RESEARCH & DEVELOPMENT
LICENSE AGREEMENT
ABBOTT LABORATORIES
SPECTRX, INC.
TABLE OF CONTENTS
ABBOTT LABORATORIES
SPECTRX, INC.
TITLE PAGE NO.
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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
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TABLE OF CONTENTS
(CONTINUED)
TITLE PAGE NO.
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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
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TABLE OF CONTENTS
(CONTINUED)
TITLE PAGE NO.
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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
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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
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THIS AGREEMENT dated 10 October, 1996 ("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, a Delaware corporation with principal offices at 6025A Unity Drive, Norcross, Georgia 30071 ("SPECTRx").
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.
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:
(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 ABBOTT's 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.
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.
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.
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.
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 ABBOTT's 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 ABBOTT's 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.
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 ABBOTT's 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 oth ...
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