1
EXHIBIT 10.23
RESEARCH & DEVELOPMENT
AND
LICENSE AGREEMENT
BETWEEN
XXXXXX LABORATORIES
AND
SPECTRX, INC.
2
TABLE OF CONTENTS
XXXXXX LABORATORIES
AND
SPECTRX, INC.
TITLE PAGE NO.
----- --------
1. DEFINITIONS..................................................................................................1
2. RESEARCH AND DEVELOPMENT.....................................................................................9
2.1 Research Committee..................................................................................9
2.2 Research Program Plan..............................................................................10
2.3 Research Program Payments..........................................................................10
2.4 Research Program Milestones and Payments...........................................................11
2.5 Development of Initial System......................................................................12
3. ABBOTT DUE DILIGENCE........................................................................................13
3.1 Development Program................................................................................13
3.2 Development Program Milestone Due Diligence........................................................14
3.3 Marketing..........................................................................................15
3.4 Manufacturing......................................................................................16
4. LICENSE.....................................................................................................16
4.1 Grant..............................................................................................16
4.2 Stock Purchase; License Fees and Royalties.........................................................17
4.3 Credited Against Royalties.........................................................................21
4.4 Royalty Stacking...................................................................................21
4.5 Directly Competitive Product.......................................................................22
4.6 No Multiple Royalties..............................................................................24
4.7. Royalty Report.....................................................................................24
4.8 Royalty Payments...................................................................................24
4.9 Records and Audit..................................................................................25
4.10 Taxes..............................................................................................25
5. RIGHT OF FIRST NEGOTIATION FOR ADDITIONAL ANALYTES..........................................................26
5.1 Analytes List......................................................................................26
5.2 Right of First Negotiation.........................................................................26
5.3 Agreement Terms....................................................................................29
-i-
3
TABLE OF CONTENTS
(CONTINUED)
TITLE PAGE NO.
----- --------
6. OWNERSHIP OF INTELLECTUAL PROPERTY..........................................................................29
6.1 SPECTRx Research Program Technology................................................................29
6.2 ABBOTT Research Program Technology and Derived Technology..........................................31
6.3 Joint Research Program Technology..................................................................33
6.4 ABBOTT Development Program Technology..............................................................35
7. DEVELOPMENT PROGRAM TECHNOLOGY GRANT BACKS..................................................................36
7.1 Prior to First Shipment Date.......................................................................36
7.2 After First Shipment Date..........................................................................36
8. PATENTS.....................................................................................................37
8.1 Patents Filing and Maintenance; Costs..............................................................37
8.2 Joint Patents Filing...............................................................................39
8.3 Discontinuance of Prosecution......................................................................39
8.4 Improvements.......................................................................................40
8.5 Infringement by Third Parties......................................................................41
8.6 Third Party Claims of Infringement Against ABBOTT..................................................42
9. REPRESENTATIONS AND WARRANTIES..............................................................................43
9.1 By SPECTRx.........................................................................................43
9.2 By ABBOTT..........................................................................................44
10. TERM AND TERMINATION........................................................................................45
10.1 Term...............................................................................................45
10.2 Early Termination..................................................................................45
10.3 Consequences of Expiration or Early Termination....................................................48
10.4 Survival...........................................................................................50
11. INDEMNIFICATION.............................................................................................51
11.1 By SPECTRx.........................................................................................51
11.2 By ABBOTT..........................................................................................51
11.3 Conditions.........................................................................................52
-ii-
4
TABLE OF CONTENTS
(CONTINUED)
TITLE PAGE NO.
----- --------
12. LIMITATION OF LIABILITY AND REMEDIES........................................................................52
12.1 Liability Limitation...............................................................................52
12.2 Exclusive Remedies.................................................................................52
13. CONFIDENTIAL INFORMATION....................................................................................53
13.1 Due Care...........................................................................................53
13.2 Permitted Disclosures..............................................................................53
13.3 Publication........................................................................................54
13.4 Other Agreements...................................................................................54
14. MISCELLANEOUS...............................................................................................54
14.1 Force Majeure......................................................................................54
14.2 Notices............................................................................................55
14.3 Assignment.........................................................................................56
14.4 Successors and Assigns.............................................................................56
14.5 Alternative Dispute Resolution.....................................................................56
14.6 Publicity..........................................................................................56
14.7 Relationship of the Parties........................................................................57
14.8 Appendices.........................................................................................57
14.9 Headings; Number...................................................................................57
14.10 Waiver.............................................................................................58
14.11 Severability.......................................................................................58
14.12 Entire Agreement, Amendment........................................................................58
14.13 Applicable Law.....................................................................................58
-iii-
5
TABLE OF CONTENTS
(CONTINUED)
APPENDICES
EXHIBIT A
STOCK PURCHASE AGREEMENT
APPENDIX 1.20
LICENSED PATENTS
APPENDIX 1.25
PRIOR DISCLOSURES
APPENDIX 1.28
RESEARCH PROGRAM OUTLINE
APPENDIX 2.3
COST CATEGORIES R&D COSTS TO BE REIMBURSED SPECTRX, INC.
APPENDIX 2.4
MILESTONE CRITERIA
APPENDIX 4.2(C)
REGIONS AND DESIGNATED COUNTRIES
APPENDIX 14.5
ALTERNATIVE DISPUTE RESOLUTION
-iv-
6
AGREEMENT
THIS AGREEMENT dated 10 October, 1996 ("Effective Date"), by and
between Xxxxxx Laboratories, an Illinois corporation with principal offices at
000 Xxxxxx Xxxx Xxxx, Xxxxxx Xxxx, Xxxxxxxx 00000-0000 and its Affiliates
("ABBOTT") and SPECTRx, a Delaware corporation with principal offices at 0000X
Xxxxx Xxxxx, Xxxxxxxx, Xxxxxxx 00000 ("SPECTRx").
RECITALS
WHEREAS, SPECTRx owns or has rights under the patents, patent
applications and invention disclosures listed in Appendix 1.20 of this Agreement
relating, respectively, to the use of [*] for the extraction of interstitial
fluid samples for diagnostic applications, including glucose monitoring;
WHEREAS, ABBOTT desires to obtain certain licenses under such patents,
patent applications and disclosures, and ABBOTT and SPECTRx desire to pursue a
research program to determine the feasibility of such technology in the area;
WHEREAS, if feasibility is proven, ABBOTT and SPECTRx desire that
ABBOTT pursue development and commercialization of a product based on such
technology;
NOW, THEREFORE, in consideration of the premises and the mutual
promises and covenants set forth below, ABBOTT and SPECTRx mutually agree as
follows:
1. DEFINITIONS
In addition to the terms defined in the provisions of the Agreement,
the following terms shall have the meaning ascribed below:
1.1 "Affiliate" means any entity which controls, is controlled by or is
under common control with another entity. An entity is deemed to be in control
of another entity (controlled entity)
[*] 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
if the former owns directly or indirectly at least fifty percent (50%), or the
maximum percentage allowed by law in the country of the controlled entity, of
the outstanding voting equity of the controlled entity.
1.2 "Agreement" means this Agreement, as may be amended, including all
Appendices and Exhibits attached hereto.
1.3 "Analyte" means an individual compound, protein or substance which
is the target of quantitative or qualitative measurement for medical diagnostic
purposes.
1.4 "Average Market Share" means for a country, a fraction, the
numerator of which shall be the total retail sales (in the local currency) of
all Directly Competitive Products or Licensed Product as the case may be in such
country in a calendar quarter and the denominator of which shall be the sum of
total retail sales of all Directly Competitive Products plus the total retail
sales of all Licensed Products in such country, all as measured by IMS Americas,
Inc. or such other recognized industry source as may be reasonably agreed to by
the parties.
1.5 "CDA" means the Confidential Disclosure Agreement entered into by
ABBOTT and SPECTRx and dated December 13, 1995.
1.6 "Confidential Information" means information disclosed in writing
by one party to the other pursuant to this Agreement or the CDA and identified
as "CONFIDENTIAL" or "PROPRIETARY" as well as information disclosed orally to
the extent such oral disclosure is identified as "CONFIDENTIAL" at the time of
disclosure and is summarized in writing which is provided to the other party
within thirty (30) days after oral disclosure. "Confidential Information" does
not include any of such information which:
-2-
8
(A) is known to the receiving party before receipt thereof
under this Agreement or the CDA, or is independently developed by the receiving
party without recourse to the other party's Confidential Information, both as
evidenced by the receiving party's written records which are contemporaneous to
the claimed event;
(B) is disclosed to the receiving party without restriction
after full execution of this Agreement by a Third Party having a legal right to
make such disclosure; or
(C) is or becomes part of the public domain through no breach
of this Agreement.
1.7 "Derived Technology" means any invention, development, know-how or
discovery, excluding [*] Technology and [*], derived from or directly based upon
Prior Disclosures and invented solely by ABBOTT employees, agents or contractors
which was made more than [*] before the information in Prior Disclosures from
which it is derived or on which it is based became part of the public domain
without any breach by ABBOTT of its confidential obligations to SPECTRx; and
which was made within [*] after the Effective Date.
1.8 "[*] Technology" means technology for [*].
1.9 "[*]" means use of the technology claimed in the Licensed Patents,
Know-How and/or Derived Technology to [*].
1.10 "Development Program" means that work to be carried out by ABBOTT
specifically to develop a Licensed Product for commercialization, which program
shall commence upon the date of XXXXXX'x Development Program Notification to
SPECTRx in accordance with Section 2.5 and shall end on the First Shipment Date.
1.11 "Directly Competitive Products" means all medical devices,
instruments and associated disposables within the Field which incorporate [*]
means to perforate the stratum corneum for the
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
-3-
9
purpose of sampling interstitial fluid for glucose monitoring, excluding those
[*], and which over the preceding two calendar quarters have maintained an
Average Market Share within the country in question of [*]. Directly Competitive
Products shall not include any product which during such calendar quarters in
that country is the subject of a pending infringement action by either SPECTRx
or ABBOTT. Directly Competitive Products shall only include products which in a
given country, either would [*] which was presented to the relevant [*]. For
purposes of this Section, "significant claim" means a claim encompassing a core
function of such products (e.g., method for extracting interstitial fluid).
1.12 "Disposables" means a single or multiple use detector which is
sold by ABBOTT or its sublicensees with labeling or instructions identifying it
for use with Product, which is used for any measurement of glucose utilizing
such Product,[*].
1.13 "Exclusive License" means a license whereby the receiving party's
rights shall be sole and exclusive and shall operate to exclude all others
including, but not limited to, the grantor.
1.14 "FDA" means the United States Food and Drug Administration or any
successor entity thereto.
1.15 "Field" means the use of [*] for the extraction of interstitial
fluid samples for glucose monitoring.
1.16 "First Shipment Date" means the date of the first shipment of
Product, other than Product used for clinical studies, after receipt of
regulatory approval in a country and which is sold by ABBOTT or its sublicensees
to a Third Party.
[*] 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.
-4-
10
1.17 "510K Filing" means a premarket notification submission filed with
the FDA requesting clearance to commercially distribute a medical device for
human use in the United States based on substantial equivalence to a device
currently in commercial distribution.
1.18 "Improvements" means any and all developments, improvements,
inventions or discoveries relating to the Licensed Patents or Know-How, [*],
with the right to sublicense, by SPECTRx, during the term of this Agreement and
shall include, but not be limited to, developments intended to enhance the
safety and efficacy of the Product.
1.19 "Know-How" means that proprietary technology, know-how and/or
trade secrets of SPECTRx (or licensed to SPECTRx with the right to sublicense)
in the Field relating to the Product or the Licensed Patents including, but not
limited to, manufacturing or production techniques, formulations, methods,
products and processes.
1.20 "Licensed Patents" means all patents and patent applications that
cover inventions useful within the Field, but excluding Delivery Applications,
conceived and/or reduced to practice by SPECTRx, its employees, agents or
contractors or acquired by SPECTRx with the right to sublicense, whether prior
to or after the Effective Date, including, but not limited to, (A) the patents
and patent applications set forth in Appendix 1.20 (excluding Delivery
Applications) and any patents or patent applications covering inventions within
the Field subsequently developed or acquired by SPECTRx prior to the First
Shipment Date, including, but not limited to, those arising from the SPECTRx
Research Program Technology as set forth in Section 6.1(A) and (B)(i), the Joint
Research Program Technology as set forth in Section 6.3, and the Improvements as
set forth in Section 8.4; (B) all patents arising from such applications
identified in (A); (C) any foreign counterparts of the patents or patent
applications described in (A) or (B); (D) any divisions, continuations, and
continuations-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.
-5-
11
part, extensions, renewals, re-examinations or reissues of the patents or patent
applications identified in (A) or (B), or (C).
1.21 "Licensed Product" means the (i) Product and (ii) Disposables.
1.22 "[*]" means use of technology which would [*] in interstitial
fluid using technology described in the Licensed Patents to which SPECTRx has
rights with the right to sublicense and then would [*], as to which ABBOTT has,
or in the future obtains, rights for such [*].
1.23 (A) "Net Sales" means the gross sales of the Licensed Product
shipped and billed to a Third Party by ABBOTT and its sublicensees in the
Territory, less reasonable and appropriate:
(i) allowances and adjustments separately and actually
credited or payable including, but not limited to, credit for damaged, outdated
and returned Products or Disposables;
(ii) trade discounts earned or granted;
(iii) cash discounts actually allowed;
(iv) transportation charges (including, but not limited to,
insurance costs), handling charges, sales taxes, excise taxes and duties, and
other similar charges invoiced to customers or a reasonable factor for any such
charges if such charges are absorbed by ABBOTT and included in the Licensed
Product's selling price, but not itemized on the invoice, which factor shall not
exceed five percent (5%) of the selling price;
(v) wholesaler chargebacks; and
(vi) rebates earned or granted and any prorated management
fees which are required by buying groups and similar organizations.
(B) If a Product or Licensed Product is sold in combination with
another product, other than a Disposable, for a single price ("Combination
Product"), the Net Sales with respect to 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.
-6-
12
Combination Product means the gross sales of the Combination Product billed to a
Third Party by ABBOTT and its sublicensees in the Territory less the adjustments
referred to in Sections 1.23(A)(i)-(vi), multiplied by a fraction, the numerator
of which shall be the per unit current net selling price of the Product or
Licensed Product as sold separately in a country and the denominator of which
shall be the sum of the current net selling price(s) in such country of each of
the products having significant independent utility in the Combination Product
including the Product or Licensed Product. If there is no established net or
other selling price at the time in question for the Licensed Product, Product or
the product(s) included in the Combination Product, then XXXXXX'x standard
factory cost of the Product or Licensed Product and other products shall be used
to determine the above fraction.
(C) Net Sales shall be calculated in accordance with XXXXXX'x
standard internal policies and procedures in compliance with generally accepted
accounting principles consistently applied.
1.24 "PMA" means an application other than a 510K filed with the FDA
for approval by such agency of the commercial distribution of a medical device
for human use in the United States, whether such application is designated as a
Pre-Marketing Approval, or by another name.
1.25 "Prior Disclosures" means the invention disclosures, other
Confidential Information, patent application drafts and patent applications
which SPECTRx disclosed to ABBOTT under the CDA and which are listed in Appendix
1.25.
1.26 "Product" means a product in the Field whose manufacture, use or
sale would, but for the licenses granted under Section 4.1 of this Agreement,
infringe a Valid Claim of a patent within the Licensed Patents or as to which
ABBOTT is otherwise required to pay royalties hereunder.
-7-
13
1.27 "Regulatory Filing" means an application filed with a governmental
entity for approval by that entity in a country of the sale of a medical device
for human use in such country including, but not limited to, a PMA or a 510K in
the United States.
1.28 "Research Program" means the joint research to be carried out by
ABBOTT and SPECTRx to determine the feasibility of the Product ("Phase 1") [*]
("Phase 1a") and of [*] ("Phase 1b"); and the milestones to be met by SPECTRx as
outlined in Appendix 2.4, which program shall commence on the Effective Date and
shall end on the date of XXXXXX'x Development Program Notification to SPECTRx in
accordance with Section 2.5, as the Research Program is more particularly
described in Appendix 1.28.
1.29 "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 work under the Research Program as
described in Appendix 1.28.
1.30 [*]
1.31 "Territory" means the entire world.
1.32 "Third Party" means any individual, corporation, partnership,
trust or other business organization or entity, and any other recognized
organization other than the parties hereto and their Affiliates or sublicensees.
1.33 "Valid Claim" means any claim of a pending patent application
which has received its notice of allowance or any claim of an issued and
unexpired patent which has not been held unenforceable, unpatentable nor invalid
by a decision of a court or governmental agency of competent jurisdiction,
unappealable or unappealed within the time allowed for appeal, nor has been
admitted by the holder of the patent to be invalid or unenforceable through
reissue, disclaimer or otherwise.
[*] 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-
14
2. RESEARCH AND DEVELOPMENT
2.1 Research Committee. ABBOTT and SPECTRx shall each designate two (2)
representatives to serve on a research committee to direct and coordinate the
Phase 1 work under the Research Program (the "Research Committee"). The Research
Committee shall be responsible for designating all Research Program tasks to be
carried out by SPECTRx or ABBOTT (the "Research Program Plan") as initially set
forth in Appendix 1.28 and for preparation of a budget on a quarterly basis
covering tasks assigned to SPECTRx under the Research Program Plan. ABBOTT or
SPECTRx may designate substitute representatives to the Research Committee by
written notice from one party to the other.
2.2 Research Program Plan. SPECTRx and ABBOTT shall carry out the
Research Program in accordance with the Research Program Plan as developed and
approved by the Research Committee. The Research Program Plan as well as
Appendix 1.20 (Licensed Patents) shall be updated quarterly by the Research
Committee. SPECTRx shall submit to ABBOTT a quarterly status report summarizing
the completion or degree of completion of each SPECTRx task or milestone in the
Research Program Plan. During the period of time covered by the Research Program
Plan, the Research Committee shall meet at least once each calendar quarter at
times and places mutually agreed upon to discuss the status of the Research
Program Plan and the underlying research. Each party shall diligently undertake,
pursue and support all research activities required to complete the Research
Program as set forth in the Research Plan which shall be directed towards the
completion of Phase 1a and 1b milestones in a timely manner; provided, however,
the Research Program may be terminated by mutual agreement of the parties.
-9-
15
2.3 Research Program Payments. During the Research Program, ABBOTT
shall be responsible for SPECTRx's actual costs for the cost categories set
forth in Appendix 2.3 incurred for completion of tasks under Phases 1a and 1b of
the Research Program as set forth in the Research Program Plan. Such payments
shall be made in accordance with the quarterly budget as approved by the
Research Committee in accordance with Section 2.1 and shall be paid to SPECTRx
in advance of such quarter. Any budget revisions or variance shall be subject to
the review and approval of the Research Committee. Any funds not expended by
SPECTRx in one quarter shall be credited to the subsequent quarter. If SPECTRx
receives notification of termination of this Agreement from ABBOTT or delivers
such notice to ABBOTT in accordance with Section 10.2 prior to the completion of
the Research Program, then SPECTRx shall immediately commence a wind down in
good faith of its research tasks under the Research Program Plan, shall
immediately terminate or notice termination, as permitted, of any obligations
which incur costs under the Research Program Plan, shall not enter into any new
financial commitments regarding the Research Program and shall take all
reasonable steps to minimize any existing and/or continuing costs under the
Research Program Plan which cannot be immediately terminated. SPECTRx shall
reimburse ABBOTT for all advance payments made to SPECTRx which are in excess of
the actual costs of the Research Program as of the date of termination less any
contractual obligations of the Research Program which by their terms are
noncancelable and thus extend beyond the termination date and other similar
costs which cannot be reasonably avoided.
2.4 Research Program Milestones and Payments. SPECTRx shall be entitled
to receive two milestone payments of [*] each upon successful completion of the
Phase 1a and 1b milestones in accordance with the milestone criteria set forth
in Appendix 2.4. Such payments shall be made within
[*] 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-
16
thirty (30) days after successful completion of each milestone. If one or both
milestones has not been completed, and ABBOTT terminates this Agreement in
accordance with Section 10.2, then ABBOTT shall not be obligated to make the
milestone payment for any milestone that is not met by SPECTRx by the date of
termination. However, if one or both milestones have not been completed and
ABBOTT notifies SPECTRx as set forth in Section 2.5, then ABBOTT shall make such
milestone payment(s) within sixty (60) days of such Development Program
Notification. If SPECTRx has not successfully completed the Phase 1a milestone
in accordance with the milestone criteria set forth in Appendix 2.4 within [*],
then ABBOTT may terminate this Agreement, provided that ABBOTT has not delivered
the Development Program Notice set forth in Section 2.5, and such termination by
ABBOTT shall be considered a termination under Section 10.2(C)(i).
2.5 Development of Initial System.
(A) At any time prior to forty-five (45) days after the
completion of the Phase 1b milestone (in accordance with Appendix 2.4), but in
no event later than [*], ABBOTT may notify SPECTRx in writing if ABBOTT
determines to commence the Development Program ("Development Program
Notification"). If ABBOTT has not delivered to SPECTRx the Development Program
Notification within such period, then this Agreement shall immediately terminate
upon written notice from one party to the other; provided, however, that if the
Phase 1b milestone has not been completed, then SPECTRx shall not be entitled to
the licenses under Section 6.2(C).
(B) If ABBOTT commences the Development Program, then ABBOTT
intends to utilize the Licensed Patents and Know-How during the Development
Program [*] for a [*] ("Initial System"). SPECTRx acknowledges that the practice
of the Licensed Patents and Know-How with regard to the Initial System does not
preclude XXXXXX'x other development activities necessary 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.
-11-
17
compete in the glucose market including, but not limited to, the development of
enhancements to XXXXXX'x invasive glucose testing products, use of other
technologies in the Initial System which ABBOTT determines in its sole
discretion is necessary for a commercially viable Product, the development of
improvements to the Initial System for inclusion as part of a [*]. If ABBOTT
determines at any point after commencing the Development Program not to practice
the Licensed Patents and Know-How with regard to the Initial System, ABBOTT
shall promptly notify SPECTRx in writing and this Agreement will terminate
immediately unless otherwise agreed by the parties. Such termination shall be
subject to the applicable provisions of Section 10.3 and Section 10.4.
3. ABBOTT DUE DILIGENCE
3.1 Development Program
(A) Upon delivery of the Development Program Notification to
SPECTRx set forth in Section 2.5, ABBOTT shall diligently undertake and pursue
all development activities reasonably required in order to submit Regulatory
Filings to obtain governmental approvals to market the Product in the United
States, major European Union countries, Japan and in the other countries of the
Territory, and in order to obtain approvals, all in accordance with XXXXXX'x
historical practice. All such development activity shall be at XXXXXX'x expense
and shall be undertaken in accordance with XXXXXX'x normal procedures for
evaluating development projects and the exercise of its reasonable business
judgment, consistent with the custom and practice in the industry, and XXXXXX'x
historical practice in filing of Regulatory Filings, conduct and completion of
clinical trials, demonstration of clinical efficacy and commercial feasibility,
and obtaining of regulatory approvals.
(B) Any delays in, or failure to complete the Development
Program (i) due to the intentional or negligent acts of SPECTRx except
activities directed or required by ABBOTT or the
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
-12-
18
Research Committee; or (ii) because the Product is either determined not to have
been shown to be safe or efficacious, or it is determined that additional
material, data, or information is needed to determine safety or efficacy; or
(iii) because the Product [*]; or (iv) due to events beyond the reasonable
control of ABBOTT shall not constitute a failure of diligence by ABBOTT under
this Article, nor a breach by ABBOTT of this Agreement provided, however, that
no such delay (other than as set forth in this Section 3.1 (B)(1)) shall extend
the periods of the time set forth in Section 3.2 of this Agreement. If an event
set forth in Section 3.1 (B)(1) delays the submission of a Regulatory Filing or
the First Shipment Date, ABBOTT and SPECTRx shall negotiate in good faith to
extend the time periods set forth in Section 3.2(A) and (B) by a period of time
commensurate with such delay.
3.2 Development Program Milestone Due Diligence. ABBOTT shall make
certain payments during the Development Program in accordance with Section
4.2(B).
(A) If the First Shipment Date has not occurred and if ABBOTT
has not submitted a Regulatory Filing to the FDA and has not made the payment
set forth at Section 4.2(B)(ii) within [*] after the earlier of SPECTRx's having
completed the Phase 1b milestone in accordance with Appendix 2.4 (or any
extended time period agreed to by the parties pursuant to Section 3.1) or the
Development Program Notification, then ABBOTT may make such payment and extend
the time to submit such Regulatory Filing for an [*] so that the total period
becomes [*]. Unless the parties agree to extend such time for the Regulatory
Filing, if ABBOTT has not made such Regulatory Filing during [*], then upon
written notice from SPECTRx, this Agreement shall terminate subject to the
applicable provisions of Section 10.3 and Section 10.4; provided that, if such
Regulatory Filing did not occur due to one of the events set forth in Section
3.1 (B), then SPECTRx shall not be entitled to the grant back of rights set
forth in Sections 6.2(C) and 7.1.
[*] 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.
-13-
19
(B) If the First Shipment Date has not occurred and ABBOTT has
not made the payment set forth in Section 4.2(B)(iv) within either [*] if a 510K
Filing is required or [*] if a PMA or equivalent is required (or any extended
time period agreed to by the parties pursuant to Section 3.1, plus any extension
taken under Section 3.2(A)) after the earlier of SPECTRx's having completed the
Phase 1b milestone in accordance with Appendix 2.4 or the Development Program
Notification, then ABBOTT may make such payment and extend the time for the
First Shipment Date for [*], such additional period to commence immediately upon
expiration of the relevant initial period. Unless the parties agree to further
extend such time for the First Shipment Date, if the First Shipment Date has not
occurred during the [*] extension period or if ABBOTT does not make the payment
to extend, then upon written notice from SPECTRx, this Agreement shall terminate
subject to the applicable provisions of Section 10.3 and Section 10.4; provided
that if the First Shipment Date did not occur due to the events set forth in
Section 3.1(B), then SPECTRx shall not be entitled to the grant back of rights
set forth in Sections 6.2(C) or 7.1.
3.3 Marketing. Promptly upon receipt of relevant regulatory approval
for any country in the Territory, ABBOTT shall diligently undertake and pursue
all marketing, sales, promotional and other commercialization activities as
reasonably required to maximize the sale of Licensed Product in that country and
to promote and support the Licensed Product by undertaking advertising, sales
training, exhibitions, and seminars including, without limitation: (A) properly
training, equipping and deploying its sales force to promote the Licensed
Product in such country including providing appropriate incentives; (B) making a
financial commitment as is customary in the industry for direct marketing and
promotional support of the Licensed Product in such country during the first two
(2) years of commercialization, and thereafter such amounts as are commensurate
with projected sales of
[*] 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-
20
the Licensed Product in such country, and (C) providing technical support to end
users by using an appropriate specialist staff. For purposes of this provision,
ABBOTT will not be deemed to have failed to exercise diligence if ABBOTT
undertakes the tasks hereunder in accordance with XXXXXX'x normal procedures for
training, launching a new product and marketing products or in accordance with
XXXXXX'x historical practices in various regions of the world.
