PARTY UNDER THIS AGREEMENT TO THE
OTHER PARTY ARE NET AMOUNTS AND ARE PAYABLE IN FULL, WITHOUT DEDUCTION FOR TAXES
OR DUTIES OF ANY KIND.
THE PARTIES WILL BE RESPONSIBLE FOR, AND WILL PROMPTLY
PAY, ALL TAXES AND DUTIES OF ANY KIND (INCLUDING, BUT NOT LIMITED TO, SALES, USE
AND WITHHOLDING TAXES) ASSOCIATED WITH THEIR RECEIPT OF LICENSE RIGHTS,
PRODUCTS, OR SERVICES UNDER THIS AGREEMENT, EXCEPT FOR TAXES BASED ON THE OTHER
PARTY'S NET INCOME.
5.
REPORTS; RECORDS.
5.1.
REPORTS.
CEPHEID WILL PROVIDE QUARTERLY REPORTS AND PAYMENT OF
ALL ROYALTIES DUE TO IDI WITHIN FORTY-FIVE (45) DAYS OF THE END OF EACH CALENDAR
QUARTER.
FOR PURPOSES OF ACCOUNTING AND COMPUTING ROYALTIES, SALES OF CEPHEID
SOURCED PRODUCTS BY CEPHEID TO A CEPHEID AFFILIATE FOR RESALE SHALL NOT BE
DEEMED A SALE, BUT SALES OF SUCH PRODUCTS BY SUCH AFFILIATES SHALL BE TREATED AS
A SALE BY CEPHEID.
5.2.
RECORDS; AUDIT.
USING A PARTY'S CUSTOMARY PRACTICES AND
PROCEDURES IN ACCORDANCE WITH APPLICABLE GAAP, EACH PARTY, INCLUDING CEPHEID'S
AFFILIATES AND SUB-DISTRIBUTORS, WILL KEEP AND MAINTAIN PROPER AND COMPLETE
RECORDS AND BOOKS OF ACCOUNT SUFFICIENT IN DETAIL TO ENABLE THE VERIFICATION OF
MONIES SPENT AND RECEIVED BY EACH PARTY, AND MANUFACTURING COST OF AND SUBJECT
ROYALTIES PAID BY EACH PARTY, IN CONNECTION WITH EACH PARTY'S OBLIGATIONS UNDER
THIS AGREEMENT.
WITHOUT LIMITING THE FOREGOING, SUCH RECORDS WILL SHOW THE
MANUFACTURE, SALE, USE, AND OTHER DISPOSITION OF PRODUCTS SOLD OR OTHERWISE
DISPOSED OF UNDER THE LICENSES HEREIN GRANTED.
SUCH RECORDS WILL INCLUDE
GENERAL LEDGER RECORDS SHOWING CASH RECEIPTS AND EXPENSES, AND RECORDS WHICH
INCLUDE PRODUCTION RECORDS, CUSTOMERS, SERIAL NUMBERS AND RELATED INFORMATION IN
SUFFICIENT DETAIL TO ENABLE THE ROYALTIES PAYABLE HEREUNDER TO BE DETERMINED.
THE BOOKS AND RECORDS WILL BE RETAINED FOR A PERIOD OF AT LEAST 6 YEARS AFTER
THE END OF THE PERIOD FOR WHICH SUCH BOOKS AND RECORDS PERTAIN. EACH PARTY WILL
HAVE THE RIGHT FROM TIME TO TIME (NOT TO EXCEED ONCE PER CALENDAR YEAR) DURING
NORMAL BUSINESS HOURS AND UPON FIVE (5) BUSINESS DAYS PRIOR WRITTEN NOTICE, TO
INSPECT IN CONFIDENCE, OR HAVE AN AGENT, ACCOUNTANT OR OTHER REPRESENTATIVE
INSPECT IN CONFIDENCE, SUCH BOOKS AND RECORDS OF THE OTHER PARTY.
THE PARTY
INITIATING THE INSPECTION WILL BEAR THE COSTS THEREOF UNLESS THE INSPECTION
REVEALS A DISCREPANCY UNFAVORABLE TO THAT PARTY OF AT LEAST FIVE PERCENT (5%),
IN WHICH CASE THE OTHER PARTY WILL PAY THE COSTS OF THE INSPECTION.
IF THE
INSPECTION RESULTS IN A FINAL DETERMINATION THAT AMOUNTS HAVE BEEN OVERSTATED OR
UNDERSTATED, THE APPLICABLE AMOUNT WILL BE REFUNDED OR PAID PROMPTLY BY THE
APPROPRIATE PARTY. THE INSPECTING PARTY WILL TREAT ALL INFORMATION LEARNED IN
THE COURSE OF ANY AUDIT OR INSPECTION AS CONFIDENTIAL INFORMATION, AND WILL
MAINTAIN SUCH CONFIDENTIAL INFORMATION IN STRICT CONFIDENCE, EXCEPT TO THE
EXTENT NECESSARY FOR THE PARTY TO REVEAL SUCH INFORMATION IN ORDER TO ENFORCE
ITS RIGHTS UNDER THIS AGREEMENT OR IF DISCLOSURE IS REQUIRED BY LAW AS PROVIDED
FOR IN SECTION 8.6. ANY PUBLIC ACCOUNTING FIRM SHALL SIGN A CUSTOMARY
CONFIDENTIALITY AGREEMENT AS A