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Exhibit 10.12
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (the "Agreement") effective as of March 25, 1999
(the "Effective Date") is by and between Genzyme Corporation, a Massachusetts
corporation having its principal offices at One Kendall Square, Cambridge, MA
02139 ("Genzyme"), through Genzyme's Molecular Oncology Division, and EXACT
Laboratories, Inc., a Delaware corporation having its principal offices at 63
Great Road, Maynard, MA 01754 ("EXACT").
WITNESSETH:
WHEREAS, Genzyme is the licensee of certain patent rights relating to
the Field (as defined herein) under the JHU License Agreement (as defined
herein) and is willing to grant to EXACT a worldwide, nonexclusive,
royalty-bearing sublicense to use such patent rights for the development and
commercialization of Diagnostic Services, Licensed Reagents and Kits (each as
defined herein) in the Field upon the terms and conditions set forth herein; and
WHEREAS, EXACT desires to obtain a worldwide, nonexclusive,
royalty-bearing sublicense to use such patent rights for the development and
commercialization of Diagnostic Services, Licensed Reagents and Kits in the
Field on the terms and conditions set forth herein; and
WHEREAS, Genzyme is willing to grant EXACT such a sublicense on the
terms and conditions set forth herein in light of the relationship between EXACT
and JHU (as defined herein) and the relationship between Genzyme and JHU;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE 1. DEFINITIONS
1.1 "Affiliate" shall mean any corporation or other entity which controls,
is controlled by, or is under common control with EXACT. A corporation
or other entity shall be regarded as in control of another corporation
or entity if it owns or directly or indirectly controls more than fifty
percent (50%) of the voting stock or other ownership interest of the
other corporation or entity, or if it possesses, directly or
indirectly, the power to direct or cause the direction of the
management and policies of the corporation or other entity or the power
to elect or appoint more than fifty percent (50%) of the members of the
governing body of the corporation or other entity.
1.2 "Diagnostic Service(s)" shall mean the performance of laboratory-based
assays covered in whole or in part by a Valid Claim of the Patent
Rights.
1.3 "Field" shall mean the determination, in stool or samples prepared from
stool, of the presence of, absence of or variation(s) within a nucleic
acid of interest, or differences between a nucleic acid of interest and
a reference standard or sample, including but not limited to screening,
diagnosis, prognosis and monitoring tests, for the purpose of detecting
changes associated with colorectal cancer.
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1.4 "First Commercial Sale" shall mean (a) the first performance for
consideration of a Diagnostic Service in the Field or (b) the first
sale for consideration of a Licensed Reagent or Kit for use in the
Field, as applicable. Any performance of a Diagnostic Service or
transfer of Licensed Reagents or Kits by EXACT solely for purposes of
performing Research shall not be deemed to constitute a First
Commercial Sale.
1.5 "Gene Patent Rights" shall mean the United States and foreign patents
and patent applications relating to the APC gene and/or the p53 gene
and licensed (with the right to grant sublicenses) to Genzyme pursuant
to the JHU License Agreement together with patents arising therefrom
and any extensions, registrations, confirmations, reissues, divisions,
continuations or continuations-in-part, re-examinations or renewals
thereof, including without limitation the patents and patent
applications listed in Appendix A hereto (which may be updated from
time to time to include such additional patents and patent application
that may arise therefrom); PROVIDED, HOWEVER, that Gene Patent Rights
expressly excludes any claims of such patents and patent applications
that fall outside of the Field, including, without limitation, claims
to antibodies, to the treatment, prevention or remedying of a gene
deficiency, to purified proteins, or to DNA sequences other than those
sequences that correspond to the p53 gene and the APC gene; PROVIDED
FURTHER that DNA sequences which are (i) immediately adjacent to the
p53 or APC genes and (ii) necessary to the use of the p53 or APC genes,
respectively, in the Field shall be considered within the Gene Patent
Rights.
1.6 "Instrument" shall mean any instrument, apparatus, appliance, automated
system or computer software that is covered in whole or in part by a
Valid Claim of the Patent Rights and is useful or necessary for
performing laboratory-based assays.
1.7 "JHU License Agreement" shall mean the License Agreement dated as of
February 5, 1992 by and between Genzyme (as successor to PharmaGenics,
Inc.), The Johns Hopkins University ("JHU") and Hoffman-La Roche Inc.
("Roche"), as amended from time to time.
1.8 "Kit" shall mean a collection of one or more Reagents, including at
least one Licensed Reagent, packaged in the form of a kit.
1.9 "Licensed Reagent" shall mean any Reagent covered in whole or in part
by a Valid Claim of the Patent Rights.
1.10 "Methodology Patent Rights" shall mean the United States and foreign
patents and patent applications relating to methods of detecting
mammalian nucleic acids isolated from stool specimens and reagents
therefor and licensed (with the right to grant sublicenses) to Genzyme
pursuant to the JHU License Agreement together with patents resulting
therefrom and any extensions, registrations, confirmations, reissues,
divisions, continuations or continuations-in-part, re-examinations or
renewals thereof, including without limitation the patents and patent
application listed in Appendix B hereto (which may be updated from time
to time to include such additional patents and patent applications that
may arise therefrom).
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1.11 (a) "Net Sales" shall mean the adjusted gross sales of Licensed
Reagents and Kits by EXACT LESS [CONFIDENTIAL TREATMENT REQUESTED]/*/
of adjusted gross sales in lieu of items such as custom duties, inbound
transportation, insurance costs, agent's commission, bad debts, etc.
The adjusted gross sales shall mean the actual gross sales price of a
Licensed Reagent or Kit billed by EXACT (not including miscellaneous
items on the invoice such as taxes, etc.) LESS chargebacks, cash
discounts, credits or allowances (not including miscellaneous items
credited such as taxes, etc.) including those incurred or granted on
account of price adjustments, rejections, returns, rebates or recalls
of Licensed Reagents or Kits previously sold. "Net Sales" does not
include "no charge" samples to the extent customary in the trade.
(b) In the event that EXACT decides to sell a Kit which combines
Licensed Reagents with ingredients or components which are not Licensed
Reagents (such other ingredients or components being "Other Items"),
then (i) EXACT shall notify Genzyme in writing of its intent to offer
such combination, (ii) Genzyme and EXACT shall, within thirty (30) days
after Genzyme's receipt of such notification, initiate good-faith
negotiations on the value of the Licensed Reagents which shall be used
as the basis to calculate Net Sales pursuant to this clause (b) and
(iii) if the parties can not reach agreement within thirty (30) days
after the commencement of such negotiations, such dispute shall be
referred to arbitration pursuant to Article 11 hereof. However, in no
event shall the royalty rates on Net Sales be reduced by more than
[CONFIDENTIAL TREATMENT REQUESTED]/*/. The term "Other Items" does not
include solvents, diluents, carriers, excipients, enzymes used in
amplification for diagnostic use, or the like used in formulating a
product.
(c) In the event that a Licensed Reagent or Kit is sold for
non-monetary consideration in addition to or in lieu of money, the
value of such consideration to the extent that it can be reasonably
determined by EXACT shall be added to Net Sales in accordance with
Sections 1.11 (a) and (b) hereof.
(d) No deductions shall be made for commissions paid to individuals
whether they be with independent sales agencies or regularly employed
by EXACT and on its payroll, or for cost of collections.
(e) Net Sales expressly excludes transfers or dispositions of Licensed
Reagents or Kits at cost or less than cost for the sole purpose of
conducting Research.
1.12 (a) "Net Service Revenues" shall mean actual billings by EXACT for the
performance of Diagnostic Services less the following deductions to the
extent that they are applicable and are not already deducted in the
actual billings: (i) discounts allowed and taken, in amounts customary
in the trade; (ii) sales and/or use taxes and/or duties imposed upon
and with specific reference to particular sales.
(b) If a Diagnostic Service(s) is offered in combination with another
diagnostic or other service(s) (such as patient counseling) provided by
EXACT (such other services being referred to as "Other Services" and
such Diagnostic Service(s) and Other Services collectively being
referred to as "Combination Services"), Net Service Revenues for
/*/ [CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN
OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL
SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED.
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purposes of determining royalties on the Diagnostic Service(s) shall be
calculated as provided below:
(i) If the Diagnostic Service(s) and the Other Services are
sold or provided separately, Net Service Revenues shall
be calculated by multiplying the Net Service Revenues of
the Combination Service (as determined in accordance
with Section 1.12(a) above but applied to the
Combination Service), by the fraction A/(A+B), where "A"
is the invoice price of the Diagnostic Service(s) and
"B" is the invoice price of the Other Services in the
Combination Service if sold or provided separately.
