EXPENSES AND PAYMENTS ON A
COUNTRY-BY-COUNTRY BASIS UNDER THIS AGREEMENT AND SUCH RECORDS SHALL BE OPEN
DURING REASONABLE BUSINESS HOURS FOR A PERIOD OF THREE (3) YEARS FROM CREATION
OF INDIVIDUAL RECORDS FOR EXAMINATION AT VALENTIS' EXPENSE FROM TIME TO TIME BY
AN INDEPENDENT CERTIFIED PUBLIC ACCOUNTING FIRM SELECTED BY VALENTIS, OR
VALENTIS' INTERNAL ACCOUNTANTS UNLESS SCHERING OBJECTS TO THE USE OF SUCH
INTERNAL ACCOUNTANTS, FOR THE SOLE PURPOSE OF VERIFYING FOR VALENTIS THE
CORRECTNESS OF CALCULATIONS AND CLASSIFICATIONS OF SUCH REVENUES, COSTS,
EXPENSES OR PAYMENTS MADE UNDER THIS AGREEMENT.
EACH PARTY SHALL BEAR ITS OWN
COSTS RELATED TO SUCH AUDIT; PROVIDED THAT, FOR ANY UNDERPAYMENTS GREATER THAN
FIVE (5) PERCENT BY SCHERING, SCHERING SHALL PAY VALENTIS THE AMOUNT OF
UNDERPAYMENT, INTEREST AS PROVIDED FOR IN SECTION 15.3 FROM THE TIME THE AMOUNT
WAS DUE AND VALENTIS' OUT-OF-POCKET EXPENSES.
FOR ANY UNDERPAYMENTS LESS THAN
FIVE (5) PERCENT BY SCHERING FOUND UNDER THIS SECTION, SCHERING SHALL PAY
VALENTIS THE AMOUNT OF UNDERPAYMENT PLUS INTEREST.
ANY OVERPAYMENTS BY SCHERING
WILL BE REFUNDED TO SCHERING OR CREDITED TO FUTURE ROYALTIES, AT SCHERING'S
ELECTION.
ANY RECORDS OR ACCOUNTING INFORMATION RECEIVED FROM THE OTHER PARTY
SHALL BE CONFIDENTIAL INFORMATION FOR THE PURPOSES OF ARTICLE 20.
RESULTS OF
ANY AUDIT SHALL BE PROVIDED TO BOTH PARTIES AND SHALL BE CONFIDENTIAL
INFORMATION FOR THE PURPOSES OF ARTICLE 20.
15.5.2
AUDIT DISAGREEMENT. IF THERE IS A DISPUTE BETWEEN THE PARTIES
FOLLOWING ANY AUDIT PERFORMED PURSUANT TO SECTION 15.5.1, EITHER PARTY MAY REFER
THE ISSUE (AN "AUDIT DISAGREEMENT") TO AN INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANT FOR RESOLUTION.
IN THE EVENT AN AUDIT DISAGREEMENT IS SUBMITTED FOR
RESOLUTION BY EITHER PARTY, THE PARTIES SHALL COMPLY WITH THE FOLLOWING
PROCEDURES:
(I) THE PARTY SUBMITTING THE AUDIT DISAGREEMENT FOR RESOLUTION
SHALL PROVIDE WRITTEN NOTICE TO THE OTHER PARTY THAT IT IS INVOKING THE
PROCEDURES OF THIS SECTION 15.5.2.
(II) WITHIN THIRTY (30) BUSINESS DAYS OF THE
GIVING OF SUCH NOTICE, THE PARTIES SHALL JOINTLY SELECT A RECOGNIZED
INTERNATIONAL ACCOUNTING FIRM TO ACT AS AN INDEPENDENT EXPERT TO RESOLVE SUCH
AUDIT DISAGREEMENT.
(III) THE AUDIT DISAGREEMENT SUBMITTED FOR RESOLUTION SHALL
BE DESCRIBED BY THE PARTIES TO THE INDEPENDENT EXPERT, WHICH DESCRIPTION MAY BE
IN WRITTEN OR ORAL FORM, WITHIN TEN (10) BUSINESS DAYS OF THE SELECTION OF SUCH
INDEPENDENT EXPERT.
(IV) THE INDEPENDENT EXPERT SHALL RENDER A DECISION ON THE
MATTER AS SOON AS PRACTICABLE.
(V) THE DECISION OF THE INDEPENDENT EXPERT SHALL
BE FINAL AND BINDING UNLESS SUCH AUDIT DISAGREEMENT INVOLVES ALLEGED FRAUD,
BREACH
26
of this Agreement or construction or interpretation of any of the terms and
conditions thereof.
(vi) All fees and expenses of the independent expert,
including any Third Party support staff or other costs incurred with respect to
carrying out the procedures specified at the direction of the independent expert
in connection with such Audit Disagreement, shall be borne by each Party in
inverse proportion to the disputed amounts awarded to the Party by the
independent expert through such decision (e.g. Valentis disputes $100, the
independent expert awards