EXHIBIT 10.20
AMENDMENT TO LICENSE AGREEMENT
This Amendment to License Agreement by and between Iowa State University
Research Foundation, Inc., a body having corporate powers under the laws of the
State of Iowa ("ISURF"), and SpectruMedix Corporation, a Delaware corporation
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("SMDX"), is dated as of July 30, 1999.
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WHEREAS, ISURF and SMDX entered into that certain License Agreement
effective as of June 24, 1997 (the "License Agreement");
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WHEREAS, ISURF and SMDX desire to amend the License Agreement as
hereinafter set forth and otherwise to be bound hereby;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged and agreed, the parties hereto
hereby agree as follows:
1. Defined Terms. Capitalized terms used but not otherwise defined herein
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shall have the meanings ascribed thereto in the License Agreement.
2. Default. ISURF and SMDX acknowledge and agree that SMDX has defaulted
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under the License Agreement by virtue of its failure to pay the sum of
***** owing to ISURF as of the date hereof under Section 5 of the License
Agreement (the "Default Amount"). ISURF shall not claim a default or breach
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under the License Agreement with respect to the Default Amount unless and until
SMDX fails to comply with Section 3 hereof.
3. Payment of the Default Amount. SMDX shall pay the entire Default Amount
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by delivery by a nationally recognized overnight courier to ISURF of a check in
an amount at least equal to the Default Amount within ten (10) days after the
date hereof and in any event within three (3) business days after receipt by
SMDX of the Sublicense Issue Fee.
4. Payment of Minimum Royalty Payment. Section 5.2 of the License
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Agreement is hereby deleted and replaced in its entirety with the following:
5.2 Minimum Royalties: ISURF shall have the right to terminate this
license in the event that the Licensee does not pay ISURF at least the following
minimum royalty payments:
(i) For calendar year 2000, payable on
November 15, 2000 *******
(ii) For calendar year 2001 (and each
year thereafter), payable on
December 31, 2001
(and each year thereafter) *******
Such minimum royalty payments are nonrefundable, but they are
creditable against earned royalties to the extent provided in Section 5.4.
5. Termination. Section 14.2 of the License Agreement is hereby amended
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by deleting the phrase ***** and replacing it with the phrase *****.
6. Event of Default. In the event ISURF terminates the License Agreement
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in accordance with Section 14.2 thereof, SMDX shall upon the request of ISURF
grant to ISURF a worldwide non-exclusive license to the extent not prohibited by
other SMDX patents not licensed to ISURF to sublicense any patents, trade
secrets and other technology owned or developed by SMDX in connection with its
business of manufacturing, distributing and/or selling DNA sequencing equipment
to use and exploit such patents, trade secrets and technology. Any sublicense
granted by ISURF pursuant to such license shall provide that the relevant
sublicensee shall not further sublicense the licensed technology. ISURF shall
pay to SMDX a royalty of fifty percent (50%) of all revenues received by it in
connection with any such license; provided, however, that ISURF may instead
apply any amounts which would otherwise be owing to SMDX under this Section 6
against amounts owing to ISURF by SMDX under the License Agreement.
7. SMDX Board. Until July 31, 2002, ISURF shall have the right to
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designate a representative reasonably acceptable to SMDX to attend and observe
each meeting of the Board of Directors of SMDX (the "Observer"); provided,
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however, that SMDX shall have the right to terminate the observer status of the
Observer by written notice to ISURF upon the consummation of one or more public
offerings after the date hereof of equity securities of SMDX pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
as a result of which SMDX received an aggregate of not less than ******* in
gross proceeds. SMDX shall provide to the Observer a copy of all written
materials prepared for and provided to the Board of Directors of SMDX. ISURF
shall cause the Observer to execute and deliver a confidentiality agreement in
form and substance satisfactory to SMDX. Notwithstanding the foregoing, SMDX
shall be entitled (a) to withhold from the Observer any confidential written
materials dealing with commercial matters involving ISURF, and (b) to exclude
the Observer from any portion of any meeting of the Board of Directors dealing
with commercial matters involving ISURF. The rights provided to ISURF herein are
personal to ISURF and are not transferable. As promptly as practicable, but in
any event prior to the consummation of the closing of the Equity Financing (as
hereinafter defined), SMDX shall cause to be elected to the Board of Directors
at least two additional independent members. The "Equity Financing" shall mean
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the closing of a transaction or transactions pursuant to which SMDX raises
approximately ******* in cash, whether by means of debt and/or equity, from
banks, institutional investors and/or qualified private investors.
