Common use of Reporting Audits Clause in Contracts

Reporting Audits. (i) Purchaser shall keep and maintain, and shall require that its Affiliates (including the Company) and any Contingent Payment Obligor or other Selling Party, keep and maintain, for the period required under applicable Laws, but in no event less than [***] years from the end of the Calendar Quarter to which they pertain, complete and accurate books, ledgers, and other records of Purchaser or its Affiliates (including the Company) or applicable Contingent Payment Obligor or other Selling Party, as the case may be, with respect to each Product (collectively, “Purchaser Records”), as necessary to enable (A) Purchaser to provide the Reports pursuant to Section 2.07(j), and (B) Seller to perform an audit as contemplated by this Section 2.07(j). (ii) From and after the Closing Date and for so long as the Contingent Payments may become payable, Purchaser shall provide, in accordance with Section 11.04, Seller, on a [***] basis by the [***] day following the end of each [***] period following such initial [***] anniversary, with reasonably detailed written reports, on a country-by-country (if applicable) and on an aggregate basis, of the status of activities of any Contingent Payment Obligor or other Selling Party reasonably pertinent to the Contingent Payments and diligence and other obligations of Purchaser under Section 2.07 and any material developments (including commencement of IND-enabling studies) which would reasonably be expected to lead to filing of an IND with respect to any Developed Product or Excluded Product (each such report, a “Status Report”). Each Status Report shall be in a form proposed by Purchaser and reasonably acceptable to Seller. (iii) From and after the date of the First Commercial Sale of a Product, Purchaser shall, or shall cause the Company to (A) within [***] days following the end of each Calendar Quarter, provide to Seller a report, on a country-by-country and on an aggregate basis (a “Net Sales Report”, and together with the Status Reports, the “Reports”) of (1) the number of Products sold during such period, (2) the calculation of Net Sales and any ROW Transaction Revenue for such period (including a reasonably detailed breakdown of any deductions), (3) any Milestone Payment owed to Seller in accordance with this Agreement for the period covered by such Report, (4) any Additional Consideration Payment owed to Seller in accordance with this Agreement for the period covered by such Report, including the applicable rate set forth in Section 2.07(e)(i) and reasonable details of any reductions in accordance with Section 2.07(e)(v) applied by Purchaser in respect thereof, (5) any ROW Additional Consideration Payment owed to Seller in accordance with this Agreement for the period covered by such Report, including the applicable rate set forth in Section 2.07(f)(i) and any reductions in accordance with Section 2.07(f)(v) applied by Purchaser in respect thereof, and (6) any ROW Transaction Revenue; and (B) make any Contingent Payments owed to Seller hereunder in accordance with such report in arrears, concurrently with the delivery of such Net Sales Report and in accordance with Section 2.08. Each Net Sales Report shall be in a form proposed by Purchaser and reasonably acceptable to Seller. (iv) Upon not more than [***] calendar days’ prior written notice from Seller, Purchaser shall permit access during normal business hours to the Purchaser Records to be examined by certified public accountants at an independent accounting firm of international standing appointed by Seller and reasonably acceptable to Purchaser, for the purpose of verifying the Reports or the Contingent Payments payable to Seller, for a period covering not more than the [***] years prior to the date of request; provided that no period shall be subject to inspection under this Section 2.07(j) more than once for the same purpose. Such audit shall not be performed more frequently than [***] each Calendar Year; provided, that the foregoing shall not prevent Seller from conducting discovery, or making document requests, in connection with a bona fide dispute under this Agreement. The auditor will execute a reasonable written confidentiality agreement with Purchaser and will disclose to Seller only such information as is reasonably necessary to provide Seller with information regarding any actual or potential discrepancies between (A) amounts reported and actually paid (and the corresponding information provided in any Report) and (B) amounts payable under this Agreement, and reasonable support therefor. The auditor will send a copy of the final report to Purchaser at the same time it is sent to Seller. The report sent to both Parties will include the methodology and calculations used to determine the results. Any fees or expenses payable to an independent accounting firm in connection with such examination shall be paid by Seller, except if the results of the audit, as determined by the auditor, reveals any underreporting of Net Sales of Products or underpayment of any Contingent Payment under this Agreement of 5% or more in any reporting period, in which case the reasonable out-of-pocket fees, costs, and expenses related to such audit, including those of the independent accounting firm, shall be paid by Purchaser. If the audit discloses an overpayment by Purchaser, then Purchaser will deduct the amount of such overpayment from amounts otherwise owed to Seller under this Agreement, unless no further payments are due hereunder, in which case the amount of such overpayment shall be refunded by Seller to Purchaser. If the audit discloses any underpayment by Purchaser, then the amount of such underpayment shall be transmitted to Seller within [***] Business Days, together with any applicable interest pursuant to Section 2.10. Notwithstanding the foregoing, Seller shall not be responsible for any costs or expenses incurred by Purchaser in connection with any such audit. (v) Within [***] calendar days after delivery of a Report, if Seller in good faith requests a telephonic meeting with representatives of Purchaser or any of Purchaser’s applicable Affiliates to discuss such Report, Purchaser shall make available for such meeting at least one employee with operating management responsibility for the activities of Purchaser or any such Affiliate related to the contents of such Report. (vi) All Purchaser Records and information provided to Seller or any of its Representatives pursuant to this Section 2.07(j), whether written or oral, shall be confidential information of Purchaser and be held in confidence by such Person except as permitted by Section 6.03; provided, that Seller (A) may disclose such information on a confidential basis (1) as required by Law, and (2) to its Representatives who have a need to know such information and who are under an obligation of confidentiality and non-use consistent with the Seller’s obligation hereunder, and (B) shall use such information solely to assess Purchaser’s compliance with the terms and conditions of this Agreement, including the value of, the progress towards, and the probability of, achieving the Contingent Payments.

