Common use of Payment of Royalties Clause in Contracts

Payment of Royalties. Royalties payable to the Venture hereunder shall be due and payable in United States currency on a quarterly basis on or before the forty-fifth (45th) day following the end of each calendar quarter. Each royalty payment shall be accompanied by a statement setting forth in reasonable detail the basis for and determination of the royalties due. The books and records of the licensee or its sublicensee relating to its Gross Revenues for any calendar year shall be preserved for a period of not less than eighteen (18) months after the end of such calendar year, and such books and records will be available for inspection by the Venture and its designated agents, accountants and attorneys during business hours upon reasonable advance notice. The Venture shall have the right to audit the Gross Revenues of the licensee and/or its sublicensee(s) on a not more frequent than annual basis for purposes of determining compliance with the royalty obligations hereunder. Any such audit shall be paid for by the Venture, unless such audit results in an increase in the annual amount of royalties payable hereunder of five percent (5%) or more, in which case the licensee or its sublicensee(s) shall pay for the costs of such audit. Any such audit shall be conducted by the accounting firm then responsible for auditing the financial statements of the Venture (unless otherwise mutually agreed upon by the Venture and the licensee), and the determination of such auditors shall be final and binding on all parties in the absence of manifest error. Any adjustment payment by or to the Venture resulting from such an audit shall be made, without interest or penalty except as provided below, to the appropriate party within thirty (30) days after the delivery of the audit report to the licensee and the Venture. In the event that any payment due under this Section 4(b) is not made within fifteen (15) days of its due date, such payment shall accrue interest at the lesser of the prime rate charged from time to time by Citibank, N.A. to its best customers on unsecured borrowings, plus two (2) percentage points, or the highest rate permitted by applicable law. Notwithstanding the foregoing, no royalty payment payable in respect of any calendar year may be challenged, through audit or otherwise, by the Venture more than eighteen (18) months after the end of such calendar year.

Payment of Royalties. Royalties payable to the Venture (a) Payments required of Licensee hereunder shall be due and payable made to Licensor in United States currency on a Dollars. The Sales Royalty payable with respect to Net Sales in currencies other than United States Dollars during any quarterly basis on or before the forty-fifth (45th) day following the end of each calendar quarter. Each royalty payment accounting period shall be accompanied by a statement setting forth in reasonable detail computed on the basis for and determination of the royalties due. The books and records conversion rate of the licensee or its sublicensee relating to its Gross Revenues for any calendar year shall be preserved for a period of not less than eighteen (18) months after the end of such calendar year, and such books and records will be available for inspection by the Venture and its designated agents, accountants and attorneys during business hours upon reasonable advance notice. applicable currencies into United States Dollars quoted in The Venture shall have the right to audit the Gross Revenues Wall Street Journal as of the licensee and/or its sublicensee(sclose of business on the last business day of the applicable quarter. (i) on a not more frequent than annual basis for purposes of determining compliance with With respect to the royalty obligations hereunder. Any such audit first Annual Period, the Minimum Annual Royalty shall be paid for by upon the Venture, unless such audit results in an increase in the annual amount execution and delivery of royalties payable hereunder of five percent (5%) or more, in which case the licensee or its sublicensee(s) shall pay for the costs of such audit. Any such audit shall be conducted by the accounting firm then responsible for auditing the financial statements of the Venture (unless otherwise mutually agreed upon by the Venture and the licensee)this Agreement, and the determination of such auditors Sales Royalty shall be final accounted for and binding on all parties in the absence of manifest error. Any adjustment payment by or to the Venture resulting from such an audit shall be madepaid quarterly, without interest or penalty except as provided