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EXHIBIT 10.21
PURCHASING AND LICENSING AGREEMENT
THIS PURCHASING AND LICENSING AGREEMENT ("Agreement") is made and
entered into as of this 19th day of June, 1996 by and between HEALTHDYNE
TECHNOLOGIES, INC., a Georgia corporation ("Healthdyne"), and SPECTRX, INC., a
Georgia corporation ("SpectRx"), with reference to the following:
R E C I T A L S:
A. SpectRx has developed technology applicable to non-invasive
bilirubin testing and has entered into a license for certain additional
technology applicable to the instrument which will be utilized for non-invasive
bilirubin testing. SpectRx is the sole and exclusive owner of two patents and a
Patent Cooperation Treaty ("PCT") application in respect of such technology, as
more specifically defined below. SpectRx has also signed a Product License
Agreement with the University of Texas M.D. Anderson Cancer Center and related
parties (herein defined as the "MD Anderson License"). Such Patent License
Agreement has been signed by authorized representatives of the University of
Texas M.D. Anderson Cancer Center and the Board of Regents of the University of
Texas System and is awaiting final approval by the Board of Regents in August of
1996. A true and correct copy of such Patent License Agreement as executed by
SpectRx, M.D. Anderson and the Board of Regents of the University of Texas
System has been previously delivered from SpectRx to Healthdyne. Subject to the
final approval of the Board of Regents, SpectRx desires to license or
sublicense, as the case may be, all such technology to Healthdyne in accordance
with the terms and conditions set forth herein.
B. Healthdyne manufactures and markets medical equipment and desires to
license or sublicense, as the case may be, SpectRx technology from SpectRx in
accordance with the terms and conditions set forth herein.
C. Healthdyne also desires to purchase from SpectRx certain items
utilizing the SpectRx technology for the use and/or resale by Healthdyne.
D. SpectRx desires to manufacture and sell such items to Healthdyne
pursuant to the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, Healthdyne and SpectRx hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms, whether
used in the singular or the plural, shall have the following meaning:
1.1 Accessory means items manufactured by SpectRx which would
be considered accessory to and not necessary for the operation of the Instrument
or the Disposable. Initial product specifications for Accessories are set forth
on Exhibit A. Final product specifications for Accessories shall be mutually
agreed upon by the parties prior to commercial introduction.
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1.2 Affiliate means any company, corporation, or business ("Company")
in which:
(a) the party owns or controls, directly or indirectly, 50% or
more of the voting stock of that Company;
(b) the party owns or controls, directly or indirectly,
sufficient voting stock in that Company to elect a majority of the directors of
that Company;
(c) that Company owns or controls, directly or indirectly, 50%
or more of the voting stock of the party;
(d) that Company owns or controls, directly or indirectly,
sufficient voting stock in the party to elect a majority of the directors of the
party;
(e) an organization owns or controls, directly or indirectly,
50% or more of the voting stock of the party and that Company; or
(f) an organization owns or controls, directly or indirectly,
Sufficient voting stock in the party and that Company to elect a majority of
the directors of the party and that Company.
1.3 Average Selling Price means the average of the Net Selling Price
for a particular product in a calendar quarter.
1.4 Change In Control means changes in the ownership of a corporation,
changes in the effective control of a corporation and changes in ownership of a
substantial portion of a corporation's assets all as defined, discussed and
illustrated in Section 280G of the Internal Revenue Code and the duly
promulgated Treasury Regulations thereunder, and the disposition of a
substantial portion of the corporation's assets as set forth below.
A disposition of a substantial portion of a corporations assets occurs
on the date that the corporation transfers assets by sale, distribution to
shareholders, assignment to creditors, foreclosure or otherwise, in a
transaction or transactions not in the ordinary course of the corporation's
business (or has made such transfers during the twelve (12) month period ending
on the date of the most recent such transfer of assets) that have a total fair
market value equal to or more than one-half of the total fair market value of
all of the assets of the corporation as of the date immediately prior to the
first of such transfer or transfers. The transfer of assets by a corporation is
not treated as a disposition of a substantial portion of the corporation s
assets if the assets are transferred to an entity, fifty percent (50%) or more
of the total value or voting power of which is owned, directly or indirectly, by
the corporation.
1.5 Disposable Cost means the cost for direct materials and direct
labor per generally accepted accounting principles ("GAAP") or the landed cost
from an outside supplier in the event SpectRx utilizes a contract manufacturer.
In the event SpectRx utilizes an outside supplier as a
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contract manufacturer, Healthdyne shall approve the form and substance of the
agreement and any modifications thereto, which approval shall not be
unreasonably withheld.
1.6 Instrument means an instrument for non-invasive bilirubin
measurement with required [*] utilizing the Disposable to measure bilirubin
levels. The initial product specifications for the Instruments are set forth on
Exhibit A. Final product specifications for the Instrument shall be mutually
agreed upon by the parties prior to commercial introduction.
1.7 Healthdyne Improvements shall have the meaning set forth in
Section 10.
1.8 Healthdyne Subsidiary means any majority-owned subsidiary of
Healthdyne or any of Healthdyne's wholly owned subsidiaries.
1.9 Gross Margin means gross margin as defined by GAAP.
1.10 Improvement means any invention, modification, adaptation or
change relating to SpectRx Technology, but in no event shall include
improvements to Healthdyne Technology.
1.11 Licensed Products shall mean the Instruments, Disposables and
Accessories.
1.12 Licensed Trademark means the SpectRx Products designation set
forth on Exhibit B to this Agreement.
1.13 Healthdyne Technology means technical information, inventions,
products, components, concepts, trade secrets, know-how, techniques, designs,
processes, communications, protocols, software, whether patentable or not,
patent applications, Healthdyne Improvements, copyright applications, patent
rights of any kind and copyrights and all other intellectual property rights
relating to Healthdyne's business other than SpectRx Technology.
1.14 SpectRx Technology means technical information, inventions,
products, components, concepts, trade secrets, know-how, techniques, designs,
processes, communications, protocols, Software, whether patentable or not,
patent applications, copyright applications, the Patent Rights, and copyrights
and all other intellectual property rights relating to SpectRx proprietary
technology and related proprietary documentation.
1.15 Net Selling Price means the total sales revenue for the product in
question excluding charges for returns, outbound prepaid or allowed
transportation charges, sales taxes, tariffs or duties directly imposed with
reference to particular sales or similar items. In the event a Party leases,
licenses or permits the use of a Licensed Product without effecting a sale
thereof (except for demo loaners and end user evaluation samples), the Net
Selling Price therefor shall be deemed to be the Average Selling Price of such
Licensed Product for the relevant calendar quarter. In the event a Party sells a
Licensed Product through an Affiliate, the Net Selling Price for that sale shall
be the Net Selling Price for the first sale to a customer which is not an
Affiliate of a Party. Net Selling Price shall only include one sale per Licensed
Product.
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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1.16 Party means Healthdyne or SpectRx; "Parties" means Healthdyne and
SpectRx.
1.17 Patent Rights shall mean any U.S. and Canadian patents filed by
SpectRx relating to the SpectRx Technology which are necessary, used or useful
for the manufacture, sale or use of Licensed Products, the inventions described
and claimed therein, and any divisions, patents of addition, continuations,
continuations-in-part, extensions, patents and patent applications
corresponding thereto; which will be automatically incorporated in and added to
this Agreement and shall be periodically added to Exhibit C attached to this
Agreement and made a part thereof. Patent Rights shall also be defined to
include the patent rights licensed by SpectRx pursuant to the M.D. Anderson
License.
1.18 Purchase Orders shall have the meaning set forth in Section 4.1
hereof.
1.19 Royalty shall mean a percentage of the Net Selling Price for the
Licensed Product in question.
1.20 Software means any and all computer/instrument software and/or
firmware developed by or acquired by SpectRx that is used or useful in
connection with SpectRx Technology.
1.21 Disposable means disposable probes, tips or other devices
for calibration, cross-contamination prevention, or other purposes as agreed to
by the p which when used with the Instrument measure bilirubin levels. Initial
product specifications for the Disposable are set forth on Exhibit A. Final
product specifications for the Disposable shall be mutually agreed upon by the
parties prior to commercial introduction.
1.22 Territory shall mean the United States and Canada.
1.23 M.D. Anderson License has the meaning assigned to it in the
recitals hereto.
1.24 Cost of Goods Sold means cost of goods sold as defined by GAAP.
2. Licenses Granted.
2.1 Licenses Granted to Licensee. Subject to the terms and conditions
set forth herein, SpectRx grants to Healthdyne an exclusive and a
non-transferable (except as set forth herein) license or sublicense, as the case
may be, within the Territory to SpectRx Technology for the following
applications:
(i) to use and sell Instruments; Healthdyne and SpectRx shall
each execute the Sub-license Agreement attached hereto as Exhibit D-1 for the
portion of the SpectRx Technology licensed from M.D. Anderson relating to the
Instrument within ten (10) days of the approval of the Board of Regents. In the
event of a conflict between the terms of this Agreement and the Sub-License
Agreement, the terms of this Agreement shall control. Each party shall use
reasonable business efforts to obtain the approval of the Board of Regents to
the Successor Letter Agreement
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attached hereto as Exhibit D-2; except as specifically set forth in Section 6.1
hereof, neither the execution, delivery and performance of the Sub-license
Agreement between SpectRx and Healthdyne nor the Successor Letter Agreement will
require Healthdyne to pay any additional fees, royalties, payments or the like.
Healthdyne's sole payment obligation for the Instrument shall be as set forth in
Section 6.1. SpectRx shall use its best efforts to obtain the approval of the
Board of Regents to the M.D. Anderson License and the Successor Letter Agreement
as set forth herein on or before August 30, 1996; failure to obtain approval for
any reason within such time period shall be grounds for Healthdyne to terminate
this Agreement immediately upon the giving of written notice from Healthdyne to
SpectRx. Within thirty (30) days of receipt of such notice of termination,
SpectRx shall return all license fees paid to SpectRx by Healthdyne.
(ii) to use and sell Disposables and
Accessories; and
(iii) to make Instruments, Accessories and/or
Disposables in the event that SpectRx, following the first thirty (30) days
after commercial release of the Instrument, Disposable or Accessory, as the case
may be, is unable to meet the requirements of Subsections (A) or (B) of this
Section 2.1(iii) within the immediately succeeding two (2) calendar months
following the calendar month which is the subject of written notice from
Healthdyne that SpectRx failed to meet the requirements of Subsections (A) or
(B) of this Section 2.1(iii) or in the event that the United States Food and
Drug Administration ("FDA") enjoins SpectRx from distributing into interstate
commerce Instruments, Accessories and/or Disposables pursuant to the Federal
Food, Drug and Cosmetic Act, as amended ("FDA Injunction"). Healthdyne shall
notify SpectRx of an FDA Injunction or SpectRx's failure to meet the
requirements of Subsections (A) or (B) within ten (10) days of the end of the
calendar month which is the subject of the notice. in the event of an FDA
Injunction, the license to make Licensed Products shall be deemed granted
immediately upon receipt of the notice.
In the event Healthdyne becomes licensed to make
Instruments, Disposables or Accessories, as the case may be, as set forth above,
it shall be entitled to utilize the documentation as set forth in Section 16.15
and SpectRx shall provide Healthdyne with access to SpectRx tooling to permit
the manufacture of such Licensed Product(s) in a timely manner. In the event
such tooling is in the possession of a third party, SpectRx shall cause such
third party to supply Healthdyne with access to such tooling. In the event such
tooling is in the possession of SpectRx, SpectRx shall provide such tooling to
Healthdyne; provided, however, Healthdyne shall give SpectRx reasonable access
to such tooling to allow duplication of same. SpectRx may resume making Licensed
Products following Healthdyne's commencement of making a Licensed Product if
SpectRx demonstrates it can meet the requirements of Subsections (A) and (B) of
this Section 2.l(iii), and SpectRx reimburses Healthdyne for reasonable costs to
commence manufacturing [*] plus the cost of any enhanced or improved tooling
developed by Healthdyne to the extent such enhanced or improved tooling cost,
when added to Healthdyne's reasonable costs to commence manufacturing, would
[*]. In the event SpectRx resumes making the Product, all SpectRx tooling will
be returned promptly to SpectRx by Healthdyne. If such SpectRx tooling has been
altered or improved, such altered or improved tooling shall be returned to
SpectRx. In addition, all manufacturing know-how acquired by Healthdyne in
manufacturing the Licensed Products will be licensed to SpectRx on a
non-exclusive royalty-free basis in perpetuity. In the event Healthdyne has
made Instruments, Accessories, or Disposables, as
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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the case may be, for two (2) years, SpectRx will no longer have the right to
resume making such Licensed Products.
(A) [*] of all units of a Licensed Product
delivered in any one calendar month period must meet the
inspection and acceptance standards set forth in Section 8
hereof,
(B) in any one calendar month period,
SpectRx must deliver quantities representing [*] of all units
of a Licensed Product called for on purchase orders accepted
or required to be accepted by SpectRx under Section 4 hereof
Deliveries of replacement Licensed Products
shall be included within the calculation of (A) or (B) above
in the month in which such replacement Licensed Products are
delivered to Healthdyne. If SpectRx fails to meet (A) or (B)
above, and Healthdyne delivers notice of such failure pursuant
to this Section 2.1(iii), Healthdyne, at its option and
expense, may engage a consultant to review the circumstances
and suggest corrective action to be taken during the two (2)
month cure period specified above in order to assist in the
correction of the failures specified in the notice. Engagement
of the Consultant by Healthdyne or adoption of corrective
action suggested by the Consultant shall not extend or affect
in any manner the two (2) month cure period specified above.
The provisions of this Section 2.1(iii) are in addition to and
not in lieu of any other rights or remedies of Healthdyne in
this Agreement (or otherwise in law or in equity) to require
Licensed Products to meet final product specifications and to
be delivered in a timely manner.
