EXCLUSIVE LICENSE AGREEMENT

 

<PAGE>

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY

BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND

EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS

AMENDED.

 

 

                                                                   Exhibit 10.17

 

                           EXCLUSIVE LICENSE AGREEMENT

 

      THIS AGREEMENT made as of September 5th, 2003.

 

  BETWEEN:

 

      MOLECULAR INSIGHT PHARMACEUTICALS, INC. F/K/A BIOSTREAM, INC.

           a corporation incorporated under the laws of the State of

      Massachusetts, and having a place of business at 160 Second Street,

                        Cambridge, MA, (the "Licensee")

 

AND:

 

                       THE UNIVERSITY OF WESTERN ONTARIO,

               a corporation under the Universities Act (Ontario)

                               (the "University")

 

  WHEREAS:

 

A)     the University is the owner of certain Technology (as defined herein)

      relating to the University's Invention Numbers 01-003 and 02-018 known as:

      "Polymer Precursors of Radiolabeled Compounds and Methods of Making and

      Using the Same" and "Polymer-Supported Propenyl Mesylates as Precursors

      for the Radiolabelling of Amines, Sulfides and Ethers" respectively, and

      has the authority and capacity to grant licenses to the Technology;

 

B)     the University wishes to have the Technology developed and commercialized

      to benefit the public and is willing to grant a license to any underlying

       Patent Rights thereto; and

 

C)     the Licensee wishes to obtain from the University and the University has

      agreed to grant a license to the Licensee to commercially exploit the

      Technology on the terms set out.

 

NOW THEREFORE in consideration of the premises and of the mutual covenants set

forth herein, the parties hereto agree as follows:

 

ARTICLE 1 - DEFINITIONS

 

1.1    For purposes of this Agreement, the following words and phrases shall have

      the following meanings:

 

      (a)    "Business Day" means every day other than Saturday, Sunday, and

            statutory holidays in the Province of Ontario or the Commonwealth of

            Massachusetts;

 

                                                                    Page 1 of 27

<PAGE>

 

      (b)    "Confidential Information" means scientific, technical and/or

            business information (including written descriptions, drawings,

            samples, compositions, formulae, visual demonstrations, prototypes

            and other data) which is disclosed by one party (the "Discloser") to

            the other party (the "Recipient") and which is in each case marked

            or identified (either in writing or orally) as confidential at the

            time of disclosure.

 

      (c)    "Effective Date" means the date on which this Agreement shall come

            into effect, which shall be the 5th day of September, 2003;

 

      (d)    "Field of Use" means all uses of the Technology;

 

      (e)    "Net Revenue" means all revenues and receipts directly or indirectly

            receivable by the Licensee and, where sublicensing is permitted

            hereunder, its sub-licensees or payable to the Licensee and its

            sub-licensees, from third party use, sale, distribution, leasing or

            sublicensing of Licensed Products and/or the use of Licensed

            Processes, calculated on the basis of the Licensee's fiscal year, or

            part thereof, less the following amounts relating to such sales: (i)

            discounts allowed in amounts that are reasonable and customary in

            the trade; (ii) actual freight and insurance costs incurred in

            transporting Licensed Products to such purchasers; (iii) sales, use,

            value-added and other direct taxes incurred in respect of sale of

            Licensed Products; (iv) customs duties, surcharges and other

            governmental charges incurred in connection with the export or

            import of Licensed Products; and (v) amounts credited or allowed on

            returns. No deductions shall be made for commissions or fees paid to

            persons whether independent sales agents, or are employed by the

            Licensee or its sub-licensee, or for other similar costs.

            Notwithstanding anything in this Agreement to the contrary, revenues

            and receipts shall be considered directly or indirectly receivable

            by Licensee when the Licensee receives such amounts owed to it;

            provided, however, that the Licensee has exercised commercially

            reasonable efforts to collect all amounts owed to it by its

            sub-licensees or other third parties in connection with the licenses

            granted hereunder in a timely manner. Licensed Products shall be

            deemed to have been sold and included in the Net Revenue of the

            Licensee and sub-licensee when invoiced, or if not invoiced, when

            delivered or paid for, whichever is the first to occur. Under no

             circumstances shall Net Revenue include any grant money or other

            funding received by the Licensee as re-imbursement of expenses

            associated with the research and development of the Technology by

            the Licensee.