Reporting Audits. (ia) Purchaser The provisions of this Section 5 shall keep and maintain, and shall require that its Affiliates (including be effective only following the Company) and any Contingent Payment Obligor or other Selling Party, keep and maintain, for the period required under applicable Laws, but in no event less than [***] years from the end termination of the Calendar Quarter Agreement to which they pertain, complete this Exhibit is attached and accurate books, ledgers, and other records of Purchaser or its Affiliates (including the Company) or applicable Contingent Payment Obligor or other Selling Party, as the case may be, with respect to each Product (collectively, “Purchaser Records”), as necessary to enable (A) Purchaser to provide the Reports pursuant to Section 2.07(j), and (B) Seller to perform an audit as contemplated by this Section 2.07(j). (ii) From and after the Closing Date then only if and for so long as Manager is entitled, pursuant to the Contingent Payments may become payable, Purchaser shall provide, in accordance with Section 11.04, Seller, on a [***] basis by the [***] day following the end terms of each [***] period following such initial [***] anniversary, with reasonably detailed written reports, on a country-by-country (if applicable) and on an aggregate basis, Article VI of the status Agreement to which this Exhibit is attached, to receive Incentive Compensation pursuant to the terms of activities the Agreement; provided, however, that the provisions of this Section 5 shall also be effective for the duration of any Contingent Payment Obligor or other Selling Party reasonably pertinent period during the term of the Agreement that Manager does not have access to all of the Contingent Payments reports and diligence and other obligations of Purchaser under information specified in Section 2.07 and any material developments (including commencement of IND-enabling studies5(b) which would reasonably be expected to lead to filing of an IND with respect to any Developed Product or Excluded Product (each such report, a “Status Report”). Each Status Report shall be in a form proposed by Purchaser and reasonably acceptable to Sellerbelow. (b) Owner shall deliver to Manager copies of the following at substantially the same time they are delivered to Owner’s mortgage lender (or any Unaffiliated Mezzanine Lender) or the JV Members: monthly and quarterly financial reports, annual audited financial statements, balance sheets and statements of operations, statements of Members’ capital and statement of cash flow, and business plans and budgets that have been adopted by Owner and any modifications thereto that have been adopted by Owner, which information shall be sufficient to track loan draws and payments, and dates of capital contributions and Distributions. Such reporting shall include (i) the information relating to Excluded Payments specified in Section 2(b) above; (ii) a calculation of all Distributions made during the reporting period in question; (iii) From only if and after to the date extent any of the First Commercial Sale of a Productfollowing is otherwise prepared and presented to the JV’s Executive Committee or other governing body: traffic, Purchaser shall, or shall cause the Company to (A) within [***] days following the end of each Calendar Quarter, provide to Seller a report, on a country-by-country and on an aggregate basis (a “Net Sales Report”sales, and together closing reports by neighborhood and overall community, and builder product reports (by neighborhood), inclusive of total number of homes, floor plans, square footage, and price; and (iv) copies of any final, signed third party reports that have been commissioned by and delivered to Owner by such third parties and which have been shared with Owner’s mortgage lender or the Status ReportsJV Members. For avoidance of doubt, it is agreed that Owner shall have no obligation to deliver to Manager any drafts or alternative iterations of business plans, budgets, cash flow models and the “Reports”like unless and until they have been adopted by Owner. If any Organizational Documents are amended Owner shall notify Manager as provided in Section 2(f) of above. Not more than one (1) time during any calendar year, Manager shall have the number of Products sold during such periodright, upon fifteen (215) the calculation of Net Sales and any ROW Transaction Revenue for such period (including a reasonably detailed breakdown of any deductions), (3) any Milestone Payment owed to Seller in accordance with this Agreement for the period covered by such Report, (4) any Additional Consideration Payment owed to Seller in accordance with this Agreement for the period covered by such Report, including the applicable rate set forth in Section 2.07(e)(i) and reasonable details of any reductions in accordance with Section 2.07(e)(v) applied by Purchaser in respect thereof, (5) any ROW Additional Consideration Payment owed to Seller in accordance with this Agreement for the period covered by such Report, including the applicable rate set forth in Section 2.07(f)(i) and any reductions in accordance with Section 2.07(f)(v) applied by Purchaser in respect thereof, and (6) any ROW Transaction Revenue; and (B) make any Contingent Payments owed to Seller hereunder in accordance with such report in arrears, concurrently with the delivery of such Net Sales Report and in accordance with Section 2.08. Each Net Sales Report shall be in a form proposed