below, to the appropriate party within thirty forty five (3045) days after the delivery close of each of the audit report last four (4) three-month periods (each a "quarter"). (ii) With respect to each subsequent Annual Period, the Sales Royalty hereunder shall be accounted for, and the Sales Royalty and/or Minimum Annual Royalty hereunder shall be paid, quarterly, within forty five (45) days after the close of each quarter of each Annual Period. The Minimum Annual Royalty shall be payable in four (4) equal installments. (iii) The Sales Royalty payable for each quarter during each Annual Period shall be computed on the basis of Net Sales during the elapsed portion of the Annual Period, and credited against the Minimum Annual Royalties due. *Excised. (c) The amount of Sales Royalty paid for any Annual Period in excess of the Minimum Annual Royalty required to be paid for any such Annual Period (the "Excess Royalty Payment"), shall be credited against (i) the Minimum Annual Royalty due for the next Annual Period, solely to the licensee and extent that the Venture. In Minimum Annual Royalty to be paid for such next Annual Period exceeds the event that any payment Sales Royalty due under this Section 4(bfor such next Annual Period; and (ii) the Sales Royalty due for the Annual Period in which the Excess Royalty Payment is not made within fifteen (15) days of its due datepaid, such payment shall accrue interest at solely to the lesser extent the Minimum Annual Royalty paid for the immediately preceeding Annual Period exceeded the amount of the prime rate charged from time to time by Citibank, N.A. to its best customers on unsecured borrowings, plus two Sales Royalty due for such Annual Period (2) percentage points, or the highest rate permitted by applicable law. Notwithstanding the foregoing, no royalty payment payable in respect of any calendar year may be challenged, through audit or otherwise, by the Venture more than eighteen (18) months after the end of such calendar year"Shortfall Royaly Payment").

Payment of Royalties. Royalties payable to the Venture hereunder shall be due and payable in United States currency on a quarterly basis on or before the forty-fifth 3.1 Within thirty (45th30) day following working days of the end of each calendar quartersuccessive quarterly period of three months commencing on 1 October, 1 January, 1 April and 1 July in each year, the CONTRACTOR shall pay to the AUTHORITY the Royalties accrued in respect of the previous quarter (whether or not in fact the charges which gave rise to such Royalties have been received by the CONTRACTOR). Each royalty payment The Royalties shall be accompanied paid in sterling and shall be converted from the currency in which they are invoiced at the Closing mid-point rate for Spot transactions as published in the Financial Times in London on the date of payment. 3.2 The Royalties are exclusive of any Value Added Tax which may be payable and shall be paid gross without any deduction of any withholding or other income taxes except where the CONTRACTOR is required by a statement setting forth law to make such deduction or withholding, in reasonable detail which event the basis for CONTRACTOR shall in addition pay to the AUTHORITY such amount as shall result in the net amount received by the AUTHORITY being equal to the amount which would have been received by the AUTHORITY had no such deduction or withholding been made. 3.3 The AUTHORITY shall be entitled to charge the CONTRACTOR interest on all overdue payments in accordance with the Late Payment of Commercial Debts (Interest) Xxx 0000. 3.4 The CONTRACTOR shall keep proper records and determination books of account showing the Software sub-licensed and Royalties payable. The CONTRACTOR shall grant the AUTHORITY, any statutory auditors of the royalties due. The AUTHORITY and their respective authorised agents, the right of reasonable access on reasonable notice to all such records and books and records shall provide all reasonable assistance at all times during the term of this Licence for the licensee or its sublicensee relating to its Gross Revenues for any calendar year shall be preserved for a period purposes of not less than eighteen (18) months after the end carrying out an audit of such calendar year, and such books and records will be available for inspection by the Venture and its designated agents, accountants and attorneys during business hours upon reasonable advance notice. The Venture shall have the right to audit the Gross Revenues of the licensee and/or its sublicensee(s) on a not more frequent than annual basis for purposes of determining compliance with the royalty obligations hereunderrecords. Any such audit shall be paid for carried out at the sole expense of the AUTHORITY unless, (1) it relates to an investigation by the Venture, unless such audit results in an increase in AUTHORITY which reveals fraudulent activity or impropriety by the annual amount CONTRACTOR or (2) it reveals a shortfall of royalties payable hereunder of more than five percent (5%) or morein payments to the AUTHORITY, in which case the licensee audit costs shall be borne by the CONTRACTOR. 