 

      (f)    "Licensee" is the party of the first part and includes any

            corporation which controls, is controlled by, or is under common

            control with the Licensee; for this purpose, "control" means the

            direct or indirect ownership of voting shares carrying more than 50%

            of the votes for the election of directors;

 

      (g)    "Licensee Improvement" means any technology, whether patentable or

            not, that is developed by or under the direction of the Licensee and

            whose use would infringe one or more claims or rights under the

            Patent Rights or whose development has relied upon the Technology;

 

                                                                    Page 2 of 27

<PAGE>

 

      (h)    "Licensed Process" means any process which relies in whole or in

            part upon the Technology or which is covered in whole or in part by

            an issued, unexpired claim or pending claim contained in the Patent

            Rights;

 

      (i)    "Licensed Product" means any product or part thereof which:

 

            (i)    relies in whole or in part, upon the Technology, or is

                  utilized to practise a Licensed Process; or

 

            (ii)   is produced or processed by using a Licensed Process; or

 

            (iii) is covered in whole or in part by an issued, unexpired claim

                  or a pending claim contained in the Patent Rights in the

                  country in which any such product or part thereof is made,

                   used or sold.

 

      (j)    "Materials" means any substance, product or compound (including all

            cell lines, vectors, plasmids, clones, micro organisms, anti-bodies,

            antigens, test plates, reagents, chemicals, compounds, physical

            samples, models and specimens) delivered by the University to the

            Licensee, and the Materials specifically described in Schedule "C",

            and all progeny, mutants and derivatives thereof supplied by the

             University;

 

      (k)    "Milestone Payments" has the meaning set forth in Section 5.2;

 

      (l)    "Patent Rights" means any of the following intellectual property of

            the University:

 

            (i)    patents and/or patent applications listed in Schedule "A";

 

            (ii)   patents issued from the applications listed in Schedule "A",

                  or from divisions or continuations of such applications, or

                  any re-issues of such patents; or

 

            (iii) such other statutory or common law protection as may be

                  available to the University in connection with such patents or

                  patent applications listed on Schedule A.

 

      (m)    "Royalty Due Date" means the date 30 days following the last day of

            March, June, September and December of each and every year during

            which this Agreement remains in full force and effect, commencing on

            January 30, 2004;

 

      (n)    "Territory" means worldwide;

 

      (o)    Technology" means any and all knowledge, know-how, information,

            software and/or techniques invented, developed or acquired or being

            invented, developed and/or acquired prior to or after the Effective

            Date by the University, and any Materials related thereto, all of

            which are related to the Patent Rights, University Improvements or

            Licensee Improvements as applicable, provided that for the purposes

            of determining University

 

                                                                     Page 3 of 27

 

<PAGE>

 

            ownership of Technology, Licensee Improvements developed solely by

            the Licensee shall be excluded.

 

      (p)    "University Improvement" means any technology, whether patentable or

            not, that is created by the University under the research program of

            Dr. Duncan Hunter or whose use would infringe one or more claims or

            rights under the Patent Rights; and

 

      (q)    "Trade-marks" means any mark, trademark, service mark, logo,

            insignia, seal, design or other symbol or device used by the

            University or Licensee and associated with or referring to either of

            the University or Licensee, as the case may be, or any of its

            facilities, property or products.

 

ARTICLE 2 - GRANT OF RIGHTS AND TERM

 

2.1    LICENSE. Subject to the terms and conditions of this Agreement, the

      University hereby grants to the Licensee the right and license, within the

      Field of Use and in the Territory, to use, modify, improve, sublicense or

      otherwise exploit, for commercial and non-commercial purposes, the

      Technology, the Patent Rights, and/or University Improvements as

      applicable, and, to make, have made, use, lease, sell, distribute and

      import Licensed Products and to use, modify, improve, sublicense and

      otherwise exploit, for commercial and non-commercial purposes, the

      Licensed Processes, until the end of the earlier of 20 years from the

      Effective Date of this Agreement or the term for which a patent or patents

      under the Patent Rights are granted, and in the latter instance, on a

      country by country basis, unless this Agreement is sooner terminated

      according to the terms hereof. Notwithstanding anything to the contrary,

      the license granted hereunder shall not be construed to confer any rights

      or benefits upon the Licensee by implication, or otherwise, as to any

      patents, technology or rights not specifically included in the Technology.

