Common use of Financial Audits Clause in Contracts

Financial Audits. Upon the written request of Lilly and not more than [***] in each Calendar Year, Spruce shall permit an independent certified public accounting firm of nationally recognized standing selected by Lilly and reasonably acceptable to Spruce, at Lilly’s expense, to have access during normal business hours, on at least [***] prior written notice, to such of the records of Spruce as may be reasonably necessary to verify the accuracy of the royalty reports hereunder for any Calendar Year ending not more than [***] prior to the date of such request. Spruce may require such accounting firm to sign a reasonable confidentiality agreement with Spruce. Any given period may not be audited more than [***]. At Spruce’s request, Lilly may consider in good faith, at its sole discretion and choice, the use of Spruce’s then current external auditor to perform such audit. The accounting firm shall disclose to Lilly and Spruce only whether the royalty reports are correct or incorrect and the specific details concerning any discrepancies. No other information shall be provided to Lilly. This right to audit shall remain in effect throughout the Term and for a period of [***] after the Term. If such accounting firm identifies a discrepancy made during such period, Spruce shall pay Lilly the amount of the discrepancy within [***] of the date Lilly delivers to Spruce such accounting firm’s written report so concluding, or as otherwise agreed upon by the Parties. The fees charged by such accounting firm shall be paid by Lilly unless the underpayment exceeded the greater of A) [***] of the amount owed by Spruce to Lilly for such Calendar Year or B) [***], in which case, the accounting firm’s fee to conduct such audit shall be borne by Spruce. Spruce shall pay interest on any underpayment as the rate set forth in Article 4.9. Spruce shall include in each sublicense granted by it pursuant to this Agreement a provision requiring the Sublicensee to allow Spruce’s independent nationally recognized certified public accounting firm to have access during normal business hours, on at least [***] prior written notice, to such of the records of the Sublicensee as may be reasonable necessary to verify the accuracy of the royalty reports hereunder for any Calendar Year ending not more than [***] prior to the date of such request. At Lilly’s request, Spruce shall initiate an audit of any Sublicensee with an independent nationally recognized certified public accounting firm, acceptable to Lilly, at Spruce’s expense. Prior to initiating any such audit, Spruce shall submit the accounting firms Sublicensee planned audit program to Lilly for review and approval. Lilly shall treat all financial information subject to review as Spruce’s Confidential Information in accordance with the confidentiality and non-use provisions of this Agreement, and shall cause its accounting firms to enter into an acceptable confidentiality agreement with Spruce, its Affiliate or Sublicensee, as applicable, obligating them to retain all such information in confidence pursuant to such confidentiality agreement.

Financial Audits. Upon Auxilium shall keep complete and accurate records of the Net Sales of the Product, and any other reimbursable expenses. GSK shall have the right, at GSK’s expense, through an independent certified public accountant or like person reasonably acceptable to Auxilium, upon execution of a confidentiality agreement, to examine such records during regular business hours upon reasonable written request notice during the Term of Lilly this Agreement and any period during which a Tail Payment is due to GSK and for two (2) years thereafter; provided, however, that (a) such examination shall not take place more often than [**] per [**] and shall not cover such records for more than that portion of the year in which the audit takes place and the two (2) preceding years (but not for any period prior to the Effective Date or with respect to any period that has previously been audited), and (b) such accountant shall report to GSK only such information as is required to be disclosed under this Agreement and in a summary fashion as is necessary to report such Third Party’s conclusions. All such information