3.5 On or its sublicensee(sbefore the tenth (10th) working day of every month, the CONTRACTOR shall pay submit to the AUTHORITY a statement providing details of sales of the Software and Royalties payable and details of reasonable sales prospects for the costs of such audit. Any such audit shall be conducted by the accounting firm then responsible for auditing the financial statements of the Venture (unless otherwise mutually agreed upon by the Venture and the licensee), and the determination of such auditors shall be final and binding on all parties in the absence of manifest error. Any adjustment payment by or to the Venture resulting from such an audit shall be made, without interest or penalty except as provided below, to the appropriate party within thirty (30) days after the delivery of the audit report to the licensee and the Venture. In the event that any payment due under this Section 4(b) is not made within fifteen (15) days of its due date, such payment shall accrue interest at the lesser of the prime rate charged from time to time by Citibank, N.A. to its best customers on unsecured borrowings, plus two (2) percentage points, or the highest rate permitted by applicable law. Notwithstanding the foregoing, no royalty payment payable in respect of any calendar year may be challenged, through audit or otherwise, by the Venture more than eighteen (18) months after the end of such calendar yearnext month.

Payment of Royalties. 7.1 VAR shall pay to Licensor royalties in accordance with Schedule 7.1 annexed hereto which is incorporated and made a part hereof ("Royalties") by check or wire transfer in U.S. Dollars, according to instructions given to VAR by Licensor. VAR will bear all related bank charges. Any late payment will accrue interest at a rate of 1.5% per month. VAR will pay any late payment charge upon remitting the principal amount to Licensor. 7.2 Statements as to Royalties payable to the Venture hereunder shall be due and payable in United States currency on a quarterly basis on or before the forty-fifth (45th) day sent by VAR to Licensor within 30 days following the end of each quarterly calendar quarter. Each royalty period for such preceding quarterly period together with payment of Royalties, if any, shown to be due thereon. 7.3 All statements of Royalties and all other accountings rendered by VAR hereunder shall be accompanied by a statement setting forth in reasonable detail subject to objection, stating the basis for and determination thereof, by Licensor within three (3) years after the date rendered (including after termination or expiration of this Agreement). 7.4 VAR shall maintain, at its executive offices in 0000 Xxxxxx Xxxx, Suite O, Columbia, Md. 21046, books of account concerning sales of the royalties VDP and the Licensed Technology. Licensor or its agent may, at Licensor's sole expense, examine VAR's said books relating to the sale of the VDP and the Licensed Technology hereunder for the purpose of verifying the accuracy thereof, during VAR's normal business hours and upon reasonable written notice. Such books relating to any particular royalty statement may be examined as aforesaid only within two years after the date rendered. Licensor shall notify VAR in writing within 90 days after such examination if Licensor believes that VAR's books are not accurate. Licensor and its agents shall keep all information obtained in such examination confidential and use such information solely for the purpose of this paragraph. 7.5 Licensor may change the List Prices as defined in Schedule 7.1, Maintenance Fees and Upgrade Fees, in whole or in part, at any time upon no less that 90 days prior notice to VAR, subject to any binding commitment that Licensor has made to VAR, but only if Licensor generally applies such changes to its other VARs. Licensor may also increase the Product Discount, Maintenance Discount or Upgrade Discount upon no less that 30 days prior notice to VAR. Any reduction of such discounts will require VARs consent. 