1
Exhibit 10.21(c)
THIRD AMENDMENT DATED NOVEMBER 30, 1999
to the Agreement between
Abbott Laboratories and SpectRx, Inc.
Dated October 10, 1996
As amended December 22, 1997 and March 31, 1998
THIS THIRD AMENDMENT dated November 30, 1999 ("Third Amendment
Effective Date"), by and between Abbott Laboratories, an Illinois corporation
with principal offices at 100 Abbott Park Road, Abbott Park, Illinois 60064-3500
and its Affiliates ("ABBOTT") and SpectRx, Inc. a Delaware corporation with
principal offices at 6025A Unity Drive, Norcross, Georgia 30071 and its
Affiliates ("SPECTRX").
WHEREAS, ABBOTT and SPECTRX have previously entered into an agreement
dated October 10, 1996, as amended December 22, 1997 and March 31, 1998,
relating to the use of (*) for the extraction of interstitial fluid samples for
diagnostic applications, including glucose monitoring ("Agreement");
WHEREAS, ABBOTT and SPECTRX desire to now modify that Agreement and to
that end desire to enter into this Third Amendment;
NOW, THEREFORE, in consideration of the premises and the mutual
promises and covenants set forth below, ABBOTT and SPECTRX mutually agree as
follows:
1. INTRODUCTION
1.1 Conflict with Agreement. The provisions of this Third Amendment are
hereby made a part of the Agreement. All capitalized terms used in this Third
Amendment, and not defined herein, shall have the same meanings as given to them
in the Agreement. Any conflict between the provisions of this Third Amendment
and the Agreement shall be resolved in favor of this Third Amendment; provided,
however, that all definitions in this Third Amendment shall only apply
prospectively from the Third Amendment Effective Date, unless otherwise noted in
this Third Amendment, and such application will be without prejudice to
interpretation of the Agreement as it was in effect prior to the Third Amendment
Effective Date.
1.2 Modified Provisions. The following modifications are hereby made to
the Agreement:
(A) The following shall be added to the end of Section
1.8 and shall be effective as of June 1, 1998:
"(*) Technology includes, but is not limited to,
the means to measure the (*). (*) Technology
does not include (*) Technology."
(*) 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.
1
2
(B) Section 1.12 is modified as follows:
"(*)" or "(*)" means a single or multiple use
device other than a (*), or the equivalent
to a (*) for the Non-Continuous Product,
sold or marketed with labeling or
instructions identifying it for use with
Product, which effectuates or facilitates
any measurement of glucose or is involved
with (*)Technology for such Product
including, but not limited to, (*).
(C) Section 1.20 shall be amended as follows and shall be
effective as of the Effective Date of the Agreement:
replace "that cover inventions useful within
the Field" with "that (1) cover (*)
Technology for glucose monitoring and/or (2)
cover inventions useful within the Field"
(D) The following shall be added to the end of
Section 1.20(A):
"and any patents or patent applications
covering inventions within the Field arising
out of SPECTRX Continuous Product Research
Program Technology as set forth in Section
11.1(A) and 11.1(B)(1) of the Third
Amendment, and the Joint Continuous Product
Research Program Technology as set forth in
Section 11.3 of the Third Amendment;"
(E) The following shall be added to the end of Section 1.21:
"provided, however, that a (*) will not be
included in Licensed Product if SPECTRX or a
Third Party is marketing (other than
exclusively to ABBOTT) (*), except for an
item that is a Directly Competitive
Product."
(F) Section 1.26 shall be amended as follows:
(1) replace "but for the licenses granted under
Section 4.1 of this Agreement" with "but for
the licenses granted under Section 4.1 of
this Agreement, as to ABBOTT, or the license
granted under Section 4.2 of the Third
Amendment, as to 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.
2
3
(2) add to the end of Section 1.26 ", as to
ABBOTT, or as to which SPECTRX is otherwise
required to pay royalties hereunder as to
SPECTRX."
(G) Section 1.29 is modified to delete the words "as described
in Appendix 1.28."
(H) The following shall be added to the end of Section 1.30
and shall be effective as of June 1, 1998:
"including, but not limited to, (*). Such
site includes, but is not limited to, a site
at which (*). (*) includes, but is not
limited to, devices which incorporate (*)
does not include (*) Technology."
(I) Section 3.1(A) shall be amended as follows:
replace "set forth in Section 2.5" with "set
forth in Section 3.4 of the Third
Amendment"
(J) Section 3.1(B) shall be amended as follows:
(1) replace "shall extend the periods of the
time set forth in Section 3.2 of this
Agreement" with "shall extend the periods of
time set forth in Section 3.7 of the Third
Amendment"
(2) replace "extend the time periods set forth
in Section 3.2(A) and (B)" with "extend the
time periods set forth in Section 3.7 of the
Third Amendment"
(K) The following shall be added at the beginning of
Section 3.4:
"Except for those (*) in accordance with
Section 5.2 of the Third Amendment and the
SPECTRX Continuous Product as allowed in
Article 4 of the Third Amendment,"
(L) The following shall be added to the end of Section
6.2(A):
"; except for Abbott Research Program
Technology invented on or after August 29,
1998, which, to the extent applicable to the
Field, shall be treated in the same manner
that Development Program Technology would be
treated in Section 7.1 of the Agreement
after delivery of the Development Program
Notification but prior to the First Shipment
Date."
(*) 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
4
(M) Section 6.2(C) shall be amended as follows:
replace "pursuant to Section 2.5(A) (subject
to the exception in that Section) or 2.5(B)
or Section 10.2(A)(i) or by SPECTRX pursuant
to Section 3.2(A) or (B) subject to certain
exceptions set forth in those Sections) or
pursuant to Section 10.2(D) prior to the
First Shipment Date:" with "pursuant to
Section 3.8(A) of the Third Amendment or
Section 10.2(A)(i) or by SPECTRX pursuant to
Sections 3.7(D) or (F) of the Third
Amendment (subject to certain exceptions set
forth in those Sections) or pursuant to
Section 10.2(D) prior to the First Shipment
Date:"
(N) Sections 8.1(A), 8.1(B), and 8.3(A) shall be amended
as follows:
replace "SPECTRX Research Program
Technology" with "SPECTRX Research Program
Technology and SPECTRX Continuous Product
Research Program Technology"
(O) Sections 8.2, 8.3(B) and 8.5(B) shall be amended as
follows:
replace "Joint Research Program Technology"
with "Joint Research Program Technology and
Joint Continuous Product Research Program
Technology"
(P) Section 10.1 shall be amended as follows:
replace "pursuant to Sections 2.2, 2.5, 3.2,
4.2(D) or (E) (on a country by country
basis), 10.2 or 14.1," with "pursuant to
Sections 4.2 (D) or (E) (on a country by
country basis), 10.2 or 14.1 of the
Agreement or Sections 3.7 or 3.8 of the
Third Amendment"
(Q) Section 10.2 shall be amended as follows:
replace "In addition to Sections 2.2, 2.5,
and 4.2(D) and (E) (on a country by country
basis), 3.2 and 14.1," with "In addition to
Sections 4.2(D) and (E) (on a country by
country basis) and 14.1 of the Agreement and
Sections 3.7 and 3.8 of the Third
Amendment,"
(R) Section 10.2(D)(iv) shall be amended as follows:
replace "except as provided in Sections 2.2,
2.5, 3.2, 4.2(D) and (E) (on a country by
country basis), 10.2(A),(B) and (C) and
14.1," with "except as provided in Sections
4.2(D) and (E) (on a country by country
basis), 10.2(A), (B) and (C) and 14.1 of the
Agreement and Section 3.7 and 3.8 of the
Third Amendment,"
4
5
(S) Section 10.3(A) shall be amended as follows:
replace "under Sections 2.2, 2.5, 3.2,
4.2(D) and (E) (on a country by country
basis), 10.2 and 14.1:" with "under Sections
4.2(D) and (E) (on a country by country
basis), 10.2 and 14.1 of the Agreement and
Sections 3.7 and 3.8 of the Third
Amendment:"
(T) Section 10.3(B) shall be amended as follows:
replace "under Sections 2.2, 2.5, 3.2,
4.2(D) and (E) (on a country by country
basis), 10.2 and 14.1," with "under Sections
4.2(D) and (E) (on a country by country
basis), 10.2 and 14.1 of the Agreement and
Sections 3.7 and 3.8 of the Third
Amendment,"
(U) Section 10.3(C) shall be amended as follows:
replace "under Section 2.2, by ABBOTT under
Sections 2.5, 4.2(D) and (E) (on a country
by country basis), 10.2(A), (C) and (D); or
by SPECTRX under Sections 3.2(A) or (B) and
10.2(B) and (D) or by either party under
Section 14.1." with "by ABBOTT under
Sections 4.2(D) and (E) (on a country by
country basis), 10.2(A), (C) and (D); or by
SPECTRX under Section 3.7(F) of the Third
Amendment and 10.2(B) and (D) or by either
party under Section 14.1 and Section 3.8 of
the Third Amendment."
(V) Section 10.3(D) shall be amended as follows:
replace "under Section 2.5(A) (subject to
the exception in that Section) or (B) or
10.2(A)(i) or if SPECTRX terminates this
Agreement under Section 3.2(A) or (B) (in
accordance with the terms of Section 3.2(A)
or (B))" with "under Section 10.2(A)(i) or
if SPECTRX terminates this Agreement under
Section 3.7(F) of the Third Amendment (in
accordance with the terms of Section 3.7) or
under Section 3.8(A) of the Third Amendment
or under Section 10.2(D) prior to the First
Shipment Date."
(W) Section 10.3(E) shall be amended as follows:
5
6
replace "under Section 2.5(B) or 10.2(A)(i)
or if SPECTRX terminates this Agreement
under Section 3.2(A) or (B) or under Section
10.2(D) prior to the First Shipment Date"
with "under Section 3.8(A) of the Third
Amendment or Section 10.2(A)(i) or if
SPECTRX terminates this Agreement under
Section 3.7(F) of the Third Amendment or
under Section 10.2(D) prior to the First
Shipment Date."
(X) The following shall be added to Section 10.3:
"(I) SPECTRX shall be entitled to the
license set forth in Section 6.1(A)(2) of
the Third Amendment upon early termination
or expiration of the Agreement other than
for breach by SPECTRX."
(Y) The second sentence in Section 13.1 shall be amended
as follows:
"Neither party will use Confidential
Information of the other party, nor allow it
to be used for its own benefit or the
benefit of others, except as provided by
this Agreement and will exercise due care to
prevent the disclosure of Confidential
Information of the other party.
(Z) Section 13.3 shall be amended as follows:
Replace "Research Program" with "Research
Program or Continuous Product Research
Program"
1.3 Deleted Agreement Provisions. The following provisions are deleted
from the Agreement and will have no further force or effect:
(A) Section 1.5
(B) Section 1.10
(C) Section 1.28
(D) Article 2
(E) Section 3.2
(F) Section 4.2 (B)
(G) Section 4.3
(H) Section 10.3(G)
(I) Appendices 2.3 and 2.4
6
7
1.4 Added Appendices. The following Appendices are added to the
Agreement:
(A) Appendix 2.7 - Continuous Product Research Program Specifications
(B) Appendix 4.2 - (*)
(C) Appendix 4.4 - SPECTRX Continuous Product Royalty Rate
(D) Appendix 5.1 - Common Stock Agreement
(E) Appendix 5.2 - Supply Agreement
(F) Appendix 5.5 - Preferred Stock Agreement
2. DEFINITIONS
2.1 "ABBOTT Continuous Product Research Program Technology" has the
meaning attributed to it in Section 11.2.
2.2 "Abbott Post-Transfer Technology" has the meaning attributed to it
in Section 11.2(E).
2.3 "Abbott (*) Technology" means technology (1) which was Derived from
SPECTRX (*) Technology or SPECTRX (*) and (2) such derivation occurs on or
between July 28, 1999, and the earlier of (a) the delivery of a Development
Program Notification by ABBOTT to SPECTRX or (b) the transfer of the Continuous
Product Research Program to ABBOTT as set forth in Section 3.3(B) or (c) the
termination of ABBOTT's rights to all Continuous Products.
2.4 "CDA" means the confidential disclosure agreements entered into by
ABBOTT and SPECTRX dated December 15, 1995 and July 28, 1999 to the extent of
Confidential Information disclosed after the Third Amendment Effective Date. The
confidential disclosure agreements dated March 4, 1996, May 31, 1996, and July
28, 1999 (to the extent of Confidential Information disclosed between July 28,
1999 and the Third Amendment Effective Date), are not included as CDAs for
purposes of this Agreement and shall remain in full force and effect in
accordance with their respective terms.
2.5 "Continuous Product" means a Product, consisting of one or more
components, with at least one component continuously attached to or worn by a
subject, during the device's period of use, whereby one of the continuously
attached components provides a means to take more than one measurement of an
Analyte in the subject's interstitial fluid without removal of said component
during its period of use.
(*) 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
8
2.6 "Continuous Product Research Program" means the research carried
out by SPECTRX or ABBOTT (including the case in which the Continuous Product
Research Program is transferred to ABBOTT pursuant to Section 3.3(B)), to
determine the feasibility of a Continuous Product, including, but not limited
to, potential development activities related to a (*), which program shall
commence on (*) and shall end on the earlier of (1) the date of ABBOTT's
Development Program Notification to SPECTRX in accordance with Section 3.4 of
the Third Amendment, or (2) the date of termination of ABBOTT'S rights to all
Continuous Products. Continuous Product Research Program also includes
activities separately funded by SPECTRX between and including (*), which were
directly related to research for a Continuous Product.
2. 7 "Continuous Product Research Program Specifications" means
specifications for a Continuous Product listed as "Product Specs. Minimum
Acceptable" in Appendix 2.7, definitions and protocols applicable to demonstrate
the achievement of the specifications also listed in Appendix 2.7, and the
deliverables listed in Appendix 2.7. Such specifications may be amended by
written agreement of the parties.
2.8 "Continuous Product Research Program Technology" means all
inventions, developments, know-how, or discoveries, whether or not patentable,
which are conceived and/or reduced to practice during the course of the work
under the Continuous Product Research Program.
2.9 "Derived" means technology whose conception, development and/or
reduction to practice by one party is based, in whole or in part, upon the
Confidential Information of the other party including, but not limited to, the
Information (as that term is defined in the CDA dated July 28, 1999) disclosed
as of the Third Amendment Effective Date, which Information is subject to such
CDA.
2.10 "Development Program" means that work to be carried out by ABBOTT
(whether at ABBOTT or at SPECTRX, or both as set forth in Section 3.5(A) or
3.6(A) of the Third Amendment) specifically to develop the first Continuous
Product and the first Non-Continuous Product which is actually commercialized,
which program shall commence upon the date of ABBOTT's Development Program
Notification to SPECTRX in accordance with Section 3.5 and/or Section 3.7 of the
Third Amendment, as the case may be, and, for the Continuous Product, shall end
on the First Shipment Date of the Continuous Product being developed and ,for
the Non-Continuous Product, on the First Shipment Date of the Non-Continuous
Product being developed.
2.11 "Development Program Notification" means a written notification by
ABBOTT to SPECTRX that ABBOTT has determined to commence a Development Program.
(*) 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
9
2.12 "Diligent," "Diligently" and "Diligence" means the degree of
effort employed by a party hereto consistent with the exercise of good business
judgment, which with respect to Continuous Product Research Program, Research
Program, Development Programs and commercialization of Licensed Products, shall
not be less than the degree of effort accorded projects or products of similar
commercial value which result from the party's own research and/or development
and commercialization activities, nor less than customary in current industry
practice for projects or products of similar commercial value (unless otherwise
specifically agreed to in writing by the parties). If a minimum spending level
is specified, such minimum will be the maximum spending level needed to meet the
financial component of any Diligence.
2.13 "(*) Technology" means that technology which effectuates or
facilitates accessing and/or extraction of interstitial fluid (*), including,
but not limited to (*), use of (*) into and/or out of the (*). This definition
shall be effective as of the Effective Date of the Agreement.
2.14 "Joint Continuous Product Research Program Technology" has the
meaning attributed to it in Section 11.3.
2.15 "Manufacturing Costs" means direct labor, direct materials and
allocated manufacturing overhead, used in the manufacture of the Product, such
calculation being based on generally accepted accounting principles.
2.16 (*) means an (*) of a Continuous Product including, but not
limited to, (*), which Product is (*), or the (*), or the (*), the component not
being a (*) or a (*) or a (*)
2.17 "Milestones" means those milestones set forth in Section 5.1.
2.18 "Non-Continuous Product" means any Product which is not a
Continuous Product.
2.19 "Non-Invasive Electromagnetic Radiation Technology" means
technology using electromagnetic radiation to measure the properties of a
biological substance or condition inside or outside the body without the
addition of reagents.
2.20 "(*) Milestone" means the milestone set forth in Section
5.1(A)(2).
2.21 "Research Oversight Committee" has the meaning set forth in
Section 3.2.
2.22 "Research Program" means the research carried out jointly from the
Effective Date of the Agreement to and including (*) under former Article 2 of
the Agreement and the research carried out (*) at ABBOTT and to be carried out
by ABBOTT under the provisions of this Third Amendment to determine the
feasibility of 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.
9
10
Non-Continuous Product. The Research Program shall end on the earlier of (1) the
date of ABBOTT's Development Program Notification to SPECTRX in accordance with
Section 3.6 of the Third Amendment, or (2) the date of termination of ABBOTT's
rights to all Non-Continuous Product. All Diligence obligations under the
Research Program shall only be those performance obligations set forth in
Sections 3.6(B) and 3.7(F) of the Third Amendment.
2.23 "SPECTRX Continuous Product" means the Continuous Product
developed by SPECTRX for SPECTRX as set forth in Article 4 of this Third
Amendment.
2.24 "SPECTRX Continuous Product Research Program Technology" has the
meaning attributed to it in Section 11.1.
2.25 "Supply Agreement" has the meaning attributed to it in Section
5.2.
2.26 "Transfer Price" means the agreed upon purchase price of any (*)
supplied by SPECTRX under agreement with ABBOTT.
