Third Amendment To Research And Development

THIRD AMENDMENT DATED NOVEMBER 30, 1999
to the Agreement between
Abbott Laboratories and SpectRx, Inc.
Dated October 10, 1996
As amended December 22, 1997 and March 31, 1998


THIS THIRD AMENDMENT dated November 30, 1999 ("Third Amendment Effective Date"), by and between Abbott Laboratories, an Illinois corporation with principal offices at 100 Abbott Park Road, Abbott Park, Illinois 60064-3500 and its Affiliates ("ABBOTT") and SpectRx, Inc. a Delaware corporation with principal offices at 6025A Unity Drive, Norcross, Georgia 30071 and its Affiliates ("SPECTRX").


WHEREAS, ABBOTT and SPECTRX have previously entered into an agreement dated October 10, 1996, as amended December 22, 1997 and March 31, 1998, relating to the use of (*) for the extraction of interstitial fluid samples for diagnostic applications, including glucose monitoring ("Agreement");


WHEREAS, ABBOTT and SPECTRX desire to now modify that Agreement and to that end desire to enter into this Third Amendment;


NOW, THEREFORE, in consideration of the premises and the mutual promises and covenants set forth below, ABBOTT and SPECTRX mutually agree as follows:


1. INTRODUCTION


1.1 Conflict with Agreement. The provisions of this Third Amendment are hereby made a part of the Agreement. All capitalized terms used in this Third Amendment, and not defined herein, shall have the same meanings as given to them in the Agreement. Any conflict between the provisions of this Third Amendment and the Agreement shall be resolved in favor of this Third Amendment; provided, however, that all definitions in this Third Amendment shall only apply prospectively from the Third Amendment Effective Date, unless otherwise noted in this Third Amendment, and such application will be without prejudice to interpretation of the Agreement as it was in effect prior to the Third Amendment Effective Date.


1.2 Modified Provisions. The following modifications are hereby made to the Agreement:


(A) The following shall be added to the end of Section
1.8 and shall be effective as of June 1, 1998:


"(*) Technology includes, but is not limited to,
the means to measure the (*). (*) Technology
does not include (*) Technology."


(*) Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.


1 2


(B) Section 1.12 is modified as follows:


"(*)" or "(*)" means a single or multiple use
device other than a (*), or the equivalent
to a (*) for the Non-Continuous Product,
sold or marketed with labeling or
instructions identifying it for use with
Product, which effectuates or facilitates
any measurement of glucose or is involved
with (*)Technology for such Product
including, but not limited to, (*).


(C) Section 1.20 shall be amended as follows and shall be
effective as of the Effective Date of the Agreement:


replace "that cover inventions useful within
the Field" with "that (1) cover (*)
Technology for glucose monitoring and/or (2)
cover inventions useful within the Field"


(D) The following shall be added to the end of
Section 1.20(A):


"and any patents or patent applications
covering inventions within the Field arising
out of SPECTRX Continuous Product Research
Program Technology as set forth in Section
11.1(A) and 11.1(B)(1) of the Third
Amendment, and the Joint Continuous Product
Research Program Technology as set forth in
Section 11.3 of the Third Amendment;"


(E) The following shall be added to the end of Section 1.21:


"provided, however, that a (*) will not be
included in Licensed Product if SPECTRX or a
Third Party is marketing (other than
exclusively to ABBOTT) (*), except for an
item that is a Directly Competitive
Product."


(F) Section 1.26 shall be amended as follows:


(1) replace "but for the licenses granted under
Section 4.1 of this Agreement" with "but for
the licenses granted under Section 4.1 of
this Agreement, as to ABBOTT, or the license
granted under Section 4.2 of the Third
Amendment, as to SPECTRX,"


(*) Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.


2 3


(2) add to the end of Section 1.26 ", as to
ABBOTT, or as to which SPECTRX is otherwise
required to pay royalties hereunder as to
SPECTRX."


(G) Section 1.29 is modified to delete the words "as described
in Appendix 1.28."


(H) The following shall be added to the end of Section 1.30
and shall be effective as of June 1, 1998:


"including, but not limited to, (*). Such
site includes, but is not limited to, a site
at which (*). (*) includes, but is not
limited to, devices which incorporate (*)
does not include (*) Technology."