7.6 All amounts payable by VAR under this Agreement are exclusive of any tax, levy or similar governmental charge that may be assessed by any jurisdiction, whether based on gross revenue, the delivery, possession or use of VAR's products, the execution or performance of this Agreement or otherwise, except for net income, net worth or franchise taxes assessed on VAR outside of the Territory. If, under the laws of the Territory, VAR is required to withhold any taxes on such payments, then the amount of the payment will be automatically increased to totally offset such tax, so that the amount actually remitted to Licensor , net of all taxes, equals the amount invoiced or otherwise due. The books and records of the licensee or its sublicensee relating to its Gross Revenues for any calendar year shall be preserved for a period of not less than eighteen (18) months after the end of such calendar year, and such books and records will be available for inspection by the Venture and its designated agents, accountants and attorneys during business hours upon reasonable advance notice. The Venture shall have the right to audit the Gross Revenues of the licensee and/or its sublicensee(s) on a not more frequent than annual basis for purposes of determining compliance VAR with promptly furnish Licensor with the royalty obligations hereunder. Any such audit shall be paid for by the Venture, unless such audit results in an increase in the annual amount official receipt of royalties payable hereunder payment of five percent (5%) or more, in which case the licensee or its sublicensee(s) shall pay for the costs of such audit. Any such audit shall be conducted by the accounting firm then responsible for auditing the financial statements of the Venture (unless otherwise mutually agreed upon by the Venture and the licensee), and the determination of such auditors shall be final and binding on all parties in the absence of manifest error. Any adjustment payment by or to the Venture resulting from such an audit shall be made, without interest or penalty except as provided below, these taxes to the appropriate party within thirty (30) days after the delivery taxing authority. VAR will pay all other taxes, levies or similar governmental charges or provide Licensor with a certificate of the audit report exemption acceptable to the licensee and the Venture. In the event that any payment due under this Section 4(b) is not made within fifteen (15) days of its due date, such payment shall accrue interest at the lesser of the prime rate charged from time to time by Citibank, N.A. to its best customers on unsecured borrowings, plus two (2) percentage points, or the highest rate permitted by applicable law. Notwithstanding the foregoing, no royalty payment payable in respect of any calendar year may be challenged, through audit or otherwise, by the Venture more than eighteen (18) months after the end of such calendar yeartaxing authority.

Payment of Royalties. (a) Licensee shall pay to UWA on a Product-by-Product and a country-by-country basis, royalty fees (each, a “Royalty” and collectively, the “Royalties”) equal to [†††]% of aggregate Net Sales of all Products by Licensee, its Affiliates or sublicensees. (b) Royalties shall accrue and be payable to the Venture hereunder shall be due and payable in United States currency by Licensee on a quarterly basis on or before the within forty-fifth five (45th45) day days following the end of each calendar quarterquarter in which any Products generating Net Sales were sold. Each royalty payment of Royalties shall be accompanied by a statement setting forth in reasonable detail the basis number and each type of Product sold and the Net Sales applicable thereto in the applicable calendar quarter. The Products shall be considered as being sold for and determination the purpose of the royalties duecalculation of Royalties under this Agreement when the payments for such Products have been received by Licensee. The books and records of the licensee or its sublicensee relating to its Gross Revenues for any calendar year Except as otherwise provided in Section 4.6, all Royalties shall be preserved paid in United States Dollars. (c) Licensee shall create and maintain complete and accurate records and documentation concerning all Net Sales of Products in sufficient detail to enable the Royalties payable hereunder to be determined. Licensee shall retain such records and documentation for not less than three (3) years from the date of their creation. During the term of this Agreement and for a period of not less than eighteen one (181) months after the end of such calendar yearyear thereafter, and such books and records will be available for inspection by the Venture UWA and its designated agents, accountants and attorneys