3.4 Manufacturing. ABBOTT shall undertake all manufacture of the
Product and Disposables and may self-manufacture or have the Product and/or
Disposables manufactured by a Third Party, in the sole discretion of ABBOTT.
4. LICENSE
4.1 Grant. Subject to the terms and conditions of this Agreement:
(A) SPECTRx hereby grants to ABBOTT a royalty-bearing,
Exclusive License, with the right to sublicense, under the Licensed Patents and
Know-How to make, have made, use, sell and import the Product in the Territory
with the exception of Singapore and the Netherlands provided, however, that any
such sublicense for the sale of Product in the United States, European Union
countries or Japan shall be subject to the approval of SPECTRx, which approval
shall not be unreasonably withheld. Regardless of the terms of such sublicense,
ABBOTT shall remain jointly and separately liable to SPECTRx under the present
Agreement for all obligations, including, but not limited to, royalties, under
this Agreement as if the sales of Licensed Products were directly by ABBOTT
under this Agreement.
(B) SPECTRx hereby grants to ABBOTT a royalty-bearing,
nonexclusive license, with the right to sublicense, under the Licensed Patents
and Know-How to make, have made, use, sell and import the Product in Singapore
and the Netherlands.
-15-
21
(C) The Exclusive License granted under Section 4.1(A) and the
nonexclusive license granted under Section 4.1(B) are collectively referred to
hereunder as "Licenses."
4.2 Stock Purchase; License Fees and Royalties.
(A) Within fifteen (15) days of the Effective Date, ABBOTT
shall purchase five hundred thousand (500,000) shares of SPECTRx preferred stock
at six dollars ($6.00) per share for a total payment of Three Million Dollars
($3,000,000), in accordance with the Stock Purchase Agreement appended as
Exhibit A to this Agreement.
(B) In partial consideration for the Licenses granted to
ABBOTT under Section 4.1, ABBOTT shall make license fee payments [*] in the
amounts and within the time frames as follows:
(i) [*] of the date of the Development Program
Notification by ABBOTT to SPECTRx, ABBOTT shall pay SPECTRx [*].
(ii) [*] of ABBOTT submitting a Regulatory Filing
regarding the Product to the FDA, ABBOTT shall pay SPECTRx [*].
(iii) [*] of receipt by ABBOTT of a written notice of
approval of the Regulatory Filing by the FDA, ABBOTT shall pay to SPECTRx [*];
or if ABBOTT receives notice of regulatory approval of its Regulatory Filing in
any country in Europe or in Japan prior to that of the FDA, then (in lieu of and
not in addition to such [*] payment) ABBOTT shall pay to SPECTRx [*] of receipt
of such notice and [*] of receipt of XXXXXX'x notice of approval from the FDA.
(iv) [*] of the First Shipment Date, ABBOTT shall
pay to SPECTRx [*].
(v) [*] of written notification and evidence of
notice of allowance of the first United States Licensed Patent which includes a
claim which covers the interstitial fluid sampling
[*] 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-
22
which the Product (including Product under development) would infringe except
for the rights granted under this Agreement, ABBOTT shall pay to SPECTRx [*].
(C) In partial consideration for the Licenses granted under
Section 4.1, ABBOTT shall pay a royalty based on the annual Net Sales of the
Licensed Product in the Territory, such royalty to be calculated on a graduated
basis as follows, subject to Section 4.2(D):
Net Sales [*] Royalty Rate
$MM (% of Net Sales)
------------- ----------------
First [*] at [*]
Next [*] at [*]
Next [*] at [*]
Next [*] at [*]
Remainder at [*]
For example, if total Net Sales for the year are [*], then the royalty would be
calculated as follows: [*].
For so long as a product is covered by a major Valid Claim (as defined
in Section 4.2(D)) in all of the designated countries ("Designated Countries")
in a given region ("Region") as such Designated Countries and Regions are
constituted in Appendix 4.2(C), then all sales of said product and associated
Disposables by ABBOTT or its sublicensees in the countries of that Region shall
be deemed gross sales for the determination of Net Sales of Licensed Product for
the purposes of this Section. If Regions or Designated Countries are affected by
geographical or political changes that negatively affect patent prosecution,
ABBOTT and SPECTRx shall confer on needed modifications to Appendix 4.2(C).
(D) For a period of [*] from the First Shipment Date in any of
the [*], ABBOTT shall have the obligation to pay royalties on any product and
associated Disposables sold by ABBOTT which utilizes technology under the
Licensed Patents [*] within the Field even if 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-
23
product does not infringe a Valid Claim of a patent included in the Licensed
Patents and therefore is not a Licensed Product. If after such [*] expires, a
product sold by ABBOTT in a particular country in a given Region utilizes
technology under the Licensed Patents within the Field, but does not infringe a
major Valid Claim in the Licensed Patents in every Designated Country in such
given Region, then, unless sales of such product in such country constitute
infringement of a Valid Claim of Licensed Patents, ABBOTT may at anytime
thereafter cease to pay royalties pursuant to this Section on its Net Sales in
any such country in such Region and XXXXXX'x license in that country shall
terminate. If the patent process in one or two Designated Countries extends
beyond the [*] from the First Shipment Date for reasons outside the control of
SPECTRx (as reasonably determined by ABBOTT) and SPECTRx has been seeking such
patent protection diligently (as reasonably determined by XXXXXX), XXXXXX shall
continue to pay, in its sole discretion, royalties in such Region provided that
a Valid Claim of a patent covering the Licensed Product sold by ABBOTT in such
Region exists in all the other Designated Countries in such Region. For purposes
of this Section, "major Valid Claim" means a Valid Claim encompassing a core
function of such ABBOTT product (e.g., method for extracting interstitial
fluid.)
(E) If a product of ABBOTT is not covered by a Valid Claim due
to the decision of a court or governmental agency of competent jurisdiction that
all claims of Licensed Patents in a given Designated Country of a Region which
cover such product are unenforceable or invalid, then ABBOTT shall have no
obligation to pay royalties for activities in all countries of that Region for
which there is no Valid Claim covering such product unless a decision not
subject to appeal becomes final which reverses this determination with regard to
at least one claim covering such product in such country. However, royalties
shall be accrued during such period and if requested by SPECTRx, shall
[*] 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-
24
be escrowed under reasonable commercial terms, including receipt of interest. If
the determination is reversed by a final decision, SPECTRx shall receive the
escrowed royalties and interest. If the decision is not so reversed, ABBOTT
shall receive the escrowed royalties and interest. If ABBOTT elects not to
continue to pay royalties upon a final determination which does not reverse such
finding, then XXXXXX'x license in such Designated Country shall terminate. Upon
termination in such Designated Country, XXXXXX'x obligation to pay royalties in
the remaining countries of the corresponding Region shall be determined by the
presence in each country of a Valid Claim covering such product. For each
country in which ABBOTT so chooses not to pay royalties in such country,
XXXXXX'x license in such country shall immediately terminate; provided, however,
it shall not terminate if a product of ABBOTT is not covered by a Valid Claim in
a given country in such corresponding Region due to the decision of a court or
governmental agency of competent jurisdiction as set forth above and ABBOTT
shall have no obligation to pay royalties hereunder with regard to such product
unless a decision not subject to appeal becomes final. Such royalties shall be
accrued with regard to such country under the same terms as set forth above for
a Designated Country. If ABBOTT elects not to continue to pay royalties upon a
final determination which does not reverse such finding, then XXXXXX'x license
in such country shall terminate.
(F) No royalty shall be payable for products (which if sold
with Product would be Disposables) which are sold separately from and not used
with Product as determined by publicly available marketing data generally
accepted in the industry or other mutually agreed upon methods.
4.3 Credited Against Royalties. The license fee payment of [*] set
forth in Section 4.2(B)(iii) and the license fee payment of [*] set forth in
Section 4.2(B)(iv) shall be credited against future royalties. Such payments
shall be credited against royalties due to SPECTRx at the time of
[*] 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-
25
payment of such royalty so that SPECTRx shall receive [*] of the royalty amount
due to it (i.e., for every dollar in royalties due SPECTRx, SPECTRx shall
receive [*]) until the total of [*] has been credited against royalties due
SPECTRx from ABBOTT.
4.4 Royalty Stacking. If ABBOTT is obligated or has agreed to pay a
total royalty rate that exceeds [*] of Net Sales of the Licensed Products,
whether the royalty is due to SPECTRx or to Third Parties, then ABBOTT may
reduce the royalty rate payable to SPECTRx by [*]. Such royalty limitation shall
not include those royalties for which ABBOTT is obligated to a Third Party under
agreements entered into prior to the Effective Date for either (A) technology
which may be integrated into the Product or Disposables or (B) technology which
is incorporated into the strips manufactured by XXXXXX'x subsidiary, MediSense,
Inc. For example, if the total royalty rate paid by ABBOTT in a year is [*] and
the royalty rate for SPECTRx for that year is [*], then ABBOTT may decrease
SPECTRx's royalty rate by [*] of that which exceeds the royalty rate of [*]
which results in a SPECTRx royalty rate of [*] for that year. However, in no
event shall the total royalty rate for SPECTRx be less than [*].
4.5 Directly Competitive Product.
(A) If in any calendar quarter, a Third Party is selling a
Directly Competitive Product in any country where ABBOTT is selling the Licensed
Product, then ABBOTT may decrease the royalty rate by [*] in such country for
the period that the Directly Competitive Product and the Licensed Product are
both sold. For example, if the royalty rate for that year is [*], then the
royalty shall be calculated at a rate of [*] for the Net Sales in the country in
which the Directly Competitive Product and the Licensed Product are both sold.
The minimum royalty rate specified in Section 4.4 shall not be applicable to
calculations' under this 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.
-20-
26
(B) It a product was not designated as a Directly Competitive
Product, during any calendar quarter, because such product was subject to an
infringement action by ABBOTT or SPECTRx, and if such action is either settled
(as approved by ABBOTT and SPECTRx) or adjudicated so as to allow the continued
sale of such product in the country, then such product shall be retroactively
designated a Directly Competitive Product, and ABBOTT may deduct that portion of
the royalties that ABBOTT paid during the pendency of the infringement action,
that would not have been paid due to the Third Party sale of a Directly
Competitive Product, from any royalties thereafter due and payable to SPECTRx
under this Agreement.
(C) Any time after [*] from the date of first reduction of the
royalty rate in any country in the Territory under Section 4.5(A), (i) if the
Average Market Share of the Directly Competitive Products in that country
exceeds that of the Licensed Product and (ii) no Valid Claim of a patent under
the Licensed Patents covers the Directly Competitive Product in that country,
then (a) ABBOTT may terminate its Exclusive License or non-exclusive license for
such country upon written notification to SPECTRx and SPECTRx shall grant to
ABBOTT a nonexclusive license to use any Know-How in the Field as set forth
below in this Section 4.5(C); or (b) ABBOTT may continue to pay the reduced
royalty rate as set forth above and maintain its Exclusive License or
nonexclusive license for that country. If ABBOTT elects to terminate, SPECTRx
hereby grants to ABBOTT a nonexclusive, royalty-free license, with the right to
sublicense to use any Know-How in the Field which covers the manufacture, use or
sale of such ABBOTT product sold in any country where ABBOTT has terminated its
license under this Agreement covering such product in such country pursuant to
this Section 4.5(C).
[*] 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-
27
(D) If SPECTRx has not granted a license or is not under a
binding obligation to grant a license to a Third Party or sublicensee in the
Field or is not itself actively engaged in significant development or
commercialization of a product in the Field and (i) the Directly Competitive
Product ceases sales in such country (and no other Directly Competitive Product
is sold in such country at that time) or (ii) a patent of SPECTRx issues in such
country and such patent has a Valid Claim covering the Directly Competitive
Product, or (iii) the Average Market Share of the Licensed Product exceeds that
of the Directly Competitive Product, then SPECTRx shall promptly notify ABBOTT
of any of the conditions arising under (i)-(iii) above (if ABBOTT has such
knowledge, ABBOTT may so notify SPECTRx). Thereafter upon written notice from
ABBOTT to SPECTRx, ABBOTT may have its Exclusive License or its nonexclusive
license reinstated on the same terms and conditions as set forth in Section
4.2(C); provided that if SPECTRx has granted a nonexclusive license to a Third
Party, SPECTRx shall promptly notify ABBOTT of such Third Party license and
ABBOTT and SPECTRx shall then enter into good faith negotiations to modify the
royalty rates of a nonexclusive reinstated license in such country to a rate no
greater than [*] of the rates set forth in Section 4.2(C).
4.6 No Multiple Royalties. No multiple royalties shall be payable
because a Licensed Product, its manufacture, use, sale or importation is or
shall be covered by more than one Valid Claim of a patent included in Licensed
Patents or more than one patent under Licensed Patents.
4.7.Royalty Report. Each royalty payment shall be accompanied by a
statement which sets forth the total Net Sales and calculations for deriving Net
Sales in each country, to the extent provided to ABBOTT through its normal
financial processes, expressed in U.S. dollars, the royalty rates, and royalties
payable in U.S. dollars.
[*] 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-
28
4.8 Royalty Payments. Royalty payments for United States sales,
pursuant to Section 4.2(C) shall be paid to SPECTRx in United States dollars, by
electronic transfer to an account (within an institution that is equipped to
utilize such electronic transfer) designated by SPECTRx, within [*] after each
calendar quarter ending March 31, June 30, September 30, and December 31 of each
year, and within [*] after each such calendar quarter, for sales in countries
outside the United States. Royalty payments earned in countries outside the
United States shall be first determined by ABBOTT in the currency of the country
where Net Sales were made and then converted by ABBOTT directly to its
equivalent in U.S. dollars. Conversion of such currencies to U.S. dollars shall
be done in accordance with the procedures ordinarily used by ABBOTT in
converting foreign currency sales, based on the same method as used to calculate
ABBOTT sales worldwide, which procedures shall be in accordance with generally
accepted accounting principles consistently applied.
4.9 Records and Audit. ABBOTT shall keep and maintain records of Net
Sales and the calculations for deriving Net Sales made pursuant to this
Agreement for a period of two (2) years after the Net Sales period to which such
records relate. During this period, such records shall be open to inspection
upon reasonable written notice by SPECTRx to ABBOTT. Such inspection shall be
performed by a nationally recognized independent certified public accountant
selected by SPECTRx and approved by ABBOTT, which approval shall not be
unreasonably withheld. All expenses of such inspection shall be borne by
SPECTRx; provided that, if ABBOTT is found to have underpaid by more than five
percent (5%), then ABBOTT 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 Agreement and report findings
(but not the underlying data)
[*] 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-
29
of the examination to SPECTRx as is necessary to evidence that records were or
were not maintained and used in accordance with this Agreement. A copy of any
report provided to SPECTRx by the independent certified public accountant shall
be given concurrently to ABBOTT.
4.10 Taxes. ABBOTT [*] under this Agreement provided that the parties
are entities incorporated under the laws of one of the states of the United
States. If one or more of the parties ceases to be so incorporated, then the
parties shall consult to determine the steps necessary to meet requirements of
appropriate fiscal or tax authorities [*].
5. RIGHT OF FIRST NEGOTIATION FOR ADDITIONAL ANALYTES
5.1 Analytes List. At anytime within two (2) years of the Effective
Date, ABBOTT may deliver to SPECTRx a written, prioritized list of additional
Analytes and [*] in which ABBOTT has an interest in development work. The
parties will promptly enter into good faith negotiations to mutually agree upon
a final list of Analytes (including panels) and [*] for development as well as
identify those Analytes in which ABBOTT has no interest (the "Analytes List").
The Analytes List shall be updated every twelve (12) months by the mutual
agreement of the parties.
5.2 Right of First Negotiation.
(A) During the period ending [*] from the First Shipment Date,
or [*] from the Effective Date, whichever comes first (the "Negotiation
Period"), ABBOTT shall have the right of first negotiation for rights to
practice the Licensed Patents and Know-How for development and commercialization
of those Analytes in conjunction with Licensed Patents and [*] to which SPECTRx
has rights with the right to sublicense, and which ABBOTT has identified as of
interest to ABBOTT, whether SPECTRx has agreed to their placement on the
Analytes List or not. Xxxxxx'x right of first negotiation for [*] is not limited
to those for which Abbott has existing rights for [*] technology. 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.
-24-
30
commence such negotiation, during the Negotiation Period, ABBOTT shall deliver
written notice ("ABBOTT Notice") to SPECTRx indicating on which such Analyte or
[*] it desires a license and/or a collaboration agreement from SPECTRx. ABBOTT
may only deliver one ABBOTT Notice per Analyte or [*].
(B) During the Negotiation Period, if SPECTRx desires to grant
a license for or collaborate on a particular Analyte or [*] and such Analyte has
been identified as of interest to ABBOTT, SPECTRx shall deliver written
notification of such intent or a proposal ("SPECTRx Notice") to ABBOTT. The
SPECTRx Notice shall be delivered to ABBOTT prior to SPECTRx engaging in
discussions with any Third Party concerning such Analyte or [*] during the
Negotiation Period; provided, that SPECTRx may acknowledge to any such Third
Party that XXXXXX has a right of first negotiation with regard to such Analyte
or [*] and describe the relevant terms of such right.
(C) XXXXXX shall have [*] after receipt of the SPECTRx Notice
to provide a written response indicating whether XXXXXX is interested or not in
such Analyte or [*]; provided, however, that XXXXXX shall not be required to
evaluate any Analyte or [*] until at least [*] from the Effective Date and then
XXXXXX shall not be required to evaluate more than [*] Analytes or [*] at the
same time. Notwithstanding the allotted [*] time period, at any time upon
receipt of SPECTRx Notice hereunder, if XXXXXX has no interest, it will promptly
so notify SPECTRx.
(D) At the time that the SPECTRx Notice is delivered to XXXXXX
or within fifteen (15) days of receipt of the XXXXXX Notice by SPECTRx, SPECTRx
shall provide to XXXXXX a full report on the current status of its research and
development activities on such Analyte or [*]. At any time within sixty (60)
days after receipt of such report, XXXXXX may send to SPECTRx an initial
proposal containing proposed financial and other material terms for a 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.
-25-
31
and/or collaboration agreement for the development and commercialization of such
Analyte or [*] (the "Initial Proposal"). If XXXXXX does not send an Initial
Proposal within such period of time or any extended time period agreed to by the
parties, then upon written notice from SPECTRx, XXXXXX'x right of first
negotiation with regard to such Analyte or [*] shall cease.
(E) If XXXXXX sends an Initial Proposal to SPECTRx, SPECTRx
and XXXXXX shall promptly enter into good faith negotiations towards a license
and/or collaboration agreement upon mutually agreed terms and conditions.
Subject to SPECTRx making all reasonable efforts to meet and negotiate with
XXXXXX on a timely basis and in good faith, if SPECTRx and XXXXXX fail to reach
mutual agreement on a term sheet covering the material terms and conditions of a
license and/or collaboration agreement within [*] from the receipt of the
Initial Proposal by SPECTRx (or such extended time as agreed by the parties)
then upon written notice from SPECTRx, all negotiations shall cease and XXXXXX
shall have no further right of first negotiation with regard to such Analyte or
[*].
(F) Notwithstanding the other provisions of this Section 5.2,
if a [*] as agreed by the parties prior to [*], which utilizes technology
licensed to XXXXXX under this Agreement and [*] of Altea Technologies, Inc.
("ALTEA") , the parties agree to work together to develop and commercialize such
system upon mutually agreed development and commercial terms which are
reasonable.
(G) If, for any reason, XXXXXX'x rights under this Article 5
shall expire or terminate as to any particular Analyte, then such rights shall
also terminate simultaneously for the related [*].
[*] 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-
32
5.3 Agreement Terms. Any collaboration agreement negotiated by the
parties regarding an Analyte or [*] may contain appropriate payments by XXXXXX
to SPECTRx to cover the actual cost of necessary research and development as
mutually agreed by the parties. The parties acknowledge that the Research
Program under this Agreement is expected to provide base technology applicable
to the development of any additional Analyte or [*] to the extent [*] use
technology for Analyte extraction as described in Licensed Patents and Know-How
and/or developed under the Research Program. Therefore, any research and
development milestone payments agreed to by the parties will be limited to an
amount appropriate for the key tasks identified for the specific Analyte or [*]
and patents or know-how not included under Licensed Patents or Know-How and will
not include any premium for the existing base technology to the extent it was
developed under the Research Program or it is included under Licensed Patents or
Know-How. Except for [*], a license negotiated by the parties shall contain no
additional license fees except for those related to patents and know-how not
included under the Licensed Patents or Know-How and shall contain royalty rates
of not less than [*], nor greater than [*], of those royalty rates set forth in
Section 4.2(C).
6. OWNERSHIP OF INTELLECTUAL PROPERTY
6.1 SPECTRx Research Program Technology. All Research Program
Technology invented solely by SPECTRx employees, agents or contractors ("SPECTRx
Research Program Technology") shall be the property of SPECTRx, shall be
promptly disclosed in writing to XXXXXX, and shall be subject to the following:
(A) If the SPECTRx Research Program Technology is useful
solely within the Field, then such SPECTRx Research Program Technology shall be
included under the Licensed
[*] 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-
33
Patents or Know-How, as appropriate, and shall be included under XXXXXX'x
Licenses in the Field as set forth in Section 4.1.
(B) If the SPECTRx Research Program Technology is useful within the
Field and outside the Field, then
(i) such SPECTRx Research Program Technology shall be included
under the Licensed Patents or Know-How, as appropriate, and shall be included
under XXXXXX'x Licenses in the Field as set forth in Section 4.1; and
(ii) SPECTRx shall hereby grant to XXXXXX a worldwide,
royalty-free, nonexclusive license with the right to sublicense under the
SPECTRx Research Program Technology to make, have made, use, sell and import
products within the field of [*]; and
(iii) XXXXXX shall have the right of first negotiation for a
license under the SPECTRx Research Program Technology in all other fields with
the exception of [*], such right to be exercised as set forth in Section 6.3(D).
(C) If the SPECTRx Research Program Technology is useful solely outside
the Field, then (i) if applicable, SPECTRx shall hereby grant to XXXXXX a
worldwide, royalty-free, nonexclusive license with the right to sublicense under
the SPECTRx Research Program Technology to make, have made, use, sell and import
products within the field of [*]; and (ii) XXXXXX shall have the right of first
negotiation to a license under the SPECTRx Research Program Technology in all
other fields with the exception of [*], such right to be exercised as set forth
in Section 6.3(D).
(D) The licenses granted to XXXXXX by SPECTRx under Sections 6.1(B)(ii)
and (C)(i) shall survive expiration or early termination of this Agreement for
any reason. For a period ending [*] from expiration or termination of this
Agreement, if either party desires exclusive rights
[*] 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-
34
under any SPECTRx Research Technology for which XXXXXX has been granted a
nonexclusive license under Sections 6.1 (B)(ii) and (C)(i), then such party
shall notify in writing the other party. If the other party is not developing or
is not in the process of developing a commercial product covered by such rights,
then the parties shall enter into good faith negotiations as to the terms under
which the other party shall grant such rights to the notifying party.
(E) By way of clarification, but not limitation, all
technology invented by SPECTRx, its employees, agents or contractors outside the
Research Program and outside the Field or acquired or licensed by SPECTRx
outside the Field, are the sole property of SPECTRx, and SPECTRx shall have no
obligation hereunder to grant a license under such technology to XXXXXX.
6.2 XXXXXX Research Program Technology and Derived Technology
(A) All Research Program Technology invented solely
by XXXXXX employees, agents or contractors ("XXXXXX Research Program
Technology") shall be the property of XXXXXX and all XXXXXX Research Program
Technology in the Field shall be promptly disclosed in writing to SPECTRx and
shall be subject to Section 6.2(C)(i).
(B) Derived Technology shall be the property of XXXXXX. Such
Derived Technology shall be promptly disclosed in writing to SPECTRx and shall
be subject to Section 6.2(C)(ii).
(C) In the event of early termination by XXXXXX 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:
-29-
35
(i) XXXXXX shall xxxxx to SPECTRx a worldwide,
royalty-bearing, nonexclusive license with the right to sublicense, under XXXXXX
Research Program Technology to make, have made, use, sell and import products in
the Field.
(ii) XXXXXX shall xxxxx to SPECTRx a worldwide,
nonroyalty-bearing, nonexclusive license, with the right to sublicense, under
the Derived Technology to make, have made, use, sell and import products for
extracting interstitial fluid for any purpose. Additionally, SPECTRx may notify
XXXXXX of its interest in exclusive rights to [*] in which event XXXXXX will in
good faith negotiate with SPECTRx for exclusive rights on commercially
reasonable terms.
(D) XXXXXX and SPECTRx shall enter into a license agreement
regarding the licenses in Section 6.2(C) which shall contain the standard
license terms and conditions under which XXXXXX 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 ALTEA or Non-Invasive Monitoring Company, Inc. ("NIMCO") under an agreement
dated March 1, 1996.
(E) At any time prior to termination of this Agreement,
SPECTRx may notify XXXXXX in writing of SPECTRx's interest in obtaining from
XXXXXX (i) a nonexclusive license or (ii) an exclusive license to [*], in which
event XXXXXX will in good faith negotiate with SPECTRx toward such license on
commercially reasonable terms, provided, however, that the royalty rates shall
not exceed [*] or [*], respectively, of net sales and there shall be no license
fees imposed.
(F) By way of clarification, but not limitation, all
technology invented by XXXXXX employees, agents or contractors outside the
Research Program other than Derived Technology as noted above; all [*]
Technology including [*] and algorithms; and all technology under 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.
-30-
36
XXXXXX acquires a license from Third Parties, whether or not within the Field,
are the sole property of XXXXXX and XXXXXX shall have no obligation hereunder to
grant a license under such technology to SPECTRx.
6.3 Joint Research Program Technology. All Research Program
Technology invented by at least one employee, agent or contractor of XXXXXX and
at least one employee, agent or contractor of SPECTRx ("Joint Research Program
Technology") shall be the joint property of XXXXXX and SPECTRx subject to the
following:
(A) If the Joint Research Program Technology is useful within
the Field, then SPECTRx's interest in such Joint Research Program Technology
shall be included under the Licensed Patents or Know-How, as appropriate, and
shall be included under XXXXXX'x Licenses in the Field as set forth in Section
4.1.