3. RESEARCH AND DEVELOPMENT
3.1 Continuous Product Research Program. The Continuous Product
Research Program for ABBOTT primarily will be conducted by SPECTRX at its
facility in Norcross, Georgia. SPECTRX will have control over the Continuous
Product Research Program provided that SPECTRX is working toward achieving the
Continuous Product Research Program Specifications, unless it is transferred to
ABBOTT pursuant to Section 3.3(B), in which case ABBOTT will have control. All
deviations from or modifications to the Continuous Product Research Program
Specifications will be in writing and signed by both parties. SPECTRX shall
Diligently undertake, pursue and support those activities under the Continuous
Product Research Program required to achieve the Continuous Product Research
Program Specifications. For avoidance of doubt, non-achievement of the
Continuous Product Research Program Specifications does not necessarily mean
lack of Diligence on the part of either party. ABBOTT shall Diligently
undertake, pursue, and support those research activities to which the parties
have mutually agreed in writing shall be carried out by ABBOTT as part of the
Continuous Product Research Program, including a specific reference to what
performance requirements constitutes Diligence with regard to such activities.
However, notwithstanding such research activities by ABBOTT, other than ABBOTT's
obligation of Diligence in the preceding sentence, ABBOTT shall have no
responsibility for achievement of, nor any liability for failure to achieve, the
Continuous Product Research Program Specifications, no matter what is the reason
for such failure. Further, after ABBOTT delivers a Development Program
Notification for the first Continuous Product under this Agreement, neither
ABBOTT nor SPECTRX shall have
(*) 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.
10
11
further obligations with regard to any research activities or Diligence
obligations with regard to any other Continuous Product that ABBOTT may
determine to develop or any improvements to any Continuous Product that ABBOTT
may make. Diligence requirements for development of the first Continuous Product
which is actually commercialized remain in accordance with Section 3.4 of the
Third Amendment . If SPECTRX and ABBOTT determine that certain activities have
the potential for intellectual property disputes then the parties will negotiate
an agreement to cover such specific activities including relevant intellectual
property issues before commencing such activities where possible.
3.2 Research Oversight Committee. Within thirty (30) days of the Third
Amendment Effective Date, ABBOTT and SPECTRX will appoint members to a committee
to review the work under the Continuous Product Research Program ("Research
Oversight Committee"). The parties will define the number of members, duties and
frequency of meetings (which shall not be less than every two (2) months) within
thirty (30) days of the Third Amendment Effective Date. Notwithstanding the
foregoing, upon thirty (30) days prior notice by ABBOTT, SPECTRX will disclose
such data and other information related to the Continuous Product Research
Program as reasonably requested by ABBOTT. Prior to each Research Oversight
Committee meeting, ABBOTT and SPECTRX shall each provide to the other a written
report of its respective activities under the Continuous Product Research
Program, including relevant data, a description of progress made, and a
discussion of any plan variances or problems encountered.
3.3 Completion, Termination or Transfer of the Continuous Product
Research Program.
(A) ABBOTT will have no obligation to pay any wind-down
or other expenses of SPECTRX if the Continuous
Product Research Program is successfully completed,
terminated or transferred under this provision or any
other provision of the Third Amendment or the
Agreement; provided, however, that SPECTRX may
utilize the funds from ABBOTT's purchase of preferred
stock as set forth in Section 5.5 of this Third
Amendment for such expenses.
(B) ABBOTT may, in its sole discretion, after (*), elect
to transfer the Continuous Product Research Program
to ABBOTT and/or redefine the Continuous Product
Research Program Specifications and to cease funding
such Continuous Product Research Program as conducted
by SPECTRX if SPECTRX has not achieved the (*)
Milestone by such date. If ABBOTT makes such
election, ABBOTT will give SPECTRX forty-five (45)
days prior written notice of such election. For
clarification, but not limitation, ABBOTT may give
(*) 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.
11
12
such notice any time after (*). At the end of the
forty-five (45) day notice period if ABBOTT transfers
the Continuous Product Research Program to ABBOTT,
ABBOTT will Diligently undertake the research
activities in an attempt to achieve acceptable
performance to meet the Continuous Product Research
Program Specifications and expenditures for that
purpose shall be in accordance with Section
3.4(A)(2). If ABBOTT notifies SPECTRX of its interest
to transfer the Continuous Product Research Program,
SPECTRX will promptly, after such notice, (i)
transfer to ABBOTT all information, all data and half
of the (*) Products related to the Continuous Product
Research Program as conducted by SPECTRX; (ii)
provide shared access to all materials, hardware,
software and pilot manufacturing lines related to the
Continuous Product Research Program as conducted by
SPECTRX for a reasonable period of time until ABBOTT
is able to develop or acquire its own capabilities in
these areas, and (iii) provide reasonable assistance
to ABBOTT in transferring such activities to ABBOTT,
and ABBOTT shall reimburse SPECTRX for its reasonable
direct expenses, excluding the cost of personnel time
required to physically transfer the Continuous
Product Research Program materials. If only one
hardware item or other item exists, ABBOTT and
SPECTRX will develop a plan that allows use by both
parties, including the sharing of any operating costs
of such item.
(C) ABBOTT may elect to cease funding the Continuous
Product Research Program as either conducted by
SPECTRX or ABBOTT, including declining to make any
preferred stock purchase in accordance with Section
5.5.
(1) If ABBOTT elects not to make such preferred
stock purchase, it will give SPECTRX twenty
(20) days prior written notice and the
Continuous Product Research Program will
terminate at the end of such twenty (20) day
notice period.
(2) If ABBOTT elects to cease funding the
Continuous Product Research Program after it
is transferred to ABBOTT, then ABBOTT will
give SPECTRX ten (10) days prior written
notice and the Continuous Product Research
Program will terminate at the end of such
ten (10) day notice period.
(3) If, after (*), ABBOTT elects to cease
funding the Continuous Product Research
Program, after a decision by ABBOTT to
maintain such program at SPECTRX as
communicated in
(*) 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.
12
13
writing to SPECTRX, then ABBOTT will give SPECTRX
thirty (30) days prior written notice and the
Continuous Product Research Program will terminate at
the end of such thirty (30) day notice period.
(D) If ABBOTT does not deliver the Development Program
Notification to SPECTRX for a Continuous Product by
the end of the first notice period to come into
existence, if any, under Section 3.3(C)(1)-(3), then
ABBOTT shall have no further rights under the
Agreement (except any right of ABBOTT in ABBOTT
Research Program Technology, Derived Technology,
Joint Research Program Technology, ABBOTT Continuous
Product Research Program Technology, or Joint
Continuous Product Research Program Technology or any
right pursuant to Article 6 of this Third Amendment
or Section 10.3 of the Agreement) to any and all
Continuous Products.
3.4 Development Program Notification.
(A) At any time prior to (*), but in no event later than
the notice periods specified after the notice for
termination of the Continuous Product Research
Program as set forth in Section 3.3(C) or (*) after
the (*) Milestone has been achieved by SPECTRX,
ABBOTT may deliver the Development Program
Notification to SPECTRX if ABBOTT determines to
commence the Development Program for the Continuous
Product. Such time period for delivery by ABBOTT of
the Development Program Notification for the
Continuous Product may be extended to the earlier of
(*) after the (*) Milestone has been achieved or (*),
if the (*) Milestone for the Continuous Product has
not been achieved by (*); if ABBOTT provides notice
to SPECTRX of such extension on or before (*); and if
the following occur:
(1) ABBOTT provides additional funding at a
minimum rate of (*) per quarter and
continues the Continuous Product Research
Program at SPECTRX to achieve the Continuous
Product Research Program Specifications or
any such specifications as redefined by
ABBOTT, or
(2) ABBOTT transfers the Continuous Product
Research Program to ABBOTT due to technical
problems which SPECTRX has been unable to
overcome to achieve the (*) Milestone; and
if the Continuous Product Research Program
(*) Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities Exchange Commission. Omitted
portions have been filed separately with the Commission.
13
14
is transferred to ABBOTT, ABBOTT spends at the
minimum rate of (*) per quarter for each quarter and
Diligently pursues the solution to such technical
problems until ABBOTT resolves the technical problems
to achieve the Continuous Product Research Program
Specifications or any such specifications as
redefined by ABBOTT.
(B) Such time period for delivery by ABBOTT of the
Development Program Notification to SPECTRX may be
further extended to (*), if ABBOTT makes a Milestone
pre-payment of (*) towards the (*) Milestone payment
to SPECTRX any time prior to (*)and, if ABBOTT has
transferred the Continuous Product Research Program
to ABBOTT, ABBOTT continues in accordance with
Section 3.4(A)(2) to pursue a solution to the
technical problems.
(C) If ABBOTT does not deliver the Development Program
Notification for a Continuous Product by (*), or such
extended time period as set forth in Section 3.4
(A)-(B), then all rights of ABBOTT under the
Agreement for all Continuous Products (except any
right of ABBOTT in ABBOTT Research Program
Technology, Derived Technology, Joint Research
Program Technology, ABBOTT Continuous Product
Research Program Technology, or Joint Continuous
Product Research Program Technology or any rights
pursuant to Article 6 of this Third Amendment or
Section 10.3 of the Agreement) shall immediately
revert to SPECTRX. SPECTRX shall promptly send a
notice to ABBOTT confirming such reversion of rights;
however, such notice will not impact whether such
reversion occurs.
3.5 Development Program - Continuous Product.
(A) ABBOTT shall have complete control of the Development
Program for the Continuous Product, including, but
not limited to, whether to conduct the Development
Program itself or to maintain a Development Program
for a Continuous Product at SPECTRX or at both
SPECTRX and ABBOTT. The cost of such Development
Program shall be borne by ABBOTT. Notwithstanding the
foregoing, it is anticipated that SPECTRX will be
performing development oriented activities prior to
ABBOTT providing Development Program Notification
(which activities shall have the prior approval of
both SPECTRX and ABBOTT) that will be funded by the
preferred stock purchase set forth in Section 5.5. To
the extent such activities require additional
expenditures, which
(*) 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.
14
15
together with expenditures made or to be made by
SPECTRX for the Continuous Product Research Program,
are in excess of the funding by the preferred stock
purchase, then such additional expenditures shall be
separately funded by ABBOTT with prior written
approval of ABBOTT. If ABBOTT determines, and SPECTRX
agrees, to maintain a portion of the Development
Program at SPECTRX, such determination and agreement
to be made at the time of Development Program
Notification, then ABBOTT and SPECTRX shall establish
a mutually agreeable plan and budget for such
Development Program within ninety (90) days of the
date the Development Program Notification is
delivered to SPECTRX. Such Development Program plan
will require that SPECTRX at a minimum provide the
same resources and expertise, as it has used during
the Continuous Product Research Program, or their
equivalents as agreed to by ABBOTT and SPECTRX.
ABBOTT and SPECTRX shall agree on interim activities,
if any, and ABBOTT shall provide interim funding for
such activities between Development Program
Notification and establishment of the mutually
agreeable plan. If SPECTRX is concurrently pursuing
development of the SPECTRX Continuous Product, then
SPECTRX will also provide equivalent resources,
expertise, and priorities for the ABBOTT Continuous
Product Development Program. If ABBOTT believes that
there is a conflict of interest between the SPECTRX
Continuous Product development and the Continuous
Product Development Program that materially impacts
ABBOTT's Continuous Product Development Program, then
ABBOTT shall notify SPECTRX in writing describing the
specifics of the conflict of interest. Upon such
written notification, the parties will meet to
attempt to resolve any issue and SPECTRX shall have
thirty (30) days to correct the conflict of interest.
If SPECTRX does not correct such conflict of interest
within such thirty (30) day period, then ABBOTT (1)
will have no obligation to enter into a Supply
Agreement or may terminate an existing Supply
Agreement for the manufacture of (*)s by SPECTRX; (2)
ABBOTT may immediately cease funding SPECTRX
activities under the Continuous Product Development
Program; and (3) then SPECTRX will promptly transfer
to ABBOTT everything related to the Continuous
Product Development Program, including, but not
limited to, all information, data, Products,
materials, hardware, software, pilot manufacturing
lines and provide reasonable assistance in
transferring such activities and items to ABBOTT.
Such transfer shall not include information, data,
Products, materials, hardware, software and pilot
manufacturing lines that are solely part of the
development
(*) 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.
15
16
program for the SPECTRX Continuous Product. If any of
these items are common between the ABBOTT program and
the SPECTRX program, then the parties will negotiate
in good faith on an approach to split or share such
items. For clarification, neither the fact that
SPECTRX is developing the SPECTRX Continuous Product,
nor the fact that it has entered into a Third Party
relationship, shall be deemed in and of itself to
constitute a conflict of interest for the purposes of
this Section 3.5(A).
(B) Notwithstanding Section 3.4(A), if the (*) Milestone
has been achieved less than (*) before (*), and
ABBOTT has not delivered the Development Program
Notification for such Product by (*), then ABBOTT
shall have (*) from the date of (*) Milestone
achievement to deliver the Development Program
Notification and will be obligated to pay for any
Continuous Product Research Program expenses or any
development activities expenses for such Continuous
Product requested and authorized in writing by ABBOTT
and incurred by SPECTRX after (*) until the date of
Development Program Notification. In such case,
SPECTRX will have no obligation to continue the
research activities for the Continuous Product
Research Program after (*) unless ABBOTT and SPECTRX
agree to such activities commencing (*).
3.6 Development Program - Non-Continuous Product.
(A) At any time prior to (*), ABBOTT may deliver the
Development Program Notification to SPECTRX if ABBOTT
determines to commence the Development Program for
the Non-Continuous Product. ABBOTT shall have
complete control of the Development Program for the
Non-Continuous Product or Non- Continuous Products
under this Agreement. However, such control by ABBOTT
shall not affect the timing of Milestones or the rate
of royalties for such Non-Continuous Product or
Non-Continuous Products.
(B) If ABBOTT does not Diligently pursue research
activities beginning (*), and spend at the minimum
rate of (*) per year on the Non-Continuous Product
research activities beginning (*) and ending upon
delivery of the Development Program Notice for such
product, or does not deliver the Development Program
Notification for a Non-Continuous Product by (*),
then all rights of ABBOTT under the Agreement for any
and all Non-Continuous Products (except any right of
ABBOTT in ABBOTT Research Program Technology, Derived
Technology, Joint Research Program Technology,
(*) 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.
16
17
ABBOTT Continuous Product Research Program
Technology, or Joint Continuous Product Research
Program Technology, or any rights pursuant to Article
6 of this Third Amendment) shall immediately revert
to SPECTRX. SPECTRX shall promptly send a notice to
ABBOTT confirming such reversion of rights; however,
such notice will not impact whether such reversion
occurs.
(C) If ABBOTT's rights to all Continuous Products have
been terminated as set forth in Section 3.4(C), or if
ABBOTT notifies SPECTRX that it is terminating the
Continuous Product Research Program or Development
Program, then ABBOTT must deliver the Non-Continuous
Product Development Program Notification to SPECTRX
prior to (*) from such termination date for the
Continuous Product rights or from notice of
termination of the Continuous Product Research
Program or Development Program or (*), whichever is
earlier or ABBOTT's rights to a Non-Continuous
Product shall terminate (except any right of ABBOTT
in ABBOTT Research Program Technology, Derived
Technology, Joint Research Program Technology, ABBOTT
Continuous Product Research Program Technology, or
Joint Continuous Product Research Program Technology,
or any rights pursuant to Article 6 of this Third
Amendment).
3.7 ABBOTT Development Program Due Diligence.
(A) For the Continuous Product and the Non-Continuous
Product on which ABBOTT delivers a Development
Program Notification to SPECTRX, ABBOTT shall
Diligently use its commercially reasonable efforts to
achieve:
(1) submission of a Regulatory Filing with the
FDA within (*) (if a 510K Filing submission
is to be made) (*) (if a PMA submission is
to be made) after delivery of such
Development Program Notification for such
Product;
(2) the First Shipment Date for such Product
within (*) after delivery of such
Development Program Notification for such
Product if a 510K Filing submission is to be
made for such Product or within (*) if a PMA
submission is to be made for such Product.
(B) If the First Shipment Date has not occurred and if
ABBOTT has not submitted a Regulatory Filing to the
FDA within the period set forth in Section 3.7(A)(1)
above (or any extended period agreed to by the
parties pursuant to Section 3.1 of the Agreement) and
such
(*) 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.
17
18
failure is not due to a lack of SPECTRX Diligence in
fulfilling its responsibilities, if any, under the
Development Program, then prior to the end of the
period set forth in Section 3.7(A)(1) or such
extended period agreed by the parties, ABBOTT may
extend such period by (*) by written notice of
extension to SPECTRX and within thirty (30) days of
such notice, payment to SPECTRX of (*)set forth in
Section 5.1(A)(4). ABBOTT further may extend such
period by an additional (*) if SPECTRX has commenced
developing its SPECTRX Continuous Product and if
ABBOTT is Diligently working toward a Regulatory
Filing to the FDA. If ABBOTT's failure under this
Section 3.7(B) is due to a lack of SPECTRX Diligence,
if any, then any such deadline will be extended to
the extent impacted by SPECTRX's lack of Diligence.
(C) If the First Shipment Date has not occurred and such
failure is not due to a lack of SPECTRX Diligence in
fulfilling its responsibilities, if any, under the
Development Program, then prior to the end of the (*)
period set forth in Section 3.7(A)(2), as the case
may be, ABBOTT may extend such period (*) ,
respectively, by written notice of extension to
SPECTRX and within thirty (30) days of such notice,
payment to SPECTRX of (*). ABBOTT further may extend
such period by an additional (*) if SPECTRX has
commenced developing its SPECTRX Continuous Product
and if ABBOTT is Diligently working toward the First
Shipment Date. If ABBOTT's failure under this Section
3.7(C) is due to a lack of SPECTRX Diligence, then
such deadlines will be extended to the extent
impacted by SPECTRX's lack of Diligence.
(D) Unless the parties agree to extend such time for the
Regulatory Filing in Section 3.7(A)(1) above, if
ABBOTT (i) has not made such Regulatory Filing within
the period set forth in Section 3.7(A)(1) or an
extended period pursuant to Section 3.7(B) or (ii) if
the First Shipment Date has not occurred within the
period set forth in Section 3.7(A)(2) or an extended
period pursuant to Section 3.7(C), then upon written
notice from SPECTRX, ABBOTT shall have no further
rights to any and all Continuous Products or to any
and all Non-Continuous Products, as the case may be
(except any right of ABBOTT in ABBOTT Research
Program Technology, Derived Technology, Joint
Research Program Technology, ABBOTT Continuous
Product Research Program Technology, or Joint
Continuous Product Research Program Technology, or
any rights pursuant to Article 6 of this Third
Amendment), provided that, if ABBOTT has relinquished
all rights pursuant to this Section 3.7(D)
(*) 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.
18
19
and as a result this Agreement terminates in
accordance with Section 3.8(A), and a Regulatory
Filing did not occur due to one of the events set
forth in Section 3.1(B) of the Agreement, then
SPECTRX shall not be entitled to the license in
Section 6.2(C) of the Agreement and grant back of
rights set forth in Section 7.1 of the Agreement or
the license set forth in Section 11.2(B) of the Third
Amendment upon termination of the Agreement.
