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EXHIBIT 10.1
AMENDMENT TO PATENT AND TECHNOLOGY LICENSE AGREEMENT
This This AMENDMENT TO PATENT AND TECHNOLOGY LICENSE AGREEMENT
("Amendment") is made and entered into as of this 9th day of June, 2000 by and
between ACCUMED INTERNATIONAL, INC., a Delaware corporation ("AccuMed") and
AMPERSAND MEDICAL CORPORATION ("Ampersand" or "Licensee"), a Delaware
corporation, as Assignee of INPATH, LLC. ("Inpath"), a wholly owned subsidiary
of Ampersand.
WHEREAS, as of September 4, 1998 AccuMed and Inpath entered into that
certain Patent and Technology Licence Agreement (the "License Agreement").
WHEREAS, on November 19, 1999 Inpath purported to terminate the License
Agreement.
WHEREAS, AccuMed challenged the validity of the November 19, 1999
termination of the License Agreement by Inpath.
WHEREAS, on March 29, 2000 the parties hereto entered into a Letter
Agreement ("Letter Agreement") pursuant to which the parties agreed to resolve
all differences among them as set forth in the Letter Agreement and in this
Amendment, the Assignment and the related Additional License and Purchase
Agreement described therein.
WHEREAS, in conjunction with this Amendment, Inpath has assigned all of its
rights, title, interest and obligations under the License Agreement and this
Amendment to Ampersand.
WHEREAS, pursuant to the Letter Agreement, AccuMed agreed to the Assignment
of the License Agreement by Inpath to Ampersand.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, AccuMed and Ampersand hereby agree as follows:
1. Definitions. The capitalized terms used in this Amendment shall have the
respective meanings ascribed to them in the License Agreement unless otherwise
expressly defined in this Amendment.
2. Reinstatement of License Agreement. AccuMed and Ampersand agree to
reinstate and modify the September 4, 1998 License Agreement as set forth
herein.
3. The following definitions outlined in the License Agreement are hereby
replaced with the following:
"Foreign Patents" means, collectively (i) the letters patent corresponding
to the U.S. Patents, issued or applied for in a country other than the
United States; (ii) the continuations, continuations-in-part, or divisions
thereof; and (iii) any and all improvements,
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modifications, extensions, renewals, or reissues of such Patent, subject to
the provisions of Section 5.1 governing the prosecution thereof.
"Sales" means all recorded booked revenues for actual sales upon which
payment has been collected by Licensee or an Affiliated Person of Licensee
(whether in cash or by way of other benefit, advantage, or concession (in
which case the applicable revenue will be the monetary equivalent or value
of same).
"U.S. Patents" means (i) AccuMed's Patent entitled "A Method and Apparatus
For Imaging and Sampling Diseased Tissue Using Autofluorescence" U.S.
patent number 5,999,844 dated 12/07/99; (ii) the continuations,
continuations-in-part or divisions thereof, if any; and (iii) any and all
improvements, modifications, extensions, renewals or reissues of such
Patent, if any.
4. Section 2.1 of the License Agreement is replaced with the following:
2.1 Grant of License in Patents. AccuMed hereby grants to Licensee, and
Licensee accepts from AccuMed, an exclusive, non-transferable (except as
provided in Section 10.8 herein), non-divisible license to make, have made,
use, offer to sell and sell Licensed Products covered by the U.S. Patents
and Foreign Patents for use in cervical and ovarian gynecological
applications for Point of Care and concurrent with a patient's medical
office visit in a physician's office and the non-exclusive license to make,
have made, use, offer to sell and sell Licensed Products covered by the
U.S. Patents and Foreign Patents for use in cervical and ovarian
gynecological applications for Point of Care in labs outside of the
physician's office.