(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 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 ALTEA or NIMCO under an agreement dated March 1, 1996. 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.
(C) If either party is interested in obtaining an Exclusive
License, or in outlicensing its interest under any Joint Research Program
Technology outside the Field, then such party ("licensing party") shall promptly
notify the other party and such other party shall have the right of
[*] 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-
37
first negotiation to obtain an Exclusive License under the licensing party's
interest in such Joint Research Program Technology, in accordance with the
procedure under Section 6.3(D).
(D) XXXXXX and SPECTRx have the right of first negotiation to
certain Research Program Technology of the other or the Business (as defined in
Section 7.2) in accordance with Sections 6.1(B)(iii) and (C), 6.3(C) and 7.2. If
either party intends to outlicense or desires to collaborate regarding such
Research Program Technology or XXXXXX desires to sell the Business, 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
Research Program Technology or the Business, 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 thirty (30) days after receipt of
the Notice to provide a written response indicating whether or not it is
interested in such Research Program Technology or the Business. 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 Research Program Technology or information on the Business. At
any time within sixty (60) days 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 Research Program Technology or
for a purchase agreement for the Business (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 Research Program Technology or the Business shall expire. If the
other party sends a Proposal to the Notifying Party, the parties shall promptly
enter into good faith
-32-
38
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 ninety (90) days 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 Research Program Technology or
the Business, as the case may be.
6.4 XXXXXX Development Program Technology. All inventions,
developments, know- how, or discoveries, whether or not patentable, which are
invented solely by XXXXXX employees, agents or contractors during the course of
work under the Development Program ("XXXXXX Development Program Technology")
shall be the property of XXXXXX and all such XXXXXX Development Program
Technology to the extent applicable to the Field shall be subject to the license
under Section 7.1.
7. DEVELOPMENT PROGRAM TECHNOLOGY GRANT BACKS
7.1 Prior to First Shipment Date. After delivery of the Development
Program Notification from XXXXXX to SPECTRx and prior to the First Shipment
Date, in the event of early termination by XXXXXX under Section 10.2 (except for
termination under Section 10.2(B), (C)(i), (iii) or (iv) and (D)) or by SPECTRx
under Section 10.2(D) (which is not timely cured), then XXXXXX shall xxxxx to
SPECTRx the following with regard to Development Program Technology: [*]. Upon
such termination, XXXXXX and SPECTRx shall enter into a license agreement the
material terms and royalty rates of which shall be the same as those set forth
in this Agreement provided, however, that it shall not contain license fees nor
milestone payments. The agreement shall specifically except (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.
-33-
39
(B) [*] Technology including algorithms,[*], and [*] of the Product, which arise
during or from the Development Program or from [*] subsidiary or [*] from a
Third Party. XXXXXX shall have no obligation hereunder to grant back to SPECTRx
a license under any of the technology listed in 7.1(A) or (B).
7.2 After First Shipment Date. In the event of early termination by
XXXXXX after the First Shipment Date, except for termination under Section
10.2(D) for breach by SPECTRx, SPECTRx will have the right of first negotiation
for the purchase of the business of manufacturing and selling the Product (the
"Business"). The exercise of such right shall be in accordance with Section
6.3(D).
8. PATENTS
8.1 Patents Filing and Maintenance; Costs.
(A) SPECTRx shall be responsible for filing, prosecuting and
maintaining U.S. and foreign applications and patents within the Licensed
Patents, including any SPECTRx Research Program Technology included within the
Licensed Patents provided, however, that regarding the latter, XXXXXX shall
determine, with the input and cooperation of SPECTRx, whether such applications
and in which countries (at a minimum in all the Designated Countries) such
applications are filed and patents maintained. Any patent counsel selected by
SPECTRx to prosecute patents under such SPECTRx Research Program Technology
shall receive the prior written approval of XXXXXX, which shall not be
unreasonably withheld. XXXXXX shall be given an opportunity to review and
comment upon patent applications covering SPECTRx Research Program Technology.
If SPECTRx shall provide such opportunities, then XXXXXX shall make no claim
against SPECTRx with regard to the discharge of said responsibilities provided
that SPECTRx exercises reasonable
[*] 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-
40
judgment. SPECTRx shall keep XXXXXX advised as to all material developments with
respect to all patents and patent applications within Licensed Patents and shall
promptly supply XXXXXX with copies of all papers received and proposed to be
filed in connection with the prosecution or defense thereof in sufficient time
for XXXXXX to comment thereon. SPECTRx may, at its sole discretion, file and
prosecute patent applications in any country as to which XXXXXX has determined
not to file.
(B) XXXXXX shall bear all costs (including, but not limited
to, attorney fees) incurred after the Effective Date in connection with such
preparation, filing, prosecution and maintenance for all U.S. and foreign
applications and patents covering SPECTRx Research Program Technology included
within the Licensed Patents. SPECTRx shall prepare an annual budget of such
costs for approval by XXXXXX. Any exceptions to such approved budget shall be
addressed on a case-by case basis. XXXXXX shall reimburse SPECTRx for such costs
in accordance with the approved budget within thirty (30) days of receipt of
documentation reasonably satisfactory to XXXXXX that evidences such costs. If
SPECTRx grants a license in any country to a Third Party under any SPECTRx
Research Program Technology for which XXXXXX is bearing such costs, then SPECTRx
shall become responsible for fifty percent (50%) of such costs from the
effective date of such license grant. If XXXXXX'x Exclusive License or
nonexclusive license set forth in Section 4.1 is terminated in any country for
any reason by XXXXXX or SPECTRx, then XXXXXX'x obligation to pay any such costs
associated with any patents and patent applications under such Exclusive License
or nonexclusive license in that country shall cease as of the date of
termination. If this Agreement is terminated in its entirety, then XXXXXX'x
obligation under this Section to pay all patent costs shall terminate on such
date.
-35-
41
(C) XXXXXX may, but shall have no obligation to assume
responsibility for the filing, prosecution or maintenance of any U.S. or foreign
patent application or patent within the Licensed Patents if SPECTRx is not
pursuing such activity with diligence. If XXXXXX shall assume such
responsibility, then SPECTRx shall make no claim against XXXXXX with regard to
its discharge of said responsibility provided that XXXXXX exercises reasonable
judgment in discharging this responsibility or discharges this responsibility
through a patent counsel approved by SPECTRx. SPECTRx shall not unreasonably
withhold its approval of any such patent counsel proposed by XXXXXX. In the
event XXXXXX does assume such responsibility, it shall provide SPECTRx with the
same information and opportunity to comment which SPECTRx is obligated to
provide it under Section 8.1(A) hereinabove. However, XXXXXX shall not be
responsible for any costs which SPECTRx may incur with regard to any such case
after XXXXXX assumes responsibility for said case.
8.2 Joint Patents Filing. XXXXXX shall notify SPECTRx in writing if
XXXXXX wants to pursue patent protection for any Joint Research Program
Technology and indicate in which countries it desires such protection. XXXXXX
shall then be responsible for filing, prosecuting and maintaining U.S. rights
and foreign applications and patents covering such Joint Research Program
Technology and all costs incurred in connection with such responsibility. XXXXXX
shall keep SPECTRx advised as to all material developments with respect to all
patents and patent applications regarding such Joint Research Program Technology
and shall promptly supply SPECTRx with copies of all papers received and
proposed to be filed in connection with the prosecution or defense thereof in
sufficient time for SPECTRx to comment upon. If SPECTRx grants a license to a
Third Party under SPECTRx's interest in any Joint Research Program Technology
for which XXXXXX is bearing such
-36-
42
costs, then SPECTRx shall become responsible for fifty percent (50%) of such
costs from the effective date of such license grant. SPECTRx shall reimburse
XXXXXX for such costs within thirty (30) days of receipt of documentation
satisfactory to SPECTRx that evidences such costs.
8.3 Discontinuance of Prosecution.
(A) If XXXXXX elects not to have SPECTRx prepare and file a
patent application covering any SPECTRx Research Program Technology or elects to
discontinue the prosecution or maintenance of any patent applications or patents
covering such SPECTRx Research Program Technology, XXXXXX shall promptly notify
SPECTRx and SPECTRx may, but does not have the obligation to, file or continue
prosecution of such application or maintain such patent at its own expense.
(B) If XXXXXX elects not to prepare and file a patent
application covering any Joint Research Program Technology or elects to
discontinue the prosecution or maintenance of any patent applications or patents
covering such Joint Research Program Technology, XXXXXX shall promptly notify
SPECTRx and then SPECTRx may, but does not have the obligation to, file or
continue prosecution of such application or maintain such patent at its own
expense.
(C) If SPECTRx elects not to prepare and file a patent
application covering a SPECTRx Improvement referenced under Section 8.4 or if
either party elects to discontinue the prosection of any patent application or
maintenance of any patent under the Licensed Patents or covered by this Section
8.3, then that party shall promptly notify the other party and supply the other
party with copies of all written communications with the appropriate patent
authorities. That party may then, at its sole discretion, file or continue
prosecution of such application or maintain such patent at its own expense.
-37-
43
8.4 Improvements.
SPECTRx shall promptly notify XXXXXX of any Improvements in the Field
or with respect to which XXXXXX has rights of first negotiation under Article 5
and of any efforts by SPECTRx to obtain patents on Improvements in the Field
including, but not limited to designation of the countries in which any patent
application in respect thereof is to be filed. SPECTRx shall use its reasonable
best efforts to obtain the right to sublicense under any licenses SPECTRx is
granted which cover improvements relating to the Licensed Patents or Know-How;
provided, that, with regard to any such Improvement sublicensed hereunder to
XXXXXX, XXXXXX shall pay to SPECTRx the same royalty rate (on Net Sales of
Product that incorporate such Improvement) paid by SPECTRx to a Third Party for
the license which covers such Improvement, subject to Section 4.4. XXXXXX shall
have the right to review and approve any such royalty rate prior to SPECTRx
entering into such license. Any patent application in respect of such
Improvement and any patent issued therefrom shall become part of the Licensed
Patents. Appendix 1.20 shall be modified to reflect such addition to Licensed
Patents. If any Improvement is not patented, it shall become part of the
Know-How.
8.5 Infringement by Third Parties
(A) In the event SPECTRx or XXXXXX have reason to believe that
a Third Party may be infringing any of the Licensed Patents by activities in the
Field, such party shall promptly notify the other party. SPECTRx may, in its
discretion, elect to enforce the Licensed Patents, through legal action or
otherwise, and XXXXXX agrees to reasonably cooperate with SPECTRx in such
enforcement. SPECTRx shall be entitled to retain any recovery which may be
obtained in any suit brought by SPECTRx. In the event SPECTRx does not commence
activities to diligently enforce the Licensed Patents within three (3) months
after notice of possible infringement is given between
-38-
44
SPECTRx and XXXXXX, XXXXXX may institute suit and if diligently pursuing such
suit, may deduct the reasonable expenses of such suit from any royalties due to
SPECTRx from XXXXXX. SPECTRx agrees to serve as a nominal party if its presence
is legally required and to sign any papers necessary to support any litigation.
XXXXXX shall be entitled to retain any recovery which may be obtained in any
suit brought by XXXXXX. SPECTRx will provide all reasonable cooperation with
respect to any suit which XXXXXX may bring pursuant to this Section 8.5. If such
infringement has not ceased within [*] of the date of the notice from one party
to the other as set forth above and SPECTRx has not instituted suit or is not
actively prosecuting such suit, then XXXXXX, upon thirty (30) days written
notice to SPECTRx, may cease paying any royalties in the country in which such
infringement exists and the Agreement and license granted hereunder will
terminate as to such country.
(B) In the event SPECTRx or XXXXXX have reason to believe that
a Third Party may be infringing any of the patents covering the Joint Research
Program Technology by activities not in the Field, such party shall promptly
notify the other party and the parties shall promptly consult with one another
regarding action to be taken. If either party or both parties elect to enforce
the patents through legal action or otherwise, they will cooperate with each
other in such enforcement and will determine the appropriate sharing of expenses
of such enforcement and any recovery.
8.6 Third Party Claims of Infringement Against XXXXXX. ln the event
that a Third Party brings a legal action or administrative proceeding against
XXXXXX alleging infringement by XXXXXX, XXXXXX shall maintain control of its
defense, including any decision as to settlement, and shall bear the total costs
of any court award or settlement of such legal action (subject to its right to
adjust the royalty rate as set forth in Section 4.4) and all other costs, fees
and expenses related to the
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
-39-
45
resolution thereof and shall be entitled to keep the entire amount of any
damages awarded. XXXXXX shall notify SPECTRx promptly of such action if such
action relates to the practice of the Licensed Patents or Know-How and notify
SPECTRx of those terms of any settlement which would reflect adversely on the
Licensed Patents at a reasonable time before the settlement becomes final.
XXXXXX will consider any comments of SPECTRx.
9. REPRESENTATIONS AND WARRANTIES
9.1 By SPECTRx. Except as previously disclosed in a writing from
SPECTRx to XXXXXX dated September 26, 1996 (the receipt of which is acknowledged
by XXXXXX), SPECTRx hereby represents and warrants that:
(A) SPECTRx has the full right, power and corporate authority
to enter into this Agreement, and to make the promises and grant the licenses
set forth in this Agreement and that there are no outstanding agreements,
assignments or encumbrances in existence inconsistent with the provisions of
this Agreement.
(B) To the best of its knowledge, as of the Effective Date,
the Licensed Patents have not or will not be obtained through any intentional
activity, omission or representation by SPECTRx that would limit or destroy the
validity of the Licensed Patents and SPECTRx has no knowledge or information
that would impact on or affect the validity and/or enforceability of the
Licensed Patents.
(C) To the best of its knowledge, as of the Effective Date no
actions are threatened or pending before any court or governmental agency or
other tribunal relating to the Licensed Patents or Know-How.
-40-
46
(D) SPECTRx has not and will not authorize Third Parties to
practice the Licensed Patents or the Know-How or otherwise grant rights to make,
have made, use, sell and import the Product in the Field in the Territory that
are inconsistent with this Agreement.
(E) To the best of its knowledge, no Third Party has acquired,
owns or possesses any right, title or interest in or to the Licensed Patents or
Know-How in the Field.
(F) SPECTRx is in compliance and shall remain in compliance
with all material terms of any agreement with a Third Party which grants rights
to SPECTRx for technology under the Licensed Patents or Know-How, so as not to
adversely affect the rights of ABBOTT in such technology under this Agreement.
(G) As of the Effective Date, the patents, patent applications
and invention disclosures delivered to ABBOTT and the Know-How disclosed to
ABBOTT under the CDA constitute all of the inventions, developments, know-how
and discoveries in the Field which are owned by or to which SPECTRx has a right
and SPECTRx, to the best of its knowledge, has accurately disclosed to ABBOTT
the stage of development of all such inventions, developments, know-how and
discoveries in the Field.
9.2 By XXXXXX. XXXXXX hereby represents and warrants that:
(A) ABBOTT has the full right, power and corporate authority
to enter into this Agreement and to make the promises set forth in this
Agreement and that there are no outstanding agreements, assignments or
encumbrances in existence' inconsistent with the provisions of this Agreement.
(B) To the best of XXXXXX'x knowledge, as of the Effective
Date, it does not have any information that would affect the validity or
enforceability of the Licensed Patents, of any
-41-
47
actions threatened relating to Licensed Patents or Know-How or of any Third
Party rights to Licensed Patents or Know-How, except for that disclosed in a
writing from SPECTRx to ABBOTT dated September 26, 1996.
10. TERM AND TERMINATION
10.1 Term. The term of this Agreement shall commence on the
Effective Date, and unless sooner terminated 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, shall
continue in effect until the last to expire of the patents under the Licensed
Patents. Upon such expiration, ABBOTT shall have a paid-up nonexclusive license
under the Know-How.
10.2 Early Termination. In addition to Sections 2.2, 2.5, 4.2(D)
and (E) (on a country by country basis), 3.2 and 14.1, this Agreement may be
terminated in accordance with the following provisions:
(A) By ABBOTT. For no cause by termination of the Agreement
and surrender of the Licenses granted hereunder (i) at any time prior to the
First Shipment Date upon sixty (60) days prior written notice from ABBOTT to
SPECTRx and (ii) at any time after the First Shipment Date upon one hundred
twenty (120) days prior written notice from ABBOTT to SPECTRx.
(B) Insolvency. By notice by either party to the other party
(provided that termination of SPECTRx shall only occur if an event of this
Section is followed by a material default by SPECTRx) upon:
(i) the insolvency of the other party, or the appointment
of a receiver by the other party for all or any substantial part of its
properties, provided that such receiver is not discharged within sixty (60)
days of his appointment;
(ii) the adjudication of the other party as a bankrupt;
-42-
48
(iii) the admission by the other party in writing of
its inability to pay its debts as they become due;
(iv) the execution by the other party of an
assignment for the benefit of its creditors; or
(v) the filing by the other party of a petition to
be adjudged a bankrupt, or a petition or answer admitting the material
allegations of a petition filed against the other party in any bankruptcy
proceeding, or the act of the other party in instituting or voluntarily being
or becoming a party to any other judicial proceeding intended to effect a
discharge of the debts of the other party, in whole or in part.
(C) Product or Patent Failure. By thirty (30) days prior
written notice from ABBOTT to SPECTRx if:
(i) the Product [*], including being
uneconomical; or
(ii) the Product is found to be, or is challenged
as, not safe or efficacious by SPECTRx, by ABBOTT or by a Third Party,
including the FDA or equivalent foreign governmental agency; or
(iii) SPECTRx has not received notice that the PTO
will grant a letter of allowance relating to a United States patent application
seeking coverage for [*] from the Effective Date; or
(iv) ABBOTT is unable to acquire a license on
reasonable terms to a patent which dominates (according to opinion of outside
patent counsel reasonably acceptable to both parties) its practice of the
technology covered by any of the patents under the Licensed Patents 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.
-43-
49
technology is incorporated in a fundamental core feature of the Product or is
commercially or technically essential to the Product which ABBOTT has developed
in accordance with Section 3.
(D) Default.
(i) If either party believes that the other party
has committed a breach of any material provision of this Agreement, and the
other party has failed to remedy such breach within sixty (60) days after the
receipt of notice in writing of such breach from the nonbreaching party, then
the nonbreaching party may submit the issue of whether the other party has
committed a breach of any material provision hereunder for resolution in
accordance with the procedure set forth in Section 14.5 (Alternative Dispute
Resolution); and
(ii) if the neutral person (as set forth in Section
14.5) in accordance with the procedures set forth in Section 14.5 renders a
ruling that the breaching party has materially breached the Agreement;
(iii) and if the breaching party has materially
failed to comply with the terms of such ruling within the time period specified
therein for compliance or, if no time period is stated, then the nonbreaching
party has served notice upon the breaching party to undertake the actions
specified to comply with the terms of the ruling and the breaching party has
materially failed, within forty-five (45) days of such notice with regard to
payment obligations and within ninety (90) days of such notice with regard to
other obligations, to undertake such action, then the nonbreaching party shall
have the right to terminate this Agreement by delivering written notice to the
breaching party within thirty (30) days after expiration of the applicable
period under this Section 10.2(D)(iii); and
(iv) 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, the
foregoing rights to terminate this
-44-
50
Agreement and to terminate the Licenses herein are the only such rights of the
parties to take such actions under this Agreement.
10.3 Consequences of Expiration or Early Termination
(A) On the date of expiration or early termination of
this Agreement by either party under Sections 2.2, 2.5, 3.2, 4.2(D) and
(E) (on a country by country basis), 10.2 and 14.1:
(i) XXXXXX'x obligation to pay for costs of filing
patent applications and patent maintenance under Section 8.1(B) shall cease.
(ii) ABBOTT shall retain ownership of all clinical
data, Regulatory Filings and governmental marketing approvals and all other data
developed solely by ABBOTT; and SPECTRx shall retain ownership of all data
developed solely by SPECTRx. The parties shall retain joint ownership of all
Joint Research Program Technology, joint data and joint information.
(iii) XXXXXX'x and SPECTRx's right of first
negotiation hereunder shall terminate except as set forth in Section 10.3(F).
(B) Within sixty (60) days of the date of expiration or
early termination by either party under Section 2.2, 2.5, 3.2, 4.2(D)
and (E) (on a country by country basis), 10.2 and 14.1, each party shall,
except as otherwise provided in this Agreement, return or destroy, and certify
to such destruction of, all Confidential Information of the other party and
each party may maintain one copy for archival purposes solely to confirm
compliance with the provisions of Article 13.
(C) On the date of expiration or early termination of
this Agreement under Section 2.2, by ABBOTT under Sections 2.5, 4.2(D)
and (E) (on a country by country basis) and 10.2(A), (C) and (D); or by SPECTRx
under Sections 3.2(A) or'(8) and 10.2(8) and (D) or by either party under
Section 14.1.
-45-
51
(i) XXXXXX'x Licenses pursuant to Section 4.1 and
the license under Section 4.5(C) (only upon early termination) shall
terminate. ABBOTT shall pay all royalties and other obligations which shall
have accrued through date of termination.
(ii) Any sublicenses granted by ABBOTT under the
Licenses shall be terminated by ABBOTT in accordance with the terms of such
sublicenses, but in no event shall such termination extend beyond thirty (30)
days after the termination date of this Agreement. Any Net Sales by such
sublicensee during this period shall be included in the calculation under
Section 4.2(C). ABBOTT shall be responsible for the performance of its
sublicensees.
(iii) ABBOTT and its sublicensees may dispose of, by
sale or otherwise, any remaining Product, whether characterized as clinical or
commercial Product, in the Territory. Any sales shall be included in the
calculation under Section 4.2(C).
(D) SPECTRx shall be entitled to the licenses set forth
in Section 6.2 (C) if ABBOTT terminates this Agreement 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)) or under Section 10.2(D) prior to the
First Shipment Date.
(E) SPECTRx shall be entitled to a license in accordance
with the provisions of Section 7.1 (provided, that the conditions for
such license under Section 7.1 are met) if ABBOTT terminates this Agreement
under Section 2.5(B) or 10.2(A)(i) or if SPECTRx terminates this Agreement
under Section 3.2(A) or (8) or under Section 10.2(D) prior to the First
Shipment Date.
-46-
52
(F) SPECTRx shall be entitled to the right of first
negotiation in accordance with the provisions of Section 7.2 if ABBOTT
terminates this Agreement after the First Shipment Date except for termination
by ABBOTT under Section 10.2(D).
(G) If ABBOTT terminates this Agreement under Section
10.2(A)(i) after the completion of Phase 1b by SPECTRx and prior to the First
Shipment Date, then ABBOTT shall pay a one time Development Program milestone
prepayment of [*] within forty-five (45) days after the termination date and
ABBOTT shall have no further liability for any unmet milestones or payments for
unmet milestones pursuant to Section 4.2(B)(i-v) under the Agreement.
(H) If the breach that gave rise to termination under Section
10.2(D) is a breach of a representation or warranty under Article 9, then the
nonbreaching party shall also have any available remedy under Article 11,
Indemnification.
10.4 Survival. Expiration or early termination of this Agreement
shall not relieve either party of its obligations incurred prior to
expiration or early termination. The following provisions shall survive
expiration or early termination of this Agreement or of any extensions thereof
for a period of ten (10) years or for such period of time as indicated in the
surviving provision: Section 4.8 Royalty Payments (as applicable to royalties
owed) and 4.9 Records and Audit; Article 6 (Ownership of Intellectual Property
except as to rights of first negotiation); Sections 10.3 (Consequences of
Expiration or Early Termination) and 10.4 (Survival); Article 11
(indemnification); Article 12 (Limitation of Liability and Remedies); Article
13 (Confidential Information, as to the obligations of the parties); Section
14.5 (Alternative Dispute Resolution) and Section 14.6 (Publicity). All license
provisions that survive termination, are irrevocable or arise due to
termination shall survive 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.
-47-
53
accordance with their terms. Any other provisions of this Agreement contemplated
by their terms to pertain to a period of time following termination or
expiration of this Agreement shall survive.
11. INDEMNIFICATION
11.1 By SPECTRx. SPECTRx shall indemnify, defend and hold ABBOTT, its
directors, employees, agents and representatives harmless from and against all
claims, causes of action, settlement costs (including, but not limited to,
reasonable attorney fees and expenses), losses or liabilities ("Liabilities") of
any kind (A) which are asserted by a Third Party or sublicensee to the extent
arising from the development, manufacture, use or sale of the Products to the
extent arising out of or attributable to any negligent act (except if the
negligent act or negligence in the performance of the act was directed or
requested by ABBOTT or the Research Committee) or omission or willful misconduct
on the part of SPECTRx, its directors, employees, agents or representatives; or
(B) to the extent arising from a breach of a representation or warranty in
Section 9.1.
11.2 By XXXXXX. XXXXXX shall indemnify, defend and hold SPECTRx, its
directors, employees, agents, representatives and licensors harmless from and
against all Liabilities (A) which are asserted by a Third Party or sublicensee
(including, but not limited to, product liability claims) to the extent arising
from the development, manufacture, use or sale of the Licensed Products, to the
extent arising out of or attributable to any negligent act or omission or
willful misconduct on the part of ABBOTT, its employees, agents, or
representatives or arising from any other theory of liability (except to the
extent such Liabilities arise from SPECTRx's directors', employees', agents',
representatives' or licensors' negligence or willful misconduct subject to the
limitation in Section 11.1); or (B) to the extent arising from a breach of a
representation or warranty in Section 9.2.
-48-
54
11.3 Conditions of Indemnification. If either party expects to seek
indemnification under this Article, it shall promptly give notice to the
indemnifying party of the basis for such claim of indemnification. If
indemnification is sought as a result of any Third Party or sublicensee claim or
suit, such notice to the indemnifying party shall be within fifteen (15) days
after receipt by the other party of such claim or suit or within such time
period as not to materially prejudice the rights of the indemnifying party (if
to ABBOTT, notice to XXXXXX Laboratories, Risk Management, D-317, 000 Xxxxxx
Xxxx Xxxx, Xxxxxx Xxxx, XX 00000-0000; if to SPECTRx, notice as set forth in
Section 14.2). Each party shall cooperate fully with the other party in the
defense of all such claims or Suits. No offer of settlement, settlement or
compromise shall be binding on a party hereto without its prior written consent
(which consent will not be unreasonably withheld) unless such settlement fully
releases the other party without any liability, loss, cost or obligation to such
party.
12. LIMITATION OF LIABILITY AND REMEDIES
12.1 Liability Limitation. EXCEPT FOR THIRD PARTY OR SUBLICENSEE
LIABILITY ARISING UNDER ARTICLE 11, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR
INDIRECT, INCIDENTAL, PENAL OR CONSEQUENTIAL DAMAGES, OR OTHER SIMILAR DAMAGES
ARISING OUT OF THIS AGREEMENT.