(E) If ABBOTT has made a payment for a particular
extension under Section 3.7(B) and/or 3.7(C) for
either the first Continuous Product or the first
Non-Continuous Product, then if ABBOTT requires the
same extension for the first Product of the other
type (Non-continuous Product or Continuous Product,
as the case may be) under a Development Program,
ABBOTT will receive such extension (*) upon prior
written notification to SPECTRX within the original
time period; provided, that, ABBOTT is employing
Diligent commercially reasonable efforts to meet the
requirements as set forth in Section 3.7(A) (1) or
(2) for such Product and requires such extension to
meet such requirements.
(F) If ABBOTT does not deliver the Development Program
Notification for a Continuous Product by the
prescribed date or if ABBOTT notifies SPECTRX that it
is terminating all Continuous Product Research or
Development Programs, then in the first (*) following
the prescribed date or notice of such termination,
ABBOTT will Diligently pursue research activities or
Development Program, (including spending at the rate
of at least (*) on Non-Continuous Product research
activities or Development Program and, thereafter, at
the rate of (*) per each (*) period until completion
or termination of such program). If ABBOTT does not
meet these requirements, then SPECTRX may terminate
ABBOTT's rights to all Non-Continuous Products upon
written notice to ABBOTT and the Agreement will
terminate in accordance with Section 3.8(A).
3.8 Termination of all Programs.
(A) Prior to the First Shipment Date, if ABBOTT ceases
funding all research activities as set forth in the
Agreement, and does not deliver any Development
Program Notifications within the prescribed times or
ceases all or does not commence any Development
Program with regard to either the Continuous Product
or Non-Continuous Product, and the parties have not
agreed otherwise, then this Agreement shall terminate
upon receipt of written notice of same from one party
to the other, subject 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.
19
20
Sections 10.3 and 10.4 of the Agreement. In any case,
prior to the First Shipment Date, if rights to both
the Continuous Product and the Non-Continuous Product
are relinquished by ABBOTT, this Agreement shall
terminate.
(B) After the First Shipment Date, if rights to both the
Continuous Product and the Non-Continuous Product are
relinquished by ABBOTT, this Agreement shall
terminate.
(C) If ABBOTT ceases funding any research activities,
ceases any research activities or any development
activities which are required by the Agreement for
the Continuous Product or the Non-Continuous Product,
ABBOTT shall notify SPECTRX within thirty (30) days
of each such cessation unless otherwise provided by
this Third Amendment or the Agreement.
3.9 Reports. ABBOTT and SPECTRX each will provide the other with
quarterly reports on its activities under either the Continuous Product Research
Program or Research Program and reports every six (6) months for activities
under Development Programs, including summary data generated, to the extent
necessary to demonstrate that such party is meeting its Diligence requirements
(including spending requirements) set forth in the Agreement. Such reports shall
redact any data or other information which is subject to a confidentiality
agreement between ABBOTT and a Third Party and any data which is outside the
scope of ABBOTT's obligations under this Agreement. This requirement for reports
for a Research Program and any Development Programs shall not commence until a
party has Diligence requirements for such Research Program or Development
Program as set forth in Sections 3.5, 3.6 and/or 3.7, as the case may be. Such
reports to the Research Oversight Committee will satisfy reporting requirements
under this Section 3.9.
3.10 R & D Expense Records and Audit. ABBOTT and SPECTRX each shall
keep and maintain records of amounts spent on the Continuous Product Research
Program, the Research Program and Development Programs conducted in accordance
with the provisions of Article 3 of the Agreement and Article 3 of this Third
Amendment, except for Abbott's requirement for the Research Program and
Development Program which shall commence upon the date it has Diligence
requirements for such Research Program or Development Program as set forth in
Sections 3.5, 3.6 and/or 3.7, for a period of two (2) years after the period to
which such records relate. During this period, such records shall be open to
inspection upon reasonable written notice by one party to the other party. Such
inspection shall be performed by a nationally recognized independent certified
public accountant selected by the party requesting the audit and approved by the
party to be audited, which approval shall not be unreasonably withheld. All
expenses of such inspection shall be borne by the party requesting the audit;
provided that, if the audited party is found to have overstated its spending by
more than (*) any amounts required to be spent for the Continuous Product
Research
(*) 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.
20
21
Program, Research Program or Development Programs under Article 3, and as a
result is non-compliant with its Diligence requirements, then the audited party
shall bear such expenses. The independent certified public accountant shall sign
a confidentiality agreement and shall then have the right to examine the records
kept pursuant to this Section and report findings (but not the underlying data)
of the examination to the party requesting the audit as is necessary to evidence
that records were or were not maintained and expenditures made as required by
this Article 3. A copy of any report provided to the party requesting the audit
by the independent certified public accountant shall be given concurrently to
the audited party.
4. SPECTRX CONTINUOUS PRODUCT
4.1 Development by SPECTRX. If ABBOTT delivers a notice to materially
redefine the Continuous Product Research Program Specifications or of the
transfer to ABBOTT of the Continuous Product Research Program or to extend the
Development Program Notification date for the Continuous Product in accordance
with the Agreement, then SPECTRX may determine to develop not earlier than (*),
one (1) Continuous Product, for its own benefit, such research and development
to be funded by SPECTRX ("SPECTRX Continuous Product"). SPECTRX shall have the
right to modify SPECTRX Continuous Product to eliminate the use of any or all
Licensed Rights (as defined in Section 4.2(B)). Notwithstanding the foregoing,
SPECTRX will not have such rights to develop a SPECTRX Continuous Product until
after (*) if ABBOTT funds the Continuous Product Research Program at SPECTRX
after (*) with a commercially reasonable funding level agreed to by the parties
in order to develop a (*) Product that meets the Continuous Product Research
Program Specifications as first specified in Appendix 2.7. SPECTRX will provide
ABBOTT with ten (10) days prior written notice prior to commencing development
of a SPECTRX Continuous Product. One Continuous Product means (*) Continuous
Product which shall be sold (*) and pursuant to a (*) and which, after
commercial launch, (*). Notwithstanding anything in this Section 4.1, (A) if the
(*) Milestone is achieved between (*), and (*),, and ABBOTT delivers Development
Program Notification within sixty (60) days of SPECTRX's achievement of the (*)
Milestone, or (B) if ABBOTT provides Development Program Notification to SPECTRX
between (*), and (*), after funding the Continuous Product Research Program at
SPECTRX after (*), as set forth in this Section 4.1, then SPECTRX shall not have
the right to develop a SPECTRX Continuous Product.
4.2 License to SPECTRX.
(A) If the criteria of Section 4.1 are met and within the time
period that ABBOTT has extended the deadline for delivering
the Product Development Notification ABBOTT receives a written
notification from SPECTRX of its election to develop such
SPECTRX Continuous Product, ABBOTT shall grant to SPECTRX a
royalty-bearing, non-exclusive license, without the right to
sublicense,
(*) 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.
21
22
under the Licensed Patents and Know-How to make, have
made, use, sell and import the SPECTRX Continuous
Product in the Territory, (*). ABBOTT and SPECTRX
shall enter into a license agreement which shall
include the grant set forth in this Section 4.2(A),
the royalty in Section 4.4 and other customary terms
and conditions, similar where appropriate, to those
license terms set forth in the Agreement.
(B) Upon receiving SPECTRX's election to develop such
SPECTRX Continuous Product, ABBOTT shall grant to
SPECTRX a royalty-bearing, non-exclusive license,
without the right to sublicense, under those ABBOTT
patent rights and know-how ("Licensed Rights") which
have been incorporated into the Continuous Product at
the earliest of the following: (1) date of ABBOTT's
notice to materially redefine the Continuous Product
Research Program Specifications as set forth in
Section 4.1; or (2) date of ABBOTT's notice of the
transfer to ABBOTT of the Continuous Product Research
Program as set forth in Section 4.1; or (3) date of
SPECTRX's notice as set forth in Section 4.2(A), to
use, sell, and import the SPECTRX Continuous Product
in the Territory. ABBOTT and SPECTRX shall enter into
a license agreement for such Licensed Rights under
commercially reasonable royalty rates and other
customary terms and conditions, similar where
appropriate, to those license terms set forth in the
Agreement.
4.3 Manufacturing Rights.
(A) If SPECTRX is granted a license under Section 4.2(B),
ABBOTT shall have the option to manufacture for
SPECTRX those items covered by the Licensed Rights.
SPECTRX shall deliver notification of such
anticipated date to ABBOTT within (*) prior to
SPECTRX's commercially reasonable anticipated date of
the first commercial sale of the SPECTRX Continuous
Product. ABBOTT may exercise its option hereunder by
written notice to SPECTRX (*) days of receiving
SPECTRX's notification. If ABBOTT delivers such
notice to SPECTRX, SPECTRX and ABBOTT shall enter
into a manufacturing agreement under commercially
reasonable terms agreed upon by the parties. If
ABBOTT does not exercise its option within the
designated time period, then ABBOTT shall modify
SPECTRX's license grant set forth in Section 4.2(B)
to extend it to "make and have made."
(B) If SPECTRX is manufacturing (*)s for ABBOTT in
accordance with Section 5.2 and SPECTRX's (*) of the
SPECTRX Continuous
(*) 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.
22
23
Product and (*) exceed the greater of (*) of SPECTRX
(*) as defined in Section 4.4(B) in any rolling
twelve (12) month period, or (2) (*) of the combined
total of the (*) of SPECTRX (*) as defined in Section
4.4(B) of the SPECTRX Continuous Product and (*) and
the (*) of ABBOTT Continuous Product and (*), then
ABBOTT shall have the option to transfer such
manufacture of (*)s to ABBOTT or a Third Party
designated by ABBOTT. ABBOTT may exercise its option
at any time after SPECTRX exceeds the threshold set
forth in this Section by written notice to SPECTRX.
ABBOTT and SPECTRX will agree on a commercially
reasonable transition plan and timetable to transfer
such manufacturing to ABBOTT or ABBOTT's designee and
SPECTRX will provide the necessary documentation and
assistance for such transfer. SPECTRX will provide
the necessary documentation and limited assistance at
its own expense and ABBOTT shall pay for all other
expenses associated with such transfer.
4.4 Royalty.
(A) In consideration for the license granted under
Section 4.2(A), SPECTRX shall pay to ABBOTT a royalty
as set forth in Section 4.4(B) on (*) of the SPECTRX
Continuous Product and (*) in the Territory applying
the same criteria to SPECTRX as in (*) for ABBOTT,
including the same provisions for deductions as set
forth in Section 1.23(A) of the Agreement and Section
5.6(B) of the Third Amendment. No royalty shall be
due for sales through ABBOTT or by ABBOTT under
distributor rights negotiated under Section 4.5 or
for items manufactured by ABBOTT for SPECTRX that are
related to the SPECTRX Continuous Product; provided,
that royalties also shall be due under the
circumstances that would call for ABBOTT to pay
royalties on its (*) under Section 4.2(D) of the
Agreement.
(B) Prior to First Shipment Date of Abbott's Continuous
Product, royalties will be calculated on (*) at a
royalty rate of (*). Thereafter, the royalty rate
will be based on SPECTRX (*) (as defined in Section
4.4(B)(1)) in accordance with Appendix 4.4. Royalties
shall be calculated as follows:
(1) It is anticipated that a majority of
SPECTRX's (*), if any, of the SPECTRX
Continuous Product and (*) will be made (*)
for each year, total SPECTRX actual (*) of
the SPECTRX Continuous Product and (*) shall
be (*) unless SPECTRX or ABBOTT can
demonstrate that the impact of such (*) is
materially different than (*) for such year.
The royalty rate(s)
(*) 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.
23
24
for such year shall be determined by
applying such SPECTRX (*) to the chart in
Appendix 4.4.
(2) The royalty payment shall be determined by
the formula (*) where (*) is the applicable
royalty rate in Appendix 4.4; (*) is the
total SPECTRX (*); and (*) is a fraction,
the numerator of which is that portion of
the SPECTRX (*) applicable to such royalty
rate and the denominator of which is the
total (*).
(C) Any sales of the SPECTRX Continuous Product and/or
(*) by a Third Party in which SPECTRX has a material
financial interest shall be deemed sales by SPECTRX
and such sales shall be included in (*) for purposes
of calculation of the royalty payment under this
Article.
4.5 Right of First Negotiation - Distribution Rights. ABBOTT shall have
the right of first negotiation for the exclusive right to the distribution of
the SPECTRX Continuous Product which right of first negotiation may be exercised
as follows:
(A) Within (*) prior to SPECTRX's commercially reasonable
anticipated date of first commercial sale of the
SPECTRX Continuous Product, SPECTRX shall deliver
written notification to ABBOTT regarding its right of
first negotiation. SPECTRX shall not engage in any
discussions with any Third Party concerning such
distribution until ABBOTT's right of first
negotiation terminates in accordance with Section
4.5(C) or 4.5(D).
(B) ABBOTT shall have (*) after receipt of the notice and
the report in Section 4.5(C) to provide a written
response indicating whether ABBOTT is interested or
not in such distribution rights.
(C) At the time that the notice is delivered to ABBOTT,
SPECTRX shall provide to ABBOTT a full report on the
SPECTRX Continuous Product, including technical
specifications and performance of the SPECTRX
Continuous Product reasonably necessary to assess
performance and marketability and any other
information reasonably requested by ABBOTT. Within
(*) after receipt of such report, ABBOTT may send to
SPECTRX an initial proposal containing proposed
financial and other material terms for such
distribution relationship (the "ABBOTT Proposal"). If
ABBOTT does not send an ABBOTT Proposal within such
period of time, then ABBOTT's right of first
negotiation with regard to such distribution rights
shall terminate.
(*) 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.
24
25
(D) If ABBOTT delivers an ABBOTT Proposal to SPECTRX,
SPECTRX and ABBOTT shall promptly enter into good
faith negotiations towards a distribution agreement
upon mutually agreed terms and conditions. Subject to
SPECTRX making all reasonable efforts to meet and
negotiate with ABBOTT on a timely basis and in good
faith, if SPECTRX and ABBOTT fail to reach mutual
agreement on a term sheet covering the material terms
and conditions of a distribution agreement within (*)
from the receipt of the ABBOTT Proposal by SPECTRX,
or fail to execute a definitive distribution
agreement within (*) of such receipt, then upon
written notice from SPECTRX, ABBOTT shall have no
further right of first negotiation with regard to
such distribution rights except as set forth in
Section 4.5(E).
(E) (1) If, during the (*) period subsequent to the
process set forth in Section 4.5(A)-(D),
SPECTRX negotiates proposed terms for a
distribution agreement for the SPECTRX
Continuous Product with a Third Party under
terms and conditions that are more favorable
to the Third Party than those originally
proposed during negotiation with ABBOTT
(taking into consideration all relevant
terms of both proposals, including, but not
limited to, quantities, any minimum purchase
obligations, type of distribution rights,
type of Third Party and other agreement
obligations) ("More Favorable Terms"), then
SPECTRX by written notice promptly shall
inform ABBOTT of the More Favorable Terms
and ABBOTT shall have (*) to accept such
More Favorable Terms by written notice to
SPECTRX.
(2) If ABBOTT and SPECTRX fail to enter into a
distribution relationship pursuant to
Section 4.5(D), and prior to entering into
any other definitive distribution agreement
with a Third Party, SPECTRX makes
significant improvements to the SPECTRX
Continuous Product, then ABBOTT shall have
the right of first negotiation with regard
to such improved SPECTRX Continuous Product
under the same process as set forth in this
Section 4.5(A)-(D).
4.6 Post Election Efforts on ABBOTT's Program. Notwithstanding
SPECTRX's election to develop a SPECTRX Continuous Product, if SPECTRX is
continuing to perform research or development work under this Agreement for
ABBOTT, SPECTRX agrees that it will Diligently pursue all such activities in
accordance with Section 3.5(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.
25
26
5. CONSIDERATION
5.1 Milestone Payments.
(A) ABBOTT shall pay to SPECTRX the following payments
for the milestones listed below ("Milestones"):
(1) (*) or achievement of the Milestone set
forth in Section 5.1(A)(2), whichever is
earlier (but in no case prior to (*).
(2) (*) of ABBOTT's (or a mutually acceptable
competent Third Party's) written notice of
determination that a (*) meets all of the
Continuous Product Research Program
Specifications or on (*), whichever is
later; such written notice of determination
to be made within (*) after receipt by
ABBOTT of the investigator's final report on
the (*) study and all other reports
described in the Continuous Product Research
Program Specifications necessary to assess
the achievement of this Milestone (excluding
items required for the Development Program,
e.g., drawings, parts list, etc.). (This
Milestone shall be deemed achieved if ABBOTT
delivers the Development Program
Notification in Section 5.1(A)(3) for either
a Continuous Product or Non-Continuous
Product.)
(3) (*) of delivery by ABBOTT to SPECTRX of a
Development Program Notification.
(4) (*) of submission by ABBOTT of a Regulatory
Filing with the FDA for a Product.
(5) (*) of ABBOTT receiving the first written
approval to market from the FDA for a
Product.
(6) (*) of the First Shipment Date of Product.
(B) The payment for each Milestone shall be made only
once, notwithstanding that the Milestone is met for
more than one Product. The total consideration due
from ABBOTT under this Section 5.1 shall not exceed
(*).
(C) ABBOTT at its election by the delivery of a written
notice to SPECTRX ("Common Stock Election Notice"),
may use a portion, up to one-half, of its payment
obligations under each of Section
(*) 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.
26
27
5.1(A)(2) and Section 5.1(A)(3) to purchase shares of
common stock of SPECTRX ("SPECTRX Common Stock") as
detailed in the Common Stock Purchase Agreement,
Appendix 5.1. If ABBOTT elects to make any such
purchase of SPECTRX Common Stock, then, as further
provided in Section 5.4(A) hereof, the credit against
royalties for certain Milestone payments shall be
reduced by a sum equal to the aggregate purchase
price of such SPECTRX Common Stock.
(D) If a Milestone payment is made as specified in 5.1(A)
or as a prepayment for an extension (Sections 3.4(B),
3.7(B), 3.7(C)) any such payment is non-refundable,
except as to credits in Section 5.4, or in any case,
if this Agreement is terminated.