(ii) If the Diagnostic Service(s) are sold or provided
separately but the Other Services are not, Net Service
Revenues shall be calculated by multiplying the Net
Service Revenues of the Combination Service (as
determined in accordance with Section 1.12(a) above but
applied to the Combination Service), by the fraction
A/C, where "A" is the invoice price of the Diagnostic
Service(s) and "C" is the invoice price of the
Combination Service.
(iii) If the Diagnostic Service(s) and the Other Services in
the combination are not sold or provided separately, Net
Service Revenues for purpose of determining royalties on
the Diagnostic Service(s) shall be calculated by
multiplying Net Service Revenues of the Combination
Service (as determined in accordance with Section
1.12(a) above but applied to the Combination Service) by
the fraction E/(E+D), where "E" is the value of the
Diagnostic Service(s) and "D" is the reasonably
estimated value (using accepted diagnostic industry
standards) of the Other Services based at least in part
on the value of the other active component or components
used in the Combination Service; provided, that (A)
EXACT shall notify Genzyme in writing of its intent to
offer such Combination Services, (B) Genzyme and EXACT
shall, within thirty (30) days after Genzyme's receipt
of such notification, initiate good-faith negotiations
on the value of the Diagnostic Service(s) and Other
Services which shall be used as the basis to calculate
Net Service Revenues pursuant to this clause (iii) and
(C) if the parties can not reach agreement within thirty
(30) days after the commencement of such negotiations,
such dispute shall be referred to arbitration pursuant
to Article 11 hereof.
(c) In the event that a Diagnostic Service is provided for non-monetary
consideration in addition to or in lieu of money, the value of such
non-monetary consideration to the extent that it can be reasonably
determined by EXACT shall be added to Net Service Revenues in
accordance with Sections 1.12(a) and (b) hereof.
(d) Net Service Revenues expressly excludes the use or performance of
Diagnostic Services at cost or less than cost for the sole purpose of
conducting Research.
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1.13 "Patent Rights" shall mean collectively the Gene Patent Rights and the
Methodology Patent Rights.
1.14 "Reagents" shall mean reagents useful in or necessary to the
performance of laboratory-based assays, whether used individually or
sold or used as one or more component(s) of a kit.
1.15 "Research" shall mean pre-clinical, clinical and regulatory activities
conducted by or on behalf of EXACT to develop and obtain regulatory
approvals of products or services utilizing the Patent Rights licensed
to EXACT hereunder.
1.16 "Valid Claim" shall mean an issued claim of an unexpired patent, or a
claim of a pending patent application, which shall not have been
withdrawn, canceled or disclaimed, or held invalid or unenforceable by
a court of competent jurisdiction in an unappealed or unappealable
decision. Notwithstanding the foregoing to the contrary, a claim of a
pending patent application, divisional application, or
continuation-in-part application, or the foreign equivalents thereof,
shall cease to be a Valid Claim if no patent has issued on such claim
on or prior to the fifth (5th) anniversary of the date of filing such
patent application (or, in the case of a continuation application or
foreign equivalent thereof, the date of filing of the earliest parent
application), provided that such claim shall once again become a Valid
Claim on the issue date of a patent that subsequently issues and
includes such claim.
ARTICLE 2. LICENSE GRANT
2.1 Genzyme hereby grants to EXACT, subject to all the terms and conditions
of this Agreement, a worldwide, nonexclusive right and license (without
the right to grant sublicenses) under the Patent Rights to: (a) use,
offer to sell, sell and practice Diagnostic Services in the Field; (b)
make, have made, use, offer to sell, sell and import Licensed Reagents
in the Field; and (c) make, have made, use, offer to sell, sell and
import Kits in the Field.
2.2 The license granted hereunder shall not extend to Instruments. In the
event that Genzyme becomes aware of any Instruments, Genzyme shall
deliver written notice thereof to EXACT. In the event that after the
Effective Date EXACT decides in good faith to develop Instruments for
use in the Field and delivers written notice of such decision to
Genzyme, Genzyme and EXACT shall, within thirty (30) days after
Genzyme's receipt of such notification from EXACT, enter into good
faith negotiations for a worldwide, non-exclusive license (without the
right to grant sublicenses) to be granted by Genzyme to EXACT under the
Patent Rights to make, use, offer to sell, sell and import Instruments
in the Field. Any such license shall include commercially reasonable
terms and conditions. In the event that Genzyme and EXACT are unable to
reach agreement on the terms of any such license within ninety (90)
days after the date Genzyme and EXACT commence negotiations for such
license, then the dispute shall be immediately referred to one (1)
executive officer of each party, chosen at the sole discretion of that
party, who shall negotiate in good faith with each other to resolve the
dispute during the period ending thirty (30) days after the date of
such referral. If the designated officers of the parties are
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unable to resolve the dispute within such thirty (30) day period, the
dispute shall be referred to arbitration pursuant to Article 11 hereof.
ARTICLE 3. DUE DILIGENCE
3.1 EXACT agrees to use commercially reasonable efforts to make (i)
Diagnostic Services,(ii) Licensed Reagents and (iii) Kits available for
the benefit of the general public consistent with regulatory compliance
and public safety.
3.2 EXACT's material failure to perform in accordance with any subsection
of Section 3.1 above shall be grounds for Genzyme to terminate the
license under Section 2.1. above with respect to Diagnostic Services,
Licensed Reagents or Kits, as applicable, pursuant to Section 7.8
hereof by delivering written notice of its intention to terminate to
EXACT. If EXACT disputes Genzyme's determination, (i) EXACT shall
deliver written notice of such dispute within ten (10) business days
after its receipt of notice from Genzyme of its intent to terminate,
(ii) the matter shall be referred to arbitration pursuant to Article
11hereof and (iii) EXACT's license under Section 2.1 above to the
Diagnostic Services, Licensed Reagents or Kits, as applicable, and
EXACT's obligations with respect thereto shall continue in full force
and effect until the resolution of such arbitration.
3.3 Within thirty (30) days after the date this Agreement is signed on
behalf of EXACT and subsequently no later than May 1 and November 1 of
each year, commencing on November 1, 1999, EXACT shall provide a
written report to Genzyme on its research, development and
commercialization efforts with respect to (i) Diagnostic Services,
(ii)Licensed Reagents and (iii) Kits (each individually), which report
shall cite specific goals and objectives in researching, developing and
commercializing the licensed technology and methodology and progress in
meeting these goals and objectives. If Genzyme does not receive any
such report(s) in a timely manner, it shall notify EXACT of such
delinquency in writing. EXACT shall have thirty (30) days from its
receipt of such notice to provide Genzyme with any and all overdue
report(s). Failure by EXACT to provide such overdue report(s) within
said thirty (30) day period may constitute grounds for termination of
this Agreement by Genzyme as provided for in Section 7.5 hereof;
PROVIDED, HOWEVER, that the number of days elapsed since EXACT first
received notice from Genzyme of the delinquent reports shall be counted
for purposes of determining the sixty (60) day period described in
Section 7.5 hereof.
ARTICLE 4. PAYMENTS
4.1 In partial consideration for the license granted hereunder, and upon
execution of this Agreement, EXACT agrees to pay Genzyme [CONFIDENTIAL
TREATMENT REQUESTED]/*/, which amount shall not be creditable against
any other amounts payable by EXACT to Genzyme hereunder.
4.2 EXACT shall pay to Genzyme during the term of this Agreement a royalty
amounting to (a) [CONFIDENTIAL TREATMENT REQUESTED]/*/of Net Service
Revenues worldwide and (b) [CONFIDENTIAL TREATMENT REQUESTED]/*/of Net
Sales worldwide.
/*/ [CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN
OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL
SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED.
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4.3 (a) EXACT shall pay Genzyme a minimum royalty of [CONFIDENTIAL
TREATMENT REQUESTED]/*/ payable within thirty (30) days of the date
this Agreement is signed on behalf of EXACT for 1999 and on January 1
of each year thereafter with respect to the licenses granted for
Diagnostic Services; PROVIDED, HOWEVER, that the minimum royalty for a
given year shall be creditable against any royalties subsequently due
during said year under Section 4.2.
(b) EXACT shall pay Genzyme a minimum royalty of [CONFIDENTIAL
TREATMENT REQUESTED]/*/ payable on January 1, 2004 and on January 1 of
each year thereafter with respect to the licenses granted for Licensed
Reagents and Kits; PROVIDED, HOWEVER, that the minimum royalty for a
given year shall be creditable against any royalties subsequently due
during said year under Section 4.2.
(c) Waiver or deferral of any minimum royalty payment by Genzyme shall
not be construed as waiver or deferral of any such subsequent payment.