12.2 Exclusive Remedies The remedies set forth in this Agreement shall
constitute the sole and exclusive remedies of the parties hereunder and the
parties shall not avail themselves of any other remedies, whether in equity or
at law, except that either party may seek injunctive relief and/or damages for
violation of Article 13.
-49-
55
13. CONFIDENTIAL INFORMATION
13.1 Due Care. It is recognized by the parties that during the
term of this Agreement, the parties will exchange Confidential
Information pertaining to their performance hereunder. Each party will exercise
due care to prevent the disclosure of Confidential Information of the other
party.
13.2 Permitted Disclosures.
(A) Notwithstanding the above, nothing contained in this
Agreement shall preclude SPECTRx or ABBOTT from utilizing or disclosing to
others its Confidential Information or utilizing Confidential Information
received from the other party as may be required (i) for regulatory purposes,
including obtaining FDA or other governmental approvals subject to requesting
confidential treatment; (ii) for audit, tax or customs purposes subject to
requesting confidential treatment; (iii) for purposes of preparing Patent
applications consistent with the terms of this Agreement; (iv) to inform
investors and potential investors of SPECTRx of the pertinent terms of this
Agreement provided that such investors or potential investors have agreed in
writing to abide by terms of confidentiality substantially similar to those
under this Article; (v) by court or other government order, provided that the
party subject to such order notifies the other party and reasonably cooperates
with the other parties' efforts to obtain a protective order covering such
Confidential Information, or (vi) as otherwise required by law, provided that if
SPECTRx makes such disclosure, ABBOTT shall be given the opportunity for prior
review of and comment on (which comment will be considered by SPECTRx) any such
disclosure of ABBOTT Confidential Information as well as any references to
ABBOTT, the transactions under this Agreement, or this Agreement, including, but
not limited to, review and comment on any requests for redaction of ABBOTT or
SPECTRx Confidential Information, the redacted document, any registration
statements or other accompanying documents.
-50-
56
(B) In addition to the foregoing, ABBOTT and SPECTRx may
disclose the Confidential Information of the other party, only to Third Parties
who have a reasonable need for the Confidential Information in the performance
of their services in connection with the matters set forth in this Agreement or
otherwise within the scope of the licenses set forth in Article 4; who are
informed of the confidential nature of the Confidential Information; and who are
bound not to disclose such Confidential Information.
(C) ABBOTT shall not use Confidential Information in Prior
Disclosures for use in conjunction with Delivery Applications.
13.3 Publication.SPECTRx shall not publish nor make any presentation
regarding the Research Program, or results of the Research Program unless such
information has been previously published by ABBOTT or is in the public domain
without breach of this Agreement by SPECTRx.
13.4 Other Agreements. The parties have entered into a Confidential
Disclosure Agreement dated December 13, 1995 ("CDA"). On and after the Effective
Date of this Agreement, all subject matter conveyed or covered under this
Agreement or the CDA shall be governed in all respects by the confidentiality
provisions contained in this Article 13. The obligations of the parties set
forth in this Article 13 shall apply during the term hereof and for a period of
five (5) years after the date of early termination or expiration of this
Agreement or any extension thereof.
14. MISCELLANEOUS
14.1 Force Majeure
(A) Delay or failure on the part of either party in performing
its obligations under this Agreement shall not subject such party to any
liability to the other if such delay or failure is caused by or results from
acts such as but not limited to acts of God, fire, explosion, flood, drought,
-51-
00
xxx, xxxx, xxxxxxxx, xxxxxxx, strikes or other labor trouble, or compliance with
any law, order or regulation of any government entity acting with color of
right.
(B) Upon occurrence of an event of force majeure, the party
affected shall promptly notify the other in writing, setting forth the details
of the occurrence, and making every attempt to resume the performance of its
obligations as soon as practicable after the force majeure event ceases. If such
event prevents or will prevent performance of a material provision of the
Agreement by one party for more than six (6) months, then the other party may
immediately terminate this Agreement upon written notice to the non-performing
party, in accordance with Section 10.3.
14.2 Notices. Any notice permitted or required by this Agreement
shall be sent by (A) facsimile with a written confirmation copy, (B)
registered mail or (C) a recognized private mail carrier service, and such
notice shall be effective on the date received as indicated by the facsimile
imprint date in the case of (A) and the carrier receipt in the case of (B) and
(C), if sent and addressed as follows (or if regarding indemnification sent to
the address in Section 11.3) or to such other address as may be designated by a
party in writing:
If to SPECTRx: SPECTRx, Inc.
Attn: Xxxx X. Xxxxxxx
President, CEO
0000X Xxxxx Xxxxx
Xxxxxxxx, XX 00000
Telefax: (000) 000-0000
With copy to: Xxxxxxx Xxxxxxx, Esq.
QED Technologies
00 Xxxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Telefax: (000) 000-0000
-52-
58
If to XXXXXX: Xxxxxx Laboratories
Director, Technology Acquisitions
Xxxxxx Diagnostics Division --D9RK, AP6C
000 Xxxxxx Xxxx Xxxx
Xxxxxx Xxxx, XX 00000-0000
Telefax: (000) 000-0000
With copy to: Division Vice President
Domestic Legal Division
D-322, AP6D
Xxxxxx Laboratories
000 Xxxxxx Xxxx Xxxx
Xxxxxx Xxxx, XX 00000-0000
Telefax: (000) 000-0000
14.3 Assignment. This Agreement may not be assigned or transferred by
either party, whether by operation of law or otherwise, without the consent of
the other party, which consent will not be unreasonably withheld.
14.4 Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their successors and permitted
assigns.
14.5 Alternative Dispute Resolution. The parties agree that any dispute
that arises in connection with this Agreement shall first be presented to the
respective presidents of the XXXXXX Diagnostic Products Division, and of
SPECTRx, or their designees, for resolution. If no resolution is reached, then
such dispute shall be resolved by binding Alternative Dispute Resolution ("ADR")
in the manner described in the Appendix 14.5.
14.6 Publicity. After the execution of this Agreement, a press release
regarding the transaction will be issued. The parties shall mutually agree upon
the content, text, timing and whether the press release shall be joint or issued
individually. During the term of this Agreement, neither party shall (A)
originate any publicity, news release or other public announcement, written or
oral, whether to the public press, stockholders or otherwise, relating to this
Agreement, any amendment
-53-
59
hereto or performance hereunder, or (B) use the name of the other in any
publicity, news release or other public announcement, except (1) with the prior
written consent of the other party, or (2) as required by law, in which case the
originating party will give reasonable prior notice of such proposed disclosure
to the other party, will provide the basis for the disclosure and the content.
Consistent with applicable law, the other party will have the right to request
reasonable changes to the disclosure to protect its interests. If a party has
previously given consent to the other party for the public disclosure of certain
facts, then the other party does not have to obtain consent again to use the
same facts at a future time.
14.7 Relationship of the Parties. The relationship of the parties under
this Agreement is that of independent contractors. Nothing contained in this
Agreement is intended or is to be construed so as to constitute the parties as
partners, joint venturers, or either party as an agent or employee of the other.
Neither party has any express or implied right under this Agreement to assume or
create any obligation on behalf of or in the name of the other, or to bind the
other party to any contract, agreement or undertaking with any Third Party, and
no conduct of the parties shall be deemed to infer such right.
14.8 Appendices. All appendices and exhibits referenced herein are
hereby made a part of this Agreement.
14.9 Headings; Number The headings used in this Agreement are for
convenience only and are not a part of this Agreement. In this Agreement, the
singular shall include the plural and vice versa.
-54-
60
14.10 Waiver No waiver by either party of any default, right or remedy
shall be effective unless in writing, nor shall any such waiver operate as a
waiver of any other or of the same default, right or remedy respectively, on a
future occasion.
14.11 Severability If any term or provision of this Agreement shall for
any reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other term or
provision hereof, and there shall be substituted for the provision at issue a
valid and enforceable provision as similar as possible to the provision at
issue.
14.12 Entire Agreement, Amendment This Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all prior agreements, written and oral, between the parties except
for the CDA and the agreement between ABBOTT, SPECTRx, NIMCO and ALTEA dated the
same as this Agreement. No modification of any of the terms of this Agreement
shall be deemed to be valid unless it is in writing and signed by both parties.
No course of dealing or usage of trade shall be used to modify the terms and
conditions herein.
14.13 Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of Delaware, excluding its conflict of laws
principles.
-55-
61
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized representative as of the day and
year first above written.
XXXXXX LABORATORIES SPECTRx, INC.
By: /s/ Xxxxxx Xxxxxx By: /s/ Xxxx X. Xxxxxxx
---------------------- ---------------------
Title: President and Chief Operating Officer Title: President and CEO
---------------------------------------- ------------------
Date: October 8, 1996 Date: October 9, 1996
-------------------------------------- ----------------
-56-
62
SERIES C PREFERRED STOCK
PURCHASE AGREEMENT
SPECTRX, INC.
0000X XXXXX XXXXX
XXXXXXXX, XX 00000
63
TABLE OF CONTENTS
PAGE
----
SECTION 1 Authorization and Sale of Preferred Stock..................................................................1
1.1 Authorization.......................................................................................1
1.2 Sales of Preferred..................................................................................1
SECTION 2 Closing Dates; Delivery....................................................................................1
2.1 Closing Date........................................................................................1
2.2 Delivery............................................................................................1
SECTION 3 Representations and Warranties of the Company..............................................................2
3.1 Organization and Standing; Articles and By-Laws.....................................................2
3.2 Corporate Power.....................................................................................2
3.3 Subsidiaries........................................................................................2
3.4 Capitalization......................................................................................2
3.5 Authorization.......................................................................................3
3.6 Labor Agreements and Actions........................................................................3
3.7 Agreements; Action..................................................................................3
3.8 Title to Properties and Assets; Liens, etc..........................................................4
3.9 Compliance with Other Instruments, None Burdensome, etc.............................................4
3.10 Litigation, etc.....................................................................................5
3.11 Employees...........................................................................................5
3.12 Registration Rights.................................................................................5
3.13 Governmental Consent, etc...........................................................................5
3.14 Offering............................................................................................5
3.15 Brokers or Finders; Other Offers....................................................................6
3.16 Patents and Trademarks..............................................................................6
3.17 Financial Statements; No Material Adverse Change....................................................6
3.18 Disclosure..........................................................................................6
SECTION 4 Representations and Warranties of the Purchaser............................................................7
4.1 Experience..........................................................................................7
4.2 Investment..........................................................................................7
4.3 Rule 144............................................................................................7
4.4 No Public Market....................................................................................7
4.5 Access to Data......................................................................................7
4.6 Authorization.......................................................................................8
4.7 Brokers or Finders..................................................................................8
4.8 Tax Liability.......................................................................................8
4.9 Legend..............................................................................................8
-i-
64
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
SECTION 5 Conditions to Closing of Purchaser.........................................................................8
5.1 Representations and Warranties Correct..............................................................8
5.2 Covenants...........................................................................................9
5.3 Opinion of Company's Counsel........................................................................9
5.4 Compliance Certificate..............................................................................9
5.5 Blue Sky............................................................................................9
5.6 Amended and Restated Articles.......................................................................9
5.7 Registration Rights Agreement.......................................................................9
5.8 Development and License Agreement...................................................................9
5.9 Secretary's Certificate.............................................................................9
SECTION 6 Conditions to Closing of Company...........................................................................9
6.1 Representations....................................................................................10
6.2 Blue Sky...........................................................................................10
6.3 Amended and Restated Articles......................................................................10
6.4 Legal Matters......................................................................................10
SECTION 7 Affirmative Covenants of the Company and the Purchaser....................................................10
7.1 Financial Information..............................................................................10
7.2 Assignment of Rights to Financial Information......................................................10
7.3 Inspection.........................................................................................11
7.4 Termination of Covenants...........................................................................11
SECTION 8 Registration Rights.......................................................................................11
SECTION 9 Miscellaneous.............................................................................................11
9.1 Governing Law......................................................................................11
9.2 Survival...........................................................................................11
9.3 Successors and Assigns.............................................................................11
9.4 Entire Agreement; Amendment........................................................................11
9.5 Notices, etc.......................................................................................12
9.6 Delays or Omissions................................................................................12
9.7 Georgia Legend.....................................................................................12
9.8 Expenses...........................................................................................13
9.9 Finder's Fees......................................................................................13
9.10 Counterparts.......................................................................................13
9.11 Severability.......................................................................................13
9.12 Titles and Subtitles...............................................................................13
-ii-
65
TABLE OF CONTENTS
(CONTINUED)
EXHIBITS
A Amended and Restated Certificate of Incorporation
B Exceptions to Representations and Warranties
C Proprietary Information Agreement
D Amended and Restated Registration Rights Agreement
E Legal Opinion
F License Agreement
-iii-
66
SPECTRX, INC.
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
This Agreement is made as of October 21, 1996 between SpectRx, Inc., a
Delaware corporation located at 0000X Xxxxx Xxxxx, Xxxxxxxx, Xxxxxxx 00000 (the
"Company"), and Xxxxxx Laboratories, an Illinois corporation located at 000
Xxxxxx Xxxx Xxxx, Xxxxxx Xxxx, Xxxxxxxx 00000 (the "Purchaser").
SECTION 1
AUTHORIZATION AND SALE OF PREFERRED STOCK
1.1 AUTHORIZATION. The Company will authorize the sale and issuance of
up to 500,000 shares of its Series C Preferred Stock (the "Series C Shares"),
having the rights, privileges and preferences as set forth in the Amended and
Restated Certificate of Incorporation (the "Articles") 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 severally issue and sell to the Purchaser and the Purchaser will
buy from the Company 500,000 Series C Shares the Closing (as defined below) for
the purchase price of $6.00 per share.
SECTION 2
CLOSING DATES; DELIVERY
2.1 CLOSING DATE. The closing of the purchase and sale of the Series C
Shares hereunder (the "Closing") shall be held at the offices of Wilson,
Sonsini, Xxxxxxxx & Xxxxxx, Professional Corporation, 000 Xxxx Xxxx Xxxx, Xxxx
Xxxx, Xxxxxxxxxx 00000 at 9:00 a.m., local time, on October 21, 1996 or at such
other time and place upon which the Company and the Purchaser shall agree. The
Closing shall occur simultaneously with or promptly after execution and delivery
of this Agreement by the Purchaser and the Company, but in any event within ten
(10) days of the satisfaction of the conditions set forth in Section 5.
2.2 DELIVERY. At the Closing, the Company will deliver to the Purchaser
a certificate, registered in the Purchaser's name, representing the 500,000
Series C Shares to be purchased by the Purchaser at the Closing, against payment
of the purchase price therefor by cancellation of indebtedness, by check payable
to the Company, or by wire transfer per the Company's wiring instructions.
67
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on Exhibit B attached hereto, 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 corporate 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 affect on the
Company's business as now conducted or as now proposed to be conducted.
3.2 CORPORATE POWER. The Company will have at the Closing all requisite
legal and corporate power and authority to execute and deliver this Agreement
and the agreements set forth as Exhibits hereto (collectively, the
"Agreements"), to sell and issue the Series C Shares hereunder, to issue the
Common Stock issuable upon conversion of the Series C Shares and the Series C1
Preferred Stock 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.
3.4 CAPITALIZATION. The authorized capital stock of the Company
consists or will, upon the filing of the Articles, consist of 15,000,000 shares
of Common Stock, 3,560,000 shares of Series A Preferred Stock, 3,560,000 shares
of Series A1 Preferred Stock, 1,375,000 shares of Series B Preferred Stock,
1,375,000 shares of Series B1 Preferred Stock, 500,000shares of Series C
Preferred Stock and 500,000 shares of Series C1 Preferred Stock (the Series C
and Series C1 Preferred Stock shall be referred to as the "Preferred Stock").
Immediately prior to the Closing 2,083,500 shares of Common Stock, 3,103,784
shares of Series A Preferred Stock and 1,300,000 shares of Series B Preferred
Stock will be outstanding and no other shares of capital stock will be
outstanding. There are also outstanding immediately prior to the Closing
warrants to purchase an aggregate of 1,268,643 shares of Common Stock and
360,000 shares of Series A Preferred Stock. All of the outstanding shares of
Common Stock, Series A Preferred Stock and Series B Preferred Stock are duly
authorized, validly issued, fully paid and nonassessable, and were issued in
compliance with applicable federal and state securities laws. The Series C
Shares, when issued pursuant to the terms of this Agreement, will be duly
authorized, validly issued, fully paid and nonassessable. The Company has
reserved 5,435,000 shares of Common Stock for issuance upon conversion of the
Preferred Stock, and 1,150,000 shares of its Common Stock for issuance pursuant
to its 1995 Incentive Stock Plan. The Company has also reserved 1,268,643 shares
of Common Stock and 360,000 shares of Series A Preferred Stock for issuance upon
the exercise of warrants to purchase
-2-
68
shares of Common Stock and Series A Preferred Stock outstanding as of the
Closing. Except for those set forth in the Agreements, there are no options,
warrants or other rights (including conversion or preemptive 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 Series C 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 Agreements, when executed and delivered by the
Company, shall constitute valid and binding obligations of the Company,
enforceable in accordance with their terms, except as the indemnification
provisions of paragraph 7 of the Registration Rights Agreement (as defined
below) hereof may be limited by principles of public policy, and 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. The Series C 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 Articles; 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 Articles, 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
Series C 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 LABOR AGREEMENTS AND ACTIONS. The Company is not bound by or
subject to (and none of its assets or properties is bound by or subject to) any
written or oral, express or implied, contract, commitment or arrangement with
any labor union, and no labor union has requested or, to the knowledge of the
Company, has sought to represent any of the employees, representatives or agents
of the Company. There is no strike or other labor dispute involving the Company
pending, or to the knowledge of the Company threatened, which could have a
material adverse effect on the assets, properties, financial condition,
operating results, or business of the Company, nor is the Company aware of any
labor organization activity involving its employees. The Company is not aware
that any officer or key employee, or that any group of key employees, intends to
terminate their employment with the Company, nor does the Company have a present
intention to terminate the employment of any of the foregoing. The employment of
each officer and, to the best of the Company's knowledge, each employee of the
Company is terminable at the will of the Company.
3.7 AGREEMENTS; ACTION.
(a) Except for agreements explicitly contemplated hereby,
there are no agreements, understandings or proposed transactions between the
Company and any of its officers, directors, affiliates, or any affiliate thereof
nor are there agreements or understandings between any
-3-
69
person and/or entities, which affects or relates to the voting or giving of
written consents with respect to any security or by a director of the Company.
(b) There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
the Company is a party or by which it is bound which may involve (i) obligations
(contingent or otherwise) of, or payments to the Company in excess of, $5,000,
or (ii) the license of any patent, copyright, trade secret or other proprietary
right to or from the Company or (iii) provisions restricting or affecting the
development, manufacture or distribution of the Company's products or services
or (iv) indemnification by the Company with respect to infringements of
proprietary rights.
(c) The Company has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any indebtedness for money borrowed or any
other liabilities individually in excess of $5,000 or, in the case of
indebtedness and/or liabilities individually less than $5,000, in excess of
$25,000 in the aggregate, (iii) made any loans or advances to any person, other
than ordinary advances for travel expenses, or (iv) sold, exchanged or otherwise
disposed of any of its assets or rights, other than the sale of its inventory in
the ordinary course of business.
(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
3.8 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. The Company has
good and marketable title to its properties and assets, and has good
title to all its leasehold interests, in each case subject to no mortgage,
pledge, lien, lease, encumbrance or charge, other than (i) the lien of current
taxes not yet due and payable, and (ii) possible minor liens and encumbrances
which do not in any case materially detract from the value of the property
subject thereto or materially impair the operations of the Company, and which
have not arisen otherwise than in the ordinary course of business. The Company
has timely filed or will file with appropriate taxing authorities all returns
and other information required with respect to taxes (regardless of form) for
all taxable periods ending on or prior to the Closing; all such returns shall
be or have been complete and accurate in all material respects.
3.9 COMPLIANCE WITH OTHER INSTRUMENTS, NONE BURDENSOME, ETC. The
Company is not in violation or default of any term of its Articles or Bylaws, or
in any material respect of any term or provision of any material mortgage,
indebtedness, indenture, contract, agreement, instrument, judgment, order or
decree, and to the best of its knowledge is not in violation of any statute,
rule or regulation applicable to the Company where such violation would
materially and adversely affect the Company. The execution, delivery and
performance of and compliance with the Agreements, and the issuance of the
Series C Shares and the Common Stock issuable upon conversion of the Preferred
Stock, have not resulted and will not result in any material violation of, or
conflict with, or constitute,
-4-
70
with or without the passage of time and the giving of notice, a material
violation or default under the Company's Articles or Bylaws or any of its
agreements, nor result in the creation of any mortgage, pledge, lien,
encumbrance or charge upon any of the properties or assets of the Company; and
there is no such violation or default which materially and adversely affects the
business of the Company or any of its properties or assets.
3.10 LITIGATION, ETC. There are no actions, suits, proceedings or
investigations pending against the Company or its properties before any court or
governmental agency (nor, to the best of the Company's knowledge, is there any
reasonable basis therefor or threat thereof). The foregoing includes, without
limitation, actions pending or threatened (or any basis therefor known to the
Company) involving the prior employment of any of the Company's employees, their
use in connection with the Company's business of any information or techniques
allegedly proprietary to any of their former employers or their obligations
under any agreement with their former employers. The Company is not a party or
subject to the provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality. There is no action, suit,
proceeding or investigation by the Company currently pending or which the
Company intends to initiate.
3.11 EMPLOYEES. To the best of the Company's knowledge, no employee of
the Company is in violation of any term of any employment contract, patent
disclosure agreement or any other contract or agreement relating to the
relationship of such employee with the Company or any other party because of the
nature of the business conducted or to be conducted by the Company. Each
employee of the Company with access to confidential or proprietary information
has executed a Proprietary Information Agreement, the form of which is attached
hereto as Exhibit D.
3.12 REGISTRATION RIGHTS. Except as set forth in the Amended and
Restated Registration Rights Agreement attached hereto as Exhibit D (the
"Registration Rights Agreement"), the Company is not under any contractual
obligation to register (as defined in Section 1 of the Registration Rights
Agreement) any of its presently outstanding securities or any of its securities
which may hereafter be issued.
3.13 GOVERNMENTAL CONSENT, ETC. No consent, approval or authorization
of or designation, declaration or filing with any governmental authority on the
part of the Company is required in connection with the valid execution and
delivery of this Agreement, or the offer, sale or issuance of the Series C
Shares (and the Common Stock issuable upon conversion of the Preferred Stock),
or the consummation of any other transaction contemplated hereby, except (a)
filing of the Articles in the office of the Delaware Secretary of State, and (b)
qualification (or taking such action as may be necessary to secure an exemption
from qualification, if available) of the offer and sale of the Series C Shares
(and the Common Stock issuable upon conversion of the Preferred Stock) under
applicable state securities laws, which filings and qualifications, if required,
will be accomplished in a timely manner.
3.14 OFFERING. Subject to the accuracy of the Purchaser's
representations in Section 4 hereof, the offer, sale and issuance of the Series
C Shares to be issued in conformity with the terms of this Agreement, and the
issuance of the Common Stock to be issued upon conversion of the Preferred
-5-
71
Stock, constitute transactions exempt from the registration requirements of
Section 5 of the Securities Act of 1933, as amended (the "Securities Act") and
in compliance with applicable state securities laws.
3.15 BROKERS OR FINDERS; OTHER OFFERS. The Company has not incurred,
and will not incur, directly or indirectly, as a result of any action taken by
the Company, any liability for brokerage or finders' fees or agents' commissions
or any similar charges in connection with this Agreement.
3.16 PATENTS AND TRADEMARKS. There are no outstanding options,
licenses, or agreements of any kind relating to the intellectual property of the
Company. The Company is not bound by or a party to any options, licenses or
agreements of any kind with respect to the patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses, information, proprietary
rights and processes of any other person or entity. The Company has not received
any communications alleging that the Company has violated or, by conducting its
business as proposed, would violate any of the patents, trademarks, service
marks, trade names, copyrights or trade secrets or other proprietary rights of
any other person or entity. The Company is not aware that any of its employees
is obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would interfere with the use of his
best efforts to promote the interests of the Company or that would conflict with
the Company's business as proposed to be conducted. Neither the execution nor
delivery of this Agreement, nor the carrying on of the Company's business by the
employees of the Company, nor the conduct of the Company's business as proposed,
will, to the Company's knowledge, conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any of such employees is now obligated. The
Company does not believe it is or will be necessary to utilize any inventions of
any of its employees (or people it currently intends to hire) made prior to
their employment by the Company.
3.17 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE. The audited
financial statements of the Company for the fiscal years ended December 31,
1993, December 31, 1994 and December 31, 1995 (the "Financial Statements"),
which include audited balance sheets, statements of operations, statements of
stockholders' equity and statements of cash flows as of such dates and for the
periods then ended, have been prepared in accordance with generally accepted
accounting principles consistently applied and fairly present the financial
condition and results of operations of the Company as of such dates and for the
periods then ended. Except as set forth in the Schedule of Exceptions or as set
forth in the Financial Statements (including the footnotes thereto), there are
no liabilities, debts, claims or obligations, whether accrued, absolute,
contingent or otherwise, of or affecting the Company or its property or assets.
Except as set forth in the Schedule of Exceptions, since December 31, 1995 there
has been no material adverse change in the financial condition, operating
results, assets, operation or business prospects of the Company.
3.18 DISCLOSURE. This Agreement, together with the Exhibits attached
hereto and all other certificates delivered in connection herewith, when taken
as a whole, does not contain any untrue statement of a material fact or omit any
material fact necessary in order to make the statements contained herein not
misleading in light of the circumstances under which they were made. The
-6-
72
Company has fully provided each Purchaser with all the information such
Purchaser has requested for deciding whether to purchase the Series C Shares and
all information which the Company believes is reasonably necessary to enable
such Purchaser to make such decision.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby severally represents and warrants to the Company
with respect to the purchase of the Series C 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 Series C 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 Series C Shares to be
purchased and the Common Stock underlying the Preferred Stock have not been, and
will not be, registered under 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 two years after a party has purchased and paid for the security to
be sold, the sale being effected through a "broker's transaction" or in
transactions 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 any of the securities issued by the Company and that the Company has made no
assurances that a public market will ever exist for the Company's securities.
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
-7-
73
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, except as the
indemnification provisions of paragraph 7 of the Registration Rights Agreement
may be limited by principles of public policy, and 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 (including any tax consequences
resulting from the recently enacted tax legislation). 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
Series C 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."