5.2 Transfer Price - (*)s for Continuous Product. If SPECTRX is
competitive with regard to Manufacturing Costs (*) greater than those by
bonafide Third Party manufacturers) unless SPECTRX adjusts its Transfer Price to
an amount equal to that Transfer Price that would have resulted had SPECTRX
Manufacturing Costs been no more than (*) greater, and manufacturing quality of
the (*)s for the Continuous Product (i.e., SPECTRX meets FDA QSR and European
EN46001 requirements, demonstrates to ABBOTT's reasonable satisfaction it has
sufficient manufacturing capacity to timely meet reasonably expected demand in
accordance with the forecast according to the Supply Agreement, and is able to
consistently supply (*)s that meet the final product specifications), then
ABBOTT and SPECTRX shall enter into a supply agreement substantially in the form
of Appendix 5.2 and containing the following terms for the supply of the (*)s by
SPECTRX to ABBOTT ("Supply Agreement"). ABBOTT shall pay a Transfer Price for
each (*) whether manufactured by SPECTRX or for SPECTRX by a Third Party that
equals the product of the Manufacturing Costs multiplied (*) or such lower
Transfer Price as SPECTRX may propose. If SPECTRX elects to supply the (*)s that
are manufactured by a Third Party under the direction of SPECTRX, ABBOTT shall
have the right to approve such Third Party, which approval will not be
unreasonably withheld.
5.3 Royalty - Continuous Product. ABBOTT will pay royalties on annual
(*) of all Continuous Product and all (*) which are Licensed Products, excluding
that part of (*) attributable to (*) manufactured by SPECTRX, in the Territory
as set forth in Section 4.2(C) of the Agreement; subject to the (*) deduction in
Section 5.6, and provided, however, that the (*) of all Licensed Products shall
be aggregated to obtain the (*) Within One Year for purposes of the royalty
calculation set forth in Section 4.2(C) of the Agreement.
5.4 Credits Against Royalties and Transfer Price.
(A) The Milestone payments under Sections 5.1(A)(5) and
5.1(A)(6), up to a total amount of (*), less any
amounts paid for preferred
(*) 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
28
stock as set forth in Section 5.5 or SPECTRX Common
Stock in lieu of Milestone payments as set forth in
Section 5.1(C), shall be credited against future
royalties payable by ABBOTT and/or the Transfer Price
of the (*)s purchased by ABBOTT from SPECTRX. Such
payments shall be credited against royalties or the
Transfer Price due to SPECTRX (1) at the time of
payment of such royalty so that SPECTRX shall receive
(*) of the royalty amount due to it (i.e., for every
(*) in royalties due SPECTRX, SPECTRX shall receive
(*) or (2) at a rate of (*) of the Transfer Price,
respectively, until the total of (*) or such
applicable lesser amount, has been credited against
royalties and/or the Transfer Price due SPECTRX from
ABBOTT.
(B) If (*) of the first Licensed Product, which Licensed
Product establishes the First Shipment Date, and all
subsequent Licensed Products, have not totaled (*)
within (*) of the First Shipment Date ("Cumulative
Amount"), then upon written notice by ABBOTT to
SPECTRX the following amounts would be creditable
against royalties and/or the Transfer Price of the
(*)s, in accordance with the formula set forth in
Section 5.4(A), until the total credited amount had
been attained or until the (*) by ABBOTT of the
Licensed Product for any twelve (12) month period
following the First Shipment Date (i.e. months 1-12,
13-24, 25-36, etc. starting from the First Shipment
Date) equal (*), whichever is first:
Cumulative Amount Up to and Including Credited Amount
------------------------------------- ---------------
(*) (*)
(*) (*)
(*) (*)
(C) ABBOTT may within (*) of the Third Amendment
Effective Date identify a (*) and, thereafter, if
ABBOTT chooses in its commercially reasonable
business judgment to take a license under such (*) or
any foreign counterparts, any divisions,
continuations and continuations-in-part, extensions,
renewals or reissues of such patent to make, have
made, use, sell or import a Product, in order not to
infringe such (*) by the practice of the Licensed
Patents or Know How for such Product, then up to (*)
of payments made by Abbott to acquire and maintain
such license, not to exceed (*) of such payments),
shall be creditable against royalties and/or Transfer
Price due to SPECTRX from ABBOTT, in accordance with
the formula set forth in Section 5.4(A), provided,
however, that no such payments shall be creditable
for license payments made to an affiliate of ABBOTT.
To the extent that such license also covers
(*) 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.
28
29
other products or services, the payments shall be
allocated among Product and such other products or
services based on sales and the credit shall be
limited to the percentage allocated to Product.
(D) If SPECTRX fails to supply the (*)s and ABBOTT elects
to transfer the manufacturing to ABBOTT or an ABBOTT
designated Third Party, all in accordance with the
terms of the Supply Agreement, then ABBOTT shall be
entitled to a credit against any royalties due to
SPECTRX for the reasonable costs of transition of
such manufacturing from SPECTRX. ABBOTT shall give
written notification of such costs with the first
royalty payment due SPECTRX after the transfer is
effective. The credit shall be taken against any
royalties due to SPECTRX under the Agreement without
recourse to the formula under Section 5.4(A).
5.5 Preferred Stock Purchase.
(A) Contemporaneously with the execution and delivery of
this Third Amendment, and effective as of the Third
Amendment Effective Date, ABBOTT and SPECTRX have
entered into that certain Redeemable Convertible
Preferred Stock Purchase Agreement pursuant to which
and subject to its terms and conditions, SPECTRX has
agreed to issue and sell, and ABBOTT has agreed to
purchase, an aggregate of 525,000 shares of a new
class of preferred stock of SPECTRX to be designated
Redeemable Convertible Preferred Stock at a purchase
price of Ten Dollars ($10.00 ) per share. The date of
the First Closing (as defined in such Redeemable
Convertible Preferred Stock Purchase Agreement) shall
be the Third Amendment Effective Date.
(B) SPECTRX shall use all of the payments for preferred
stock received from ABBOTT only for the costs
associated with the Continuous Product Research
Program for ABBOTT (such costs to be similar to those
outlined in the original Appendix 2.3 of the
Agreement) under the Third Amendment or any wind-down
expenses of SPECTRX in accordance with Section 3.3,
if a Continuous Product Research Program is
completed, terminated or transferred by ABBOTT. If,
at the time ABBOTT elects to transfer the Continuous
Product Research Program to ABBOTT, ABBOTT and
SPECTRX agree to continue research activities at
SPECTRX, or at the time that ABBOTT gives Development
Program Notification, ABBOTT and SPECTRX agree (in
both cases, SPECTRX's agreement will not be
unreasonably withheld) to continue development
activities at SPECTRX, then to the extent
(*) 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.
29
30
that the total costs and expenses incurred by SPECTRX
for performance of the Continuous Product Research
Program are less than the payments for preferred
stock received from ABBOTT, SPECTRX shall first use
the balance of those payments for the above-mentioned
continuing research and development activities and
upon the complete use of those payments, ABBOTT shall
provide separate funding for the costs and expenses
of the remainder of such activities. ABBOTT shall
have up to three (3) months from the above election
or notice to identify and agree with SPECTRX on such
activities. The obligation to use the preferred stock
payments, if any balance remains, will cease six (6)
months from any such election or notice. SPECTRX
shall employ Diligent commercially reasonable efforts
to limit wind-down expenses, including, but not
limited to, immediately terminating or noticing
termination, as permitted, of any obligations which
incur costs, not entering into any new financial
commitments and Diligently taking all reasonable
steps to minimize any existing and/or continuing
costs which cannot be immediately terminated.
5.6 (*) Deduction. Prior to the determination of any royalty amount due
to SPECTRX by ABBOTT, (*) for each year shall be adjusted as follows:
(A) (*)
(B) (*)
6. OTHER LICENSES
6.1 (*) Technology and (*).
(A) Subject to Section 6.1(B), if either SPECTRX or
ABBOTT possesses any rights pursuant to a patent or
patent application (which it has the right to
sublicense) covering (*) Technology or (*) and the
other party requests the right to practice under such
patent rights, then the party possessing such rights
pursuant to a patent or patent application agrees to
grant a non-exclusive license, without the right to
sublicense, except for a limited right to sublicense
for Third Party manufacture, to the other party,
under reasonable commercial terms mutually agreed
upon by the parties, to make, have made, use, sell
and import Continuous Products as follows:
(1) If SPECTRX is the party possessing such
rights, then SPECTRX shall grant to ABBOTT a
non-exclusive license under SPECTRX (*)
Technology or (*); the term of any such
(*) 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.
30
31
license(s) from SPECTRX to ABBOTT shall be concurrent
with the term of the rights under Licensed Patents
and Know How held in the Field by ABBOTT except any
such license for technology Derived by SPECTRX from
ABBOTT (*) Technology or (*) shall survive
termination, other than for breach by ABBOTT of the
Agreement; or
(2) if ABBOTT is the party possessing such rights, then:
(a) if the Agreement is terminated other
than for breach by SPECTRX, ABBOTT
shall grant SPECTRX a non-exclusive
license under ABBOTT (*) Technology
for Continuous Products;
(b) if, pursuant to the terms of this
Agreement, ABBOTT's rights to all
Continuous Products are terminated,
other than by a termination by
ABBOTT of the Agreement for breach
by SPECTRX, then ABBOTT shall grant
SPECTRX a non-exclusive license
under ABBOTT (*) Technology for
Continuous Products.
(c) The term of any such license(s)
granted under this Section
6.1(A)(2) shall survive termination
of the Agreement other than
termination for breach by SPECTRX.
(B) Any license granted to SPECTRX under Section 6.1(A)
shall be strictly limited to ABBOTT (*) Technology
and shall not include or imply the right to use any
ABBOTT (*) Technology or (*) which was not Derived
from SPECTRX technology, nor shall it include or
imply any right to practice under any intellectual
property rights based on technology recorded in the
written records of ABBOTT before July 28, 1999
(except for Derived Technology), or any technology
under which ABBOTT acquires a license from Third
Parties except for the (*) referenced in Section
5.4(C).
(C) If SPECTRX utilizes the license granted by ABBOTT
pursuant to Section 6.1(A), then ABBOTT will have the
right to manufacture any (*) for the SPECTRX Product
which utilizes such license during the term of such
license under commercially reasonable terms agreed to
by the parties. At the time SPECTRX delivers written
notice to ABBOTT of its intention to commence
development of a SPECTRX Continuous Product pursuant
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.
31
32
Section 4.1 of this Third Amendment, which shall not
be before specifications sufficient to allow
reasonable estimate of Manufacturing Costs of such
(*) are finalized, SPECTRX and ABBOTT will enter into
good faith negotiations toward an agreement for the
supply of such (*) by ABBOTT. In the event that the
parties are not able to reach an agreement within (*)
despite Diligent negotiations, either party may
terminate such negotiations upon written notice to
the other, after which SPECTRX shall have the right
to manufacture for itself, or have manufactured for
it by Third Parties, such (*), provided, however that
the terms and conditions for SPECTRX of such
manufacturing arrangement shall not be, in the
aggregate, less favorable to SPECTRX than the terms
offered by ABBOTT. During such negotiation, ABBOTT
shall supply (*) to SPECTRX on mutually agreeable
terms, or at SPECTRX's option, SPECTRX shall have the
right to purchase (*) from a Third Party.
(D) In any case in which a license to patent rights
covering (*) Technology is conveyed to a party, it
shall convey a license to patent rights covering
combinations of (*) Technology with (*) Technology or
combinations of (*) Technology with (*), in which the
advancement over the art is in (*) Technology, and
the combination is made with (*) Technology or (*) in
existence as of the Effective Date of this Third
Amendment, but shall not convey a license to patent
rights covering (*) Technology or (*) alone.
Therefore, a license to such patent rights for the
combinations does not in and of itself provide the
right to practice the combination unless the party
already has the right to use such (*)Technology or
(*).
6.2 (*). At SPECTRX's written request, ABBOTT agrees to enter into good
faith negotiations with SPECTRX for the granting of a license to SPECTRX for
ABBOTT Diagnostic Division (*) (which technology is not subject to an exclusive
license or other restrictions prohibiting the granting of a license at the time
of SPECTRX's request); provided, that, ABBOTT Diagnostics Division desires to
out-license such technology to Third Parties, not including technology which
ABBOTT is cross-licensing or has cross-licensed with a Third Party in order to
obtain the technology of such Third Party. If SPECTRX makes such a request to
ABBOTT and ABBOTT does not desire to out-license such technology at the time of
such request, then SPECTRX's request shall be effective for a (*) period
following the date the request is received by ABBOTT. If ABBOTT desires to
out-license such technology during such (*) period, ABBOTT will notify SPECTRX
and SPECTRX and ABBOTT will enter into good faith negotiations for the grant of
a license to SPECTRX for such technology. After such (*) period, ABBOTT will
have no obligation to enter into such negotiations unless SPECTRX makes another
request in writing. Any breach of this Section 6.2 by ABBOTT will not be
considered a material breach of the Agreement.
(*) 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.
32
33
6.3 (*). For avoidance of doubt, the parties acknowledge that ABBOTT
has the right to (*)
6.4 License Limitation.
(A) The licenses granted by either party pursuant to this
Article 6 shall not extend to making, having made,
using, selling or importing (*) for either (i) the
Products developed for or by the other party or (ii)
devices of any kind other than Products in which the
other party has any exclusive or co-exclusive right
and neither party shall have an obligation under the
Agreement to grant such license to the other.
(B) If under the terms of a contract that existed prior
to the Effective Date of the Agreement between a
party to this Agreement and a Third Party, such party
is obligated to license to such Third Party any
rights granted to it under this Article 6, then such
license shall be granted to such Third Party only to
the extent of the license granted to such party
(i.e., such license to a Third Party must include all
limitations imposed on the original licensee
hereunder).
7. (*)
7.1 Payments by ABBOTT. Under the agreement among (*)
7.2 (*). SPECTRX agrees to (*)
8. OTHER MANUFACTURING BY SPECTRX
Upon the request of SPECTRX, ABBOTT will consider using SPECTRX to
manufacture devices for ABBOTT Diagnostic Division which devices use optical
technology or any other devices that could be economically manufactured in a
SPECTRX manufacturing facility. Any breach of this Article 8 by ABBOTT will not
be construed as a material breach of the Agreement by ABBOTT.
9. WAIVER
SPECTRX hereby waives any milestone payments associated with the
milestones set forth in Section 4.2(B) of the Agreement, including, but not
limited to, the payment set forth in Section 4.2(B)(v) of the Agreement, all of
which milestones and milestone payments are superceded by the Milestones and
Milestone payments set forth in Section 5.1.
(*) 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.
33
34
10. EXISTING AGREEMENT TERMS
All other terms and conditions of the Agreement shall be effective to
the extent they are not inconsistent with this Third Amendment as set forth in
Section 1.1 of this Third Amendment.
11. OWNERSHIP OF INTELLECTUAL PROPERTY
11.1 SPECTRX Continuous Product Research Program Technology. All
Continuous Product Research Program Technology invented solely by SPECTRX
employees, agents or contractors ("SPECTRX Continuous Product Research Program
Technology") shall be the property of SPECTRX; and all SpectRx Continuous
Product Research Program Technology in the Field and all SPECTRX Continuous
Product Research Program Technology related to (*) Technology, (*) or (*)
Technology shall be promptly disclosed in writing to ABBOTT; and shall be
subject to the following:
(A) If the SPECTRX Continuous Research Program Technology
is useful solely within the Field, then such SPECTRX
Continuous Product Research Program Technology shall
be included under the Licensed Patents or Know-How,
as appropriate, and shall be included under ABBOTT's
Licenses in the Field as set forth in Section 4.1 of
the Agreement.
(B) If the SPECTRX Continuous Product Research Program
Technology is useful within the Field and outside the
Field, then:
(1) such SPECTRX Continuous Product Research
Program Technology shall be included under
the Licensed Patents or Know-How, as
appropriate, and shall be included under
ABBOTT's Licenses in the Field as set forth
in Section 4.1 of the Agreement; and
(2) ABBOTT shall have the right of first
negotiation for a license under the SPECTRX
Continuous Product Research Program
Technology in all other fields with the
exception of (*), such right to be exercised
as set forth in Section 11.3(D).
(C) If the SPECTRX Continuous Product Research Program
Technology is useful solely outside the Field, then
ABBOTT shall have the right of first negotiation to a
license under the SPECTRX Continuous Product Research
Program Technology in all other fields with the
exception of (*), such right to be exercised as set
forth in Section 11.3(D).
(*) 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.
34
35
(D) By way of clarification, but not limitation, all
technology invented by SPECTRX, its employees, agents
or contractors outside the Continuous Product
Research Program (other than that invented under the
Research Program as set forth in Section 6.1 of the
Agreement) and outside the Field or acquired or
licensed by SPECTRX outside the Field, are the sole
property of SPECTRX, and except as set forth in
Section 6.1, SPECTRX shall have no obligation
hereunder to grant a license under such technology to
ABBOTT.
11.2 ABBOTT Continuous Product Research Program Technology
(A) All Continuous Product Research Program Technology
invented solely by ABBOTT employees, agents or
contractors ("ABBOTT Continuous Product Research
Program Technology") shall be the property of ABBOTT
and all ABBOTT Continuous Product Research Program
Technology in the Field and all ABBOTT Continuous
Product Research Program Technology related to ABBOTT
(*) Technology shall be promptly disclosed in writing
to SPECTRX and shall be subject to Section 11.2(B).
(B) In the event of early termination pursuant to
Section 3.8(A) or by ABBOTT pursuant to Section
10.2(A)(i) of the Agreement or by SPECTRX pursuant to
Section 3.7(D) (subject to certain exceptions set
forth in that Section) or pursuant to Section 10.2(D)
of the Agreement prior to the First Shipment Date,
ABBOTT shall grant to SPECTRX a worldwide,
royalty-bearing, nonexclusive license with the right
to sublicense, under ABBOTT Continuous Product
Research Program Technology, other than (*)Technology
or (*), except for ABBOTT (*) Technology set forth in
Section 6.1, to make, have made, use, sell and import
products in the Field.
(C) ABBOTT and SPECTRX shall enter into a license
agreement regarding the licenses in Section 11.2
which shall contain the standard license terms and
conditions under which ABBOTT shall be entitled to
(*) of all license fees and royalties received by
SPECTRX from any sublicense from SPECTRX to a Third
Party, which shall not include SPECTRX's existing
license obligations to (*) under an agreement dated
(*).
(D) By way of clarification, but not limitation, the
following are the sole property of ABBOTT and, except
for Abbott (*) Technology as set forth in Section
6.1, ABBOTT shall have no obligation hereunder 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.