8. Phantom Stock Grant. SMDX hereby grants to ISURF an award of phantom
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stock (the "Stock Award") that entitles ISURF to receive, upon the occurrence of
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a Sale Event (as hereinafter defined), an amount equal to the excess of (i) the
Fair Market
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Value (as hereinafter defined) of 150,000 shares of Common Stock, par value
$0.00115 per share, of SMDX (the "Shares") as of the Sale Date (as hereinafter
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defined) over (ii) the Fair Market Value of the Shares as of the date hereof.
The Stock Award shall be payable on the Sale Date in cash. The Stock Award shall
be forfeited upon termination by ISURF of the License Agreement pursuant to
Section 14.2 thereof. ISURF shall have no rights as a stockholder as a result of
the Stock Award. Neither the Stock Award nor the rights and privileges conferred
hereby may be transferred, assigned, pledged, hypothecated or encumbered, and
shall not be subject to execution, attachment, garnishment or other similar
legal process. Upon any attempt to transfer, assign, pledge, hypothecate or
otherwise encumber or dispose of the Stock Award, the Stock Award and the rights
and privileges conferred hereby shall be rendered null and void. The number of
the Shares shall not be adjusted in the event of any stock dividend or
distribution, recapitalization, stock split, reverse stock split, share
combination, share exchange or any similar change in the capital structure of or
by SMDX.
"Sale Event" shall mean an acquisition, consolidation or merger (including,
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but not limited to, combinations, recapitalizations or redemptions) respecting
SMDX as a result of which more than 50% of the voting interests of SMDX, or as
applicable, the entity succeeding SMDX, become owned by an individual,
corporation, partnership, limited liability company or other entity which
together with its affiliates did not own more than 50% of SMDX immediately prior
to such event.
"Fair Market Value" shall mean (i) as of the Sale Event Date, the highest
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per share consideration (as cash or, if not as cash, the cash or fair market
value thereof) received for a share of Common Stock of SMDX in the Sale Event
and (ii) as of the date hereof, $0.15625.
"Sale Date" shall mean the date of the closing of the Sale Event.
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9. Xxxxxx-Xxxxx Corporation Sublicense.
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(a) SMDX has advised ISURF that it intends to enter into a
sublicense agreement (the "Sublicense") with The Xxxxxx-Xxxxx Corporation, a New
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York corporation ("PEC"), pursuant to which, inter alia, PEC will (i) sublicense
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from SMDX U.S. Patent Nos. 5,741,411 and 5,582,705, (ii) pay to SMDX a
sublicense issuance fee of $1,000,000 (the "Sublicense Issue Fee"), and (iii)
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pay to SMDX minimum annual royalties of ***** per year, commencing August
1, 2000, based upon the following schedule:
Cumulative Net Sales Royalty Rate
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Up to ******* **%
*******_******* **%
In excess of ******* **%
The royalties paid by PEC to SMDX pursuant to the Sublicense are hereinafter
referred to as the "PEC License Fees."
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(b) Notwithstanding any terms and provisions in the License Agreement
that are or may be inconsistent herewith, ISURF hereby (i) consents to the entry
by SMDX into the Sublicense; (ii) agrees that the Sublicense Issuance Fee shall
be ******* to SMDX and ******* to ISURF, which payment to ISURF shall be fully
creditable toward payment of the Default Amount and shall satisfy in full any
and all monetary defaults by SMDX under the License Agreement; and (iii) agrees
that the royalties payable by SMDX to ISURF in respect of PEC License Fees shall
be payable, subject to subsection (D) below, as follows:
(A) The PEC License Fees in respect of calendar year 2000 shall be
payable ******* to ISURF and ******* to SMDX.
(B) The first ******* of PEC License Fees in respect of calendar year
2001 shall be payable in full to ISURF. The next ******* of PEC License
Fees in respect of calendar year 2001 shall be payable in full to SMDX. Any
PEC License Fees in excess of ******* in respect of calendar year 2001
shall be payable ******* to SMDX and ******* to ISURF.