(I) Section 3.1(A) shall be amended as follows:


replace "set forth in Section 2.5" with "set
forth in Section 3.4 of the Third
Amendment"


(J) Section 3.1(B) shall be amended as follows:


(1) replace "shall extend the periods of the
time set forth in Section 3.2 of this
Agreement" with "shall extend the periods of
time set forth in Section 3.7 of the Third
Amendment"


(2) replace "extend the time periods set forth
in Section 3.2(A) and (B)" with "extend the
time periods set forth in Section 3.7 of the
Third Amendment"


(K) The following shall be added at the beginning of
Section 3.4:


"Except for those (*) in accordance with
Section 5.2 of the Third Amendment and the
SPECTRX Continuous Product as allowed in
Article 4 of the Third Amendment,"


(L) The following shall be added to the end of Section
6.2(A):


"; except for Abbott Research Program
Technology invented on or after August 29,
1998, which, to the extent applicable to the
Field, shall be treated in the same manner
that Development Program Technology would be
treated in Section 7.1 of the Agreement
after delivery of the Development Program
Notification but prior to the First Shipment
Date."


(*) Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.


3 4


(M) Section 6.2(C) shall be amended as follows:


replace "pursuant to Section 2.5(A) (subject
to the exception in that Section) or 2.5(B)
or Section 10.2(A)(i) or by SPECTRX pursuant
to Section 3.2(A) or (B) subject to certain
exceptions set forth in those Sections) or
pursuant to Section 10.2(D) prior to the
First Shipment Date:" with "pursuant to
Section 3.8(A) of the Third Amendment or
Section 10.2(A)(i) or by SPECTRX pursuant to
Sections 3.7(D) or (F) of the Third
Amendment (subject to certain exceptions set
forth in those Sections) or pursuant to
Section 10.2(D) prior to the First Shipment
Date:"


(N) Sections 8.1(A), 8.1(B), and 8.3(A) shall be amended
as follows:


replace "SPECTRX Research Program
Technology" with "SPECTRX Research Program
Technology and SPECTRX Continuous Product
Research Program Technology"


(O) Sections 8.2, 8.3(B) and 8.5(B) shall be amended as
follows:


replace "Joint Research Program Technology"
with "Joint Research Program Technology and
Joint Continuous Product Research Program
Technology"


(P) Section 10.1 shall be amended as follows:


replace "pursuant to Sections 2.2, 2.5, 3.2,
4.2(D) or (E) (on a country by country
basis), 10.2 or 14.1," with "pursuant to
Sections 4.2 (D) or (E) (on a country by
country basis), 10.2 or 14.1 of the
Agreement or Sections 3.7 or 3.8 of the
Third Amendment"


(Q) Section 10.2 shall be amended as follows:


replace "In addition to Sections 2.2, 2.5,
and 4.2(D) and (E) (on a country by country
basis), 3.2 and 14.1," with "In addition to
Sections 4.2(D) and (E) (on a country by
country basis) and 14.1 of the Agreement and
Sections 3.7 and 3.8 of the Third
Amendment,"


(R) Section 10.2(D)(iv) shall be amended as follows:


replace "except as provided in Sections 2.2,
2.5, 3.2, 4.2(D) and (E) (on a country by
country basis), 10.2(A),(B) and (C) and
14.1," with "except as provided in Sections
4.2(D) and (E) (on a country by country
basis), 10.2(A), (B) and (C) and 14.1 of the
Agreement and Section 3.7 and 3.8 of the
Third Amendment,"


4 5
(S) Section 10.3(A) shall be amended as follows:


replace "under Sections 2.2, 2.5, 3.2,
4.2(D) and (E) (on a country by country
basis), 10.2 and 14.1:" with "under Sections
4.2(D) and (E) (on a country by country
basis), 10.2 and 14.1 of the Agreement and
Sections 3.7 and 3.8 of the Third
Amendment:"


(T) Section 10.3(B) shall be amended as follows:


replace "under Sections 2.2, 2.5, 3.2,
4.2(D) and (E) (on a country by country
basis), 10.2 and 14.1," with "under Sections
4.2(D) and (E) (on a country by country
basis), 10.2 and 14.1 of the Agreement and
Sections 3.7 and 3.8 of the Third
Amendment,"


(U) Section 10.3(C) shall be amended as follows:


replace "under Section 2.2, by ABBOTT under
Sections 2.5, 4.2(D) and (E) (on a country
by country basis), 10.2(A), (C) and (D); or
by SPECTRX under Sections 3.2(A) or (B) and
10.2(B) and (D) or by either party under
Section 14.1." with "by ABBOTT under
Sections 4.2(D) and (E) (on a country by
country basis), 10.2(A), (C) and (D); or by
SPECTRX under Section 3.7(F) of the Third
Amendment and 10.2(B) and (D) or by either
party under Section 14.1 and Section 3.8 of
the Third Amendment."