during business hours upon reasonable advance notice. The Venture representatives shall have the right to audit such records and documentation as shall pertain to the Gross Revenues determination and payment of Royalties no more than once in any calendar year. Such examiners shall have reasonable access during regular business hours to Licensee’s offices and the relevant records, files and books of account, and shall have the right to examine any other records reasonably necessary to determine the accuracy of the licensee and/or its sublicensee(s) on a not more frequent than annual basis for purposes Royalty calculations provided by Licensee. The costs of determining compliance with the royalty obligations hereunder. Any any such audit shall be paid for borne by the VentureUWA, unless as a result of such audit results inspection it is determined that the amounts payable by Licensee for any period are in an increase in the annual amount of royalties payable hereunder of error by greater than five percent (5%) or more), in which case the licensee or its sublicensee(s) shall pay for the costs of such audit. Any such audit shall be conducted borne by Licensee. UWA shall report the accounting firm then responsible for auditing the financial statements results of the Venture any such audit to Licensee within forty-five (unless otherwise mutually agreed upon by the Venture and the licensee), and the determination of such auditors shall be final and binding on all parties in the absence of manifest error. Any adjustment payment by or to the Venture resulting from such an audit shall be made, without interest or penalty except as provided below, to the appropriate party within thirty (30) days after the delivery of the audit report to the licensee and the Venture. In the event that any payment due under this Section 4(b) is not made within fifteen (1545) days of its due datecompletion. Thereafter, Licensee shall promptly pay to UWA the amount of any underpayment discovered in such payment audit, or UWA shall accrue credit to Licensee against future Royalty payments the amount of any overpayment discovered in such audit, as the case may be. In addition, Licensee shall pay interest on any underpayment at the lesser rate that is the lower of the prime rate charged from time to time by Citibank, N.A. to its best customers on unsecured borrowings, plus (i) two percent (2%) percentage points, over the rate of interest announced by Bank of America in Massachusetts (or any successor in interest thereto or any commercially equivalent financial institution if no such successor exists) to be its “prime rate,” or (ii) the highest rate permitted by applicable law. Notwithstanding , in each of cases (i) and (ii) from the foregoing, no royalty date such amount was underpaid to the date payment payable in respect of any calendar year may be challenged, through audit or otherwise, by the Venture more than eighteen (18) months after the end of such calendar yearis actually received.

Payment of Royalties. Royalties payable (A) The Licensee shall pay to the Venture hereunder Licensors a royalty (hereinafter referred to as the "Royalty") equal to 7.5% of the net revenue of the product (gross revenue less discounts and returns) made by the Licensee as a result of the distribution and sale of the Product including any sale of license to market the Product, and any revenue in any form received by Licensee in connection with such license, (hereinafter referred to as "Net Revenue"), said percentage to be determined as follows: 7.5% of all Net Revenues of the product. (B) Minimum royalty payments of $21,000.00 ($3,500.00 per month) shall be made, no later than the first day of each six month period of this Agreement. Starting May 1, 2001 and the six-month anniversary minimum royalty payment of $21,000.00 shall continue to be made, no later than the first day of each six-month anniversary thereafter for the term of the Agreement. In the event net revenue for any month results in an earned royalty due and payable the Licensor in United States currency on a quarterly basis on or before excess of the forty-fifth (45th) $3,500.00 minimum, such excess royalty payment will be made, no later than the first day of the second month following the end month in which the Product sales were made. Earned royalty payments shall be made equal to the earned royalty minus the minimus royalty payment already paid. The Licensee will make the first minimum royalty payment on May 1, 2001 and the first monthly earned royalty payment (if any) in excess of the $3,500.00 minimus royalty will be paid on July 1, 2001. The earned royalty payment (if