5. Section 2.2 of the License Agreement is replaced with the following:
2.2 Grant of License in Technology. AccuMed hereby grants to Licensee, and
Licensee accepts from AccuMed, and exclusive, non-transferable (except as
provided in Section 10.8 herein), non-divisible license to make, have made,
use, offer to sell and sell Licensed Products utilizing the Technology for
use in cervical and ovarian gynecological applications for Point of Care
and concurrent with a patient's medical office visit in a physician's
office and the non-exclusive license to make, have made, use, offer to sell
and sell Licensed Products utilizing the Technology for use in cervical and
ovarian gynecological applications for Point of Care in labs outside of the
physician's office.
6. The following sentence is added to the end of Section 2.5:
"The parties acknowledge and agree that AccuMed has no obligation,
express or implied, to (i) develop any improvements to the U.S.
Patents, the Foreign Patents, the Technology on the Copyrighted Works
or (ii) to file any patent applications for any further developments,
inventions or discoveries known to AccuMed.
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7. Section 2.6 of the License Agreement is stricken in its entirety.
8. Section 3.1 of the License Agreement is modified to add the following
sentence:
As of the date of the Amendment hereto, all of the Guaranteed License Issue
Fees due to be paid hereunder have been paid and no further amounts are
outstanding.
9. Section 3.2 of the License Agreement is replaced with the following:
3.2 Required Royalty; Minimum Guaranteed Payments; Advanced Required
Royalty Payments.
(a) For the rights and privileges granted to Licensee under this
Agreement, Licensee (subject to paragraph (b) of Section 5.1, Section
5.2, and Section 5.3) shall pay to AccuMed from and after January 1,
2000 until the licenses hereunder are terminated in accordance with
this Agreement, a royalty rate equal to 4% of all Sales ("Required
Royalty").
(b) Notwithstanding the amount of any sales or Required Royalty,
Licensee shall pay AccuMed, a minimum guaranteed payment of $5,000,000
("Minimum Guaranteed Payment") payable by Licensee only out of the
booked revenues for Sales at the Royalty Rate outlined in (a) herein
as Required Royalty Payments for the term of the Agreement. In the
event that the Minimum Guaranteed Payment of $5,000,000 is not paid in
full at the time of the termination of this Agreement, then the
difference between the amounts actually paid by Licensee to AccuMed as
Required Royalty Payments and $5,000,000 shall be immediately due and
payable by Licensee to AccuMed.
(c) Upon the signing by all parties of the Amendment, and related
documents, Licensee shall pay or provide to AccuMed the following:
(i) $500,000 in cash, which cash payment shall represent an advanced,
non-refundable Required Royalty Payment hereunder;
(ii) a $100,000 convertible promissory note payable to AccuMed (with
conversion rights at $3.50/share into registered shares of Ampersand)
bearing interest of 11% and due or convertible on March 29, 2001. The
principal amount of the note shall represent an additional advanced,
non-refundable Required Royalty Payment hereunder; and
(iii) 128,571 shares of Ampersand common stock which stock Ampersand
will price protect to a share price of not less than $3.50/share to a
measurement date sixty days following the date on which the shares
being issued become registered and are freely
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tradable. If the market price at the measurement date is less than
$3.50 per share, Ampersand shall at its option (x) make a cash payment
to AccuMed in an amount representing the difference in market price
and $3.50 per share multiplied by 128,571 shares or (y) issue an
additional number of Ampersand shares to AccuMed which number shall be
arrived at by multiplying the difference in the then market price per
share and $3.50 and dividing the resultant sum by the then market
price per share. The issuance of common stock by Ampersand to AccuMed
as outlined herein, to a value of $450,000, shall represent an
additional advanced, non-refundable Required Royalty Payment
hereunder.
(d) The cash payments and issuance of stock outlined in (c)(i) - (iii)
herein represent the payment by Licensee of advanced Required Royalty
Payments to AccuMed. Ampersand shall not be required to make any
additional payments to AccuMed for Required Royalty Payments until the
total of the Required Royalty Payments called for hereunder from
Ampersand, exceeds the amount of advanced Required Royalty Payments
actually made by Ampersand to AccuMed pursuant to paragraphs
c(i)-(iii) herein.