2.2 OEM Licenses. Notwithstanding anything to the contrary set
forth herein, Healthdyne may (i) grant sub-licenses to one or more third parties
to manufacture Instruments in the event a manufacturing license is granted in
accordance with Section 2.1(iii), and (ii) may grant non-exclusive sub-licenses
to use and sell Licensed Products to one or more third parties (but not the
manufacture of such Licensed Products unless such manufacture is pursuant to a
manufacturing license granted in accordance with Section 2.1(iii)) in such third
party's name, or such third party's name in conjunction with Healthdyne's name
provided such third party is a hospital, or a home care dealer or distributor
who, in the absence of the sub-license, would be considered an end user within
Healthdyne's normal channels of distribution ("Private Label Dealer").
Healthdyne covenants that no more than [*] of its net sales revenue for Licensed
Products shall be sold to Private Label Dealers.
2.3 Other Sub-Licenses. Except for sub-licenses and licenses
consistent with Section 2.2 or assignments consistent with Section 16.2,
Healthdyne may only sublicense SpectRx Technology with SpectRx's written
consent, which shall not be unreasonably withheld.
2.4 Reservation of Rights. This Agreement does not grant,
license or permit (either expressly or by implication) Healthdyne to transfer,
assign, sell, give, license, sub-license or in any way permit the use of any of
the SpectRx Technology by or to any person, including any Affiliate of
Healthdyne, other than as, and to the extent, expressly provided for herein.
Healthdyne shall not
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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use the SpectRx Technology for any purpose or purposes other than those
expressly permitted under the license grants provided for in Section 2.1 hereof,
and subject to the limitations, and terms and conditions, thereof. The licenses
granted to Healthdyne provided for herein grants unto Healthdyne, subject to the
terms and conditions hereof, the right to use the SpectRx Technology to use and
sell the Licensed Products, and under certain defined circumstances to make
certain Licensed Products only, and only within the Territory, and, except for
the right to receive royalties on sale of Licensed Products sold outside the
Territory under the circumstances set forth in Section 14.5, nothing contained
herein or elsewhere shall be construed to permit the use by Healthdyne of the
SpectRx Technology to use or sell, or make or have made products other than the
Licensed Products, or to use or sell Licensed Products outside of the Territory.
3. Commercialization Efforts and License Fees.
3.1 Commercialization Efforts. Each party agrees to utilize reasonable
business efforts to progress through the milestones toward commercialization of
the Licensed Products, as specifically set forth in Exhibit E. Once
commercialized, Healthdyne shall promote and support the Licensed Products at an
effort level consistent with Healthdyne's sales support, customer service and
technical support levels with respect to Healthdyne's other products. Healthdyne
covenants that it will only sell Disposables which have been manufactured in
accordance with the terms of this Agreement. Healthdyne shall submit a marketing
plan in respect of the Licensed Products to SpectRx in respect of each calendar
year no later than thirty (30) days prior to the commencement of such year. Such
plan shall include, without limitation, plans to undertake clinical studies,
advertisements in journals and other publications and other typical marketing
communications as may be reasonably necessary to promote sales of the Licensed
Products.
3.2 License Fees. Healthdyne agrees to pay license fees for the
Disposable based upon achievement of certain milestones set forth in Exhibit E.
If all milestones are attained, the total license fees will amount to [*]. The
parties agree that [*] of such license fees have been paid by Healthdyne to
SpectRx. Each such milestone payment shall be due and payable in advance upon
the completion of the previous milestone as set forth in Exhibit E. SpectRx will
give Healthdyne no less than ten (10) days written notice of a meeting at which
it will review with Healthdyne its completion of a milestone as set forth on
Exhibit E. Healthdyne shall, within ten (10) business days of the meeting set
forth in the notice, pay SpectRx with respect to the following milestone or give
SpectRx written notice its intent to arbitrate. Notwithstanding the above, the
milestone for the Delivery of the Pre-Production Unit shall only be payable upon
the satisfactory completion of the milestone.
4. Purchase and Distribution of Licensed Products.
4.1 Purchase Orders. During the term of this Agreement and in
accordance with its provisions, SpectRx agrees to sell and Healthdyne agrees to
purchase the Instruments, Disposables and Accessories, in accordance with the
terms of this Agreement. The purchase and sale of the products between the
Parties shall be made by means of purchase orders placed by Healthdyne or its
designee to SpectRx ("Purchase Orders"). Purchase Orders and change orders may
be placed by telex or facsimile. A Purchase Order may provide for delivery of
the products for a period of up to
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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one hundred eighty (180) days following termination of this Agreement in order
to complete the inventory of Licensed Products necessary to complete purchase
orders for Licensed Products outstanding at the time of termination and all
terms and conditions of this Agreement shall govern. Any Purchase Order issued
for the products hereunder shall be non-cancelable after the expiration of
fifteen (15) days from the acceptance of the Purchase Order, and Healthdyne
thereafter shall be responsible for taking deliveries of and paying for all
products set forth on such Purchase Order.
4.2 Acceptance. Purchase Orders and change orders issued by
Healthdyne shall be deemed to be offers to purchase Licensed Products on the
terms and conditions of this Agreement subject to acceptance by telex or
facsimile within five (5) working days after receipt of Healthdyne's Purchase
Orders. Acceptance of receipt and acceptance by SpectRx may be placed by telex
or facsimile.
4.3 Contents. All Purchase Orders for the products submitted
by Healthdyne shall state the following: (i) price, (ii) the quantities ordered,
(iii) the requested delivery dates, (iv) destination, (v) requested method of
shipment, and (vi) model or number of the products in accordance with the terms
and conditions hereof Healthdyne shall use its form of Purchase Order attached
hereto as Exhibit F to place Purchase Orders and emergency orders referred to in
Section 4.6 below, provided that, in the event of a conflict between the form of
the Purchase Order and this Agreement, the terms and conditions of this
Agreement shall prevail.
4.4 Rolling Forecasts. On or before the fifth (5th) day of
each calendar quarter commencing with the second quarter following
commercialization of a Licensed Product, Healthdyne agrees to submit to SpectRx
a non-binding forecast of its anticipated product purchases for the following
six (6) calendar months. The quantity of Licensed Products contained in a
particular calendar quarter may not vary by more than twenty percent (20%) from
the previous forecast for such calendar quarter.
4.5 Purchase Orders Quantities. Healthdyne will issue a
Purchase Order consistent with subsection 4.3 at least thirty (30) days prior to
the scheduled delivery date. SpectRx shall be required to accept Purchase Orders
calling for delivery of Licensed Products which are within [*] of the quantities
forecasted for such Licensed Products in the most recent forecast as set forth
in Section 4.4. Failure to accept Purchase Orders greater than [*] of the most
recent forecast or less than [*] of the most recent forecast shall not be
grounds for Healthdyne to notify SpectRx of its failure to deliver Licensed
Products as set forth in Section 2.1(iii) hereof.
4.6 Emergency Orders. The rolling forecasts and Purchase
Orders submitted by Healthdyne under subsections 4.4 and 4.5 above shall not
prevent Healthdyne from placing additional orders or emergency orders for units
of the products for delivery in less than thirty (30) days. SpectRx agrees to
use reasonable business efforts (at an effort level equivalent to SpectRx's
efforts with respect to its other customers) to deliver such units of products
on the requested schedule. Failure to deliver quantities of products on or
before the date specified in the Emergency Purchase Order shall not be grounds
for Healthdyne to notify SpectRx of its failure to deliver Licensed Products as
set forth in Section 2.1(iii).
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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5. Minimum Purchases.
5.1 Instruments and Disposables. In order to maintain the exclusivity
provisions in Section 2.1 hereof, Healthdyne will purchase from SpectRx (or pay
a Royalty for equivalent number of sales of Licensed Products in the event
Healthdyne is making Licensed Products pursuant to Section 2.1(iii)) during the
term of this Agreement the minimum number of Instruments and Disposable units
set forth on Exhibit G. The sole remedy of SpectRx for the failure of Healthdyne
to meet minimum unit purchases for any period shall be to convert the license
granted hereunder for the remainder of the term of the License Agreement to a
non-exclusive license. Such conversion shall be effective upon the giving
forty-five (45) days prior written notice to Healthdyne following the end of any
minimum period hereunder. If during the forty-five (45) day notice period
Healthdyne makes up the previous minimum short fall, then Healthdyne's rights
remain exclusive. Licensed Products purchased during such period to make up the
shortfall will not be counted for purposes of the then current period in respect
of the minimum purchase required therefor. If Healthdyne's rights under this
Agreement become non-exclusive, Healthdyne thereafter shall not be required to
make minimum purchases.
6. Prices, Royalties and Payment.
6.1 Instrument Price. SpectRx's price to Healthdyne for the Instrument
(excluding Disposables) delivered in accordance with this Agreement shall be [*]
each. In addition, Healthdyne agrees to pay [*] of the Royalty due and payable
to M.D. Anderson, [*] of the Net Selling Price for the Instrument all as set
forth in the Sub-license Agreement set forth in Exhibit D-1 hereto. All prices
are F.O.B. SpectRx's shipping dock. Should SpectRx's or Healthdyne's respective
Gross Margin for the sale of Instruments ever fall below [*] for [*] consecutive
quarters, then Healthdyne and SpectRx will renegotiate transfer pricing for the
Instrument in good faith. If SpectRx's or Healthdyne's Gross Margin for the sale
of Instruments ever exceed [*] for [*] consecutive quarters, then Healthdyne and
SpectRx will renegotiate transfer pricing for the Instrument in good faith. In
the event that Healthdyne becomes entitled to make the Instruments, SpectRx will
receive a Royalty equal to the difference between the [*] then in effect and
Healthdyne's [*] for manufacturing the Instrument. In the event that the
difference between the transfer price then in effect and Healthdyne's Cost of
Goods Sold is a negative number (i.e. Healthdyne's Cost of Goods Sold exceed the
then existing transfer price), there will be no amount payable to SpectRx. [*]
following Healthdyne's commencement of making a Licensed Product, SpectRx's
total compensation will be revised to a [*] Royalty on Healthdyne's Net Selling
Price. [*] following Healthdyne's commencement of making a Licensed Product,
SpectRx's total compensation will be reduced to a [*] Royalty on Healthdyne's
Net Selling Price. [*] following Healthdyne's commencement of making a Licensed
Product and thereafter for the remaining term of the Agreement, SpectRx's total
compensation will be reduced to a [*] royalty on Healthdyne's Net Selling Price.
6.2 Disposable and Accessory Pricing. Healthdyne shall pay
SpectRx SpectRx's Disposable Cost for manufacturing the Disposable or Accessory
in question. SpectRx and Healthdyne agree to split equally the available margin
for Disposables and Accessories manufactured by SpectRx where the margin is
defined as the difference between (i) Healthdyne's Average Selling
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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Price, and (ii) the sum of (a) SpectRx's Disposable Costs to manufacture the
Disposables or Accessory in question and (b) [*] of Healthdyne's Average Selling
Price for Disposables and Accessories. Healthdyne agrees to use reasonable
business efforts (an effort level equivalent to Healthdyne's efforts with
respect to its own products) to maximize the amounts to be split from
Disposables and Accessories. SpectRx agrees to use reasonable business efforts
(at an effort level equivalent to SpectRx's efforts with respect to its other
products) to minimize its Disposable Costs. Should SpectRx's Disposable Cost for
the Disposable ever [*], the Parties will renegotiate pricing in good faith.
Margins and Average Selling Price shall be calculated for each calendar quarter.
In the event Healthdyne becomes entitled to make any of the Disposables or
Accessories for use with Instruments, Healthdyne shall pay to SpectRx a Royalty
equal to [*] between (i) Healthdyne's Average Selling Price and (ii) the sum of
(a) Healthdyne's Disposable Cost to produce the Disposable or Accessory in
question and (b) [*] of Healthdyne's Average selling price for Disposables and
Accessories. In the event that the difference as calculated above is a negative
number, no amounts will be paid to SpectRx hereunder.
6.3 Audit Rights. SpectRx shall have the right to verify, at
its expense and not more frequently than twice per year and upon not less than
thirty (30) days' prior written notice to Healthdyne, the accuracy of the
accounting reports and Royalty payments provided by Healthdyne hereunder,
through inspection of Healthdyne's pertinent records and books of accounts
maintained in the ordinary course of business. Such audit shall be conducted by
a certified public accountant (the "CPA") chosen by SpectRx in its reasonable
discretion, and which CPA is reasonably acceptable to Healthdyne. If the CPA
determines that Healthdyne has overpaid SpectRx, SpectRx will promptly repay
Healthdyne. If the CPA determines that Healthdyne has underpaid SpectRx,
Healthdyne shall have sixty (60) days from receipt of notice of the alleged
underpayment to investigate and review the alleged underpayment. If Healthdyne
concurs that there has been an underpayment, Healthdyne shall promptly pay
SpectRx the amount of any such underpayment. In such event, SpectRx shall pay
all costs, expenses and fees of the CPA unless (i) Healthdyne has underpaid
SpectRx, and (ii) the amount of such underpayment exceeds five percent (5%) of
the amount actually due to SpectRx for the period audited, in which event the
CPA's costs, fees and expenses shall be paid by Healthdyne. If Healthdyne does
not concur with the CPA's determination, the matter will be sent to binding
arbitration in accordance with the rules set forth as Exhibit H, provided,
however, the arbitrator shall be a CPA from an agreed upon national accounting
firm which is not affiliated with either party and is reasonably satisfactory to
each party. Each party shall pay its own costs in arbitration.
Healthdyne shall have the right to verify, at its expense and
not more frequently than twice per year and upon not less than thirty (30) days
prior written notice to SpectRx, the accuracy of the accounting records reported
to Healthdyne by SpectRx hereunder, through inspection of SpectRx's pertinent
records and books of accounts (including but not limited to product costs)
maintained in the ordinary course of business. Such audit shall be conducted by
a certified public accountant (the "CPA") chosen by Healthdyne in its reasonable
discretion, and which CPA is reasonably acceptable to SpectRx. If the CPA
determines that Healthdyne has underpaid SpectRx, Healthdyne will promptly pay
SpectRx such amount. If the CPA determines that Healthdyne has overpaid SpectRx,
SpectRx shall have sixty (60) days from receipt of notice of the alleged
overpayment to investigate and review the alleged overpayment. If SpectRx
concurs that there has
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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been an overpayment, SpectRx shall promptly pay Healthdyne the amount of any
such overpayment. In such event, Healthdyne shall pay all costs, expenses and
fees of the CPA unless (i) Healthdyne has overpaid SpectRx, and (ii) the amount
of such overpayment exceeds five percent (5%) of the amount actually due to
SpectRx for the period audited, in which event the CPA's costs, fees and
expenses shall be paid by SpectRx. If SpectRx does not concur with the CPA's
determination, the matter will be sent to binding arbitration in accordance with
the rules set forth as Exhibit H; provided, however, the arbitrator shall be a
CPA from an agreed upon national accounting firm which is not affiliated with
either party and is reasonably satisfactory to each party. Each party shall pay
its own costs in arbitration.
