AMENDMENT NO. 1 TO LICENSE AGREEMENT
EXHIBIT
99.2
AMENDMENT
NO. 1 TO
Sontra
Medical Corporation, with offices located at 00 Xxxxx Xxxxxxx, Xxxxxxxx,
XX
00000 ("SONTRA" or "LICENSOR”) and Bayer HealthCare LLC (BAYER), on behalf of
its Diabetes Care Division, entered into a License Agreement, effective July
28,
2003,
under
which BAYER is granted an exclusive worldwide license to certain patent rights
and know how relating to the determination of glucose concentration in body
fluid which glucose is obtained using ultrasonic techniques (the AGREEMENT).
SONTRA and BAYER have agreed to amend the AGREEMENT as follows.
The
following is added to Article 1 (Definitions):
1.10
"IMPROVEMENTS" shall mean any invention (whether patented or published in
a
patent application) and/or Know-How (including inventions in unpublished
patent
application(s)) in the Field of Use that is/are identified and/or discovered
by
SONTRA during the term of the AGREEMENT and that is/are related to the Licensed
Product or Process, including, without limitation, that which performs the
same
or similar function as the Licensed Product or Process in the Field of Use,
modification of a component useful in the Licensed Product or Process,
manufacturing processes, formulations, compositions, product configurations
and
methods of use in the Field of Use.
The
following is added to Article 2 (World
Wide License to BAYER):
2.3.1.
Grantback:
BAYER
hereby grants back to LICENSOR the co-exclusive (as to BAYER and SONTRA)
rights
under the license granted to BAYER in Article 2.1 (Grant) of the AGREEMENT,
to
make, have made solely for SONTRA through an Original Equipment Manufacturer
(OEM) supply agreement, use, import, sell or, subject to Article 2.3.2 (Right
of
First Refusal) and 2.3.3 (SONTRA Product Sales), have sold Licensed Products
and/or Processes in the hospital intensive care unit (ICU) market worldwide.
SONTRA does not have the right to sub-license the co-exclusive rights granted
hereunder other than as expressly stated above.
2.3.2
Right
of First Refusal
2.3.2.1.
SONTRA shall first offer to Bayer six (6) months prior to SONTRA’s earliest
anticipated product launch date, the opportunity to market SONTRA’s hospital ICU
product(s) worldwide, regionally, or on a country by country basis pursuant
to
a
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mutually
acceptable marketing agreement including reasonable commercial terms to be
negotiated by the parties in good faith. In the event that such six month
period
lapses and BAYER and LICENSOR have not entered into such an agreement, then
Sontra shall be entitled to market and sell SONTRA’s hospital ICU product(s),
directly or through a distributor or agent, subject to Article 2.3.2.2
below.
2.3.2.2
If agreement cannot be reached under Article 2.3.2.1, SONTRA shall not enter
into any third party agreement for product distribution with terms that are
more
favorable to the third party than those offered to BAYER by SONTRA in writing
during negotiations pursuant to Article 2.3.2.1 above, before first offering
those more favorable terms to BAYER. BAYER has sixty (60) days from the date
BAYER receives the proposed third party terms from SONTRA in writing in which
to
agree to the more favorable terms. In any event, SONTRA will not enter into
a
hospital ICU product distribution agreement with any third party having annual
global sales in the blood glucose monitoring market of five hundred million
dollars ($500,000,000) or more without the prior written consent of
BAYER.
2.3.3
SONTRA
Product Sales:
If
BAYER does not market SONTRA's hospital ICU product(s) under Article 2.3.2,
and
SONTRA markets such product(s) (directly or through a distributor or agent),
then SONTRA shall pay BAYER a royalty of one percent (1%) of Net Sales of
hospital ICU product(s) sold until expiry of the last patent under 2.1 (Grant)
of the License Agreement. SONTRA may deduct its actual incurred direct sales
and
marketing costs from its Net Sales of hospital ICU product(s) for each of
the
first two (2) consecutive twelve month periods of product sales before
calculating royalty payments due. If such sales and marketing costs exceed
SONTRA's total hospital ICU product Net Sales in a twelve month period,
deduction of any excess costs from that twelve month period shall not be
carried
over into and tacked onto any subsequent twelve month period in which any
subsequent payment is due. Articles 4.1 (Records), 4.2 (Audit of Records)
and
4.3 (Quarterly Reports and Payments) of the AGREEMENT shall be reciprocal
as to
SONTRA with respect to sales of hospital ICU product(s).
