7. DUE DILIGENCE
7.2 Within thirty (30) days of each anniversary of the EFFECTIVE DATE of this Agreement, LICENSEE shall provide a written report to YALE, indicating LICENSEE’s progress and problems to date in the development and commercialization of LICENSED PRODUCTS, and a forecast and schedule of major events required to market the LICENSED PRODUCTS. Such report shall clearly indicate which of LICENSEE’s products are LICENSED PRODUCTS and/or CLINICAL DEVELOPMENT CANDIDATES, as appropriate. Within thirty (30) days following any assignment by LICENSEE pursuant to Article 17.6, the assignee shall provide YALE with an updated and revised copy of the report.
7.3 LICENSEE shall immediately notify YALE if at any time LICENSEE (a) abandons or suspends its research, development or marketing of the LICENSED PRODUCTS and or LICENSED METHODS, or its intent to research, develop and market such products or methods, or (b) fails to comply with its due diligence obligations under this Article for a period exceeding [***] days.
9. REPORTS, RECORDS AND INSPECTIONS
9.1 LICENSEE shall, within thirty (30) days after the calendar year in which NET SALES first occur, and within thirty (30) days after each calendar quarter (March 31, June 30, September 30 and December 31) thereafter, provide YALE with a written report detailing the NET SALES and uses, if any, made by LICENSEE, its SUBLICENSEES and AFFILIATES of LICENSED PRODUCTS and LICENSED METHODS during the preceding calendar quarter and calculating the payments due pursuant to Article 6. NET SALES of LICENSED PRODUCTS or LICENSED METHODS shall be deemed to have occurred on the date of invoice for such LICENSED PRODUCTS or LICENSED METHODS. Each such report must include:
(a) the number of LICENSED PRODUCTS manufactured, sold, leased or otherwise transferred or disposed of, and the amount of LICENSED METHODS sold, by LICENSEE, SUBLICENSEES and AFFILIATES;
(b) a calculation of NET SALES for the applicable reporting period in each country, including the gross invoice prices charged for the LICENSED PRODUCTS and LICENSED METHODS and any permitted deductions made pursuant to Article 2.15 [Net Sales definition];
(c) a calculation of total royalties or other payment due, including any exchange rates used for conversion; and
(d) names and addresses of all SUBLICENSEES and the type and amount of any SUBLICENSE INCOME received from each SUBLICENSEE
9.2 LICENSEE, AFFILIATES and its SUBLICENSEES shall keep and maintain complete and accurate records and books containing an accurate accounting of all data in sufficient detail to enable verification of EARNED ROYALTIES and other payments under this Agreement LICENSEE shall preserve such books and records for three (3) years after the calendar year to which they pertain. Such books and records shall be open to inspection by an independent certified public accountant selected by YALE, at YALE’s expense, during normal business hours at a time reasonably acceptable to LICENSEE, for the purpose of verifying the accuracy of the reports and computations rendered by LICENSEE. Such inspections shall not occur more than once per year. Prior to any such inspection, such accountant shall agree in writing to maintain all information obtained through such inspection as CONFIDENTIAL INFORMATION of LICENSEE in accordance with the terms of this Agreement, and shall not use CONFIDENTIAL INFORMATION of LICENSEE for any purpose other than conducting the inspection. In the event LICENSEE underpaid the amounts due to YALE with respect to the audited period by more than [***], LICENSEE shall pay the reasonable, out–of– pocket cost of such accountant, together with the deficiency not previously paid, within thirty (30) days of receiving notice thereof from YALE.
9.3 Annually, LICENSEE shall provide YALE with LICENSEE’s financial statements for the preceding fiscal year including or a summary of such statements.