35
36
grant a license to SPECTRX under: (1) technology
invented by ABBOTT employees, agents and/or
contractors outside the Continuous Product Research
Program other than that invented under the Research
Program as set forth in Section 6.2 of the Agreement;
(2) (*) Technology including (*) and (*); and (3)
technology under which ABBOTT acquires a license from
Third Parties except for the (*) referenced in
Section 5.4(C), whether or not within the Field.
(E) Notwithstanding anything in this Section 11.2, if the
Continuous Product Research Program is transferred to
ABBOTT, then all ABBOTT Continuous Product Research
Program Technology conceived and/or reduced to
practice solely by ABBOTT or by ABBOTT with a Third
Party after such transfer ("Abbott Post-Transfer
Technology") shall be the property of ABBOTT or
ABBOTT and such Third Party and all such technology
to the extent applicable to the Field shall be
treated in the same manner that Development Program
Technology would be treated in Section 7.1 of the
Agreement after delivery of the Development Program
Notification but prior to the First Shipment Date.
11.3 Joint Continuous Product Research Program Technology. All
Continuous Product Research Program Technology invented by at least one
employee, agent or contractor of ABBOTT and at least one employee agent or
contractor of SPECTRX ("Joint Continuous Product Research Program Technology")
shall be the joint property of ABBOTT and SPECTRX subject to the following:
(A) If the Joint Continuous Product Research Program
Technology is useful within the Field, then SPECTRX's
interest in such Joint Continuous Product Research
Program Technology shall be included under the
Licensed Patents or Know-How, as appropriate, and
shall be included under ABBOTT's Licenses in the
Field as set forth in Section 4.1 of the Agreement.
(B) If either party grants a license to a Third Party
outside the Field (or after termination of this
Agreement within or outside what was defined as the
Field when the Agreement was effective) under that
party's interest in any Joint Continuous Product
Research Program Technology, then the other party
shall be entitled to (*) of all license fees and
royalties received by the licensed party in
consideration for such license which shall not
include SPECTRX's existing license obligations to (*)
under an agreement dated (*). If the parties jointly
grant an Exclusive License to a Third Party, then the
parties shall equally share in all license fees and
royalties generated by such license.
(*) 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
37
(C) If either party is interested in obtaining an
Exclusive License, or in outlicensing its interest
under any Joint Continuous Product Research Program
Technology outside the Field, then such party
("licensing party") shall promptly notify the other
party, and in the latter case, such other party shall
have the right of first negotiation to obtain an
Exclusive License under the licensing party's
interest in such Joint Continuous Product Research
Program Technology, in accordance with the procedure
under Section 11.3(D).
(D) ABBOTT and SPECTRX have the right of first
negotiation to certain Continuous Product Research
Program Technology of the other in accordance with
Sections 11.1(B)(2), 11.1(C) and 11.3(C) or the
Business (as defined in Section 7.2 of the Agreement)
for Continuous Products. If either party intends to
outlicense or desires to collaborate regarding such
Continuous Product Research Program Technology (or
ABBOTT desires to sell the Business for Continuous
Products), such party ("Notifying Party") shall
deliver written notification of such intent or a
proposal ("Notice") to the other party. The Notice
shall be delivered prior to the Notifying Party
engaging in discussions with any Third Party
concerning such Continuous Product Research Program
Technology (or the Business for Continuous Products),
provided that the Notifying Party may acknowledge to
any such Third Party that the other party has such a
right of first negotiation. The other party shall
have (*) after receipt of the Notice to provide a
written response indicating whether or not it is
interested in such Continuous Product Research
Program Technology (or the Business for Continuous
Products). At the time that the Notice is delivered,
the Notifying Party shall provide to the other party
a report on the current status of its research and
development activities with regard to such Continuous
Product Research Program Technology (or the Business
for Continuous Products). At any time within (*)
after receipt of such report, the other party may
send to the Notifying Party an initial proposal
containing proposed financial and other material
terms for a license and/or collaboration agreement
for the development and commercialization of such
Continuous Product Research Program Technology (or
for a purchase agreement for the Business for
Continuous Products) (the "Proposal"). If the other
party does not send a Proposal within such period of
time or any extended time period agreed to by the
parties, then the other party's right of first
negotiation with regard to such Continuous Product
Research Program Technology (or the Business for
Continuous Products), shall expire. If the other
party sends a Proposal to the Notifying
(*) 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.
37
38
Party, the parties shall promptly enter into good
faith negotiations towards an agreement upon mutually
agreed terms and conditions. Subject to the Notifying
Party making all reasonable efforts to meet and
negotiate with the other party on a timely basis and
in good faith, if the parties fail to reach mutual
agreement on a term sheet covering the material terms
and conditions of an agreement within (*) from the
receipt of the Proposal, then upon written notice
from the Notifying Party to the other party, all
negotiations shall cease and the other party shall
have no further right of first negotiation with
regard to such Continuous Product Research Program
Technology (or the Business for Continuous Products).
ABBOTT LABORATORIES SPECTRX, INC.
By: By:
------------------------------- -------------------------------------
James J. Koziarz Mark A. Samuels
Title: Corporate Vice President Title: Chairman, Chief Executive Officer
Diagnostic Products
Research and Development
Date: Date:
----------------------------- -----------------------------------
(*) 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.
38
39
Appendix 2.7
Continuous Product Research Program Specifications
(*)
Appendix 2.7 Definitions:
(*)
Appendix 2.7 Information for Protocols:
(*)
Appendix 2.7 (*) 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.
1
40
Appendix 4.2
List of Companies
(*)
Appendix 4.2 (*) 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.
1
41
Appendix 4.4
SPECTRX Continuous Product Royalty Rate
SPECTRX (*)
-----------
Within One Year
---------------
($MM) Royalty Rate Percent
----- --------------------
------------------------------------------------------------------------------
Up to (*) (*)
------------------------------------------------------------------------------
(*) (*)
------------------------------------------------------------------------------
(*) (*)
------------------------------------------------------------------------------
(*) (*)
------------------------------------------------------------------------------
(*) (*)
------------------------------------------------------------------------------
Appendix 4.4 (*) 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
42
Appendix 5.1
COMMON STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of November November 30, 1999
between SpectRx, Inc., a Delaware corporation located at 6025A Unity Drive,
Norcross, Georgia 30071 ("SpectRx"), and Abbott Laboratories, an Illinois
corporation located at 100 Abbott Park Road, Abbott Park, Illinois 60064
("Abbott").
WITNESSETH:
WHEREAS, contemporaneously with the execution and delivery of
this Agreement, the parties hereto have entered into a certain Amendment dated
of even date herewith to that certain Research & Development and License
Agreement between the parties dated October 10, 1996 (the "Development
Amendment");
WHEREAS, pursuant to Section 5.1(A)(2) and Section 5.1(A)(3)
of the Development Amendment, and subject to certain terms and conditions,
Purchaser has agreed to make certain milestone payments to SpectRx, each in the
amount of (*);
WHEREAS, the parties hereto have agreed that Abbott (*) and
receive in exchange therefor shares of common stock of SpectRx ("SpectRx Common
Stock"), and to accommodate these agreements and the purchase and sale of such
shares of SpectRx Common Stock, the parties have entered into this Common Stock
Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual promises and covenants set forth below, SpectRx and Abbott agree as
follows:
1. AGREEMENT AS TO PURCHASE AND SALE OF SPECTRX COMMON STOCK.
Abbott at its election by delivery of a written notice to SpectRx ("Common Stock
Election Notice"), may use a portion, up to one-half, of its payment obligations
under each of Section 5.1(A)(2) and Section 5.1(A)(3) of the Development
Amendment to purchase shares of common stock of SpectRx ("SpectRx Common
Stock"). The number of shares of SpectRx Common Stock to be issued and sold by
SpectRx, and purchased by Abbott, should Abbott make any of the elections
described in the preceding sentence, will equal the sum so elected by Abbott to
be applied to purchase SpectRx Common Stock, divided by the average closing
sales price of the SpectRx Common Stock as reported by NASDAQ for the thirty
(30) trading days prior to the date of the Common Stock Election Notice. The
Common Stock Election Notice in respect of the payments due under Section
5.1(A)(2) and under Section 5.1(A)(3) shall be
Appendix 5.1 (*) 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.
1
43
issued and delivered simultaneously with the respective notifications pursuant
to such Section 5.1(A)(2) and Section 5.1(A)(3) made by Abbott of achievement of
such milestones. If Abbott elects to make any such purchase of SpectRx Common
Stock, then as further provided in Section 5.4(A) of the Development Agreement,
the credit against royalties for certain milestone payments shall be reduced by
a sum equal to the aggregate purchase price of such SpectRx Common Stock.
2. CLOSING AND DELIVERIES. The closing of the purchase
and sale of SpectRx Common Stock pursuant to this Agreement shall be held at the
executive offices of SpectRx on the fifth (5th) business day following the date
of receipt by SpectRx of the Common Stock Election Notice, or at such other time
and place upon which SpectRx and Abbott shall agree. At such closing, SpectRx
will deliver to Abbott a certificate, registered in Abbott's name, representing
the shares of SpectRx Common Stock to be purchased, against payment of the sum
as to which Abbott has made an election to receive and purchase SpectRx Common
Stock as provided for hereinabove.
3. REPRESENTATIONS AND WARRANTIES. Coincident with the
closing of the purchase and sale of SpectRx Common Stock pursuant to this
Agreement, SpectRx will deliver a certificate by which it will make to Abbott
representations and warranties that are substantially similar to those contained
in the Redeemable Convertible Preferred Stock Purchase Agreement of even date
herewith between the parties ("Preferred Stock Agreement"), although such
representations and warranties shall be updated or exceptions made thereto to
account for changes or events that have occurred between the date of this
Agreement and the date of such closing, and such other corresponding changes to
dates and references to financial statements and share numbers and the like so
as to enable SpectRx to make such representations on a current basis. Similarly,
Abbott will deliver a certificate at closing where it will make to SpectRx as of
the date of such closing the representations and warranties contained in Section
4 of the Preferred Stock Agreement.
4. COVENANT RE: TRANSFER OF SPECTRX COMMON STOCK. Abbott
covenants and agrees that it shall not sell, make any short sale of, loan, grant
any option for the purchase of, or otherwise dispose of any shares of SpectRx
Common Stock acquired by Abbott pursuant to this Agreement for a period of one
hundred eighty (180) days from the date of issuance of shares of SpectRx Common
Stock. Abbott agrees that the certificates for shares of SpectRx Common Stock
issued pursuant to this Agreement shall bear the following legend:
"THESE SECURITIES MAY NOT BE SOLD, PLEDGED OR OTHERWISE DISPOSED OF
PRIOR TO ____________________ [181st day after issuance] BY REASON OF
AN AGREEMENT BETWEEN THE COMPANY AND THE HOLDER OF THE SHARES
REPRESENTED BY THIS CERTIFICATE."
Appendix 5.1
2
44
5. GOVERNING LAW. This Agreement shall be governed in
all respects by the internal laws of the State of Delaware as applied to
agreements entered into among Delaware residents to be performed entirely within
Delaware, without reference to the principles of conflict of laws under Delaware
law.
6. SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto, provided, however, that the rights of Abbott to purchase the
SpectRx Common Stock shall not be assignable without the consent of SpectRx.
7. ENTIRE AGREEMENT; AMENDMENT. This Agreement and the
other documents delivered pursuant hereto at the closing constitute the full and
entire understanding and agreement between the parties with regard to the
subject hereof and thereof, and no party shall be liable or bound to any other
party in any manner by any warranties, representations or covenants except as
specifically set forth herein or therein. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought.
8. NOTICES, ETC. All notices and other communications
required or permitted hereunder shall be in writing and shall be mailed by
registered or certified mail, postage prepaid, or by facsimile transmission, or
otherwise delivered by hand or by messenger, addressed (a) if to Abbott, at
Abbott's address set forth above, or at such other address as Abbott shall have
furnished to SpectRx in writing, or (b) if to SpectRx, one copy should be sent
to its address set forth on the cover page of this Agreement and addressed to
the attention of the Corporate Secretary, or at such other address as SpectRx
shall have furnished to Abbott.
Each such notice or other communication shall for all purposes
of this Agreement be treated as effective or having been given when delivered if
delivered personally, or, if sent by mail, at the earlier of its receipt or 72
hours after the same has been deposited in a regularly maintained receptacle for
the deposit of the United States mail, addressed and mailed as aforesaid, or if
by facsimile transmission, as indicated by the facsimile imprint date.
9. DELAYS OR OMISSIONS. Except as expressly provided herein, no
delay or omission to exercise any right, power or remedy accruing to any party
hereto, upon any breach or default of any other party under this Agreement,
shall impair any such right, power or remedy of such holder nor shall it be
construed to be a waiver of
Appendix 5.1
3
45
any such breach or default, or an acquiescence therein, or of or in any similar
breach or default thereafter occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default theretofore
or thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
10. GEORGIA LEGEND. Abbott acknowledges that each
certificate shall bear, in addition to the legend referenced in Section 4.9 of
the Preferred Stock Agreement, the following legend: THESE SECURITIES HAVE BEEN
ISSUED OR SOLD IN RELIANCE ON PARAGRAPH 13 OF CODE SECTION 10-5-9 OF THE GEORGIA
SECURITIES ACT OF 1973, AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A
TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT TO AN EFFECTIVE
REGISTRATION UNDER SUCH ACT.
11. EXPENSES. SpectRx and Abbott shall bear its own legal
and other expenses with respect to this Agreement.
12. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
13. SEVERABILITY. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision; provided that no such severability shall be
effective if it materially changes the economic benefit of this Agreement to any
party.
14. TITLES AND SUBTITLES. The titles and subtitles used
in this Agreement are used for convenience only and are not considered in
construing or interpreting this Agreement.
The foregoing agreement is hereby executed as of the date first above
written.
"PURCHASER" "COMPANY"
ABBOTT LABORATORIES SPECTRX, INC.
By: By:
------------------------- --------------------------
Title: Title:
---------------------- -----------------------
Appendix 5.1
4
46
Appendix 5.2
(*) Supply Agreement Terms
Unless otherwise defined in this Exhibit 5.2, the defined terms have the
meanings set forth in the Third Amendment or the Agreement.
I. PRICING, ORDERING, DELIVERY, and INVOICING
A. Transfer Price. The Transfer Price for (*)s supplied by SPECTRX to ABBOTT
hereunder shall be as set forth in Section 5.2 of the Third Amendment. The
Transfer Price will be adjusted as follows: 1) at least semi-annually, or 2) if
purchased material costs change by more than (*) since the last adjustment, or
3) if there is any other change which significantly impacts the Manufacturing
Costs. A reconciliation process will be developed as part of the Supply
Agreement to reconcile any differences between actual and estimated
Manufacturing Costs.
B. Manufacturing Costs Reduction. SPECTRX will use commercially reasonable
efforts to minimize Manufacturing Costs. If the then current Transfer Price for
(*)s results in a gross margin for SPECTRX of less than (*) any cost savings
will be absorbed by SPECTRX until said margin reaches (*). Gross margin shall be
computed as the difference between the Transfer Price and actual Manufacturing
Costs divided by the Transfer Price. SPECTRX will implement commercially
reasonable manufacturing process changes requested by ABBOTT. Any costs
associated with said changes will be paid (*). SPECTRX will buy raw materials
and components of the (*) through ABBOTT if ABBOTT can purchase such raw
materials and components at a lower price than SPECTRX.
C. Delivery. SPECTRX will ship within (*) from date of receipt of purchase order
if requested by ABBOTT as long as the cumulative quantities of (*)s ordered by
ABBOTT and scheduled to ship during that month do not exceed the forecast for
that month or SPECTRX's production capacity as defined in Section II-G. SPECTRX
will make commercially reasonable efforts to ship (*)s that are ordered in
excess of the amount forecasted for that month within thirty (30) days of
receipt of said order. ABBOTT will reimburse SPECTRX, with prior written
approval by ABBOTT, for any (*). SPECTRX shall ship (*)s ordered by ABBOTT
F.O.B. SPECTRX's manufacturing facility.
D. Forecasting and Ordering. ABBOTT shall provide rolling 12-month forecasts of
its monthly requirements starting six (6) months prior to the delivery of the
first production units, and, updated monthly for the first year after the first
(*) shipment, and quarterly thereafter, submitted thirty (30) days in advance of
the beginning of said quarter. The first three (3) months of such forecast shall
be binding and shall vary by no more than
Appendix 5.2 (*) 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
47
(*) of the previous forecast for the same three (3) month period. The last nine
(9) months of the forecast shall not be binding and shall be used only for
planning purposes and ordering materials.
E. Purchase Orders. Orders shall be placed upon ABBOTT's purchase order form,
specifying quantities ordered and delivery dates. Purchase orders must be placed
at least thirty (30) days prior to requested shipment date. Terms and conditions
in the Supply Agreement supersede terms and conditions on the purchase order.
Purchase orders issued by ABBOTT are non-cancellable.
F. Invoice Terms. SPECTRX shall invoice ABBOTT for (*)s purchased by ABBOTT upon
shipment of such (*)s to ABBOTT. Such invoices shall be paid in full within
thirty (30) days of the date such invoice is received by ABBOTT.
G. Certificate of Analysis. Each shipment of (*)s will be delivered with a full
certificate of analysis verifying the (*)s' compliance with the current (*)
Specifications (as defined in Section II-A).
H. (*). At SPECTRX's option, ABBOTT will pay SPECTRX in advance for (*).
I. Tooling & Equipment. All tooling and equipment required to be purchased
exclusively for the manufacture of (*)s for ABBOTT will be paid for and owned by
ABBOTT, including any such tooling and equipment required to increase capacity.
ABBOTT shall bear all costs for replacement of such tooling and equipment owned
byAbbott, except in cases of negligence or willful misconduct on the behalf of
Spectrx in which case SPECTX shall bear all such costs.
J. ABBOTT Purchases. Any tooling, equipment, raw materials, and components that
are purchased by ABBOTT for use in manufacturing by SPECTRX and not then sold to
SPECTRX will not be included in calculating Manufacturing Costs for purposes of
determining the Transfer Price.
K. (*) Acceptance. ABBOTT shall have twenty (20) business days from date of
receipt to inspect (*)s for conformance to the (*) Specifications and accept or
reject (*)s. Any (*)s not rejected in writing within twenty (20) business days
of receipt shall be deemed accepted by ABBOTT. Such acceptance does not waive
SPECTRX's obligations in the Supply Agreement related to the (*)s including, but
not limited to, warranty, indemnification, and product recall obligations.
Appendix 5.2 (*) 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.
6
48
II. SPECIFICATIONS AND MANUFACTURING
A. Specifications. The specifications for the (*)(s) will be incorporated into
the Supply Agreement and shall include SpectRx's internal manufacturing
specifications as well as technical specifications and test protocols relating
to the (*)s ("(*) Specifications").