(V) Section 10.3(D) shall be amended as follows:


replace "under Section 2.5(A) (subject to
the exception in that Section) or (B) or
10.2(A)(i) or if SPECTRX terminates this
Agreement under Section 3.2(A) or (B) (in
accordance with the terms of Section 3.2(A)
or (B))" with "under Section 10.2(A)(i) or
if SPECTRX terminates this Agreement under
Section 3.7(F) of the Third Amendment (in
accordance with the terms of Section 3.7) or
under Section 3.8(A) of the Third Amendment
or under Section 10.2(D) prior to the First
Shipment Date."


(W) Section 10.3(E) shall be amended as follows:


5 6


replace "under Section 2.5(B) or 10.2(A)(i)
or if SPECTRX terminates this Agreement
under Section 3.2(A) or (B) or under Section
10.2(D) prior to the First Shipment Date"
with "under Section 3.8(A) of the Third
Amendment or Section 10.2(A)(i) or if
SPECTRX terminates this Agreement under
Section 3.7(F) of the Third Amendment or
under Section 10.2(D) prior to the First
Shipment Date."


(X) The following shall be added to Section 10.3:


"(I) SPECTRX shall be entitled to the
license set forth in Section 6.1(A)(2) of
the Third Amendment upon early termination
or expiration of the Agreement other than
for breach by SPECTRX."


(Y) The second sentence in Section 13.1 shall be amended
as follows:


"Neither party will use Confidential
Information of the other party, nor allow it
to be used for its own benefit or the
benefit of others, except as provided by
this Agreement and will exercise due care to
prevent the disclosure of Confidential
Information of the other party.


(Z) Section 13.3 shall be amended as follows:


Replace "Research Program" with "Research
Program or Continuous Product Research
Program"


1.3 Deleted Agreement Provisions. The following provisions are deleted from the Agreement and will have no further force or effect:


(A) Section 1.5
(B) Section 1.10
(C) Section 1.28
(D) Article 2
(E) Section 3.2
(F) Section 4.2 (B)
(G) Section 4.3
(H) Section 10.3(G)
(I) Appendices 2.3 and 2.4


6 7 1.4 Added Appendices. The following Appendices are added to the
Agreement:


(A) Appendix 2.7 - Continuous Product Research Program Specifications (B) Appendix 4.2 - (*) (C) Appendix 4.4 - SPECTRX Continuous Product Royalty Rate (D) Appendix 5.1 - Common Stock Agreement (E) Appendix 5.2 - Supply Agreement (F) Appendix 5.5 - Preferred Stock Agreement


2. DEFINITIONS


2.1 "ABBOTT Continuous Product Research Program Technology" has the meaning attributed to it in Section 11.2.


2.2 "Abbott Post-Transfer Technology" has the meaning attributed to it in Section 11.2(E).


2.3 "Abbott (*) Technology" means technology (1) which was Derived from SPECTRX (*) Technology or SPECTRX (*) and (2) such derivation occurs on or between July 28, 1999, and the earlier of (a) the delivery of a Development Program Notification by ABBOTT to SPECTRX or (b) the transfer of the Continuous Product Research Program to ABBOTT as set forth in Section 3.3(B) or (c) the termination of ABBOTT's rights to all Continuous Products.


2.4 "CDA" means the confidential disclosure agreements entered into by ABBOTT and SPECTRX dated December 15, 1995 and July 28, 1999 to the extent of Confidential Information disclosed after the Third Amendment Effective Date. The confidential disclosure agreements dated March 4, 1996, May 31, 1996, and July 28, 1999 (to the extent of Confidential Information disclosed between July 28, 1999 and the Third Amendment Effective Date), are not included as CDAs for purposes of this Agreement and shall remain in full force and effect in accordance with their respective terms.


2.5 "Continuous Product" means a Product, consisting of one or more components, with at least one component continuously attached to or worn by a subject, during the device's period of use, whereby one of the continuously attached components provides a means to take more than one measurement of an Analyte in the subject's interstitial fluid without removal of said component during its period of use.


(*) Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.


