Amendment to License Agreement
This Amendment to License Agreement, dated as of ____ October 1997, is by
and among Applied Research Systems ARS Holding N.V. ("ARS"); Laboratoires Serono
S.A. ("LSA"), the successor in interest to Serono Diagnostic S.A. ("Diagnostic")
(ARS, LSA and any successor thereof being collectively referred to as the
"Serono Companies") and Quantech Ltd. ("Quantech"), the successor in interest to
Spectrum Diagnostics, S.p.A. ("Spectrum").
RECITALS:
A. The Serono Companies and Quantech are parties to the License, Sublicense
and Purchase Agreement dated November 7th, 1991, attached as Exhibit A (the
"License Agreement").
B. Section 2 (a) (i) of the License Agreement reserves from the scope of the
license granted to Spectrum thereunder, among other reservations, a right
to develop and commercialize the SPR technology for the development of
products to be marketed in the name of the Serono Companies and/or Serono
Affiliates (the "SPR License Reservation").
C. Section 2 (d) of the License Agreement sets forth a series of benchmarks of
aggregate payments (the "Minimum Royalties") and Section 4(b) of the
License Agreement sets forth sublicense, assignment and transfer royalties
(the "Transfer Royalties").
D. Section 2 (e) of the License Agreement grants the Serono Companies and
Serono Affiliates the right to demand a royalty-free right to use any
technology Spectrum has developed with respect to SPR (the "Grant Back
License"), subject to certain reservations.
E. Upon an Event of Default, Section 10 of the License Agreement (the "Default
Provision") provides that the license rights granted to Spectrum shall
terminate and revert back to the Serono Companies.
F. The Serono Companies and Quantech wish to amend and restate the License
Agreement as it concerns the SPR License Reservation, the Minimum
Royalties, the Transfer Royalties, the Grant Back License, and the Default
Provision.
In consideration of the agreements contained herein and other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the parties
agree as follows:
1. Definitions. All of the defined terms in the License Agreement shall have
the same meanings in this Amendment to License Agreement.
2. SPR License Reservation. Upon Payment to the Serono Companies pursuant to
Section 2(d) of the License Agreement of Minimum Royalties of at least
$1,000,000 in the aggregate by December 31, 1997, the Serono Companies, on
behalf of themselves and the Serono Affiliates, shall waive all of their
rights under the SPR License Reservation.
3. Minimum Royalties. Section 2 (d) of the License Agreement shall be amended
to read as follows:
(d) Minimum Royalty: Notwithstanding anything stated in this Agreement
to the contrary, in the event that the royalty payments actually paid to
the Serono Companies by Spectrum and/or any Third Party Transferee pursuant
to Section 4 of this Agreement do not equal the following amounts: (a) at
least $500,000 in the aggregate by December 31, 1993; (b) at least $850,000
in the aggregate by December 31, 1995; (c) at least $1,000,00 in the
aggregate by December 31, 1997; (d) at least $1,150,00 in the aggregate by
December 31, 1998; and (e) at least $1,300,000 in the aggregate by December
31, 1999, then each time one of the first three of such benchmarks is not
met, the cumulative royalties to be paid to the Serono Companies pursuant
to Section 4(d) hereof shall be increased by two million ($2,000,000)
dollars so that if all three initial benchmarks are not met, the cumulative
royalties payable to the Serono Companies pursuant to Section 4(d) hereof
shall be increased from eighteen million ($18,000,000) dollars to
twenty-four million ($24,000,000) dollars. Also if any one of the first
three of such benchmarks is not met the restrictions on the Serono
Companies pursuant to Section 2(a)(i) hereof that provide only the Serono
Companies and/or Serono Affiliates shall be allowed to market products
developed pursuant to the retention of the right to develop and
commercialize SPR shall lapse. If Spectrum shall receive any lump sum
payment from any Third Party Transferee under a Transfer Agreement prior to
December 31, 1999, then Spectrum shall accelerate payment of the minimum
royalties set forth in this Section 2(d) by paying up to twenty percent
(20%) of such lump sum payment to the Serono Companies. It is expressly
understood that such lump sum payments do not give rise to any additional
royalty obligations than would otherwise be payable to the Serono Companies
under Section 4(b) and shall not increase any aggregate minimum royalties
payable under this Section 2(d).
4. Section 4(b)(B) of the License Agreement shall be restated to read as
follows:
(B) Commencing on July 2, 1996, each Third Party Transferee shall pay
Third Party Royalties to Diagnostic equal to the 15% Royalties. The
obligation of Spectrum and any subsequent Third Party Transferees to pay
Third Party Royalties to the Serono Companies shall terminate only in
accordance with subparagraph 4(d) below.
5. Grant Back License. Section 2(e) of the License Agreement shall be amended
to read as follows:
(e) Spectrum Obligation to provide technology: Upon termination of
this Agreement under Section 10 below, the Serono Companies shall be
entitled to a royalty-free license to make, use and sell whatever
technology Spectrum has developed with respect to SPR, provided that such
license shall be subject to the terms and conditions of any Preferred
Transfer Agreement (as that term is defined in Section 6 of the Amendment
to License Agreement) which is in force and effect at the time of such
termination of this Agreement. This royalty-free license shall not extend
to any technology and/or data and/or patents which Spectrum developed with
a third party and with respect to which the third party retained a
proprietary right.
6. Default Provision. Upon an Event of Default under the Default Provision,
any sublicense granted by Quantech to a Preferred Third Party Transferee
under a Preferred Transfer Agreement prior to the Event of Default shall
survive termination of the license and sublicense rights in the Licensed
SPR Technology granted to Spectrum and reversion of such license and
sublicense rights to the Serono Companies under the Default Provision,
and such Preferred Transfer Agreement shall continue in full force and
effect under its own terms and conditions. For purposes of this
Section 6, a "Preferred Third Party Transferee" shall be any third
party which had assets of $100 million or more at the end of the third
party's fiscal year immediately preceding the execution of such
Transfer Agreement. For purposes of this Section 6, a "Preferred
Transfer Agreement" shall be any Transfer Agreement with a Preferred
Third Party Transferee which is approved by LSA, which approval will not
be unreasonably withheld.
7. Execution in Counterparts. This Amendment to License Agreement may be
executed in one or more counterparts, all of which shall be considered
one and the same agreement, and shall become a binding agreement when
one or more counterparts have been signed by each party and delivered
to the other party.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Amendment to License Agreement as of the date first above written.
APPLIED RESEARCH SYSTEMS LABORATOIRES SERONO S.A.
ARS HOLDING N.V.
___________________________ ___________________________
By_________________________ By_________________________
Its________________________ Its________________________
QUANTECH LTD.
___________________________
By Xxxxxxx X. Xxxxxxx
Its COO and CFO