(C) The first ******* of PEC License Fees in respect of calendar year
2002 and each calendar year thereafter shall be payable ****** to ISURF and
any PEC License Fees in excess of ******* in respect of any such calendar
year shall be payable ******* to SMDX and ******* to ISURF; provided,
however, that if the aggregate royalties payable to ISURF pursuant to the
License Agreement in respect of calendar year 2002 from sources other than
the PEC License Fees shall be less than *******, then ISURF, acting in its
sole discretion, may instead elect, on a one-time irrevocable basis, that
the PEC License Fees in respect of calendar year 2002 and thereafter shall
be payable ******* to SMDX and ******* to ISURF. In the event ISURF shall
fail to give written notice of such election to SMDX on or prior to January
31, 2003, it shall be deemed to have waived its right to so elect.
(D) Notwithstanding subsections (A), (B) and (C) above, in the event
SMDX consummates one or more transactions pursuant to which SMDX receives
net cash proceeds of ******* or more, whether by means of debt and/or
equity, from banks, institutional investors, qualified private investors or
the public, the first ******* of PEC License Fees in respect of any
calendar year thereafter shall be payable in full to ISURF and any PEC
License Fees in excess of ******* in respect of such calendar year shall be
payable ******* to SMDX and ******* to ISURF.
ISURF agrees that payments by SMDX of the PEC License Fees shall be applied
toward SMDX's obligation to pay minimum royalties under the License Agreement.
SMDX agrees that it shall segregate from its other funds by the establishment
and maintenance of a separate account funds in an amount equal to the PEC
License Fees payable to ISURF. SMDX agrees that it shall make payment to ISURF
of the PEC License Fees payable to ISURF within ten (10) business days after
SMDX's receipt of the relevant PEC License Fees. SMDX further agrees that in
the event SMDX is in default of the
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License Agreement as a result of a failure to pay amounts owing to ISURF
thereunder, ISURF may request from PEC that PEC pay directly to ISURF amounts
payable after the date of such request in respect of the PEC License Fees.
(c) SMDX covenants to ISURF that the Sublicense shall be in
compliance with Section 13.3 of the License Agreement except that the Sublicense
may provide, and ISURF agrees that the Sublicense may provide, that PEC may
further sublicense to its end-user purchasers the right to use the Licensed
Products. SMDX covenants to ISURF that SMDX will not accept from PEC or its
affiliates any consideration in respect of the Sublicense other than the
Sublicense Issue Fee and the PEC License Fees and that any consideration SMDX
receives in respect of any Stock Purchase Agreement and/or Consulting Agreement
between SMDX and PEC and/or its affiliates shall not be consideration in respect
of the Sublicense.
10. Mutual Releases. Upon the execution and delivery of this Amendment,
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ISURF, SMDX and Xxxxxx X. Xxxxxxxxxx shall execute and deliver the releases in
the forms attached hereto as Exhibits A, B and C, respectively.
11. Confidentiality. ISURF shall, and shall cause its affiliates,
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officers, directors, employees, agents and representatives to, keep secret and
not divulge to any third party or otherwise use for its benefit (other than in
connection with the transactions contemplated by this Agreement) any
confidential or proprietary information of SMDX to which such person or entity
obtains access pursuant to Section 8; provided, however, that such obligation
shall not apply to any information to the extent that (a) it is or becomes part
of public or industry knowledge or literature as a result of causes other than
the acts or omissions of such person or entity, (b) it can be demonstrated to
have been known to such person or entity prior to its receipt from SMDX, (c) it
is received by such person or entity in good faith from a third party, or (d)
disclosure shall be required by applicable law, regulation or court order
provided that prior to such disclosure, such person or entity shall promptly
notify SMDX with respect to such requirement in recognition of the fact that
SMDX may elect to obtain relief from such disclosure requirement.
12. Effect. Except to the extent amended hereby, the License Agreement
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shall remain in full force and effect.
13. Counterparts. This Amendment may be executed in counterparts, all of
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which, when taken together, shall constitute one agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment to
License Agreement as of the date hereof.
SPECTRUMEDIX CORPORATION
/s/ Xxxxxx X. Xxxxxxxxxx
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Name: Xxxxxx X. Xxxxxxxxxx
Title: Chief Executive Officer
IOWA STATE UNIVERSITY
RESEARCH FOUNDATION, INC.
/s/ Xxxxxxx Xxxxxxxx
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Name: Xxxxxxx Xxxxxxxx
Title: Executive Director
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