B. Regulatory & QSR Compliance. (*)s manufactured by SPECTRX for ABBOTT under
the Supply Agreement shall be manufactured and tested by SPECTRX in accordance
with the (*) Specifications, United States FDA QSR, European EN46001, and all
applicable federal, state and local laws, regulations and guidelines. Any fees
and expenses for licensing or registration to market the (*) in the U.S. and in
world markets shall be (*).
C. Safety Stock. At ABBOTT's request, SPECTRX shall maintain and store a safety
stock of key raw materials and (*) components sufficient to produce that
quantity of (*)s in ABBOTT's (*) forecast. In order to minimize the cost of
maintaining safety stock, SPECTRX will be allowed a reasonable amount of time to
adjust its safety stock as new forecasts are issued by ABBOTT in accordance with
Section I-D or as requested in writing by ABBOTT. (*).
D. Termination. In the event of termination of the Supply Agreement, ABBOTT will
be (*)
E. Manufacturing Changes. SPECTRX and ABBOTT shall establish a "Change
Notification Protocol" covering changes in the manufacturing process of (*)s,
including but not limited to any changes that affect written quality plans for
production or written quality procedures respecting same, as well as any changes
outside the validated level or procedure, in manufacturing procedures, component
part or raw materials vendors or manufacturing sites. ABBOTT will have final
approval of such Change Notification Protocol. Under the Change Notification
Protocol, manufacturing changes will be classified, as determined by ABBOTT,
into three categories: 1) ABBOTT written approval required prior to
implementation, 2) SPECTRX notification to ABBOTT prior to implementation, and
3) no notification required. For those changes requiring approval by ABBOTT,
only upon notice of written approval from ABBOTT may SPECTRX incorporate such
change into the manufacturing process (such approval shall not be unreasonably
withheld and, if forthcoming, shall be delivered in a timely manner). All
changes to the design and manufacturing process will be made in accordance with
SPECTRX's written change control procedures incorporated into the Change
Notification Protocol, and in compliance with 21 CFR ss. 820.40. In the event
such manufacturing change was due to SPECTRX and it has an impact on product
Appendix 5.2 (*) 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
49
registrations, SPECTX shall reimburse ABBOTT for the costs of any such product
registration amendment, notification or resubmission as a result of such
manufacturing change. In the event such manufacturing change was due to ABBOTT
and it has an impact on product registrations, ABBOTT shall pay for the costs of
any such product registration amendment, notification or resubmission as a
result of such manufacturing change. Abbott shall be responsible for the cost of
any inventory obsoleted by design or process changes requested by Abbott.
F. Manufacturing Site. Abbott shall have approval of SPECTRX's choice of
manufacturing site and any future changes, which approval shall not be
unreasonably withheld. In the event SPECTRX changes the manufacturing site for
reasons other than force majeure and such relocation has an impact on product
registrations, SPECTRX shall reimburse ABBOTT for the costs of any such product
registration amendment, notification or resubmission.
G. Manufacturing Capacity. SPECTRX shall maintain manufacturing capacity
(facilities, support personnel, equipment and tooling) of at least (*) above the
(*) forecast provided by ABBOTT.
H. Failure to Supply. Failure by SPECTRX to deliver by the requested delivery
date (*), will constitute a "Failure to Supply," unless such failure is due to
changes in design or process required by Abbott or due to ABBOTT's failure to
timely approve requested changes to the design and manufacturing process
requested by SPECTRX as described in Section II-E. Upon written notification by
ABBOTT of Failure to Supply, Abbott may (i) agree to a future delivery date,
(ii) terminate the Supply Agreement or (iii) require SPECTRX to assist ABBOTT,
and at ABBOTT's sole discretion, to allow ABBOTT to manufacture (*)s itself or
by a designated Third Party by transferring all know-how, technology, trade
secrets and patent rights necessary to manufacture (*)s ("(*) Technology")
thereby enabling ABBOTT to manufacture (*)s. To the extent required beyond
ABBOTT's licenses set forth in the Agreement to implement ABBOTT's right to
manufacture and sell such (*)s, SPECTRX hereby grants to ABBOTT, without the
necessity of any further documentation, a non-exclusive, royalty-free,
irrevocable worldwide manufacturing license. The license will include access to
SPECTRX's (*) Technology to make and have made such (*)s. In the event any (*)
Technology is owned by, controlled by or licensed from a Third Party, to the
extent required to implement ABBOTT's right to manufacture (*)s, SPECTRX shall
use commercially reasonable efforts to obtain from the owners, the right for
ABBOTT to use said (*) Technology for the production of (*)s. In addition,
SPECTRX shall reasonably assist ABBOTT in the transfer and the start-up of
manufacturing operations for such (*)s and shall make the necessary plans,
formulations and manufacturing processes and
Appendix 5.2 (*) 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
50
procedures available to ABBOTT. Further, SPECTRX shall grant ABBOTT access to
its regulatory files and shall supply technical or regulatory assistance as is
reasonably requested by ABBOTT. Any tooling, equipment and component parts owned
or committed to be purchased by SPECTRX exclusively for the manufacture of the
(*)s will be sold to ABBOTT at SPECTRX's asset value for equipment and (*) for
raw materials and WIP. Within thirty (30) days of the first anniversary of
ABBOTT's shipment of (*)s manufactured by Abbott, if SPECTRX can demonstrate in
reasonable detail, its ability to resume manufacturing of the (*)s in accordance
with the Supply Agreement, SPECTRX may resume manufacturing within a mutually
agreed to time frame, with tooling, equipment and component parts sold back to
SPECTRX and reasonable assistance provided by ABBOTT. ABBOTT will not
unreasonably deny SPECTRX the right to resume manufacturing.
I. Warranty. SpectRx will warrant the (*)s for the same period of time ABBOTT
warrants the (*)s to its customers up to (*) from date of delivery to ABBOTT's
customers or (*) from delivery to ABBOTT, whichever comes first, for failure to
meet the (*) Specifications or SPECTRX's internal manufacturing specifications
due to defects in material (other than design) or workmanship, and will replace,
free of charge, any (*) component (*), that fails such warranty. Any spare parts
and shipping expenses associated with warranty work will be at SPECTRX's
expense. Abbott will return all (*)s to SpectRx which it wants replaced under
warranty, within thirty (30) days of return by customer and no later than thirty
(30) days after expiration of warranty. (*)
III. REGULATORY MATTERS
A. (*) Recalls. Should either party's actions or any governmental action
attributable to a (*) require: (a) the recall, destruction or withholding from
market of any Product sold by ABBOTT ("Recall") or (b) institution of a field
correction of any Product containing a (*) sold by ABBOTT ("Field Correction"),
SPECTRX shall bear the costs and expenses of such Recall or Field Correction to
the extent such Recall or Field Correction is attributable to SPECTRX's
manufacture of the (*)s, and ABBOTT shall bear the costs and expenses of such
Recall or Field Correction to the extent such Recall or Field Correction is not
attributable to SPECTRX's manufacture of the (*)s. Such Recall or Field
Correction shall be based solely on ABBOTT's policies and historical practices.
B. Site Inspections. SPECTRX shall allow representatives of ABBOTT to tour and
inspect all facilities utilized by SPECTRX in manufacturing, testing, packaging
and shipment of (*)s sold to ABBOTT under the Supply Agreement. During such
visits (and other reasonable times), SPECTRX shall provide reasonable access to
its manufacturing quality control documentation and shall cooperate with such
Appendix 5.2 (*) 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
51
representatives in every reasonable manner. Except in extreme circumstances,
ABBOTT will provide a minimum of five (5) business days notice of any such
inspections. All such inspections shall be arranged by SpectRx, conducted during
SPECTRX's normal business hours and in the presence of a representative of
SpectRx.
C. Customer Complaints. In the event that ABBOTT or SPECTRX receives any
customer complaint regarding ABBOTT's Products containing SPECTRX (*)s, the
complaint shall be evaluated and investigated by ABBOTT. If ABBOTT determines
that the complaint is related to SPECTRX's (*), then SPECTRX shall assist ABBOTT
in follow-up correction of Product complaints, at ABBOTT's reasonable request,
should said complaint be the result of the (*).
IV. TERM AND TERMINATION
A. Term. The Supply Agreement shall become effective upon full execution of the
Supply Agreement and, unless terminated early in accordance with the terms of
the Supply Agreement, the Supply Agreement shall remain in effect for (*).
Thereafter, the Supply Agreement shall automatically be renewed annually unless
SPECTRX is not meeting its obligations under the Supply Agreement or the Supply
Agreement is terminated as set forth below.
B. Early Termination. The Supply Agreement may be terminated at any time as set
forth below.
1. The Supply Agreement, and any license(s) granted thereunder,
will terminate immediately upon the termination of the
Agreement or upon ABBOTT's loss of rights to all Continuous
Products pursuant to the Agreement.
2. If either party is in default of any material obligation
imposed upon such party under the Supply Agreement, such party
shall use reasonable efforts to remedy such default as soon as
possible, and if such default is not remedied within a period
of sixty (60) days after written notice thereof is given to
the defaulting party by the other party, then the other party
may terminate the Supply Agreement immediately by giving
written notice of termination to the defaulting party.
3. If SPECTRX is not cost competitive or does not elect to change
the Transfer Price, as set forth in Section 5.2 of the Third
Amendment, which determination may be made at the end of each
contract year of the Supply Agreement. Contract year shall
mean each twelve (12) month period starting with the effective
date of the Supply Agreement.
Appendix 5.2 (*) 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.
10
52
4. Other standard reasons for early termination (e.g. bankruptcy).
V. INDEMNIFICATION
In addition to indemnification obligations as set forth in Article 11 of the
Agreement, SPECTRX shall indemnify ABBOTT against Third Party actions brought
against ABBOTT regarding product liability related to SPECTRX's, its
subcontractors' and its Third Party manufacturer's actions or omissions in
connection with manufacture of (*)s.
VI. MISCELLANEOUS
Articles similar to Article 12 Limitation of Liability and Remedies, Article 13
Confidentiality, and Article 14 Miscellaneous of the Agreement will be
incorporated into the Supply Agreement.
Appendix 5.2 (*) 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.
11
53
Appendix 5.5
REDEEMABLE CONVERTIBLE PREFERRED
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of November 30, 1999 between SPECTRX, INC., a
Delaware corporation located at 6025A Unity Drive, Norcross, Georgia 30071 (the
"Company"), and ABBOTT LABORATORIES, an Illinois corporation located at 100
Abbott Park Road, Abbott Park, Illinois 60064 (the "Purchaser").
SECTION 1
AUTHORIZATION AND SALE OF PREFERRED STOCK
1.1 AUTHORIZATION. The Company will prior to the First Closing (as
defined below) authorize the sale and issuance of up to 525,000 shares of its
Redeemable Convertible Preferred Stock (the "Preferred Shares"), having the
rights, privileges and preferences as set forth in the Certificate of
Designations (the "Designations") in the form attached to this Agreement as
Exhibit A.
1.2 SALES OF PREFERRED. Subject to the terms and conditions
hereof, the Company will issue and sell to the Purchaser and the Purchaser will
buy from the Company a total of 525,000 Preferred Shares, with 275,000 Preferred
Shares to be purchased and sold at the First Closing and 250,000 Preferred
Shares to be purchased and sold at the Second Closing (as defined below), for
the purchase price of $10.00 per share.
SECTION 2
CLOSING DATES; DELIVERY
2.1 CLOSING DATE. The first closing of the purchase and sale of
the Preferred Shares hereunder (the "First Closing") shall be held at the
executive offices of the Company or at such other place upon which the Company
and the Purchaser shall agree. The First Closing shall occur simultaneously with
or immediately after the execution and delivery of this Agreement by the
Purchaser and the Company, which the parties intend to execute and deliver
coincident with the execution and delivery of the Development Amendment (defined
in Section 5.6 below). The second closing of the purchase and sale of Preferred
Shares hereunder (the "Second Closing") shall be held at the executive offices
of the Company on January 3, 2000, or such other time and place upon which the
Purchaser and Company shall agree.
2.2 DELIVERY. At the First Closing, the Company will deliver to
the Purchaser a certificate, registered in the Purchaser's name, representing
275,000 Preferred Shares to be purchased by the Purchaser at the First Closing,
against payment of the purchase price therefor by wire transfer per the
Company's wiring instructions. At the
1
54
Second Closing, the Company will deliver to Purchaser a certificate registered
in the Purchaser's name, representing 250,000 Preferred Shares to be purchased
by the Purchaser at the Second Closing, against payment of the purchase price
therefor by wire transfer per the Company's wiring instructions.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser as follows:
3.1 ORGANIZATION AND STANDING; ARTICLES AND BY-LAWS. The Company
is a corporation duly organized and validly existing under, and by virtue of,
the laws of the State of Delaware and is in good standing under such laws. The
Company has requisite power and authority to own and operate its properties and
assets, and to carry on its business as presently conducted and as proposed to
be conducted. The Company is not presently qualified to do business as a foreign
corporation in any jurisdiction other than Georgia, and the failure to be so
qualified will not have a material adverse effect on the Company's business as
now conducted or as now proposed to be conducted.
3.2 CORPORATE POWER. The Company has all requisite legal and
corporate power and authority to execute and deliver this Agreement and at the
First Closing to execute and deliver the agreements set forth as Exhibits hereto
(collectively referred to with this Agreement as the "Agreements"), and at each
of the First Closing and Second Closing to sell and issue the Preferred Shares
to be issued and sold at such respective closings, to issue the Common Stock
issuable upon conversion of the Preferred Shares and to carry out and perform
its obligations under the terms of the Agreements.
3.3 SUBSIDIARIES. The Company has no subsidiaries or affiliated
companies and does not otherwise own or control, directly or indirectly, any
equity interest in any corporation, association or business entity, other than
its equity interest in FluorRx, Inc.
3.4 CAPITALIZATION. The authorized capital stock of the Company
consists or will, upon the filing of the Certificate of Designations, consist of
50,000,000 shares of Common Stock, and 5,000,000 shares of Preferred Stock, of
which 525,000 shall be designated as Redeemable Convertible Preferred Stock
pursuant to the Certificate of Designations (the "Preferred Stock"). As of
November 29, 1999, there are 8,048,856 shares of Common Stock, issued and
outstanding and no other shares of capital stock which are issued and
outstanding. As of November 29, 1999, there are options outstanding issued by
the Company to purchase an aggregate of 1,121,789 shares of Common Stock. All of
the outstanding shares of Common Stock are duly authorized, validly issued,
fully paid and nonassessable, and were issued in compliance with applicable
federal and state securities laws. The Preferred Shares, when issued pursuant to
the terms of this Agreement, will be duly authorized, validly issued, fully
2
55
paid and nonassessable. The Company has reserved 559,225 shares of Common Stock
for issuance upon conversion of the Preferred Stock, and 1,303,112 shares of its
Common Stock for issuance pursuant to its stock option plans. Except as set
forth above, there are no options, warrants or other rights (including
conversion or pre-emptive rights) or agreements outstanding to purchase any of
the Company's authorized and unissued capital stock.
3.5 AUTHORIZATION. All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the
authorization, execution, delivery and performance of the Agreements by the
Company, the authorization, sale, issuance and delivery of the Preferred Shares
(and the Common Stock issuable upon conversion of the Preferred Stock) and the
performance of all of the Company's obligations under the Agreements has been
taken or will be taken prior to the Closing. The approval of the transactions
provided for herein will constitute approval of Abbott becoming an interested
stockholder under Section 203 of the Delaware General Corporation Law, to the
extent applicable. The Agreements, when executed and delivered by the Company,
shall constitute valid and binding obligations of the Company, enforceable in
accordance with their terms, and subject to the laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other equitable remedies.
The Preferred Shares, when issued in compliance with the provisions of this
Agreement, will be validly issued, will be fully paid and nonassessable, and
will have the rights, preferences and privileges described in the Certificate of
Designations; the Common Stock issuable upon conversion of the Preferred Stock
has been duly and validly reserved and, when issued in compliance with the
provisions of this Agreement and the Certificate of Designations, will be
validly issued, and will be fully paid and nonassessable; and the Preferred
Stock and such Common stock will be free of any liens or encumbrances, assuming
the Purchaser takes the Preferred Shares with no notice thereof, other than any
liens or encumbrances created by or imposed upon the holders; provided, however,
that the Preferred Stock (and the Common Stock issuable upon conversion thereof)
may be subject to restrictions on transfer under state and/or federal securities
laws as set forth herein.
3.6 REPORTS AND FINANCIAL STATEMENTS. The Company has delivered to
the Purchaser prior to the execution of this Agreement a copy of each
registration statement, schedule, report, proxy statement or information
statement it has filed with the Securities and Exchange Commission ("SEC") since
December 31, 1998, without limitation, the Company's Annual Report on Form 10-K
for the year ended December 31, 1998, the Company's Quarterly Reports on Form
10-Q for the quarters ended March 31, 1999 and June 30, 1999, the definitive
proxy statement for the Company's 1999 annual meeting of shareholders and any
Current Reports on Form 8-K (as such documents have since the time of their
filing been amended or supplemented, the "SEC Reports"). The SEC Reports (a)
complied as to form in all material respects with the requirements of the
Securities Exchange Act of 1934, as amended and (b) did not contain any untrue
statement of a material fact or omit to state a material fact required
3
56
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and unaudited interim consolidated
financial statements (including, in each case, the notes, if any, thereto)
included in the SEC Reports complied as to form in all material respects with
the published rules and regulations of the SEC with respect thereto, were
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto and except with respect to unaudited statements
as permitted by Form 10-Q of the SEC) and fairly present (subject, in the case
of the unaudited interim financial statements, to year-end audit adjustments and
the absence of footnotes) the consolidated financial position of the Company as
at the respective dates thereof and the consolidated results of their operations
and cash flow for the respective periods then ended.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company with respect to
the purchase of the Preferred Shares as follows:
4.1 EXPERIENCE. It has substantial experience in evaluating and
investing in private placement transactions of securities in companies similar
to the Company so that it is capable of evaluating the merits and risks of its
investment in the Company and has the capacity to protect its own interests.
4.2 INVESTMENT. It is acquiring the Preferred Shares and the
Common Stock underlying the Preferred Stock for investment for its own account,
not as a nominee or agent, and not with the view to, or for resale in connection
with, any distribution thereof. It understands that the Preferred Shares to be
purchased and the Common Stock underlying the Preferred Stock have not been, and
will not be, registered under the Securities Act of 1933, as amended (the
"Securities Act") by reason of a specific exemption from the registration
provisions of the Securities Act, the availability of which depends upon, among
other things, the bona fide nature of the investment intent and the accuracy of
such Purchaser's representations as expressed herein.