6.4 Currency Basis. Prices for the products sold to Healthdyne shall be
in U.S. Dollars.
6.5 F.O.B. Point. Title to and risk of loss of the products shall pass
to Healthdyne, F.O.B. SpectRx's United States shipping dock.
6.6 Payment. Payment by Healthdyne to SpectRx for the transfer price
for Instruments shall be made thirty (30) days following receipt of delivery by
Healthdyne. Payment by Healthdyne to SpectRx for margin split amounts due for
Disposables and Accessories under 6.2 hereof shall be payable within forty-five
(45) days of the end of each calendar quarter. Any Royalty payable under 6.1 or
6.2 shall be payable within forty-five (45) days of the end of each calendar
quarter together with a report providing in reasonable detail the basis for
calculating the royalty.
6.7 Instrument Only Business. In the event the marketplace for sales of
Instruments and Disposables becomes predominantly for the sale of Instruments
only, the Parties agree to meet and negotiate in good faith to revise the
pricing under this Section 6.
6.8 Covenant as to Pricing. In determining the Net Selling Price for
each Licensed Product, Healthdyne covenants and agrees to not disadvantage or
understate the Net Selling Price to the advantage of Healthdyne relative to the
sale of its other products.
7. Delivery.
7.1 Transportation. The method of transportation and carrier selected
shall be as specified by Healthdyne in its Purchase Orders. Unless otherwise
agreed, after delivery of the products to the F.O.B. point, all transportation
charges, including insurance, shall be paid by Healthdyne.
7.2 Packaging. SpectRx shall package Licensed Products for shipment and
ship Licensed Products in accordance with standards mutually agreed upon by the
parties and other required international regulatory standards. Each shipment
shall include a packing list containing: (i) Purchase Order number, (ii) model
number of the products, (iii) quantity, (iv) serial number or date code of
shipped products, and (v) the results of applicable quality assurance and other
tests performed with respect to the products being shipped.
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7.3 Delivery. SpectRx shall use reasonable business efforts (at an
effort level consistent with its efforts with respects to its other customers)
to assure that it fills all Purchase Orders by delivery dates and in quantities
specified by Healthdyne in its Purchase Orders.
8. Inspection and Acceptance.
8.1 SpectRx Inspection. SpectRx shall be an FDA registered
manufacturing facility and shall follow good manufacturing practices established
by the FDA and provide and maintain an inspection procedure and quality
assurance program for the products sold by SpectRx to Healthdyne hereunder and
its production processes. Complete records of all inspection and quality
assurance work done by SpectRx shall be made available to Healthdyne upon its
request at reasonable times during the term of this Agreement. Healthdyne shall
have the right to audit SpectRx's manufacturing facilities upon reasonable
notice to determine whether SpectRx is following good manufacturing practices.
8.2 Healthdyne Inspection.
8.2.1 Prior to commercial introduction of Licensed Products, the
parties shall mutually agree on Healthdyne's criteria for acceptance testing
("Acceptance Test"). All products ordered by Healthdyne under this Agreement may
be subject to statistical lot sampling inspection or 100% testing to
Healthdyne's Acceptance Test at Healthdyne's receiving facility. In order to
invoke Section 2.I(iii) hereof, Healthdyne must 100% inspect the units involved
in such shipments. Any of the products or lots of products ("Lot") which
materially fall to meet the mutually agreed upon final product specifications
following the Acceptance Test may be rejected by Healthdyne and returned to
SpectRx for replacement. Prior to returning any products to SpectRx, Healthdyne
shall notify SpectRx by facsimile or telex that Healthdyne has rejected the
products, inclusive of the reason or basis of such rejection. Within three (3)
working days of the receipt of the non-conforming notification, SpectRx will
issue a "Return to Vendor" ("RTV") number to Healthdyne by facsimile or telex,
which RTV number will be Healthdyne's authorization to return the products. In
Healthdyne's sole discretion, it may allow SpectRx to enter on Healthdyne's
premises to repair products otherwise subject to replacement under the
provisions of this Section 8.2.
8.2.2 Healthdyne shall promptly notify SpectRx of any incoming
failure. Except for products repaired pursuant to Section 8.2.1, Products which
do not conform to the final product specifications shall be returned by
Healthdyne to SpectRx freight collect and insured for full replacement value.
Within twenty (20) days after the date of receipt of the nonconforming products
by SpectRx, replacement product will be shipped to Healthdyne at SpectRx's
expense. Should SpectRx fail to replace rejected products by shipping conforming
products to Healthdyne within twenty (20) days of its receipt of the
nonconforming products, Healthdyne shall have the option, in addition to any
other remedies available to it in law or equity, to cancel without cost or
liability the purchase of such products and receive, at Healthdyne's option, a
credit or rebate if payment has been made. Healthdyne shall pay freight charges,
insurance and other customary charges for transportation for improperly rejected
products.
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8.2.3 All costs to replace or repair including transportation with
respect to the defective products shall be the sole responsibility of SpectRx.
8.2.4 If Healthdyne attempts to correct deficiencies to the
products purchased under this Agreement without prior authorization from
SpectRx, then SpectRx shall have no further obligations with respect to such
products.
8.3 Nonconforming Acceptance. Healthdyne may choose to accept
the products which fail to conform in a minor aspect to the specifications
established by this Agreement without prejudice to its right to reject
nonconforming items in the future. If Healthdyne so chooses, Healthdyne will
notify SpectRx of its intent to accept nonconforming items. However, SpectRx
accepts no responsibility for the nonconforming aspects of the items accepted by
Healthdyne.
9. Confidentiality; Exclusive Rights; Exclusive Option and Right of First
Refusal.
9.1 Confidentiality. The parties agree that the terms and conditions of
that certain Confidentiality Agreement between the parties dated February 22,
1995 are superseded by the following confidentiality provisions:
(a) Each party agrees to keep the Trade Secrets and Confidential
Information of the other party confidential. For purposes of this Agreement,
"Trade Secrets" means information including, but not limited to, technical or
nontechnical data, formulas, patterns, compilations, programs, devices, methods,
techniques, drawings, processes, financial data, financial plans, product plans
or fists of actual or potential customers or suppliers which (1) derives
economic value, actual or potential, from not being generally known to, and not
being readily ascertainable by proper means by other persons who can obtain
economic value from its disclosure or use; and (2) is the subject of efforts
that are reasonable under the circumstances to maintain its secrecy.
"Confidential Information" means data and information relating to the business
of a party (which does not rise to the level of Trade Secret) which is or has
been disclosed to the other party or of which the other party became aware as a
consequence of or through its relationship with the disclosing party and which
has value to the disclosing party and is not generally known to the disclosing
party's competitors. Trade Secrets and Confidential Information will not include
any data or information that is already known to a party at the time of
disclosure to such party, or which (i) has become generally known to the public
through no wrongful act of such party; (ii) has been rightfully received by such
party from a third party without restriction on disclosure and without breach of
an obligation of confidentiality running either directly or indirectly to the
other party; (iii) has been approved for release and released to the general
public by written authorization of the other party; (iv) has been disclosed
pursuant to a requirement of a governmental agency or of law without similar
restrictions or other protections against public disclosure, or has been
required to be disclosed by operation of law; provided, however, that a party
must first have given written notice of such required disclosure to the other
party, used reasonable business efforts to obtain a protective order requiring
that the Trade Secret or Confidential Information so disclosed be used only for
the purposes for which disclosure is required, and taken reasonable steps to
allow the other party to seek to protect the confidentiality of the information
required to be disclosed; (v) is independently developed by a party without use,
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directly or indirectly, of the Trade Secret or Confidential Information; or (vi)
is furnished to a non-Affiliated third party by the other party without
restrictions on the third party's right to disclose the information. The
provisions of this Agreement restricting the use of Trade Secrets shall survive
termination of this Agreement for so long as is permitted by the Georgia Trade
Secrets Act of 1990, O.C.G.A. Section 10-1-760-10-767. The provisions of this
Agreement restricting the use of Confidential Information shall survive for a
period of three (3) years following termination or expiration of this Agreement.
(b) Disclosure may be made by Healthdyne to governmental agencies to
the extent required or desirable to obtain regulatory approval for Licensed
Products and to nonclinical and clinical investigators and consultants where
necessary or desirable for their information to the extent normal and usual in
the custom of the trade and under a secrecy agreement with provisions as to
confidentiality essentially the same as those in this Agreement.
9.2 Exclusive Option. SpectRx hereby grants to Healthdyne the exclusive
option to acquire an exclusive license for the United States and Canada, on
substantially the same terms and conditions as are set out in this Purchasing
and License Agreement, to any new technology and intellectual property (other
than the SpectRx Technology and any Improvement thereto) for which SpectRx has
right and authority to grant licenses that may be conceived, invented, reduced
to practice, or otherwise come into existence subsequent to the date of this
Agreement by SpectRx for such other devices as may be directly or indirectly
competitive with the Licensed Products manufactured using the SpectRx Technology
(hereinafter referred to as the "Area Device"), provided that Healthdyne agrees
to reimburse SpectRx for [*] to develop and commercialize an Area Device.
Payment of [*] shall be in lieu of any license fees, and the parties agree that
"substantially the same terms and conditions" as used in the preceding sentence
shall not include license fees or the like.
9.3 Right of First Refusal. With respect to the option granted in
Section 9.2, Healthdyne shall have a three (3) month period after notification
by SpectRx in which to exercise in writing its option to obtain such license.
Such notification shall include a detailed description of the new technology,
the design of the proposed Area Device, and any prototype in existence together
with the projected costs of development and manufacture of the Area Devices and
the schedule for commercialization. If Healthdyne falls to exercise its option,
SpectRx may license such development to any third party on terms no more
favorable than those offered to Healthdyne. If SpectRx proposes to offer more
favorable terms to a third party, then Healthdyne shall be notified of the more
favorable terms and shall have a thirty (30) day period to accept the new terms
after which period SpectRx may enter into a license with a third party. For the
purposes of clarity, SpectRx may only enter into a license with a third party
for any technology relative to the Area Device after Healthdyne has had the
opportunity to accept the license on equivalent or better terms.
9.4 Exclusive Rights. During the term of any exclusive license granted
under the terms of this Agreement, SpectRx agrees that as part of the exclusive
license granted hereby, it will not market or sell within the Territory any Area
Devices without first complying with the provisions of Section 9.2 and 9.3
hereof in respect thereof.
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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10. Proprietary Rights.
10.1 If, during the term of this Agreement, either party shall discover
or invent an improvement (hereinafter called the "Improvement") to the SpectRx
Technology, such party agrees to promptly disclose to the other party and
furnish to the other party all information pertaining thereto, including
blueprints, sketches, drawings, designs, computer programs, and other data.
Healthdyne and SpectRx shall, to the best of their ability, cause its
employees to disclose only to Healthdyne and SpectRx, respectively, any
Improvement made or developed by them or any of them during the term of this
Agreement, and Healthdyne and SpectRx each agree to inform the other party
promptly of any such Improvement of which it becomes aware within a reasonable
time. Title to any such Improvement shall as it relates to the SpectRx
Technology shall reside with SpectRx. During the term of this Agreement,
Healthdyne may use such Improvements as are discovered or invented by SpectRx
only in conjunction with the SpectRx Technology and only for the purposes
contemplated by this Agreement and such discovery or invention shall be deemed
to be part of the licensed subject matter for all purposes of this Agreement.
Notwithstanding the foregoing, an Improvement made by Healthdyne which
also has application to Healthdyne Technology shall be owned by Healthdyne as it
relates to Healthdyne Technology ("Healthdyne Improvement"). In such case, both
parties shall be entitled to utilize such enhancement or revisions in connection
with Licensed Products (and, in the case of Healthdyne, with its other products)
without the payment of any additional Royalty, provided however that SpectRx
shall not make any commercial use thereof in the United States and Canada during
the term of this Agreement.
In the event an Improvement increases the cost for direct materials and
direct labor per GAAP ("Direct Cost") for manufacturing the Instrument, SpectRx
may increase the transfer pricing in Section 6.1 by the amount of such increase
in the Direct Cost provided Healthdyne approves in writing the incorporation of
such Improvement into the Instrument. Healthdyne shall also approve
incorporation of an Improvement to a Disposable or an Accessory.
10.2 Further Action. Healthdyne and SpectRx each agree that it shall
promptly notify the other of any Improvement, invention or other improvement in
which such party has involvement and which relates to this Agreement and fully
disclose such Improvement, invention or other improvement to the other party.
Each party agrees that it shall take all actions and execute all documents, as
the other party may reasonably . request, to effectuate the acknowledgment of
any party's ownership or exclusive license under this Section 10.
11. Warranty.
11.1 SpectRx Warranty.
11.1.1 SpectRx warrants that the Instruments supplied by SpectRx
to Healthdyne to be under normal use and care free for a period of the longer of
[*] after shipment to
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Healthdyne or [*] from sale to the end-user from any defect in workmanship or
material and to materially conform with the mutually agreed upon final product
specifications. All replacement costs under this Warranty shall be borne by
SpectRx. Units returned to SpectRx for warranty repairs shall be shipped to
SpectRx freight collect according to SpectRx's instruction. Within twenty (20)
days of the receipt of Instruments, SpectRx shall replace or repair such units
and shall ship them to Healthdyne's designated return destination freight
prepaid. The foregoing warranties extend to the products returned by
Healthdyne's customers.