(e) The shares of Ampersand stock to be issued to AccuMed herein shall
be registered with an appropriate Registration Statement (excluding
the S-8 underlying the Employee Equity Incentive Plan) which is
presently being prepared by Ampersand. AccuMed will not be subject to
any restrictions in the disposal of shares it holds, other than those
regarding unregistered shares prior to the effective date of the
Registration Statement outlined herein and those imposed by applicable
securities laws.
10. Paragraph 5.1 of the License Agreement is replaced with the following:
5.1 Prosecution and Protection.
(a) AccuMed shall have the authority, in its discretion, but no
duty to prosecute the application for the issuance of Foreign Patents.
If AccuMed shall elect to prosecute a Foreign Patent under this
Section, it shall be at the sole cost and expense of AccuMed.
(b) Licensee shall notify AccuMed in writing of Licensee's sale
of Licensed Products in any Foreign Country upon or prior to the date
on which Licensee first sells Licensed Products in such Foreign
Country. If a Foreign Patent shall not already be pending or issued in
such Foreign County, AccuMed shall have twenty-one (21) days from such
written notice to notify Licensee in writing whether or not AccuMed
will commence the prosecution thereof. If AccuMed elects, in such
notice, not to prosecute a Foreign Patent in such Foreign Country or
if AccuMed fails to make a timely election, then Licensee may elect to
prosecute such Foreign Patent, at Licensee's sole cost and expense,
for and on behalf of and in the name of AccuMed. Licensee may deduct
all reasonable out-of-pocket costs and expenses,
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including without limitation, attorneys' fees and filing costs,
incurred by Licensee for its prosecution (in accordance its election
under with this paragraph) of Foreign Patents in any Foreign Country
from the Required Royalties (but not the Minimum Guaranteed Payments)
applicable to that Foreign Country under Section 3.2. AccuMed will
provide to Licensee all information, papers, instruments or affidavits
required to apply for and obtain Foreign Patents in AccuMed's name and
will provide reasonable assistance to Licensee in Licensee's efforts
to prosecute any Foreign Patents in accordance with its election under
this paragraph. Any such Foreign Patents prosecuted by Licensee for
and on behalf of AccuMed shall be the sole and exclusive property of
AccuMed, but Licensee shall be granted a license thereunder coincident
with the grant under Section 2.1 for all Foreign Patents.
(c) Nothing in this Section shall (i) require either AccuMed or
Licensee to prosecute patents in any Foreign Country or (ii) as
between the parties, restrict Licensee from exercising its exclusive
license rights under this Agreement in any Foreign Country or
throughout the Territory, regardless of whether Licensee or AccuMed
elects to prosecute any application for Foreign Patents therein.