4.3 RULE 144. It acknowledges that the Preferred Stock and the
underlying Common Stock must be held indefinitely unless subsequently registered
under the Securities Act or unless an exemption from such registration is
available. It is aware of the provisions of Rule 144 promulgated under the
Securities Act which permit limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions, including, among
other things, the existence of a public market for the shares, the availability
of certain current public information about the Company, the resale occurring
not less than one year after a party has purchased and paid for the security to
be sold, the sale being effected through a "broker's transaction" or in
4
57
transaction directly with a "market maker" and the number of shares being sold
during any three-month period not exceeding specified limitations.
4.4 NO PUBLIC MARKET. It understands that no public market now
exists for the Preferred Shares and that the Company has made no assurances that
such a public market will ever exist.
4.5 ACCESS TO DATA. It has had an opportunity to discuss the
Company's business, management and financial affairs with its management. It has
also had an opportunity to ask questions of officers of the Company, which
questions were answered to its satisfaction. It understands that such
discussions, as well as any written information issued by the Company, were
intended to describe certain aspects of the Company's business and prospects but
were not a thorough or exhaustive description.
4.6 AUTHORIZATION. This Agreement when executed and delivered by
such Purchaser will constitute a valid and legally binding obligation of the
Purchaser, enforceable in accordance with its terms, subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies.
4.7 BROKERS OR FINDERS. The Company has not, and will not, incur,
directly or indirectly, as a result of any action taken by such Purchaser, any
liability for brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement.
4.8 TAX LIABILITY. It has reviewed with its own tax advisors the
federal, state, local and foreign tax consequences of this investment and the
transactions contemplated by this Agreement. It relies solely on such advisors
and not on any statements or representations of the Company or any of its
agents. It understands that it (and not the Company) shall be responsible for
its own tax liability that may arise as a result of this investment or the
transactions contemplated by this Agreement.
4.9 LEGEND. It is understood that the certificates evidencing the
Preferred Shares, and shares of Common Stock to be issued upon conversion of the
Preferred Shares, will bear the following legend: "THESE SECURITIES HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN
EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS
SOLD PURSUANT TO RULE 144 OF SUCH ACT."
5
58
SECTION 5
CONDITIONS TO CLOSING OF PURCHASER
The Purchaser's obligation to purchase the Preferred Shares at the
First Closing is, at the option of the Purchaser, subject to the fulfillment of
the following conditions:
5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations
and warranties made by the Company in Section 3 hereof shall be true and correct
in all material respects as of the First Closing.
5.2 COVENANTS. All covenants, agreements and conditions contained
in this Agreement to be performed by the Company on or prior to the First
Closing shall have been performed or complied with in all material respects.
5.3 COMPLIANCE CERTIFICATE. Should the Closing occur as of a date
other than the date of this Agreement, the Company shall have delivered to the
Purchaser a certificate of the Company executed by the President of the Company,
dated as of the Closing certifying to the fulfillment of the conditions
specified in Sections 5.1 and 5.2 of this Agreement.
5.4 CERTIFICATE OF DESIGNATIONS. The Designations shall have been
filed with the Delaware Secretary of State.
5.5 REGISTRATION RIGHTS AGREEMENT. The Company and the parties
listed thereon shall have executed and delivered the First Amendment to the
Amended Registration Rights Agreement of the Company in substantially the form
attached hereto as Exhibit B.
5.6 AMENDMENT TO RESEARCH & DEVELOPMENT AGREEMENT. The Company
shall have entered into the Amendment to that certain Research & Development and
License Agreement dated October 10, 1996, between the Company and the Purchaser
(the "Development Amendment").
5.7 SECRETARY'S CERTIFICATE. The Company shall have delivered to
the Purchaser a certificate of the Company executed by the Secretary of the
Company, dated as of the Closing, certifying (i) resolution adopted by the Board
of Directors of the Company authorizing the execution of the Agreement, the
filing of the Certificate of Designation and the transactions contemplated
hereby; (ii) the Certificate of Incorporation and Bylaws of the Company, each as
amended, and copies of the third party consents, approvals and filings required
in connection with the consummation of the transactions contemplated by the
Agreement; and (iii) such other documents relating to the transactions
contemplated by the Agreement.
6
59
The Purchaser's obligation to purchase the Preferred Shares at the
Second Closing is, at the option of the Purchaser, subject to the fulfillment,
as of the Second Closing, of the following conditions:
5.1A PRIOR CONDITIONS. The fulfillment, as of the Second Closing,
of the conditions set forth in Sections 5.1, 5.2 and 5.3 hereof.
5.2A DEVELOPMENT PROGRAM NOTIFICATION. Purchaser will have not
delivered the "Development Program Notification" (as same is defined in Section
2.6 of the Development Amendment) to the Company on or prior to December 10,
1999.
5.3A TERMINATION OF 1996 AGREEMENT. On or prior to December 10,
1999, the Agreement (as defined in the Development Amendment) will not have been
terminated, nor will Purchaser have given written notice prior to December 10,
1999 electing to terminate such Agreement.
SECTION 6
CONDITIONS TO CLOSING OF COMPANY
The Company's obligation to sell and issue the Preferred Shares at the
First Closing is, at the option of the Company, subject to the fulfillment as of
the First Closing of the following conditions:
6.1 REPRESENTATIONS. The representations made by the Purchaser in
Section 4 hereof shall be true and correct when made, and shall be true and
correct on the Closing.
6.2 CERTIFICATE OF DESIGNATIONS. The Designations shall have been
filed with the Delaware Secretary of State.
6.3 AMENDMENT TO RESEARCH & DEVELOPMENT AGREEMENT. The Purchaser
shall have entered into the Development Amendment.
6.4 LEGAL MATTERS. All material matters of a legal nature which
pertain to this Agreement, and the transactions contemplated hereby, shall have
been reasonably approved by counsel to the Company.
The Company's obligation to sell and issue the Preferred
Shares at the Second Closing is, at the option of the Company, subject to the
fulfillment, at the Second Closing, of the conditions set forth in Sections 6.1
and 6.4 hereof.
7
60
SECTION 7
COVENANT RE: TRANSFER OF COMMON STOCK
The Purchaser covenants and agrees that it shall not sell, make any
short sale of, loan, grant any option for the purchase of, or otherwise dispose
of any of the shares of Common Stock acquired by Purchaser upon conversion of
any Preferred Shares for a period of one hundred eighty (180) days from the date
of issuance of such shares of Common Stock upon such conversion. Purchaser
agrees that the certificates for shares of Common Stock issued upon conversion
of the Preferred Shares shall bear the following legend: "THESE SECURITIES MAY
NOT BE SOLD, PLEDGED OR OTHERWISE DISPOSED OF PRIOR TO ___________________
[181st day after issuance] BY REASON OF AN AGREEMENT BETWEEN THE COMPANY AND THE
HOLDER OF THE SHARES REPRESENTED BY THIS CERTIFICATE."
SECTION 8
MISCELLANEOUS
8.1 GOVERNING LAW. This Agreement shall be governed in all
respects by the internal laws of the State of Delaware as applied to agreements
entered into among Delaware residents to be performed entirely within Delaware,
without reference to the principles of conflict of laws under Delaware law.
8.2 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by the Purchaser and
the Closing of the transactions contemplated hereby.
8.3 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto,
provided, however, that the rights of the Purchaser to purchase the Preferred
Stock shall not be assignable without the consent of the Company.
8.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other
documents delivered pursuant hereto at the Closing constitute the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and thereof, and no party shall be liable or bound to any other
party in any manner by any warranties, representations or covenants except as
specifically set forth herein or therein. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought;
provided, however, that holders of a majority of the Common Stock issued or
issuable upon conversion of the Preferred Stock may, with the Company's prior
written consent, waive, modify or amend on behalf of the Purchaser, any
provision hereof.
8
61
8.5 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or by facsimile transmission, or otherwise
delivered by hand or by messenger, addressed (a) if to the Purchaser, at the
Purchaser's address set forth above, or at such other address as such Purchaser
shall have furnished to the Company in writing, or (b) if to any other holder of
any shares, at such address as such holder shall have furnished the Company in
writing, or, until any such holder so furnishes an address to the Company, then
to and at the address of the last holder of such shares who has so furnished an
address to the Company, or (c) if to the Company, one copy should be sent to its
address set forth on the cover page of this Agreement and addressed to the
attention of the Corporate Secretary, or at such other address as the Company
shall have furnished to the Purchaser.
Each such notice or other communication shall for all purposes
of this Agreement be treated as effective or having been given when delivered if
delivered personally, or, if sent by mail, at the earlier of its receipt or 72
hours after the same has been deposited in a regularly maintained receptacle for
the deposit of the United States mail, addressed and mailed as aforesaid, or if
by facsimile transmission, as indicated by the facsimile imprint date.
8.6 DELAYS OR OMISSIONS. Except as expressly provided herein, no
delay or omission to exercise any right, power or remedy accruing to any holder
of any shares, upon any breach or default of the Company under this Agreement,
shall impair any such right, power or remedy of such holder nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any holder of any
breach or default under this Agreement, or any waiver on the part of any holder
of any provisions or conditions of this agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
holder, shall be cumulative and not alternative.
8.7 GEORGIA LEGEND. The Purchaser acknowledges that each
certificate shall bear the following legend: THESE SECURITIES HAVE BEEN ISSUED
OR SOLD IN RELIANCE ON PARAGRAPH 13 OF CODE SECTION 10-5-9 OF THE GEORGIA
SECURITIES ACT OF 1973, AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A
TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT TO AN EFFECTIVE
REGISTRATION UNDER SUCH ACT.
8.8 FURTHER LEGEND. The Purchaser acknowledges that each
certificate shall bear the following legend: "THE CORPORATION WILL FURNISH
WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO REQUESTS A STATEMENT OF THE
DESIGNATIONS, RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS
9
62
APPLICABLE TO EACH CLASS, AND SERIES WITHIN A CLASS, OF CAPITAL STOCK OF THE
CORPORATION AND THE VARIATIONS IN RIGHTS, PREFERENCES AND LIMITATIONS APPLICABLE
TO EACH SERIES (AND THE AUTHORITY OF THE CORPORATION'S BOARD OF DIRECTORS TO
DETERMINE VARIATIONS FOR FUTURE SERIES)."
8.9 EXPENSES. The Company and the Purchaser shall bear its own
legal and other expenses with respect to this Agreement.
8.10 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
8.11 SEVERABILITY. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision; provided that no such severability shall be
effective if it materially changes the economic benefit of this Agreement to any
party.
8.12 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not considered in construing or
interpreting this Agreement.
The foregoing agreement is hereby executed as of the date first above written.
"PURCHASER" "COMPANY"
ABBOTT LABORATORIES SPECTRX, INC.
By: By:
----------------------------- ---------------------------
Title: Title:
-------------------------- -------------------------
10
63
Appendix 5.5 (continued)
EXHIBIT A
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND
RIGHTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK
OF
SPECTRX, INC.
SpectRx, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"),
DOES HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of
Directors by the Restated Certificate of Incorporation of the Corporation, and
pursuant to the provisions of Section 151 of Title 8 of the Delaware General
Corporation Law, said Board of Directors by unanimous written consent executed
on __________________, 1999, adopted resolutions providing for the designations,
preferences and relative, participating, optional or other rights, and the
qualifications, limitations or restrictions thereof, of the Redeemable
Convertible Preferred Stock of the Corporation, which resolutions are set forth
below (with the attachment to such resolution being attached hereto as Schedule
1):
WHEREAS, Section 151(g) of the Delaware General
Corporation Law and the Restated Certificate of Incorporation
of SpectRx, Inc. (the Company") authorized the Board of
Directors to divide the share of the Company's $.001 par value
preferred stock into one or more series and to issue shares of
any such series, and to fix and to determine the relative
rights and preferences of the shares of such series; and
WHEREAS, the Board of Directors of the Company has
determined that it is in the best interests of the Company to
enter into a Redeemable Convertible Preferred Stock Purchase
Agreement by and among the Company and Abbott Laboratories
(the "Purchase Agreement"), pursuant to which the Company will
issue and sell 525,000 shares of its Redeemable Convertible
Preferred Stock for $10.00 per share or the aggregate
consideration of $5,250,000;
11
64
NOW, THEREFORE, BE IT RESOLVED, that the Board of
Directors of the Company hereby establishes a series of $.001
par value preferred stock of the Company to be designated the
"Redeemable Convertible Preferred Stock";
FURTHER RESOLVED, that the number of shares of
Redeemable Convertible Preferred Stock, the voting rights,
dividend rights, liquidation rights and conversion rights of
the holder of the shares of the Redeemable Convertible
Preferred Stock, the provisions for redemption of the shares
of Redeemable Convertible Preferred Stock, and all other
preferences and relative rights in respect of shares of
Redeemable Convertible Preferred Stock, shall be as set forth
on Schedule 1 attached to these resolutions.
IN WITNESS WHEREOF, the Corporation has caused this
Certificate to be signed by _____________________________, its
________________________, and attested by _______________________________, its
Secretary, this _______ day of __________________, 1999.
SPECTRX, INC.
By:
---------------------------------
------------------, -------------
ATTEST:
By:
------------------------------------
_____________________, Secretary
(Corporate Seal)
12
65
Appendix 5.5 (continued)
Schedule 1
DESIGNATIONS, PREFERENCES AND RIGHTS OF
REDEEMABLE CONVERTIBLE PREFERRED STOCK OF
SPECTRX, INC.
Pursuant to authority granted in the certificate of incorporation, as
amended, of SpectRx, Inc. (the "Corporation"), the Board of Directors of the
Corporation has been authorized to issue in series shares of preferred stock and
to designate by resolution the relative preferences and rights of each series
established. By resolution of the Corporation's Board of Directors, the
Corporation has established and fixed the relative preferences and rights of
525,000 shares of preferred stock designated the "Redeemable Convertible
Preferred Stock," each of $0.001 par value.
For the purposes of this statement,
"Board of Directors" shall mean the board of directors of the
Corporation.
"Common Stock" shall mean the common stock, $0.001 par value,
of the Corporation.
"Corporation" shall mean SpectRx, Inc.
"Holder" means a holder of record of shares of Preferred
Stock.
"Issue Date" as to any share of Preferred Stock shall mean the
date of issuance of such share.
"Invested Amount" per share of Preferred Stock shall mean
$10.00 (as adjusted for changes in the Preferred Stock by stock split, stock
dividend, or the like occurring after the Original Issue Date).
"Junior Stock" means shares of any class of capital stock of
the Corporation ranking subordinate to the Preferred Stock as to both dividends
and distribution of assets upon liquidation.
"Original Issue Date" shall mean the initial Issue Date, when
shares of Preferred Stock are first issued.
"Preferred Stock" shall mean the 525,000 shares of Redeemable
Convertible Preferred Stock, $0.001 par value, hereby designated.
The rights, preferences, privileges and restrictions granted
to and imposed upon the Preferred Stock are as follows:
13
66
(a) Dividend Rights. The Holders shall be entitled when
and if declared by the Board of Directors to receive dividends out of assets of
the Corporation legally available therefor at an annual rate of $0.60 per share
of Preferred Stock (as adjusted for changes in the Preferred Stock by stock
split, stock dividend, or the like occurring after the Original Issue Date).
Such dividends shall be cumulative and shall accrue whether or not declared by
the Board of Directors of the Corporation. So long as any shares of Preferred
Stock shall be outstanding, the Corporation shall not declare or pay on any
Junior Stock any dividend whatsoever, whether in cash, property or otherwise,
nor shall the Corporation make any distribution on any Junior Stock, nor shall
any Junior Stock be purchased or redeemed by the Corporation, nor shall any
monies by paid or made available for a sinking fund for the purpose of
redemption of Junior Stock, unless all dividends declared or accrued on any
outstanding shares of Preferred Stock shall have been paid or declared and a sum
of money sufficient for the payment thereof set apart.
(b) Liquidation. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, before
any payment or distribution of the assets of the Corporation shall be made to or
set apart for the holders of Junior Stock, the Holders shall be entitled to
receive in respect of their shares of Preferred Stock payment out of assets of
the Corporation of Ten Dollars ($10.00) per share, plus all accrued but unpaid
dividends to the date of final distribution.
(c) Conversion. The Holders shall have conversion rights
in respect of these shares of Preferred Stock as follows (the "Conversion
Rights"):
1. Conversion Rate. The shares of Preferred
Stock shall be convertible, at the times and under the conditions described in
this Section (c) hereafter, at the rate (the "Conversion Rate") of one share of
Preferred Stock into the number of shares of Common Stock that equals the
quotient obtained by dividing the Invested Amount by the Conversion Price
(defined hereinafter). Thus, the number of shares of Common Stock to which a
Holder shall be entitled upon any conversion provided for in this Section (c)
shall be the product obtained by multiplying the Conversion Rate by the number
of shares of Preferred Stock being converted. Such conversion shall be deemed to
have been made on the Conversion Effective Date (defined hereinafter), and such
conversion shall be effected in accordance with the procedures described in
Subsection (c)(3) below. Upon conversion of any shares of Preferred Stock, the
Company shall pay all declared or accrued but unpaid dividends as to such shares
to the Holders thereof to and through the Conversion Effective Date; provided,
however, that the Corporation may, at its option, in lieu of making a full cash
payment of all such declared or accrued but unpaid dividends, make payment
thereof in that number of whole shares of Common Stock calculated by dividing
the total of such declared or accrued but unpaid dividends due such Holders by
the Conversion Price.. The "Conversion Price" shall be equal to the greater of
(I) (*) or (ii) the average of the closing sales price of the Common Stock as
reported by the NASDAQ Stock Market for each day of the thirty (30)-day trading
period that begins on the trading day that is
14
67
fifteen (15) trading days prior to the date of the receipt by the Corporation of
the Conversion Notice (defined hereinafter).
2. Conversion Right. Each share of Preferred
Stock shall be convertible, at the option of the Holder thereof and without
payment of additional consideration, at any time after the first (1st)
anniversary of the Issue Date in respect of such share at the office of the
Corporation or any transfer agent for the Preferred Stock, into Common Stock at
the then effective Conversion Rate; provided, however, that if on or prior to
such first anniversary, the Corporation shall effect a merger or consolidation
wherein shares of Common Stock are exchanged for securities of another
corporation or for other consideration, then each of the Holders will be
afforded reasonable prior notice of such merger or consolidation and permitted,
if such Holder so chooses, to convert its shares of Preferred Stock into Common
Stock at the then effective Conversion Rate to be effective immediately prior to
the effectiveness of such merger or consolidation.