 

2.2    PERIOD OF EXCLUSIVITY. In order to establish a period of exclusivity for

      the Licensee, the University hereby agrees that it shall not grant any

      other license to make, have made, use, lease, sell and distribute the

      Technology, the Patent Rights, the University Improvements or the Licensed

      Products or to utilize Licensed Processes in the Territory for the Field

      of Use during the period of time commencing the Effective Date and

      terminating upon expiration of any patent issued on a country by country

      basis.

 

2.3    RIGHTS RETAINED BY UNIVERSITY. Nothing in this Agreement shall affect the

      University's right to use the Technology or to use and distribute the

      Materials to third parties for research, teaching and other non-commercial

      uses and the Licensee hereby grants back to the University rights to use

      the Patent Rights, whether for the University's own purposes or in

      conjunction with other similar research institutions, for research,

      teaching and other non-commercial applications, including technical

      services and industrially sponsored research. This grant to the University

      expressly excludes any rights to use the Patent Rights alone or in

      conjunction with others, for commercial purposes.

 

                                                                    Page 4 of 27

 

<PAGE>

 

2.4    OWNERSHIP, IMPROVEMENTS. The parties acknowledge that the University shall

      retain ownership of the Technology excluding all Licensee Improvements.

      The Licensee shall own all Licensee Improvements, provided that the

      Licensee hereby grants to the University a perpetual, non-exclusive

      royalty-free right to use all Licensee Improvements solely for research,

      teaching and other non-commercial uses in accordance with the rights

      granted under Section 2.3.

 

2.5    REPORT OF IMPROVEMENTS. From time to time and in any event at least

      annually:

 

       (a)    the Licensee shall disclose in writing to the University the details

            of all Licensee Improvements; and

 

      (b)    the University shall disclose in writing to the Licensee the details

            of all University Improvements, for the purposes of causing same to

            be part of the grant of rights in the Technology hereunder.

 

2.6    RESTRICTION ON DISCLOSURE; USE OF TRADE-MARKS. Neither party shall

      disclose any of the financial terms and conditions of this Agreement but

       shall be entitled to reveal the parties and the nature of the license

      granted. Neither Party shall use any of the other's Trade-marks or make

      reference to the other for any advertising or publicity purposes, without

      the prior written consent of that party. Notwithstanding the foregoing,

      the parties (and their representatives) may disclose to any person or

      entity the tax treatment and tax structure of the transactions

      contemplated by this Agreement and any materials (including opinions and

      other tax analyses) provided to them relating to the tax treatment and tax

      structure of the transactions contemplated herein.

 

ARTICLE 3 - SUBLICENSES

 

3.1    SUBLICENSES. The Licensee shall have the right to grant sublicenses of the

      rights, privileges and licenses granted hereunder within the Territory

      during the exclusive period of this Agreement in accordance with the

      provisions of Section 3.2. Upon any termination of this Agreement, and at

      the election of the University, any sub-licensees' rights shall also

      terminate.

 

3.2    COVENANTS OF SUB-LICENSEES.

 

      (a)    Licensee covenants and agrees that it shall cause any sublicense

            agreement entered into by it to contain, on the part of such

            sub-licensee, covenants in favour of the University with respect to

            the obligations set forth in Sections 3.1, 6.1 and Articles 10 and

            12 herein, and that to the extent there exists an inconsistency

             between the sublicense agreement and this Agreement, any such

            inconsistency or conflict will be resolved in favour of this

            Agreement. In granting any sublicense hereunder, the Licensee

            undertakes to observe and perform any obligations of the

            sub-licensee, to intent that none of the rights, entitlements or

            remedies of the University are impaired by the granting of such

            sublicense. The Licensee shall deliver to the University a true copy

            of such sublicense agreement upon execution.

 

                                                                    Page 5 of 27

 

<PAGE>

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY

BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND

EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS

AMENDED.