disclosed or generated by the auditor shall be deemed Confidential Information of Auxilium. Subject to Section 4.3, any adjustments required as a result of overpayments or underpayments identified through GSK’s exercise of audit rights shall be made by subtracting or adding, as appropriate, amounts from or to the next Promotional Payment or Tail Payment in accordance with Section 4.1 and Section 4.2 or, if no further Promotional Payments or Tail Payments are due, by payment to GSK after identification of such adjustment within sixty (60) days of Auxilium’s receipt of a written invoice from GSK. All costs and expenses incurred in connection with performing audits under this Section 8.3 shall be paid by GSK, provided, however, Auxilium shall reimburse GSK for reasonable out-of-pocket costs and expenses in the event the audit reveals an error of overstatement or understatement equal to or exceeding [**] in each Calendar the numbers reported in any Year. In the event that a Party disputes an invoice or other payment obligation under this Agreement, Spruce such Party shall permit an independent certified public accounting firm of nationally recognized standing selected by Lilly and reasonably acceptable to Spruce, at Lilly’s expense, to have access during normal business hours, on at least [***] prior written notice, to such of the records of Spruce as may be reasonably necessary to verify the accuracy of the royalty reports hereunder for any Calendar Year ending not more than [***] prior to the date of such request. Spruce may require such accounting firm to sign a reasonable confidentiality agreement with Spruce. Any given period may not be audited more than [***]. At Spruce’s request, Lilly may consider in good faith, at its sole discretion and choice, the use of Spruce’s then current external auditor to perform such audit. The accounting firm shall disclose to Lilly and Spruce only whether the royalty reports are correct or incorrect and the specific details concerning any discrepancies. No other information shall be provided to Lilly. This right to audit shall remain in effect throughout the Term and for a period of [***] after the Term. If such accounting firm identifies a discrepancy made during such period, Spruce shall timely pay Lilly the amount of the discrepancy within [***] of invoice or other payment obligation that is not in dispute, and the date Lilly delivers to Spruce Parties shall resolve such accounting firm’s written report so concluding, or as otherwise agreed upon by the Parties. The fees charged by such accounting firm shall be paid by Lilly unless the underpayment exceeded the greater of A) [***] of the amount owed by Spruce to Lilly for such Calendar Year or B) [***], in which case, the accounting firm’s fee to conduct such audit shall be borne by Spruce. Spruce shall pay interest on any underpayment as the rate set forth in Article 4.9. Spruce shall include in each sublicense granted by it pursuant to this Agreement a provision requiring the Sublicensee to allow Spruce’s independent nationally recognized certified public accounting firm to have access during normal business hours, on at least [***] prior written notice, to such of the records of the Sublicensee as may be reasonable necessary to verify the accuracy of the royalty reports hereunder for any Calendar Year ending not more than [***] prior to the date of such request. At Lilly’s request, Spruce shall initiate an audit of any Sublicensee with an independent nationally recognized certified public accounting firm, acceptable to Lilly, at Spruce’s expense. Prior to initiating any such audit, Spruce shall submit the accounting firms Sublicensee planned audit program to Lilly for review and approval. Lilly shall treat all financial information subject to review as Spruce’s Confidential Information dispute in accordance with the confidentiality Article 17 and non-use provisions neither Party shall be deemed to be in breach of this Agreement, and shall cause its accounting firms to enter into an acceptable confidentiality agreement with Spruce, its Affiliate or Sublicensee, as applicable, obligating them to retain all Agreement during the pendency of such information in confidence pursuant to such confidentiality agreementdispute.