11.1.2 SpectRx warrants that for a period that an Accessory is
warranted by a manufacturer other than SpectRx, the Accessories supplied by
SpectRx to Healthdyne hereunder will be, under normal use and care, free from
any defect in workmanship or material and to be in conformity with the
manufacturer's specifications. All replacement costs under this Warranty shall
be borne by SpectRx. Units returned to SpectRx for warranty repairs shall be
shipped to SpectRx or the manufacturer freight collect according to SpectRx's
instruction. Within twenty (20) days of the receipt of the returned Accessories,
SpectRx shall replace or repair such units and shall ship them to Healthdyne's
designated return destination freight prepaid. The foregoing warranties extend
to the products returned by Healthdyne's customers. Accessories manufactured by
SpectRx shall have the same warranty as the Instrument.
11.1.3 SpectRx warrants that for a period of the lesser of [*]
from SpectRx to Healthdyne of a Disposable (single patient use only) supplied by
SpectRx to Healthdyne hereunder will be, under normal use and care, and only
upon first use free from any defect in workmanship or material and to materially
conform with the mutually agreed upon n product specifications. SpectRx shall
bear all replacement costs under this Warranty. Healthdyne shall ship units
returned to SpectRx for warranty repairs to SpectRx freight collect according to
SpectRx's instruction. Within ten (10) days of the receipt of the Disposable,
SpectRx shall replace or repair such units and shall ship them to Healthdyne's
designated return destination freight prepaid. The foregoing warranties extend
to the products returned by Healthdyne's customers.
11.2 Limitation of Liability. EXCEPT FOR THE EXPRESS WARRANTIES SET
FORTH ABOVE, SPECTRX GRANTS NO WARRANTIES, EITHER EXPRESS OR IMPLIED, ON THE
LICENSED PRODUCTS, INCLUDING ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL EITHER PARTY BE RESPONSIBLE
FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL DAMAGES, LOSS OF PROFIT, SUFFERED BY THE
OTHER PARTY IN CONNECTION WITH THIS AGREEMENT.
12. Infringement.
12.1 Third Party Infringement of Patent Rights. In the event that
Healthdyne believes a third party to be infringing one or more of the Patent
Rights or Healthdyne's exclusive license granted hereunder ("License Rights"),
Healthdyne shall bring such infringement to the attention of SpectRx. If SpectRx
does not institute infringement proceedings against such third party within
ninety (90) days after written notice from Healthdyne that such third party
appears to be
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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infringing one or more of the Patent Rights or License Rights, Healthdyne shall
have the right to take whatever steps in its own and sole discretion it shall
deem advisable, including but not limited to, settlement or the filing of suit
for damages, or to enjoin such sales or offers for sale by such third party. In
the event that Healthdyne exercises its discretion to bring an infringement
action, SpectRx shall perform all acts which may become necessary or desirable
to vest in Healthdyne the right to institute any such suit and shall, upon
reasonable notice, cooperate and, to the extent deemed necessary or desirable by
Healthdyne and at Healthdyne's expense, participate in any suit to enjoin such
infringement and to collect, for the benefit of Healthdyne, damages, profits and
awards of any nature recoverable for such infringement. In the event the third
party infringer is a licensee of SpectRx, SpectRx agrees to take all actions
reasonably requested by Healthdyne to require such licensee to cease such
infringement and recoup damages, profits and awards of any nature recoverable
for such infringement; such action by SpectRx may include, but is not limited
to, termination of the license of the infringing licensee. The costs and
expenses of such suit or settlement shall be borne by the party hereto bringing
the suit. Recovery of damages in any such suit or settlement any third party
shall first be applied to reimburse the party brining the suit for its
reasonable attorneys' fees, costs plus other out-of-pocket costs or expenses
incurred in connection with such suit or settlement. Any excess recovered
damages shall be applied one-half to SpectRx and one-half to Healthdyne.
12.2 Patent Rights Allegedly Infringe Rights of Third Party. In the
event a third party alleges that the SpectRx Technology infringes upon
intellectual property rights of another entity in the United States or Canada,
the party learning of such alleged infringement shall notify the other party. In
accordance with the provisions hereinafter provided, SpectRx will settle or
defend all proceedings, threats of proceedings or claims against SpectRx,
Healthdyne or its customers for infringement or alleged infringement by the
SpectRx Technology furnished by SpectRx to Healthdyne under this Agreement of
patents, copyrights, or similar intellectual property rights of any third party
in the United States or Canada. Healthdyne agrees to give SpectRx necessary
assistance where practical, to modify the SpectRx Technology to make Licensed
Products non-infringing or, where practical, to obtain licenses under such
patents, copyrights or similar intellectual property rights. SpectRx may, at its
sole discretion, modify the SpectRx Technology to make it non-infringing
provided the Licensed Product so modified meets final product specifications for
the Licensed Product. In all other instances, the parties agree to consult with
one another concerning the defense or settlement of any and all proceedings,
threats of proceedings or claims against SpectRx or Healthdyne hereunder, and
Healthdyne shall have the right to obtain independent counsel to represent its
interests in the proceedings, threats of proceedings or claims; such counsel
shall be provided full access to all documents and meetings and be allowed to
participate in the proceedings or claims to the extent permitted by the court.
Both parties shall be required to approve and execute any settlement of the
proceedings, threats of proceedings or claims. Healthdyne and SpectRx each agree
to pay one-half of any (i) defense costs incurred by either party (including
reasonable attorney's fees) in defending any proceedings, threats or claims, and
(ii) damages, settlement payments, ongoing royalties, license fees or the like
payable to a third party by either party to allow the continued manufacture, use
and sale of the Licensed Products. In the event either Healthdyne or SpectRx is
enjoined from further sale of a Licensed Product hereunder during the first two
(2) years of commercialization of Licensed Products, SpectRx will pay Healthdyne
one-half of all License Fees paid by Healthdyne to SpectRx hereunder.
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12.3 Regulatory Compliance.
Healthdyne shall be solely responsible for identifying and obtaining,
at its sole cost and expense, all FDA and United States or Canadian safety
agency required approvals and any other agency or regulatory approvals which are
required for Healthdyne's use or sale of the Licensed Products in the United
States or Canada. SpectRx will reasonably cooperate with Healthdyne by providing
at no charge to Healthdyne any SpectRx engineering data that is reasonably
required to obtain the regulatory approvals, including but not limited to 510(k)
application materials submitted by SpectRx for its own products that incorporate
SpectRx Technology. Other than as stated above, SpectRx will not, however, be
required to produce any new data or reformat or otherwise republish any existing
data. Disclosure by Healthdyne of any such data shall be subject to the
confidentiality provisions of Section 9.
13. Incident Reporting.
13.1 SpectRx Reporting. SpectRx represents and warrants that all
products manufactured and sold to Healthdyne pursuant to this Agreement shall be
manufactured in conformance with all applicable requirements of the FDA and in
accordance with all United States federal, state and local statues, ordinances
and regulations, including, but not limited to, the Federal Food, Drug and
Cosmetic Act (21 U.S.C. 301 et seq.).
13.2 Recall. If for any reason (i) the FDA mandates a recall of
Licensed Product(s), or (ii) the parties agree that a recall of Licensed
Product(s) is (are) necessary, Healthdyne agrees that it shall as expediently as
possible issue a recall notice to all its customers recalling the Licensed
Products in question. Provided that the products meet the final product
specifications, SpectRx's responsibilities under the recall shall be to repair
or replace the part that causes the recall free of charge. In respect of a
recalled Licensed Product, if the Licensed Products fail to meet materially
final product specifications, then SpectRx shall repair and/or replace the
Licensed Product in question free of charge and pay all freight or shipping
charges involved with such recall. In the event of any recall of any Licensed
Product which does not arise from the incorporation of SpectRx Technology into
such Licensed Products, the parties shall cooperate to the extent reasonably
necessary to conduct such recall in accordance with Healthdyne's policies and
procedures.
14. Term and Termination.
14.1 Term. This Agreement shall become effective as of the effective
date first set forth above, and shall remain in effect for the longer of [*] or
the last to expire patent contained in the Patent Rights. At Healthdyne's
option, Healthdyne may give SpectRx notice of its intent to renew at least
ninety (90) days prior to the end of the initial term or any renewal term, as
the case may be, for additional fifteen year terms.
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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14.2 Termination.
14.2.1 The default by one Party of a material obligation of such
Party under this Agreement shall entitle the other Party to give the Party in
default written notice describing such default and requiring it to remedy such
default. If such default is not reasonably remedied within ninety (90) days
after the date of such notice, the notifying Party shall be entitled to
terminate this Agreement by a written notice to the defaulting Party.
14.2.2 Either Party may terminate this Agreement after the filing
against the other Party by any third party of a petition in bankruptcy (which
petition remains undismissed for forty-five (45) days), or upon or after any
adjudication that the other Party is insolvent, or upon or after the filing by
the other Party of any petition or answer seeking reorganization, readjustment
or arrangement of the business of the other Party under any law relating to
bankruptcy or insolvency, or upon or after the appointment of a receiver for all
or substantially all of the property of the other Party of any assignment or
attempted assignment for the benefit of creditors, or upon or after the
institution of any proceedings for the liquidation or winding up of the other
Party's business.
14.3 Rights Upon Termination. In the event of any valid termination of
this Agreement by SpectRx under Section 14.2 hereof, all of Healthdyne's rights
under this Agreement shall be terminated. In the event of any valid termination
of this Agreement by Healthdyne under Section 14.2 hereof, Healthdyne, at its
option, may abandon all use of SpectRx Technology or continue use of its rights
in this Agreement by making, using and selling Licensed Products and the
provisions of Sections 2.2, 5.1, 6 and 16.15 shall continue to apply. In the
event of any termination, all requirements under Sections 9.1, 10, 11, 12, and
13 shall remain in effect. No termination shall impact SpectRx's rights to
collect for accrued royalties and payment for ordered and delivered product.
14.4 Not For Cause Termination. Healthdyne may terminate with or
without cause at any time during the term of this Agreement upon thirty (30)
days prior written notice to SpectRx. If Healthdyne terminates this Agreement
prior to the first sale of a Licensed Product, then all of Healthdyne's rights
under this Agreement with respect to the Licensed Product shall be terminated.
If subsequent to such termination by Healthdyne, SpectRx either licenses or
sells the SpectRx Technology or commercializes the SpectRx Technology or
Licensed Products, then any fees actually paid by Healthdyne to SpectRx that had
not been refunded to Healthdyne shall be paid to Healthdyne, as when sums become
available to SpectRx in the form of license fees, royalties on product-related
payments from third parties, or revenue from commercialization by SpectRx.
14.5 Liquidated Damages. In the event that the Milestone on Exhibit E
entitled "Acceptance by Healthdyne of Quantities Delivered Pursuant to First
Purchase Order" does not occur on or before [*] (the "Milestone Deadline") for
any reason whatsoever (other than the failure of Healthdyne to submit a purchase
order on a timely basis in order to prevent SpectRx from meeting such
milestone), Healthdyne shall have the right to assume the Commercialization
Efforts with respect to the Licensed Products as set forth in Section 3.1 and on
Exhibit E. In such event (i) SpectRx shall immediately supply Healthdyne with
all SpectRx Technology and documentation with respect to the
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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Licensed Products as such documentation is described in Section 16.15, (ii)
SpectRx shall be deemed to have granted to Healthdyne, in addition to the
licenses set forth in Section 2.1(i) and (ii), the license set forth in Section
2.1(iii) to make Licensed Products once it completes the Commercialization
Efforts, (iii) all further License Fees from Healthdyne to SpectRx shall cease,
and (iv) SpectRx shall compensate Healthdyne by paying the Liquidated Damages
(as defined herein) in the manner provided for herein below. Notwithstanding the
assumption of the Commercialization Efforts by Healthdyne, and except as
expressly provided for in this Section 14.5, all other terms and conditions of
this Agreement shall remain in effect as provided for in this Agreement.
Although Healthdyne shall have the right to make Licensed Products pursuant to
subclause (ii) above, SpectRx shall have the right to resume making Licensed
Products in lieu of Healthdyne pursuant to the terms and conditions of Section
2.1 hereof "Liquidated Damages", as used herein, shall mean [*] Healthdyne's
actual costs in commercializing the Licensed Products incurred from the
Milestones Deadline until the time of the first commercial sale of a Licensed
Product in the Territory, although such Liquidated Damages shall in no event in
the aggregate [*]. The sum of "Healthdyne's actual costs in commercializing the
Licensed Products", as used in the preceding sentence to compute Liquidated
Damages, will be reduced by the amount of any unpaid License Fees which would
have otherwise been due to SpectRx by Healthdyne. The parties agree that
Healthdyne shall offset any amounts due to SpectRx from Healthdyne as such
amounts become due and payable to pay the Liquidated Damages (except that if
SpectRx is selling the Licensed Products to Healthdyne, Healthdyne may not
offset against or otherwise reduce or be excused from paying that portion of the
purchase price constituting the Disposable Cost thereof). All remaining
Liquidated Damages shall be paid by SpectRx solely in the form of a ten percent
(10%) royalty payable quarterly on the Average Selling Price for all SpectRx
sales of Licensed Products outside the Territory.
15. Dispute. In the event of a dispute hereunder, the Parties agree to
submit the matter to binding arbitration by one Party giving the other Party
notice of the intent to arbitrate. The arbitration shall be conducted in
accordance with the rules and procedures set forth as Exhibit H hereto, provided
each Party shall select one arbitrator who is an expert in the subject matter
area in dispute within ten (10) days of the receipt of the notice of arbitration
and the two arbitrators chosen by the Parties shall select a third within ten
(10) days of being selected.
16. Miscellaneous.
16.1 Marking. Healthdyne agrees to mark each Licensed Product
manufactured or sold by it in accordance with the Statutes of the United States
relating to the marking of patented articles. SpectRx will, from time to time,
update its patent numbers for Healthdyne as patents issue. Healthdyne shall
include the SpectRx Licensed Trademark on the Licensed Products when
Healthdyne's Licensed Trademark is utilized. The Licensed Trademark shall be
used to signify that the Licensed Product was developed by SpectRx and shall be
no less than thirty percent (30%) of the size of Healthdyne's Licensed
Trademark.
