Common use of Reports and Audits of Licensee's Net Sales Clause in Contracts

Reports and Audits of Licensee's Net Sales. a. Licensee agrees that, within sixty (60) days after the end of each quarter, in each and every calendar year, commencing with the Licensee's obligation to make royalty payments, Licensee will furnish to Licensor written reports specifying the Licensee's Net Sales during the preceding quarter (the "Licensee Quarterly Reports"). Such reports shall provide adequate details to allow Licensor to reasonably determine that its business with Licensee has been accurately reported by Licensee's financial system. b. Licensee agrees to have its auditors verify in writing the accuracy of the Licensee's Quarterly Reports for each calendar year, which written verification is to be submitted to Licensor no later than ninety (90) days after the end of each calendar year (the "Licensee's Auditor's Verification"). c. Licensee agrees to allow an independent certified public accountant or other audit professional selected by Licensor to audit and analyze Licensee's accounting records during regular business hours to determine the accuracy of Licensee's Quarterly Reports (an "Independent Licensee Audit"). Such audits shall not be requested by Licensor more than twice per calendar year, may be conducted only upon ten (10) business dates written notice to Licensee, and must be conducted so as not to interfere unreasonably with Licensee's business activities. d. The Independent Licensee Audit shall be at the expense of Licensor, unless a variation or error is revealed by the Independent Licensee Audit that exceeds five percent (5%) of the Net Sales for the quarter in which the error occurs, whereupon the Licensee shall pay all costs of the Independent Licensee Audit. e. If Licensor fails to request an Independent Licensee Audit within two years after receipt of the Licensee's Auditor's Verification then the Licensee's Auditor's Verification shall be conclusively determinative of the Net Sales for that calendar year for the purposes of calculating royalties due Licensor pursuant to this Article 9, and Licensor may not thereafter dispute the accuracy of the Net Sales figure reported by Licensee and verified by Licensee's Auditor's Verification.