Common use of Financial Audits Clause in Contracts

Financial Audits. Lian shall keep or cause to be kept books of account containing all information that may be necessary for the purpose of calculating amounts payable by Lian in connection with this Agreement for a period of [***] Calendar Years following the end of the Calendar Year during which such amounts were payable. Tarsus may appoint an independent public accountant (on a non-contingency basis and reasonably acceptable to Lian; any “Big 4” accountant shall be deemed acceptable to Lian), at Tarsus’s expense and subject to such accountant entering into a confidentiality agreement with Lian, to inspect such books of account in order to verify the calculation of any amounts payable to Tarsus hereunder. Such inspections shall be performed not more frequently than once in any [***] month period and upon reasonable prior notice, and shall be conducted during regular business hours in such a manner as to not unreasonably interfere with Lian’s normal business activities. Tarsus’s accountant may only share with Tarsus the report containing the summary results of its inspection, but not the books of account reviewed by the accountant during the audit, and such report shall constitute Lian’s Confidential Information. If any such inspection reveals that any payment (a) that should have been paid by Lian is greater than those that were actually paid by Lian, then Lian shall promptly pay the underpaid amount to Tarsus or (b) that was actually paid by Lian is greater than those that should have paid by Lian, then Lian shall credit the overpaid amount against future royalty payments to Tarsus. If the payments that should have been paid by Lian are at least [***] greater than those that were actually paid by Lian, then Lian shall also reimburse Tarsus for the reasonable out-of-pocket costs of such inspection.

Financial Audits. Lian Upon the written request of Lilly and not more than [***] in each Calendar Year, Spruce shall keep or cause permit an independent certified public accounting firm of nationally recognized standing selected by Lilly and reasonably acceptable to be kept books Spruce, at Lilly’s expense, to have access during normal business hours, on at least [***] prior written notice, to such of account containing all information that 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 purpose date of calculating amounts payable by Lian 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 connection with this Agreement 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 [***] Calendar Years following after the end Term. If such accounting firm identifies a discrepancy made during such period, Spruce shall pay Lilly the amount of the Calendar Year during which such amounts were payable. Tarsus may appoint an independent public accountant (on a non-contingency basis and reasonably acceptable to Lian; any “Big 4” accountant shall be deemed acceptable to Lian), at Tarsus’s expense and subject to such accountant entering into a confidentiality agreement with Lian, to inspect such books of account in order to verify the calculation of any amounts payable to Tarsus hereunder. Such inspections shall be performed not more frequently than once in any discrepancy within [***] month period and of the date Lilly delivers to Spruce such accounting firm’s written report so concluding, or as otherwise agreed upon reasonable prior notice, and by the Parties. The fees charged by such accounting firm shall be conducted 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 regular business hours in such a manner as to not unreasonably interfere with Lian’s normal business activities. Tarsus’s accountant may only share with Tarsus the report containing the summary results of its inspectionhours, but not the books of account reviewed by the accountant during the audit, and such report shall constitute Lian’s Confidential Information. If any such inspection reveals that any payment (a) that should have been paid by Lian is greater than those that were actually paid by Lian, then Lian shall promptly pay the underpaid amount to Tarsus or (b) that was actually paid by Lian is greater than those that should have paid by Lian, then Lian shall credit the overpaid amount against future royalty payments to Tarsus. If the payments that should have been paid by Lian are on at least [***] greater 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 those that were actually paid by Lian, then Lian shall also reimburse Tarsus for [***] prior to the reasonable out-of-pocket costs date of such inspectionrequest. 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. Lian shall keep or Following Commercial Launch for the Product, upon at least fourteen (14) Business Days written notice and during normal business hours, no more frequently than once per calendar year, BXLS may cause an inspection and/or audit by an independent public accounting firm reasonably acceptable to Reata to be kept made of Reata’s books of account containing all information that may be necessary for the three (3) calendar years prior to the audit for the purpose of calculating amounts payable determining the correctness of Product Payments made under this Agreement. Upon BXLS’s reasonable request not more than once in any calendar year while any Third Party License remains in effect, Reata shall exercise any rights it may have under any Third Party License to cause an inspection and/or audit by Lian an independent Specific terms in connection this Exhibit have been redacted because such terms are both not material and would likely cause competitive harm to the Company if publicly disclosed. These redacted terms have been marked in this Exhibit with three asterisks [***]. public accounting firm to be made of the books of account of any counterparty thereto for the purpose of determining the correctness of Product Payments made under this Agreement and promptly provide BXLS with the results of such inspection and/or audit. and Reata shall include in any such Third Party License provisions allowing Reata (or an independent public accounting firm) reasonable and customary rights to inspect and audit the relevant books of account of such counterparty consistent in scope with the rights granted to BXLS hereunder with respect to Reata’s books and records. All of the expenses of any inspection or audit requested by BXLS hereunder (including the fees and expenses of such independent public accounting firm designated for such purpose) shall be borne by (i) the BXLS, if the independent public accounting firm determines that Product Payments previously paid were incorrect by an amount less than or equal to [***]% of the Product Payments actually paid or (ii) Reata, if the independent public accounting firm determines that Product Payments previously paid were incorrect by an amount greater than [***]% of the Product Payments actually paid. The terms on which any such independent public accounting firm is engaged shall provide that such independent public accounting firm may not disclose the confidential information of Reata or any such counterparty to any Third Party License to BXLS, except to the extent such disclosure is either necessary to determine the correctness of Product Payments or such confidential information otherwise would be included in a period Product Payment report provided pursuant to Section 6.5. All information obtained by BXLS as a result of any such inspection or audit shall be Confidential Information of Reata and the independent public accounting firm shall be considered a Representative of BXLS for purposes of Article 10. Absent manifest error, the financial results of the audit of the independent public accounting firm will be final and non-appealable. Any payment owed by one Party to another as a result of the audit shall be made within [***] Calendar Years following the end of receipt of the Calendar Year during which such amounts were payableaudit report. Tarsus may appoint an independent public accountant (Without limiting the foregoing, Reata shall, on the request of BXLS, provide BXLS with a non-contingency basis copy of the Net Sales provision under any Third Party License and reasonably acceptable supporting financial data provided to Lian; any “Big 4” accountant shall be deemed acceptable Reata that is being used to Lian), at Tarsus’s expense and subject to such accountant entering into a confidentiality agreement with Lian, to inspect such books of account in order to verify determine the calculation of any amounts Product Payments payable to Tarsus hereunder. Such inspections shall be performed not more frequently than once in any [***] month period and upon reasonable prior noticeBXLS, and shall be conducted during regular business hours if BXLS so desires it may challenge whether such provision is commercially reasonable in such a manner as to not unreasonably interfere accordance with Lian’s normal business activities. Tarsus’s accountant may only share with Tarsus the report containing the summary results of its inspection, but not the books of account reviewed by the accountant during the audit, and such report shall constitute Lian’s Confidential Information. If any such inspection reveals that any payment (a) that should have been paid by Lian is greater than those that were actually paid by Lian, then Lian shall promptly pay the underpaid amount to Tarsus or (b) that was actually paid by Lian is greater than those that should have paid by Lian, then Lian shall credit the overpaid amount against future royalty payments to Tarsus. If the payments that should have been paid by Lian are at least [***] greater than those that were actually paid by Lian, then Lian shall also reimburse Tarsus for the reasonable out-of-pocket costs of such inspectiondispute resolution process set forth in Section 15.10.