7 8
2.6 "Continuous Product Research Program" means the research carried out by SPECTRX or ABBOTT (including the case in which the Continuous Product Research Program is transferred to ABBOTT pursuant to Section 3.3(B)), to determine the feasibility of a Continuous Product, including, but not limited to, potential development activities related to a (*), which program shall commence on (*) and shall end on the earlier of (1) the date of ABBOTT's Development Program Notification to SPECTRX in accordance with Section 3.4 of the Third Amendment, or (2) the date of termination of ABBOTT'S rights to all Continuous Products. Continuous Product Research Program also includes activities separately funded by SPECTRX between and including (*), which were directly related to research for a Continuous Product.


2. 7 "Continuous Product Research Program Specifications" means specifications for a Continuous Product listed as "Product Specs. Minimum Acceptable" in Appendix 2.7, definitions and protocols applicable to demonstrate the achievement of the specifications also listed in Appendix 2.7, and the deliverables listed in Appendix 2.7. Such specifications may be amended by written agreement of the parties.


2.8 "Continuous Product Research Program Technology" means all inventions, developments, know-how, or discoveries, whether or not patentable, which are conceived and/or reduced to practice during the course of the work under the Continuous Product Research Program.


2.9 "Derived" means technology whose conception, development and/or reduction to practice by one party is based, in whole or in part, upon the Confidential Information of the other party including, but not limited to, the Information (as that term is defined in the CDA dated July 28, 1999) disclosed as of the Third Amendment Effective Date, which Information is subject to such CDA.


2.10 "Development Program" means that work to be carried out by ABBOTT (whether at ABBOTT or at SPECTRX, or both as set forth in Section 3.5(A) or 3.6(A) of the Third Amendment) specifically to develop the first Continuous Product and the first Non-Continuous Product which is actually commercialized, which program shall commence upon the date of ABBOTT's Development Program Notification to SPECTRX in accordance with Section 3.5 and/or Section 3.7 of the Third Amendment, as the case may be, and, for the Continuous Product, shall end on the First Shipment Date of the Continuous Product being developed and ,for the Non-Continuous Product, on the First Shipment Date of the Non-Continuous Product being developed.


2.11 "Development Program Notification" means a written notification by ABBOTT to SPECTRX that ABBOTT has determined to commence a Development Program.


(*) Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.


8 9
2.12 "Diligent," "Diligently" and "Diligence" means the degree of effort employed by a party hereto consistent with the exercise of good business judgment, which with respect to Continuous Product Research Program, Research Program, Development Programs and commercialization of Licensed Products, shall not be less than the degree of effort accorded projects or products of similar commercial value which result from the party's own research and/or development and commercialization activities, nor less than customary in current industry practice for projects or products of similar commercial value (unless otherwise specifically agreed to in writing by the parties). If a minimum spending level is specified, such minimum will be the maximum spending level needed to meet the financial component of any Diligence.


2.13 "(*) Technology" means that technology which effectuates or facilitates accessing and/or extraction of interstitial fluid (*), including, but not limited to (*), use of (*) into and/or out of the (*). This definition shall be effective as of the Effective Date of the Agreement.


2.14 "Joint Continuous Product Research Program Technology" has the meaning attributed to it in Section 11.3.


2.15 "Manufacturing Costs" means direct labor, direct materials and allocated manufacturing overhead, used in the manufacture of the Product, such calculation being based on generally accepted accounting principles.


2.16 (*) means an (*) of a Continuous Product including, but not limited to, (*), which Product is (*), or the (*), or the (*), the component not being a (*) or a (*) or a (*)


2.17 "Milestones" means those milestones set forth in Section 5.1.


2.18 "Non-Continuous Product" means any Product which is not a Continuous Product.


2.19 "Non-Invasive Electromagnetic Radiation Technology" means technology using electromagnetic radiation to measure the properties of a biological substance or condition inside or outside the body without the addition of reagents.


2.20 "(*) Milestone" means the milestone set forth in Section 5.1(A)(2).


2.21 "Research Oversight Committee" has the meaning set forth in Section 3.2.


2.22 "Research Program" means the research carried out jointly from the Effective Date of the Agreement to and including (*) under former Article 2 of the Agreement and the research carried out (*) at ABBOTT and to be carried out by ABBOTT under the provisions of this Third Amendment to determine the feasibility of a


(*) Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.


9 10 Non-Continuous Product. The Research Program shall end on the earlier of (1) the date of ABBOTT's Development Program Notification to SPECTRX in accordance with Section 3.6 of the Third Amendment, or (2) the date of ...