 

 

      (b)    In addition, all sublicenses shall be subject to the following

            conditions:

 

            (i)    in no event will a sub-licensee be permitted to further

                  sublicense or to assign or transfer any rights which have been

                  granted to it by the Licensee (except to the extent that such

                  assignment is in connection with the sale of all or

                  substantially all of the assets or stock of such sub-licensee

                  or in connection with the merger or similar transaction

                  between such sub-licensee and a third party and University is

                  notified of such assignment); and

 

            (ii)   the Licensee shall not be entitled to receive from any

                  sub-licensee any consideration or matter of value in lieu of

                  cash payments not otherwise part of Net Revenue, in

                  consideration for any sublicense under this Agreement, without

                  the express prior written consent of the University.

 

ARTICLE 4 - LICENSEE'S PERFORMANCE OBLIGATIONS

 

4.1    LICENSEE'S COMMERCIALIZATION DUE DILIGENCE; MILESTONE OBLIGATIONS. The

      Licensee shall use commercially reasonable efforts to bring one or more

      Licensed Products or Licensed Processes to market through a thorough,

      concerted and diligent program for exploitation of the Technology and to

      continue active, diligent marketing efforts for one or more Licensed

      Products or Licensed Processes during the entire period that this

      Agreement is in effect, in order to meet the milestones set out on

      Schedule "D" from time to time.

 

4.2    ACKNOWLEDGEMENT OF EXPERTISE BY LICENSEE. The Licensee covenants and

      agrees that it has the expertise necessary to handle the Technology,

      Materials, the Licensed Products and the Licensed Processes with care and

       without danger to the Licensee, its employees, agents, or the public, and

      to observe and perform the covenants and obligations set out herein.

 

4.3    COMPLIANCE BY LICENSEE WITH LAWS. The Licensee covenants and agrees that

      it will comply with all laws, regulations and ordinances, whether federal,

      provincial, state, municipal or otherwise, as appropriate, with respect to

      the Materials, the Technology, the Licensed Products, the Licensed

      Processes and this Agreement.

 

4.4    FAILURE TO MEET PERFORMANCE REQUIREMENTS. In the event the Licensee fails

      to meet any of the milestones or performance criteria set forth in

      Schedule D, or observe and perform the obligations set forth under any of

      Sections 4.1 or 4.3, such shall constitute a default under this Agreement

      pursuant to Section 13.2 hereof.

 

4.5    NO PRIOR SECURITY INTERESTS. The Licensee covenants that it will not grant

      a security interest in or to the Technology.

 

ARTICLE 5 - FEES, ROYALTIES AND PAYMENTS

 

5.1    INITIAL LICENSE FEE. The Licensee shall pay to the University, an initial

      license fee with respect to the issuance of the license, of Canadian

      $[******]. The said sum shall

 

                                                                     Page 6 of 27

 

<PAGE>

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY

BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND

EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS

AMENDED.

 

 

      be deemed earned and due immediately upon the Effective Date, and shall

      not be refundable to the Licensee in whole or in part under any

      circumstances.

 

5.2    ROYALTY FOR DISCOVERY, RESEARCH AND DEVELOPMENT USES.

 

      (a)     The Licensee shall pay to the University, in advance, an annual fee

            of Canadian $[******] ([***************] dollars) per year for seven

            years commencing on the anniversary of the Effective Date beginning

            one year after the Effective Date, and thereafter on each successive

            anniversary of the Effective Date. The parties are agreed that no

            payment shall be required for that period from the Effective Date to

            the first anniversary thereof; and

 

      (b)    As further consideration for the value of the Technology for

            application as a discovery tool and use as a research and

            development platform by the Licensee ("Research Uses"):

 

            (i)    Licensee shall pay to the University a royalty of [********]

                  percent ([***]%) of the Net Revenue receivable by the Licensee

                  that is attributable to products sold, made, or distributed

                  directly by Licensee to third parties where such products rely

                  upon such Research Uses and which no longer are relying upon

                  the Technology directly;

 

            (ii)   Where Licensee provides Research Uses to third parties on a

                  fee-for-service basis, Licensee shall pay a royalty to the

                  University of [**************] percent ([***]%) of the Net

                  Revenue receivable by the Licensee in connection with such

                  fee-for-service work which relies upon such Research Uses; and

 

            (iii) Where the Licensee has previously provided to third parties

                  Research Uses on a fee-for-service basis and such third party

                  thereafter sells, makes or distributes a product that relies

                  on such Research Uses, the Licensee shall pay to the

                  University a royalty of [********************] ([***]%) of the

                  Net Revenue receivable by the Licensee as a royalty payment

                  from such third party in connection with products which rely

                  upon such Research Uses and which do not require a sublicense

                  of the Technology.

