MPP will require that the Commercialization Partners will pay royalties over Net Sales of Licensed Products directly to University on a country-by-country basis starting from the date of the first commercial sale of Licensed Products in the Territory. Royalties will be paid as described below:
(i) Royalty-free where the supply of licensed products is to any Group 1 country for use solely in that country; and
(ii) Royalty-free where the supply of licensed products is to Group 2 countries and for use solely in that country and where the licensed products are sold to the public sector in that country; and
(iii) In Group 2 countries where there is a valid issued licensed patent in the country of manufacture or sale, a royalty equal to 1% of the net sales value of licensed products where the licensed products are sold in the private sector; and
(iv) In Group 3 countries where there is a valid issued licensed patent in the country of manufacture or sale, a royalty equal to 1.75% of the Net Sales value of licensed product.
(v) Notwithstanding the above, no royalties will be owed on specific formulations labeled for the prevention and treatment of pediatric HIV (including the prevention of mother-to-child transmission).
[Note: Group 1 countries include low-income countries, least developed countries and all countries in sub-Saharan Africa. Group 2 countries include lower-middle income countries that are not in sub-Saharan Africa and are not least developed countries. Group 3 countries include upper-middle income countries that are not in sub-Saharan Africa and not least developed countries. See agreement Schedule 3 for the list of countries included in the Territory.]