16.2 Assignability--Healthdyne. Except as set forth in Sections
2.2 and 2.3 hereof or in connection with a Change In Control of Healthdyne or
the sale of all or substantially all of the assets of a product line, Healthdyne
may not assign, transfer or sublicense any of the rights or obli-
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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21
gations under this Agreement without the prior written consent of SpectRx, which
consent shall not be unreasonably withheld. Notwithstanding the foregoing,
Healthdyne may assign its rights to receive any revenue or payments due
hereunder. For purposes of this Section 16.2, a product line shall be defined,
at a minimum, as phototherapy devices and devices for the diagnosis and
treatment of neonatal jaundice.
16.3 Assignability--SpectRx. Except in connection with a Change in
Control of SpectRx or the sale of all or substantially all of the assets of a
product line, SpectRx may not assign this Agreement without the prior written
consent of Healthdyne, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, SpectRx may assign its rights to receive any
revenue or payments due hereunder. For purposes of this Section 16.3, a product
fine shall be defined, at a minimum, as phototherapy devices and devices for the
diagnosis and treatment of neonatal jaundice.
16.4 Successors and Assigns. This Agreement will inure to the benefit
of and bind SpectRx's and Healthdyne's successors and assigns.
16.5 Failure to Enforce. The failure of either Party to enforce at any
time or for any period of time the provisions of this Agreement shall not be
construed to be a waiver of such provisions or of the right of such Party to
enforce each and every such provision.
16.6 Governing Law. This Agreement shall be governed by and construed
according to the laws of the State of Georgia, U.S.A.
16.7 Severability. In the event that any of the provisions of this
Agreement shall be held by a court or other tribunal of competent jurisdiction
to be unenforceable, such provisions shall be deleted from this Agreement and
the remaining portions of this Agreement shall remain in full force and effect,
except where the economic equity of both parties hereto is materially affected
by such unenforceability.
16.8 Notice. Except as either Party may hereafter notify the other with
respect to itself, the addresses of the Parties for all purposes of this
Agreement shall be:
SpectRx: SpectRx Inc.,
6025A Unity Drive
Norcross, Georgia 30071
Attention: Mark A. Samuels
Healthdyne: Healthdyne Technologies, Inc.
1255 Kennestone Circle
Marietta, Georgia 30066
Attention: President and General Counsel
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All notices and communications pursuant to this Agreement shall be addressed as
set forth above and shall be delivered to the Party for whom intended by hand or
by postage prepaid, first class, registered or certified mad, return receipt
requested. Such notices and recommendations shall be deemed to have been given
and delivered as of the date of receipt.
16.9 Force Majeure. Except with respect to the Liquidated Damages set
forth in Section 14.5, neither Party shall be liable to the other Party hereto
for any loss, injury delay, damages or other casualties suffered or incurred by
such other Party due to strikes, riots, storms, fires, acts of God, or war or
any other cause beyond the reasonable control of either Party.
16.10 Headings. Headings to paragraphs and sections of this Agreement
are to facilitate reference only, do not form a part of this Agreement and shall
not in any way affect the interpretation hereof.
16.11 Survival From This Agreement. The rights and obligations of the
parties hereto under Articles 9, 10, 11, 12, and 13 of this Agreement shall
survive and continue after any expiration or termination of this Agreement and
shall bind the Parties and their representatives, successors, heirs and
assignees.
16.12 Exhibits. All exhibits and attachments to which this Agreement
refers are hereby incorporated into and made a part of this Agreement.
16.13 Entire Agreement. This Agreement constitutes the entire agreement
between Healthdyne and SpectRx, and there are no other understandings,
agreements or representations, express or implied, written or oral, not
specified herein. The letter agreement dated April 18, 1995 between the parties
is hereby superseded and terminated. This Agreement may only be amended by
express written agreement and signed by authorized representatives of both
Parties.
16.14 Publicity.
(i) A copy of all public announcements and press releases which
either Party intends to release or make shall be provided to the other Party
prior to being released or made. Any public announcement or news release that
names, refers to or in any way identifies both Parties shall be approved by both
Parties prior to being released or made. Each party shall respond to a request
for approval within three (3) working days or receipt of the copy and the
approval of each Party will not be unreasonably withheld.
(ii) Except as set forth herein, the Parties shall not use each
other's name in any advertising material without the prior written consent of
the other Party, which consent may not be unreasonably withheld.
16.15 Documentation. Immediately upon FDA clearance of a Licensed
Product SpectRx shall provide Healthdyne with all SpectRx Technology and
documentation with respect to the Licensed Product, including, but not limited
to, any and all models, photographs, drawings,
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23
calculations, specifications, test results, hardware, software, and operation
instructions together with any and all other documentation which may be used or
useful in the manufacture of the Instruments, Disposables and Accessories for
the Licensed Products sufficient in all respect to allow the manufacture of such
Licensed Products in the event Healthdyne becomes entitled to do so in
accordance with the terms and conditions of this Agreement. The Parties agree
that this provision is necessary in order for Healthdyne to assume making
Licensed Products in accordance with provisions set forth in this Agreement in a
manner which will allow Healthdyne to meet product demand and Healthdyne's
quality standards. SpectRx shall update such documentation from time to time and
upon written request from Healthdyne to assure that all such documentation is
current and meets the requirements of this Section 16.15.
16.16 Offset. Healthdyne shall have the right to offset from any
amounts due to SpectRx hereunder any amounts due and payable from SpectRx to
Healthdyne whether arising under this Agreement or the Convertible Note executed
by SpectRx on the date hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date forth above.
HEALTHDYNE TECHNOLOGIES, INC.
By: /s/ Craig B. Reynolds
--------------------------------------
Craig B. Reynolds, President and
Chief Executive Officer
SPECTRX, INC.
By: /s/ Mark A. Samuels
--------------------------------------
Mark A. Samuels, President
Chief Executive Officer
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EXHIBIT A
26
- --------------------------------------------------------------------------------
"BILI-TEST"PRELIMINARY PRODUCT REQUIREMENTS DOCUMENT
(PRD)
- --------------------------------------------------------------------------------
This document describes application, market, intended use, end user,
(and predicate device) for serum chemistry with regard to bili-test.
Following are the device related product requirements, based on inputs
from various sources (see customer market research reports).
1.0 ASSUMPTIONS
1.01 Overall starting point, or reference, for the physical concept
shall be per the first version of physical model developed by
SpectRx, Healthdyne Technologies and Inno in terms of looks,
shape, aesthetics or eye appeal, ergonomics, human
engineering, size volume and physical characteristics. (See
attached.)
(See attached Inno industrial design).
1.02 Exact dimensions and weight will be finalized after finalizing
specifications.
1.03 HDTC, mutually agreed by SpectRx, Inc. has ultimate right to
make any. changes to these requirements.
1.04 Schedule, cost specifications, quality or quantity goals may
change by mutual agreement of SpectRx and HDTC.
1.05 All other HDTC/SpectRx contractual agreements are met,
including ISO, FDA, other requirements.
1.06 Bili-test system has four components:
1). Hand held device
2). [*]
3). [*]
4). Mateable to a ("Hertz) holster/printer later
1.07 End user, RN, Nursing Assistant, RRT
3). Neonatologist
4). Pediatrician
5). Homecare phototherapy service
1.08 Printer to be available after launch of product
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
27
2.0 FUNCTIONS AND FEATURES
2.01 Non-invasively read and display result in units of mg/dl of
total serum bilirubin.
2.02 [*] with a standard error of TBD.
2.03 Optical radiation output will not cause retinal burn. Device
shall not exceed the optical radiation Threshold Limit Values
(TLV's) as determined by the American Conference of
Governmental Industrial Hygenists for light, near infrared
radiation or UV radiation.
2.04 Two second total measurement time measured from when trigger
is engaged until reading is displayed.
2.05 User calibration at power up. Calibration good for 5 (maybe 3)
applications after which device requires another calibration
and a replacement of disposable tip.
2.06 [*], including calibration. Automatic time-out between
measurements 2 minutes.
2.07 Does not require any input such as age, etc. of patient before
displaying a reading.
2.08 Simple, easy to follow user prompts and messages.
2.09 Battery backed up, time, date and last reading by primary
battery.
1). Battery life between charges [*] tests/shift.
2). Low battery LCD icon.
3). When battery is at lowest device activation level,
the device will not take a measurement, will emit the
invalid tone, and will display three dashes.
4). Last reading maintained until device is turned off
or recalibrated.
2.10 Field upgradeable and serviceable by trained technicians or
hospital bio-meds, and trained personnel.
1). Connectors
2). Battery
3). E-prom
4). Light source
2.11 Failure rate of less than [*].
1). FMECA
2). MTBF
3). Hazards analysis
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
-2-
28
2.12 Mean time to troubleshoot and repair in field to be less than
30 minutes, without factory intervention.
2.13 [*]
2.14 Have built in error messages, test point, diagnostic features
for minimal downtime in troubleshooting device failures, using
off-the-shelf test fixtures.
2.15 Can be used by end user with no special training required.
2.16 Operator and service manual.
1). Operator's manual by HDTC
2). Service manual by SpectRx
3.0 HAND HELD DEVICE PHYSICAL
3.1 GENERAL
3.1.1 Must meet FDA/EMC tests for Attachment A.
3.1.2 It will be a hand-held device, easily packaged and
transportable using off-the-shelf and easily available
packaging materials.
3.1.3 User grip is intuitive and comfortable.
3.1.4 Per physical concept defined by HDTC/SpectRx/Inno.(see
attached)
3.1.5 Resistant to scratches and normal abuse including during
transport.
3.1.6 Cleanable by specified, off-the-shelf available agents, not
prone for infection hazards. Low stain risk. Smooth surface to
reduce harboring of bacteria.
1). [*]
3.2 PORTS
3.2.1 [*] conforming to [*] in accordance with Attachment A.
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
-3-
29
3.3 INPUTS
3.3.1 ELECTRICAL/POWER INPUT
3.3.1.1 Input voltage through a minimum of 2 pins
through housing from associated charger.
3.3.1.2 Limit switch at disposable interface as unit
triggers only with disposable in place.
3.3.1.3 Deleted
3.3.1.4 Meet UL, CSA, CE and International symbol
and color standards.
3.3.2 TERMINAL INPUT
3.3.2.1 Use standard, off-the-shelf, IRDA output
port.
3.3.2.2 Bi-directional communication with IRDA
compatible terminals.
3.3.3 KEYPAD INPUT
3.3.3.1 Two "soft" keys per concept, linked to
display prompts.
1). First soft key for working and/or
calibrating the device.
2). Second soft key for triggering the
device.
3.3.4 DATA INPUT
3.3.4.1 Ability to accept data such as date(mm/dd or
dd/nun), with 12 hours or 24 hour time
(extra LED or with graphics display).
3.3.4.2 Data entry using 2 keys located inside
battery housing.
3.4 OUTPUTS
3.4.1 DATA OUTPUT
3.3.4.1 Output results with relevant, associated
information via onboard display and/or
annunciator, or via external IRDA compatible
printers or terminal.
-4-
30
3.4.2 DISPLAY OUTPUT
3.4.2.1 High contrast, back-lit LCD(TBD), size
comparable to current concept. Three digit
display desired (XX.X) with one ready icon
and one low-battery indication icon
(consistent with agreed-upon power budget).
Time and date always visible.
3.4.3 ANNUNCIATORS, ADVISORIES & WARNINGS
3.4.3.1 Audible annunciator with two distinct
levels, one for valid, other for invalid
entered, detected, displayed or transferred
data.
3.4.3.2 Display indicates when calibration is
required.
3.4.3.3 Display indicates when trigger sequence is
ready.
3.4.3.4 Display indicates standby mode.
3.4.3.5 Display indicates when batteries are low and
unit requires a charge.
3.4.3.6 Display indicates invalid reading by
returning three dashes (---).
3.5. BULB/LIGHT SOURCE
3.5.1 Ideally, does not require periodic
replacement of light source.
3.5.2 If it has to have bulbs replaced
periodically:
a). [*] per bulb, whichever provides
longer usage (Based on source
analysis).
b). Easy to access and replace bulb
assembly by end user.
c). No special tools, techniques, or
skills needed to replace bulb.
d). Spare bulb socket desired.
e). May have up to maximum of three
bulbs/cartridge.
f). Maximum of $50/cartridge.
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
-5-
31
4.0 CHARGE BASE PHYSICAL
4.1 GENERAL
4.1.1 It must meet all FDA requirements (per
Attachment A).
4.1.2 It will be able to be mounted on a wall, or
on a counter.
4.1.3 It will be manufactured with off-the-shelf
and easily available packaging materials.
4.1.4 Per physical concept defined by
HDTC/SpectRx/Inno.
4.1.5 Resistant to scratches and normal abuse
including during transport.
4.1.6 Cleanable by specified, off-the-shelf
agents, not prone to infection hazards (per
3.1.6).
4.1.7 Wall bracket to allow mounting to accompany
base.
4.2 INPUTS
4.2.1 ELECTRICAL/POWER INPUT
4.2.1.1 Input voltage externally adjustable from
87-250 Vac. 50/60 Hz.
4.2.1.2 Meet specifications with voltage
fluctuations +/- 10% of set voltage.
4.2.1.3 Fast blow, commonly available, externally
accessible, replaceable fuse, with slot for
spare fuse in holder.
4.2.1.4 Sufficient heat dissipation to allow one to
touch any outside part after 24 hours of
continuous use.
4.2.1.5 Meet CSA, IEC 601 safety standard, and
international symbol and color requirement.
4.2.1.6 Transformer for unit to be placed on a wall
at socket.
4.2.1.7 Monitors four charging pins to determine
when hand held is fully charged.
-6-
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4.2.2 SOFT KEY INPUT
4.2.2.1 Soft key push-button toggle switch to select
fast-charge or normal charge.
4.3 OUTPUT
4.3.1.1 Output TBD+/- TBD (per battery selection)
VCD voltage into four charging pins on hand
held unit.
4.3.2 DISPLAY OUTPUT
4.3.2.1 LED icon indicates electrical
contact, comparable to current
concept.
4.3.2.2 LED icon indicates if hand held is
currently under charge.
4.3.2.3 LED icon indicates if hand held is
currently under fast charge.
