3.2, AND SUCH
FAILURE CONTINUES FOR THIRTY (30) DAYS AFTER LICENSOR NOTIFIES LICENSEE THEREOF
IN WRITING,
THE LICENSES GRANTED
UNDER SECTION 2 SHALL TERMINATE IMMEDIATELY AND ALL RIGHTS AND INTERESTS GRANTED
THEREIN SHALL REVERT BACK TO LICENSOR.
THE PARTIES SHALL TAKE ANY AND ALL
NECESSARY ACTIONS AND EXECUTE ALL DOCUMENTS NECESSARY TO ENSURE THAT THE INTENT
OF THIS SECTION IS ENFORCED.
3.4 ROYALTY OBLIGATION AND CONDITIONAL TRANSFER OF LICENSED TECHNOLOGY.
THE
ROYALTIES AGREED TO HEREUNDER SHALL BE PAID UNTIL THE EARLIER OF THE DATE ON
WHICH LICENSEE HAS PAID LICENSOR AN AGGREGATE OF FOUR MILLION FIVE HUNDRED
THOUSAND U.S. DOLLARS ($4,500,000) OR THE FIFTH ANNIVERSARY OF EFFECTIVE DATE.
("TOTAL ROYALTY").
IF LICENSEE PAYS LICENSOR THE TOTAL ROYALTY, LICENSOR SHALL
ASSIGN AND TRANSFER TO LICENSEE ALL OF LICENSOR'S RIGHTS, TITLE AND INTERESTS IN
AND TO THE LICENSED TECHNOLOGY.
THE PARTIES SHALL TAKE ANY AND ALL NECESSARY
ACTIONS AND EXECUTE ALL DOCUMENTS NECESSARY TO ENSURE THE INTENT OF THIS SECTION
IS ENFORCED.
3.5 PAYMENT TERMS.
THE ROYALTIES DUE HEREUNDER SHALL BE PAID ON A SEMI ANNUAL
BASIS ("PAYMENT PERIOD") COMMENCING SIX (6) MONTHS FROM THE EFFECTIVE DATE.
WITHIN THIRTY (30) DAYS AFTER THE END OF EACH PAYMENT PERIOD, LICENSEE:
(I) SHALL PAY ALL ROYALTIES SET FORTH IN THIS SECTION 3 ACCRUED AND PAYABLE FOR
SUCH PERIOD, AND
(II) FURNISH LICENSOR WITH A ROYALTY REPORT ALONG WITH A WRITTEN STATEMENT
CERTIFIED BY AN OFFICER OF LICENSEE (A) STATING THAT THE ROYALTY REPORT IS TRUE
AND ACCURATE, AND (B) SPECIFYING THE TOTAL ROYALTIES PAYABLE TO LICENSOR FOR
SUCH PERIOD AND PROVIDING THE BASIS FOR THE CALCULATION OF SUCH ROYALTIES.
ALL PAYMENTS DUE TO LICENSOR SHALL BE MADE SOLELY IN U.S. DOLLARS IN IMMEDIATELY
AVAILABLE FUNDS, VIA WIRE TRANSFER TO SUCH ACCOUNT AS IS DESIGNATED BY LICENSOR
IN WRITING TO LICENSEE.
LATE PAYMENTS SHALL ACCRUE INTEREST FROM THE DATE DUE
UNTIL THE DATE PAID AT A RATE OF ONE PERCENT (1%) PER MONTH, OR THE MAXIMUM RATE
ALLOWED UNDER APPLICABLE LAW, WHICHEVER IS LESS.
LICENSEE SHALL MAKE NO OFFSET
FOR ANY AMOUNTS DUE TO LICENSOR REGARDLESS OF THE JUSTIFICATION FOR SUCH
INTENDED OFFSET.
3.6 RIGHT OF AUDIT.
DURING THE TERM AND FOR THREE (3) YEARS AFTER THE
EXPIRATION AND TERMINATION OF THIS AGREEMENT FOR ANY REASON (THE "AUDIT
PERIOD"), LICENSEE SHALL KEEP COMPLETE, TRUE AND ACCURATE RECORDS CONTAINING ALL
INVOICES AND OTHER DATA RELATED TO THE COMPUTATION AND VERIFICATION OF THE
ROYALTIES TO BE PAID UNDER SECTION 3 AND ANY OTHER AMOUNTS TO BE PAID TO
LICENSOR, AND (B) THE BASIS OF INFORMATION PROVIDED IN THE ROYALTY REPORT OR ANY
STATEMENTS PROVIDED BY LICENSEE TO LICENSOR PURSUANT TO THIS AGREEMENT.
DURING
THE AUDIT PERIOD LICENSEE SHALL PERMIT LICENSOR OR ITS DESIGNEES OR AGENTS,
AT LICENSOR'S EXPENSE AND UPON TEN (10) DAYS PRIOR WRITTEN NOTICE, TO INSPECT
AND MAKE COPIES OF SUCH RECORDS FOR THE SOLE PURPOSE OF VERIFYING THE ACCURACY
OF THE ROYALTIES AND OTHER PAYMENTS MADE BY LICENSEE UNDER THIS AGREEMENT.
LICENSEE SHALL ITSELF, AND SHALL CAUSE ITS ACCOUNTANTS TO, DILIGENTLY COOPERATE
WITH