Exhibit 10.6
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.
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 eight percent (8%)
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
fifty percent (50%). 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
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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 one hundred and fifty thousand
dollars($150,000), 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) three percent
(3%) of Net Service Revenues worldwide and (b) three percent (3%)
of Net Sales worldwide.
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4.3
(a) EXACT shall pay Genzyme a
minimum royalty of twenty thousand dollars($20,000) per year
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 twenty thousand
dollars($20,000) per year 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 five (5) years after the Effective
Date, EXACT shall pay Genzyme an annual maintenance fee of one
hundred thousand dollars ($100,000) payable on each anniversary of
the Effective Date commencing with the fifth (5th) 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 five(5) year 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 five (5)
year 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
Section4.4(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 seven (7) years after the Effective Date and
the license granted pursuant to Section 2.1 (c) hereof has not been
terminated by Genzyme pursuant to Section 7.7 hereof, EXACT shall
pay Genzyme an annual maintenance fee of one hundred thousand
dollars ($100,000) payable on each anniversary of the Effective
Date commencing with the
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seventh (7th) 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 seven (7) year 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 seven (7)
year 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; p rovided 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 two hundred and fifty thousand dollars
($250,000) within thirty (30) days 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 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
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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
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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 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 calculatio