4.4 (a) In the event that the First Commercial Sale of a Diagnostic Service
by EXACT has not occurred within [CONFIDENTIAL TREATMENT
REQUESTED]/*/after the Effective Date, EXACT shall pay Genzyme an
annual maintenance fee of [CONFIDENTIAL TREATMENT REQUESTED]/*/ payable
on each anniversary of the Effective Date commencing with the
[CONFIDENTIAL TREATMENT REQUESTED]/*/ anniversary of the Effective
Date; PROVIDED, HOWEVER, that if EXACT has submitted a BONA FIDE
application to the U.S. Food and Drug Administration or the equivalent
authority at that time ("FDA") to obtain final marketing approval for a
Diagnostic Service within said [CONFIDENTIAL TREATMENT REQUESTED]/*/
period and EXACT's failure to make such First Commercial Sale is due to
delays in obtaining such approval that are caused by the FDA and are
not related to a substantial deficit in said application, then Genzyme
may elect, in its sole discretion, to extend said [CONFIDENTIAL
TREATMENT REQUESTED]/*/ period and shall notify EXACT in writing of any
such determination and election and of the amount of time by which such
period has been extended; PROVIDED FURTHER that if the parties disagree
as to whether said application contained a substantial deficit and the
time for resolution of such deficit, the dispute shall be referred to
arbitration pursuant to Article 11 hereof and, until final resolution
of the dispute, EXACT shall deposit any amounts otherwise due and
payable to Genzyme under this Section 4.4(a) into an escrow account
established by EXACT exclusively for such purpose in a recognized
commercial banking institution reasonably selected by EXACT and
promptly identified by written notice from EXACT to Genzyme. If the
arbitrator resolves the dispute in favor of Genzyme, then the amounts
held in escrow plus all interest accrued thereon shall be promptly paid
to Genzyme in same day funds. Amount payable under this Section 4.4(a)
shall not be creditable against any royalties or other payments due
during said year under this Article 4. Waiver or deferral of any
maintenance fee by Genzyme shall not be construed as waiver or deferral
of any such subsequent payment.
(b) In the event that the First Commercial Sale of a Kit by EXACT has
not occurred within [CONFIDENTIAL TREATMENT REQUESTED]/*/ after the
Effective Date and the license granted pursuant to Section 2.1 (c)
hereof has not been terminated by
/*/ [CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN
OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL
SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED.
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Genzyme pursuant to Section 7.7 hereof, EXACT shall pay Genzyme an
annual maintenance fee of [CONFIDENTIAL TREATMENT REQUESTED]/*/ payable
on each anniversary of the Effective Date commencing with the
[CONFIDENTIAL TREATMENT REQUESTED]/*/ anniversary of the Effective
Date; PROVIDED, HOWEVER, that if EXACT has submitted a BONA FIDE
application to the FDA to obtain final marketing approval for a Kit
within said [CONFIDENTIAL TREATMENT REQUESTED]/*/ period and EXACT's
failure to make such First Commercial Sale is due to delays in
obtaining such approval that are caused by the FDA and are not related
to a substantial deficit in said application, then Genzyme may elect,
in its sole discretion, to extend said [CONFIDENTIAL TREATMENT
REQUESTED]/*/ period and shall notify EXACT in writing of any such
determination and election and of the amount of time by which such
period has been extended; PROVIDED FURTHER that if the parties disagree
as to whether said application contained a substantial deficit and the
time for resolution of such deficit, the dispute shall be referred to
arbitration pursuant to Article 11 hereof and, until final resolution
of the dispute, EXACT shall deposit any amounts otherwise due and
payable to Genzyme under this Section 4.4(b) into an escrow account
established by EXACT exclusively for such purpose in a recognized
commercial banking institution reasonably selected by EXACT and
promptly identified by written notice from EXACT to Genzyme. If the
arbitrator resolves the dispute in favor of Genzyme, then the amounts
held in escrow PLUS all interest accrued thereon shall be promptly paid
to Genzyme in same day funds. Amount payable under this Section 4.4(b)
shall not be creditable against any royalties or other payments due
during said year under this Article 4. Waiver or deferral of any
maintenance fee by Genzyme shall not be construed as waiver or deferral
of any such subsequent payment.
4.5 EXACT shall pay Genzyme a milestone payment in the amount of
[CONFIDENTIAL TREATMENT REQUESTED]/*/ within [CONFIDENTIAL TREATMENT
REQUESTED]/*/ after the first receipt by EXACT of either 510(k)
clearance or approval of a Pre-Marketing Authorization application
("PMA") (or the equivalent of such submissions required at such time)
for a Kit from the FDA. Such amount shall not be creditable against any
royalties or other payments due under this Article 4.
4.6 Payment of royalties specified in Section 4.2 shall be made by EXACT to
Genzyme within forty-five (45) days after March 31, June 30, September
30 and December 31 each year during the term of this Agreement covering
Net Sales and Net Service Revenues during the preceding calendar
quarter. The last such payment shall be made within forty-five (45)
days after the expiration or earlier termination of this Agreement.
4.7 No multiple royalties shall be payable on any Diagnostic Service,
Licensed Reagent or Kit because such Diagnostic Service, Licensed
Reagent or Kit or its practice, manufacture, use, importation or sale
is or shall be covered by more than one of the Patent Rights.
4.8 All payments to be made under this Article 4 shall be paid in United
States dollars, in Boston, Massachusetts or at such other place and in
such other way as Genzyme may reasonably designate in writing, without
deduction of exchange, collection or other charges. Conversion of
foreign currency into United States dollars shall be calculated
/*/ [CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN
OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL
SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED.
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using the applicable exchange rate as published in The Wall Street
Journal on the date that the payment is first due and payable. If by
law, regulation or fiscal policy of a particular country, conversion
into United States dollars or transfers of funds of a convertible
currency to the Untied States is restricted or forbidden, EXACT shall
give Genzyme prompt written notice of such restriction or prohibition,
which notice shall satisfy the forty-five (45) day payment deadline set
forth in Section 4.6. EXACT shall pay any amounts due to Genzyme
through whatever lawful methods Genzyme reasonably designates in
writing; PROVIDED, HOWEVER, that if Genzyme fails to designate such
payment method within thirty (30) days after Genzyme is notified of the
restriction, EXACT may deposit such payment in local currency to the
credit of Genzyme in a recognized commercial banking institution
reasonably selected by EXACT and promptly identified by written notice
from EXACT to Genzyme, and such deposit shall fulfill all obligations
of EXACT to Genzyme with respect to such payment.
4.9 In the event that any payment due hereunder is not made when due, the
payment shall accrue interest beginning on the first day following the
due date as herein specified, calculated at the annual rate of the sum
of (a) two percent (2%) PLUS (b) the prime interest rate quoted by
BankBoston N.A. on the date said payment is due, the interest being
compounded on the last day of each calendar quarter; provided, that in
no event shall said annual rate exceed the maximum legal interest rate
in Massachusetts. The payment of such interest shall not foreclose
Genzyme from exercising any other rights it may have as a consequence
of the lateness of any payment.
4.10 Royalty payments and other payments due to Genzyme under this Agreement
shall not be reduced by reason of any withholding or similar taxes
applicable to such payments to Genzyme.
4.11 Genzyme hereby agrees that if, after the Effective Date, (a) Genzyme
grants a license ("Subsequent Comparable License") to another person
or entity (other than a wholly-owned subsidiary of Genzyme)
conveying rights to (i) practice Diagnostic Services in the Field,
(ii) make, use, offer to sell, sell and import Licensed Reagents for
use in the Field, or (iii) make, use, offer to sell, sell and import
Kits for use in the Field, (b) such person or entity intends to sell
Diagnostic Services, Licensed Reagents or Kits, as applicable, other
than for research purposes and (c) such Subsequent Comparable
License has financial terms which, taken as a whole, are more
favorable to such person or entity than those set forth herein,
Genzyme shall promptly deliver written notice to EXACT of the grant
of such Subsequent Comparable License and EXACT shall thereafter have
sixty (60) days in which to elect to substitute into this Agreement
all the financial terms and conditions of such Subsequent Comparable
License by delivering written notice of such election to Genzyme
within said sixty (60) day period.