Financial Audits. Lian shall Licensee will keep or cause full and accurate books and records relating to the performance required of it under this Agreement. Lilly will have the right, during regular business hours and upon reasonable advance notice, to have such books and records of Licensee audited no more than one (1) time per Calendar Year so as to verify the accuracy of the information previously reported to Lilly. Lilly will, for purposes of such audit, utilize only the services of an independent certified public accounting firm selected by Lilly and approved by Licensee, such approval not to be kept books unreasonably withheld. Such audit may cover the two (2) Calendar Years preceding the date of account containing all the request for such audit. Notwithstanding the foregoing, no audit of Licensee pursuant to this Section 2.10 will cover any period of time preceding the Effective Date. Such accountants will keep confidential any information that may obtained during such audit and will, report to Lilly only their conclusions. The cost of such audit will be necessary for the purpose of calculating amounts payable borne by Lian in connection with this Agreement for a period Lilly; however, if such audit reveals an underpayment to Lilly of [***] Calendar Years following or more, the end cost of the Calendar Year during which audit will be borne by Licensee. Within thirty (30) days after both Parties have received a copy of an audit report, Licensee or Lilly, as appropriate, will compensate the other Party for payment errors or omissions revealed by the audit. Licensee will include in all sublicenses granted in accordance herewith, and any other agreements enabling a Third Person to be a Permitted Seller, an audit provision substantially similar to the foregoing requiring such amounts were payablePermitted Seller to keep full and accurate books and records relating to the *** Certain information on this page has been omitted and filed separately with the Commission. Tarsus may appoint Confidential treatment has been requested with respect to the omitted portions. Product and granting Lilly the right to have an independent public accountant (on a non-contingency basis and reasonably acceptable to Lian; any “Big 4” accountant shall be deemed acceptable to Lian), at Tarsus’s expense and subject to such accountant entering into a confidentiality agreement with Lian, to inspect such books accounting firm audit the accuracy of account in order to verify the calculation of any amounts payable to Tarsus hereunder. Such inspections shall be performed not more frequently than once in any [***] month period and upon reasonable prior notice, and shall be conducted during regular business hours in such a manner as to not unreasonably interfere with Lian’s normal business activities. Tarsus’s accountant may only share with Tarsus the report containing the summary results of its inspection, but not the books of account reviewed information reported by the accountant during the audit, and such report shall constitute Lian’s Confidential Information. If any such inspection reveals that any payment (a) that should have been paid by Lian is greater than those that were actually paid by Lian, then Lian shall promptly pay the underpaid amount to Tarsus or (b) that was actually paid by Lian is greater than those that should have paid by Lian, then Lian shall credit the overpaid amount against future royalty payments to Tarsus. If the payments that should have been paid by Lian are at least [***] greater than those that were actually paid by Lian, then Lian shall also reimburse Tarsus for the reasonable out-of-pocket costs of such inspectionsublicensee in connection therewith.