PRODUCT TO CUSTOMERS, VITAL WILL RECEIVE * OF THE R2 SOFTWARE
MAINTENANCE PROGRAM FEES ACTUALLY RECEIVED BY R2.
SUCH AMOUNTS SHALL BE PAYABLE
WITHIN THIRTY (30) DAYS FOLLOWING THE CALENDAR MONTH IN WHICH SUCH FEES ARE
COLLECTED.
* Confidential Treatment Requested
5.5 MINIMUM REVENUES.
(a) Sales to Customers shall generate for R2 certain specified minimum revenues
(the "Applicable Minimums") payable to R2, net only of Commissions, on a
Quarterly basis from the Product Revenues as follows:
(I) STARTING WITH THE QUARTER ENDING SEPTEMBER 30, 2005 AND ENDING WITH THE
QUARTER ENDING MARCH 31, 2006 (THE "INITIAL PERIOD"), THE APPLICABLE MINIMUMS
SHALL BE AS FOLLOWS:
VITAL SHALL GENERATE FOR R2 PRODUCT REVENUES PER QUARTER
OF * (SUCH QUARTERLY AMOUNT BEING THE "GUARANTEED MINIMUM"); PROVIDED THAT ANY
PRODUCT REVENUES THAT VITAL GENERATES FOR R2, INCLUDING PRODUCT REVENUES RELATED
TO THE LN 1000 VERSION OF THE R2 LUNG CAD PRODUCT,
BETWEEN THE EFFECTIVE DATE
AND JUNE 30, 2005 SHALL COUNT AGAINST THE APPLICABLE MINIMUM FOR THE FIRST
QUARTER OF THE INITIAL PERIOD ; AND
(II) SUBSEQUENT TO THE INITIAL PERIOD AND SUBJECT TO THE PROVISIONS OF
SUBSECTION (III) BELOW, THE APPLICABLE MINIMUMS PER QUARTER FOR THE REMAINDER OF
THE TERM OF THE AGREEMENT (THE "SUBSEQUENT PERIOD") SHALL BE EQUAL TO THE
APPLICABLE MINIMUM OF THE IMMEDIATELY PRECEDING QUARTER UNLESS THE PRODUCT
REVENUES GENERATED BY VITAL FOR R2 DURING THE PRECEDING QUARTER FELL BELOW THE
APPLICABLE MINIMUM FOR THAT QUARTER.
IN SUCH EVENT, THE APPLICABLE MINIMUM FOR
THE CURRENT QUARTER SHALL BE CALCULATED AS FOLLOWS:
THE LOWER OF (A) THE
APPLICABLE MINIMUM OF THE PRECEDING QUARTER MULTIPLIED BY THE PERCENT BY WHICH
THE PRODUCT REVENUES IN THE PRECEDING QUARTER FELL BELOW THAT QUARTER'S
APPLICABLE MINIMUM, UP TO A MAXIMUM DECLINE IN PERCENTAGE EACH QUARTER OF
*; OR
(B) * TIMES THE PRODUCT REVENUES GENERATED BY R2 DURING THE PRECEDING QUARTER
THROUGH ALL OTHER SALES, MARKETING AND DISTRIBUTION CHANNELS EXCLUDING REVENUES
GENERATED FROM CUSTOMERS UNDER THIS AGREEMENT (THE "NON-VITAL PRODUCT
REVENUES").
IF DURING THE SUBSEQUENT PERIOD, PRODUCT REVENUES FOR A QUARTER
EXCEED THE ORIGINAL GUARANTEED MINIMUM AMOUNT, THEN THE APPLICABLE MINIMUM FOR
THE NEXT QUARTER WILL EITHER REMAIN UNCHANGED OR, IF THE APPLICABLE MINIMUM FOR
THAT QUARTER HAD BEEN REDUCED PER THE FORMULA SET FORTH ABOVE, THEN THE
APPLICABLE MINIMUM WILL RESET TO THE GUARANTEED MINIMUM AMOUNT.
SUBSEQUENT
QUARTERS WILL THEN BE AGAIN ADJUSTED AS SET FORTH IN THIS SUBSECTION (II) AND IN
SUBSECTION (III) BELOW.
(III) AT THE END OF EVERY FOURTH QUARTER DURING THE TERM OF THIS AGREEMENT, THE
PARTIES WILL EVALUATE VITAL'S PERFORMANCE DURING THOSE PAST FOUR (4) QUARTERS
AND WHETHER IN AGGREGATE VITAL HAS EXCEEDED THE GUARANTEED MINIMUMS FOR THE PAST
FOUR (4) QUARTERS (SUCH AGGREGATE EXCESS AMOUNT BEING THE "AGGREGATE EXCESS")
AND WILL SET THE GUARANTEED MINIMUMS FOR THE SUBSEQUENT FOUR (4) QUARTERS.
IF
VITAL HAS EXCEEDED THE TOTAL GUARANTEED MINIMUM AMOUNT (MEANING WITHOUT TAKING
INTO ACCOUNT ADJUSTMENTS TO THE APPLICABLE MINIMUMS PER SUBSECTION (II) ABOVE),
FOR THOSE PAST FOUR (4) QUARTERS, IN AGGREGATE, THEN THE APPLICABLE MINIMUMS