 

5.3    MILESTONE PAYMENTS. The Licensee shall pay to the University milestone

      product development payments with respect to achievement of each of the

      enumerated events arising from the development of each of the Licensed

      Products and/or Licensed Processes, all as set forth in the table below,

      with each payment becoming due and payable on the first date of completion

      for each element of every Class ("Class" means any of Cardiology,

      Oncology, Central Nervous System, Infection, and Vascular Disease) of

      Licensed Product and/or Licensed Process of such milestone, regardless of

      the country in which achievement of such milestone first occurs:

 

<TABLE>

<CAPTION>

                Milestone                    Payment

                ---------                    -------

<S>                                           <C>

Initiation of Phase I Clinical Trial         Canadian $[******]

Completion of Phase II Clinical Trial        Canadian $[******]

Completion of Phase III Clinical Trial       Canadian $[******]

Grant of Regulatory Approval                 Canadian $[******]

</TABLE>

 

                                                                    Page 7 of 27

 

<PAGE>

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY

BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND

EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS

AMENDED.

 

 

      For certainty with respect to milestone product development payments,

      there are four (4) milestones anticipated for each of the five (5)

      Classes.

 

5.4    ANNUAL ROYALTIES AND PAYMENTS. In consideration of the license granted

      hereunder, the Licensee shall pay to the University subject to Section 5.6

      below:

 

      (a)    a royalty of [**************] percent ([***]%) of Net Revenue; For

             greater clarification, on sales between Licensee, and/or its

            Affiliates, sub-licensees or agents for resale purposes, the royalty

            shall be paid only on the resale value by such Affiliate,

            sublicense, or agent. Such royalties shall become due and payable on

            each Royalty Due Date, and shall be calculated with respect to Net

            Revenue for the calendar quarter immediately preceding the month in

            which the applicable Royalty Due Date occurs; and

 

      (b)    in addition to such annual royalties in subsection (a) hereof, [****

            ***********] percent ([***]%) of:

 

            (i)    initial up-front fees, or other consideration (including

                  equity or other participation), or in-kind or non-monetary

                  contribution, if any, receivable by Licensee upon its

                  execution of or pursuant to the terms of any sub-license

                  agreement related to the use of the Technology, Materials,

                  Licensed Products or Licensed Processes; and

 

            (ii)   any payments or other consideration (including equity or other

                  participation), or in-kind or non-monetary contribution

                  receivable by Licensee upon the successful achievement of

                  milestones set forth in, and pursuant to the terms of, any

                  sublicense agreement related to the use of the Technology,

                  Materials, Licensed Products or Licensed Processes. The

                  Licensee shall be entitled to deduct from any of the foregoing

                  consideration received that portion which is a reimbursement

                  of its direct, out-of-pocket costs for research projects

                   funded on behalf of the sub-licensee relating to the

                  Licensee's Improvements after the effective date of the

                  sub-license agreement.

 

      Any payments under this subsection (b) shall be following receipt by the

      Licensee of the fees, consideration, or in-kind or non-monetary

      contribution, provided Licensee has exercised commercially reasonable

      efforts to collect such amount or entitlement owing.

 

      Notwithstanding anything herein to the contrary, the University

      acknowledges and agrees, that it is not entitled to any compensation,

      royalty or payment whatsoever in connection with any payments or other

      consideration (including equity or other participation), with respect to

      third party equity investments in the Licensee which are not directly

      attributable to the sub-licensing of any of the Technology, Materials,

      Licensed Products or Licensed Processes.