ARTICLE 5. REPORTS AND RECORDS
5.1 EXACT shall maintain true, accurate and complete books of account,
records and files containing an accurate record of all data reasonably
necessary for the full computation and verification of sales and the
determination of the amounts payable under Article 4 hereof for a
period of at least four (4) years following the period of each report
required by Section 5.2 below. Said books and records shall be kept at
EXACT's principal place of business and shall be in accordance with
generally accepted accounting principles, consistently applied. Said
books and records, to the extent not previously audited, shall be
available for inspection by an independent certified public accountant
selected by Genzyme (or its licensor of the Patent Rights) and
reasonably acceptable to EXACT, upon ten (10) business days advance
written notice and during regular business hours, for three (3) years
following the end of the calendar year to which they pertain in order
to enable Genzyme (or its licensor of the Patent Rights) to ascertain
the correctness of any report and/or payment made under this Agreement.
Such inspections may be conducted no more than once in any twelve (12)
month period and, except as provided below, shall be conducted at the
expense of Genzyme (or its licensor, as the case may be). If such
examination reveals that royalties have been misstated, any adjustment
shall be promptly
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refunded or paid, as appropriate. Genzyme (or its licensor, as the case
may be) shall pay the fees and expenses of the accountant engaged to
perform the audit, unless such audit reveals an underpayment of five
percent (5%) or more for the period examined, in which case EXACT shall
pay all reasonable costs and expenses incurred by Genzyme (or its
licensor, as the case may be) in the course of making such
determination, including without limitation the fees and expenses of
the accountant.
5.2 Within forty-five (45) days after March 31, June 30, September 30 and
December 31, of each year in which this Agreement is in effect, EXACT
shall deliver to Genzyme full, true and accurate reports of its
activities relating to this Agreement during the preceding three month
period. These reports shall include at least the following:
(a) the total actual billings for Diagnostic Services on a
country-by-country basis during the applicable period;
(b) the total gross sales of Licensed Reagents and Kits, each
individually, on a country-by-country basis during the applicable
period;
(c) the calculation of Net Service Revenues and Net Sales on a
country-by-country basis for the applicable period, including a
detailed listing of the applicable deductions permitted under Sections
1.11 and 1.12 hereof on an item-by-item basis and a detailed
explanation of the calculation of Net Service Revenues and Net Sales of
any Combination Services or combination products; and
(d) the calculation of total royalties due in U.S. dollars, together
with the exchange rates used for conversion, to the extent applicable.
5.3 With each such report, EXACT shall pay to Genzyme the royalties due and
payable as provided for in Section 4.2. To the extent that royalties
for the applicable period are creditable against minimum royalties paid
pursuant to Section 4.3 hereof, EXACT shall so report. If no royalties
are due, EXACT shall so report.
ARTICLE 6. PATENT PROSECUTION; INFRINGEMENT
6.1 The prosecution, filing and maintenance of all patents and the expense
thereof shall be the responsibility of Genzyme (and/or its licensor of
the Patent Rights).
6.2 (a) EXACT agrees to provide Genzyme with prompt written notice after
becoming aware of any infringement of any of the Patent Rights.
(b) Genzyme (or its licensor, as the case may be) shall have the right,
under its control and at its expense, to prosecute any third party
infringement of the Patent Rights or to defend the Patent Rights in any
declaratory judgment action brought by a third party which alleges the
invalidity, unenforceability or non-infringement of any Patent Right.
EXACT agrees to cooperate fully in any action under this Section 6.2,
provided that Genzyme (or its licensor, as the case may be) reimburses
EXACT for its reasonable costs and expenses incurred in connection with
providing such assistance.
<PAGE>
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(c) In the event that
(i) EXACT notifies Genzyme that a third party is conducting
activities in the Field that infringe the Patent Rights
in any country,
(ii) said third party continues to infringe for [CONFIDENTIAL
TREATMENT REQUESTED]/*/ after receipt by Genzyme of such
notice and does not obtain a license from Genzyme under
the applicable Patent Rights within such period, and
(iii) EXACT can demonstrate to Genzyme's reasonable
satisfaction through written documentation that (A)
EXACT has Net Sales or Net Service Revenues in one or
more countries in which there is any Valid Claim within
the Patent Rights, and (B) the infringing activities of
said third party have resulted in annualized income to
said third party equal to or greater than (x)
[CONFIDENTIAL TREATMENT REQUESTED]/*/ worldwide in
countries in which there is any Valid Claim within the
Patent Rights (determined based on Net Sales or Net
Service Revenues of the [CONFIDENTIAL TREATMENT
REQUESTED]/*/ or (y) [CONFIDENTIAL TREATMENT
REQUESTED]/*/ of EXACT's annualized Net Sales or Net
Service Revenues (as applicable) worldwide in countries
in which there is any Valid Claim within the Patent
Rights (determined based on Net Sales or Net Service
Revenues of the[CONFIDENTIAL TREATMENT REQUESTED]/*/),
whichever is greater,
then, after making such a demonstration, EXACT may withhold up to
[CONFIDENTIAL TREATMENT REQUESTED]/*/ of the royalty payments that
would otherwise be payable to Genzyme on Net Services Revenues from
Diagnostic Services covered in whole or in part by the infringed Patent
Rights or on Net Sales of Licensed Reagents or Kits covered in whole or
in part by the infringed Patent Rights, as applicable, in such
countries until such time as the infringement is abated; PROVIDED,
HOWEVER, that in the event that Genzyme (or its licensor, as the case
may be) either (A) fails to use good faith efforts to undertake the
prosecution of such third party infringement or otherwise Resolve such
infringement within two hundred and forty (240) days after receipt by
Genzyme of the notice delivered by EXACT pursuant to clause (c)(i)
above or (B) delivers written notice to EXACT that Genzyme (or its
licensor, as the case may be) does not intend to undertake the
prosecution of such third party infringement, then EXACT may withhold
one hundred percent (100%) of the aforementioned royalty payments;
PROVIDED FURTHER that, if EXACT withholds such royalty payments and
Genzyme (or its licensor, as the case may be) either successfully
Resolves such infringement or undertakes the prosecution of such third
party infringement and obtains a favorable judgment, settlement,
consent judgment or other final disposition of the suit, EXACT shall
resume full payment of the aforementioned royalties due under this
Agreement on Net Service Revenues and Net Sales in such countries upon
receipt of either written notice of the successful abatement of such
infringement by prosecution or Resolution signed by an officer of
Genzyme or a copy of an official, written evidence of such favorable
judgment,
/*/ [CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN
OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL
SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED.
<PAGE>
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settlement, consent judgment or other final disposition; PROVIDED
FURTHER that in the event that Genzyme (or its licensor, as the case
may be) undertakes the prosecution of such infringement and obtains a
favorable settlement, an order to dismiss shall constitute adequate
official written evidence for purposes of this sentence. For purposes
of this clause (c), "Resolve(s)" or "Resolution" means the cessation of
such third party infringement other than as a result of prosecution,
including without limitation the grant of a nonexclusive license under
the Patent Rights or the discontinuance by such third party of the
infringing activities.
(d) If Genzyme notifies EXACT in writing within ten (10) days of
receiving written documentation pursuant to Section 6.2(c)(iii) above
that Genzyme is not reasonably satisfied that EXACT has demonstrated
conditions sufficient to justify the withholding of royalty payments
under Section 6.2(c) above, then, until final resolution of the
dispute, EXACT shall deposit all withheld royalty payments otherwise
due and payable to Genzyme into an escrow account established by EXACT
exclusively for such purpose in a recognized commercial banking
institution reasonably selected by EXACT and promptly identified by
written notice from EXACT to Genzyme. If the parties are unable to
resolve the dispute within thirty (30) days after EXACT's receipt of
Genzyme's notice, then the dispute shall immediately be referred to one
(1) executive officer of each party, chosen in the sole discretion of
that party, who shall negotiate with each other in good faith to
resolve the dispute during the period ending thirty (30) days after the
date of such referral. If the designated officers of the parties are
unable to resolve the dispute within such thirty (30) day period, the
dispute shall be referred to arbitration pursuant to Article 11 hereof.
If such officers or the arbitrator, as applicable, resolves the dispute
in favor of Genzyme, then the amounts held in escrow plus all interest
accrued thereon shall be promptly paid to Genzyme in same day funds and
EXACT shall resume full payment of royalties under this Agreement.
(e) In the event that EXACT withholds royalty payments pursuant to
Section 6.2(c), EXACT shall include the amount of such withheld
royalties and the basis for the calculation thereof on a
country-by-country basis in the reports deliverable by EXACT to Genzyme
pursuant to Section 5.2 hereof as distinct line items.
(f) EXACT hereby acknowledges and agrees that Roche has rights under
the Patent Rights under an agreement with JHU and, therefore,
activities by Roche in accordance with such agreement with JHU will not
be subject to this Section 6.2.