Financial Audits. Upon (a) Each Party (the written request of Lilly and not more than [***] in each Calendar Year, Spruce “Audited Party”) shall permit an independent certified public accounting firm of nationally recognized standing selected by Lilly the other Party (the “Verifying Party”) and reasonably acceptable to Sprucethe Audited Party, at Lilly’s expensewhich acceptance shall not be unreasonably withheld or delayed, to have access at mutually agreeable dates and during normal business hours, on at least [***] prior written notice, hours of the Audited Party to such of the records of Spruce as may be reasonably necessary to verify the accuracy of the royalty reports hereunder for any Calendar Year ending Audited Party’s payment obligations as set forth in the Agreement. All such verifications shall be conducted at the expense of the Verifying Party and not more than [*** in each calendar year. The Audited Party shall be provided with at least *** advance notice of such audit. (b) In the event such audit concludes that adjustments should be made in the Verifying Party’s favor, then any appropriate payments (plus accrued interest at a rate announced by the Bank of America (or any successor) as its prime rate in effect on the date that such payment was first due plus *** percent (***] prior to %)) shall be paid by the date of such request. Spruce may require such accounting firm to sign a reasonable confidentiality agreement with Spruce. Any given period may not be audited more than [Audited Party within ***]. At Spruce’s request, Lilly may consider in good faith, at its sole discretion and choice, the use of Spruce’s then current external auditor to perform such audit. The accounting firm shall disclose to Lilly and Spruce only whether the royalty reports are correct or incorrect and the specific details concerning any discrepancies. No other information shall be provided to Lilly. This right to audit shall remain in effect throughout the Term and for a period of [***] after the Term. If such accounting firm identifies a discrepancy made during such period, Spruce shall pay Lilly the amount of the discrepancy within [***] * of the date Lilly delivers to Spruce such the Audited Party receives the Verifying Party’s accounting firm’s written report so concluding, or unless the Audited Party shall have a good faith dispute as otherwise agreed upon by to the Partiesconclusions set forth in such written report, in which case the Audited Party shall provide written notice to the Verifying Party within such *** period of the nature of its disagreement with such written report. Any undisputed amounts shall be paid within the *** period set forth above. (c) The Parties shall thereafter attempt in good faith to resolve such dispute with respect to disputed amounts. Any disputes that the Parties are unable to resolve through good faith efforts shall be resolved in accordance with Article 14 of the Agreement. The Audited Party shall be required to make the payment (plus interest) pursuant to subsection (b) above only if the dispute is resolved in favor of the Verifying Party. (d) The fees charged by such accounting firm engaged in any audit shall be paid by Lilly the Verifying Party unless such audit discloses that adjustments in favor of the underpayment exceeded Verifying Party for the period are greater of Athan (i) [$*** and (ii) an amount equal to *** percent (***] %) or more of the aggregate amount owed paid or payable by Spruce the Audited Party to Lilly for such Calendar Year or B) [***]the Verifying Party during the audited period, in which case, case the accounting firm’s fee to conduct such audit shall be borne by Spruce. Spruce Audited Party shall pay interest on any underpayment as the rate set forth in Article 4.9. Spruce shall include in each sublicense granted reasonable documented fees and expenses charged by it pursuant to this Agreement a provision requiring the Sublicensee to allow Spruce’s independent nationally recognized certified public accounting firm to have access during normal business hours, on at least [***] prior written notice, to such of the records of the Sublicensee as may be reasonable necessary to verify the accuracy of the royalty reports hereunder for any Calendar Year ending not more than [***] prior to the date of such request. At Lilly’s request, Spruce shall initiate an audit of any Sublicensee with an independent nationally recognized certified public accounting firm, acceptable to Lilly, at Spruce’s expense. Prior to initiating any after receipt of the xxxx/invoice for such audit. (e) The Parties agree that, Spruce shall submit except for information that belongs to the accounting firms Sublicensee planned Verifying Party, all information disclosed by the Audited Party to the Verifying Party in the course of such audit program to Lilly for review and approval. Lilly shall treat all financial information subject to review as Spruce’s is Confidential Information in accordance with of the confidentiality and non-use provisions of this AgreementAudited Party, and that the Verifying Party shall cause its accounting firms to enter into an acceptable confidentiality agreement with Spruce, its Affiliate or Sublicensee, as applicable, obligating them firm to retain all such information in confidence pursuant subject to such the confidentiality agreementrestrictions of Article 12 of the Agreement.

