tanox, an Affiliate or sublicensee; plus (B) ***** of Worldwide net profits (calculated in a manner consistent with the calculation of Net Profits (U.S.) minus Sales Costs (U.S.) set forth in the Financial Appendix) of Tanox and/or applicable Affiliates and sublicensees from Anti-IgE Products (where costs incurred by Tanox which are directly related to the transfer to Tanox of the continued Development and Commercialization of Anti-IgE Products shall be deducted in the calculation of such net profits); and (ii) For the period beginning on the date that is ***** and continuing thereafter: (A) ***** of net sales in any country (calculated in a manner consistent with that set forth in the Financial Appendix) of Anti-IgE Antibodies and Anti-IgE Products sold by Tanox, an Affiliate or sublicensee, the manufacture, use or sale of which would infringe a Valid Claim of an Anti-IgE Patent in such country Controlled by either or both of Genentech or Novartis and licensed to Tanox under Section 18.3(c) and Part 1 of Schedule D (it being understood that no such ***** royalty shall be due in the absence of any such Valid Claim); plus (B) ***** of Worldwide net profits (calculated in a manner consistent with the calculation of Net Profits (U.S.) minus Sales Costs (U.S.) set forth in the Financial Appendix) of Tanox and/or applicable Affiliates and sublicensees from Anti-IgE Products (where costs incurred by Tanox which are directly related to the transfer to Tanox of the continued Development and Commercialization of Anti-IgE Products shall be deducted in the calculation of such net profits). ***** -76-*