by Purchaser and reasonably acceptable to Seller. (iv) Upon not more than [***] calendar days’ prior written notice from Sellerto Owner and at Manager’s sole cost and expense, Purchaser to audit Owner’s books and records at the place where such books and records are kept, provided that such audit shall permit access during normal business hours be limited to the Purchaser Records information contained in the reports required to be examined provided by certified public accountants at an independent accounting firm of international standing appointed by Seller Owner to Manager pursuant to this Exhibit and reasonably acceptable to Purchaser, for the purpose of verifying the Reports or the Contingent Payments payable to Seller, for a period covering not more than the [***] years prior to the date of request; provided that no period shall be subject to inspection under this Section 2.07(j) more than once for the same purpose. Such such audit shall not be performed more frequently than [***] each Calendar Year; provided, that the foregoing of Owner’s books and records generally. Owner shall not prevent Seller from conducting discovery, or making document requests, in connection reasonably cooperate with a bona fide dispute under this Agreement. The Manager and Manager’s auditor will execute a reasonable written confidentiality agreement with Purchaser and will disclose to Seller only such information as is reasonably necessary to provide Seller with information regarding any actual or potential discrepancies between (A) amounts reported and actually paid (and the corresponding information provided in any Report) and (B) amounts payable under this Agreement, and reasonable support therefor. The auditor will send a copy of the final report to Purchaser at the same time it is sent to Seller. The report sent to both Parties will include the methodology and calculations used to determine the results. Any fees or expenses payable to an independent accounting firm in connection with such examination shall be paid by Seller, except if the results of the audit, as determined by the auditor, reveals any underreporting of Net Sales of Products or underpayment of any Contingent Payment under this Agreement of 5% or more in any reporting period, in which case the reasonable out-of-pocket fees, costs, and expenses related to such audit, including those of the independent accounting firm, shall be paid by Purchaser. If the audit discloses an overpayment by Purchaser, then Purchaser will deduct the amount of such overpayment from amounts otherwise owed to Seller under this Agreement, unless no further payments are due hereunder, in which case the amount of such overpayment shall be refunded by Seller to Purchaser. If the audit discloses any underpayment by Purchaser, then the amount of such underpayment shall be transmitted to Seller within [***] Business Days, together with any applicable interest pursuant to Section 2.10. Notwithstanding the foregoing, Seller shall not be responsible for any costs or expenses incurred by Purchaser in connection with any such audit. Owner acknowledges and agrees that an action for damages is inadequate to compensate Manager for a breach of the provisions of Section 5(b) and, accordingly, Manager shall have the right, without the requirement of posting any bond, to bring an action or proceeding for specific performance of the provisions of Section 5(b). (vc) Within [***] calendar days after delivery of a ReportManager agrees and acknowledges that all business plans, if Seller budgets, cash flow models and any other projections, estimates or other forward looking information (collectively, “Forward Looking Materials”) delivered to Manager shall be delivered for informational purposes only and shall not constitute any representation, warranty or covenant by Owner as to any matters contained in good faith requests a telephonic meeting with representatives of Purchaser any Forward Looking Materials and in no event whatsoever shall Owner have any liability whatsoever to Manager or any other Person by reason of Purchaserprojections, estimates, data or other information contained in any Forward Looking Materials, including by reason of any deviation (whether or not material) of the actual performance of Owner’s applicable Affiliates to discuss such Reportbusiness from that projected in any Forward Looking Materials, Purchaser shall make available regardless of the reason for such meeting at least one employee with operating management responsibility for the activities of Purchaser or any such Affiliate related to the contents of such Report. (vi) All Purchaser Records and information provided to Seller or any of its Representatives pursuant to this Section 2.07(j), whether written or oral, shall be confidential information of Purchaser and be held in confidence by such Person except as permitted by Section 6.03; provided, that Seller (A) may disclose such information on a confidential basis (1) as required by Lawdeviations, and (2) to its Representatives who have a need to know such information Manager hereby waives and who are under an obligation of confidentiality releases any and non-use consistent with the Seller’s obligation hereunder, and (B) shall use such information solely to assess Purchaser’s compliance with the terms and conditions of this Agreement, including the value of, the progress towards, and the probability of, achieving the Contingent Paymentsall claims against Owner based thereon.