ARTICLE 7. TERM AND TERMINATION
7.1 Unless earlier terminated as hereinafter provided, this Agreement shall
remain in full force and effect until the expiration of the last to
expire Patent Rights. Royalties on Net Service Revenues from Diagnostic
Services and on Net Sales of Licensed Reagents and Kits covered by the
Gene Patent Rights shall cease upon the expiration of the last to
expire Gene Patent Right. Royalties on Net Service Revenues of
Diagnostic Services and on Net Sales of Licensed Reagents and Kits
covered by the Methodology Patent Rights shall cease upon the
expiration of the last to expire Methodology Patent Right.
<PAGE>
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7.2 If (a) Genzyme, acting reasonably, determines that EXACT has ceased to
carry on its business with respect to the performance of Diagnostic
Services in the Field and/or the provision of Licensed Reagents and/or
Kits in the Field in any country in North America or Europe for a
period of more than six (6) months with no plan to resume such business
within the following three (3) months, then (b) Genzyme shall have the
right to terminate this Agreement and all rights, privileges and
license hereunder granted with respect to such Diagnostic Services
and/or Licensed Reagents and/or Kits, as applicable, upon six (6)
months prior written notice to EXACT; PROVIDED, HOWEVER, that if EXACT
is temporarily unable to carry on such business due to a corporate
reorganization or restructuring of EXACT, then the six (6) month time
period set forth in clause (a) of this Section 7.2 shall be reasonably
extended to accommodate such corporate circumstance by a period to be
mutually agreed upon by the parties, which extension period shall not
exceed six (6) months. Such termination shall become effective
immediately upon the conclusion of such notice period unless EXACT
shall have resumed such business in good faith prior to the expiration
of such notice period.
7.3 Should EXACT fail to pay Genzyme any amounts as are due and payable
hereunder, Genzyme shall have the right to terminate this Agreement
upon forty-five (45) days prior written notice, unless EXACT shall pay
Genzyme within said forty-five (45) day period such delinquent amounts
and all interest due and payable thereon. If EXACT shall not have paid
all such delinquent amounts and interest due and payable thereon within
said period, Genzyme, at its sole option, may immediately terminate
this Agreement and all rights, privileges and license hereunder
granted.
7.4 EXACT shall have the right to terminate this Agreement and all rights,
privileges and license hereunder granted at any time upon sixty (60)
days prior written notice to Genzyme.
7.5 Upon any material breach or default of this Agreement by EXACT, other
than those delineated in Sections 7.2 and 7.3, which shall always take
precedence in that order over any material breach or default referred
to in this Section 7.5, Genzyme shall have the right to terminate this
Agreement and the rights, privileges and license hereunder granted upon
sixty (60) days prior written notice to EXACT. Such termination shall
become effective immediately at the conclusion of such notice period
unless EXACT shall have cured any such breach or default prior to the
expiration of said sixty (60) day period.
7.6 (a) If no royalties have been paid by EXACT with respect to any
Diagnostic Service within two (2) years after the First Commercial Sale
by EXACT of a Diagnostic Service, the rights, privileges and license
granted under this Agreement to EXACT under Section 2.1 (a) hereof
shall automatically terminate.
(b) If no royalties have been paid by EXACT with respect to any
Licensed Reagent within two (2) years after the First Commercial Sale
of a Licensed Reagent, the rights, privileges and license granted under
this Agreement to EXACT under Section 2.1 (b) hereof shall
automatically terminate.
<PAGE>
-14-
7.7 (a) If EXACT fails to make a 510(k) or PMA submission for a Kit to the
FDA (or the equivalent of such submissions as may be required by the
FDA at such time) within five (5) years after the Effective Date,
Genzyme may, in its sole discretion, elect to terminate the rights,
privileges and license granted under Section 2.1 (c) hereof in any or
each country in which Genzyme has Patent Rights unless such license
grant is sooner terminated according to the terms of this Agreement.
(b) If EXACT fails to achieve annual Net Sales of Licensed Reagents and
Kits for use in the Field of ten million dollars ($10,000,000) or more
within four (4) years after the First Commercial Sale of a Kit, Genzyme
may, in its sole discretion, elect to terminate the rights, privileges
and license granted under Section 2.1 (c) hereof in any and each
country in which Genzyme has Patent Rights unless such license grant is
sooner terminated according to the terms of this Agreement.
7.8 If EXACT materially fails to perform in accordance with clauses (i),
(ii) or (iii) of Section 3.1 hereof, Genzyme may elect to terminate the
rights, privileges and license granted under Section 2.1 with respect
to the subject matter of the clause or clauses of Section 3.1 under
which EXACT has materially failed to perform, as set forth in Section
3.2, hereof upon thirty (30) days prior written notice to EXACT.
Notwithstanding the foregoing, any termination of the license granted
under any one clause of Section 2.1 pursuant to this Section 7.8 will
be effective only with respect to the subject matter of the clause of
Section 3.1 under which EXACT has materially failed to perform, and the
remaining clauses of Section 3.1 and the remaining rights granted under
2.1 shall be unaffected by such termination.
7.9 Upon any termination of this Agreement in its entirety or any of the
rights, privileges and licenses granted under Section 2.1 hereof, EXACT
shall be entitled to finish any work-in-progress and to sell any
completed inventory of Licensed Reagents or Kits, as applicable, which
remain on hand as of the date of the termination provided that EXACT
pays Genzyme the royalties applicable to said subsequent sales in
accordance with the terms and conditions set forth in this Agreement.
7.10 (a) In the event that Genzyme terminates this Agreement and the rights,
privileges and licenses hereunder granted pursuant to Section 7.2
above, then Genzyme shall refund to EXACT the PRO RATA share of the
amount equal to the sum of (i) any payment made by EXACT pursuant to
Section 4.3 hereof on January 1 of the calendar year in which the
effective date of such termination falls PLUS (ii) any payment made by
EXACT pursuant to Section 4.4 hereof on the anniversary of the
Effective Date immediately preceding the effective date of such
termination PLUS (iii) one-half of any payment made by EXACT pursuant
to Section 4.5 hereof if the license granted under Section 2.1 (c) is
being terminated and if such payment was made by EXACT within the six
(6) month period immediately preceding the effective date of such
termination less (iv) the aggregate amount of any payments made by
Genzyme to JHU in that Year under the JHU License Agreement based on
the payments described in clauses (i), (ii) and (iii) above.
<PAGE>
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(b) In the event that Genzyme terminates the license granted under
Section 2.1 (a) hereof with respect to Diagnostic Services pursuant to
Section 7.6 or 7.8 hereof, then Genzyme shall refund to EXACT the pro
rata share of the amount equal to the sum of (i) any payment made by
EXACT pursuant to Section 4.3(a) hereof on January 1 of the calendar
year in which the effective date of such termination falls PLUS (ii)
any payment made by EXACT pursuant to Section 4.4(a) hereof on the
anniversary of the Effective Date immediately preceding the effective
date of such termination less (iii) the amount of any payment made by
Genzyme to JHU in that Year based on the payments described in clauses
(i) and (ii) above.
(c) In the event that Genzyme terminates the rights, privileges and
license granted under Section 2.1 (b) or (c) hereof with respect to
Licensed Reagents and Kits pursuant to Sections 7.7 or 7.8 hereof, then
Genzyme shall refund to EXACT the PRO RATA share of the amount equal to
the sum of (i) any payment by EXACT to Genzyme pursuant to Section
4.3(b) hereof on January 1 in which the calendar year of the effective
date of such termination falls PLUS (ii) any payment made by EXACT
pursuant to Section 4.4(b) hereof on the anniversary of the Effective
Date immediately preceding the effective date of such termination PLUS
(iii) one-half of any payment made by EXACT pursuant Section 4.5 hereof
to if the license granted under Section 2.1 (c) is being terminated and
if such payment was made to Genzyme within six (6) months immediately
preceding the effective date of such termination less (iv) the
aggregate amount of any payments made by Genzyme to JHU in that Year
based on the payments described in clauses (i), (ii) and (iii) above.
(d) The PRO RATA share of any amounts to be refunded by Genzyme
pursuant to this Section 7.10 shall be determined based on either (i)
the portion of the twelve (12) month period after said anniversary of
the Effective Date or (ii) the portion of said calendar year, as
applicable, during which this Agreement shall not be in effect. In no
event shall any amounts be refundable by Genzyme to the extent they
have been credited by Genzyme against royalties payable by EXACT in
accordance with Sections 4.3 and/or 4.4 hereof. Interest paid to
Genzyme pursuant to Section 4.9 hereof or on any amounts held in escrow
during the pendency of a dispute shall not be included in the
calculation of any amounts refundable by Genzyme.
(e) Any and all amounts refundable by Genzyme to EXACT pursuant to this
Section 7.10 shall be paid to EXACT within thirty (30) days after the
applicable effective date of the termination.