3. Automatic Conversion. Each outstanding share
of Preferred Stock shall automatically be converted into Common Stock on and as
of December 31, 2004, at the then effective Conversion Rate. Such conversion
shall be automatic, without need for any further action by the Holders and
regardless of whether the certificates representing such shares are surrendered
to the Corporation or its transfer agent; provided, however, that the
Corporation shall not be obligated to issue certificates evidencing the shares
of Common Stock issuable upon such conversion or to pay the dividends payable
upon such conversion unless certificates evidencing such shares of the Preferred
Stock are surrendered to the Corporation in accordance with the procedures
described in Subsection (c)(5) below. Upon the conversion of the Preferred Stock
pursuant to this Subsection (c)(3), the Corporation shall promptly send notice
thereof to each Holder, which notice shall state that certificates evidencing
shares of Preferred Stock must be surrendered at the office of the Corporation
(or of its transfer agent for the Common Stock, if applicable) in the manner
described in Subsection (c)(5) below.
4. Fractional Shares. No fractional shares of
Common Stock shall be issued upon conversion of Preferred Stock, and any shares
of Preferred Stock surrendered for conversion that would otherwise result in a
fractional share of Common Stock shall be redeemed at the then effective
Conversion Price per share, payable as promptly as possible when funds are
legally available therefor.
5. Mechanics of Conversion. Before any Holder
shall be entitled to receive certificates representing the shares of Common
Stock into which shares of Preferred Stock are converted in accordance with
Subsections (c)(2) or (c)(3) above, such Holder shall surrender the certificate
or certificates for such shares of Preferred Stock, duly endorsed, at the office
of the Corporation or of any transfer agent for the Preferred Stock, and shall
give written notice to the Corporation at such office of the name or names in
which such Holder wishes the certificate or certificates for
15
68
shares of Common Stock to be issued, if different from the name shown on the
books and records of the Corporation. Said conversion notice ("Conversion
Notice") shall also contain such representations of the Holder as may reasonably
be required by the Corporation to the effect that the shares to be received upon
conversion are not being acquired and will not be transferred in any way that
might violate the then applicable securities laws. In the case of a conversion
pursuant to Subsection (c)(2) hereof, the Corporation shall, on the
seventy-fifth (75th) day succeeding receipt by the Corporation of the Conversion
Notice, unless the Corporation elects to redeem such shares of Preferred Stock
in accordance with the provisions of Subsection (d)(2) hereof, issue and deliver
at such office to such Holder, or to the nominee or nominees of such Holder as
provided in the Conversion Notice, a certificate or certificates for the number
of shares of Common Stock to which such Holder shall be entitled as aforesaid.
Such date for issuance and delivery of the shares of Common Stock received upon
conversion of Preferred Stock pursuant to Subsection (c)(2) hereof is hereafter
referred to as the Conversion Effective Date. The person or persons entitled to
receive the shares of Common Stock issuable upon a conversion pursuant to
Subsection (c)(2) hereof shall be treated for all purposes as the record holder
or holders of such shares of Common Stock as of the Conversion Effective Date.
All certificates issued upon the exercise or occurrence of the conversion shall
contain a legend governing restrictions upon such shares imposed by law or
agreement of the Holder or his or its predecessors.
6. Adjustment for Subdivisions or Combinations
of Common Stock. In the event the Corporation at any time or from time to time
after the Original Issue Date effects a subdivision or combination of the
outstanding Common Stock into a greater or lesser number of shares without a
proportionate and corresponding subdivision or combination of the outstanding
Preferred Stock, then and in each such event the Conversion Price (and the
corresponding Conversion Rate) shall be increased or decreased proportionately.
7. No Impairment. The Corporation shall not, by
amendment of its Certificate of Incorporation or Bylaws or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Corporation, but shall at all times in good faith assist in the
carrying out of all the provisions of this Section (c) and in the taking of all
such action as may be necessary or appropriate in order to protect the
Conversion Rights of the Holders against impairment.
8. Reservation of Stock Issuable Upon
Conversion. The Corporation shall at all times reserve and keep available out of
its authorized but unissued shares of Common Stock solely for the purpose of
effecting the conversion of the shares of the Preferred Stock such number of its
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of the Preferred Stock; and if at any time
the number of authorized but unissued shares of
16
69
Common Stock shall be insufficient to effect the conversion of all then
outstanding shares of the Preferred Stock, the Corporation shall take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purpose.
(d) Redemption. The Preferred Stock shall be
subject to redemption as follows:
1. Optional Redemption at Election of
Holders. In the event the Holders elect, by a vote of the Holders of a majority
of the issued and outstanding shares of Preferred Stock, to cause the redemption
of the outstanding shares of Preferred Stock, then such Holders shall so notify
the Corporation by delivery of a written notice to the Corporation on or prior
to the later to occur of (i) September 30, 2002 or (ii) sixty (60) days
subsequent to the date upon which the Company gives the Holders notice (which
notice the Company undertakes to timely issue) of its right to cause such
redemption (which notice may not be given prior to June 1, 2002). Should such
election be timely made, then all shares of Preferred Stock shall be redeemed in
accordance with the following provisions of this Subsection (d)(1). The
Corporation shall, on December 31, 2002, redeem one-half (1/2) of all of the
then outstanding shares of Preferred Stock held by each Holder of Preferred
Stock at a price per share equal to the Redemption Price (hereinafter defined).
If the Corporation has achieved the Revenue Threshold (defined hereinafter),
then the Corporation shall, as soon as reasonably practicable after the
determination of whether the Corporation has met the Revenue Threshold, but in
any event on or prior to January 31, 2004, redeem all of the then outstanding
shares of Preferred Stock at a price per share equal to the Redemption Price. If
the Corporation has not achieved the Revenue Threshold, it shall, no later than
the time for redemption indicated in the immediately prior sentence, redeem
one-half (1/2) of the then outstanding shares of Preferred Stock held by each
Holder of Preferred Stock at a price per share equal to the Redemption Price,
and it shall, on December 31, 2004, redeem all of the then remaining outstanding
shares of Preferred Stock at a price per share equal to the Redemption Price.
Notwithstanding the foregoing, the date for notification of the election of the
Holders to cause a redemption as provided herein, and the dates for redemption
provided herein, may be extended by written agreement of the Corporation and the
Holders of a majority of the outstanding shares of Preferred Stock.
2. Optional Redemption Upon Conversion
Notice. In addition to the foregoing provisions governing mandatory redemption,
the Corporation may at its option redeem any shares of Preferred Stock which any
Holder has elected to convert to Common Stock by the issuance of a Conversion
Notice by redeeming any or all of such shares at a price per share equal to the
Redemption Price. If the Corporation elects to so redeem any such shares of
Preferred Stock, it shall, by the issuance of a notice to the Holders whose
shares are to be so redeemed, schedule a date for redemption, which date must be
prior to the Conversion Effective Date which would
17
70
apply to such shares in accordance with the provisions of Subsection (c)(4) were
they to be converted to Common Stock pursuant thereto. On or before each date
scheduled for redemption, each Holder of shares to be redeemed shall surrender
the certificate representing such shares to the Corporation and shall receive
payment of the Redemption Price therefor in cash. If fewer than all of the
shares represented by a surrendered certificate are redeemed, the Corporation
shall issue a new certificate representing the unredeemed shares.
3. Certain Definitions. As used
herein, "Redemption Price" means $10.00 per share on Preferred Stock (as
adjusted for changes in the Preferred Stock by stock split, stock dividend, or
the like occurring after the Original Issue Date), plus all accrued but unpaid
dividends in respect of such share of Preferred Stock. "Revenue Threshold" shall
mean the recognition of Twenty Million Dollars ($20,000,000) or more of revenue
by the Corporation on a consolidated basis as reflected on the regularly
prepared income statements of the Corporation for the twelve (12) months ended
December 31, 2003.
(e) Voting Rights. Except as set forth in this Section
(e), the Holders shall have no voting rights in respect of the Preferred Stock
except that Holders shall have the right to vote on those matters which, under
the Delaware General Corporation Law, voting by classes of stock is required.
So long as any shares of Preferred Stock are outstanding, the
Corporation shall not, without the unanimous consent (given by vote in person or
by proxy at a meeting called for the purpose, or by written consent) of the
Holders of the shares of Preferred Stock then outstanding:
(i) alter or change the annual dividend rate on
the Preferred Stock;
(ii) alter or change the cumulative nature of the
annual dividend rate on the Preferred Stock or the date from which such
dividends are cumulative;
(iii) alter or change the amounts which the
Holders shall be entitled to receive on the liquidation, dissolution or winding
up of the Corporation;
(iv) alter or change the terms relating to time
of payment or price to be paid in connection with the redemption of Preferred
Stock by the Corporation;
(v) alter or change the terms relating to
conversion of Preferred Stock to shares of Common Stock;
(vi) allocate any earned surplus, whether now
existing or hereafter arising, to capital, in accordance with Delaware law, if
the effect thereof would
18
71
be to reduce the legally available funds for payment of dividends or for
redemption of the Preferred Stock; or
(vii) create or authorize any shares of any class
of capital stock of the Corporation having any preference or priority as to
either dividends or distribution or assets upon liquidation superior to any such
preference or priority of the shares of Preferred stock or reclassify any
securities into shares of such superior stock.
(f) Registration of Transfer. The Corporation shall keep
at its principal office (or such other place as the Corporation reasonably
designates) a register for the registration of Preferred Stock. Upon the
surrender of any certificate representing Preferred Stock at such place, the
Corporation shall, at the request of the record Holder of such certificate,
execute and deliver (at the Corporation's expense) a new certificate or
certificates in exchange therefor representing in the aggregate the number of
shares represented by the surrendered certificate, and the Corporation forthwith
shall cancel such surrendered certificate. Each such new certificate will be
registered in such name and shall represent such number of shares as is
requested by the Holder of the surrendered certificate and will be substantially
identical in form to the surrendered certificate, and dividends shall accrue on
the Preferred Stock represented by such new certificate from the date to which
dividends have been fully paid on such Preferred Stock represented by the
surrendered certificate. The issuance of new certificates shall be made without
charge to the Holders of the surrendered certificates.
(g) Replacement. Upon receipt of evidence reasonably
satisfactory to the Corporation (an affidavit of the registered Holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing shares of Preferred Stock, and in the case of any
such loss, theft or destruction, upon receipt of indemnity reasonably
satisfactory to the Corporation (provided that if the Holder is a financial
institution, other institutional investor or executive officer of the
Corporation, such Holder's own agreement shall be satisfactory), or, in the case
of any such mutilation upon surrender of such certificate, the Corporation shall
(at its expense) execute and deliver in lieu of such certificate a new
certificate of like kind representing the number of shares represented by such
lost, stolen, destroyed or mutilated certificate and dated the date of such
lost, stolen, destroyed or mutilated certificate, and dividends shall accrue on
the Preferred Stock represented by such new certificate from the date to which
dividends have been fully paid on such lost, stolen, destroyed or mutilated
certificate.
(h) Notices. Any notice required by the provisions hereof
to be given to the Corporation or Holders shall be deemed given if deposited in
the United States Postal Service, postage prepaid, and addressed to the
Corporation at its then principal executive office, or to each Holder at the
address of such Holder appearing on the books of the Corporation.
19
72
Appendix 5.5 (continued)
EXHIBIT B
FIRST AMENDMENT TO
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
This First Amendment to Amended and Restated Registration
Rights Agreement (the "Amendment") amends that certain Amended and Restated
Registration Rights Agreement dated as of October 21, 1996 (the "Agreement") by
and among SPECTRX, INC., a Delaware corporation (the "Company") and the holders
of Registrable Securities (as such term is defined in the Agreement).
W I T N E S S E T H:
WHEREAS, the Company has determined to issue and sell to
Abbott Laboratories, an Illinois corporation ("Abbott") shares of a new series
of preferred stock of the Company designated Redeemable Convertible Preferred
Stock ("Preferred Stock"), and as a condition to the obligation of Abbott to
purchase shares of Preferred Stock the Company and Abbott desire to effect an
amendment to the Agreement to provide Abbott with registration rights in respect
of shares of Common Stock of the Company which may be issued upon conversion of
the shares of Preferred Stock to be issued to Abbott by the Company;
WHEREAS, the holders of at least a majority of the Registrable
Securities for the benefit of the Company and to induce Abbott to purchase the
shares of Preferred Stock agree to amend the Agreement by entering into this
Amendment;
NOW, THEREFORE, in consideration of the mutual promises and
other terms and conditions set forth in the Agreement and in the agreements
pursuant to which Abbott will acquire the Preferred stock referenced above, the
parties hereto agree as follows:
1. Effectiveness of Amendment. The Company and the
holders of Registrable Securities who have executed and delivered this Amendment
below acknowledge and agree that the Agreement is hereby amended by this
Amendment pursuant to the provisions of Section 14 of the Agreement whereby any
provision of the Agreement may be amended with the written consent of the
Company and the holders of a majority of the Registrable Securities then
outstanding, and further acknowledge and agree that such Amendment shall be
binding upon each holder of Registrable Securities then outstanding and each
future holder of all Registrable Securities of the Company.
2. Amendment. The parties hereto agree that the
definition of "Registrable Securities" as contained in Section 2 of the
Agreement is hereby amended and restated as follows:
20
73
"Registrable Securities" shall mean (i) the Common Stock
issued upon conversion of the Series A Preferred Stock, (ii)
the Common Stock issued upon conversion of the Series A
Preferred Stock issued upon exercise of certain warrants
issued pursuant to the Note and Warrant Purchase Agreement
dated April 6, 1994, (iii) the Common Stock issued upon
conversion of the Series A Preferred Stock issued upon
exercise of certain warrants issued pursuant to the Note and
Warrant Purchase Agreement dated April 29, 1994, (iv) the
Common Stock issued upon conversion of the Series A Preferred
Stock issued upon exercise of certain warrants issued pursuant
to the Note and Warrant Purchase Agreement dated June 15,
1994, (v) the Common Stock issued upon conversion of the
Series B Preferred Stock, (vi) the Common Stock issued upon
conversion of the Series C Preferred Stock, (vii) the Common
Stock issuable or issued upon conversion of the Redeemable
Convertible Preferred Stock, (viii) the Common Stock which may
be issued to Abbott Laboratories pursuant to the Common Stock
Purchase Agreement dated November 30, 1999, by and between the
Company and Abbott Laboratories, and (ix) any Common Stock or
other securities issued with respect to such Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Redeemable Convertible Preferred Stock or Common Stock;
provided, however, that shares of Common Stock or other
securities shall only be treated as Registrable Securities if
and so long as they have not been (i) sold to or through a
broker or dealer or underwriter in a public distribution or a
public securities transaction or (ii) sold by a person in a
transaction in which their rights under this Agreement are not
assigned."
21
74
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the date first above written.
SPECTRX, INC.
By:
------------------------------------------
Title:
---------------------------------------
HILLMAN MEDICAL VENTURES 1993 L.P.,
a Delaware limited partnership
By: Hillman/Dover Limited Partnership,
general partner
By: Wilmington Securities, Inc.,
its sole general partner
By:
------------------------------------------
Title:
---------------------------------------
NORO-MOSELEY PARTNERS II, L.P.,
a Georgia limited partnership
By: Moseley & Company, II,
general partner
By:
------------------------------------------
Jack R. Kelly, Jr.
Title: General Partner
ABBOTT LABORATORIES
By:
------------------------------------------
Title:
---------------------------------------
22
75
THIRD AMENDMENT
TO THE AGREEMENT BETWEEN
ABBOTT LABORATORIES
AND
SPECTRX, INC.
76
TABLE OF CONTENTS
1. INTRODUCTION......................................................................................1
1.1 Conflict with Agreement................................................................1
1.2 Modified Provisions....................................................................1
1.3 Deleted Agreement Provisions...........................................................6
1.4 Added Appendices.......................................................................7
2. DEFINITIONS.......................................................................................7
3. RESEARCH AND DEVELOPMENT.........................................................................10
3.1 Continuous Product Research Program...................................................10
3.2 Research Oversight Committee..........................................................11
3.3 Completion, Termination or Transfer of the Continuous Product
Research Program......................................................................11
3.4 Development Program Notification......................................................13
3.5 Development Program - Continuous Product..............................................14
3.6 Development Program - Non-Continuous Product..........................................16
3.7 ABBOTT Development Program Due Diligence..............................................17
3.8 Termination of all Programs...........................................................19
3.9 Reports...............................................................................19
3.10 R & D Expense Records and Audit.......................................................20
4. SPECTRX CONTINUOUS PRODUCT.......................................................................20
4.1 Development by SPECTRX................................................................20
4.2 License to SPECTRX....................................................................21
4.3 Manufacturing Rights..................................................................22
4.4 Royalty...............................................................................23
4.5 Right of First Negotiation - Distribution Rights......................................24
4.6 Post Election Efforts on ABBOTT's Program.............................................25
5. CONSIDERATION....................................................................................26
5.1 Milestone Payments....................................................................26
5.2 Transfer Price - (*)s for Continuous Product..........................................27
5.3 Royalty - Continuous Product..........................................................27
5.4 Credits Against Royalties and Transfer Price..........................................27
5.5 Preferred Stock Purchase..............................................................29
5.6 (*) Deduction.........................................................................30
(*) 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.
77
6. OTHER LICENSES.................................................................................30
6.1 (*) Technology and (*)................................................................30
6.2 (*) Technology........................................................................32
6.3 (*)s..................................................................................33
6.4 License Limitation....................................................................33
7. (*) ......................................................................................33
7.1 Payments by ABBOTT....................................................................33
7.2 (*)...................................................................................34
8. OTHER MANUFACTURING BY SPECTRX.................................................................34
9. WAIVER 34
10. EXISTING AGREEMENT TERMS.......................................................................34
11. OWNERSHIP OF INTELLECTUAL PROPERTY.............................................................34
11.1 SPECTRX Continuous Product Research Program Technology................................34
11.2 ABBOTT Continuous Product Research Program Technology.................................36
11.3 Joint Continuous Product Research Program Technology..................................37
Appendix 2.7
Continuous Product Research Program Specifications
Appendix 4.2
(*)
Appendix 4.4
SPECTRX Continuous Product Royalty Rate
Appendix 5.1
Common Stock Purchase Agreement
Appendix 5.2
(*) Supply Agreement Terms
Appendix 5.5
Redeemable Convertible Preferred Stock Purchase Agreement
(*) 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.