Audit rights

Rights to access and analyze books and accounts of the other party to an agreement

Rights to access and analyze books and accounts of the other party to an agreement.

This right is usually inserted into an agreement to allow the licensor to review the performance and accuracy of the licensees records of product sales and payment such as royalties due from such sales.

It is normal to have a audit rights clause in an agreement, and should be accepted by parties to an agreement. However, the audit rights should normally be restricted to access to books and records relating to the rights granted under the agreement, limited in frequency, and at the expense of the licensor.

In the event of discovery of over or under payments by one party to the other, a number of penalties may be applied in addition to the recover of the gains/losses. Penalties would normally include payment of the legal and audit expenses of the offended party.

Disputes would normally be resolved through agreed procedures so as to avoid unessecary litigation that may harm the future of the agreement between the parties.

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Clause: Audit Rights.

5.8.1 WYETH shall have the right, at its own expense, to access the books and records of ACCESS and its Affiliates as may be reasonably necessary to verify the accuracy of the labor costs and Material costs referred to in Section 5.2. Such access shall be conducted after thirty (30) days' prior written notice to ACCESS and during ordinary business hours, will be conducted in a manner that is not disruptive to ACCESS's operations, and shall not be more frequent than once per Contract Year or in respect of any Contract Year ending not more than twenty-four (24) months prior to the date of such notice. Subject to Section 5.8.3, if such independent certified public accountant's report shows any overpayment by WYETH, ACCESS shall remit to WYETH within thirty (30) days after ACCESS's receipt of such report, (a) the amount of such overpayment, and (b) if such overpayment exceeds five percent (5%) of the total amount owed for the period then being audited, the reasonable fees and expenses of any independent accountant performing the audit on behalf of WYETH. Subject to Section 5.8.3, if such independent certified public accountant's report shows any underpayment by WYETH, WYETH shall pay to ACCESS within thirty (30) days after WYETH's receipt of such report, the amount of such underpayment. Any audit or inspection conducted under this Agreement by WYETH or its agents or contractors will be subject to the confidentiality provisions of this Agreement, and WYETH will be responsible for compliance with such confidentiality provisions by such agents or contractors.

5.8.2 WYETH shall maintain books of account with respect to its sales of the Product in each country in the Territory. ACCESS shall have the right, not more than once during each calendar year, to have an independent accountant selected and retained by ACCESS to inspect and examine such books of WYETH during regular business hours for the purpose of verifying the statements of the aggregate Net Sales resulting from sales of Product and determining the correctness of the Royalties paid. Subject to Section 5.8.3, if such independent certified public accountant's report shows any underpayment by WYETH, WYETH shall pay to ACCESS within thirty (30) days after WYETH's receipt of such report, (a) the amount of such underpayment, and (b) if such underpayment exceeds five percent (5%) of the total amount owed for the period then being audited, the reasonable fees and expenses of any independent accountant performing the audit on behalf of ACCESS. Subject to Section 5.8.3, if such independent certified public accountant's report shows any overpayment by WYETH, ACCESS shall remit to WYETH within thirty (30) days after ACCESS's receipt of such report, the amount of such overpayment. Any audit or inspection conducted under this Agreement by ACCESS or its agents or contractors will be subject to the confidentiality provisions of this Agreement, and ACCESS will be responsible for compliance with such confidentiality provisions by such agents or contractors.

5.8.3 If any dispute arises under this Section 5.8 between the Parties relating to overpayments or underpayments, and the Parties cannot resolve such dispute within thirty (30) days of a written request by either Party to the other Party, the Parties shall hold a meeting, attended by the Chief Executive Officer or President of each party (or their respective designees), to attempt in good faith to negotiate a resolution of the dispute. If, within sixty (60) days after such meeting request, the Parties have not succeeded in negotiating a resolution of the dispute, either Party may pursue any other available remedy, including, upon prior written notice to the other Party, instituting legal action.

-- License and Supply agreement between Access and Wyeth, January 2004

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