7.11 Upon the expiration or the earlier termination of this Agreement for
any reason, nothing herein shall be construed to release either party
from any obligation that matured prior to the effective date of such
expiration or the termination. The provisions of Articles 5, 8, 10, 11,
13, 18 and 21, Section 4.6, 7.9, 7.10 and this Section 7.11 shall
survive the expiration or earlier termination of this Agreement.
<PAGE>
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ARTICLE 8. INDEMNIFICATION AND INSURANCE
8.1 (a) Subject to the provisions of Section 8.3 hereof, EXACT shall
indemnify, defend and hold harmless Genzyme, JHU, The John Hopkins
Health System ("JHHS") and their respective present and former
officers, directors, trustees, employees, consultants, agents,
students, faculty, treating and consulting physicians, inventors of the
Patent Rights, subsidiaries, successors, heirs and assigns
(collectively, the "Genzyme Indemnitees") against any liability,
damage, loss or expense (including reasonable attorneys' fees and
expenses of litigation) incurred by or imposed upon the Genzyme
Indemnitees, or any one of them, in connection with any claims, suits,
actions, demands or judgments arising out of (i) the design, sale, use,
manufacture or promotion by EXACT and its officers, directors,
employees, representatives and agents, of any process, service or
product relating to, or developed, manufactured, used or commercialized
pursuant to, this Agreement and (ii) the practice and use of the Patent
Rights by EXACT and its officers, directors, employees, representatives
and agents.
(b) EXACT's indemnification under this Section 8.1 shall not apply to
any liability, damage, loss or expense to the extent that it is
directly attributable to the negligence, reckless misconduct or
intentional misconduct of the Genzyme Indemnitees.
(c) EXACT agrees, at its own expense, to provide attorneys to defend
against any actions brought or filed against any Genzyme Indemnitee
with respect to the subject of indemnity contained herein, whether or
not such actions are rightfully brought, such attorneys to be
reasonably acceptable to Genzyme and not to be subject to any conflict
of interest in representing any of the Genzyme Indemnitees nor to have
been deemed within the preceding ten (10) years by any Genzyme
Indemnitee to have provided unsatisfactory legal representation of such
Genzyme Indemnitee.
8.2 (a) Subject to the provisions of Section 8.3 hereof Genzyme shall
indemnify, defend and hold harmless EXACT and its present and former
officers, directors, employees, agents, consultants, successors, heirs
and assigns (collectively, the "EXACT Indemnitees") against any
liability, damage, loss or expense (including reasonable attorney's
fees and expenses of litigation) incurred by or imposed upon the EXACT
Indemnitees, or anyone of them, in connection with any claims, suits,
actions, demands or judgments arising out of (i) the design, sale, use,
manufacture or promotion by Genzyme and its officers, directors,
employees, representatives and agents, of any process, service or
product utilizing the Patent Rights in the Field and (ii) the practice
and use of the Patent Rights in the Field by Genzyme and its officers,
directors, employees, representatives and agents.
(b) Genzyme's indemnification under this Section 8.2 shall not apply to
any liability, damage, loss or expense to the extent it is directly
attributable to the negligence, reckless misconduct or intentional
misconduct of the EXACT Indemnitees.
(c) Genzyme agrees, at its own expenses to provide attorneys to defend
against any actions brought or filed against any EXACT Indemnitee with
respect to the subject of indemnity contained herein, whether or not
such actions are rightfully brought, such
<PAGE>
-17-
attorneys to be reasonably acceptable to EXACT and not to be subject to
any conflict of interest in representing any of the EXACT Indemnitees
not to have been deemed within the preceding ten (10) years by any
EXACT Indemnitee to have provided unsatisfactory legal representation
of such EXACT Indemnitee.
8.3 In the event any such action is commenced or claim made or threatened
against an indemnified party covered by Section 8.1 or 8.2 hereof, the
indemnified party shall promptly notify the indemnifying party in
writing of such event. The failure of indemnified party to deliver
notice to the indemnifying party within a reasonable time after the
commencement of any such action, if materially prejudicial to the
ability of the indemnifying party to defend such action, shall relieve
the indemnifying party of any liability to the indemnified party under
this Article 8 solely with respect to such action, but the failure to
deliver notice to the indemnifying party will not relieve it of any
liability with respect to such action that it may have to the
indemnified party otherwise than under this Article 8. The indemnifying
party shall assume, with the reasonable cooperation of the indemnified
party, the investigation and defense of, and may settle that part of,
any such claim or action commenced or made against the indemnified
party which relates to the indemnifying party's indemnification and the
indemnifying party may take such other steps as may be necessary to
protect itself. The indemnifying party shall not be liable to
indemnified party on account of any settlement of any such claim or
litigation affected without the indemnifying party's express written
consent, which consent shall not be unreasonably withheld or delayed.
The right of the indemnifying party to assume the defense of any action
shall be limited to that part of the action commenced against an
indemnified party which relates to the indemnifying party's obligation
of indemnification and holding harmless.
8.4 (a) Beginning at such time as any Diagnostic Service, Licensed Reagent
or Kit relating to, or developed pursuant to, this Agreement is being
made available (other than for the purpose of obtaining regulatory
approvals) by EXACT, EXACT shall, at its sole cost and expense, procure
and maintain commercial general liability insurance, applicable
worldwide, in amounts not less than two million dollars ($2,000,000)
per incident and two million dollars ($2,000,000) annual aggregate and
naming Indemnitees as additional insureds. Such commercial general
liability insurance shall provide (i) product liability coverage and
(ii) contractual liability coverage for EXACT's indemnification under
Section 8.1 of this Agreement. If EXACT elects to self-insure all or
part of the limits described above (including deductibles or retentions
that are in excess of two hundred and fifty thousand dollars
($250,000) annual aggregate) such self-insurance program must be
acceptable to Genzyme. The minimum amounts of insurance coverage
required under this Section 8.4(a) shall not be construed to create a
limit of EXACT's liability with respect to its indemnification
obligation under Section 8.1 of this Agreement.
(b) Genzyme shall, at its sole cost and expense, procure and maintain
commercial general liability insurance, applicable worldwide, in
amounts not less than two million dollars ($2,000,000) per incident and
two million dollars ($2,000,000) annual aggregate and naming the EXACT
Indemnitees as additional insureds. Such commercial general liability
insurance
<PAGE>
-18-
shall provide (i) product liability coverage and (ii) contractual
liability coverage for Genzyme's indemnification under Section 8.2 of
this Agreement. If Genzyme elects to self-insure all or part of the
limits described above (including deductibles or retentions that are in
excess of two hundred and fifty thousand dollars ($250,000) annual
aggregate) such self-insurance program must be acceptable to EXACT. The
minimum amounts of insurance coverage required under this Section
8.4(a) shall not be construed to create a limit of Genzyme's liability
with respect to its indemnification obligation under Section 8.2 of
this Agreement.
(c) Each party shall provide the other with written evidence of such
insurance upon request of the other party. Each party shall provide the
other with written notice at least thirty (30) days prior to the
cancellation, non-renewal or material change in such insurance. If such
party does not obtain replacement insurance providing comparable
coverage within such thirty (30) day period, the other party shall have
the right to terminate this Agreement and the rights, privileges and
license granted hereunder effective at the end of such thirty (30) day
period without any notice or additional waiting periods.
(d) Each party shall maintain such comprehensive general liability
insurance beyond the expiration or termination of this Agreement during
(a) the period that any process, service or product relating to, or
developed pursuant to, this Agreement is being made available (other
than for the purpose of obtaining regulatory approvals) by EXACT and
(b) a reasonable period after the period referred to in clause (a)
above which in no event shall be less than fifteen (15) years.
ARTICLE 9. REPRESENTATIONS, WARRANTIES AND DISCLAIMERS
9.1 (a) Genzyme hereby represents and warrants to EXACT that it has the
right and power to enter into this Agreement, to extend the rights and
licenses granted herein and to perform its obligations hereunder, and
that this Agreement is a valid and binding agreement, enforceable in
accordance with its terms.
(b) Genzyme further represents and warrants to EXACT that Genzyme is
not in material breach of the JHU License Agreement as of the Effective
Date, and that Genzyme will use commercially reasonable and diligent
efforts to comply with all of its material obligations and duties with
regard to the Patent Rights under the JHU License Agreement, including
without limitation any provisions of the JHU Agreement as may be
reasonably necessary to maintain in effect this Agreement or preserve
EXACT's rights under this Agreement, including without limitation the
preservation of EXACT's rights hereunder in the event that Genzyme
shall breach or default on its obligations under the JHU License
Agreement.