SECTION 5
CONDITIONS TO CLOSING OF PURCHASER
The Purchaser's obligation to purchase the Series C Shares at the
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 Closing.
-8-
74
5.2 COVENANTS. All covenants, agreements and conditions contained in
this Agreement to be performed by the Company on or prior to the Closing shall
have been performed or complied with in all material respects.
5.3 OPINION OF COMPANY'S COUNSEL. The Purchaser shall have received
from Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, counsel to the Company, an opinion
addressed to it, dated the Closing Date, in substantially the form of Exhibit E.
5.4 COMPLIANCE CERTIFICATE. 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.
5.5 BLUE SKY. The Company shall have obtained all necessary state
securities law permits and qualifications, or have the availability of
exemptions therefrom, required by any state for the offer and sale of the Series
C Shares and the Common Stock issuable upon conversion of the Preferred Stock.
5.6 AMENDED AND RESTATED ARTICLES. The Articles shall have been filed
with the Delaware Secretary of State.
5.7 REGISTRATION RIGHTS AGREEMENT. The Company and the parties listed
thereon shall have executed and delivered the Registration Rights Agreement in
substantially the form attached hereto as Exhibit D.
5.8 DEVELOPMENT AND LICENSE AGREEMENT. The Company and the Purchaser
shall have entered into a research and development and license agreement in the
form attached hereto as Exhibit F.
5.9 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) resolutions adopted by the Board of
Directors and the stockholders of the Company authorizing the execution of the
Agreement, the filing of the Restated Articles and the transactions contemplated
hereby; (ii) the Restated Articles and Bylaws of the Company; copies of 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.
SECTION 6
CONDITIONS TO CLOSING OF COMPANY
The Company's obligation to sell and issue the Series C Shares at the
Closing is, at the option of the Company, subject to the fulfillment as of the
Closing of the following conditions:
-9-
75
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 BLUE SKY. The Company shall have obtained all necessary state
securities law permits and qualifications, or have the availability of
exemptions therefrom, required by any state for the offer and sale of the Series
C Shares and the Common Stock issuable upon conversion of the Preferred Stock.
6.3 AMENDED AND RESTATED ARTICLES. The Articles shall have been filed
with the Delaware Secretary of State.
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.
SECTION 7
AFFIRMATIVE COVENANTS OF THE COMPANY AND THE PURCHASER
The Company hereby covenants and agrees as follows:
7.1 FINANCIAL INFORMATION. As long as the Purchaser holds not less than
66,700 shares of Preferred Stock and/or Common Stock issued upon conversion of
the Preferred Stock, to furnish to the Purchaser:
(a) As soon as practicable after the end of each fiscal year,
and in any event within 120 days thereafter, consolidated balance sheets of the
Company and its subsidiaries, if any, as of the end of such fiscal year, and
consolidated statements of income and consolidated statements of changes in
financial position of the Company and its subsidiaries, if any, for such year,
prepared in accordance with generally accepted accounting principles and setting
forth in each case in comparative form the figures for the previous fiscal year
(or, at the election of the Company, setting forth in comparative form the
budgeted figures for the fiscal year then reported), all in reasonable detail
and audited by independent public accountants of national standing selected by
the Company.
(b) As soon as practicable after the end of each calendar
quarter, and in any event within 15 days thereafter, an unaudited quarterly
report including a balance sheet, profit and loss statement cash flow analysis
(prepared in accordance with generally accepted accounting principles other than
for accompanying notes and subject to changes resulting from year-end audit
adjustments).
7.2 ASSIGNMENT OF RIGHTS TO FINANCIAL INFORMATION. The rights granted
pursuant to Section 7.1 may not be assigned or otherwise conveyed by any
Purchaser or by any subsequent transferee of any such rights without the prior
written consent of the Company; provided, however, that any Purchaser may assign
to any transferee, other than a competitor of the Company, and after
-10-
76
giving notice to the Company, the rights granted pursuant to Section 7.1 to (i)
a transferee who acquires at least 66,700 shares of Preferred Stock and/or
Common Stock issued upon conversion of the Preferred Stock (appropriately
adjusted for recapitalizations) or (ii) any constituent partner of a Purchaser.
7.3 INSPECTION. The Company shall permit the Purchaser, at such
Purchaser's expense, to visit and inspect the Company's properties, to examine
its books of account and records and to discuss the Company's affairs, finances
and accounts with its officers, all at such reasonable times as may be requested
by the Purchaser, provided, however, that the Company shall not be obligated
pursuant to this Section 7.3 to provide access to any information which it
reasonably considers to be a trade secret or similar confidential information.
7.4 TERMINATION OF COVENANTS. The covenants set forth in Sections 7.1,
7.2 and 7.3 shall terminate and be of no further force or effect at such time as
the Company is required to file reports pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended.
SECTION 8
REGISTRATION RIGHTS
The Purchaser shall have the registration rights set forth in the
Registration Rights Agreement attached hereto as Exhibit D.
SECTION 9
MISCELLANEOUS
9.1 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.
9.2 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.
9.3 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.
9.4 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
-11-
77
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.
9.5 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.
9.6 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.
9.7 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.
-12-
78
9.8 EXPENSES. The Company and the Purchaser shall bear its own legal
and other expenses with respect to this Agreement.
9.9 FINDER'S FEES. With respect to any finder's fees arising out of the
purchase of the Series C Shares pursuant to this Agreement:
(a) The Company hereby agrees to indemnify and to hold the
Purchaser harmless of and from any liability for any commission or compensation
in the nature of a finder's fee to any broker or other person or firm (and the
costs and expenses of defending against such liability or asserted liability)
for which the Company or any of its employees or representatives are
responsible.
(b) The Purchaser hereby agrees to indemnify and to hold the
Company harmless of and from any liability for any commission or compensation in
the nature of a finder's fee to any broker or other person or firm (and the
costs and expenses of defending against such liability or asserted liability)
for which such Purchaser or any of its employees or representatives, are
responsible.
9.10 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.
9.11 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.
9.12 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.
-13-
79
The foregoing agreement is hereby executed as of the date first above
written.
"PURCHASER" "COMPANY"
XXXXXX LABORATORIES, SPECTRX, INC.
an Illinois corporation a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxx X. Xxxxxxx
------------------------ --------------------
Title: President & Chief Operating Officer Title: President & CEO
------------------------------------- ------------------
-14-
80
EXHIBIT A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
81
I, XXXXXX X. XXXXX, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED
CERTIFICATE OF "SPECTRX, INC.", FILED IN THIS OFFICE ON THE THIRTIETH DAY OF
SEPTEMBER, A.D., AT 4:30 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ Xxxxxx X. Xxxxx
-----------------------------------
Xxxxxx X. Xxxxx, Secretary of State
AUTHENTICATION:
2313878 8100 8128301
DATE:
960284480 10-01-96
82
RESTATED CERTIFICATE OF INCORPORATION
OF
SPECTRX, INC.
SpectRx, Inc., a Corporation organized and existing under the laws of
the State of Delaware (the "Corporation"), hereby certifies that:
1. The name of the Corporation is SpectRx, Inc. The Corporation was
originally incorporated under the same name, and the original Certificate of
Incorporation was filed with the Secretary of State of the State of Delaware on
October 27, 1992.
2. This Certificate restates and amends the provisions of the
Corporation's Restated Certificate of Incorporation to read as set forth in
Exhibit A attached to this Certificate.
3. This restatement and amendment of the Corporation's Certificate of
Incorporation has been duly adopted by the Corporation's Board of Directors in
accordance with Sections 242 and 245 of the General Corporation Law of the State
of Delaware, and by the holders of each class of outstanding stock entitled to
vote thereon as a class by written consent given in accordance with Section 228
of the General Corporation Law of the State of Delaware. Written notice pursuant
to Section 228 has been given to those stockholders of the Corporation who have
not consented in writing to this action.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Restatement of Certificate of Incorporation to be signed by Xxxx X. Xxxxxxx, its
President, and attested by Xxxxxx X. Xxxxxxxx, its Assistant Secretary, this
30th day of September, 1996.
SPECTRX, INC.
By: /s/ Xxxx X. Xxxxxxx
-------------------------------
Xxxx X. Xxxxxxx, President
ATTEST:
/s/ Xxxxxx X. Xxxxxxxx
------------------------
Xxxxxx X. Xxxxxxxx,
Assistant Secretary
83
EXHIBIT A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
SPECTRX, INC.
I
The name of this corporation is SpectRx, Inc. (the "Corporation").
II
The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 0000 Xxxxxx Xxxxxx, xx xxx Xxxx xx
Xxxxxxxxxx, Xxxxxx of New Castle, Zip Code 19801. The name of its registered
agent at such address is The Corporation Trust Company.
III
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
IV
The Corporation is authorized to issue two classes of capital stock:
Preferred Stock, $0.001 par value per share, and Common Stock, $0.001 par value
per share. The total number of shares of Preferred Stock which the Corporation
shall have the authority to issue is 10,870,000 of which 3,560,000 shares shall
be designated Series A Preferred Stock ("Series A Preferred Stock"), 3,560,000
shares shall be designated Series A1 Preferred Stock ("Series A1 Preferred
Stock"), 1,375,000 shares shall be designated Series B Preferred Stock ("Series
B Preferred Stock"), 1,375,000 shares shall be designated Series B1 Preferred
Stock ("Series B1 Preferred Stock"), 500,000 shares shall be designated Series C
Preferred Stock ("Series C Preferred Stock"), and 500,000 shares shall be
designated Series C1 Preferred Stock ("Series C1 Preferred Stock"). The total
number of shares of Common Stock which the Corporation shall have the authority
to issue is 15,000,000. The Series A Preferred Stock, Series A1 Preferred Stock,
Series B Preferred Stock, Series B1 Preferred Stock, Series C Preferred Stock
and Series C1 Preferred Stock are herein collectively referred to as the
"Preferred Stock."
V
The rights, preferences, privileges and restrictions granted to or
imposed upon the Common Stock and the Preferred Stock are as follows:
84
1. Dividends. The holders of Series A Preferred Stock, Series A1
Preferred Stock, Series B Preferred Stock, Series B1 Preferred Stock, Series C
Preferred Stock and Series C1 Preferred Stock shall be entitled, when and if
declared by the board of directors of the Corporation, to dividends out of
assets of the Corporation legally available therefor at the rate of $0.10,
$0.10, $0.40, $0.40, $0.60 and$0.60 per share, per annum, respectively.
Dividends on the Preferred Stock shall be payable in preference and prior to any
payment of any dividend on the Common Stock of the Corporation. Thereafter, the
holders of Common Stock shall be entitled, when and if declared by the board of
directors of the Corporation, to dividends out of assets of the Corporation
legally available therefor. Notwithstanding anything set forth in this paragraph
1, no dividends shall be payable on any shares of Common Stock issued with
respect to shares of Series A1 Preferred Stock, Series B1 Preferred Stock and
Series C1 Preferred Stock issued pursuant to paragraph 4(e)(ii)(A) and
4(e)(ii)(B). The right to dividends on shares of Common Stock and Preferred
Stock shall not be cumulative, and no right shall accrue to holders of Common
Stock or Preferred Stock by reason of the fact that dividends on said shares are
not declared in any prior period.
2. Liquidation Preference.
(a) Preference. In the event of any liquidation, dissolution
or winding up of the Corporation, either voluntarily or involuntarily, the
holders of Preferred Stock shall, subject to the right of each such holder to
convert such holder's shares of Preferred Stock into shares of Common Stock
pursuant to the provisions of Section 4 below, be entitled to receive, prior and
in preference to any distribution of any of the assets or surplus funds of the
Corporation to the holders of Common Stock of the Corporation by reason of their
ownership thereof, an amount equal to $1.00, $1.00, $4.00, $4.00, $6.00 and
$6.00 per share for each outstanding share of Series A Preferred Stock, Series
A1 Preferred Stock, Series B Preferred Stock, Series B1 Preferred Stock, Series
C Preferred Stock and Series C1 Preferred Stock, respectively, plus any declared
but unpaid dividends on such share. If upon such liquidation, dissolution or
winding up of the Corporation, the assets of the Corporation are insufficient to
provide for the cash payment described above to the holders of Preferred Stock,
such assets as are available shall be paid to the holders of Preferred Stock in
proportion to the full preferential amount each such holder is otherwise
entitled to receive.
After the payment or setting apart of payment to the holders
of Preferred Stock of the preferential amounts so payable to them, the holders
of Common Stock shall be entitled to receive any remaining assets of the
Corporation on a pro rata basis, based upon the number of shares held.
(b) Reorganization or Merger. A reorganization or merger of
the Corporation with or into any other corporation or corporations, or a sale of
all or substantially all of the assets of the Corporation shall be deemed to be
a liquidation within the meaning of this paragraph 2; provided that the holders
of Preferred Stock and Common Stock shall be paid in cash or in securities
received or in a combination thereof (which combination shall be in the same
proportions as the consideration received in the transaction). Any securities to
be delivered to the holders of the Preferred Stock and Common Stock upon a
merger, reorganization or sale of substantially all of the assets of the
Corporation shall be valued as follows:
-2-
85
(i) If traded on a securities exchange, the value
shall be deemed to be the average of the closing prices of the securities on
such exchange over the 30-day period ending three (3) business days prior to the
closing;
(ii) If actively traded over-the-counter, the value
shall be deemed to be the average of the closing bid prices over the 30-day
period ending three (3) business days prior to the closing; and
(iii) If there is no active public market, the value
shall be the fair market value thereof, as mutually determined by the
Corporation and the holders of not less than a majority of the outstanding
shares of Preferred Stock, provided that if the Corporation and the holders of a
majority of the outstanding shares of Preferred Stock are unable to reach
agreement, then by independent appraisal by an investment banker hired and paid
by the Corporation, but acceptable to the holders of a majority of the
outstanding shares of Preferred Stock.
(c) Noncash Distributions. If any of the assets of the
Corporation are to be distributed other than in cash under this paragraph 2 or
for any purpose, then the board of directors of the Corporation shall promptly
engage independent competent appraisers to determine the value of the assets to
be distributed to the holders of Preferred Stock or Common Stock. The
Corporation shall, upon receipt of such appraiser's valuation, give prompt
written notice to each holder of shares of Preferred Stock or Common Stock of
the appraiser's valuation.
3. Voting Rights.
(a) The holder of each share of Preferred Stock shall be
entitled to the number of votes equal to the number of shares of Common Stock
into which each share of Preferred Stock could be converted on the record date
for the vote or written consent of stockholders and, except as otherwise
required by law, shall have voting rights and powers equal to the voting rights
and powers of the Common Stock. The holder of each share of Preferred Stock
shall be entitled to notice of any stockholders' meeting in accordance with the
bylaws of the Corporation and shall vote with holders of the Common Stock upon
all matters submitted to a vote of stockholders, except those matters required
to be submitted to a class or series vote pursuant to paragraph 5 herein or by
law. Fractional votes shall not, however, be permitted and any fractional voting
rights resulting from the above formula (after aggregating all shares of Common
Stock into which shares of Preferred Stock held by each holder could be
converted) shall be rounded to the nearest whole number (with one-half rounded
upward to one).
(b) Notwithstanding the foregoing, as long as more than
800,000 shares of Preferred Stock are outstanding, the holders of Preferred
Stock, voting as a class, shall have the right to elect two members of the
Corporation's board of directors. The holders of Common Stock, voting as a
single class, shall have the right to elect all other members of the
Corporation's board of directors. Notwithstanding any Bylaw provisions to the
contrary, the stockholders entitled to elect a particular director shall be
entitled to remove such director or to fill a vacancy in the seat formerly
-3-
86
held by such a director, all in accordance with the applicable provisions
provided in the General Corporation Law of the State of Delaware.
4. Conversion. The holders of the Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Preferred Stock shall be
convertible without the payment of any additional consideration by the holder
thereof and, at the option of the holder thereof, at any time after the date of
issuance of such share at the office of the Corporation or any transfer agent
for the Preferred Stock. Each share of each series of Preferred Stock shall be
convertible into the number of fully paid and nonassessable shares of Common
Stock which results from dividing the Conversion Price (as hereinafter defined)
per share in effect for such series of Preferred Stock at the time of conversion
into the per share Conversion Value (as hereinafter defined) of such series.
Upon the filing of this Amended and Restated Certificate of Incorporation with
the Delaware Secretary of State, the initial Conversion Price per share of
Series A Preferred Stock, Series A1 Preferred Stock, Series B Preferred Stock,
Series B1 Preferred Stock, Series C Preferred Stock and Series C1 Preferred
Stock shall be $1.00, $1.00, $4.00, $4.00, $6.00 and $6.00, respectively. The
per share Conversion Value of the Series A Preferred Stock, the Series A1
Preferred Stock, the Series B Preferred Stock, the Series B1 Preferred Stock,
the Series C Preferred Stock and the Series C1 Preferred Stock shall be $1.00,
$1.00, $4.00, $4.00, $6.00 and $6.00, respectively. The initial Conversion Price
of the Series A Preferred Stock, the Series A1 Preferred Stock, the Series B
Preferred Stock, the Series B1 Preferred Stock, the Series C Preferred Stock and
the Series C1 Preferred Stock shall be subject to adjustments from time to time
as provided below. The number of shares of Common Stock into which a share of
Preferred Stock is convertible is hereinafter referred to as the "Conversion
Rate" of such series.
(b) Automatic Conversion. Each share of Preferred Stock shall
automatically be converted into shares of Common Stock at its then effective
Conversion Rate immediately upon the closing of a firm commitment underwritten
public offering pursuant to an effective registration statement under the
Securities Act of 1933, as amended, covering the offer and sale of Common Stock
of which the aggregate gross proceeds attributable to sales for the account of
the Corporation exceed $10,000,000 at a per share issuance price of at least
$9.00 per share.
(c) Mechanics of Conversion. Before any holder of Preferred
Stock shall be entitled to convert the same into shares of Common Stock, such
holder shall surrender the certificate(s) therefor, 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 that the holder elects to
convert the same (except that no such written notice of election to convert
shall be necessary in the event of an automatic conversion pursuant to paragraph
4(b) hereof). The Corporation shall, as soon as practicable thereafter, issue
and deliver at such office to such holder of Preferred Stock certificate(s) for
the number of shares of Common Stock to which the holder shall be entitled as
aforesaid. Such conversion shall be deemed to have been made immediately prior
to the close of business on the date of such surrender of the shares of
Preferred Stock to be converted (except that in the case of an automatic
conversion pursuant to paragraph 4(b) hereof such conversion shall be
-4-
87
deemed to have been made immediately prior to the closing of the offering
referred to in paragraph 4(b)) and the person(s) entitled to receive the shares
of Common Stock issuable upon such conversion shall be treated for all purposes
as the record holder(s) of such shares of Common Stock on such date.
(d) Fractional Shares. In lieu of any fractional shares to
which the holder of Preferred Stock would otherwise be entitled, the Corporation
shall pay cash equal to such fraction multiplied by the fair market value of one
share of Common Stock as determined by the board of directors of the
Corporation. Whether or not fractional shares of Common Stock are issuable upon
such conversion shall be determined on the basis of the total number of shares
of Preferred Stock of each holder at the time converting into Common Stock and
the number of shares of Common Stock issuable upon such aggregate conversion.
(e) Adjustment of Conversion Price.
(i) Special Definitions. For purposes of this
paragraph 4(e), the following definitions shall apply:
(A) "Excluded Stock" shall mean:
(1) all shares of Common Stock issued and
outstanding on the date this document is filed with the Delaware Secretary of
State and all shares of Common Stock issued or issuable upon conversion of
Preferred Stock; and
(2) all shares of Common Stock or other
securities issued or issuable to officers, directors, consultants or employees
of the Corporation or lessors, lenders or licensors to the Corporation which
are approved by of the board of directors of the Corporation. All outstanding
shares of Excluded Stock (including shares of Common Stock issuable upon
conversion of the Preferred Stock) shall be deemed to be outstanding for all
purposes of the computations of subparagraph 4(e)(iii) below.
(B) "Financing" means any issuance of Common
Stock (including securities exercisable for or convertible into Common Stock)
in a transaction with gross proceeds to the Corporation equal to or greater
than $100,000 where the holders of Preferred Stock are offered an opportunity
to purchase their Preferred Stock Pro Rata Share of the additional shares of
Common Stock (including securities exercisable for or convertible into Common
Stock) issued in such transaction.
(C) "Preferred Stock Pro Rata Share" shall mean
the amount determined by multiplying the total number of shares of Common Stock
(including securities exercisable for or convertible into Common Stock) offered
for sale by the Corporation in a Financing to all parties by a fraction, (x)
the numerator of which is the total number of shares of Common Stock (including
securities convertible into Common Stock) held by such stockholder and (y) the
denominator of which is the total number of shares of Common Stock (including
securities
-5-
88
convertible into Common Stock) then outstanding plus any shares reserved for
issuance pursuant to plans approved by the board of directors of the
Corporation.
(D) "Series A Dilutive Issuance" shall mean an
issuance of Common Stock (including securities exercisable for or convertible
into Common Stock) in a Financing for a consideration per share less than the
Conversion Price of the Series A Preferred Stock in effect on the date of and
immediately prior to such issue.
(E) "Series B Dilutive Issuance" shall mean an
issuance of Common Stock (including securities exercisable for or convertible
into Common Stock) in a Financing for a consideration per share less than the
Conversion Price of the Series B Preferred Stock in effect on the date of and
immediately prior to such issue.
(F) "Series C Dilutive Issuance" shall mean an
issuance of Common Stock (including securities exercisable for or convertible
into Common Stock) in a Financing for a consideration per share less than the
Conversion Price of the Series C Preferred Stock in effect on the date of and
immediately prior to such issue.
(G) "Participating Investor" shall mean any holder of
Preferred Stock that purchases at least its Preferred Stock Pro Rata Share of
either a Series A Dilutive Issuance or Series B Dilutive Issuance.
(H) "Non-Participating Investor" shall mean any
holder of Preferred Stock that is not a Participating Investor.
(ii) Shadow Preferred.
(A) Series A Preferred Stock. In the event the
Corporation issues additional shares of Common Stock (including securities
exercisable for or convertible into Common Stock) in a Series A Dilutive
Issuance, each share of Series A Preferred Stock held by each and every
Nonparticipating Investor shall, immediately prior to the closing of the
applicable Series A Dilutive Issuance (the "Closing"), be converted into one
fully paid and nonassessable share of Series A1 Preferred Stock plus such number
of fully paid and nonassessable shares of Common Stock as is determined by
multiplying one by the Forced Conversion Rate. The Forced Conversion Rate shall
be equal to (X) minus one, where (X) equals the per share Conversion Price of
Series A Preferred Stock immediately prior to the Closing divided into the per
share Conversion Value of Series A Preferred Stock. Upon the conversion of
Series A Preferred Stock held by a Nonparticipating Investor as set forth
herein, such shares of Series A Preferred Stock shall no longer be outstanding
on the books of the Corporation and the Nonparticipating Investor shall be
treated for all purposes as the record holder of such shares of Series A1
Preferred Stock and, if applicable, Common Stock upon the Closing of the
applicable Series A Dilutive Issuance.
(B) Series B Preferred Stock. In the event the
Corporation issues additional shares of Common Stock (including securities
exercisable for or convertible into Common
-6-
89
Stock) in a Series B Dilutive Issuance, each share of Series B Preferred Stock
held by each and every Nonparticipating Investor shall, immediately prior to the
closing of the applicable Series B Dilutive Issuance (the "Closing"), be
converted into one fully paid and nonassessable share of Series B1 Preferred
Stock plus such number of fully paid and nonassessable shares of Common Stock as
is determined by multiplying one by the Forced Conversion Rate. The Forced
Conversion Rate shall be equal to (X) minus one, where (X) equals the per share
Conversion Price of Series B Preferred Stock immediately prior to the Closing
divided into the per share Conversion Value of Series B Preferred Stock. Upon
the conversion of Series B Preferred Stock held by a Nonparticipating Investor
as set forth herein, such shares of Series B Preferred Stock shall no longer be
outstanding on the books of the Corporation and the Nonparticipating Investor
shall be treated for all purposes as the record holder of such shares of Series
B1 Preferred Stock and, if applicable, Common Stock upon the Closing of the
applicable Series B Dilutive Issuance.
(C) Series C Preferred Stock. In the event the
Corporation issues additional shares of Common Stock (including securities
exercisable for or convertible into Common Stock) in a Series C Dilutive
Issuance, each share of Series C Preferred Stock held by each and every
Nonparticipating Investor shall, immediately prior to the closing of the
applicable Series C Dilutive Issuance (the "Closing"), be converted into one
fully paid and nonassessable share of Series C1 Preferred Stock plus such number
of fully paid and nonassessable shares of Common Stock as is determined by
multiplying one by the Forced Conversion Rate. The Forced Conversion Rate shall
be equal to (X) minus one, where (X) equals the per share Conversion Price of
Series C Preferred Stock immediately prior to the Closing divided into the per
share Conversion Value of Series C Preferred Stock. Upon the conversion of
Series C Preferred Stock held by a Nonparticipating Investor as set forth
herein, such shares of Series C Preferred Stock shall no longer be outstanding
on the books of the Corporation and the Nonparticipating Investor shall be
treated for all purposes as the record holder of such shares of Series C1
Preferred Stock and, if applicable, Common Stock upon the Closing of the
applicable Series C Dilutive Issuance.
(iii) Adjustment of Conversion Price for Issuance of Common
Stock. No adjustment in the Conversion Price of Series A1 Preferred Stock or
Series B1 Preferred Stock or Series C1 Preferred Stock shall be made in respect
of the issuance of additional shares of Common Stock or securities exercisable
for or convertible into Common Stock (other than in the event of stock
dividends, subdivisions, split-ups, combinations, dividends or recapitalizations
which are covered by paragraphs 4(e)(iv), (v) and (vi) hereof).
The Conversion Price of each series of Preferred Stock shall
be subject to adjustment from time to time as follows:
If the Corporation shall issue any Common Stock other than
Excluded Stock for a consideration per share less than the Conversion Price in
effect immediately prior to the issuance of such Common Stock (excluding stock
dividends, subdivisions, split-ups, combinations, dividends or recapitalizations
which are covered by paragraphs 4(e)(iv), (v) and (vi)), the Conversion Price in
effect immediately after each such issuance shall forthwith (except as provided
in this paragraph 4(e)) be adjusted to a price equal to the quotient obtained by
dividing:
-7-
90
(1) an amount equal to the sum of
(x) the total number of shares of
Common Stock outstanding (including any shares of Common Stock issuable upon
conversion of the Preferred Stock, or deemed to have been issued pursuant to
subdivision (C) of this clause (iii)) immediately prior to such issuance
multiplied by the Conversion Price in effect immediately prior to such issuance,
plus
(y) the consideration received by
the Corporation upon such issuance, by
(2) the total number of shares of Common
Stock outstanding (including any shares of Common Stock issuable upon conversion
of the Preferred Stock or deemed to have been issued pursuant to subdivision (C)
of this clause (iii)) immediately after the issuance of such Common Stock.
