DUE DILIGENCE BY LICENSEE
3.1 Due Diligence by Licensee. Licensee represents and warrants to Research Institute, to induce Research Institute to enter into this Agreement, that Licensee: (a) shall use commercially reasonable efforts to exploit the Licensed Technology, where it is commercially reasonable to do so, so that public utilization and practical application results therefrom; (b) has, or shall obtain within **** after the Effective Date, the expertise necessary to develop, market and sell Licensed Products if commercially reasonable.
3.2 Development Plan. Licensee has provided Research Institute with the development plan attached as Exhibit C describing the steps Licensee agrees to take to develop the Licensed Technology and make and sell Licensed Products in the Field of Use and throughout the Licensed Territory, as may be updated by Licensee from time to time during the Term.
3.3 Development Report. Within **** following the end of each License Year, Licensee shall provide Research Institute with a written development report containing at least the information set forth in Exhibit D, and describing in reasonable detail: (a) as of that reporting period, all development activities for each Licensed Product and the names of all sublicensees, including which are Affiliates; and (b) an updated development plan for the next reporting period which shall, notwithstanding Section 12.3, amend Exhibit C of this Agreement.
3.4 Milestones. Licensee shall achieve the following milestones. Licensee shall promptly notify Research Institute upon the achievement of each of the milestones, identify whether the Licensee or a sublicensee is responsible for the achievement of such milestone and the actual achievement date of such.
3.4.1 Licensee shall market the Licensed Products in the United States upon receiving regulatory approval if commercially reasonable;
3.4.2 Following the first commercial sale of a Licensed Product, Licensee shall satisfy the market demand for such Licensed Product in those countries within the Licensed Territory for which Licensee has obtained regulatory approval for such Licensed Product during the Term if and where commercially reasonable to do so and continue to develop additional Licensed Products and applications within the Field of Use if commercially reasonable.
3.5 Requirements. Licensee’s failure to perform any of its obligations specified in this Article 3, including: (a) perform substantially in accordance with the current development plan as defined in Exhibit C (and any update thereto); or (b) meet each milestone in Section 3.4; in each case of (a) and (b), shall constitute a material breach of this Agreement and Research Institute shall have the right and option at its sole election to terminate this Agreement as provided in Section 11.2.2 in whole or in part, or convert Licensee’s exclusive license to a non-exclusive license with respect to the applicable Licensed Product in the applicable country for which it was finally determined that Licensee had materially breached such diligence obligations hereunder.
3.6 Development Records. Licensee shall maintain documentation evidencing that Licensee is pursuing development of Licensed Products as required herein. Such documentation may include invoices for studies of Licensed Products, laboratory notebooks, internal job cost records, and filings made to the Internal Revenue Department to obtain tax credits, if available, for research and development of Licensed Products. Licensee shall permit Research Institute and/or its representatives to audit the