5.0 PRINTER
5.01 [*]
5.02 [*]
5.03 Resolution will be legible at 3 feet with 20/20 vision.
5.04 Dimensions (TBD)
a). weight (TBD)
b). height (TBD)
c). length (TBD)
5.05 Battery life - no less than ____________ (TBD)
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
-7-
33
6.0 DISPOSABLE CALIBRATION TIP PHYSICAL
6.1 GENERAL
6.1.1 It will meet as many of the HDTC Industrial
guideline requirements as possible. (See
Attachment A)
6.1.2 It will be a [*] and transportable using
off-the-shelf and easily available packaging
materials.
6.1.3 The [*] that also serves to protect the patient [*]
from debris.
6.1.4 User grip and device attachment is intuitive and
comfortable.
6.1.5 Per physical concept defined by HDTC/SpectRx/Inno.
6.1.6 Resistant to scratches and normal abuse including
during transport.
7.0 ENVIRONMENTAL CONDITIONS
7.1 Operate within specifications between [*]. Be undamaged and
fully operational after storage at [*]. Must not fail in such
a way as to be a hazard to users.
7.2 Operate within specifications between [*], w/o condensation.
Not be damaged by storage at a non-condensing [*] for a
duration of at least 24 hours.
7.3 No effect of altitude.
7.4 No effect of extraneous light.
7.5 Meet FCC, FDA, EC standards for Electromagnetic compatibility
(EMC).
7.6 Meet [*] standards for Electrostatic Discharge Immunity
standards. Will not be permanently damaged by discharge of up
to +/- 15kV. and discharges of 10kV or less will cause only
transient effects. In no case may internal stored data be lost
or corrupted, or incorrect measurement results be displayed or
stored.
7.7 Meet [*], second edition standards for Electromagnetic
Interference Immunity (EMI); Operate within specifications
when exposed to field strengths of 10 V/m at frequencies from
[*], from I meter.
7.8 Meet following Class B Electromagnetic Emissions standards.
[*]
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
-8-
34
7.9 Meet Electrical Fast Transient Burst standards in accordance
[*]; instrument will not be permanently damaged after being
exposed to fast transient bursts of [*] to the mains
connections and [*] for interconnecting lines greater than [*]
meters. In no case will the device lose or corrupt data, or
display incorrect results.
7.10 Meet [*] standard for electrical surges; instrument will not
be permanently damaged after being exposed to differential
surges of [*], or common mode surges of [*], to the mains
connection. In no case will the device lose or corrupt stored
data, or display incorrect results.
8.0 SHOCK, VIBRATION & DROP
(In no case will the device lose or corrupt stored data, or
display incorrect results).
8.1 Be able to meet all specifications after subjected to shock
levels in accordance to Healthdyne Technologies Product
Environmental Testing Procedure, [*].
8.2 Be able to meet all specifications after subjected to random
vibration in accordance with Healthdyne Technologies Product
Environment Testing Procedure, [*].
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
-9-
35
ATTACHMENT A
1. It will meet the following technical and environmental requirements and
standards specified by the Food and Drug Administration (FDA), we well
as the following internal engineering and quality standards specified
by Healthdyne Technologies:
a. FDA environmental test requirements and test protocols
specified by domestic and international standards contained
within the Reviewer Guidance for Premarket Notification
Submissions, November 1993.
b. FDA firmware and software test methods and documentation
requirements specified with the Reviewer Guidance for Computer
Controlled Medical Devices.
c. FDA Biological Evaluation of Medical Devices, ISO 10993
Part-1.
d. Healthdyne Technologies, Product Environmental Testing
Procedure, EOP 9001 4.4.106.
e. American National Standards, Safe Current Limits for
Elctro-Medical Apparatus, ANSI/AAMI, ESI-1095.
f. Canadian Standards Association, Medical Electrical Equipment-
Part 1; General Requirements for Safety - 2. Collateral
Standard: Electromagnetic Compatibility-Requirements and Test.
[*]
g. [*], Medical Electrical Equipment, Part 1; General
Requirements for Safety, 2nd Edition.
h. [*] standards for products with LED devices or revisions
(possible rev. March 1, 1996.)
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
36
EXHIBIT B
37
LOGO
-2-
38
EXHIBIT C
39
[UNIVERSITY OF TEXAS
Letterhead]
April 12, 1996
VIA AIRBORNE
Keith D. Ignotz
Chief Operating Officer
SpectRx
6025A Unity Drive
Norcross, Georgia 30071
RE: Patent and Technology License Agreement
"Optical Measurement of Bilirubin in Human Tissue", UTSC:254
Steven Jacques, et al, Principal Investigator
Dear Keith:
Enclosed is one fully executed original counterpart of the subject
agreement for your files.
Best regards,
/s/ Carla
------------------------------
Carla for Karen V. Francis
Licensing Specialist
KVF/cjs
Enclosure
cc: Steven Jacques, Ph.D., Box 017 (w/enclosure)
40
PATENT LICENSE AGREEMENT
THIS Sixteen (16) Page AGREEMENT ("AGREEMENT") is made by and between
the BOARD OF REGENTS ("BOARD") of THE UNIVERSITY OF TEXAS SYSTEM ("SYSTEM"), an
agency of the State of Texas, whose address is 201 West 7th Street, Austin Texas
78701, THE UNIVERSITY OF TEXAS M.D. ANDERSON CANCER CENTER ("MDA"), a component
Institution of the SYSTEM and SpectRx, a Norcross, Georgia corporation having a
principal place of business located at 6025 A Unity Drive, Norcross, GA 30071
("LICENSEE").
TABLE OF CONTENTS
RECITALS Page 2
I. EFFECTIVE DATE Page 2
II. DEFINITIONS Page 2
III. LICENSE Page 4
IV. CONSIDERATION, PAYMENTS, AND REPORTS Page 5
V. SPONSORED RESEARCH Page 8
VI. INFRINGEMENT BY THIRD PARTIES Page 9
VII. PATENT MARKING Page 9
VIII. INDEMNIFICATION Page 9
IX. USE OF BOARD AND COMPONENTS NAME Page 10
X. CONFIDENTIAL INFORMATION Page 10
XI. ASSIGNMENT Page 10
XII. TERMS AND TERMINATION Page 11
XIII. WARRANTY: SUPERIOR-RIGHTS Page 12
XIV. GENERAL Page 13
SIGNATURES Page 15
41
RECITALS
A. BOARD owns certain PATENT RIGHTS related to LICENSED SUBJECT
MATTER, which were developed at MDA, a component institution
of SYSTEM.
B. BOARD desires to have the LICENSED SUBJECT MATTER developed in
the LICENSED FIELD and used for the benefit of LICENSEE, the
inventor, BOARD, and the public as outlined in the
Intellectual Property Policy promulgated by the BOARD.
C. LICENSEE wishes to obtain a license from BOARD to practice
LICENSED SUBJECT MATTER.
NOW, THEREFORE, in consideration of the mutual covenants and premises
herein contained, the parties hereto agree as follows:
I. EFFECTIVE DATE
1.1 This AGREEMENT shall be effective as of March 12, 1996 subject
to approval by BOARD ("EFFECTIVE DATE").
II. DEFINITIONS
As used in this AGREEMENT, the following terms shall have the meanings
indicated:
2.1 AFFILIATE shall mean any business entity more than 50% owned
by LICENSEE, any business entity which owns more than 50% of
LICENSEE, or any business entity that is more than 50% owned
by a business entity that owns more than 50% of LICENSEE.
2.2 LICENSED FIELD shall mean Optical Measurement of Bilirubin in
Human Tissue within the LICENSED SUBJECT MATTER.
2.3 LICENSED PRODUCTS shall mean any product or service SOLD by
LICENSEE comprising LICENSED SUBJECT MATTER pursuant to this
AGREEMENT.
2.4 LICENSED SUBJECT MATTER shall mean PATENT RIGHTS.
2.5 LICENSED TERRITORY shall mean the United States in which
LICENSED PRODUCTS are sold by LICENSEE.
2.6 NET SALES shall mean the gross revenues received by LICENSEE
from the SALE of LICENSED PRODUCTS less sales and/or use taxes
actually paid, import and/or
42
export duties actually paid, outbound transportation prepaid
or allowed, and amounts allowed or credited due to returns
(not to exceed the original billing or invoice amount).
2.7 PATENT RIGHTS shall only mean any and all of BOARD'S rights in
information or discoveries claimed in U.S. Patent No.
5,353,790 issued and entitled "Methods and Apparatus for
Optical Measurement of Bilirubin in Tissue" and all
divisionals, continuations, continuations-in-part, reissues,
reexaminations or extensions thereof.
2.8 SALE or SOLD shall mean the transfer or disposition of a
LICENSED PRODUCT for value to a third party other than
LICENSEE or an AFFILIATE.
III. LICENSE
3.1 BOARD hereby grants to LICENSEE a royalty-bearing, exclusive
license under LICENSED SUBJECT MATTER to manufacture, have
manufactured, use and/or sell LICENSED PRODUCTS within
LICENSED TERRITORY for use within LICENSED FIELD and, subject
to Paragraph 4.5 herein, shall extend to BOARD's undivided
interest in any LICENSED SUBJECT MATTER developed during the
term of this AGREEMENT and jointly owned by BOARD and
LICENSEE. This grant shall be subject to Paragraph 14.2 and
14.3, hereinbelow, the payment by LICENSEE to BOARD of all
consideration as provided in Paragraph 4.2 of this AGREEMENT,
(as well as the timely payment of all amounts due under any
Sponsored Research Agreement between MDA and LICENSEE in
effect during the term of this AGREEMENT) and shall be further
subject to rights retained by BOARD and MDA to:
(a) Publish the general scientific findings from research
related to LICENSED SUBJECT MATTER. In the event that
MDA wishes to publish, MDA shall notify LICENSEE of
its desire to publish at least (30) days in advance
of publication and shall furnish to LICENSEE a
written description of the subject matter of the
publication in order to permit LICENSEE to review and
comment thereon; and
(b) Subject to the provisions of ARTICLE XI herein below,
use any information contained in LICENSED SUBJECT
MATTER for research, teaching, patient care, and
other educationally-related purposes.
3.2 LICENSEE shall have the right to extend the license granted
herein to any AFFILIATE provided that such AFFILIATE consents
to be bound by this AGREEMENT to the same extent as LICENSEE.
-2-
43
3.3 Subject to the Paragraph 3.4 herein below, LICENSEE shall have
the right to grant sublicenses under LICENSED SUBJECT MATTER
consistent with the terms of this AGREEMENT provided that
LICENSEE shall be responsible for its sublicensees relevant to
this AGREEMENT, and for using its best reasonable efforts to
diligently collect all amounts due LICENSEE from subicensees.
In the event a sublicensee pursuant hereto becomes bankrupt,
insolvent or is placed in the hands of a receiver or trustee,
LICENSEE, to the extent allowed under applicable law and in a
timely manner, agrees to use its best reasonable efforts to
collect any and all consideration owed to LICENSEE and to have
the sublicense agreement confirmed or rejected by a court of
proper jurisdiction.
3.4 LICENSEE agrees to either.
(a) deliver to BOARD for BOARD'S approval a true and
correct copy of any sublicense granted by LICENSEE,
and any modification or termination thereof, within
thirty (30) days after execution, modification, or
termination; and upon termination of this AGREEMENT,
any and all sublicenses granted by LICENSEE and
approved by BOARD shall be assigned to BOARD; or
(b) deliver to BOARD for BOARD'S Information a true and
correct copy of each sublicense granted by LICENSEE,
and any modification or termination thereof, within
thirty (30) days after execution, modification, or
termination; and upon termination of this AGREEMENT,
any and all existing sublicenses granted by LICENSEE
and not approved by BOARD shall be terminated, unless
otherwise agreed to in writing by BOARD.
IV. CONSIDERATION, PAYMENTS AND REPORTS
4.1 In consideration of rights granted by BOARD to LICENSEE under
this AGREEMENT, LICENSEE agrees to pay MDA the following:
(a) [*] for all out-of-pocket expenses incurred by MDA
through [*] in filing, prosecuting, enforcing and
maintaining PATENT RIGHTS licensed hereunder. SPECTRX
will pay all future patent maintenance expenses for
so long as, and in such countries as, this AGREEMENT
remains in effect. One half of these total patent
expenses [*] will be due upon execution, and the
other half will be due at the time of the first FDA
510K filing. MDA will invoice LICENSEE upon approval
of this AGREEMENT by BOARD, and upon a quarterly
basis thereafter beginning [*] for expenses incurred
by MDA after [*] and the amounts invoiced will be due
and payable by LICENSEE within thirty (30) days
thereafter; and
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
-3-
44
(b) A non-refundable license documentation fee to be made
in staged payments in the total amount of $50,000.00,
which shall not reduce the amount of any other
payment provided for in this ARTICLE IV, and which
shall be due and payable within thirty (30) days when
invoiced by MDA as follows:
(i) [*] upon execution of this Agreement by
BOARD;
(ii) [*] upon the completion by LICENSEE of data
collection, analysis, and review of the
feasibility studies, but no later than sixty
(60) days following the entry of the last
patient in the clinical study;
(iii) [*] upon the first FDA 510K filing; and
(iv) [*] upon first FDA 510K approval.
(c) A running royalty equal to [*] of LICENSEE'S NET
SALES of LICENSED PRODUCTS in LICENSED TERRITORY and
[*] of LICENSEE'S NET SALES of LICENSED PRODUCTS
outside of LICENSED TERRITORY as long as there are no
competing products outside of LICENSED TERRITORY
(with minimum annual royalties of [*]), and [*] of
all consideration other than Research and Development
("R&D") money received by LICENSEE from any
sublicensee pursuant to Paragraphs 3.3 and 3.4 herein
above, including but not limited to royalties,
up-front payments, marketing, distribution,
franchise, option, license, or documentation fees,
bonus and milestone payments and equity securities,
payable within thirty (30) days after March 31, June
30, September 30, and December 31, at which time
LICENSEE shall also deliver to BOARD and MDA a true
and accurate report, giving such particulars of the
business conducted by LICENSEE and its sublicensee,
if any exist, during the preceding three (3) calendar
months under this AGREEMENT as are pertinent to an
account for payments hereunder. Such report shall
include at least (a) the quantities of LICENSED
PRODUCTS that it has produced; (b) the total SALES,
(c) the calculation of royalties thereon; and (d) the
total royalties so computed and due BOARD. In the
event that there are competing products outside of
LICENSED TERRITORY, then no royalty will be due
related to that specific territory. Simultaneously
with the delivery of each such report, LICENSEE shall
pay to BOARD the amount, if any, due for the period
of such report. The requirement to pay minimum annual
royalties shall commence upon FDA final approval of
the LICENSED PRODUCTS. A pro rata portion of the
annual minimum royalties shall be payable in respect
of any partial period not constituting a full year.