11. Paragraph 5.2 of the License Agreement is replaced with the following:
5.2 Infringement by Third Parties. Each party shall inform the other
party of any infringement or suspected infringement of the Patents or
infringement (including any misappropriation) of the Technology of
which such party becomes aware within ten (10) business days after
such party becomes aware of any such infringement or suspected
infringement. For a period of thirty (30) days after receipt by
AccuMed of, or AccuMed's sending of, such notice of infringement,
AccuMed will have the exclusive right to commence an action and
otherwise assert rights in the Patents and the Technology against any
such infringers or suspected infringers and will have the right at its
sole discretion to make any settlement or compromise with the
third-party infringer, provided that the terms of any such settlement
may not modify the exclusivity of the licenses granted to LICENSEE in
this Agreement or otherwise diminish LICENSEE'S economic rights or
expectations hereunder. If AccuMed shall elect to prosecute any such
infringer, LICENSEE shall take such steps as are reasonably requested
by AccuMed to enable it to protect its rights under the Patents and
under the Technology against any such infringement or suspected
infringement. If (i) AccuMed fails to commence an action or otherwise
assert its rights in the Patents and the Technology against any such
infringers or suspected infringers within such thirty (30) day period
and (ii) LICENSEE provides AccuMed with the opinion of patent counsel
mutually acceptable to the parties stating that there is a likelihood
of infringement or misappropriation by such suspected infringers (an
"Infringement Opinion"), then LICENSEE may bring an action or
proceeding
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(including any alternative dispute resolution process) to enjoin the
infringement, to recover damages for it, or both and AccuMed grants
LICENSEE the right to use AccuMed's name in connection therewith and
will have the right at LICENSEE'S sole discretion to make any
settlement or compromise with the third-party infringer, in accordance
with and subject to the provisions set forth below. If an Infringement
Opinion is delivered to AccuMed and, accordingly, LICENSEE is
permitted to bring such action, then LICENSEE may elect to deduct a
percentage of its out-of-pocket costs and expenses (but otherwise will
bear all other costs and expenses), which includes without limitation
court costs and attorneys' fees for such action up to a maximum
deduction of fifty percent (the "Fee Percentage") and shall notify
AccuMed of such election and the applicable Fee Percentage when the
Infringement Opinion is delivered by LICENSEE to AccuMed. LICENSEE
shall be permitted to deduct from future Minimum Guaranteed Payments
and Required Royalties, as they become due under this Agreement, that
portion of its out-of-pocket expenses in an amount equal to the Fee
Percentage thereof. All proceeds of any action or proceeding brought
by LICENSEE or AccuMed (if any) shall be shared between AccuMed and
LICENSEE pro rata in accordance with the Fee Percentage (i.e. AccuMed
shall receive the Fee Percentage of such proceeds and LICENSEE shall
receive the remainder). If LICENSEE shall be permitted to bring an
action pursuant to this Section, AccuMed shall take such steps as are
reasonably requested by LICENSEE at LICENSEE'S expense to enable it to
protect its licensee rights under the Patents and under the Technology
against any such infringement or suspected infringement.
12. Section 6.3(a) of the License Agreement is replaced by the following:
(a) Licensee Covenant. Licensee shall not, directly or
indirectly, whether through an Affiliated Person or otherwise, until
the termination of this Agreement, and for a period of one year
thereafter, without the prior written approval of AccuMed, employ,
engage, or seek to employ or engage, directly or indirectly, any
employee of AccuMed or its subsidiaries.
13. Paragraph 9.2 of the License Agreement is replaced by the following:
9.2 Effect of Patent Invalidation. If any Patents shall issue and,
thereafter, if all claims of all of the Patents should be finally
determined to be invalid by a decision of a court of competent jurisdiction
that is final and to which no right of appeal exists, then the rate of the
Required Royalty shall be reduced from four percent (4%) to three and
three-quarters percent (3.75%). Licensee acknowledges that the licenses
hereunder in the Technology independent of any issued and valid Patent are
valuable and reasonable consideration for the Required Royalty and Minimum
Guaranteed Payments. Licensee shall pay (subject to paragraph (b)
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of Section 5.1, Section 5.2, and Section 5.3) all Required Royalties (at
the four percent (4%) rate) due and payable before any such final
determination of invalidity and during the pendency of any validly
challenge, and Licensee is not entitled to any refund or credit for any
past due Minimum Guaranteed Payments, Required Royalties, or the Guaranteed
License Issue Fee payments. Licensee shall pay all Royalty Payments
accruing during the pendency of any challenge to the validity of any of the
Patents.