(b) EXACT hereby represents and warrants to Genzyme that it has the
right and power to enter into this Agreement and to perform its
obligations hereunder, and that this Agreement is a valid and binding
agreement, enforceable in accordance with its terms. EXACT agrees that
it shall comply with all applicable local, state, Federal and
/*/ [CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN
OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL
SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED.
<PAGE>
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international laws and regulations relating to the development, design,
manufacture, sale, use in commerce and promotion of Diagnostic
Services, Licensed Reagents and Kits.
9.2 EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN SECTION 9.1, GENZYME MAKES
NO WARRANTY, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY
IMPLIED WARRANTIES OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR
PURPOSE WITH RESPECT TO ANY PATENT, TRADEMARK, SOFTWARE, NONPUBLIC OR
OTHER INFORMATION, OR TANGIBLE RESEARCH PROPERTY, LICENSED OR OTHERWISE
PROVIDED TO EXACT HEREUNDER AND HEREBY DISCLAIMS THE SAME.
9.3 GENZYME DOES NOT WARRANT THE VALIDITY OF THE PATENT RIGHTS LICENSED
HEREUNDER AND MAKES NO REPRESENTATION WHATSOEVER WITH REGARD TO THE
SCOPE OF THE LICENSED PATENT RIGHTS OR THAT SUCH PATENT RIGHTS MAY BE
EXPLOITED BY EXACT WITHOUT INFRINGING OTHER PATENTS.
9.4 NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, EACH OF THE
PARTIES HERETO DISCLAIMS ALL OBLIGATIONS ON THE PART OF SUCH PARTY FOR
DAMAGES, INCLUDING BUT NOT LIMITED TO DIRECT, INDIRECT, SPECIAL AND
CONSEQUENTIAL DAMAGES, ATTORNEYS' AND EXPERTS' FEES AND EXPENSES, AND
COURT COSTS (EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE PROBABILITY OF
SUCH DAMAGES, FEES, EXPENSES AND COSTS) ARISING OUT OF OR IN CONNECTION
WITH THE MANUFACTURE, USE, SALE OR PROVISION OF THE LICENSED REAGENTS,
DIAGNOSTIC SERVICES UTILIZING THE LICENSED PROCESSES AND KITS BY THE
OTHER PARTY. EXACT ASSUMES ALL RESPONSIBILITY AND LIABILITY FOR ANY
LOSS OR DAMAGES CAUSED BY A LICENSED REAGENT, DIAGNOSTIC SERVICE OR KIT
MANUFACTURED, USED, SOLD OR PROVIDED BY EXACT. GENZYME ASSUMES ALL
RESPONSIBILITY AND LIABILITY FOR ANY LOSS OR DAMAGES CAUSED BY A
LICENSED REAGENT, DIAGNOSTIC SERVICE OR KIT MANUFACTURED, USED, SOLD OR
PROVIDED BY GENZYME.
ARTICLE 10. NOTICES
10.1 Any consent, notice or report required or permitted to be given or made
under this Agreement shall be in writing, delivered (i) by certified or
registered mail (postage prepaid, return receipt requested), (ii) by
facsimile (and promptly confirmed by personal delivery, courier or next
business day service of a nationally recognized courier service of good
repute), (iii) by a next business day service of a nationally
recognized courier service of good repute (with evidence of delivery)
or (iv) by courier (postage prepaid and signature required), and in any
case addressed to the other party at its address set forth in this
Article 10, and shall be effective upon receipt by the addressee.
10.2 Reports, notices and other communications from EXACT to Genzyme as
provided hereunder shall be sent to:
<PAGE>
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President, Molecular Oncology Division
Genzyme Corporation
One Mountain Road
P.O. Box 9322
Framingham, MA 01701-9322
Facsimile: (508) 271-2604
with a copy to
Chief Legal Officer
Genzyme Corporation
One Kendall Square
Cambridge, MA 02139
Facsimile: (617) 252-7553
or to such other individual or address as shall hereafter be furnished
by written notice to EXACT in accordance with this Article 10.
10.3 Reports, notices and other communications from Genzyme to EXACT as
provided hereunder shall be sent to:
President
EXACT Laboratories, Inc.
63 Great Road
Maynard, MA 01754
Facsimile: (978) 897-3481
or to such other individual or address as shall hereafter be furnished by
written notice to Genzyme in accordance with this Article 10.
ARTICLE 11. ARBITRATION
11.1 Any controversy or claim arising out of, or relating to any provisions
of this Agreement or the breach thereof which cannot otherwise be
resolved by good faith negotiations between the parties, or by any form
of Alternate Dispute Resolution other than arbitration which may be
mutually acceptable to the parties, shall be resolved by final and
binding arbitration in Boston, Massachusetts under the rules of the
American Arbitration Association, or the Patent Arbitration Rules if
applicable, then obtaining.
The arbitration shall be subject to the following terms:
(a) The number of arbitrators shall be one (1).
(b) The arbitrator shall be an independent, impartial third party
having no direct or indirect personal or financial relationship to any
of the parties to the dispute, who has agreed to accept the appointment
as arbitrator on the terms set out in this Section 11.1.
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(c) The arbitrator shall be an active or retired attorney, law
professor, or judicial officer with at least five (5) years experience
in the biotechnology or pharmaceuticals industries and a familiarity
with the laws governing proprietary rights in intellectual property.
(d) The arbitrator shall be selected as follows:
(i) Each party shall submit a description of the matter to be
arbitrated to the American Arbitration Association at its
Regional Office in Boston, Massachusetts. Said
Association shall submit to the parties a list of the
arbitrators available to arbitrate any dispute between
them. Thereafter, each party shall select, in numerical
order, those persons on said list acceptable as
arbitrators and return the same to the Association. The
first arbitrator acceptable to both parties shall be
deemed the selected arbitrator with respect to the
dispute then at issue under this Agreement. In the event
of a failure to select a mutually agreeable arbitrator,
the Association shall be requested to submit as many
subsequent lists of arbitrators as shall be necessary to
effect a mutual selection.
(ii) If the method of selection set out in paragraph (d)(i)
above fails for any reason, then either party may
petition any state or federal court in Massachusetts
having jurisdiction for appointment of the arbitrator in
accordance with applicable law, provided that the
arbitrator must satisfy the requirements of paragraphs
(b) and (c) above.
(e) The arbitrator shall announce the decision and/or award in writing
accompanied by written findings explaining the facts determined in
support of the decision and/or award, and any relevant conclusions of
law.
(f) Unless otherwise provided in this Section 11.1 or extended by
agreement of the parties, each party shall submit an initial request
for designation of an arbitrator within thirty (30) days after receipt
of the first list of available arbitrators pursuant to Section 11.1 (d)
of this Agreement, the dispute shall be submitted to the arbitrator
within ninety (90) days after the arbitrator is selected, and a
decision shall be rendered within thirty (30) days after the dispute is
submitted.
(g) The fees of the arbitrator and any other costs and fees associated
with the arbitration shall be paid in accordance with the decision of
the arbitrator.
(h) The arbitrator shall have no power to add to, subtract from, or
modify any of the terms or conditions of this Agreement. Any award
rendered in such arbitration may be enforced by either party in either
the courts of the Commonwealth of Massachusetts, or in the United
States District Court for the District of Massachusetts, to whose
jurisdiction for such purposes Genzyme and EXACT each hereby
irrevocably consents and submits.
11.2 Notwithstanding the foregoing, nothing in this Article shall be
construed to waive any rights or timely performance of any obligations
existing under this Agreement.
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ARTICLE 12. RESTRICTIONS ON USE OF NAMES
12.1 EXACT shall not use the name of Genzyme or its divisions, JHU, JHHS or
their respective directors, officers, trustees, affiliates, employees,
faculty, students and the inventor(s) of the Patent Rights or any
adaptations or contractions thereof in any advertising, promotional or
sales literature without the prior written consent of Genzyme or JHU in
each case, as applicable; PROVIDED, HOWEVER, that EXACT (a) may refer
to publications by employees of Genzyme in the scientific literature
and (b) may state that a license from Genzyme has been granted as
herein provided. With respect to reports to public agencies that are
required by law, EXACT shall provide Genzyme with a reasonable
opportunity to review the use of its name in each such report
reasonably in advance of its submission.
12.2 EXACT shall not disclose this Agreement or any of the terms or
conditions of this Agreement to any third party without the prior
written consent of Genzyme except and to the extent required to comply
with applicable laws or regulations; provided, that EXACT delivers
prior written notice to Genzyme of any disclosure required by
applicable laws or regulations and takes all reasonable and lawful
actions to obtain confidential treatment for such disclosure and, if
possible, to minimize the extent of such disclosure.