Should LICENSEE be obligated to pay running royalties
to third parties to avoid infringing such third
parties' patent rights which dominate BOARD'S PATENT
RIGHTS, LICENSEE may reduce the running royalty due
MDA by such running royalties to such third parties,
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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provided, however, the running royalty due MDA shall
in no case be less than one-half the rates stated
herein above.
4.2 During the Term of this AGREEMENT and for one (1) year
thereafter, LICENSEE shall keep complete and accurate records
of its and its sublicensees' SALES and NET SALES of LICENSED
PRODUCTS to enable the royalties payable hereunder to be
determined. LICENSEE shall permit BOARD or its
representatives, at BOARD'S expense, to periodically examine
after reasonable written notice to LICENSEE its books,
ledgers, and records during regular business hours for the
purpose of and to the extent necessary to verify any report
required under this AGREEMENT. In the event that the amounts
due to BOARD are determined to have been underpaid in an
amount equal to or greater than five percent (5%) of the total
amount due during the period of time so examined, LICENSEE
shall pay the cost of such examination, and accrued interest
at prime rate plus 10% (ten percent).
4.3 Upon the request of BOARD or MDA but not more often than once
per calendar year, LICENSEE shall deliver to BOARD and MDA a
written report as to LICENSEE'S efforts and accomplishments
during the preceding year in commercializing LICENSED SUBJECT
MATTER in the LICENSED TERRITORY and LICENSEE'S
commercialization plans for the upcoming year. Such report
will be deemed for all purposes to be confidential information
governed by Article XI hereof.
4.4 All amounts payable hereunder by LICENSEE shall be payable in
United States funds without deductions for taxes, assessments,
fees, or charges of any kind. Checks shall be made payable to
The University of Texas M.D. Anderson Cancer Center and
mailed by U.S. Mail to Box 297402, Houston, Texas 77297
Attention: Manager, Sponsored Programs.
4.5 No payments due or royalty rates under this AGREEMENT shall be
reduced as the result of co-ownership of LICENSED SUBJECT
MATTER by BOARD and another party, including LICENSEE.
V. SPONSORED RESEARCH
If LICENSEE desires to fund sponsored research, within LICENSED SUBJECT
MATTER and particularly where LICENSEE receives money for sponsored research
payments pursuant to a sublicense, LICENSEE shall notify MDA in writing of all
opportunities to conduct such sponsored research (including clinical trials, if
applicable), shall solicit research and/or clinical proposals from MDA for such
purpose, and shall give good faith consideration to funding such proposals at
MDA.
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VI. INFRINGEMENT BY THIRD PARTIES
6.1 LICENSEE shall have the obligation of enforcing at its expense
any patent exclusively licensed hereunder against infringement
by third parties and shall be entitled to retain recovery from
such enforcement. LICENSEE shall pay MDA a royalty on any
monetary recovery, net of LICENSEE'S direct out-of-pocket
expenses from such enforcement not otherwise paid to third
parties, to the extent that such monetary recovery by LICENSEE
is held to be damages or a reasonable royalty in lieu thereof.
In the event that LICENSEE does not file suit against a
substantial infringer of such patents within six (6) months of
knowledge thereof, then BOARD shall have the right to enforce
any patent licensed hereunder on behalf of itself and LICENSEE
(MDA retaining all recoveries from such enforcement) and/or
reduce the license granted hereunder to non-exclusive.
6.2 In any suit or dispute involving a third party infringer, the
parties shall cooperate fully, and upon the request and at the
expense of the party bringing suit, the other party shall make
available to the party bringing suit at reasonable times and
under appropriate conditions all relevant personnel, records,
papers, information, samples, specimens, and the like which
are in its possession.
VII. PATENT MARKING
7.1 LICENSEE agrees that all packaging containing individual
LICENSED PRODUCT(S), and documentation therefor, sold by
LICENSEE, AFFILIATE, and sublicensees of LICENSEE will be
marked permanently and legibly with the number of the
applicable patent(s) licensed hereunder in accordance with
each country's patent laws, including Title 35, United States
Code.
VIII. INDEMNIFICATION
8.1 LICENSEE shall hold harmless and indemnify BOARD, SYSTEM, MDA,
its Regents, officers, employees, students, and agents from
and against any claims, demand, or causes of action
whatsoever, costs of suit and reasonable attorney's fees
including without limitation those costs arising on account of
any injury or death of persons or damage to property caused
by, or arising out of, or resulting from, the exercise or
practice of the license granted hereunder by LICENSEE or its
officers, employees, agents or representatives.
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IX. USE OF BOARD AND COMPONENTS NAME
9.1 LICENSEE shall not use the name of (or the name of any
employee of) MDA, SYSTEM or BOARD without the advance,
express written consent of BOARD secured through:
The University of Texas
M. D. Anderson Cancer Center
Office of Public Affairs
1515 Holcombe Boulevard
Box 229
Houston, Texas 77030
ATTENTION: Stephen C. Stuyck
X. CONFIDENTIAL INFORMATION
10.1 BOARD and LICENSEE each agree that all information contained
in documents marked "confidential" which are forwarded to one
by the other shall be received in strict confidence, used only
for the purposes of this AGREEMENT, and not disclosed by the
recipient party (except as required by law or court order),
its agents or employees without the prior written consent of
the other party, unless such information (a) was in the public
domain at the time of disclosure, (b) later became part of the
public domain through no act or omission of the recipient
party, its employees, agents, successors or assigns, (c) was
lawfully disclosed to the recipient party by a third party
having the right to disclose it, (d) was already known by the
recipient party at the time of disclosure, (e) was
independently developed or (f) is required to be submitted to
a government agency pursuant to any preexisting obligation.
10.2 Each party's obligation of confidence hereunder shall be
fulfilled by using at least the same degree of care with the
other party's confidential information as it uses to protect
its own confidential information. This obligation shall exist
while this AGREEMENT is in force and for a period of three (3)
years thereafter.
XI. ASSIGNMENT
11.1 Except to effect the sale and transfer of all or substantially
all of LICENSEE'S assets to a third party, this AGREEMENT may
not be assigned by LICENSEE without the prior written consent
of BOARD.
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XII. TERMS AND TERMINATION
12.1 The term of this AGREEMENT shall extend from the Effective
Date set forth hereinabove to the full end of the term or
terms for which PATENT RIGHTS have not expired or been
declared invalid by a court of final jurisdiction.
12.2 BOARD shall have the right at any time after one (1) year from
the EFFECTIVE DATE of this AGREEMENT to terminate the license
granted herein if LICENSEE, within ninety days after written
notice from BOARD of such intended termination, fails to
provide written evidence satisfactory to BOARD that LICENSEE
has commercialized or is actively and effectively attempting
to commercialize an invention licensed hereunder within such
jurisdiction. Accurate, written evidence provided by LICENSEE
to BOARD within said ninety (90) day period that LICENSEE has
an effective, ongoing and active research, development,
manufacturing, marketing, sales and/or licensing program, as
appropriate, directed toward obtaining regulatory approval
and/or production and/or sale of LICENSED PRODUCTS
incorporating PATENT RIGHTS shall be deemed satisfactory
evidence.
12.3 Subject to any rights herein which survive termination, this
AGREEMENT will earlier terminate in its entirety:
(a) automatically if LICENSEE shall become bankrupt or
insolvent and/or if the business of LICENSEE shall be
placed in the hands of a receiver or trustee, whether
by voluntary act of LICENSEE or otherwise; or
(b) (i) upon thirty (30) days written notice by BOARD if
LICENSEE shall breach or default on the payment
obligations of ARTICLE IV, or use of name obligations
of ARTICLE X; or (ii) upon ninety (90) days written
notice by BOARD if LICENSEE shall breach or default
on any other obligation under this AGREEMENT;
provided, however, LICENSEE may avoid such
termination if before the end of such thirty (30) or
ninety (90) day period if LICENSEE provides notice
and accurate, written evidence satisfactory to BOARD
that such breach has been cured or that LICENSEE has
commenced all reasonable action to cure as soon as
possible and the manner of such cure; or
(c) at any time by mutual written agreement between
LICENSEE and BOARD, or without cause upon one hundred
eighty (180) days written notice by LICENSEE to
BOARD, subject to any rights herein which survive
termination.
-8-
49
12.4 Upon termination of this AGREEMENT for any cause:
(a) nothing herein shall be construed to release either
party of any obligation matured prior to the
effective date of such termination.
(b) LICENSEE and the BOARD covenant and agree to be bound
by the provisions of ARTICLES IX, X AND XI of this
AGREEMENT.
(c) LICENSEE (and its SUBLICENSEES) may, after the
effective date of such termination, sell all LICENSED
PRODUCTS and parts therefore that it may have on hand
at the date of termination, provided that LICENSEE
pays the earned royalty thereon and any other amounts
due pursuant to ARTICLE IV of this AGREEMENT.
XIII. WARRANTY: SUPERIOR-RIGHTS
13.1 Except for the rights, if any, of the Government of the United
States as set forth herein below, BOARD represents and
warrants its belief that it is the owner of the entire right,
title, and interest in and to LICENSED SUBJECT MATTER, and
that it has the sole right to grant licenses thereunder, and
that it has not knowingly granted licenses thereunder to any
other entity that would restrict rights granted hereunder
except as stated herein.
13.2 LICENSEE understands that the LICENSED SUBJECT MATTER may have
been developed under a funding agreement with the Government
of the United States of America and, if so, that the
Government may have certain rights relative thereto. This
AGREEMENT is explicitly made subject to the Government's
rights under any such agreement and any applicable law or
regulation, including P.L. 96-517 as amended by P.L. 98-620.
To the extent that there is a conflict between any such
agreement, applicable law or regulation and this AGREEMENT,
the terms of such Government agreement, applicable law or
regulation shall prevail.
13.3 LICENSEE understands and agrees that BOARD, by this AGREEMENT,
makes no representation as to the operability or fitness for
any use, safety, efficacy, approvability by regulatory
authorities, time and cost of development, patentability,
and/or breadth of the LICENSED SUBJECT MATTER. BOARD, by this
AGREEMENT, makes no representation as to whether there are any
patents now held, or which will be held, by others or by BOARD
in the LICENSED FIELD, nor does BOARD make any representation
that the inventions contained in PATENT RIGHTS do not infringe
any other patents now held or that will be held by others or
by BOARD.
13.4 LICENSEE, by execution hereof, acknowledges, covenants and
agrees that LICENSEE has not been induced in anyway by BOARD,
SYSTEM, MDA or
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50
employees thereof to enter into this Agreement, and further
agrees that LICENSEE has conducted sufficient due diligence
with respect to all items and issues pertaining to Article XIV
herein and all other matters pertaining to this Agreement and
agrees to accept all risks inherent herein.
XIV. GENERAL
14.1 This AGREEMENT constitutes the entire and only AGREEMENT
between the parties for LICENSED SUBJECT MATTER and all other
prior negotiations, representations, agreements and
understandings are superseded hereby. No agreements altering
or supplementing the terms hereof may be made except by means
of a written document signed by the duly authorized
representatives of the parties.
14.2 Any notice required by this AGREEMENT shall be given by
prepaid, first class, certified mail, return receipt
requested, and addressed in the case of BOARD to:
BOARD OF REGENTS
The University of Texas System
201 West Seventh Street
Austin, Texas 78701
ATTENTION: Office of General Counsel
with copy to: The University of Texas
M.D. Anderson Cancer Center
Office of Technology Development
1020 Holcombe Boulevard, Suite 1405
Houston, Texas 77030
ATTENTION: William J. Doty
or in the case of LICENSEE to: SPECTRX, INC.
6025 A Unity Drive
Norcross, Georgia 30071
ATTENTION: Mark A. Samuels
or such other address as may be given from time to time under the terms of this
notice provision.
14.3 Each party hereto covenants and agrees to comply with all
applicable federal, state and local laws and regulations in
connection with its activities pursuant to this AGREEMENT.
14.4 This AGREEMENT shall be construed and enforced in accordance
with the laws of the United States of America and of the State
of Texas.
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14.5 Failure of any party hereto to enforce a right under this
AGREEMENT shall not act as a waiver of that right or the
ability to later assert that right relative to the particular
situation involved.
14.6 Headings included herein are for convenience only and shall
not be used to construe this AGREEMENT.
14.7 If any provision of this AGREEMENT shall be found by a court
to be void, invalid or unenforceable, the same shall be
reformed to comply with applicable law or stricken if not so
conformable, so as not to affect the validity or
enforceability of this AGREEMENT.
14.8 Upon the request of LICENSEE, LICENSOR shall reasonably assist
LICENSEE in recording this Agreement in the records of the
U.S. Patent and Trademark Office at LICENSEE'S expense.
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IN WITNESS WHEREOF, parties hereto have caused their duly authorized
representatives to execute this AGREEMENT.
THE UNIVERSITY OF TEXAS BOARD OF REGENTS OF THE
M.D. ANDERSON CANCER CENTER UNIVERSITY OF TEXAS SYSTEM
By: /s/ David J. Bachrach By: /s/ Ray Farabee
------------------------------------ ------------------------------
David J. Bachrach Ray Farabee
Executive Vice President Vice Chancellor and
for Administration and Finance General Counsel
APPROVED AS TO CONTENT: APPROVED AS TO FORM:
By: /s/ William J. Doty By: /s/ Dudley R. Dobie, Jr.
------------------------------------ -------------------------------
William J. Doty Dudley R. Dobie, Jr.
Director, Technology Development Manager, Intellectual
Property
SPECTRX, INC.
By: /s/ Mark A. Samuels
--------------------------------------
Mark A. Samuels
President and CEO
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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53
EXHIBIT 1
[*]
[*]
[*]
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
54
EXHIBIT D
55
EXHIBIT D-1
SUB-LICENSE AGREEMENT
This Sub-license Agreement is entered into by and between SpectRx, Inc.