14. Paragraph 9.3 of the License Agreement shall be replaced by the
following:
9.3 Termination by Licensee. Licensee shall not be entitled to terminate
its obligations under this Agreement until AccuMed's receipt of the Minimum
Guaranteed Payment of $5,000,000. Thereafter, Licensee, at its election may
(x) terminate the exclusivity of the licenses granted hereunder upon thirty
(30) days written notice to AccuMed that in Licensee's reasonable
determination the commercial exploitation of the Licensed Product is not
commercially viable; or (y) terminate this Agreement in its entirety. In
the event that Licensee terminates the exclusivity in accordance with (x)
herein, Licensee shall continue to be obligated to make Required Royalty
Payments. In the event that Licensee seeks to terminate this Agreement in
its entirety, Licensee is still required to pay the Minimum Guaranteed
Royalty Payment of $5,000,000 called for in section 3.2 of this Agreement
and such amount shall be due and payable before any such termination shall
be deemed effective. In the event that Licensee seeks to terminate this
Agreement or its exclusivity, Licensee shall not be entitled to the refund
of any Minimum Guaranteed Payments (including those advanced pursuant to
Section 3.2 herein, Required Royalty Payments or the Guaranteed License
Issue Fee that have been paid to date.
15. In Section 9.4 of the License Agreement, delete "(or, at AccuMed's
discretion, destroy and certify to AccuMed the destruction of)".
16. With reference to Section 10.4 of the License Agreement, the parties
acknowledge and agree that, upon execution of this Agreement and payment of the
amounts owing to Peter P. Gombrich as outlined in paragraph 5 of the Letter
Agreement, the Letter Agreement will be superseded.
17. Paragraph 10.5 of the License Agreement shall be modified to reflect
the new addresses listed below:
AccuMed International, Inc.
920 North Franklin Street, Suite 402
Chicago, Illinois 60610
Attention: Paul F. Lavallee
Chairman and CEO
Telephone No.: (312) 642-9200
Fax No.: (312) 642-3101
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Ampersand Medical Corporation
414 N. Orleans
Suite 305
Chicago, IL 60610
Attention: Peter P. Gombrich, Chairman and CEO
Telephone Number: (312) 222-9550
Fax Number: (312) 222- 9580
with a copy to its counsel:
Janet S. Baer
Schwartz, Cooper, Greenberger & Krauss
180 N. LaSalle Street
Suite 2700
Chicago, IL 60601
(312) 346-1300
18. Section 10.8 is replaced with the following:
10.8 Succession and Transferability. This Agreement and the License granted
hereunder shall be binding upon and inure to the benefit of Licensee and
its successors and assignees permitted hereunder and AccuMed and its
successors and assignees. Licensee shall not assign this Agreement or the
License granted hereunder, except to an Affiliated Person, in a sale of
substantially all of the assets or equity shares of Licensee, or through a
merger of Licensee into another entity wherein such Affiliated Person,
purchaser or entity agrees in writing to be bound by this Agreement.
19. A new paragraph 10.11 is added to the License Agreement which provides
as follows:
10.11 Mutual Release. The parties hereto mutually release and forever
discharge each other and their respective agents, officers, directors,
shareholders, partners, employees, successors, representatives, attorneys
and assigns, of and from, all actions, agreements, bills, bonds, causes of
action, claims, controversies, counterclaims, covenants, cross-claims,
damages, debts, demands, executions, indemnities, judgments, liens,
promises, suits, third-party actions, filed or unfiled, and sums of money
whatsoever, in law or in equity, arising out of the disputes which they now
have or have had to date with respect to the License Agreement, the
Patents, the Technology and the Copyrighted Works.
(Signature Page Immediately Follows)
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(Signature Page to Amendment to Patent and Technology License Agreement)
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to Patent
and Technology License Agreement to be executed as of the day and year first
above written.
AMPERSAND MEDICAL CORPORATION
By: /s/ PETER P. GOMBRICH
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Peter P. Gombrich
Chairman and CEO
INPATH, LLC
By: /s/ PETER P. GOMBRICH
---------------------
Peter P. Gombrich
Chairman and CEO
ACCUMED INTERNATIONAL, INC.
By: /s/ PAUL F. LAVALLEE
--------------------
Paul F. Lavallee
Chairman and CEO
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