 

                                                                     Page 8 of 27

 

<PAGE>

 

5.5    CURRENCY AND PLACE OF PAYMENTS. All payments to be made by the Licensee to

      the University hereunder shall be made in Canadian dollars at London,

      Ontario without deduction of taxes or other fees of any other kind

      whatsoever, which may be imposed by any government, and which taxes or

      fees shall be paid by the Licensee. Where any payment or amount is

      denominated in a currency other than Canadian dollars, it shall be

      converted to the equivalent in Canadian dollars at the rate of exchange

      set by the Bank of Montreal in Toronto, Canada for converting the currency

      of such amount into Canadian dollars, on the last Business Day of the

      reporting period to which such payment relates.

 

5.6    NO DUPLICATION OF PAYMENTS. For clarification, the royalties owed pursuant

      to clauses (b)(i), or (b)(iii) of Section 5.2 and clause (a) of Section

      5.4 are to be independent of each other.

 

ARTICLE 6 - RECORDS AND REPORTING

 

6.1    ACCOUNTING RECORDS. The Licensee shall maintain at its principal place of

      business, separate accounts and records of transactions arising pursuant

      to this Agreement, such accounts and records to be in sufficient detail to

      enable proper returns to be made under this Agreement, and the Licensee

      shall include a similar requirement of its sub-licensees in any sublicense

      agreement.

 

6.2    REPORTS. The Licensee shall deliver to the University by no later than

      each Royalty Due Date, together with the royalty payment required, a

      report (the "Accounting") setting out particulars of the sale,

      distribution, leasing or sublicensing of the Licensed Products and/or

      Licensed Processes as shall be requisite for the payment of royalties,

      including the following:

 

      (a)    the number of Licensed Products sold by Licensee and all

            sub-licensees in each country during the applicable royalty period;

 

      (b)    the gross revenue for Licensed Products charged by Licensee and all

            sub-licensees during the applicable royalty period;

 

      (c)    an accounting for all Licensed Processes used, sold, leased, or, if

            applicable, licensed by the Licensee and all sub-licensees;

 

      (d)     a calculation of Net Revenue in each country including a listing of

            applicable deductions and evidence of the Licensee's payment of

            withholding taxes;

 

      (e)    a listing of additional payments or consideration from sub-licensees

            under Section 5.4(b); and

 

      (f)    total royalties payable on Net Revenue in Canadian dollars, together

            with the exchange rates used for any currency conversion in

            accordance with Section 5.5.

 

      The Licensee shall also provide to the University periodic reports at all

      significant stages and milestones in the development, manufacture and

      sale, distribution,

 

                                                                    Page 9 of 27

 

<PAGE>

 

       leasing or sublicensing of the Licensed Products and/or Licensed

      Processes, including but not limited to, the milestones described in

      Sections 4.1, 4.4 and 5.2, by no later than thirty (30) days following the

      completion of such stage or milestone; such reports shall be in sufficient

      detail to enable the University to assess the status of all required

      regulatory approvals relating to the Licensed Products, and whether the

      Licensee is meeting its obligations under Sections 4.1, 4.4 and 5.2 during

      the term of this Agreement.

 

6.3    GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP). The calculation of

      royalties shall be made in accordance with generally accepted accounting

      principles from time to time approved by the Federal Bureau of Accounting

      Standards applied on a consistent basis with the Licensee's past

      practices. Licensee certifies that its accounting practices comply with

      the Federal Bureau of Accounting Standards.

 

6.4    RETENTION OF ACCOUNTS AND RECORDS. The Licensee shall retain the accounts

      and records referred to in Section 6.1 for at least three (3) years after

      the date upon which they were made.

 

6.5    AUDIT RIGHT. During the term of this Agreement and for one (1) year

      thereafter, the University may at its cost and expense audit or cause to

      be audited, no more than once in any twelve month period, the applicable

      books, records of other relevant materials of the Licensee referable

      hereto, to verify any report rendered hereunder. The audit must be on

      reasonable advance, written notice, and be conducted during normal

      business hours of the Licensee. The Licensee shall furnish such reasonable

      evidence as such representative will deem necessary to verify the

      Accounting and may permit such representative to make copies of or

      extracts from such accounts, records and agreements at the University's

      expense. If the audit reveals an underpayment by the Licensee of three (3)

      percent or more of royalties payable in any fiscal year of the Licensee,

      the Licensee shall pay to the University such deficiency within fifteen

      (15) days of the determination thereof, together with intere