any) will continue to be made, no later than the first day of each calendar quarter. Each month for the term of the Agreement. (C) For each royalty payment shall be accompanied by a statement setting forth in reasonable detail the basis for made, Licensees agree to keep and determination of the royalties due. The books and maintain records of the licensee or its sublicensee relating to its Gross Revenues for any calendar year shall be preserved regarding such royalty payment for a period of not less than eighteen three (183) months after years in sufficient detail to enable the end of such calendar year, and such royalties payable to be determined. Licensees further agree to permit its books and records will to be available for inspection examined by an independent certified public accountant selected by Licensors at mutually agreed and reasonable times, but no more often than quarterly, to verify such reports. Such examination is to be made at Licensors' expense, except in the Venture and its designated agents, accountants and attorneys during business hours upon reasonable advance notice. The Venture shall have event that the right to audit the Gross Revenues results of the licensee and/or its sublicensee(s) on a not more frequent than annual basis for purposes of determining compliance with the royalty obligations hereunder. Any such audit shall be paid for by the Venture, unless such audit results in examination reveal an increase in the annual amount under-reporting of royalties payable hereunder due of five percent (57.5%) or more, in which case the licensee or its sublicensee(s) shall pay for then the costs of such audit. Any such audit examination shall be conducted paid by Licensees. (D) During the accounting firm then responsible for auditing the financial statements term of the Venture (unless otherwise mutually agreed upon by Agreement, the Venture and the licensee)Licensee shall, and the determination of such auditors shall be final and binding on all parties in the absence of manifest error. Any adjustment payment by or to the Venture resulting from such an audit shall be made, without interest or penalty except as provided below, to the appropriate party within thirty (30) days after the delivery last day of each month of each year, furnish to the Licensors an accurate written statement setting forth the dollar volume of net sales during the preceding calendar quarter with respect to which the Royalty is payable to the Licensors. (E) The Licensee agrees to keep full, accurate and complete records and books of account relating to its operations under this Agreement, to be kept available for at least three years. All of said records and books of account of the Licensee as shall be maintained shall be open at all reasonable times during business hours throughout the term of this Agreement and for a period of two years thereafter for the inspection and audit report by any duly authorized auditor of the Licensors, at the latter's expense, and not more often than once in each three-month period, to ascertain the accuracy of Royalty payments made hereunder by the Licensee or claimed to be due hereunder by the Licensors. (F) All payments of Royalties will be made to the licensee Licensors at the addresses contained herein, or to such successive addresses, as Licensor shall make known to the Licensee by Certified Mail. The Royalties shall be divided by the Licensee and forwarded, the fraction of the total payment to each Licensor as follows: Graeco 2, Ltd. 50%, and AAB Corporation 50%. (G) Notice and communications shall be sent to the parties and the Ventureaddress listed below. In Parties agree to notify each other of any address changes by certified mail. NovaMed Medial Products, Manufacturing Incorporated 000 Xxxxxx Xxxxxx N.E., Minneapolis, Minnesota 55413 Graeco II, Ltd. 000 X. 00xx Xx., Xxxxx 000, Xxxxxx, Xxxxx 00000 AAB Corporation 0000 Xxxx Xxxxxx #000, Xxxxx Xxxx Xxxx, Xxxx. 00000 (H) The royalties payable pursuant to this Agreement will continue for the event that any payment due under this Section 4(b) is not made within fifteen (15) days of its due date, such payment shall accrue interest at the lesser longer of the prime rate charged from time to time by Citibank, N.A. to its best customers on unsecured borrowings, plus two (2) percentage points, or the highest rate permitted by applicable law. Notwithstanding the foregoing, no royalty payment payable in respect term of any calendar year may be challenged, through audit product Patent or otherwise, by twenty (20) years from the Venture more than eighteen (18) months after the end date of such calendar yearthis Agreement.