For the purposes of this clause (iii), the
following provisions shall be applicable:
(A) In the case of the issuance of Common
Stock for cash, the consideration shall be deemed to be the amount of cash paid
therefor after deducting any discounts or commissions paid or incurred by the
Corporation in connection with the issuance and sale thereof.
(B) In the case of the issuance of Common
Stock for a consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair value thereof as determined by
the board of directors of the Corporation, in accordance with generally accepted
accounting treatment; provided, however, that if, at the time of such
determination, the Corporation's Common Stock is traded in the over-the-counter
market or on a national or regional securities exchange, such fair market value
as determined by the board of directors of the Corporation shall not exceed the
aggregate "Current Market Price" (as defined below) of the shares of Common
Stock being issued.
(C) In the case of the issuance of (i)
options to purchase or rights to subscribe for Common Stock (other than Excluded
Stock), (ii) securities by their terms convertible into or exchangeable for
Common Stock (other than Excluded Stock), or (iii) options to purchase or rights
to subscribe for such convertible or exchangeable securities (other than
Excluded Stock):
(1) the aggregate maximum number of
shares of Common Stock deliverable upon exercise of such options to purchase or
rights to subscribe for Common Stock shall be deemed to have been issued at the
time such options or rights were issued and for a consideration equal to the
consideration (determined in the manner provided in subdivisions (1) and (2)
above), if any, received by the Corporation upon the issuance of such options or
rights plus the minimum purchase price provided in such options or rights for
the Common Stock covered thereby;
-8-
91
(2) the aggregate maximum number of
shares of Common Stock deliverable upon conversion of or in exchange for any
such convertible or exchangeable securities, or upon the exercise of options to
purchase or rights to subscribe for such convertible or exchangeable securities
and subsequent conversion or exchange thereof, shall be deemed to have been
issued at the time such securities were issued or such options or rights were
issued and for a consideration equal to the consideration received by the
Corporation for any such securities and related options or rights (excluding any
cash received on account of accrued interest or accrued dividends), plus the
minimum additional consideration, if any, to be received by the Corporation upon
the conversion or exchange of such securities or the exercise of any related
options or rights (the consideration in each case to be determined in the manner
provided in subdivisions (1) and (2) above);
(3) on any change in the number of
shares of Common Stock deliverable upon exercise of any such options or rights
or conversion of or exchange for such convertible or exchangeable securities, or
on any change in the minimum purchase price of such options, rights or
securities, other than a change resulting from the antidilution provisions of
such options, rights or securities, the Conversion Price shall forthwith be
readjusted to such Conversion Price as would have obtained had the adjustment
made upon (x) the issuance of such options, rights or securities not exercised,
converted or exchanged prior to such change, as the case may be, been made upon
the basis of such change or (y) the options or rights related to such securities
not converted or exchanged prior to such change, as the case may be, been made
upon the basis of such change; and
(4) on the expiration of any such
options or rights, the termination of any such rights to convert or exchange or
the expiration of any options or rights related to such convertible or
exchangeable securities, the Conversion Price shall forthwith be readjusted to
such Conversion Price as would have obtained had the adjustment made upon the
issuance of such options, rights, convertible or exchangeable securities or
options or rights related to such convertible or exchangeable securities, as the
case may be, been made upon the basis of the issuance of only the number of
shares of Common Stock actually issued upon the exercise of such options or
rights, upon the conversion or exchange of such convertible or exchangeable
securities or upon the exercise of the options or rights related to such
convertible or exchangeable securities, as the case may be.
(iv) If the number of shares of Common Stock
outstanding at any time after the date hereof is increased by a stock dividend
payable in shares of Common Stock or by a subdivision or split-up of shares of
Common Stock, then, on the date such payment is made or such change is
effective, the Conversion Price of a series of Preferred Stock shall be
appropriately decreased so that the number of shares of Common Stock issuable on
conversion of any shares of such series of Preferred Stock shall be increased in
proportion to such increase of outstanding shares of Common Stock.
(v) If the number of shares of Common Stock
outstanding at any time after the date hereof is decreased by a combination of
the outstanding shares of Common Stock, then, on
-9-
92
the effective date of such combination, the Conversion Price of a series of
Preferred Stock shall be appropriately increased so that the number of shares of
Common Stock issuable on conversion of any shares of a series of Preferred Stock
shall be decreased in proportion to such decrease in outstanding shares of
Common Stock.
(vi) In case, at any time after the date hereof, of
any capital reorganization (other than a reorganization covered by paragraph
2(b) above), or any reclassification of the stock of the Corporation (other than
as a result of a stock dividend or subdivision, split-up or combination of
shares of stock), the shares of a series of Preferred Stock shall, after such
capital reorganization or reclassification, be convertible into the kind and
number of shares of stock or other securities or property of the Corporation or
otherwise to which such holder would have been entitled if immediately prior to
such capital reorganization or reclassification he had converted his shares of
such series of Preferred Stock into Common Stock. The provisions of this clause
(vi) shall similarly apply to successive reorganizations and reclassifications
of the type described in the first sentence of this section 4(e)(vi).
(vii) All calculations under this paragraph 4 shall
be made to the nearest cent or to the nearest one hundredth (1/100) of a share
of stock, as the case may be.
(viii) For the purpose of any computation pursuant to
this paragraph 4(e), the "Current Market Price" at any date of one share of
Common Stock, shall be deemed to be the average of the highest reported bid and
the lowest reported offer prices on the preceding business day as furnished by
the National Quotation Bureau, Incorporated (or equivalent recognized source of
quotations) or the closing sale price, if reported; provided, however, that if
the Common Stock is not traded in such manner that the quotations referred to in
this clause (viii) are available for the period required hereunder, Current
Market Price shall be determined in good faith by the board of directors of the
Corporation, but if challenged by the holders of more than 50% of the
outstanding shares of Preferred Stock, then as determined by an independent
appraiser selected by the board of directors of the Corporation, the cost of
such appraisal to be borne by the challenging parties.
(f) Minimal Adjustments. No adjustment in the Conversion
Price need be made if such adjustment would result in a change in the
Conversion Price of less than $0.01. Any adjustment of less than $0.01 which is
not made shall be carried forward and shall be made at the time of and together
with any subsequent adjustment which, on a cumulative basis, amounts to an
adjustment of $0.01 or more in the Conversion Price.
(g) No Impairment. The Corporation will not through any
reorganization, recapitalization, 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 will at all times in good faith
assist in the carrying out of all the provisions of this paragraph 4 and in the
taking of all such action as may be necessary or appropriate in order to protect
the Conversion Rights of the holders of Preferred Stock against impairment.
-10-
93
(h) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Rate pursuant to this paragraph 4,
the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
holder of Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon written request at any time
of any holder of Preferred Stock, furnish or cause to be furnished to such
holder a like certificate setting forth (i) such adjustments and readjustments,
(ii) the Conversion Rate of such series of Preferred Stock at the time in
effect, and (iii) the number of shares of Common Stock and the amount, if any,
of other property which at the time would be received upon the conversion of
such holder's shares of Preferred Stock.
(i) Notices of Record Date. In the event of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution (including any
distribution under section 2(b) above), any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property or to receive any right, the Corporation shall mail to each holder of
Preferred Stock at least ten (10) days prior to such record date, a notice
specifying the date on which any such record is to be taken for the purpose of
such dividend or distribution or right, and the amount and character of such
dividend, distribution or right.
(j) 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 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 Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of Preferred Stock, the
Corporation will 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 of stock as shall be sufficient for such purpose.
(k) Notices. Any notice required by the provisions of this
paragraph 4 to be given to the holder of shares of Preferred Stock shall be
deemed given if deposited in the United States mail, postage prepaid, and
addressed to each holder of record at such holder's address appearing on the
books of the Corporation.
(l) Reissuance of Converted Shares. No shares of Preferred
Stock which have been converted into Common Stock after the original issuance
thereof shall ever again be reissued and all such shares of Preferred Stock so
converted shall upon such conversion cease to be a part of the authorized shares
of stock of the Corporation.
5. Protective Provisions.
(a) Preferred Stock. In addition to any other class vote that
may be required by law, so long as any of the Preferred Stock shall be
outstanding the Corporation shall not, without first
-11-
94
obtaining the approval (by vote or written consent, as provided by law) of the
holders of at least a majority of the then outstanding shares of Preferred
Stock, voting together as a single class:
(i) Change of Rights. Materially and adversely alter or
change the rights, preferences or privileges of the Preferred Stock;
(ii) Create a New Class. Create, or obligate itself to
create, any new class or series of shares of stock having preferences
over or being on a parity with any outstanding shares of Preferred Stock as to
dividends, assets, liquidation preferences, conversion rights or voting rights
or being otherwise superior to or on a parity with any such preference or
priority of any outstanding shares of Preferred Stock, or authorize or issue
shares of stock of any class or series (or any bonds, debentures, notes or
other obligations convertible into or exchangeable for, or having option rights
to purchase, any shares of stock of this Corporation) having any such
preference or priority or being otherwise superior to or being on a parity with
any such preference or priority; or
(iii) merge or consolidate with any other Corporation or sell,
lease, or convey substantially all of the assets of the corporation or otherwise
effect a recapitalization or reorganization of the Corporation.
VI
1. Limitation of Directors' Liability. The liability of the directors
of this Corporation for monetary damages shall be eliminated to the fullest
extent permissible under the laws of the State of Delaware.
2. Indemnification of Corporate Agents. This Corporation is authorized
to indemnify the directors and officers of the Corporation to the fullest extent
permissible under the laws of the State of Delaware.
3. Repeal or Modification. Any repeal or modification of the foregoing
provisions of this Section VI shall not adversely affect any right of
indemnification or limitation of liability of an agent of this Corporation
relating to acts or omissions occurring prior to such repeal or modification.
VII
The Corporation is to have perpetual existence.
VIII
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter, amend or
repeal the bylaws of the Corporation.
-12-
95
IX
The number of directors which will constitute the whole Board of
Directors of the Corporation shall be as specified in the bylaws of the
Corporation.
X
The election of directors need not be by written ballot unless the
bylaws of the Corporation shall so provide.
XI
Meeting of stockholders may be held within or without the State of
Delaware, as the bylaws may provide. The books of the Corporation may be kept
(subject to any provisions contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the bylaws of the Corporation.
XII
Advance notice of new business and stockholder nomination for the
election of directors shall be given in the manner and to the extent provided in
the bylaws of the Corporation.
XIII
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Restated Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
-13-
96
EXHIBIT B
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
97
SCHEDULE OF EXCEPTIONS
This Schedule of Exceptions, dated as of October 21, 1996, is made and
given pursuant to Section 3 of the SpectRx, Inc. Series C Preferred Stock
Purchase Agreement dated October 21, 1996 (the "Agreement"). The Section numbers
in this Schedule of Exceptions correspond to the section numbers in the
Agreement; however, any information disclosed herein under any section number
shall be deemed to be disclosed and incorporated into any other section number
under this Agreement where such disclosure would be appropriate. Any terms
defined in the Agreement shall have the same meaning when used in this Schedule
of Exceptions as when used in the Agreement unless the context otherwise
requires.
3.3 Subsidiaries. The Company is currently in the process of forming a
subsidiary (the "Subsidiary") for the purpose of commercializing certain
technology of the Company. The Company intends to own approximately 65% of the
Subsidiary, and the remaining stock of the Subsidiary will be owned by the
Subsidiary's management.
3.4 Capitalization. One of the warrants outstanding as of the Closing,
for the purchase of up to 824,000 shares of Common Stock, is not currently
exercisable and will only become exercisable upon the occurrence of certain
events as specified in the warrant.
3.7 Agreements; Action.
- The Company has entered into an agreement with one of
its officers, Xxxxxxxx Xxxxxxxx, Vice President of
Research and Development (the "Officer"), and two
corporations controlled by the Officer, pursuant to
which the Company received a license to certain
technology owned by the Officer's corporations. In
return, the Company paid a license fee, agreed to pay
a royalty and issued a warrant to the corporations
which, upon the occurrence of certain events, will
become exercisable.
- Xxxx Xxxxxxx and Xxxxx Xxxxxx, the Company's chief
executive officer and chioef operating officer,
respectively, purchased shares of Common Stock of the
Company and paid for such shares by delivering a
promissory note to the Company. The aggregate amount
owed under the notes was approximately $48,525 as of
the Closing.
- The Company has entered into a development and
licensing agreement with Boehringer Mannheim
Corporation.
- The Company has entered into a development and
licensing agreement with Healthdyne Technologies.
98
- The Company has entered into a development and
licensing agreement with Teijin Limited.
- The Company has entered into a licensing agreement
with Xxxxxx X. Xxxxxxxx.
- The Company has entered into a licensing agreement
with M.D. Xxxxxxxx Cancer Center, University of
Texas.
- The Company has entered into a licensing agreement
with Georgia Institute of Technology.
3.10 Litigation, etc. The Company has received a demand notice for
payment of a $20,000 license fee due under an expired license from Xxxxxx
Xxxxxxxx Energy Systems. The Company is presently in the process of negotiating
a resolution of this dispute.
3.16 Patents and Trademarks
The Company purchased all of the technology and other intellectual
property, relating to non-invasive means of diagnosing disease through the use
of fluorescence spectroscopy, of Laser Atlanta Optics, Inc.
-2-
99
EXHIBIT C
PROPRIETARY INFORMATION AGREEMENT
100
SPECTRX, INC.
EMPLOYEE PROPRIETARY INFORMATION AGREEMENT
As a condition of my employment with Spectrx, Inc., its subsidiaries,
affiliates, successors or assigns (together the "COMPANY"), and in consideration
of my employment with the Company and my receipt of the compensation now and
hereafter paid to me by Company, I agree to the following:
1. At-Will Employment. I understand and acknowledge that my employment
with the Company is for an unspecified duration and constitutes "at-will"
employment. I acknowledge that this employment relationship may be terminated at
any time, with or without good cause or for any or no cause, at the option
either of the Company or myself, with or without notice.
2. Confidential Information.
(a) Company Information. I agree at all times during the term of my
employment and thereafter, to hold in strictest confidence, and not to use,
except for the benefit of the Company, or to disclose to any person, firm or
corporation without written authorization of the Board of Directors of the
Company, any Confidential Information of the Company. I understand that
"CONFIDENTIAL INFORMATION" means any Company proprietary information, technical
data, trade secrets or know-how, including, but not limited to, research,
product plans, products, services, customer lists and customers (including, but
not limited to, customers of the Company on whom I called or with whom I became
acquainted during the term of my employment), markets, software, developments,
inventions, processes, formulas, technology, designs, drawings, engineering,
hardware configuration information, marketing, finances or other business
information disclosed to me by the Company either directly or indirectly, in
writing, orally, by drawings, or by observation of parts or equipment. I further
understand that Confidential Information does not include any of the foregoing
items which has become publicly known and made generally available through no
wrongful act of mine or of others who were under confidentiality obligations as
to the item or items involved.
(b) Former Employer Information. I agree that I will not, during my
employment with the Company, improperly use or disclose any proprietary
information or trade secrets of any former or concurrent employer or other
person or entity and that I will not bring onto the premises of the Company any
unpublished document or proprietary information belonging to any such employer,
person or entity unless consented to in writing by such employer, person or
entity.
(c) Third Party Information. I recognize that the Company has
received and in the future will receive from third parties their confidential or
proprietary information subject to a duty on the Company's part to maintain the
confidentiality of such information and to use it only for certain limited
purposes. I agree to hold all such confidential or proprietary information in
the strictest confidence and not to disclose it to any person, firm or
corporation or to use it except as necessary in carrying out my work for the
Company consistent with the Company's agreement with such third party.
3. Inventions.
(a) Inventions Retained and Licensed. I have attached hereto, as
Exhibit A, a list describing all inventions, original works of authorship,
developments, improvements, and trade secrets which were made by me prior to my
employment with the Company, which belong to me, which relate to the Company's
proposed business, products or research and development, and which are not
assigned to the Company hereunder (collectively referred to as "Prior
Inventions"); or, if no such list is attached, I represent that there are no
such Prior Inventions. If in the course of my employment with the Company, I
incorporate into any invention, improvement, development, product, copyrightable
material or trade secret any invention, improvement, development, concept,
discovery or other proprietary information owned by me or in which I have an
interest, the Company is hereby granted and shall have a nonexclusive,
royalty-free, irrevocable, perpetual, worldwide license to make, have made,
modify, use and sell such item as part of or in connection with such product,
process or machine.
101
(b) Assignment of Inventions. I agree that I will promptly make
full written disclosure to the Company, will hold in trust for the sole right
and benefit of the Company, and hereby assign to the Company, or its designee,
all my right, title, and interest in and to any and all inventions, original
works of authorship, developments, concepts, improvements or trade secrets,
whether or not patentable or registrable under copyright or similar laws, which
I may solely or jointly conceive or develop or reduce to practice, or cause to
be conceived or developed or reduced to practice, during the period of time I am
in the employ of the Company (collectively referred to as "INVENTIONS"), except
as provided in Section 3(f) below. I further acknowledge that all original works
of authorship which are made by me (solely or jointly with others) within the
scope of and during the period of my employment with the Company and which are
protectible by copyright are "works made for hire," as that term is defined in
the United States Copyright Act.
(c) Inventions Assigned to the United States. I agree to assign to
the United States government all my right, title, and interest in and to any and
all Inventions whenever such full title is required to be in the United States
by a contract between the Company and the United States or any of its agencies.
(d) Maintenance of Records. I agree to keep and maintain adequate
and current written records of all Inventions made by me (solely or jointly with
others) during the term of my employment with the Company. The records will be
in the form of notes, sketches, drawings, and any other format that may be
specified by the Company. The records will be available to and remain the sole
property of the Company at all times.
(e) Patent and Copyright Registrations. I agree to assist the
Company, or its designee, at the Company's expense, in every proper way to
secure the Company's rights in the Inventions and any copyrights, patents, mask
work rights or other intellectual property rights relating thereto in any and
all countries, including the disclosure to the Company of all pertinent
information and data with respect thereto, the execution of all applications,
specifications, oaths, assignments and all other instruments which the Company
shall deem necessary in order to apply for and obtain such rights and in order
to assign and convey to the Company, its successors, assigns and nominees the
sole and exclusive rights, title and interest in and to such Inventions, and any
copyrights, patents, mask work rights or other intellectual property rights
relating thereto. I further agree that my obligation to execute or cause to be
executed, when it is in my power to do so, any such instrument or papers shall
continue after the termination of this Agreement. If the Company is unable
because of my mental or physical incapacity or for any other reason to secure my
signature to apply for or to pursue any application for any United States or
foreign patents or copyright registrations covering Inventions or original works
of authorship assigned to the Company as above, then I hereby irrevocably
designate and appoint the Company and its duly authorized officers and agents as
my agent and attorney in fact, to act for and in my behalf and stead to execute
and file any such applications and to do all other lawfully permitted acts to
further the prosecution and issuance of letters patent or copyright
registrations thereon with the same legal force and effect as if executed by me.
(f) Exception to Assignments. I understand that the provisions of
this Agreement requiring assignment of Inventions to the Company do not apply to
any invention which qualifies under the provisions of Exhibit B attached hereto.
I will advise the Company promptly in writing of any inventions that I believe
meet the criteria of Exhibit B.
4. Conflicting Employment. I agree that, during the term of my
employment with the Company, I will not engage in any other employment,
occupation, consulting or other business activity directly related to the
business in which the Company is now involved or becomes involved during the
term of my employment, nor will I engage in any other activities that conflict
with my obligations to the Company.
5. Returning Company Documents. I agree that, at the time of leaving
the employ of the Company, I will deliver to the Company (and will not
keep in my possession, recreate or deliver to anyone else) any and all devices,
records, data, notes, reports, proposals, lists, correspondence,
specifications, drawings, blueprints, sketches, materials, equipment, other
documents or property, or reproductions of any aforementioned items developed
by me pursuant to my employment with the Company or otherwise belonging to the
Company, its successors or assigns. In the event of the termination of my
employment, I agree to sign and deliver the "TERMINATION CERTIFICATION"
attached hereto as Exhibit C.
6. Notification to New Employer. In the event that I leave the employ
of the Company, I hereby grant consent to notification by the Company to my new
employer about my rights and obligations under this Agreement.
-2-
102
7. Solicitation of Employees. I agree that for a period of twelve (12)
months immediately following the termination of my relationship with the Company
for any reason, whether with or without cause, I shall not either directly or
indirectly solicit, induce, recruit or encourage any of the Company's employees
to leave their employment, or take away such employees, or attempt to solicit,
induce, recruit, encourage or take away employees of the Company, either for
myself or for any other person or entity.
8. Representations. I agree to execute any proper oath or verify any
proper document required to carry out the terms of this Agreement. I represent
that my performance of all the terms of this Agreement will not breach any
agreement to keep in confidence proprietary information acquired by me in
confidence or in trust prior to my employment by the Company. I have not entered
into, and I agree I will not enter into, any oral or written agreement in
conflict herewith.
9. Arbitration and Equitable Relief.
(a) Arbitration. Except as provided in Section 9(b) below, I agree
that any dispute or controversy arising out of or relating to any
interpretation, construction, performance or breach of this Agreement, shall be
settled by arbitration to be held in Norcross, Georgia in accordance with the
rules then in effect of the American Arbitration Association. The arbitrator may
grant injunctions or other relief in such dispute or controversy. The decision
of the arbitrator shall be final, conclusive and binding on the parties to the
arbitration. Judgement may be entered on the arbitrator's decision in any court
having jurisdiction. The Company and I shall each pay one-half of the costs and
expenses of such arbitration, and each of us shall separately pay our counsel
fees and expenses.
(b) Equitable Remedies. I agree that it would be impossible or
inadequate to measure and calculate the Company's damages from any breach of the
covenants set forth in Sections 2, 3, and 5 herein. Accordingly, I agree that if
I breach any of such Sections, the Company will have available, in addition to
any other right or remedy available, the right to obtain an injunction from a
court of competent jurisdiction restraining such breach or threatened breach and
to specific performance of any such provision of this Agreement. I further agree
that no bond or other security shall be required in obtaining such equitable
relief and I hereby consent to the issuance of such injunction and to the
ordering of specific performance.
-3-
103
10. General Provisions
(a) Governing Law; Consent to Personal Jurisdiction. This Agreement
will be governed by the laws of the State of Georgia. I hereby expressly consent
to the personal jurisdiction of the state and federal courts located in Georgia
for any lawsuit filed there against me by the Company arising from or relating
to this Agreement.
(b) Entire Agreement. This Agreement sets forth the entire
agreement and understanding between the Company and me relating to the subject
matter herein and merges all prior discussions between us. No modification of or
amendment to this Agreement, nor any waiver of any rights under this agreement,
will be effective unless in writing signed by the party to be charged. Any
subsequent change or changes in my duties, salary or compensation will not
affect the validity or scope of this Agreement.
(c) Severability. If one or more of the provisions in this
Agreement are deemed void by law, then the remaining provisions will continue in
full force and effect.
(d) Successors and Assigns. This Agreement may not be assigned
without the prior written consent of the Company. Subject to the foregoing
sentence, this Agreement will be binding upon my heirs, executors,
administrators and other legal representatives and will be for the benefit of
the Company, its successors, and its assigns.
Date:
--------------------- ------------------------
(Name)
--------------------------
Witness
-4-
104
EXHIBIT A
LIST OF PRIOR INVENTIONS
AND ORIGINAL WORKS OF AUTHORSHIP
Identifying
Number of
Title Date Brief Description
----- ---- -----------------
__ No inventions or improvements
__ Additional Sheets Attached
Signature of Employee:
-----------------------------------
(Name)
Date:
------------------------------------
105
EXHIBIT B
EXCEPTION TO ASSIGNMENTS
The assignment provisions shall not apply to an invention that the
employee developed entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information except for those
inventions that either:
(1) Relate at the time of conception or reduction to practice of
the invention to the employer's business, or actual or demonstrably anticipated
research or development of the employer.
(2) Result from any work performed by the employee for the
employer.
106
EXHIBIT C
SPECTRX, INC.
TERMINATION CERTIFICATION
This is to certify that I do not have in my possession, nor have I failed
to return, any devices, records, data, notes, reports, proposals, lists,
correspondence, specifications, drawings, blueprints, sketches, materials,
equipment, other documents or property, or reproductions of any aforementioned
items belonging to Spectrx, Inc., its subsidiaries, affiliates, successors or
assigns (together, the "COMPANY").
I further certify that I have complied with all the terms of the
Company's Employee Proprietary Information Agreement signed by me, including the
reporting of any inventions and original works of authorship (as defined
therein), conceived or made by me (solely or jointly with others) covered by
that agreement.
I further agree that, in compliance with the Employee Proprietary
Information Agreement, I will preserve as confidential all trade secrets,
confidential knowledge, data or other proprietary information relating to
products, processes, know-how, designs, formulas, developmental or experimental
work, computer programs, data bases, other original works of authorship,
customer lists, business plans, financial information or other subject matter
pertaining to any business of the Company or any of its employees, clients,
consultants or licensees.
I further agree that for twelve (12) months from this date, I will not
hire any employees of the Company and I will not solicit, induce, recruit or
encourage any of the Company's employees to leave their employment.
Date:
---------------------------
-------------------------------
(Name)
107
EXHIBIT D
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
108
SPECTRX, INC.
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
This Amended and Restated Registration Rights Agreement (the
"Agreement") amends and restates the Prior Registration Rights Agreement (as
defined in Section 1 hereof) and is effective as of October 21, 1996 by and
among SpectRx, Inc., a Delaware corporation (the "Company"), the holders of
Registrable Securities (as such term is defined in the Prior Registration Rights
Agreement) and the purchaser of the Company's Series C Preferred Stock.
NOW THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement and in the agreements pursuant to which the holders of Registrable
Securities acquired their Registrable Securities in the Company, the parties
hereby agree as follows:
1. Amendment of Prior Registration Rights Agreements. This Agreement
amends and restates the Prior Registration Rights Agreement in its entirety.
Such amendment and restatement is effective upon the execution of this Agreement
by the holders of at least a majority of the Registrable Securities (as such
term is defined in the Prior Registration Rights Agreement) outstanding as of
the date of this Agreement. For purposes of this Agreement, the term "Prior
Registration Rights Agreement" shall mean that certain Amended and Restated
Registration Rights Agreement dated August 30, 1996.
2. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"Act" shall mean the Securities Act of 1933, as amended.
"Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Act.
"Holder" shall mean any person owning or having the right to acquire
Registrable Securities and any person holding Registrable Securities to whom the
rights under this Agreement have been transferred in accordance with paragraph
11 hereof.
"Initiating Holders" shall mean any Holders who in the aggregate
possess more than 50% of the Registrable Securities.
"Register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Act, and the declaration or ordering of the effectiveness of
such registration statement.
"Registrable Securities" shall mean (i) the Common Stock issuable or
issued upon conversion of the Series A Preferred Stock, (ii) the Common Stock
issuable or issued upon conversion of the Series A1 Preferred Stock, (iii) the
Common Stock issuable upon conversion of the Series A
109
Preferred Stock issuable or issued upon exercise of certain warrants issued
pursuant to the Note and Warrant Purchase Agreement dated April 6, 1994, (iv)
the Common Stock issuable upon conversion of the Series A Preferred Stock
issuable or issued upon exercise of certain warrants issued pursuant to the Note
and Warrant Purchase Agreement dated April 29, 1994, (v) the Common Stock
issuable upon conversion of the Series A Preferred Stock issuable or issued upon
exercise of certain warrants issued pursuant to the Note and Warrant Purchase
Agreement dated June 15, 1994, (vi) the Common Stock issuable or issued upon
conversion of the Series B Preferred Stock, (vii) the Common Stock issuable or
issued upon conversion of the Series B1 Preferred Stock, (viii) the Common Stock
issuable or issued upon conversion of the Series C Preferred Stock, (ix) the
Common Stock issuable or issued upon conversion of the Series C1 Preferred
Stock, and (x) any Common Stock or other securities issued or issuable with
respect to such Series A Preferred Stock, Series A1 Preferred Stock, Series B
Preferred Stock, Series B1 Preferred Stock, Series C Preferred Stock, Series C1
Preferred Stock, or Common Stock upon any stock split, stock dividend,
recapitalization, or similar event, or any Common Stock otherwise issued or
issuable with respect to such Series A Preferred Stock, Series A1 Preferred
Stock, Series B Preferred Stock, Series B1 Preferred Stock, Series C Preferred
Stock, Series C1 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.
"Registration Expenses" shall mean all expenses, except Selling
Expenses as otherwise stated below, incurred by the Company in complying with
paragraphs 3, 4 and 5 hereof, including, without limitation, all registration,
qualification and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, blue sky fees and expenses, the
expense of any special audits incident to or required by any such registration
(but excluding the compensation of regular employees of the Company which shall
be paid in any event by the Company).
"Selling Expenses" shall mean all underwriting discounts, selling
commissions, stock transfer taxes applicable to the securities registered by the
Holders, and any fees and expenses of special counsel of a selling stockholder.
3. Requested Registration.
(a) Request for Registration. In case the Company shall
receive from Initiating Holders a written request that the Company effect any
registration, qualification or compliance with respect to at least 80% of the
shares of Registrable Securities held by them (or any lesser number of shares of
Registrable Securities having an expected aggregate offering price, net of
underwriting discounts and commissions, greater than $7,500,000), the Company
will:
(i) promptly give written notice of the proposed
registration, qualification or compliance to all other Holders; and
(ii) as soon as practicable, use its best efforts to
effect such registration, qualification or compliance (including, without
limitation, appropriate qualification under applicable blue
-2-
110
sky or other state securities laws and appropriate compliance with applicable
regulations issued under the Act and any other governmental requirements or
regulations) as may be so requested and as would permit or facilitate the sale
and distribution of all or such portion of such Registrable Securities as are
specified in such request, together with all or such portion of the Registrable
Securities of any Holder or Holders joining in such request as are specified in
a written request received by the Company within 20 days after receipt of such
written notice from the Company.
Provided, however, that the Company shall not be
obligated to take any action to effect any such registration, qualification or
compliance pursuant to this paragraph 3:
(1) In any particular jurisdiction in which
the Company would be required to execute a general consent to service of process
in effecting such registration, qualification or compliance unless the Company
is already subject to service in such jurisdiction and except as may be required
by the Act;
(2) Prior to the earlier of (i) September 1,
1998 or (ii) six months after the effective date of the Company's first
registered public offering of its stock;
(3) During the period starting with the date
sixty (60) days prior to the Company's estimated date of filing of, and ending
on the date three (3) months immediately following the effective date of, any
registration statement pertaining to securities of the Company (other than a
registration of securities in a Rule 145 transaction or with respect to an
employee benefit plan), provided that the Company is actively employing in good
faith all reasonable efforts to cause such registration statement to become
effective;
(4) After the Company has effected two such
registrations pursuant to this paragraph 3(a), and such registrations have been
declared or ordered effective; or
(5) If the Company shall furnish to such
Holders a certificate signed by the President of the Company that in the good
faith judgment of the Board of Directors it would be seriously detrimental to
the Company or its stockholders for a registration statement to be filed at such
time, then the Company's obligation to use its best efforts to register, qualify
or comply under this paragraph 3 shall be deferred for a period not to exceed 90
days from the date of receipt of written request from the Initiating Holders,
provided, however, that the Company may not make such certification more than
once every calendar year.
Subject to the foregoing clauses (1) through (5), the Company
shall file a registration statement covering the Registrable Securities so
requested to be registered as soon as practicable, after receipt of the request
or requests of the Initiating Holders and in any event within one hundred eighty
(180) days after receipt of such request.
(b) Underwriting. In the event that a registration pursuant to
this paragraph 3 is for a registered public offering involving an underwriting,
the Company shall so advise the Holders as part of the notice given pursuant to
paragraph 3(a)(i). In such event, the right of any Holder to such
-3-
111
registration shall be conditioned upon such Holder's participation in the
underwriting arrangements required by this paragraph 3, and the inclusion of
such Holder's Registrable Securities in the underwriting to the extent requested
shall be limited to the extent provided herein.
The Company shall (together with all Holders proposing to
distribute their securities through such underwriting) enter into an
underwriting agreement in customary form with the managing underwriter selected
for such underwriting by a majority in interest of the Initiating Holders, but
subject to the Company's reasonable approval. Notwithstanding any other
provision of this paragraph 3, if the managing underwriter advises the
Initiating Holders in writing that marketing factors require a limitation of the
number of shares to be underwritten, then the Company shall so advise all
holders of Registrable Securities and the number of shares of Registrable
Securities that may be included in the registration and underwriting shall be
allocated among all Holders thereof (except those Holders who have indicated to
the Company their decision not to distribute any of their Registrable Securities
through such underwriting) in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities held by such Holders at the time of
filing the registration statement, provided, however, that the number of shares
of Registrable Securities to be included in such underwriting shall not be
reduced unless all other securities are first entirely excluded from the
underwriting. No Registrable Securities excluded from the underwriting by reason
of the underwriter's marketing limitation shall be included in such
registration. To facilitate the allocation of shares in accordance with the
above provisions, the Company or the underwriters may round the number of shares
allocated to any Holder to the nearest 100 shares.
If any Holder of Registrable Securities disapproves of the
terms of the underwriting, such person may elect to withdraw therefrom by
written notice to the Company, the managing underwriter and the Initiating
Holders. The Registrable Securities and/or other securities so withdrawn shall
also be withdrawn from registration, and such Registrable Securities shall not
be transferred in a public distribution prior to 90 days after the effective
date of such registration, or such other shorter period of time as the
underwriters may require.
4. Company Registration.
(a) Notice of Registration. If at any time or from time to
time the Company shall determine to register any of its securities, either for
its own account or the account of a security holder or holders, other than (i)
in connection with the Company's initial public offering, (ii) a registration
relating solely to employee benefit plans, or (iii) a registration relating
solely to a Commission Rule 145 transaction, the Company will:
(i) promptly give to each Holder written notice thereof;
and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests, made within 20 days after receipt of such written notice from the
Company, by any Holder.
-4-
112
(b) Underwriting. If the registration of which the Company
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to paragraph 4(a)(i). In such event the right of any Holder to
registration pursuant to this paragraph 4 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of Registrable
Securities in the underwriting to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall
(together with the Company and the other holders distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the managing underwriter selected for such underwriting by the
Company.
Notwithstanding any other provision of this paragraph 4, if
the managing underwriter determines that marketing factors require a limitation
of the number of shares to be underwritten, the managing underwriter may limit
the Registrable Securities or other securities to be included in such
registration or exclude them entirely. The Company shall so advise all Holders
and other holders distributing their securities through such underwriting and
the number of shares of Registrable Securities and other securities that may be
included in the registration and underwriting shall be allocated among the
holders thereof in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities and other securities held by such holders at
the time of filing the registration statement. To facilitate the allocation of
shares in accordance with the above provisions, the Company may round the number
of shares allocated to any Holder or holder to the nearest 100 shares.
If any Holder or holder disapproves of the terms of any such
underwriting, he may elect to withdraw therefrom by written notice to the
Company and the managing underwriter. Any securities excluded or withdrawn from
such underwriting shall be withdrawn from such registration, and shall not be
transferred in a public distribution prior to 90 days after the effective date
of the registration statement relating thereto, or such other shorter period of
time as the underwriters may require.
(c) Right to Terminate Registration. The Company shall have
the right to terminate or withdraw any registration initiated by it under this
paragraph 4 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration.
5. Registration on Form S-3.
(a) If any Holder or Holders request that the Company file a
registration statement on Form S-3 (or any successor form to Form S-3) for a
public offering of shares of the Registrable Securities the reasonably
anticipated aggregate price to the public of which, net of underwriting
discounts and commissions, would exceed $500,000, and the Company is a
registrant entitled to use Form S-3 to register the Registrable Securities for
such an offering, the Company shall use its best efforts to cause such
Registrable Securities to be registered for the offering on such form and to
cause such Registrable Securities to be qualified in such jurisdictions as the
Holder or Holders may reasonably request; provided, however, that the Company
shall not be required to effect more than one registration pursuant to this
paragraph 5 in any calendar year. The substantive provisions of paragraph 4(b)
shall be applicable to each registration under this paragraph 5.
-5-
113
(b) Notwithstanding the foregoing, the Company shall not be
obligated to take any action pursuant to this paragraph 5: (i) in any particular
jurisdiction in which the Company would be required to execute a general consent
to service of process in effecting such registration, qualification or
compliance unless the Company is already subject to service in such jurisdiction
and except as may be required by the Act; (ii) if the Company, within ten (10)
days of the receipt of the request of the initiating Holders, gives notice of
its bona fide intention to effect the filing of a registration statement with
the Commission within ninety (90) days of receipt of such request (other than
with respect to a registration statement relating to a Rule 145 transaction, an
offering solely to employees or any other registration which is not appropriate
for the registration of Registrable Securities); (iii) during the period
starting with the date sixty (60) days prior to the Company's estimated date of
filing of, and ending on the date six (6) months immediately following, the
effective date of any registration statement pertaining to securities of the
Company (other than a registration of securities in a Rule 145 transaction or
with respect to an employee benefit plan), provided that the Company is actively
employing in good faith all reasonable efforts to cause such registration
statement to become effective; or (iv) if the Company shall furnish to such
Holder a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors it would be seriously detrimental
to the Company or its stockholders for registration statements to be filed at
such time, then the Company's obligation to use its best efforts to file a
registration statement shall be deferred for a period not to exceed 90 days from
the receipt of the request to file such registration by such Holder provided
that the Company may not make such certification more than once every calendar
year.
6. Expenses of Registration. All Registration Expenses
(exclusive of underwriting discounts and commissions or fees of special
counsel for a selling Holder) incurred in connection with (i) two registrations
pursuant to paragraph 3 and (ii) all registrations pursuant to paragraphs 4 and
5 shall be borne by the Company.
7. Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Agreement,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(a) Prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for at least one hundred
and twenty (120) days or until the distribution described in the Registration
Statement has been completed;
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them.
-6-
114
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.
(g) Furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this Agreement, on the date
that such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Agreement, (i) an opinion, dated
such date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and to
the Holders requesting registration of Registrable Securities and (ii) a letter
dated such date, from the independent accountants of the Company, in form and
substance as is customarily given by independent accountants to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and to
the Holders requesting registration of Registrable Securities.
8. Indemnification.
(a) The Company will indemnify each Holder, each of its
officers and directors and partners, and each person controlling such Holder
within the meaning of Section 15 of the Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Agreement, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Act, against all expenses, claims, losses,
damages or liabilities (or actions in respect thereof), including any of the
foregoing incurred in settlement of any litigation, commenced or threatened,
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any registration statement, prospectus, offering
circular or other document, or any amendment or supplement thereto, incident to
any such registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, or any violation by the Company of any
federal, state or common law rule or regulation applicable to the Company in
connection with any such registration, qualification or compliance, and the
Company will reimburse each such Holder, each of its officers and directors, and
each person controlling such Holder,
-7-
115
each such underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage, liability or
action, provided that the Company will not be liable in any such case to the
extent that any such claim, loss, damage, liability or expense arises out of or
is based on any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder,
controlling person or underwriter and stated to be specifically for use therein.
(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of Section 15 of the Act, and
each other such Holder, each of its officers and directors and each person
controlling such Holder within the meaning of Section 15 of the Act, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Company, such Holders,
such directors, officers, persons, underwriters or control persons for any legal
or any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Company by an instrument
duly executed by such Holder and stated to be specifically for use therein.
Notwithstanding the foregoing, the liability of each Holder under this
subsection (b) shall be limited in an amount equal to the public offering price
of the shares sold by such Holder, unless such liability arises out of or is
based on willful conduct by such Holder.
(c) Each party entitled to indemnification under this
paragraph 8 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, provided, however, that the Indemnifying Party
shall bear the expense of independent counsel for the Indemnified Party if the
Indemnified Party reasonably determines that representation of both parties by
the same counsel would be inappropriate due to actual or potential conflicts of
interest, and provided further that the failure of any Indemnified Party to give
notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Agreement unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action
and provided further, that the Indemnifying Party shall not assume the defense
for matters as to which there is a conflict of interest or separate and
different defenses. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment
-8-
116
or enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party of a
release from all liability in respect to such claim or litigation.
9. Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held by
them and the distribution proposed by such Holder or Holders as the Company may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Agreement.
10. Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Registrable Securities to the public without registration, after
such time as a public market exists for the Common Stock of the Company, the
Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Act, at all times after the
effective date that the Company becomes subject to the reporting requirements of
the Act or the Securities Exchange Act of 1934, as amended.
(b) Use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company under the
Act and the Securities Exchange Act of 1934, as amended (at any time after it
has become subject to such reporting requirements);
(c) So long as a Holder owns any Registrable Securities to
furnish to the Holder forthwith upon request a written statement by the Company
as to its compliance with the reporting requirements of said Rule 144 (at any
time after 90 days after the effective date of the first registration statement
filed by the Company for an offering of its securities to the general public),
and of the Act and the Securities Exchange Act of 1934 (at any time after it has
become subject to such reporting requirements), a copy of the most recent annual
or quarterly report of the Company, and such other reports and documents of the
Company and other information in the possession of or reasonably obtainable by
the Company as a Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing a Holder to sell any such securities
without registration.
11. Transfer of Registration Rights. The rights to cause the Company to
register securities granted Holders under paragraphs 3, 4 and 5 may be assigned
to a transferee or assignee in connection with any transfer or assignment of
Registrable Securities by a Holder provided that: (i) such transfer may
otherwise be effected in accordance with applicable securities laws, and (ii)
such assignee or transferee acquires at least 400,000 shares of Registrable
Securities. Notwithstanding the foregoing, the rights to cause the Company to
register securities may be assigned, in connection with a distribution by such
Holder, to any parent or subsidiary company or to any partner, former partner,
or the estate of any such partner without compliance with item (ii) above,
provided written notice thereof is promptly given to the Company.
-9-
117
12. Standoff Agreement. Each Holder agrees, in connection with the
Company's initial public offering of the Company's securities that, upon request
of the Company or the underwriters managing any underwritten offering of the
Company's securities, not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any Common Stock of the
Company (other than those included in the registration) without the prior
written consent of the Company or such underwriters, as the case may be, for
such period of time (not to exceed one hundred eighty (180) days) from the
effective date of such registration as may be requested by the underwriters,
provided that the officers and directors of the Company enter into similar
agreements.
13. Termination of Registration Rights. All rights of the Holders
under this Agreement shall terminate four (4) years from the date of the
Company's initial public offering.
14. Amendment of Registration Rights. Any provision of the Agreement
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and the holders of a majority of the Registrable
Securities then outstanding. Any amendment or waiver effected in accordance with
this paragraph shall be binding upon each holder of any Registrable Securities
then outstanding, each future holder of all such Registrable Securities, and the
Company.
15. Limitations on Subsequent Registration Rights. From and after the
date of this Agreement, the Company shall not, without the prior written consent
of the Holders of a majority of the then outstanding Registrable Securities,
enter into any agreement with any holder or prospective holder of any securities
of the Company which would allow such holder or prospective holder (a) to
include such securities in any registration filed under paragraph 3 hereof,
unless under the terms of such agreement, such holder or prospective holder may
include such securities in any such registration only to the extent that the
inclusion of his securities will not reduce the amount of the Registrable
Securities of the Holders which is included or (b) to make a demand registration
which could result in such registration statement being declared effective prior
to the earlier of either of the dates set forth in subparagraph 3(a)(ii)(2) or
within one hundred twenty (120) days of the effective date of any registration
effected pursuant to paragraph 3.
16. Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement among the parties with regard to the subject matter
hereof. Nothing in this Agreement, express or implied, is intended to confer
upon any person or entity, other than the parties hereto and their respective
successors and assigns, any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided herein.
17. Governing Law. This Agreement shall be governed in all respects
by the laws of the State of Delaware as such laws are applied to agreements
between Delaware residents entered into and to be performed entirely within
Delaware.
18. Successors and Assigns. Except as otherwise expressly 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.
-10-
118
19. Notices, etc. All notices and other communications required or
permitted hereunder shall be effective upon receipt and shall be in writing and
may be delivered in person, by telecopy, electronic mail, overnight delivery
service or U.S. mail, in which event it may be mailed by first-class, certified
or registered, postage prepaid, addressed (a) if to a Holder, at such Holder's
address set forth at the end of this Agreement, or at such other 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 (b) if
to the Company, at its address set forth at the end of this Agreement, or at
such other address as the Company shall have furnished to the Holders and each
such other holder in writing.
20. Severability. Any invalidity, illegality or limitation on the
enforceability of the Agreement or any part thereof, by any Holder whether
arising by reason of the law of the respective Holder's domicile or otherwise,
shall in no way affect or impair the validity, legality or enforceability of
this Agreement with respect to other Holders. If any provision of this Agreement
shall be judicially determined to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
21. Titles and Subtitles. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
22. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
23. Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to the Holders, upon any breach or
default of the Company under this Agreement, shall impair any such right, power
or remedy, nor shall it be construed to be a waiver of any such breach or
default, or any acquiescence therein, or of 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. It is further agreed that any waiver, permit, consent or approval of
any kind or character by a Holder of any breach or default under this Agreement,
or any waiver by a 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 writing and that all remedies, either under this Agreement, or by law or
otherwise afforded to a Holder, shall be cumulative and not alternative.
24. Attorneys' Fees. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
-11-
119
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
day and year first written above.
COMPANY: SPECTRX, INC.
By: /s/ Xxxx X. Xxxxxxx
---------------------
Title: President & CEO
-------------------
INVESTORS: XXXXXXX MEDICAL VENTURES 1993 L.P.,
a Delaware limited partnership
By: Xxxxxxx/Dover Limited
Partnership, general partner
By: Wilmington Securities, Inc., its
sole general partner
By: /s/ Xxxxxxx Xxxxxx
-------------------------
Title: Vice President
-----------------------
NORO-XXXXXXX PARTNERS II, L.P., a
Georgia limited partnership
By: Xxxxxxx & Company, II,
general partner
By: /s/ Xxxx X. Xxxxx Xx.
-------------------------------
Xxxx X. Xxxxx Xx.
Title: General Partner
-12-
120
XXXXXXX MEDICAL VENTURES 1994 L.P.,
a Delaware limited partnership
By: Xxxxxxx/Dover Limited
Partnership, general partner
By: Wilmington Securities, Inc., its
sole general partner
By: /s/ Xxxxxxx Xxxxxx
-----------------------
Title: Vice President
--------------------------
XXXXXXX MEDICAL VENTURES 1995 L.P.,
a Delaware limited partnership
By: Xxxxxxx/Dover Limited
Partnership, general partner
By: Wilmington Securities, Inc., its
sole general partner
By: /s/ Xxxxxxx Xxxxxx
------------------------------
Title: Vice President
---------------------------
XXXXXXX MEDICAL VENTURES 1996 L.P.,
a Delaware limited partnership
By: Xxxxxxx/Dover Limited
Partnership, general partner
By: Wilmington Securities, Inc., its
sole general partner
By: /s/ Xxxxxxx Xxxxxx
----------------------
Title: Vice President
-------------------
-13-
121
XXXXXX LABORATORIES,
an Illinois corporation
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------
Title:President & Chief Operating Officer
-----------------------------------
/s/ Xxxx Xxxxxx
-----------------------
Xxxx Xxxxxx
/s/ Xxxxx Xxxxxx
-----------------------
Xxxxx Xxxxxx
/s/ Xxxxxxx X. Xxxxxx
-----------------------
Xxxxxxx X. Xxxxxx
PMM, INC.
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------
Xxxxx X. Xxxxxxxx
-----------------------
Xxxxx Xxxxxxxxx
/s/ Xxxxxxx Xxxxxxxx
-----------------------
Xxxxxxx Xxxxxxxx
/s/ Xxxxxx Xxxxxxx
-----------------------
Xxxxxx Xxxxxxx
/s/ Xxxxxxx X. Xxxxx
-----------------------
Xxxxxxx X. Xxxxx
/s/ Xxxxxxx Xxxxxxx, Xx.
-----------------------
Xxxxxxx Xxxxxxx, Xx.
/s/ Xxxx Xxxxxx, M.D.
-----------------------
Xxxx Xxxxxx, M.D.
-14-
122
/s/ Xxxxx X. Xxxxxx
------------------------
Xxxxx X. Xxxxxx
/s/ Xxxxxxx Xxxx, M.D.
------------------------
Xxxxxxx Xxxx, M.D.
/s/ Xxxxxx Xxxxxxx
------------------------
Xxxxxx Xxxxxxx
/s/ I. Xxxxxxx Xxxxxxx
------------------------
I. Xxxxxxx Xxxxxxx, O.D.
/s/ Xxxxxx Xxxxx
------------------------
Xxxxxx Xxxxx
/s/ Xxxxx X. Xxxxxxxxx
------------------------
Xxxxx X. Xxxxxxxx
/s/ Xxxxx Xxxxxxxxxxx
------------------------
Xxxxx Xxxxxxxxxxx
/s/ R. Xxxxxx Xxxxxxx
------------------------
R. Xxxxxx Xxxxxxx
/s/ Xxxxxx Gold
------------------------
Xxxxxx Gold
The Xxxxx Xxxxxxx, Inc. Successor Trust
By:
-----------------------------------
Title: Trustee
-15-
123
/s/ Xxxxxxx Xxxxxxxx
-----------------------
Xxxxxxx Xxxxxxxx, M.D.
/s/ Xxxxx Xxxxx
-----------------------
Xxxxx Xxxxx
/s/ Xxxx Xxxxxx
-----------------------
Xxxx Xxxxxx
/s/ Xxxx Xxxxx and Xxxxxxx Xxxxx
---------------------------------
Xxxx Xxxxx and Xxxxxxx Xxxxx JROS
/s/ Xxxxxxx X. Xxxxxxxx
-----------------------
Xxxxxxx X. Xxxxxxxx
/s/ Xxxxxxxx Xxxxxxxx
-----------------------
Dr. Xxxxxxxx Xxxxxxxx
POWERVISION, INC.
By: /s/ Xxxxx Xxxxxx
-----------------------
Title: Director
--------------------
/s/ Xxxx Xxxxxxxxx
-----------------------
Xx. Xxxx Xxxxxxxxx
/s/ Xxxx Xxxx
-----------------------
Xxxx Xxxx
-16-
124
EXHIBIT E
LEGAL OPINION
125
October 21, 1996
To Xxxxxx Laboratories
Ladies and Gentlemen:
Reference is made to the Series C Preferred Stock Purchase Agreement,
dated as of October __, 1996 (the "Agreement"), complete with all listed
exhibits thereto, by and among SpectRx, Inc., a Delaware corporation (the
"Company"), and Xxxxxx Laboratories, an Illinois corporation (the "Purchaser"),
which provides for the issuance by the Company to the Purchaser of shares of
Series C Preferred Stock of the Company (the "Series C Shares"). This opinion is
rendered to you pursuant to Section 5.3 of the Agreement, and all terms used
herein have the meanings defined for them in the Agreement unless otherwise
defined herein.
We have acted as counsel for the Company in connection with the
negotiation of the Agreement and the issuance of the Series C Shares. As such
counsel, we have made such legal and factual examinations and inquiries as we
have deemed advisable or necessary for the purpose of rendering this opinion. In
addition, we have examined originals or copies of such corporate records of the
Company, certificates of public officials and such other documents which we
consider necessary or advisable for the purpose of rendering this opinion. In
such examination we have assumed the genuineness of all signatures on original
documents, the authenticity and completeness of all documents submitted to us as
originals, the conformity to original documents of all copies submitted to us
and the due execution and delivery of all documents (except as to due execution
and delivery by the Company) where due execution and delivery are a prerequisite
to the effectiveness thereof.
As used in this opinion, the expression "to our knowledge," "known to
us" or similar language with reference to matters of fact means that, after an
examination of documents made available to us by the Company, and after
inquiries of officers of the Company, but without any further independent
factual investigation, we find no reason to believe that the opinions expressed
herein are factually incorrect. Further, the expression "to our knowledge",
"known to us" or similar language with reference to matters of fact refers to
the current actual knowledge of the attorneys of this firm who have worked on
matters for the Company solely in connection with the Agreement and the
transactions contemplated thereby. Except to the extent expressly set forth
herein or as we otherwise believe to be necessary to our opinion, we have not
undertaken any independent investigation to determine the existence or absence
of any fact, and no inference as to our knowledge of the existence or absence of
any fact should be drawn from our representation of the Company or the rendering
of the opinion set forth below.
For purposes of this opinion, we are assuming that you have all
requisite power and authority, and have taken any and all necessary corporate or
partnership action, to execute and deliver the Agreement, and we are assuming
that the representations and warranties made by the Purchaser in the
126
Agreement and pursuant thereto are true and correct. We are also assuming that
the Purchaser has purchased the Series C Shares for value, in good faith and
without notice of any adverse claims within the meaning of the California
Uniform Commercial Code.