Financial Audits. Upon (a) Each Party (the written request of Lilly and not more than [***] in each Calendar Year, Spruce “Audited Party”) shall permit an independent certified public accounting firm of nationally recognized standing selected by Lilly the other Party (the “Verifying Party”) and reasonably acceptable to Sprucethe Audited Party, at Lilly’s expensewhich acceptance shall not be unreasonably withheld or delayed, to have access at mutually agreeable dates and during normal business hours, on at least [***] prior written notice, hours of the Audited Party to such of the records of Spruce as may be reasonably necessary to verify the accuracy of the royalty reports hereunder for any Calendar Year ending Audited Party’s payment obligations as set forth in the Agreement. All such verifications shall be conducted at the expense of the Verifying Party and not more than [*** in each calendar year. The Audited Party shall be provided with at least *** (***] prior to ) days advance notice of such audit. (b) In the event such audit concludes that adjustments should be made in the Verifying Party’s favor, then any appropriate payments (plus accrued interest at a rate announced by the Bank of America (or any successor) as its prime rate in effect on the date of that such request. Spruce may require such accounting firm to sign a reasonable confidentiality agreement with Spruce. Any given period may not be audited more than [payment was first due plus *** percent (***]. At Spruce’s request, Lilly may consider in good faith, at its sole discretion and choice, the use of Spruce’s then current external auditor to perform such audit. The accounting firm shall disclose to Lilly and Spruce only whether the royalty reports are correct or incorrect and the specific details concerning any discrepancies. No other information %)) shall be provided to Lilly. This right to audit shall remain in effect throughout paid by the Term and for a period of [Audited Party within ***] after the Term. If such accounting firm identifies a discrepancy made during such period, Spruce shall pay Lilly the amount of the discrepancy within [***] * Business Days of the date Lilly delivers to Spruce such the Audited Party receives the Verifying Party’s accounting firm’s written report so concluding, or unless the Audited Party shall have a good faith dispute as otherwise agreed upon by to the Partiesconclusions set forth in such written report, in which case the Audited Party shall provide written notice to the Verifying Party within such *** Business Day period of the nature of its disagreement with such written report. Any undisputed amounts shall be paid within the *** Business Day period set forth above. (c) The Parties shall thereafter attempt in good faith to resolve such dispute with respect to disputed amounts. Any disputes that the Parties are unable to resolve through good faith efforts shall be resolved in accordance with Article 14 of the Agreement. The Audited Party shall be required to make the payment (plus interest) pursuant to subsection (b) above only if the dispute is resolved in favor of the Verifying Party. (d) The fees charged by such accounting firm engaged in any audit shall be paid by Lilly the Verifying Party unless such audit discloses that adjustments in favor of the underpayment exceeded Verifying Party for the period are greater of Athan (i) [$*** and (ii) an amount equal to *** percent (***] %) or more of the aggregate amount owed paid or payable by Spruce the Audited Party to Lilly for such Calendar Year or B) [***]the Verifying Party during the audited period, in which case, case the accounting firm’s fee to conduct such audit shall be borne by Spruce. Spruce Audited Party shall pay interest on any underpayment as the rate set forth in Article 4.9. Spruce shall include in each sublicense granted reasonable documented fees and expenses charged by it pursuant to this Agreement a provision requiring the Sublicensee to allow Spruce’s independent nationally recognized certified public accounting firm to have access during normal business hours, on at least [***] prior written notice, to such of the records of the Sublicensee as may be reasonable necessary to verify the accuracy of the royalty reports hereunder for any Calendar Year ending not more than [***] prior to the date of such request. At Lilly’s request, Spruce shall initiate an audit of any Sublicensee with an independent nationally recognized certified public accounting firm, acceptable to Lilly, at Spruce’s expense. Prior to initiating any after receipt of the xxxx/invoice for such audit. (e) The Parties agree that, Spruce shall submit except for information that belongs to the accounting firms Sublicensee planned Verifying Party, all information disclosed by the Audited Party to the Verifying Party in the course of such audit program to Lilly for review and approval. Lilly shall treat all financial information subject to review as Spruce’s is Confidential Information in accordance with of the confidentiality and non-use provisions of this AgreementAudited Party, and that the Verifying Party shall cause its accounting firms to enter into an acceptable confidentiality agreement with Spruce, its Affiliate or Sublicensee, as applicable, obligating them firm to retain all such information in confidence pursuant subject to such the confidentiality agreementrestrictions of Article 12 of the Agreement.