Payment of Royalties. Royalties payable A. The Company shall use its best reasonable efforts to market and sell (or to have a third party market and sell) the Venture hereunder Products. B. The Company shall be due and payable in United States currency pay to Inventor royalties (i) on a quarterly basis on or before the forty-fifth (45th) day following the end of each calendar quarter. Each royalty payment shall be accompanied by a statement setting forth in reasonable detail the basis for and determination sales of the royalties due. The books and records Products at the rate of three percent (3%) of the licensee Net Sales Revenue, as defined below, of all Products sold by the Company, and (ii) on revenue received by the company from licensing third parties to manufacture and sell the Products or its sublicensee relating otherwise utilize the Patent Rights to its Gross Revenues for any calendar year shall be preserved for a period manufacture and sell products at the rate of not less than eighteen twelve percent (1812%) months of Net License Revenue, as defined below, after the end of such calendar year, and such books and records will be available for inspection date hereof until the date the Patent Rights expire. C. The Company shall pay Inventor royalties with respect to cash received by the Venture and its designated agents, accountants and attorneys during business hours upon reasonable advance notice. The Venture shall have the right to audit the Gross Revenues company (i) from sales of the licensee and/or its sublicensee(s) on a not more frequent Products in each quarter no later than annual basis for purposes of determining compliance with the royalty obligations hereunder. Any such audit shall be paid for by the Venture, unless such audit results in an increase in the annual amount of royalties payable hereunder of five percent (5%) or more, in which case the licensee or its sublicensee(s) shall pay for the costs of such audit. Any such audit shall be conducted by the accounting firm then responsible for auditing the financial statements of the Venture (unless otherwise mutually agreed upon by the Venture and the licensee), and the determination of such auditors shall be final and binding on all parties in the absence of manifest error. Any adjustment payment by or to the Venture resulting from such an audit shall be made, without interest or penalty except as provided below, to the appropriate party within thirty (30) days after following the delivery end of such quarter and (ii) from licensing the Products or Patent Rights in each quarter no later than forty seven (47) days following the end of such quarter and shall at the same time deliver to Inventor a royalty statement for such quarter; each such quarter royalty statement shall show, for the period covered thereby, Net Sales Revenue and Net License Revenue, with any adjustments made in such figures for preceding periods and whatever other items or information may be necessary for Inventor in calculating the royalties due under this Agreement. The Company's total sales revenue (net of charges for insurance, freight, packaging or handling), less the sum of (i) total credits for returns, (ii) any commissions paid to dealers or sales representatives, (iii) uncollectible accounts receivable, (iv) cash or credit-card discounts, (v) any fees paid to prosecute patent applications to extend the Patent Rights or otherwise obtain patents coveting the Products in foreign countries ("Patent Fees"), and (vi) all legal costs and fees incurred by the Company in litigation with regard to upholding the Patent Rights or prosecuting third parties for infringement of the audit report Patent Rights ("Legal Fees") is referred to herein as "Net Sales Revenue." The Company's total revenues received from third parties for licensing third parties to manufacture and sell the licensee Products or otherwise utilize the Patent Rights, less the sum of Patent Fees and the Venture. Legal Fees not deducted from Net Sales Revenue, is referred to herein as "Net License Revenue." In the event that any payment due under this Section 4(bthe Company shall (i) is not made within fifteen (15) days undertake a public offering of its due datesecurities pursuant to the Securities Act of 1933, as amended, or (ii) merge with another corporation, or sell all or substantially all of its assets or capital stock and the shareholders of the Company shall receive cash or publicly traded securities in such payment transaction having a value of not less than $10.00 per share of Common Stock of the Company, appropriately adjusted for any stock splits, combinations, or recapitalizations of the Company (with (i) or (ii) being referred to as a "Transaction"), then the Company shall accrue have the option (the "Option") to reduce the royalty payable to Inventor to one percent (1%) of Net Sales Revenue, effective upon the closing of the Transaction, and to provide that the royalty shall be payable only for a period of five (5) years after the date of closing of the Transaction. If the Company shall elect to exercise the Option, the Company shall pay to Inventor the sum of $1,700,000.00, to be paid in cash upon the closing of the Transaction. D. Once during each calendar year falling in whole or in part in the term of this Agreement and the following twelve months, any certified public accountants or lawyers and/or other persons of Inventor's choice may, upon reasonable notice to the Company in each case and during regular business hours, examine and make copies of the Company's books of account, records, vouchers, invoices and all other documents relating to the subject matter in whole or in part of this Agreement in order to determine the correctness and completeness of all payments made and statements delivered hereunder to Inventor. If any such examination reveals an error of 5% or more in royalties paid or payable to Inventor, then the Company shall at Inventor's request promptly pay Inventor all costs of such examination together with the amount of such deficiency of royalties payable to Inventor plus interest at the lesser of the prime rate charged from time to time by Citibank, N.A. to its best customers on unsecured borrowings, plus two (2) percentage points, or the highest maximum rate permitted by applicable lawlaw since the date such amount should have been paid to Inventor. Notwithstanding The Company shall keep in accordance with generally accepted accounting principles consistently applied, and preserve for a reasonable period of time, proper, accurate, complete and easily auditable records and books of account reflecting all dealings with the foregoing, no royalty payment payable in respect of any calendar year Product or related materials and shall make all such entries therein as may be challenged, through audit or otherwise, by the Venture more than eighteen (18) months after the end of such calendar yearnecessary to enable all calculations referred to herein to be readily verified.