2.4
Covenant
Not to Xxx:
SONTRA
hereby grants to BAYER and its distributors a fully paid up, non-cancelable,
worldwide covenant not to xxx under any and all IMPROVEMENT(S) in the Field
of
Use for the enforceable term of the IMPROVEMENT(S). Accordingly, SONTRA
covenants not to file a lawsuit or otherwise contest BAYER's rights under
this
Article 2.4 (Covenant Not to Xxx) in any manner and
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in
any
forum . This covenant shall be binding upon and inure to the benefit of the
parties, their successors and assignees.
The
following is added to Article 3.1 (Payment
of License Fee):
3.1.1
Joint
Development is Cancelled:
The
Parties agree that any obligation to enter into one or more agreements to
jointly continue development of the Licensed Product or Process, and any
and all
obligations related to joint development under Article 3.1 of the AGREEMENT
are
terminated with no change to the exclusive rights granted to BAYER in Article
2.1 (Grant).
Article
3.1 i has been amended so that, in Phase 2 of BAYER's development, BAYER
and
LICENSOR will agree upon reasonable royalty rates for sales of Licensed Product
or Process sold by BAYER under its exclusive License. Upon BAYER's request,
LICENSOR will negotiate a commercially reasonable manufacturing agreement
with
BAYER under which it will agree to supply BAYER with the SonoPrep ultrasonic
skin permeation component of LICENSOR's continuous glucose monitoring
system.
3.1.2
Milestone
Payment:
BAYER's
obligation under Article 3.1 i of the AGREEMENT to make a three million dollar
($3,000,000) milestone payment at the end of Phase 1 is terminated. Subject
to
Article 3.1.3 (December 31, 2007) below, BAYER shall make a two million dollar
($2,000,000) milestone payment to SONTRA upon Phase 1 approval of the first
BAYER Licensed Product under BAYER's PACE process.
3.1.3
December
31, 2007:
If
BAYER has not achieved Phase 1 approval of its first BAYER Licensed Product
under BAYER's PACE process and BAYER has not paid SONTRA the milestone payment
described in Article 3.1.2 (Milestone Payment) on or before December 31,
2007,
then BAYER's remaining exclusive rights outside of the worldwide hospital
ICU
market shall become co-exclusive as to SONTRA, and BAYER will hold a worldwide,
co-exclusive, non-cancelable license to the Patent Rights and Know-How according
to the terms set forth in Article 3.1 ii. Additionally, BAYER's obligation
to
pay SONTRA a milestone payment under Article 3.1.2 shall be cancelled, as
will
BAYER's right of first refusal under Article 2.3.2. BAYER’s rights in Article
2.4 (Covenant Not to Xxx) shall remain unchanged.
3.1.4
BAYER may deduct its actual incurred direct sales and marketing costs from
its
Net Sales of Licensed Product or Process for each of the first two (2)
consecutive twelve month periods of Licensed Product or Process sales before
calculating royalty payments due. If such sales and marketing costs exceed
BAYER's
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total
Licensed Product or Process Net Sales in a twelve month period, deduction
of any
excess costs from that twelve month period shall not be carried over into
and
tacked onto any subsequent twelve month period in which any subsequent payment
is due
The
following is added to Article 10 (Other
Provisions):
10.10
Further
Collaboration:
At
BAYER's request and under the terms of one or more mutually agreeable separate
written agreements, SONTRA
is
willing to continue to support Bayer’s development of products in the Field of
Use.
10.11
Settlement
of Any Allegations:
The
Parties agree that SONTRA has no complaint and Bayer has no liability in
relation to the License Agreement for any conduct prior to the effective
date of
this Amendment to the License Agreement.
All
other
terms and conditions of the AGREEMENT that do not contradict the terms of
this
Amendment remain unchanged. If there is a conflict between the terms of the
original License Agreement and the terms of this Amendment, the terms of
this
Amendment shall control.
AGREED
TO
AND ACCEPTED BY:
Sontra
Medical Corporation Bayer
HealthCare LLC
By:
/s/
Xxxxxx Xxxxxxx By:
/s/
Xxxxxx Xxxxxxxx
Xxxxxx
Xxxxxxx Xxxxxx
Xxxxxxxx
Chief
Executive Officer President
Diabetes
Care Division
Date:
12/14/05 Date:
12/12/05
[IN
DUPLICATE]
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