13. CONFIDENTIALITY
13.1 During the term of this Agreement, each party (the "disclosing party")
may communicate to the other party (the "receiving party") information
which it considers to be confidential ("Confidential Information"). All
Confidential Information shall be specifically designated as
confidential. Such Confidential Information may include, without
limitation, trade secrets, know-how, inventions, technical data or
specifications, testing methods, business or financial information,
research and development activities, product and marketing plans, and
customer and supplier information. Confidential Information that is
disclosed in writing shall be marked with a legend indicating its
confidential status. Confidential Information that is disclosed orally
or visually shall be documented in a written notice prepared by the
disclosing party and delivered to the receiving party within thirty
(30) days of the date of disclosure; such notice shall summarize the
Confidential Information disclosed to the receiving party and reference
the time and place of disclosure.
13.2 The receiving party agrees that it shall: (a) maintain all Confidential
Information in strict confidence, except that the receiving party may
disclose or permit the disclosure of any Confidential Information to
its directors, officers, employees, consultants, and advisors who are
obligated to maintain the confidential nature of such Confidential
Information and who need to know such Confidential Information for the
purposes set forth in this Agreement; (b) use all Confidential
Information solely for the purposes set forth in this Agreement; and
(c) allow its directors, officers, employees, consultants, and advisors
to reproduce the Confidential Information only to the extent necessary
to effect the purposes set forth in this Agreement, with all such
reproductions being considered Confidential Information.
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13.3 The obligations of the receiving party under Section 13.2 above shall
not apply to the extent that the receiving party can demonstrate that
certain Confidential Information: (a) was in the public domain prior to
the time of its disclosure under this Agreement; (b) entered the public
domain after the time of its disclosure under this Agreement through
means other than an unauthorized disclosure resulting from an act or
omission by the receiving party; (c) was independently developed or
discovered by the receiving party without use of the Confidential
Information; (d) is or was disclosed to the receiving party at any
time, whether prior to or after the time of its disclosure under this
Agreement, by a third party having no fiduciary relationship with the
disclosing party and having no obligation of confidentiality with
respect to such Confidential Information; or (e) is required to be
disclosed to comply with applicable laws or regulations, or with a
court or administrative order, provided, that the disclosing party
receives prior written notice of such disclosure and that the receiving
party takes all reasonable and lawful actions to obtain confidential
treatment for such disclosure and, if possible, to minimize the extent
of such disclosure.
13.4. The obligations set forth in this Article 13 shall remain in effect for
a period of five (5) years after the expiration or the earlier
termination of this Agreement.
ARTICLE 14. PATENT MARKING
14. EXACT agrees to mark any Kits, Licensed Reagents or promotional
materials, technical literature and the like that describe Kits,
Licensed Reagents or Diagnostic Services with all applicable patent
numbers, and to indicate "Patent Pending" status in accordance with
each applicable country's patent laws.
ARTICLE 15. INDEPENDENT CONTRACTOR
15. For the purpose of this Agreement and all services to be provided
hereunder, both parties shall be, and shall be deemed to be,
independent contractors and not agents or employees of the other.
Neither party shall have authority to make any statements,
representations or commitments of any kind, or to take any action, that
will be binding on the other party.
ARTICLE 16. SEVERABILITY
16. If any one or more of the provisions of this Agreement shall be held to
be invalid, illegal or unenforceable, the validity, legality or
enforceability of the remaining provisions of this Agreement shall not
in any way be affected or impaired thereby unless the invalid
provisions are of such essential importance to this Agreement that it
is to be reasonably assumed that the parties would not have entered
into this Agreement without the invalid provisions.
ARTICLE 17. NON-ASSIGNABILITY
17. Neither this Agreement nor any part hereof shall be assignable by
either party without the express prior written consent of the other,
which shall not be unreasonably withheld. Any attempted assignment
without such consent shall be void. Notwithstanding the foregoing, such
consent shall not be required for the assignment of this Agreement (i)
by
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EXACT in connection with the sale or transfer of all or substantially
all of the business or assets of EXACT however structured, or (ii) by
Genzyme in conjunction with the transfer of all or substantially all of
the business or assets of Genzyme or all or substantially all of the
business or assets allocated to its Molecular Oncology Division however
structured; PROVIDED, in any such case, that the assignor promptly
notifies the other party hereto of such assignment and the assignee
assumes all of the assignor's obligations hereunder in writing, with a
copy of such written assumption (which may be redacted to the extent
reasonably necessary to protect confidential information) to be
promptly delivered to the other party hereto.
ARTICLE 18. NON-SOLICITATION
18. During the term of this Agreement and during the period ending two (2)
years after the expiration or earlier termination of this Agreement,
neither party shall, without the prior written consent of the other,
solicit the employment of, or employ, any person in any capacity who,
at any time during the term of this Agreement, shall have been an
employee of the other party.
ARTICLE 19. ENTIRE AGREEMENT
19. This Agreement constitutes the entire agreement between the parties
with respect to the subject matter and supersedes any prior agreements
and understandings between the parties relating to the subject matter
hereof. No oral agreement, conversation or representation between any
officers, agents or employees of the parties hereto either before or
after the execution of this Agreement shall affect or modify any of the
terms or obligations herein contained.
ARTICLE 20. MODIFICATIONS IN WRITING
20. No change, modification, extension, termination or waiver of this
Agreement, or any of the provisions herein contained, shall be valid
unless made in writing and signed by a duly authorized representative
of each party.
ARTICLE 21. GOVERNING LAW
21. The validity and interpretation of this Agreement and the legal
relations of the parties to it shall be governed by the laws of the
Commonwealth of Massachusetts without regard to the conflict of laws
provisions thereunder.
ARTICLE 22. CAPTIONS
22. The captions are provided for convenience and are not to be used in
construing this Agreement.
ARTICLE 23. CONSTRUCTION
23. Each of the parties agree that this Agreement is the result of mutual
negotiation and therefore the language herein shall not be
presumptively construed against either of them.
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ARTICLE 24. COUNTERPARTS
24. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, and all of which together
shall be deemed to be one and the same instrument.
ARTICLE 25. BINDING EFFECT
25. This Agreement shall be binding upon and inure to the benefit of the
parties and their respective permitted successors and permitted
assigns.
ARTICLE 26. FORCE MAJEURE
26. Neither party shall be deemed to be in breach of this Agreement due
to, or liable to the other party for damages or loss occasioned by
failure of performance by the defaulting party if the failure is
occasioned by war, fire, explosion, flood, acts of God, strike or
lockout, embargo, or any similar cause beyond the control of the
defaulting party; provided that the party claiming this exception has
exerted all commercially reasonable and diligent efforts to avoid or
remedy such event and that such event does not extend for more than
nine (9) months; provided further that such party provides the other
party with prompt written notice of any delay or failure to perform
that occurs by reason of force majeure and continues performance
hereunder with reasonable dispatch whenever such causes are removed.
The parties shall mutually seek a resolution of the delay or failure to
perform in good faith if a force majeure event extends for more than
nine (9) months, which resolution may be termination of this Agreement.
ARTICLE 27. JHU LICENSE AGREEMENT
27. In the event that Genzyme's license to the Patent Rights under the JHU
License Agreement is terminated, this Agreement shall remain in effect
pursuant to the terms of the JHU License Agreement provided that at
such time EXACT is not in material breach of the provisions of this
Agreement and agrees to be bound to JHU as a licensor under the terms
and conditions of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective duly authorized representatives as of the date
first above written.
GENZYME CORPORATION
By: /s/ Peter Wirth
-----------------------------------
Name: Peter Wirth
--------------------------------
Title: Executive Vice President
--------------------------------
Date: March 25, 1999
--------------------------------
EXACT LABORATORIES, INC.
By: /s/ Donna K. Hazad
-----------------------------------
Name: Donna K. Hazad
---------------------------------
Title: V.P. Business Development
--------------------------------
Date: March 23, 1999
---------------------------------
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Appendix A
Gene Patent Rights
U.S. Patent No. 5,352,775
AU9213669 Patent Application No. W092/13103
GB 91000962 US Patent No. 5,648,212 (Div. of '775)
GB 91000963 US Patent No. 5,691,454 (Div. of '775)
GB 91000974 US Patent No. 5,783,666 (Div. of '775)
GB 9100975
EP 569527
JP 7500241
U.S. Patent No. 5,527,676
EP 390323
JP 4004898
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Appendix B
Methodology Patent Rights
Patent Application No. W093/20235 (detecting mammalian nucleic acids from stool)
EP 672181
JP 8504081
U.S. Patent Application No. 08/861,910