Payment of Royalties. All Royalties payable pursuant to the Venture hereunder this Agreement shall be due and payable in United States currency on a quarterly basis on or before the forty-fifth within sixty (45th60) day days following the end of each calendar quarter for Net Sales in such calendar quarter. Each royalty such payment shall be accompanied by a statement setting forth in reasonable detail of Net Sales for the basis for quarter and determination the calculation of Royalties payable hereunder. All Royalties and all other amounts which are overdue under this Agreement shall bear interest at the royalties duerate of one and one-half percent (1 1/2%) per month from the date due through the date of payment. The books Horizon shall keep and records of the licensee or shall cause its sublicensee relating to its Gross Revenues for any calendar year shall be preserved for a period of not less than eighteen (18) months after the end of such calendar year, and such books and records will be available for inspection by the Venture Affiliates and its designated agentsand their sublicensees to keep complete, accountants true and attorneys during business hours upon reasonable advance noticeaccurate records for the purpose of showing the derivation of all Royalties payable to Penwest under this Agreement. The Venture Penwest's duly accredited representatives (which representatives are approved for such purpose by Horizon, which approval shall not be unreasonably withheld nor shall it be revocable by Horizon following the start of any inspection hereunder) shall have the right to inspect, copy, and audit the Gross Revenues such records at any time during reasonable business hours upon reasonable prior notice to Horizon or any of the licensee and/or its sublicensee(s) on Affiliates or sublicensees, respectively, but such right shall not be exercised more often than once annually (it being understood that a not more frequent than annual basis for purposes single exercise of determining compliance with the royalty obligations hereundersuch right may include a series of related or continuing inspections, copying and audits). Any such audit shall be paid for by at the Ventureexpense of Penwest, unless such the audit results in an increase in reveals that, with respect to the annual amount of royalties payable hereunder of period under audit, less than ninety-five percent (595%) or moreof the Royalties due to Penwest hereunder have been reported, in which case the licensee or its sublicensee(s) event Horizon shall pay or reimburse Penwest for the costs reasonable expenses of such audit. Any , in addition to Penwest's other remedies for such audit shall be conducted by the accounting firm then responsible for auditing the financial statements of the Venture (unless otherwise mutually agreed upon by the Venture and the licensee), and the determination of such auditors shall be final and binding on all parties in the absence of manifest error. Any adjustment payment by or to the Venture resulting from such an audit shall be made, without interest or penalty except as provided below, to the appropriate party within thirty (30) days after the delivery of the audit report to the licensee and the Ventureunderpayment. In the event that any payment such audit reveals that, with respect to the period under audit, Horizon has paid to Penwest Royalties in excess of those due under this Section 4(b) is not made within fifteen (15) days of its due datehereunder, such payment Horizon shall accrue interest at be entitled to offset the lesser of the prime rate charged from time to time by Citibank, N.A. to its best customers on unsecured borrowings, plus two (2) percentage points, or the highest rate permitted by applicable law. Notwithstanding the foregoing, no royalty payment payable in respect of any calendar year may be challenged, through audit or otherwise, by the Venture more than eighteen (18) months after the end full amount of such calendar yearexcess payment against future Royalties due to Penwest.