Common use of Bad Debt Clause in Contracts

Bad Debt. If, after exercising good faith, commercially reasonable collection efforts for at least two Calendar Quarters after the Calendar Quarter in which Net Sales are made for which Licensee is unable to collect any amount that it has billed or invoiced with respect to such Net Sales for which it has already paid royalties under Sections 4.5.1 or 4.5.2, Licensee shall be entitled to deduct the amount of such royalties with respect to such uncollected amount from the royalty payments due under Sections 4.5.1 and 4.5.2 in the next succeeding (third) Calendar Quarter, which deduction shall be set forth in the corresponding report under Section 5.1 below. If, at any time after such deduction Licensee does collect on the Net Sales for which such deduction was made, such collected amount shall be included as Net Sales in the Calendar Quarter in which they are collected and Licensee shall pay Harvard royalties thereon accordingly.