The opinions hereinafter expressed are subject to the following
qualifications:
(a) We express no opinion as to the effect of applicable
bankruptcy, insolvency, reorganization, moratorium or other similar federal or
state laws affecting the rights of creditors;
(b) We express no opinion as to the effect of rules of law
governing specific performance, injunctive relief or other equitable remedies
(regardless of whether any such remedy is considered in a proceeding at law or
in equity);
(c) We express no opinion as to compliance with the anti-fraud
provisions of applicable securities laws;
(d) We express no opinion as to the enforceability of the
indemnification provisions of Section 7 of the Registration Rights Agreement to
the extent the provisions thereof may be subject to limitations of public policy
and the effect of applicable statutes and judicial decisions;
(e) We are members of the Bar of the State of California and,
except as set forth in paragraph 7 below with respect to the securities laws of
other states, we express no opinion as to any matter relating to the laws of any
jurisdiction other than the federal laws of the United States of America and the
laws of the State of California. To the extent this opinion addresses applicable
securities laws of states other than the State of California, we have not
retained nor relied on the opinion of counsel admitted to the bar of such
states, but rather have relied on compilations of the securities laws of such
states contained in reporting services presently available to us.
Based upon and subject to the foregoing, and except as set forth in the
Schedule of Exceptions to the Agreement, we are of the opinion that:
1. 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 corporate power
to own and operate its properties and assets, and to carry on its business as
presently conducted. The Company is qualified to do business as a foreign
corporation in the State of Georgia.
2. The Company has all requisite legal and corporate power to
execute and deliver the Agreement, to sell and issue the Series C
Shares thereunder, to issue the Common Stock issuable upon conversion of the
Series C Shares and to carry out and perform its obligations under the terms of
the Agreement.
3. The authorized capital stock of the Company consists of
15,000,000 shares of Common, 2,083,500 shares of which are issued and
outstanding, 3,560,000 shares of Series A Preferred of which 3,103,784 shares
are issued and outstanding, 3,560,000 shares of Series A1 Preferred none of
which are
-2-
127
issued and outstanding, 1,375,000 shares of Series B Preferred of which
1,172,071 shares of Series B Preferred issued and outstanding, and 1,375,000
shares of Series B1 Preferred none of which are issued and outstanding, 500,000
shares of Series C Preferred of which 500,000 shares of Series C Preferred are
to be issued and outstanding, and 500,000 shares of Series C1 Preferred none of
which are issued and outstanding . There are also options outstanding to
purchase an aggregate of 458,351 shares of Common Stock and warrants to purchase
an aggregate of 1,268,643 shares of Common Stock and 360,000 shares of Series A
Preferred Stock. All such issued and outstanding shares of Preferred Stock and
Common Stock have been duly authorized and validly issued and are fully paid and
nonassessable and free of any preemptive or similar rights contained in the
Certificate of Incorporation or Bylaws of the Company or, to our knowledge, in
any agreement to which the Company is a party. The Common Stock issuable upon
conversion of the Series C Shares has been duly and validly reserved, and when
issued in accordance with the Company's Certificate of Incorporation will be
validly issued, fully paid and nonassessable. The Series C Shares issued under
the Agreement will be validly issued, fully paid and nonassessable and free of
any liens, encumbrances and preemptive or similar rights contained in the
Certificate of Incorporation or Bylaws of the Company, or, to our knowledge, in
any agreement by which the Company is a party, except as specifically provided
in the Agreement and in that certain Series A Preferred Stock Purchase Agreement
dated as of February 5, 1993; provided, however, that the Series C Shares (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
in the Agreement. To our knowledge, except for rights described in the Agreement
and the Certificate of Incorporation, there are no other options, warrants,
conversion privileges or other rights presently outstanding to purchase or
otherwise acquire any authorized but unissued shares of capital stock or other
securities of the Company, or any other agreements to issue any such securities
or rights.
4. All corporate action on the part of the Company, its directors and
stockholders necessary for the authorization, execution and delivery of the
Agreement by the Company, the authorization, sale, issuance and delivery of the
Series C Shares (and the Common Stock issuable upon conversion thereof) and the
performance of the Company's obligations under the Agreement has been taken. The
Agreement has been duly and validly executed and delivered by the Company and
constitutes a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms.
5. The execution, delivery and performance of and compliance with the
terms of the Agreement, and the issuance of the Series C Shares (and the Common
Stock issuable upon conversion thereof), do not violate any provision of the
Certificate of Incorporation or Bylaws, or, to our knowledge, any provision of
any applicable federal or state law, rule or regulation. To our knowledge, the
execution, delivery and performance of and compliance with the Agreement, and
the issuance of the Series C Shares (and the Common Stock issuable upon
conversion thereof) do not violate, or constitute a default under, any material
contract, agreement, instrument, judgment or decree binding upon the Company.
6. Except as identified in the Agreement, to our knowledge, there are
no actions, suits, proceedings or investigations pending against the Company or
its properties before any court or governmental agency (nor, to our knowledge,
has the Company received any written threat thereof), which, either in any case
or in the aggregate, are likely to result in any material adverse change in the
business or financial condition of the Company or any of its properties, or in
any material impairment of
-3-
128
the right or ability of the Company to carry on its business as now conducted,
or which questions the validity of the Agreement or any action taken or to be
taken by the Company in connection therewith.
7. No consent, approval or authorization of or designation, declaration
or filing with any governmental authority on the part of the Company is required
in connection with the valid execution and delivery of the Agreement, or the
offer, sale or issuance of the Series C Shares (and the Common Stock issuable
upon conversion thereof) or the consummation of any other transaction
contemplated by the Agreement, except (a) filing of the Amended and Restated
Certificate of Incorporation in the Office of the Secretary of State of the
State of Delaware, and (b) qualification (or taking such action as may be
necessary to secure an exemption from qualification, if available) under the
Delaware General Corporation Law and other applicable blue sky laws (but
excluding jurisdictions outside of the United States) of the offer and sale of
the Series C Shares (and the Common Stock issuable upon conversion thereof) and
the modification of rights of shareholders contemplated by the Agreement. The
filing referred to in clause (a) above has been accomplished and is effective.
Our opinion herein is otherwise subject to the timely and proper completion of
all filings and other actions contemplated herein where such filings and actions
are to be undertaken on or after the date hereof.
8. Subject to the accuracy of the Purchasers' Representations and
Warranties in Section 4 of the Agreement and their responses (if any) to the
Company's inquiries, we are of the opinion that the offer, sale and issuance of
the Series C Shares in conformity with the terms of the Agreement constitute
transactions exempt from the registration requirements of Section 5 of the
Securities Act of 1933, as amended.
This opinion is furnished to the Purchasers solely for their benefit in
connection with the purchase of the Series C Shares, and may not be relied upon
by any other person or for any other purpose without our prior written consent.
Very truly yours,
/s/ Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
----------------------------------------
XXXXXX XXXXXXX XXXXXXXX & XXXXXX
Professional Corporation
-4-
129
APPENDIX 1.20
LICENSED PATENTS
1. [*]
2. United States Patent No. 5,458,140, issued October 17, 1995,
entitled "Enhancement of Transdermal Monitoring Applications
with Ultrasound and Chemical Enhancers" and any reissuances
Thereof
3. [*]
4. [*]
5. [*]
6. [*]
[*] 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.
130
APPENDIX 1.25
PRIOR DISCLOSURES
SPECTRx CONFIDENTIAL
SUMMARY OF CONFIDENTIAL MATERIALS PROVIDED TO
ABBOTT BY SPECTRX
September 19, 1996
Video tapes presented to visiting Abbott contingent on [*] showing [*],
copies of which tapes will be sent to Abbott. Overhead transparencies
summarizing the history of NIMCO. Copy of the [*] tape presented to visiting
Abbott contingent on [*].
Fax Transmission of Letter of [*] to Xxx Xxxx describing clinical study
to examine if any of the Glucose levels in the [*], i.e., is there a [*] in the
glucose [*] as it is [*]. This letter also described how we were able to modify
the [*] to work on [*] and the performance qualification data of the modified
[*].
Fax Transmission of Interim Progress Report of [*] sent to Xxx Xxxx
describing the [*] clinical study on the first [*] subjects. Fax Transmission on
7-22-96 to Xxxx Xxxxxxxx, Memorandum of Terms Regarding Private Placement of
Equity Securities. Summarized proposed private placement, stock outstanding
series A, B, Preferred, common, warrants.
Fax Transmission of [*] to Xxx Xxxxxxxx in response to his letter of
[*] regarding the functional mechanism of the SpectRx [*] method. Summarizes the
typical operating parameters and discusses our method in the context of
patentability over the [*].
Delivery to Xxx Xxxxxxxx of several SpectRx prepared, [*] and various
different [*] used for histological and microscopic analysis by Abbott and
Xxxxxx'x sub-contractors. Results of this work summarized in the Abbott internal
report No. [*].
Materials entitled "Due Diligence Information" presented to Xxxxxx
Laboratories (Xxx Xxxx) on [*] in a binder. These materials consist of the
following documents:
[*] 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.
131
1. [*]
2. Invention Disclosure Statement for "A new concept
for [*]".
3. U.S. Patent No. 5,458,140
4. U.S. Patent No. 5,445,611
5. [*]
6. [*]
7. Invention Disclosure for "[*]".
8. Opinion from Xxxx Xxxxxxx of Xxxxxxxxxx & Xxxx,
dated August 8, 1995.
Draft of the most generic [*] concept patent which formed the basis for
our recent [*]. Sent to Xxx Xxxxxxxx on [*].
Fax Transmission of a summary of the [*] situation regarding [*].
Copy of the [*]
Copy of NIMCO/ALTEA/SPECTRX Agreement dated March 1, 1996.
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
-2-
132
APPENDIX 1.28
RESEARCH PROGRAM OUTLINE
(To be prepared by the Research Committee within sixty (60) days of the
Effective Date.)
133
APPENDIX 2.3
COST CATEGORIES
R&D COSTS TO BE REIMBURSED SPECTRx, INC.
The following outlines, by type, the research and development expenses which
will be incurred by SPECTRx, Inc. with respect to the Research Program which are
to be reimbursed by XXXXXX:
Personnel Direct Costs
- Actual Research Program direct labor cost incurred
- Labor burden of 20% on actual Research Program direct labor
cost incurred to cover the cost of employer payroll taxes,
employee benefits and workers compensation insurance.
- Actual cost of training (including any travel costs incident
thereto) required for existing or new employees specific to
the Research Program.
- Actual cost of recruiting new employees (including any travel
costs incident thereto) specifically for the Research Program.
Such cost to be prorated in the event the new employee will be
supporting other R&D initiatives in addition to the Research
Program.
- All actual travel costs incurred specifically related to any
Research Program activities.
Other Direct Costs
- Actual contract R&D costs incurred which are specifically
related to the Research Program, including but not limited to
the cost of contract labor, outside laboratory services, and
other research support.
- Actual cost of all outside consultants utilized to assist in
the Research Program.
- Actual cost of all outside consultants utilized to assist in
the Research Program, including but not limited to the costs
of medical service providers, stipends to participants, and
supplies incident to the clinical trials.
- All actual travel costs incurred by nonemployees of SPECTRx,
Inc. which are specifically related to the Research Program,
including but not limited to travel costs for contract
employees and outside consultants.
- Actual cost of all research materials and supplies utilized in
the Research Program.
134
- Actual cost of all equipment purchased or rented specifically
for the Research Program.
- Actual cost of software which is utilized to assist in the
Research Program.
Incremental R&D Overhead
- R&D overhead allocation to cover the incremental cost of the
following which must be incurred by SPECTRX specifically due
to the Research Program.
- Office Rental
- Utilities
- Telephone
- Office Expenses (office supplies, copier, fax, postage,
overnight delivery, etc.)
- Insurance
- Administrative Support used directly in support of Research
Program (direct support staff such as secretarial support)
-2-
135
APPENDIX 2.4
MILESTONE CRITERIA
136
MILESTONE 1a -[*]. [*] will prove the technology is capable of [*] in a short
time period.
OBJECTIVE: Demonstrate the [*] of using [*] techniques to collect a clean (i.e.
containing less than [*]) sample of [*] of sufficient volume (volume [*]) within
[*] total collection time. Performance to be shown on a study cohort made up of
[*] subjects, with statistically representative distribution of age, gender,
body mass, and ethnic background (skin pigmentation) applied to each sub-group.
The demonstration of [*] is exclusively limited to [*] of the sample of [*] from
the human subject, [*] of said sample to facilitate other processes such as
assaying this sample for glucose or any other analyte, or any other processes
not directly related to the basic sample extraction.
Measurement of success: Milestone 1a will be met if each of the following
desired outcomes are achieved:
1. [*]. When surveyed, [*] of the test cohort rate the [*] they
experienced with the [*] as clearly [*] which they associate with a
[*].
2. Volume of [*]. Within the [*] subjects, with [*] samples drawn from
each on [*] separate days, [*], the median volume of [*] collected
during a [*] shall be at least [*] as measured from the active
engagement of the [*], not necessarily the beginning of [*].
Furthermore, at least [*] of the [*] sampling events shall show at
least [*]. The [*] of the [*] may be performed by weighing the sample
collection reservoir before and after the [*] process on an analytical
balance with suitable sensitivity and precision to quantify the [*].
The reservoir used to collect the [*] may be constructed in any of the
following approved manners:
a. A simple chamber wherein the [*] merely forms a [*], and is then
collected for volumetric quantification by using either a
micro-capillary tube, a [*].
b. A [*] placed in the collection apparatus such that as the [*], it is
absorbed and held by the [*], which may be removed after the [*] for
[*].
c. Any other method which is designed by the joint research committee
and mutually agreed to by both SpectRx and Abbott.
3. [*]. [*] of the [*] shall show [*] was performed when a [*] is applied
to the site for [*]. [*] due to the [*] of the [*] observed at the [*].
4. Histology. [*] of the [*] shall show [*] have elapsed from the last day
of [*] greater than a [*]. To assist in making this evaluation as
objective as possible, a set of reference standards shall be assembled
which can be used by an impartial grader to establish the histology
score. This set of references shall be designed and mutually approved
by both Abbott and SpectRx and shall take into account such issues as
different skin colors, magnification used for viewing, possible methods
[*], and the specific apparatus to be used for the documentation and
archiving of the before and after condition of the [*].
5. Instrumentation. All hardware utilized in the [*] studies is expected
to be prototype and not miniaturized. Nevertheless, [*] shall also be
provided as part of the deliverable package required
[*] 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-
137
to satisfy the milestone 1a completion criteria. This review shall
cover such aspects of the hardware as [*] viability of the entire
product.
SpectRx will support the evaluation of assay systems per the direction
of the Research Committee. This support will include the design and
supply of [*], which mimic the capability of the SpectRx test
instruments in the ability of using [*].
6. A patent review of the technologies employed shall be performed, at
Xxxxxx'x expense to assess the questions regarding freedom to operate
within the existing intellectual property environment. The selection of
Legal counsel for this function shall be subject to decision by the
Research Committee.
MILESTONE 1b, [*] feasibility will integrate a [*] with the [*] to prove [*].
OBJECTIVE: Demonstrate the [*] of using an [*] and glucose assay techniques to
collect a clean (containing, [*] sample of [*]) of sufficient volume [*] within
[*]. The [*] may be implemented in its entirety with laboratory based prototype
devices which may have physical embodiments substantially different from any
product design to be implemented later, but which utilize the basic concepts and
demonstrate the feasibility of these concepts in a clinical testing environment
showing the ability to produce an amount of [*]. Additional time required by the
assay system itself is not included in this [*]. The demonstration of integrated
device feasibility is exclusively limited to the [*] and to the successful
measurement of the glucose content within this sample using the [*] chosen for
this [*]. These efforts are not designed to develop an optimized glucose assay
system, specifically tailored for this approach, but merely to demonstrate the
technical feasibility of the integrated concept. For example, it is expected
that the assay technologies potentially suitable for the final product will have
undergone substantial improvements in their own right in the areas of [*].
Additionally, [*] such as the [*] are not part of this effort.
Measurement of success: Milestone 1b will be met if each of the following
desired outcomes are achieved:
SpectRx Sampling Milestone:
1. Volume Extracted - Using a test base of [*] subjects, [*] will be [*]
from each subject. The success criteria will be that [*] of all [*]
will achieve [*].
2. Pain - If [*] differ from conditions in [*], then the criteria for the
[*].
3. Healing - If [*] differ from conditions in [*], then the criteria for
the [*].
4. Histology - If [*] differ from conditions in [*], then the criteria for
the [*].
Abbott Assay Milestone:
5. Volume - [*] of devices will report results with [*] applied and
achieve a precision of [*].
6. Accuracy -The performance with [*] test specimens of [*] will achieve:
[*].
Note: The Abbott assay milestone must be completed [*] of SpectRx
starting the [*] above or by the point in time SpectRx completes the 1b
sampling milestone above, whichever is later ("SpectRx Sampling
Milestone 1b Completion"). In the event the Abbott [*], or any modified
[*] 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-
138
version agreed to by the Research Committee, is not complete at the
time of [*]. Furthermore, if Abbott has not completed the Abbott assay
milestone above, or any modified version agreed to by the Research
Committee, [*] of SpectRx [*], [*] the balance of [*] will be
considered completed as regards to the license agreement between Abbott
and SpectRx. The parties recognize that upon SpectRx Sampling Milestone
1b Completion, the research team will work on integration of the
sampling and assay devices regardless of the status of the assay
performance.
Joint Milestone:
7. Completion of both the above milestone areas.
8. Accuracy - Integrated sampling/glucose assay performance criteria, with
the acceptance criteria being: The performance with [*] subjects, in
which an integrated device achieves [*], extraction of [*], and [*] for
glucose in a total time of [*] will achieve equivalent or better
performance, as judged by the correlation [*], both correlated to a
mutually agreed to clinically acceptable reference test method.
9. Instrumentation:
All hardware utilized in the [*] studies is expected to be [*].
Nevertheless, to the degree possible, an engineering review of the
technology focused on how the prototype hardware could be transferred
into a commercial realization shall also be provided as part of the
deliverable package required to satisfy the milestone 1a completion
criteria. This review shall cover such aspects of the hardware as [*]
viability of the entire product.
10. Patent Review if technology is different from 1a - A patent review of
the technologies employed shall be performed, at Xxxxxx'x expense to
assess the questions regarding freedom to operate within the existing
intellectual property environment. The selection of Legal counsel for
this function shall be subject to decision by the Research Committee.
The Research Committee can, by agreement of all those on the committee, revise
the foregoing milestone criteria during the Research Program based on any
additional marketing or technical data which may become available. After
agreement within the Research Committee, any such modified milestones will
become effective upon approval by the appropriate duly authorized
representatives of Xxxxxx and SpectRx as part of an amendment to this 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.
-4-
139
APPENDIX 4.2(C)
REGIONS AND DESIGNATED COUNTRIES
[*] [*] [*]
[*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*]
[*] [*]
[*] [*] [*]
[*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*]
[*] [*] [*]
[*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*]
[*] [*] [*]
[*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*]
[*] [*] [*]
[*] [*]
[*] [*] [*]
[*] [*]
[*] 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.
140
[*]
[*]
[*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*]
[*] [*]
[*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*]
[*]
[*]
[*]
[*]
[*]
[*]
[*]
[*]
[*]
[*] 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-
141
APPENDIX 14.5
ALTERNATIVE DISPUTE RESOLUTION
The parties recognize that bona fide disputes as to certain matters may
arise from time to time during the term of this Agreement which relate to either
party's rights and/or obligations. To have such a dispute resolved by this
Alternative Dispute Resolution ("ADR") provision, a party first must send
written notice of the dispute to the other party for attempted resolution by
good faith negotiations between their respective presidents (or their
equivalents) of the affected subsidiaries, divisions, or business units within
twenty-eight (28) days after such notice is received (all references to "days"
in this ADR provision are to calendar days).
If the matter has not been resolved within twenty-eight (28) days of
the notice of dispute, or if the parties fail to meet within such twenty-eight
(28) days, either party may initiate an ADR proceeding as provided herein. The
parties shall have the right to be represented by counsel in such a proceeding.
1. To begin an ADR proceeding, a party shall provide written notice to
the other party of the issues to be resolved by ADR. Within fourteen (14) days
after its receipt of such notice, the other party may, by written notice to the
party initiating the ADR, add additional issues to be resolved within the same
ADR.
2. Within twenty-one (21) days following receipt of the original ADR
notice, the parties shall select a mutually acceptable neutral to preside in the
resolution of any disputes in this ADR proceeding. If the parties are unable to
agree on a mutually acceptable neutral within such period, either party may
request the President of the CPR Institute for Dispute Resolution ("CPR"), 000
Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, to select a neutral
pursuant to the following procedures:
(a) The CPR shall submit to the parties a list of not less
than five (5) candidates within fourteen (14) days after receipt of the request,
along with a Curriculum Vitae for each candidate. No candidate shall be an
employee, director, or shareholder of either party or any of their subsidiaries
or affiliates.
(b) Such list shall include a statement of disclosure by each
candidate of any circumstances likely to affect his or her impartiality.
(c) Each party shall number the candidates in order of
preference (with the number one (1) signifying the greatest preference) and
shall deliver the list to the CPR within seven (7) days following receipt of the
list of candidates. If a party believes a conflict of interest exists regarding
any of the candidates, that party shall provide a written explanation of the
conflict to the CPR along with its list showing its order of preference for the
candidates. Any party failing to return a list of preferences on time shall be
deemed to have no order of preference.
(d) If the parties collectively have identified fewer than
three (3) candidates deemed to have conflicts, the CPR immediately shall
designate as the neutral the candidate for whom the parties collectively have
indicated the greatest preference. If a tie should result between two
candidates, the CPR may designate either candidate. If the parties collectively
have identified three (3) or more candidates
142
deemed to have conflicts, the CPR shall review the explanations regarding
conflicts and, in its sole discretion, may either (i) immediately designate as
the neutral the candidate for whom the parties collectively have indicated the
greatest preference, or (ii) issue a new list of not less than five (5)
candidates, in which case the procedures set forth in subparagraphs 2(a) - 2(d)
shall be repeated.
3. No earlier than twenty-eight (28) days or later than
fifty-six (56) days after selection, the neutral shall hold a hearing
to resolve each of the issues identified by the parties. The ADR proceeding
shall take place at a location agreed upon by the parties. If the parties
cannot agree, the neutral shall designate a location other than the principal
place of business of either party or any of their subsidiaries or affiliates.
4. At least seven (7) days prior to the hearing, each party shall
submit the following to the other party and the neutral:
(a) a copy of all exhibits on which such party intends to rely
in any oral or written presentation to the neutral;
(b) a list of any witnesses such party intends to call at the
hearing, and a short summary of the anticipated testimony of each witness;
(c) a proposed ruling on each issue to be resolved, together
with a request for a specific damage award or other remedy for each issue. The
proposed rulings and remedies shall not contain any recitation of the facts or
any legal arguments and shall not exceed one (1) page per issue.
(d) a brief in support of such party's proposed rulings and
remedies, provided that the brief shall not exceed twenty (20) pages. This page
limitation shall apply regardless of the number of issues raised in the ADR
proceeding. Except as expressly set forth in subparagraphs 4(a) - 4(d), no
discovery shall be required or permitted by any means, including depositions,
interrogatories, requests for admissions, or production of documents.
5. The hearing shall be conducted on two (2) consecutive days
and shall be governed by the following rules:
(a) Each party shall be entitled to five (5) hours of hearing
time to present its case. The neutral shall determine whether each party has had
the five (5) hours to which it is entitled.
(b) Each party shall be entitled, but not required, to make an
opening statement, to present regular and rebuttal testimony, documents or other
evidence, to cross-examine witnesses, and to make a closing argument.
Cross-examination of witnesses shall occur immediately after their direct
testimony, and cross-examination time shall be charged against the party
conducting the cross- examination.
(c) The party initiating the ADR shall begin the hearing and,
if it chooses to make an opening statement, shall address not only issues it
raised but also any issues raised by the responding party. The responding party,
if it chooses to make an opening statement, also shall address all issues
-2-
143
raised in the ADR. Thereafter, the presentation of regular and rebuttal
testimony and documents, other evidence, and closing arguments shall proceed in
the same sequence.
(d) Except when testifying, witnesses shall be excluded from
the hearing until closing arguments.
(e) Settlement negotiations, including any statements made
therein, shall not be admissible under any circumstances. Affidavits prepared
for purposes of the ADR hearing also shall not be admissible. As to all other
matters, the neutral shall have sole discretion regarding the admissibility of
any evidence.
6. Within seven (7) days following completion of the hearing,
each party may submit to the other party and the neutral a post-hearing
brief in support of its proposed rulings and remedies, provided that such brief
shall not contain or discuss any new evidence and shall not exceed ten (10)
pages. This page limitation shall apply regardless of the number of issues
raised in the ADR proceeding.
7. The neutral shall rule on each disputed issue within fourteen
(14) days following completion of the hearing. Such ruling may adopt in
its entirety the proposed ruling and remedy of one of the parties on each
disputed issue but may adopt one party's proposed rulings and remedies on some
issues and the other party's proposed rulings and remedies on other issues or
may craft rulings and remedies other than those proposed by the parties. The
neutral shall not issue any written opinion or otherwise explain the basis of
the ruling if the neutral adopts a proposed ruling and remedy.
8. The neutral shall be paid a reasonable fee plus expenses.
These fees and expenses, along with the reasonable legal fees and
expenses of the prevailing party (including all expert witness fees and
expenses), the fees and expenses of a court reporter, and any expenses for a
hearing room, shall be paid as follows:
(a) If the neutral rules in favor of one party on all disputed
issues in the ADR, the losing party shall pay 100% of such fees and expenses.
(b) If the neutral rules in favor of one party on some issues
and the other party on other issues, the neutral shall issue with the rulings a
written determination as to how such fees and expenses shall be allocated
between the parties. The neutral shall allocate fees and expenses in a way that
bears a reasonable relationship to the outcome of the ADR, with the party
prevailing on more issues, or on issues of greater value or gravity, recovering
a relatively larger share of its legal fees and expenses.
(c) 9. The rulings of the neutral and the allocation of fees
and expenses shall be binding, non-reviewable, and non-appealable, and may be
entered as a final judgment in any court having jurisdiction.
10. Except as provided in paragraph 9 or as required by law, the
existence of the dispute, any settlement negotiations, the ADR hearing, any
submissions (including exhibits, testimony, proposed rulings, and briefs), and
the rulings shall be deemed Confidential Information. The neutral shall have the
authority to impose sanctions for unauthorized disclosure of Confidential
Information.
-3-