("SpectRx") and Healthdyne Technologies, Inc. ("Healthdyne") dated this ____ day
of August, 1996.
W I T N E S S E T H:
WHEREAS, SpectRx has entered into a Product License Agreement with the
University of Texas M.D. Anderson Cancer Center and related parties dated
_______________ ("M.D. Anderson License");
WHEREAS, SpectRx desires to sub-license to Healthdyne and Healthdyne
desires to sub-license from SpectRx certain patents licensed under the M.D.
Anderson License;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, Healthdyne and SpectRx hereby agree as follows:
1. A true and correct copy of the M.D. Anderson License is attached
hereto as Exhibit A.
2. SpectRx hereby sub-licenses to Healthdyne within the Territory, and
Healthdyne hereby accepts the sublicense within the Territory, of the M.D.
Anderson License subject to the terms and conditions as agreed to in writing by
authorized representatives of the parties. The Territory shall be the United
States and Canada.
3. Healthdyne agrees to pay one-half of the royalty due and payable by
SpectRx to M.D. Anderson under the M.D. Anderson License, not to exceed One
Percent (1%) of the Net Selling Price for the Instrument. For purposes of this
Sub-License Agreement, Instrument means an instrument for non-invasive bilirubin
measurement with required software, optics, circuitry, charger base and
encasement. The initial product specifications for the Instrument is set forth
on Exhibit B. Net Selling Price means the total sales revenue for the Instrument
excluding charges for returns, outbound prepaid or allowed transportation
charges, sales taxes, tariffs or duties directly imposed with reference to
particular sales or similar items. Net Selling Price shall only include one sale
per Instrument.
4. The parties hereto agree to be bound by the Successor Letter
Agreement entered into between Healthdyne and the University of Texas M.D.
Anderson Cancer Center dated ___________.
5. Exhibit A and Exhibit B hereto are incorporated by reference.
56
IN WITNESS WHEREOF, the parties hereto have caused their authorized
representatives to execute this Sub-License Agreement as of the day and year
first above written.
HEALTHDYNE TECHNOLOGIES, INC. SPECTRX, INC.
By: By:
---------------------------- --------------------------
Title: Title:
---------------------------- --------------------------
Date: Date:
---------------------------- --------------------------
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57
EXHIBIT D-2
[UNIVERSITY OF TEXAS
Letterhead]
June 17, 1996
VIA AIRBORNE
Keith D. Ignotz
Chief Operating Officer
SpectRx
6025A Unity Drive
Norcross, GA 30071
RE: Successor Letter Agreement between HealthDyne and SpectRx
Dear Keith:
Enclosed is one fully executed original of the subject agreement for
your files.
Best regards,
/s/ Carla Strobel
------------------------
Carla Strobel
Administrative Assistant
CS/cjs
Enclosure
cc: (with enclosure of executed original)
President and CEO
Healthdyne Technologies, Inc.
1255 Kennestone Circle
Marietta, GA 30066
58
SUCCESSOR LETTER AGREEMENT
June 10, 1996
Healthdyne Technologies, Inc.
1255 Kennestone Circle
Marietta, Georgia 30066
Attention: Craig B. Reynolds
President and Chief Executive Officer
Re: PATENT AND TECHNOLOGY LICENSE AGREEMENT ("AGREEMENT"),
effective March 12,1996 by and between the BOARD OF REGENTS
("BOARD") of THE UNIVERSITY OF TEXAS SYSTEM ("SYSTEM"), THE
UNIVERSITY OF TEXAS M.D. ANDERSON CANCER CENTER (MDA"), and
SPECTRX, INC. ("LICENSEE")
Dear Mr. Reynolds:
This Successor Letter Agreement is written at your request in
connection with the contemplated sublicense agreement between LICENSEE and
Healthdyne Technologies, Inc. ("HEALTHDYNE").
BOARD, SYSTEM and MDA hereby agree that in the event that LICENSEE
enters into a written and fully executed sublicense agreement with HEALTHDYNE
pursuant to Articles 3.3 and 3.4(b) of the AGREEMENT, and, subsequent thereto
while such sublicense agreement is in effect, the AGREEMENT with LICENSEE is
terminated, HEALTHDYNE shall, at its sole option with written notice to MDA by
Certified Mail, Postage Prepaid, Return Receipt Requested at the address herein
below within ninety (90) days of said termination, have the right to succeed to
all of LICENSEE's rights and responsibilities under the AGREE provided, however,
that HEALTHDYNE shall not assume any liabilities of LICENSEE to BOARD, SYSTEM or
MDA accruing prior to, or as a result of, said termination of the AGREEMENT.
BOARD, SYSTEM and MDA confirm that: (i) the AGREEMENT with LICENSEE is
in full force and effect as of the date hereinabove; and (ii) they know of no
present facts or circumstances, which, with the passage of time or otherwise,
would cause the termination of the AGREEMENT.
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59
Successor Letter Agreement
June 10, 1996
Page 2
If this Successor Letter Agreement is acceptable to you, please sign
the three (3) originals in the space provided below and return two (2) of such
originals to me at the following address:
William J. Doty
Director, Technology Development
1020 Holcombe, Suite 1405
Houston, Texas 77030
Very truly yours,
/s/ William J. Doty
--------------------------------
William J. Doty
Director, Technology Development
IN WITNESS WHEREOF, parties hereto have caused their duly authorized
representatives to execute this AGREEMENT.
THE UNIVERSITY OF TEXAS BOARD OF REGENTS OF THE
M.D. ANDERSON CANCER CENTER UNIVERSITY OF TEXAS SYSTEM
By: /s/ David J. Bachrach By: /s/ Ray Farabee
----------------------------------- ------------------------------
David J. Bachrach Ray Farabee
Executive Vice President Vice Chancellor and
for Administration and Finance General Counsel
APPROVED AS TO FORM:
By: /s/ Dudley R. Doble, Jr.
------------------------------
Dudley R. Doble, Jr.
Manager, Intellectual
Property
HEALTHDYNE TECHNOLOGIES, INC.
By: /s/ Craig B. Reynolds
-----------------------------------
60
EXHIBIT E
ESTIMATED DOLLARS
DATE (IN THOUSANDS) MILESTONE
- ----------------- ------------- -------------------------------------------------------------------------
[*] Pre-Signing Payment
[*] Signing Definitive Agreements
[*] [*] Program Review
Clinical Instruments Available
[*] [*] Program Review
Miniature Photospectometer Board Functional Test
[*] [*] Program Review
[*] Signed and Board Approved M.D. Anderson License and Successor Letter
Agreement
[*] [*] Calibration Component and Enclosure Tooling.
Purchase Order Issued
Formal Documentation Released
[*] [*] Delivery of Pre-Production Unit
[*] [*] Pre-Production Unit Test Completed
[*] [*] Seven Pieces Manufacturing Pilot Run Units Delivered
[*] [*] Manufacture Pilot Run Test Complete
[*] [*] FDA Approval
[*] [*] Acceptance by Heathdyne of Quantities Delivered Pursuant to First
Purchase Order
[*] [*] First Anniversary of Acceptance by Healthdyne of First Purchase Order
Quantities Delivered by SpectRx
* For each full month for which SpectRx has completed the "Acceptance by
Healthdyne of Quantities Delivered Pursuant to First Purchase Order"
milestone, [*] of this final milestone shall be prepaid. For example,
if the "Acceptance by Healthdyne of Quantities Delivered Pursuant to
First Purchase Order" milestone is completed on April 11, 1997, [*]
would be payable to SpectRx together with the [*] milestone payment
otherwise payable on that date, and [*] would be payable on the "First
Anniversary of Acceptance by Healthdyne of First Purchase Order
Quantities Delivered by SpectRx".
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
61
EXHIBIT G
Healthdyne's minimum unit sales for Instruments and Disposables from SpectRx
will be:
Year 2 Following Commercialization: Year 1 Healthdyne actual Disposable [*]
Year 3 Following Commercialization: Year 2 Healthdyne actual Disposable [*] minimum.
Year 4 Following Commercialization: Year 3 Healthdyne actual Disposable [*] minimum.
Year 5 Following Commercialization: Year 4 Healthdyne actual Disposable [*] minimum.
Year 6 Following commercialization: No further purchase minimum.
and onward
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
62
EXHIBIT H
RULES FOR ARBITRATION
The Parties agree that any Arbitration will be binding and conducted
pursuant to the following terms and conditions:
1. The Arbitration Tribunal shall be formed in the following
manner:
(1) The Party desiring to submit a dispute to arbitration will
give the other Party notice to arbitrate by certified mail, which states therein
the name and address of its arbitrator (a citizen of the United States), the
subject of the dispute, and the proposed date of arbitration. The date when the
notification letter is sent will be the date of first notification.
(2) The other Party, within thirty (30) days after receipt of
the notice to arbitrate, will inform the party who sent the notice, by certified
mail, of the name and address of its arbitrator (a citizen of the United
States).
(3) If the Party who receives the notice to arbitrate does not
inform the Party who gave the notice of the name and address of its arbitrator
within the thirty (30) day period specified above, then the Party who gave
notice to arbitrate may request the President of the American Arbitration
Association to appoint an arbitrator for such other Party. This appointment must
be made within thirty (30) days after the end of the thirty (30) day period in
which each Party could appoint its own arbitrator.
(4) The American Arbitration Association will be asked to
appoint an impartial arbitrator within thirty (30) days after appointment of the
other two arbitrators who will act as Chairman of the Arbitration Tribunal. The
appointment of the impartial Chairman must be made within thirty (30) days after
application for the appointment is made.
2. Notwithstanding provisions of any rules herein adopted, it is agreed
that all arbitrators shall be independent impartial neutrals who explicitly
undertake to be bound by the ABA/AAA Code of Ethics in Commercial Disputes, for
neutrals, and who shall have no ex parte direct or indirect communications with
a party relating to the dispute or otherwise tending to bias or influence the
arbitrator.
3. No Party shall conduct any private interview with an arbitrator
nominee concerning their substantive views or the dispute. Any arbitrator
nominee who has been interviewed regarding their substantive views or the
dispute shall be disqualified.
4. Both Parties agree that prompt disposal of any dispute arising out
of or relating to this Agreement or activities governed by it is important and
necessary and thus, the resolution of any
63
dispute shall be conducted expeditiously, and as soon as possible, but in no
event more than six (6) months from the date of first notification.
5. The Arbitration Tribunal will have its seat in Atlanta, Georgia,
United States of America. The Parties agree that each Arbitrator must commit in
their employment contract that they have adequate time for expeditiously
handling the dispute and that they will commit to giving this matter priority,
to the end that final disposition shall be accomplished not more than six (6)
months from the date of first notification.
6. The Chairman of the Tribunal is instructed, directed and commanded
to assume case management initiative and control of the dispute resolution
process and to initiate early scheduling of all events to assure that
disposition of the dispute is accomplished as expeditiously as practical but in
no event should final disposition be later than six (6) months from the date of
first notification. The Tribunal shall permit and Facilitate discovery as it
shall determine is appropriate under the circumstances, taking into account the
needs of the parties and the desirability of making discovery expeditious and
cost-effective. The Chairman may issue orders to protect the confidentiality of
proprietary information, trade secrets and other sensitive information disclosed
during discovery and may give general orders to the Parties regarding the
proceedings. The Chairman shall give active attention to the scope, form, likely
cost effectiveness and scheduling of all discovery, and shall issue orders
accordingly. The Chairman is instructed to attend key depositions, if any, so as
to expedite them and rule immediately on questions arising during the course of
the proceeding.
7. The Arbitration Tribunal is permitted and empowered to construe the
Agreement to arbitrate and determine the scope of its own jurisdiction.
8. Neither Party may seek a temporary restraining order, preliminary
injunctive or other extraordinary relief, either before or after the
arbitrator(s) are appointed and assume their responsibilities. Any preliminary
or extraordinary relief will be handled on an expedited basis by the Arbitration
Tribunal.
9. The Arbitration Tribunal will give the Parties an opportunity to
present their views at a hearing in Atlanta, Georgia. The hearing win be
conducted in accordance with the Rules of the American Arbitration Association
as at present in force. The English language shall be used throughout the
arbitration proceedings.
(1) The Arbitration Tribunal will render a written decision on
the dispute submitted to arbitration, which must be based on the terms and
conditions contained in this Agreement. If the Arbitration Tribunal cannot
decide a dispute without reference to provisions of substantive law, the
Arbitration Tribunal may refer to the substantive law of the State of Georgia,
U.S.A.
(2) The written decision will not specify reasons for the
decision, but will identify the arbitrators, describe the place and time of
decision, and describe the opportunity given to the Parties to present their
views.
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(3) The Arbitration Tribunal will render its decision not
later than thirty (30) days after the close of evidence. Each arbitrator's fee
will be reduced by ten percent (10%) for every five (5) day period in which a
decision has not been rendered past this thirty (30) day time period.
(4) The Arbitration Tribunal will have authority to decide all
disputes relating to the same subject.
10. The decision and award of a majority of the Arbitration Tribunal on
any dispute submitted to arbitration under this Agreement will be final and
binding on the Parties. In case the arbitrators are unable to reach a majority
decision, the final decision will be rendered by the Chairman. No appeal or
recourse to any court of law will be available to any Party after the
Arbitration Tribunal has reached its decision.
11. Judgment upon the award of the Arbitration Tribunal may be entered
in any court having jurisdiction, or application may be made to such court for a
judicial acceptance of the award and an order for enforcement, as the case may
be. Any Party who fails to comply with an arbitration award will reimburse the
other Party for all reasonable costs and expenses incurred in connection with
the enforcement of the award. The Parties acknowledge that this Agreement and
any award rendered pursuant to it shall be governed by the 1958 United Nations
Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
12. Each Party shall share equally in the costs incurred by the
Arbitration Tribunal to arbitrate any dispute, including but not limited to
arbitrators' fees, and costs and expenses directly related to the arbitration
proceedings; however, each Party shall bear its own costs to prepare and present
evidence to the Arbitration Tribunal, including but not limited to any expert
fees, or costs and expenses incurred to prepare each Party's case.
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